reliance life insurance - market research1

Final Project Report

On

Market Research

For

“RELIANCE LIFE INSURANCE”

Guided By: Mr.Surendra singh vaghala

Submitted By:

Mihir H. shahRoll no.520910127

In partial fulfillment of the requirement for the award the degree

Of

MBA 4th Sem. , Marketing

July 2011

[Type text]

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A PROJECT REPORT ON RELIANCE LIFE INSURANCE

PREFACE

Life Insurance Corporation is walking up to the challenges thrown in

by market economy. To survive in this highly competitive scenario,

the students who are the future manager to work hard in their

education and education is incomplete without “practical studies”

practical studies as a basic discipline is taught to management

students to facilitate our understanding of the foundation of the

functional areas of management with specific reference to industry

study.

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ACKNOWLEDGEMENT

The present work is an effort to throw some light on Marketing

Strategy of LIC at “Life Insurance Corporation ”. The work would not

have been possible to come to the present shape without the able

guidance, supervision and help to me by number of people.

With deep sense of gratitude I acknowledge the encouragement and

guidance received by my organizational guide Surendra singh

Vaghela and other staff members.

I convey my heartful affection to all those people who helped and

supported me during the course, for completion of my Project Report.

Date:

Place: (Mihir H. Shah)

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Table of content

Topic No. Chapter Page No.1. Introduction

1.1 insurance

1.2 type of insurance

1.3 history of insurance

1.4 global scenario of the insurance industry

1.5 indian scenario

1.6 contribution of Indian economy

1.7 government policies

6

6

11

12

17

20

27

28

2. Organizational overview

2.1 what is ADAG ?

2.2 companies under ADAG?

2.3 relience life insurance co.ltd

2.4 explanation

33

33

38

42

52

3. Research problem

3.1 Research problem

3.2 research methodology

64

64

64

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3.3 sample size

3.4 sampling technique

3.5 research findings

65

65

65

4. Data analysis & interpretation 75

5. conclusion 99

6. Questionnaire

Bibliography

105

108

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CHAPTER 1 INTRODUCTION:

“The Business of Insurance is related to the protection of the

economic values of the assets”.

Every human being has the tendency to save to protect him from

risks or events of future. Insurance is one form of savings where in

people try to assure themselves against risks or uncertainties of

future. It is assurance against risks or events or losses.

People can save their earnings either in the form gold, fixed assets

like property or in banking and insurances. All the savings of people

of a country account for gross domestic savings. In India, although

savings rate is high but people prefer to invest either in gold or fixed

assets so that they can make money out of it. Hence insurance sector

is still untapped in India.

DEFINITION OF INSURANCE AND OVERVIEW OF CURRENT INSURANCE INDUSTRY

1.1 INSURANCE

1.1.1 WHAT IS INSURANCE?

Insurance is a tool by which fatalities of a small number

are compensated out of funds (premium payment) collected from

plenteous. Insurance is a safeguard against uncertain events that

may occur in the future.

It is an arrangement where the losses experienced by a few are

extended over several who are exposed to similar risks. It is a

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protection against financial loss arising on the happening of an

unexpected event. Insurance companies collect premium to provide

security for the purpose. Loss is paid out of the premium collected

from people and the insurance companies act as trustees to the

amount so collected. These companies have proposal forms which

are filled to give details of insurance required. Depending upon the

answers in the proposal form insurance companies assess the risk

and decide on the premium.

Insurance companies are risk bearers. They underwrite the risk in

return for an insurance premium. the function of insurance is to

provide protection, prevent losses, capital formation etc. hence

insurance can be defined as a tool in which a sum of money as a

premium is paid by the insured in consideration of the insurer’s

bearing the risk of paying a large sum .it may also be defined as a

contract wherein one party (insurer) agrees to pay the other party

(insured) or his beneficiary, a certain sum upon a given contingency

against which insurance is required.

Insurance industry commands massive funds through sales of

insurance products to large number of clients. Insurers also create

liabilities and commit themselves to compensate for losses occurring

to the policyholders on future date. It also plays an important role in

process of capital formation.

From the above discussion we can find out some of the important

characteristics of insurance which are as follows:

1. Pooling of losses

2. Payment of fortuitous losses

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3. Risk transfer

4. indemnification

Pooling of losses:

Pooling or sharing of losses is the main characteristic of an insurance

industry. Pooling means to spread the losses incurred by a few over

the entire group, so that in the process, average loss is substituted for

the actual loss.

Payment of fortuitous losses:

A fortuitous loss is one that is unexpected and occurs as a result of

chance or in other words it means the loss must be accidental.

Risk transfer:

It means that a pure risk is transferred from the insured to the insurer,

who typically is in a stronger financial position to pay the loss than the

insured.

Here pure risk means a situation in which there are only the

possibilities of loss or no loss. For example premature death, job

related accidents, property destroyed by fire, flood, or earthquake.

Indemnification:

It means that the insured is restored to his or her approximate

financial position prior to the occurrence of the loss.

Thus in the most basic sense, insurance is compensating a person or

business for a loss.

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1.1.2 NATURE OF INSURANCE:

a) Risk sharing and risk transfer: insurance is used to share the

financial losses that might occur to an individual or his family on the

happening of specified events. The loss arising from such events are

shared by all the insured in the form of premium.

Example: suppose in a village, there are 250 houses, each valued at

Rs.200000.every year one house gets burnt, resulting into a total loss

of Rs 200000.if all the 250 owners come together and contribute

Rs.800 each, the common fund would be Rs200000.this is enough to

pay to the owner whose house gets burnt. Thus the risk of one owner

is spread over 250 house owners of the village.

b) Risk assessment in advance: insurance companies are risk

bearers. They assess the risk before insuring to charge the amount of

premium.

c) Its not gambling or charity: The uncertainty is changed to

certainty by insuring property and life because the insurer promises to

pay a definite sum at damage or death. Insurance is antithesis of

gambling. Failure of insurance amounts to gambling because the

uncertainty of loss is always looming. Moreover insurance is not

possible without premium. So it is different from charity because

charity is given without consideration.

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d) Huge number of insured people: It is essential to insure larger

number of people or property to make cost of insurance less

consequently premium would also be less.

e) Assists in capital formation: insurance provides capital to

society. Accumulative funds are invested in productive channels.

1.1.3 SEMANTICS:

1. Risk: it is defined as an uncertainty of a financial loss. It is the

unintentional decline in or disappearance of value arising from

contingency.

2. Policy: it is the document which embodies the insurance

contract

3. Whole life policy: it is the policy under which the amount of

policy will be paid only on death of the insured. Premiums may

be payable throughout the life or for a limited period.

4. Endowment policy: endowment policies entitle the insured to

receive the amount of the policy on his reaching a certain age

and premiums also stops. If death occurs earlier, amount of the

policy will be paid at that time and payment of premium will also

stop at that time.

