SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

INTERNATIONAL BUSINESS

SUBMITTED BY:

VIVEK GUPTA

MBA-IB (2006-2008)

Roll No. : A1802006A45

INDUSTRY GUIDE FACULTY GUIDE

AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA

AMITY UNIVERSITY – UTTAR PRADESH

Company Certificate

1

CUSTOMER RETENTION AND EXPANSION STRATEGY BY

UNDERSTANDING BEHAVIOR DYNAMICS, NEED STATES,

AND DEVELOPING VALUE-BASED OFFERINGS AND

SERVICES

(LETTER HEAD of the Company )

TO WHOM IT MAY CONCERN

This is to certify that Mr.Vivek Gupta, a student of Amity

International Business School, Noida, undertook a project on

“CUSTOMER RETENTION AND EXPANSION STRATEGY BY

UNDERSTANDING BEHAVIOR DYNAMICS, NEED STATES, AND

DEVELOPING VALUE-BASED OFFERINGS AND SERVICES ” at

BHARATT AXA From 17/05/2007 to 17/07/2007 .

Mr.Vivek Gupta has successfully completed the project under the

guidance of Mr. Manish Rustogi. He is a sincere and hard-

working student with pleasant manners.

We wish all success in his future Endeavour’s .

Signature with date(Name)(Designation)(Company Name)

CERTIFICATE OF ORIGIN

2

This is to certify that Mr.Vivek Gupta, a student of Post

Graduate Degree in International Business, of Amity

International Business School, Noida has worked in BHARTI

AXA, under the able guidance and supervision of Mr. Manish

Rustogi, Manager of agency of Bharti Axa Life Insurance. The

period for which he was on training was for eight weeks, starting

from 17/05/2007 to 17/07/2007 .

This Summer Internship report has the requisite standard for the

partial fulfillment the Post Graduate Degree in International

Business. To the best of our, knowledge no part of this report has

been reproduced from any other report and the contents are based

on original research.

Signature Signature(Faculty Guide) (Student)

3

ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr.

Manish Rustogi, Manager of agency of Bharti Axa for his able

guidance, continuous support and cooperation throughout my

project, without which the present work would not have been

possible.

I would also like to thank the entire team of Bharti Axa, for

the constant support and help in the successful completion of my

project.

Also, I am thankful to my faculty guide Prof Mr. Ravi

Prakash of my institute, for his continued guidance and

invaluable encouragement.

Signature(Student)

4

TABLE OF CONTENTS

Subject Page.no

EXECUTIVE SUMMARY--------------------------------6

RESEARCH OBJECTIVE---------------------------------8

HYPOTHESIS-----------------------------------------------9

RESEARCH DESIGN--------------------------------------11

SAMPLE DESIGN------------------------------------------11

DATA COLLECTION--------------------------------------12

SCOPE OF STUDY-----------------------------------------13

LIMITATION------------------------------------------------14

CRITICAL REVIEW OF LITERATURE ---------------15

INDUSTRY PROFILE -------------------------------------19

COMPANY PROFILE. ------------------------------------28

SWOT ANALYSIS-----------------------------------------33

FINDINGS & ANALYSIS--------------------------------35

RECOMMENDATIONS----------------------------------43 -

BIBLIOGRAPHY-------------------------------------------46

ANNEXTURES---------------------------------------------47

CASE STUDY-----------------------------------------------51

SYNOPSIS---------------------------------------------------58

.

5

EXECUTIVE SUMMARY

The contour of insurance business has been changing across the globe and

the rippling effects of the same can be observed in the domestic markets

also. The Insurance sector in India has gone through a number of phases

and changes, particularly in the recent years when the Govt. of India in

1999 opened up the insurance sector by allowing private companies to

solicit insurance and also allowing FDI up to 26%. By end March 2006,

there were fifteen life and fifteen non-life insurance companies. Bharti

Axa Life insurance company was granted Certificate of Registration in

July, 2006 and commenced its operations during the current financial year

2006-07.

Bharti AXA Life Insurance is a joint venture between Bharti, India's

leading private telecom company and AXA, world leader in financial

protection and wealth management.

This study is carried out to understand the behavioral dynamics of

consumers and the triggers for behavior and develop rapid stage

segmentation strategies for customer retention and expansion

An exploratory research was carried out through questionnaire for which a

stratified sampling technique was adopted and a sample size of 100

individuals was taken . A questionnaire was drafted to analyze the

dependence of type of insurance policy required, on the life cycle stage of

the individual. It will also clearly show the customers perception towards

insurance compared with the other investment options and financial

instruments, and as to how we can make it better.

.

6

Both qualitative and quantitative techniques were applied but this study

heavily relied on qualitative technique and it was proven that the life

cycle stage of an individual is an important determinant for deciding the

type insurance policy required by the individual.

After the completion of the study the recommendations are 1) Customer

crosses selling and bundling, 2) Implementation of Customer relationship

management, 3) Market of One strategy which has been more clearly

explained in the later stage of the report.

The implication of this research study for Bharti Axa can be developing

customer retention and expansion strategies by creating a bouquet of

offerings to meet and surpass expectations and add value in the business

system and recrafting the offerings at various points in the product life

cycle to provide a total brand value experience.