5. Claim: it is the amount which an insurer has to pay against a

policy.

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6. Reinsurance: it refers to placing a part of the risk by an insurer

with another insurer. The object is to reduce the possible loss to

be borne by the original insurer, who pays premiums at the

ordinary rates to the reinsurer. Reinsure must pay commission

to the original insurer.

7. Premium: A periodic payment made on an insurance policy.

8. Insurance penetration: it is defined as insurance premium as

a share of gross domestic product.

9. Insurance density: insurance density is defined as per capita

expenditure on insurance premium i.e. premium per capita.

10. Actuary: the actuary is a specialist who combines an

understanding of risks and mathematical technique to develop

financial products to manage these risks, price these products.

He helps in designing insurance plans and then evaluates the

financial risk of the company which it takes while selling an

insurance policy.

1.2. TYPES OF INSURANCE:

Insurance is broadly divided in two segments, based on the nature of

insurance, those are:

1. Life Insurance &

2. Non-Life Insurance or General Insurance. It can be again

subdivided into the following categories:

a) Fire Insurance.

b) Marine Insurance.

c) Social Insurance &

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d) Miscellaneous Insurance. (Health insurance, Liability Insurance

etc….)

1.3. HISTORY OF INSURANCE:

1.3.1 GLOBAL:

For now we know the meaning of insurance, different types of

insurance. Now let us know the history and reasons for and behind

different types of insurance.

Insurance has existed for thousands of years. The first ever type of

insurance was Property Insurance. It became popular about 3000 BC

in China. It all started when Chinese merchants, as well as their

investors, wanted to ensure that they would see a profit from their

goods that they shipped overseas. In the event that a ship was lost at

sea, an insuring partner would reimburse the owners of the ship and

goods. To pay for the loss the merchant would be sold into slavery to

the insurer until the debt was repaid. This was so because, a

merchant could not afford to pay for the lost goods or even to buy a

ship unless someone invested.

Property insurance was also seen in Babylon as well. In Babylon,

merchants and investors entered into a contract, in which the supplier

of money for a trade agreed to cancel the loan if the trader was

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robbed of his goods. The trader who borrowed the money paid an

extra amount for this protection in addition to the usual interest. As for

the lender, collecting these premiums from many traders made it

possible for him to absorb the losses of the few. Later this contract

was extended to include provisions for a family's home and even the

death of the insured, where life insurance came into existence. Slowly

this concept started to spread across other places like Greek,

Roman.

Since ancient times, communities have pooled some of their

resources to help individuals who suffer loss. Like, about 3500 years

ago, Moses instructed the nation of Israel to contribute a portion of

their produce periodically for "the alien resident and the fatherless

boy and the widow."

Later the origin of credit insurance, which was included in the Code of

Hammurabi, a collection of Babylonian laws said to predate the Law

of Moses. Credit insurance means, in ancient times the ship owners

obtained loans from investors to finance their trading expeditions. In

case, if a ship was lost, the owners were not responsible to pay back

the loans to the investors. The risk to the lenders was covered by the

interest paid by numerous ship owners, since many ships returned

safely.

By the middle of the 14th century, marine insurance was one of the

most popular types of insurance among nations of Europe. Things

changed dramatically in the 17th century in Europe. In 1666, the

Great Fire of London bought the need for fire insurance .The Great

Fire of London burned for four days and nights. It destroyed 436

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acres, 13,200 houses, 89 churches (including Saint Paul's

Cathedral), the Custom House, the Royal Exchange and dozens of

other public buildings. Only six people were victims in the flames, but

hundreds died from shock and exposure.

By 1688, Edward Lloyd was running a coffeehouse in London.

Where, London merchants and bankers met informally to do

business. There financiers who offered insurance contracts to

seafarers wrote their names under the specific amount of risk that

they would accept in exchange for a certain payment, called

premium. These insurers came to be known as underwriters. Finally,

in 1769, Lloyd's became a formal group of underwriters that in time

grew as an insurance company.

The concept of insurance developed at a fast pace with the growth of

British commerce in the 17th and 18th century. The first stock

companies to engage in insurance were chartered in England in the

year 1720.

In 1735, the first insurance company in the American colonies was

founded at Charleston. Later in the year 1787, fire insurance

corporations were formed in New York. Then later in the year 1759,

the life insurance corporation was started in Philadelphia, America.

The New York fire which occurred in the year 1835 was the main

reason to draw attention to create reserves to meet unexpected

losses. In the year 1837, Massachusetts was the first state to require

companies by law to maintain such reserves. After 1840, life

insurance entered a boom period.

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The Workmen's Compensation Act of 1897 in Britain required

employers to insure their employees against industrial accidents.

Public liability insurance, fostered by legislation, made its appearance

in the 1880s.It attained major importance with the advent of the

automobile.

Until the 1950s, most insurance companies in the United States were

restricted to provide only one type of insurance, but then legislation

was passed to permit fire and casualty companies to underwrite

several classes of insurance. Many firms have since expanded and

also were responsible for many mergers.

From this brief accounting of history we can see how insurance came

into existence. Fortunately for us we no longer have to sell ourselves

into slavery if our car is stolen nor we have to be scared of losses due

to absence of reserves. However we can be confident that we will be

compensated for our loss. Without people wanting to secure their

investments and great tragedies throughout history we may not have

insurance as we know it today resulting in peace of mind.

1.3.2 HISTORY OF INSURANCE INDUSTRY IN INDIA

The insurance industry in India over the past century has gone

through big changes. In India this industry reveals the 360 degree

turn. 360 degree turn means that it started in India from being an

open competitive market to nationalization and back to a liberalized

market again.

Insurance industry in India started as a fully private system with no

restriction on foreign participation in the Nineteenth Century. Before

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independence, a few British insurance companies dominated the

Market. Life insurance was first set up in India through a British

company called the Oriental Life Insurance Company in 1818,

followed by the Bombay Assurance Company in 1823 and the

Madras Equitable Life Insurance Society in 1829.All of these

companies operated in India but did not insure the lives of Indians.

They were there insuring the lives of Europeans living in India. Some

of the companies that started later did provide insurance for Indians.

But, they were treated as "substandard" and therefore had to pay an

extra premium of 20% or more. The first company that had policies

that could be bought by Indians with "fair value" was the Bombay

Mutual Life Assurance Society starting in 1871.

The first general insurance company, Triton Insurance Company Ltd.,

was established in 1850. It was owned and operated by the British.

The first general insurance company was the Indian Mercantile

Insurance Company Limited set up in Bombay in 1907.By 1938; the

insurance market in India had nearly 176 companies (both life and

non-life).

After the independence, the industry went to the other extreme. It

became a state-owned monopoly. The industry started to witness a

problem like fraud. Hence many regulations were put in place to

reduce and control the problems in the industry. After which

Insurance was nationalized. In 1956, the then finance minister S. D.

Deshmukh announced nationalization of the life insurance business

and then the general insurance business was nationalized in 1972.