7

RESEARCH OBJECTIVE

This paper describes the initiatives adapted to understanding behavior

dynamics, need states, creating rapid segmentation models and developing

value-based offerings and services to re design their own product life

cycles.

This is a holistic approach that defines the environment in the competitive

sphere and understands the messages and experience the consumer is

exposed to both from within the product/service category as well as across

categories.

Primary objective

Developing customer retention and expansion strategies

Secondary objective

Understanding the behavioral dynamics of consumers and the

triggers for behavior

Developing rapid stage segmentation strategies for customer

retention and expansion

Creating a bouquet of offerings at various inflection points in the

product life cycle to meet and surpass expectations and add value in

the business system

.

8

HYPOTHESIS

Hypothesis 0 : the need for old age solution policy depends on the life cycle stage of an individual.

Hypothesis 1: the need for old age solution policy does not depend on the life cycle stage of the individual.

Correlations

1 .990*

. .010

4 4

.990* 1

.010 .

4 4

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

agegroup

oldageneed

agegroup oldageneed

Correlation is significant at the 0.05 level (2-tailed).*.

So we fail to reject the null hypothesis

HYPOTHESIS 0: the need for policy for family depends on the life cycle

stage of an individual

HYPOTHESIS 1 : the need for policy for family does not depend on the

life cycle stage of an individual

So we fail to reject the null hypothesis

Correlations

1 .737

. .263

4 4

.737 1

.263 .

4 4

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

agegroup

ffamilyneed

agegroup familyneed

9

HYPOTHESIS 0: The need for policy providing asset building solution

depends on the life cycle stage of an individual.

HYPOTHESIS 1 : The need for policy providing asset building solution

does not depend on the life cycle stage of an individual.

Correlations

1 .400

. .600

4 4

.400 1

.600 .

4 4

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

agegroup

assetbuildingneed

agegroupassetbuildingneed

So we fail to reject the hypothesis

10

RESEARCH DESIGN

Methodology:

An exploratory research was carried out to understand the behavior

dynamics and need states and also understands the messages and

experience the consumer is exposed to both from within the

product/service category as well as across categories. Both qualitative and

quantitative techniques are applicable although exploration relies more

heavily o qualitative techniques.

Sample size:

As the research is based on study to exhibit relation between life cycle

stage of an individual and the type of insurance policy required at

different stages, a stratified sampling technique was adopted and a

sample size of 100 individuals were taken , out of which 20 sampled did

not have a life insurance policy.

The survey has been conducted within the geographic area of Delhi &

Noida. The time period for which survey has been undertaken is may-June,

2006

Sampling techniques:

A stratified sampling technique was adopted because of the nature of the

study and for higher statistical efficiency requirement to come to an

analysis. The sample was carefully drafted. A lot of care was taken and 20

samples from each age group were taken. Knowledge of the sample about

different financial instruments was an important consideration. The age

groups discussed in the study are 20-30, 30-40, 40-50 and 50-60. The

sample was designed in the above stated manner to make the analysis

easier.

11

DATA COLLECTION

Primary data:

A questionnaire was drafted which included sample rating scales like

simple category scale, multiple- choice single-response scale, multiple-

choice multiple- response scale , multiple- rating list scale, and constant

sum scale, and open ended questions.

The questionnaire contains 12 questions which helps us to analyze the

dependence of type of insurance policy required on the life cycle stage of

the individual. It will also clearly show the customers perception towards

insurance compared with the other investment options and financial

instruments, and as to how we can make it better.

Secondary data:

The secondary data was collected through the web sites of different

organizations, news papers and weekly journals of the Bharti Axa. The

secondary data is collected through the Websites related to insurance sectors,

Journals & Books on Research Methodology.

Techniques used in data analysis: Four hypothesis with both null and

alternate have been taken and correlation technique has been used to

accept or to reject the hypothesis. Correlation technique has been used so

as to show that the type of insurance policy demanded by an individual

depends on the life cycle stage of the same. Correlation analysis has been

done using the SPSS software.

12

SCOPE OF STUDY

Understand the behavioral dynamics of consumers and the triggers for

behavior and develop rapid stage segmentation strategies. Understand

customer’s perception towards insurance compared with the other

investment options and financial instruments and creating a bouquet of

offerings to meet and surpass expectations and recrafting the offerings at

various points in the product life cycle to provide a total brand value

experience.

13

LIMITATIONS

Project was undertaken in the Delhi-Noida region only .So it might

not be a true Representation of the views of the insured of other

places.

The project is based on survey of population related to Bharti Axa

only. For a better & magnified picture competitor’s similar study

should be undertaken .

All the responses taken are personal opinions & perception of

the respondents that are subjective.

14

LITERATURE SURVEY

Marketing in India, with its economic and social contrasts, is often

likened to dealing with several markets at the same time. The population

of more than 1 billion differs enormously with 15 different languages,

social customs and lives under varying states of economic development

from the vastly affluent to the destitute.

The personal and general insurance market, hitherto dominated by

governmental monopolistic monoliths - Life Insurance Corporation,

General Insurance - had to make way for a slew of private players who

paired with local financial institutions to revolutionize the insurance

market in India.

Several demographic and psychographic mega trends augured well for the

growth of financial services in general and insurance in particular.

One was the fact that there was a substantial segment of the middle class

population that remained 'unbanked' (40%) and penetration of insurance

was only 13% of the total insurable population!

Besides this, economic growth at 6.5% and the 'demographic dividend' -

55% of the population in the productive age group of 15 - 60 years were

clear indications for exponential growth.

Success factors: Understanding consumer expectations and market

behavior dynamics

15

An initial comprehensive study of the usage and attitudes towards

insurance revealed interesting perceptions and attitude segments!

To succeed, private players needed to ride piggyback on a strong

local bank (Banc assurance). The bank then provided the source of

credibility

In terms of risk attitudes, distinct trends emerged.

The defensive investors were the largest kind (60%). They preferred

safe long-term returns guaranteed by the government as well as

gold, especially the elders. These were also among the higher SEC

segments likeA1.

There was a small segment of sophisticated investors (34%) who

actually took professional advice from portfolio managers and were

even predisposed to taking calculated risks - i .e., mutual funds,

equity markets. These were typically those who had accumulated a

fair share of wealth and were not insecure about making it work for

them!

There was also a Young Cosmopolitan (Yo Co) segment (6%). The

YoCos were highly 'self opinionated’ and demanded a higher life

cover. They were keen to be educated on the financial aspects of

investing in local and foreign markets. They were largely neophytes

in the arena of investments.

Across board consumers expected a reasonable return for their

investments and the time span for returns seemed to telescope

dramatically. Consumers wanted some returns to accrue within four

to five years of entering an insurance policy.

For the private players the expectations were more stringent! They

were expected to start paying up from a reasonably short time frame

of four years for consumers to feel reassured about their long term

probity and safety of the capital!

16

Focusing on customer equity as a driver to brand equity through

rapid need state analysis, concept generation.

In order to understand consumer equity, a large segmentation and cluster

study based on life stages and market dynamics/behavior mapping was

conducted. This study innovatively meshed the socio-demo and

psychographics variables with the life stage need states of consumers.

Based on their financial investment portfolios and attitudes /expectations

from insurance, five distinct clusters emerged. The key clusters identified

for which distinct value offerings were to be offered were:

High Net Worth Buyers (16%) - more predisposed to traditional

offerings and mutual funds;

The Defensive Buyers (48%) - who keep their income in government

assured stocks, liquid forms of investments;

The Sophisticates (18%) - predisposed towards mutual funds, stocks

through portfolio managers;

The Pension Savers (12%) - older, more disposed towards safe

bonds, traditional offerings, providing income in later years;

The Neophytes (6%) - those just starting out, willing to look at

nontraditional offerings with safety, unit linked plans.

17

ATTITUDE TO INSURANCE

5 point scale

(mean scores)

High net

worth

buyers

16%

Defensive

buyers

48%

Sophisticat

es

18%

Pension

Savers

12%

Neophyte

s

6%

Prefer to invest in

policies recommended

by the advisors

3.88 4.3 3.6 4.0 4.0

Prefer government

backed funds

2.88 4.5 3.5 4.0 3.5

Prefer other assets like

gold

3.28 4.2 3.0 2.5 1.8

Want company with

variety of flexible plans

3.98 3.4 4.3 3.0 4.5

Want returns on the

investment with life

cover

4.08 3.5 4.0 3.8 4.0

Want the company to

be proactive and offer

regular updates and

suggestions

4.78 3.8 4.8 4.0 3.4

****YVDV Prasad, ING Vysya Life Insurance

Vivek Bengani , ING Vysya l i fe Insurance

Nayantara Chakravarti mult i dimension research India

18

INDUSTRY PROFILE

Indian Insurance Industry

With a large population and untapped market, insurance happens to be a

big opportunity in India. The insurance business (measured in the context

of first year premium) grew at 47.93 per cent in 2005-06, surpassing the

growth of 32.49 per cent achieved in 2004-05. However, insurance

penetration in the country continues to be low. Insurance penetration or

premium volume as a share of a country’s GDP, for the year 2005 stood at

2.53 per cent for life insurance and 0.62 per cent for non-life insurance.

The level of penetration tends to rise as income increases, particularly in

life insurance. India, with its huge middle class households, has exhibited

potential for the insurance industry. Saturation of markets in many

developed economies has made the Indian market even more attractive for

global insurance majors. The insurance market has witnessed dynamic

changes which includes presence of a fair number of insurers in both life

and non-life segment. Most of the private insurance companies are joint

ventures with recognized foreign players across the globe. Consumer

awareness has improved. Competition has brought more products and

better customer servicing. It has had a positive impact on the economy in

terms of income generation and employment growth.

The Insurance sector in India has gone through a number of phases and

changes, particularly in the recent years when the Govt. of India in 1999

opened up the insurance sector by allowing private companies to solicit

insurance and also allowing FDI up to 26%. Ever since, the Indian

insurance sector is considered as a booming market with every other

global insurance company wanting to have a lion's share. Currently, the

largest life insurance company in India is still owned by the government.