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Only in 1999 private insurance companies have been allowed back

into the business of insurance with a maximum of 26% of foreign

holding.

1.4. GLOBAL SCENARIO OF THE INSURANCE INDUSTRY

If we see the figures in terms of both the premium value and the total

market share of some of the leading countries operating in the

Insurance sector, the following picture emerges in front of us.

Country Total Life Premium

(in $bn.)

Market Share (%)

US 517.0 26.2

Japan 375.9 19.5

UK 194.0 10.11

France 154.0 7.81

Italy 91.7 4.65

Germany 90.2 4.57

China 39.5 2.1

Taiwan 38.8 1.97

India 20.1 1.02

Others 452.8 22.07

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Source: The Economic Times, dated – 20th July, 2006.

The above figure shows that US is still the leader in Life Insurance

sector, closely followed by Japan. India’s share in the global market

has doubled since 2000 (0.50%) to 2005 (1.02%), but the growth of

china is the maximum from 0.79% in 2000 to 2.10% in 2005. The total

premium received in life insurance sector has increased from $ 1,521

bn. in 2000 to $ 1,974 bn. in the year 2005.

Shares of different countries in Life Insurance

517

375.9

19415491.7

90.239.538.820.1

452.8USJapanUKFrance ItalyGermanyChinaTaiwanIndiaOthers

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1.4.1 CONCERNS IN GLOBAL INSURANCE INDUSTRY

INSURANCE FRAUD

One of the major problems which is faced by this industry is

insurance fraud. Property insurance fraud cost insurers about $30

billion in 2004. Every year more than $100 billion is stolen from

Medicare and Medicaid programs across the world in health

insurance.

Fraud may be committed at different points in the insurance

transaction by different parties like applicants for insurance,

policyholders, third-party claimants and professionals who provide

services to claimants in the industry

Common frauds include "padding," which means that the one who

commits fraud will inflate the actual claims. This is done by

misrepresenting facts on an insurance application or submitting

claims for injuries or damage that has never occurred.

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1.5 INDIAN SCENARIO:

INDIAN INSURANCE INDUSTRY

Private Sector (15)

Public Sector (1)

PublicSector (4)

Private Sector (9)

LIFE INSURANCE

NON LIFE INSURANCE

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1.5.1 LIFE INSURANCE:

Insurance business in India is growing at an annual rate of

21.9%.together with banking services, it accounts for 7.1% of GDP.

But insurance penetration as compared to other nations of the world

is very low in India. In 2004-05 it was 2.53% for life insurance and .65

% for non life insurance.

Life insurance penetration in India was less than 1% till 1990-

91.during the 90s it was between 1-2% and from 2001 onwards it is

over 2%.this is due to active role played by IRDA in licensing private

players and taking steps to increase awareness among masses.

India’s insurance sector is poised for explosive growth powered by

better penetration into rural and semi urban regions. Gross insurance

premiums have been rising. The gross premium collected in the last

fiscal year was Rs 27000 crores as compared to that of Rs 25343

crores in the last year.

Since liberalization of insurance sector in 2001, 14 life insurance

companies have entered the market out of which 13 are joint

ventures with international companies. While private players have

eaten up a part of LIC’s market share, PSU behemoth has been

witnessing tremendous growth. LIC’s premium collection was RS

18000 crores as compared to only Rs 200 crores in 1957.LIC’s

premium accretion grew by 42% last year. Among the private players

companies like Bajaj-Allianz and ICICI have captured the major

portion of the market and others are still trying to establish

themselves in the Indian market.

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1.5.2 GENERAL INSURANCE:

General insurance in India has been expecting growth except in

some portfolios like motor insurance, fire and engineering. These

portfolios are still under tariff- this means that premium depends on a

fixed predetermined rate structure.

In India, GDS as a proportion of GDP at current prices increased from

26.1% in 2002-03 to 28.1% in 2003-04.house hold sector continued

to be the major contributor to GDS at 24.3% in 2003-04.this can be

attributed to soft interest rates prevailing in housing sector. General

Insurance has low market penetration. It is 1.95% and ranks 51st.

However in collection of premium it is ranked 23rd. The ratio of the

premium collected to that of GDP is 0.58. The main reason for the

general insurance industry to perform very poorly was because of the

slow settlement of claims. Moreover the rates of claim in India were

highest in the world. It was 70 percent compared to 40 percent

internationally. This meant that out of 100 people who had insured

their commodities 70 claimed for a loss or damage. The main reason

for the lack of demand for general insurance is that people consider it

as an unnecessary expenditure. However it must be noted that the

general insurance has been earning consistent profits and has an

efficient dividend paying record accompanied by a steady growth in

its financial resources. The industry is recognized as one of the

largest financial Institutions in the country. Some of the private

players in this sector are- ICICI – Lombard, Reliance, Royal-

Sundaram, Chholamandalam etc.

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1.5.3 PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR:

The different private players in the life insurance sector and their

associations with foreign companies are being given below:

COMPANY INDIAN

PROMOTER/PARTNER

FOREIGN

INSURER

TOTAL

CAPITAL

(RS MN.)

FDI

(%)

FOREIGN

CAPITAL

(RS MN.)

AMP

SANMAR

RELIANCE

GROUP(ADAG)

None 2,170 0 0

Aviva Life Dabur Aviva (UK) 4,590 26 1193.4

Bajaj-

Allianz

Bajaj Auto Allianz

(Germany)

3680 26 960

Birla Sun

Life

Aditya Birla Group SunLife

(Canada)

4,000 26 1,040

HDFC

Standard

HDFC StandardLife

(UK)

2,500 18.9 470

ICICI

Prudential

ICICI Bank Prudential (UK) 10,850 26 2,820

ING Vysya Vysya Bank ING Ins.

(Netherlands)

4,400 26 680

Kotak

Mahindra

Old Mutual

Kotak Mahindra Bank OldMutual

(South Africa)

2,600 26 680

Max

Newyork

Max India NewYorkLife

(US)

5,000 26 1,300

Met Life J&K Bank Met Life (US) 3,550 26 920

Sahara

Life Ins. I

Sahara India None 1,000 0 0

SBI Life SBI Cardiff (France) 3,500 26 910

TATA AIG TATA Group AIG (US) 3,810 26 990

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Shriram Shriram Sanlam Life Ins.

Some of the new companies who are waiting to come in to the life

insurance sector are:

a) IDBI-FORTIS.

b) AXA-BHARTI &

c) Syndicate Bank.

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Source: IRDA Report.

Source: IRDA Report

LIC market share continued to decline in the period up to March,

2006, it declined to 71.44% from 78.23% in the same period last year.

On the other hand the market share of the private players is

continuously growing up; it increased to 28.56% from 21.77% in

terms of insurance premium.

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Source: IRDA Report

BAJAJ ALLIANZ BECOMES THE MARKET LEADER AMONG PRIVATE PLAYERS:

Bajaj Allianz has taken over from ICICI Prudential as the number one

among the private players in the life insurance sector in terms of

insurance premium collected by each company. This was mainly

possible because of increase in the number of agents in Bajaj Allianz

by 1.2 lakh and also an increase in the number of branches (more

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than 550 branches in total). The increase in the growth rate of Bajaj

Allianz is 215.76% when compared to the same of the last financial

year. The market share of Bajaj Allianz increased to 7.56%, while the

same for ICICI is only 7.35%.

1.6 CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY:

Some surveys have predicted that India and China will play a very

vital role in the years to come. Indian economy can be termed as an

emerging economy as it is doubling its GDP in 3 to 5 years and

moreover it is not dependent on any particular sector for its GDP.

If we look at the GDP of the Indian economy very closely over the

years, we can easily come to know the changing structure of the

economy. We can also come to know the changing contribution of the

various sectors like agriculture, manufacturing and the service sector.

In the financial year 1993-94, agricultural sector contributed to 31%,

manufacturing accounted to 26.3% and the service sector contributed

to 42.7% of the total GDP of the country. Thus over the years as India

became an emerging economy in 2003-04 manufacturing sector

contributed for 21.7 %, manufacturing contributed for 26.8 whereas

service sector contributed for 51.4% of the total GDP.

There has been 7.5% growth in the total GDP of the country and is

estimated to grow at 7.5% in 2005-06. The Indian economy has

shown signs of strong performance despite a rise in oil prices, high

inflation rate and abnormal rains in many parts of the country. The

overall growth of the Indian economy has been equally supported by

all the three sectors of the economy, i.e. the agriculture,

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manufacturing and the service sector. Insurance, together with the

banking sector, contributes to about 7.1 % of the total GDP of India,

and the gross premium collected contributes to about 2% of the total

GDP of the country

The insurance sector in India has completed a full circle from being

an open competitive market to nationalization and back to a

liberalized market again. Tracing the developments in the Indian

insurance sector reveals the 360 degree turn witnessed over a period

of almost 200 years.

1.7 GOVERNMENT POLICIES REGARDING LIFE INSURANCE:

Some of the important acts which have been passed in India to

regulate insurance industry are mentioned here:

a) Insurance Act 1938: It was the first comprehensive piece of

insurance legislation in the country governing both life and non life

insurance business. It was aimed to prevent the growth of

mushrooming companies and to prevent misappropriation of funds

and to protect assets. This act had a strict control over the insurance

business and was amended from time to time. Till 1945, it was

amended 6 times. Under the chairmanship of Shri Kavas Ji Jahangir,

a committee was appointed to investigate all the misconduct of

insurance business. According to this act, the central government had

control over the insurance business through the Controller of

Insurance. The insurance companies must follow the rules and

regulations else they would be penalized.

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The act of 1938 applied to all types of insurance business-life, fire,

marine etc. It also governed the provident companies, mutual offices

and cooperative societies. According to one of the provisions of this

act, there is prohibition of transaction of insurance business by

certain persons.

To prevent the growth of insurers of small financial resources, this act

provided for registration of all insurers and a substantial deposit in the

RBI.

Further under this act, no person shall, after the commencement of

this act, begin to carry any class of insurance business in India and

no insurer carrying on any class of insurance business in India shall

after the expiry of 3 months from the commencement of this act,

continue to carry on any such business unless he obtained the

certificate of registration for the particular class of insurance

business.

b) Life Insurance Corporation Act 1956

Life insurance business in India was nationalized with effect from

January 19, 1956.on the date, 16 non Indian insurers operating in

India and 75 Provident Societies were taken over by Government of

India. This act came into effect from July 1st 1956.Life Insurance

Corporation of India commenced its functioning as a corporate body.

Under this act, LIC shall be a body having perpetual succession and

a common seal with power, subject to the provisions of this act to

acquire, hold and dispose of property and may by its name sue and

be used.

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The original capital of the corporation shall be Rs 5 crores provided

by the government and the terms and conditions relating to the

provisions of capital shall be determined by the central government.

It is the general duty of the corporation to carry on life insurance

business whether in India or outside, and the corporation shall

exercise its powers under this act towards the development of life

insurance business to the best of the

advantage of the community.

C) Insurance Regulatory and Development Authority (IRDA) 1999

Reforms in the insurance sector were initiated with the passage of the

IRDA bill in December 1999.it was set up as an independent body

and it has been able to frame globally compatible legislations.

The IRDA was set up to protect the interests of holders of insurance

policies ,to regulate ,promote and insure orderly growth of the

insurance industry and for matters connected therewith or incidental

thereto.

This act extends to whole of India. With the establishment of this act,

government amended Insurance act 1938, Life Insurance Act 1956

and General Insurance Act 1972.

IRDA was formed on the recommendations of Malhotra Committee.

In 1999 government of India has set up Malhotra Committee to

examine the structure of insurance industry and recommend

changes, under R.N Malhotra –former governor of RBI.

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Some of the recommendations made by Malhotra committee

were:

1. Raising the capital base of LIC and GIC up to Rs 200 crores,

half retained by the government and rest sold to public

2. Public sector is granted permission to enter insurance industry

with a minimum paid capital of Rs 100 crores.

3. Foreign insurance companies may be allowed to enter by

floating with an India company preferably by a joint venture.

4. Limited number of private companies to be allowed in the

sector but no firm can be allowed to operate in both life and non

life sectors with the same entity.

5. Tariff Advisory Commission (TAC) is delinked from GIC to

function as a separate body under the supervision of the

insurance regulatory authority.

6. All insurance companies to be treated on equal footing and

governed by the provisions of insurance act. No special

dispensation shall be given to the government companies

7. Setting up of a strong and effective regulatory body with

independent source for financing before allowing private

companies in this sector

On the basis of the recommendations Insurance Regulatory Authority

(IRA) bill was introduced in the parliament in 1996.later in 1999 IRA

bill was renamed as IRDA and was introduced in the parliament.

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Under this act a certificate of registration is issued to the

applicant to review, modify, withdraw, suspend or cancel such

registration.

It also specifies requisite qualification and practical training for

insurance agents.

It promotes efficiency in the insurance business and specifies

code of conduct for surveyors and loss assessors.

It also specifies the manner in which the books of accounts of

the insurer and the insurance intermediaries shall be

maintained.

It regulates investment of funds by insurance companies

It regulates the margin of solvency

It also controls and regulates the rates, advantages, terms, and

conditions that may be offered by the insurer.

it also supervises the working of Tariff Advisory Committee,

which is related to the regulation of general insurance in India

it specifies the percentage of premium income of the insurer to

finance schemes for promoting professional organizations.

It also specifies the percentage of life insurance business and

general insurance business to be undertaken by the insurer in

rural or social sector.