19

Background of insurance industry

Insurance in India has its history dating back till 1818, when Oriental Life

Insurance Company started was started by Europeans in Kolkata to cater

to the needs of European community. Pre-independent era in India saw

discrimination among the life of foreigners and Indians with higher

premiums being charged for the latter. It was only in the year 1870,

Bombay Mutual Life Assurance Society, the first Indian insurance

company covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started

mushrooming up. In the year 1912, the Life Insurance Companies Act, and

the Provident Fund Act were passed to regulate the insurance business.

The Life Insurance Companies Act, 1912 made it necessary that the

premium rate tables and periodical valuations of companies should be

certified by an actuary. However, the disparage still existed as

discrimination between Indian and foreign companies.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19th

of January, 1956, that life insurance in India was completely nationalized,

through the Life Insurance Corporation Act, 1956. There were 245

insurance companies of both Indian and foreign origin in 1956.

Nationalization was accomplished by the govt. acquisition of the

management of the companies. The Life Insurance Corporation of India

was created on 1st September, 1956, as a result and has grown to be the

largest insurance company in India as of 2006.

General Insurance Business (Nationalization) Act, 1972

The General Insurance Business (Nationalization) Act, 1972 was enacted

to nationalize the 100 odd general insurance companies and subsequently

20

merging them into four companies. All the companies were amalgamated

into National Insurance, New India Assurance, Oriental Insurance, and

United India Insurance which were headquartered in each of the four

metropolitan cities.

Insurance Regulatory and Development Authority (IRDA) Act,

1999

Till 1999, there were not any private insurance companies in Indian

insurance sector. The Govt. of India then introduced the Insurance

Regulatory and Development Authority Act in 1999, thereby de-regulating

the insurance sector and allowing private companies into the insurance.

Further, foreign investment was also allowed and capped at 26% holding

in the Indian insurance companies.

Major Players in Indian Insurance

Life Insurance

Public

o Life Insurance Corporation of India

Private

o HDFC Standard Life Insurance

o Max New York Life Insurance

o ICICI Prudential Life Insurance

o Om Kotak Mahindra Life Insurance

o Birla Sun-Life Insurance

o TATA AIG Life Insurance

o SBI Life Insurance

o ING Vysya Life Insurance

o Bajaj Allianz Life Insurance

o MetLife Insurance

21

o Reliance Life Insurance Company Limited

o Bharti AXA

o Aviva Life Insurance

o Sahara India Insurance

o Shriram Life Insurance

By end March 2006, there were fifteen life and fifteen non-life insurance

companies. Bharti Axa Life insurance company was granted Certificate of

Registration in July, 2006 and commenced its operations during the

current financial year 2006-07. The total number life insurer as of now

becomes sixteen

NUMBER OF REGISTERED INSURERS IN INDIA

Type of business Public Sector Private Sector TotalLife Insurance 1 15* 16General Insurance 6 9 15Re-insurance 1 0 1Total 8 24 32

One has commenced operations in 2006-07

APPRAISAL OF INSURANCE MARKET

The contours of insurance business have been changing across the globe

and the rippling effects of the same can be observed in the domestic

markets also. Insurers are increasingly introducing innovative products to

meet the specific needs of the prospective policyholders. An evolving

insurance sector is of vital importance for economic growth. While

encouraging savings habit it also provides a safety net to both enterprises

and individuals. With an average annual growth of 37 per cent in the first

22

year premium in the life segment and 15.72 per cent growth in the non life

segment, together with the largest number of life insurance policies in

force, the potential of the Indian insurance industry is still large. Life

insurance penetration in India was less than 1 per cent till 1990-91.

During the 1990s, it was between 1 and 2 per cent and from 2001 it was

over 2 per cent. In 2005 it had increased to 2.53 per cent. The impetus for

growth has come from both the public and private insurers. In addition,

the insurance companies in general and private insurance companies in

particular, are reaching out to untapped semi-urban and rural areas

through advertisement campaigns and by offering products suitable to

meet the specific needs of the people in these segments. Innovative

products, imaginative marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster

than anyone expected. While at the time of opening up of the sector, life

insurance was viewed as a tax saving device, policyholders’ perspective is

slowly changing and they are taking insurance cover irrespective of tax

incentives. The insurable populace is looking for avenues which are

offering products which suit their specific requirements, and plenty of

choices are available in the market today.

The changes perceived in consumer attitude towards insurance over

the past Two years

Traditionally the sale of insurance had been driven by the imperative to

save tax. The changes in tax deductibility norms in the budget before the

last one have helped reinforce the idea that investing in insurance for tax

saving is great, but buying insurance to fulfill a financial need is even

better.

23

A shift in the mix of products bought by consumers

There has been a move away from the predominance of money back and

endowment policies. Using Financial Health Check, planners have been

able to get a better understanding of people’s needs.

The building blocks of a financial portfolio should ideally be as follows:

protect your family first through term or whole life. Next protect your

wealth by buying critical illness cover, health cover, hospital cash benefit,

etc. Then save for children’s education through an endowment plan. And

finally save for your retirement needs by investing in a pension plan.

Pension product has sold very well in the last financial year. There is also

selling more of term and whole life products. The single-premium market,

of course, is dead as a stone after the government decided to take away

the tax benefits. In all major markets around the world, 70-90 business

comes from single premium products. It’s a consumer-friendly product: he

has to make a one-time commitment, the charges and commissions are

lower compared to a regular premium product, etc. But in one stroke we

have set ourselves back with this decision.

Performance in the first half of 2006-07

The life insurers underwrote a premium of Rs. 29664.64 crore during the

six months in the current financial year as against Rs. 11323.13 crore in

the comparable period of last year recording a growth of 161.98 per cent.

Of the total premium underwritten, LIC accounted for Rs. 23435.08 crore

and the private insurers for Rs. 6229.56 crore. The premium underwritten

by the LIC and the new insurers grew by 178.69 per cent and 113.78 per

cent respectively, over the corresponding period in the previous year. The

number of policies written at the industry level increased by12.63 per

cent. As against this increase, the number of policies written by LIC

increased by 2.14 per cent whereas in the case of private insurers the

24

increase was 91.92 per cent. Of the total premium underwritten, individual

premium accounted for Rs. 25637.42 crore (growth of 160.29 per cent)

and the remaining Rs. 4027.22 crore from the group business (growth of

173.27 per cent). In respect of LIC, the growth in individual and group

business was 177.86 per cent and 183.71 per cent respectively. In the case

of private insurers, the individual and group business increased by 111.94

per cent and 130.44 per cent respectively. The market share of LIC was 79

per cent in premium collection and 80.09 per cent in number of polices

underwritten. In the corresponding period of last year these shares were

74.26 per cent and 88.32 per cent respectively. The number of lives

covered by life insurers under the group scheme was 87.34 lakhs recording

a growth of 108.62 per cent over the previous period. Of the total lives

covered under the group scheme, LIC accounted for 63.97 lakhs and

private insurers 4.03 lakhs. The life insurers covered 38.97 lakh lives in

the social sector with a premium of Rs.69.75 crore. In the rural sector the

insurers underwrote 21.92 lakhs policies with a premium of Rs. 2271.31

crore.

.

The growth in first year premium was fuelled by sales of unit linked

products for the second consecutive year. In a reversal from the

experience of the previous year, LIC reported a growth of 47.89 per cent

in the number of policies underwritten as against a decline of 11 per cent

in the previous year; the reversal has been witnessed on the strength of the

increase in the unit linked business. The size of life insurance market

increased on the strength of growth in the economy and concomitant

increase in per capita income

MARKET SHARE OF LIFE INSURERS

25

(Per cent)

Insurer 2004-05 2005-06First year premiumLIC 73.41 64.52Private Sector 26.59 35.48Total 100.00 100.00

Single premiumLIC 87.02 84.45Private Sector 12.98 15.55Total 100.00 100.00

Renewal premiumLIC 96.18 92.82Private Sector 3.82 7.18Total 100.00 100.00

Total premiumLIC 90.67 85.75

Private Sector 9.33 14.25Total 100.00 100.00

SWOT ANALYSIS26

STRENGTHS

Strong new business growth exceeding 40% yoy

Market increased in agency force, private players 300k

Successful banc assurance, contributing 25% of private market

Strong growth of unit linked market at the mass affluent/affluent

end

Healthy regulatory environment

WEAKNESS

Life insurance penetration at 3% still largely uninsured or under

insured population

Private players have limited focus on mass market and lower income

sections and on tier III, semi urban and rural markets

Market growth largely investment driven protection market still

underdeveloped

High cost operating models unable to yield profitability in low

ticket, high volume business.

OPPURTUNITY

Expand beyond proprietary branch outlets through a large number of

partner points of presence

Establish extensive distribution spreading to tier III , semi urban

and rural locations, with access to the large mass and low income

population

Develop the pure protection market through large volumes, lower

ticket products

Sustainable business supported through low cost operations and

service model

COMPANY PROFILE27

Bharti AXA Life Insurance is a joint venture between Bharti, India's

leading private telecom company and AXA, world leader in financial

protection and wealth management. Their philosophy is to build around

the promise of making people "Life Confident".. .

The AXA Group

AXA, ranked No 13 in the Fortune 500 list of global companies managed a

total AUM of Euro 1,091 billion as of June 30, 2006 The AXA group has

over 50 million customers and employs over 112,000 people with a

presence in over 50 countries. For over 2 decades, AXA has been focused

on providing financial protection to millions of families the world over, to

help them lead their lives confidently.

AXA Asia Pacific Holdings (AXA APH) is listed on the Australian and

New Zealand stock exchanges and is 51% owned by AXA Group. AXA

APH is responsible for AXA Group’s life insurance and wealth

management businesses in the Asia-Pacific region. It has operations in

Australia, New Zealand, Hong Kong SAR, China, Indonesia, the

Philippines, Thailand and Singapore. AXA APH had AUD 28.8 billion in

total assets as at 30 June 2005, and reported profit after tax before non-

recurring items of AUD 246 million, for six months ended 30 June 2005.