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2. ORGANIZATIONAL OVERVIEW

Before talking about ‘Reliance Life Insurance company Limited’, lets

have a brief introduction about its parent company which is “Anil

Dhirubhai Ambani Group” (ADAG). Reliance is a brand name which

was made popular by Mr. Dhirubhai Ambani all over the world and

the same tradition is being carried on by his son Mr. Anil Ambani.

After splitting with his brother Mr. Mukesh Ambani, Anil Ambani

created this ADAG and soon he has started to achieve the success

that once was started by his father.

2.1 WHAT IS ‘ADAG’?

The Reliance – Anil Dhirubhai Ambani Group is among India’s top

three private sector business houses on all major financial

parameters, with a market capitalisation of Rs 100,000 crore (US$ 22

billion), net assets in excess of Rs 31,500 crore (US$ 7 billion), and

net worth to the tune of Rs 27,500 crore (US$ 6 billion)

Across different companies, the group has a customer base of over

50 million, the largest in India, and a shareholder base of over 8

million, among the largest in the world.

Through its products and services, the Reliance - ADA Group

touches the life of 1 in 10 Indians every single day. It has a business

presence that extends to over 4,500 towns and 300,000 villages in

India, and 5 continents across the world.

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The interests of the Group range from communications (Reliance

Communications) and financial services (Reliance Capital Ltd), to

generation, transmission and distribution of power (Reliance Energy),

infrastructure and entertainment .

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2.1.1 STRUCTURE OF ‘ADAG’

2.1.2 VALUES/ OBJECTIVES OF ADAG:

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Shareholder Interest

We value the trust of shareholders, and keep their interests

paramount in every business decision we make, every choice we

exercise

People Care

We possess no greater asset than the quality of our human capital

and no greater priority than the retention, growth and well-being of

our vast pool of human talent

Consumer Focus

We rethink every business process, product and service from the

standpoint of the consumer – so as to exceed expectations at every

touch point

Excellence in Execution

We believe in excellence of execution – in large, complex projects

as much as small everyday tasks. If something is worth doing, it is

worth doing well.

Team Work

The whole is greater than the sum of its parts; in our rapidly-

changing knowledge economy, organizations can prosper only by

mobilizing diverse competencies, skill sets and expertise; by

imbibing the spirit of “thinking together” -- integration is the rule,

escalation is an exception

Proactive Innovation

We nurture innovation by breaking silos, encouraging cross-

fertilization of ideas & flexibility of roles and functions. We create an

environment of accountability, ownership and problem-solving –

109


based on participative work ethic and leading-edge research.

Leadership by Empowerment

We believe leadership in the new economy is about consensus

building, about giving up control; about enabling and empowering

people down the line to take decisions in their areas of operation

and competence…

Social Responsibility

We believe that organizations, like individuals, depend on the

support of the community for their survival and sustenance, and

must repay this generosity in the best way they can

Respect for Competition

We respect competition – because there’s more than one way of

doing things right. We can learn as much from the success of others

as from our own failures.

2.1.2 VISION OF ADAG:

To build a global enterprise for all our stakeholders, and

A great future for our country,

To give millions of young Indians the power to shape their destiny,

The means to realize their full potential…

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2.2. COMPANIES UNDER ‘ADAG’:

A) Reliance Capital

Reliance Capital (RCL) is one of India’s leading and fastest growing

private sector financial services companies, and ranks among the top

3 private sector financial services and banking companies, in terms of

net worth.

The company has interests in asset management and mutual funds,

life and general insurance, private equity and proprietary investments,

stock broking and other activities in financial services.

RCL is registered as a depository participant with National Securities

Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL)

under the Securities and Exchange Board of India (Depositories and

Participants) Regulations, 1996. RCL has sponsored the Reliance

Mutual Fund within the framework of the Securities and Exchange

Board of India (Mutual Fund) Regulations, 1996.RCL primarily

focuses on funding projects in the infrastructure sector and supports

the growth of its subsidiary companies, Reliance Capital Asset

Management Limited, Reliance Capital Trustee Co. Limited, Reliance

General Insurance Company Limited and Reliance Life Insurance

Company Limited. As of March 31, 2005, the company’s investment

in infrastructure projects stood at Rs. 1071 Crores. The investment

portfolio of RCL is structured in a way that realizes the highest post-

tax return on its investments.

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B) Reliance Communication Ventures Limited :

The flagship company of the Reliance – ADA Group, Reliance

Communication Ventures Limited, is the realisation of our founder’s

dream of bringing about a digital revolution that will provide every

Indian with affordable means of communication and a ready access

to information.

The company began operations in 1999 and has over 20 million

subscribers today. It offers a complete range of integrated telecom

services. These include mobile and fixed line telephony, broadband,

national and international long distance services, data services and a

wide range of value added services and applications aimed at

enhancing the productivity of enterprises and individuals.

C) Reliance Energy Limited

Reliance Energy Limited, incorporated in 1929, is a fully integrated

utility engaged in the generation, transmission and distribution of

electricity. It ranks among India’s top listed private companies on all

major financial parameters, including assets, sales, profits and

market capitalization.

It is India’s foremost private sector utility with aggregate estimated

revenues of Rs 9,500 crore (US$ 2.1 billion) and total assets of Rs

10,700 crore (US$ 2.4 billion).

Reliance Energy Limited distributes more than 21 billion units of

electricity to over 25 million consumers in Mumbai, Delhi, Orissa and

Goa, across an area that spans 1,24,300 sq. kms. It generates 941

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MW of electricity, through its power stations located in Maharashtra,

Andhra Pradesh, Kerala, Karnataka and Goa.

The company is currently pursuing several gas, coal, wind and hydro-

based power generation projects in Maharashtra, Uttar Pradesh,

Arunachal Pradesh and Uttaranchal with aggregate capacity of over

12,500 MW. These projects are at various stages of development.

Reliance Energy Limited is vigorously participating in emerging

opportunities in the areas of trading and transmission of power. It is

also engaged in a portfolio of services in the power sector in

Engineering, Procurement and Construction (EPC) through a network

of regional offices in India.

D) Reliance Health

In a country where healthcare is fast becoming a booming industry,

Reliance Health is a focused healthcare services company enabling

the provision of solution to Indians, at affordable prices. The company

aims at providing integrated health services that will compete with the

best in the world.It also plans to venture into diversified fields like

Insurance Administration, Health care Delivery and Integrated Health,

Health Informatics and Information Management and Consumer

Health.

Reliance Health aims at revolutionising healthcare in India by

enabling a healthcare environment that is both affordable and

accessible through partnerships with government and private

businesses.

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E) Reliance Media & Entertainment

As part of the Reliance - ADA Group, Reliance Entertainment is

spearheading the Group’s foray into the media and entertainment

space. Reliance Entertainment’s core focus is to build significant

presence for Reliance in the Entertainment eco-system: across

content and distribution platforms.