.The Bharti Group

28

Bharti Enterprises is India’s leading business conglomerate with interests

in telecom, agro business and infrastructure projects. Established in 1976,

Bharti has been a pioneering force in the telecom sector with many firsts

and innovations to its credit over the last decade, the Bharti Group,

through its flagship brand Airtel has endeavored to simplify lives by

dissolving boundaries of communication. The driving force at the Bharti

Group stems from the passion to consistently deliver superior services,

and above all, a delightful experience to millions of customers across the

country. Bharti Airtel is India's leading private telecom service provider

with over 24 million subscribers and has been voted Asia's best managed

company.

. Bharti Tele-Ventures Ltd. (BTVL), a group company, is one of India’s

leading private sector providers of telecommunication services with an

aggregate of 13.76 million customers as on July 31, 2005, consisting of

approximately 12.79 million mobile customers. The company is the only

operator to provide mobile services in all the 23 circles in India. BTVL

also provides telephone services and Internet access over DSL in 15

circles. This is complemented by its national and international long

distance services. BTVL has a market capitalization of Rs.57, 000 crores

(USD 13 billion) as on 23 August, 2005. Bharti Enterprises is also the

country’s largest manufacturer and exporter of telephone terminals. Bharti

also has a joint venture with ELRo Holdings India Ltd. – ‘Field Fresh

Foods Pvt. Ltd’, for the global distribution of fresh fruits and vegetables

BHARATI AXA

29

Bharti Enterprises and AXA Asia Pacific Holdings Limited (AXA) signed

an agreement to establish a joint venture named Bharti AXA Life

Insurance Company Limited to carry on life insurance business in India

August 26, 2005, New Delhi : Bharti Enterprises and AXA Asia Pacific

Holdings Limited (AXA) signed an agreement to establish a joint venture

named Bharti AXA Life Insurance Company Limited to carry on life

insurance business in India.

Under the agreement AXA has a 26% equity interest in the joint venture,

while Bharti holds the balance. AXA, a global leader in insurance

business, enabled the company to have access to AXA’s global life

insurance and asset management expertise. Bharti brought its strong local

market knowledge, reputation and India-wide retail presence.

“The insurance sector in India provides a mega opportunity for private

players like Bharti Axa Despite the strong growth witnessed by the sector

in the recent years, nearly 80% of the Indian population is without life

insurance coverage. As one of India’s leading business conglomerates

having an established brand and a significant presence in the retail space,

Bharti has inherent advantages in being a part of this growth story. In

AXA, Bharti has a global leader as its partner, one that is known for its

expertise and best practice across the world. More importantly, this new

venture also fits into our strategy of taking on projects that make a

difference to the society at large.

This joint venture is an opportunity for AXA to enter the Indian life

insurance market, one of the most attractive emerging insurance markets.

India is a fast growing economy and a huge market with more than 1.1

billion people. This coupled with a large middle class and increasing

income levels will drive growth in the insurance market. Bharti is a well-

30

established and financially strong group whose capabilities and network

will be of significant value to the joint venture.

The joint venture invested in the region of Rs. 500 crores (115 Million

USD) over the first three to four years of operations, reflecting both

partners’ commitment to quickly establish a strong foothold in the Indian

market.

The joint venture commenced business in the first half of 2006, subject to

IRDA, FIPB and other statutory approvals.

Vision

To be a leader and the preferred company for financial protection and

wealth management in India

Strategy

To achieve a top 5 market position in India through a multi-

distribution, multi-product platform. To adapt AXA's best practice

blueprints as a sound platform for profitable growth. To leverage

Bharti 's local knowledge, infrastructure and customer base. To deliver

high levels of shareholder return. To build long term value with our

business partners by enhancing the proposition to their customers. To

be the employer of choice to attract and retain the best talent in India.

To be recognized as being close and qualified by our customers

Strategic differentiators

Strong partner Bharti - provides access to customer base of more

than 20 million

Multi channel execution capability

Current Asia product range which is a strong match to products sold

to the mass and mass affluent

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Global scale providing cost effective and speedy re-use of systems,

products and business capability

Strong AXA and Bharti brands which can be leveraged to attract and

retain a high quality management team

SWOT ANALYSIS

32

Strengths

Use of brand affinity of Airtel to promote insurance sales.

Bharti brought its strong local market knowledge, reputation and

India.

Associated with AXA world leader in financial protection and

wealth management, ranked No 13 in the Fortune 500 list of global

companies and has enabled the company to have access to AXA’s

global life insurance and asset management expertise.

Strong partner Bharti - provides access to customer base of more

than 20 million

Weakness

Late entrant in the insurance sector

Thin distribution network all over the nation

Very less number of product offering in comparison to its

competitors

Lack of confidence among the customers as parent company does

not have a financial background.

Opportunities

Strong growth of unit linked market at the mass affluent end.

Lower income section, tier III semi-urban and rural market are still

untapped by private companies.

Potentially with 20% insurance cross sale only to new telecom

customers, this network can yield 48 lac policies per year with sum

assured of nearly Rs 58000 crores.

33

Threats

Many more companies are lining up to enter into Indian Insurance

Industry.

Consumer’s preference is still more towards public sector insurance

companies.

FINDINGS AND ANALYSIS

34

On age group 20-30

After analyzing the findings derived from the questionnaire we come

across to some interesting facts.

60% of the respondents from the age group 20-30 do not hold any

life insurance policy at all and also none of them hold more than 5

policies. (Table-4)

This age group is more attracted towards share market with 55% and

mutual funds with 35%. (Table-3)

The various needs at this age group are very low. (Table-2)

This may be due to various reasons .

The primary reason being maximum percentage of this age group are

not married and do not have children so do not have any kind of a

responsibility towards family.

Secondly most of them are still parasites and dependent on their

parents for living. A small extent is working but do not have

sufficient fund to take a life insurance policy.

They have high risk takers and want to earn quick money so are

more interested in the share market.

They have a notion that they will live long and no unavoidable

circumstances can hamper their life.

On age group 30-40

35

Again moving towards the age group 30-40 we can observe that 40%

of the respondents hold 3-5 policies and 25% have 0-3 policies and

10% have more than 5 policies. (Table-4)

From table-3 we can analyze that the number of people favoring

insurance over other investment instruments have increased from 2

to 7.

Table-2 exhibits that the various needs have also increased to a

great extent. The major needs in this age group have been children

need and family need. Asset building need has also shown a

tremendous increase.

There has been a growth of about 100% in each need in this age

group.

The reasons for these shifts may be:

The mass populations in this age group are married and even have a

child or two. They now being the bread earners for their family have

a sense of responsibility towards them.

People at this stage generally start earning a good living and can

afford to invest in policies

Since they are earning well so they can invest in policies to save tax

to some extent.

On age group 40-50

Now in age group 40-50, 45% have over 5 policies and 35% have 3-

5 policies. (Table-4)

Table-3 clearly shows that there has been a shift of interest from

other financial instrument to insurance. About 45% believe

investing in insurance.

36

There has been a 140% increase in the old age policy need as

compared to age group 30-40.( table-2)

About 50% fall in the children need policies can be observed.

(Table-2)

This may be for the following reason:

The offspring’s are already grown up and investment for their

benefit has already been made in the previous stage.

They start thinking about their old age and after retirement financial

solution.

On age group 50-60

In the age group 50-60, 50% of them hold more than 5 policies.

(Table-4)

The primary needs being old age and family need and critical

illness.

Children need has fallen by 80%. (table-2)

The asset building need has fallen by 50% from the previous age

group

This age group least wants to invest into shares

The various reasons may be:

37

He wants to secure his financial future when he retires from

his job or takes leave from his business so that he is self

dependent.

Their children are already grown up and self dependent with

their own family.

They want to secure themselves towards any kind of critical

illness.

The risk taking ability decreases and want safe and secure

returns

Summary

The age group 40-50 takes most of the insurance policies

Requirement of Old age need policies increase in number with

the increasing age.

The age groups 30-40 and 40-50 are most interested in asset

building needs and family needs

The age group 30-40 is most interested in children need and

family need and maximum in covering future cash needs.

The age groups 30-40 and 40-50 also take insurance to take

the benefit of tax relaxation.

Comparing the amount of investment different age groups

would like to make in different financial instruments i .e.

mutual funds insurance policy and shares, given 100000/-.

38

The mean value of all the respondents in different age group

were taken

47% of the

respondents like to take decision on various financial instruments

by consulting a financial advisor.

37%of the respondents feel personal reference most reliable source

to take an investment decision

A very large proportion of the respondents perceive insurance to be

less flexible compared to mutual funds and shares.

They also feel it gives the least scope to diversify.

They are also not satisfied with the liquidity aspect of insurance.

Insurance scores high on attributes like security and control over

financial future and scores average on attributes like requirement of

fund, rate of return and transparency.

Table-1

20-30 30-40 40-50 50-60

Insurance 10000 35000 45000 35000

Mutual funds 35000 30000 35000 50000

Shares 55000 35000 20000 15000

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Table-2

Table-3

40

Table-4

Table-5

41

which medium is suitable for gaining knowledge about financial instruments

31%

47%

9%

13%

Personal reference Financial advisors

Telephonic cold calls Advertisement (T.V, newspaper)

Table-6

RECOMMENDATIONS

42

perception towards insurance against other

investment options

0%

20%

40%

60%

80%

100%

5 31 15 6 14 4 32

4 43 19 13 35 7 37

3 20 13 26 28 33 21 13 23

2 48 34 22 27 18 32 8

1 32 53 16 21 7 42

Flexibility

Diversification

Security Return

on Requirement of

transparency

liquidity control over

“Market of one”

This plan should be introduced as a method of planning for time

based expenditure to be incurred on children. The maturity benefit

could be received as a single lump sum payment or in three to five

annual installments at specific stages of the child.

The critical differentiator of this plan should be that it provides

money for the child’s future with risk coverage of the parent as well

opposed to the parent receiving the money in case of any

eventuality.

“Universal life plan”

In order to ensure loyalty to the company, plans are afoot to 'catch

those young' and create customized plans at various stages and

catering to their need states. “The Universal Life Plan” should be on

the cards. This plan should be introduced as a method of planning

for time based expenditure to be incurred on children. A few of the

innovations should be based on specific needs at certain life stages.