The key content initiative are across Movies, Music, Sports, Gaming,

Internet & mobile portals, leading to direct opportunities in delivery

across the emerging digital distribution platforms: digital cinema,

IPTV, DTH and Mobile TV. Reliance ADA Group acquired Adlabs

Films Limited in 2005, one of the largest entertainment companies in

India, which has interests in film processing, production, exhibition &

digital cinema.

Reliance Entertainment has made an entry into FM Radio through

Adlabs Radio, having won 45 stations in the recent bidding, which will

soon be the Radio station with the largest footprint in India.

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2.3 RELIANCE LIFE INSURANCE COMPANY LIMITED:

As it has been presented before ‘Reliance Life Insurance Company

Ltd.’ Is a part of Reliance Capital which is again a part of ADAG.

Reliance Capital acquired 100% share of an Australian Based life

insurance company i.e. AMP SANMAR LTD. In October 2005, to form

the Reliance Life Insurance Company. Though the acquisition was

made in October, the functioning of Reliance Life has only started

from February, 2006. It is one of the two private players (along with

Sahara) in the life insurance sector which does not have any foreign

collaboration. The basic idea behind the formation of Reliance Life

was to provide the people of India with some better investment

alternatives as well as to make them aware about the usefulness of

life insurance for catering the future needs of them. Reliance life

insurance has a range of products which can fulfill the needs of both

the individual as well as corporate houses. So, it can be said that

Reliance Life is another step forward for Reliance Capital Limited to

offer need based financial services (life insurance) to individuals and

corporate houses.

2.3.1 GOALS TO ACHIEVE:

Reliance Life Insurance has the following goals to achieve in the near

future:

a) Emerge as a transnational life insurer of global scale and

standard.

b) Achieve impeccable reputation and credentials through

best business practices.

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c) To become the market leader among the private players

in the Indian life insurance sector by the end of the

current financial year.

2.3.2 MISSION:

Create unmatched value for everyone through dependable, effective,

transparent and profitable life insurance and pension plans.

2.3.3 VISION:

Empowering everyone live their dreams

2.3.4 GUIDING PRINCIPLES:

a) Customer care and satisfaction: The foremost responsibility for

an organization is to provide its customers utmost care and

satisfaction and Reliance Life is no exception in this regard.

The main objective of the organization is to provide the

customers with best possible financial plans which will match

their needs and the expectations.

b) Corporate Governance: In today’s modern business world

corporate governance is utmost essential, because it gives a

clear picture of the organization to its shareholders as well to

the general public at large. So, it is aim of Reliance Life to

maintain ethical practices in all their business transactions, to

promote a better picture of themselves.

c) Creativity and Innovation: After the IRDA ACT 1999, the private

players are also allowed to participate in the life insurance

sector, and this has opened a vast area of field to operate for

many of the companies and that’s why we see that not less

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than 15 players have entered the market in the last few years.

So, to survive in this market, the goal of reliance Life is

‘Creativity and Innovation’ which is the best way to success for

any organization.

d) Competitiveness: It provides the base for any organization to

operate in any area of business and life insurance is no

exception. Competitiveness provides the urge for any company

to outperform their competitors in the market and become the

leader in that particular sector. It is the competitiveness which

has impelled Reliance life to set a goal such as to become the

market leader among all the private players by the end of the

current financial year.

2.3.5 DEPARTMENTS AND BRANCHES OF RELIANCE LIFE

INSURANCE COMPANY LIMITED:

Branches:

There are more than 200 branches of Reliance life spread all over

the country, the head office being situated in Chennai. In the city of

Bangalore though there are only three (3) branches of Reliance life

and those are situated in:

a) Malleswaram

b) Jayanagar and

c) Indiranagar.

They are planning to open new branches at places like Mahatma

Gandhi Road and Koramangla very soon.

Departments:

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The various departments that can be seen in an insurance

organization and that has been observed by me are as follows:

a) Marketing Department: This department mainly deals with the

marketing and promotion part of the Insurance Company. They

spend most of their time in formulating strategies to make their

products known to the common people and to promote the

same in a easy and cost effective way.

b) Sales Department: This department mainly deals with the

sales part of the Insurance Company; the department includes

designations like Sales Manager and Financial Advisor who

personally contacts with people for performing the task of sales

of various products.

c) Accounts/ Financial Department: This department has the

task of keeping track of the various expenses incurred by the

various other departments of the organization and also

performs the task of allocating various funds to different

departments according to their requirements.

d) Human Resource Department: This department is handled by

the Human Resource manager of the company. The function of

this department involves the well being of the employees of the

company, I,e, to see whether there is employee grievance in

the organization or not and if it is there what are the possible

causes for that and also try to find out solutions for the same if

possible.

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e) Investment Department: This department deals with the task

of investing the money of the policy holders in such way that

will ensure both safety of the money and also a steady return

on the same. The task of this department is very difficult as it

deals with the money given by the policy holders, so it requires

lot of thinking on the part of the personnel of this department

before deciding where to invest the money.

Actuarial Department: This department is under the supervision of

an Actuary who decides the premiums and charges to be taken from

the policy holder on the basis of certain information’s (like Age,

Annual Income etc.) provided by the prospective customer. The task

also involves the calculation of mortality charges which requires high

statistical knowledge from one’s point of view. So, this department

involves in the calculation of various amounts to be charged from the

prospective customers.

2.3.6 RELIANCE LIFE INSURANCE PRODUCTS:

Reliance Life Insurance has products which can meet the needs of

both the individuals as well as the corporate houses. The products of

the Reliance Life can be subdivided broadly into two segments,

namely:

a) Individual Products. &

b) Group Products.

2.3.6.1: INDIVIDUAL PRODUCTS:

These products are offered by Reliance Life by mainly focusing to the

needs of the individual persons, these products will offer them the

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best solutions possible to their different needs. The products offered

under this category are as follows:

i) ENDOWMENT PLAN: This plan provides an easy and

inexpensive way to protect the needs of the customer,

his/her family and the business of the customer. In this plan

the customer has the option of choosing the sum assured on

the basis of his current financial condition and probable

future expenses, he also has the option of choosing the term

of the plan. In the event of untimely death, this plan will

provide all the support necessary to the beloved ones of the

policy holder.

ii) SPECIAL ENDOWMENT PLAN: This insurance policy is

designed for the people who want to combine savings with

extended security. The special feature of this plan is, the

customer will get the benefit ( life protection) of the plan even

after 5years from the date on which the customer has

stopped paying the premium. This policy can also be taken

as one which can also be participate in the profit of the

company.

iii) CASH FLOW PLAN: This policy is designed for the people

who have a recurring need of reinvestment in the business

or look for short-term investment channels. The advantage

of policy is in no time the customer has to pay a sizable

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amount of money as premium and on the other hand he can

ensure a periodic return of a lump sum amount which can

become a basis for reinvestment at a later period.