Consumers are often migrated to these newer policies. The Critical

Illness Plan should be introduced as a response to a stated need of

consumers. The differentiator here is clearly different in the number

of illnesses it includes

Implementation of a proper customer relationship

management.

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Unlike other categories, customer retention in the insurance

business has not yet been under serious consideration. Insurance as

an industry till date has adopted a strategy of “one time customer”,

and is the same with Bharti Axa, but the concept should be revised

and “life time customer” or “Customer crosses selling and bundling

of policies” Strategy should be adopted for long term sustainability

and growth of the company. The company has to begin a huge

database monitoring exercise with annual statements / mailers to the

customers and updating their databases. This can also be used for

cross selling of different policies at different life stage of the

customer

Service Delivery Pathways: Innovations

Tie-ups for reach and organic growth : To enable better

reach especially in the small towns, tie ups with banks have been

established. Co-operative societies, regional rural banks should be

tapped first. . In recent times, the business of post offices has

changed greatly. They already sell a range of products, like mutual

funds. They too could be used to sell insurance. Rural self-help

groups and NGOs have done significant work in the field of micro-

financing. They can become a significant channel. Panchayats too

can be used for conveying the message. Together, these constitute a

formidable distribution network that can be tapped.

Products and its prices will have to be tailored to suit

rural needs:

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The success mantra would be

Low cost protection product access

Large distributions reach and network places

Products Possibly with bundled benefit on purchase

Product and process simplicity

Value 'makeover' of the advisors : A different class of advisors -

celebrity stockbrokers, chartered analysts/accountants; financial

consultants and the like have been enlisted as "evangelists". They bring to

the table a meshing of consumer apprehensions /FAQ's and financial

savvy. They are able to make meaningful contributions in the

customization of offerings

BIBLIOGRAPHY

45

Times of India - 5 July 2007

Times of India- 30 June 2007

Business line- Saturday, september.21.2002

Business line- Sunday, December. 07. 2003

Business line- Friday, September. 24. 2004

Skees, J. , Hazell, P., Miranda, M.. 1999. New Approaches to Crop Yield Insurance in Developing Countries .EPTD Discussion Paper No. 55.

Business Research Methods, Cooper & Schindler

REFERENCE:

http://www.irdaindia.org/

http://www.licindia.com/

http://www.bharti-axalife.com/

http://www.iciciprulife.com/public/default.htm

https://www.hdfcinsurance.com/index2.asp

http://www.lifeinscouncil.org/

http://www.rbi.org.in/home.aspx

http://www.tac.org.in/

www.ciionline.org

www.lifeinscouncil.org

www.abc insurance .co .

www.economywatch.com

www.ficci.com

www.financialexpress.com

www.themanagementor.com

www.iinvestor.com

46

ANNEXTURE

Amity International Business School

47

Dear sir/madam,I am sincerely in need of your opinion on subject to identify and understand the customer’s perspective towards life insurance and as to how we can make insurance more beneficial to for you. This survey is conducted by Vivek Gupta student of ‘Amity International Business School’ for the completion of summer internship project.I assure the confidentiality of your sincere opinion.

Name: __________________________________occupation:____________________

Address: __________________________________

__________________________________

Age: 20-30 30-40 40-50 50-60

Gender: Male Female

Income: 1.5-3 3-5 5-10 10 above

1) Do you hold a life insurance policy?

Yes

No

2) If no, why have you not taken any life insurance policy?

Not aware

I don’t require it

Have other investment options

Lack of fund

Planning in near future

3) Now being aware of life insurance why would you take a life insurance policy? (Can

give multiple choices)

to cover Future cash needs

Tax benefit

As an investment instrument

As an angel of mercy

As a hedge against old age

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4) If yes how many life insurance policies do you hold at present?

___________

5) If yes what was your main concern for taking a life insurance policy?

Investment

Tax benefit

Purely insurance

6) What were your needs when you had taken life insurance policies? (Can tick multiple

choices)

Family need

Children need

Old age need

Asset building need

Assuming that life insurance policy is purely an investment option please answer the

following questions

7) If you hold a policy please rate the benefits in insurance policy compared to investing

in shares market and mutual funds on scale of 1-5 (where 1 being the least and 5 being

the most?)

Flexibility 1 2 3 4 5

Diversification 1 2 3 4 5

Security 1 2 3 4 5

Return on investment 1 2 3 4 5

Requirement of funds 1 2 3 4 5

transparency 1 2 3 4 5

liquidity 1 2 3 4 5

control over financial future 1 2 3 4 5

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8) Given a certain amt of money where would you invest, assuming that insurance is

purely an investment option?

Life insurance

Mutual funds

Share market

9) Suppose you have 100000/- of rupees in spare, how much would you invest in the

investment options state below?

Life insurance __________

Mutual funds __________

Share market __________

10) What would be the reason for above decision? (30 Words Max)

________________________________________________________________________

________________________________________________________________________

11) Which medium do you find more suitable to gain knowledge about different financial

instruments?

Personal reference

Financial advisors

Telephonic

Advertisement (T.V, newspaper)

12) Please give a few suggestions as to how we can make life insurance a better

investment option compared to mutual funds and share market?

________________________________________________________________________

________________________________________________________________________

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