iv) CHILD PLAN: This insurance policy is designed for those

people who wish to save money for a future time when there

will be a recurring need of substantial amount of money. This

is specially true when someone needs money for the higher

education of his son or daughter. The unique feature of this

policy is that the risk cover continues for the full sum assured

even when the periodical payments are being made.

v) TERM PLAN: This insurance policy is designed for those

people who want only life cover for their family and does not

want to save anything for themselves. It can also be useful

for business house who want to cover their businesses

against the sudden loss of partners or key manpower. The

premium charged for this policy is comparatively low than

the other policy offered by Reliance Life.

vi) WHOLE LIFE PLAN: This insurance policy is designed for

those people who does not want to avail any benefit for

themselves but rather want to create an immediate estate to

protect their family by availing of insurance cover on their life

at a very low cost. The unique feature of this policy is that

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the risk cover continues throughout the duration of the policy

holder’s life irrespective of the period of premium payment.

vii) MARKET RETURN PLAN (ULIP): In this policy one can

have the twin advantage of insurance protection as well as

reaping the benefits of investment growth. It is a flexible plan

which works throughout the life and meets the changing

requirements like additional protection, liquidity through

cash, option to invest in different asset class and many

more.

viii) GOLDEN YEAR PLAN: This policy is a flexible package that

gives the customer the freedom of choice in choosing the

type of investment, life cover, vesting options such as

commuting and annuity options. This policy is available for

all individuals ranging between the age of 18-65.

2.3.6.2 GROUP PRODUCTS: These insurance products are mainly

designed keeping in mind the needs of the group of people in an

organization or any other place. The various plans under this

category are as follows:

i) TERM ASURANCE PLAN: This policy is a one year

renewable term assurance contract. The sum is paid on the

happening of the event for which the policy was taken with in

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the one year. After one year the policy can be further

renewed for one more year.

ii) RELIANCE EMPLOYEE DEPOSIT LINKED INSURANCE

SCHEME (EDLI): All establishments which have at least 10

full time employees and which come under the purview of

Employee’s provident fund and miscellaneous provisions act

1952, have a provision to undertake Employee Deposit

linked Insurance Scheme to provide life insurance to their

employees. Reliance EDLI has been approved as a

substitute for the EDLI scheme 1976 that was provided

earlier.

iii) RELIANCE GROUP GRATUITY POLICY: It is a policy that

offers various services to manage the gratuity obligations of

any particular organization. It helps the management to

provide all the benefits of gratuity to the employees with out

requiring proper control from their behalf.

iv) RELIANCE GROUP SUPER ANNUATION POLICY: It is a

policy that offers various services to manage the

superannuation obligations of any particular organization. It

gives a choice to the organizations to tailor the super

annuation facilities fir their employees according to their

convenience.

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2.3.7 ‘SWOT’ ANALYSIS OF RELIANCE LIFE INSURANCE

COMPANY LIMITED:

STRENGTHS:

a) Impeccable brand name of ‘Reliance’.

b) Sound financial and infrastructural backup.

c) Real urge to become the leader in the market.

d) The success in one of the fields in Reliance may create a good

feeling with in the customers about Reliance Life Insurance

also.

WEAKNESSES:

a) Unawareness among the people about Reliance Life Insurance.

b) Recent split in the top management may have a bad impact on

the general people who believe in family bodings even in

business matters.

c) As they have recently come to the insurance sector, not aware

of the pros and cons of the sector.

OPPORTUNITIES:

a) Many people now days are being aware of the benefits of

insurance, so there is a vast market to target by the company.

b) 80% of the total population in India is still not covered by any

Life Insurance Policy, so there is a vast market that can be

tapped by Reliance.

c) Reliance group already has a huge number of customers in

different fields of operation, so there is a possibility that those

people may be willing to invest in this area also.

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THREATS:

a) Most of the people still believe on public players like LIC, so it is

very hard to shift those customers from LIC to other companies

like Reliance.

b) The number of players in the private insurance sector is

increasing day by day, so the competition is getting tough.

c) The failure in one of the fields of Reliance may affect adversely

the business opportunities of Reliance Life Insurance.

2.4. Explanation of the 7-S Framework of McKinsey

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2.4.1 What is the 7-S Framework?

The 7-S Framework of McKinsey is a management model that

describes 7 factors to organize a company in a holistic and

effective way. Together these factors determine the way in which a

corporation operates. Managers should take into account all seven of

these factors, to be sure of successful implementation of a strategy.

Large or small. They're all interdependent, so if you fail to pay proper

attention to one of them, this may affect all others as well. On top of

that, the relative importance of each factor may vary over time.

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2.4.2Origin of the 7-S Framework : History

The 7-S Framework was first mentioned in "The Art Of Japanese

Management" by Richard Pascale and Anthony Athos in 1981. They

had been investigating how Japanese industry had been so

successful. At around the same time that Tom Peters and Robert

Waterman were exploring what made a company excellent. The

Seven S model was born at a meeting of these four authors in 1978.

It appeared also in "In Search of Excellence" by Peters and

Waterman, and was taken up as a basic tool by the global

management consultancy company McKinsey. Since then it is known

as their 7-S model.

2.4.3The Mckinsey 7S Framework

In recent years, the 7S framework for management analysis

developed by the respected consulting firm of Mckinsey & Company

has gained in popularity. The Mckinsey’s 7S framework essentially

looks at seven elements of an organization that must be understood

when seeking to work out how it works and how to bring about any

sort of change in the organization.

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These seven elements play a significant role in any organization and

the Mckinsey 7S framework gives an insight into the integration of

these significant elements. The outstanding feature of the 7S

framework is that it has been tested extensively by Mckinsey

consultants in their studies of many companies. At the same time this

framework has been used by respected business schools such as

Harvard and Stanford. Thus, theory and practice seem to support

each other in the study of management.

a) Style

"Style" refers to the management style or the leadership style that is

followed by the superiors in an organization to carry out different

activities in the organization. Style is basically the way the

management behaves and collectively spends it’s time to achieve

organizational goals. There are a lot of different management and

leadership styles in use but the most popular ones are: -

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Exploitive Autocratic

Benevolent Autocratic

Participative

Democratic

b) Systems

In an organization, "systems" refer to the procedures and processes

such as information systems, manufacturing processes, budgeting

and control processes. When taking into consideration the systems of

any organization, things such as the customization of the systems,

tailoring those systems to individual managers, the setting up of

objectives for those systems, economizing those systems, the

flexibility of the systems and blending those systems into the

organizational environment, come into any manager’s mind.

109


It is these elements of concern associated with the Systems of the

organization that Mckinsey consultants have included this issue of

Systems of the organization into their framework.

c) Staff

The term "Staff" refers to the people in the organization and their

socialization into the organizational culture. This includes Staffing that

is the filling, and keeping filled positions in the organizational

structure through identifying work-force requirements, recruiting,

selecting, placing, promoting, appraising, planning the careers,

compensating, and training or otherwise developing both candidates

and current job holders to accomplish their tasks effectively and

efficiently. Plus this also implies towards the chosen culture of the

organization and the selection of employees according to that particular

organizational culture and the fact that whether the employees have blended into

and accepted the culture or not.

d) Structure

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"Structure" is the organizational structure or the hierarchy of the

organization that comprises of the authority and responsibility

relationships in the firm. This function of the framework is concerned

with the direction of delegation of authority, the organizational

structures, whether Flat or Tall and the degree of Centralization or

Decentralization. Structure is closely related to Staff as the size of the

staff greatly impacts the type of structure that the organization has. It

is also dependant upon the Style of management preferred by the

superiors in the organization, as it is the preference of the top

management that really matters in the real world on the type of

organizational structure being applied.

e) Strategy

The systematic actions and the allocation of resources to achieve the

organizational objectives and aims is referred to as "Strategy". There

are many predefined strategies but the management can effectively

create some other strategy through the use of creative techniques

like brainstorming or professional approach such as the Delphi

Technique.

109


f) Shared vision

"Shared vision" or Super ordinate goals are the values held and

shared by the members of an organization. By using the term Shared

Values, the 7S theorists emphasize that goal statements are very

important in determining the destiny of the organization; they also

point out that the organization members must share values equally.

Therefore, special attention is given to personal and organizational

values in order to increase organizational effectiveness.

g) Skills

These are the distinctive capabilities of an organization. In traditional

management literature the term "skills" refers to the personal skills

(e.g. technical, human, conceptual) while in the 7S framework "skills"

not only means this but it also points towards the capabilities of the

organization as a whole.

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Application of 7’s

a) STRUCTURE OF ‘ADAG’

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b) Shareholder Interest

We value the trust of shareholders, and keep their interests

paramount in every business decision we make, every choice we

exercise In the copany orgation People Care We possess no greater

asset than the quality of our human capital and no greater priority

than the retention, growth and well-being of our vast pool of human

talent We also gives the different way to focusing the consumer to

We rethink every business process, product and service from the

standpoint of the consumer – so as to exceed expectations at every

touch point

Excellence in Execution

We believe in excellence of execution – in large, complex projects

as much as small everyday tasks. If something is worth doing, it is

worth doing well.

Team Work

The whole is greater than the sum of its parts; in our rapidly-

changing knowledge economy, organizations can prosper only by

mobilizing diverse competencies, skill sets and expertise; by

imbibing the spirit of “thinking together” -- integration is the rule,

escalation is an exception

Proactive Innovation

We nurture innovation by breaking silos, encouraging cross-

fertilization of ideas & flexibility of roles and functions. We

109


create an environment of accountability, ownership and problem-

solving –based on participative work ethic and leading-edge

research.

c) Style

Reliance insurance have a different working style in different area’s those are followings.

Leadership by Empowerment

We believe leadership in the new economy is about consensus

building, about giving up control; about enabling and empowering

people down the line to take decisions in their areas of operation

and competence…

Social Responsibility

We believe that organizations, like individuals, depend on the

support of the community for their survival and sustenance, and

must repay this generosity in the best way they can

Respect for Competition

We respect competition – because there’s more than one way of doing things right. We can learn as much from the success of others as from our own failures.

Generally company use the style to develop the first relianshionship to customer then after the start the business with him. Give the good product .in this way customer can satisfy and second time

d) Strategy

To build a global enterprise for all our stakeholders, and

A great future for our country,

To give millions of young Indians the power to shape their destiny,

109


The means to realize their full potential…

Our strategy for insurance is to keep the customer satisfaction as

focal point of all our operations, adopt the best international practices

in underwriting, claims and customer service, be the most innovative

in product development, establish presence all over India, ensure

sustained value addition to all stake holders and to uphold Corporate

Value & Corporate Governance.

e) Staff

There are more than 200 branches of Reliance life spread all over the

country, the head office being situated in Chennai. In the city of

Bangalore though there are only three (3) branches of Reliance life

and those are situated in a) Malleswaram b) Jayanagar and c)

Indiranagar. In organization divided in to different depart on the bases

of hiss work like Marketing Department Sales Department Accounts/

Financial Department Human Resource Department Investment

Department Actuarial Department. In these department are to train

person on the base of his work .because of it more useful to for his

work. Sales person fist he pass the exam then after company issue

the license .After time by time company arrange the different product

train to the agent and other staff member it helps to easy to convenes

to customer.

f) Skill

Skill is most important to all the staff member because of insurance

business is

Intangible there for very difficult to convenient to the people. In

insurance business also skill required for calculation of premium or

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claims calculation or under writer, In big insurance took by any

person or company at this time for reinsurance skill person required.

Reliance life insurance company having a very good skill person

because we saw the within one years company get good perform.

g) System

The Company recognizes that the security of information requires an

ongoing commitment. Towards this end a security program would

provide a continuous cycle for assessing risk, developing and

implementing effective security procedures, and monitoring the

effectiveness of those procedures. We want to guarantee the

reliability, confidentiality and availability of critical information. To that

end, we will continue implementation of our strategy for enhancing

information security management controls.

We are in a challenging environment, dealing with all the changes in

technology, the insurance industry, the IRDA regulations and the

workplace. The expectations of what information technology (IT) can

do to benefit the business and its customers continue to grow. We've

been working hard to provide day-to-day IT services, while keeping

our eye on where the Company is headed strategically, and also

transforming the IT organization to meet future requirements.

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3. RESEARCH PROBLEM

3.1. RESEARCH PROBLEM: The problem of research was- “To

make a study of the consumer’s perception about Life Insurance

sector (I.e. how they perceive about life insurance and what

criteria’s they consider before taking a life insurance policy) and to

study the brand awareness of Reliance Life among them”. The

study was carried out with the following objectives in mind:

a) To know about the various Investment alternatives that is mostly

preferred by the people.

b) To find out the important criteria’s that people think are

important before investing in a life insurance policy and

c) To find out the brand awareness of Reliance Life Insurance

among the people.

3.2. RESEARCH METHODOLOGY: To analyze the problem

given and to conduct the study among the people, the surveying

was done with the help of a ‘Questionnaire’ (which is attached as a

part of the annexure in the report) was adapted. To know the

consumer’s perception about what they think is important before

taking a life insurance policy, eight (8) main criteria’s were listed

out to them, those are:

a) Premium

b) Charges taken by company,

109


c) Policy Term

d) Rider Benefits provided by the company

e) Bonus and interest paid by the company

f) Services provided by company (pre and post sales),

g) Accessibility of the company &

h) Company Image.

3.3. SAMPLE SIZE: After due consultation with the company

supervisor as well as with the college guide, also keeping in mind the

requirements of the company for the research, the sample size that

was found to be appropriate for the study was 100.

3.4. SAMPLING TECHNIQUE: The sampling technique that adapted

to conduct the survey was ‘Simple Random Sampling’ and the area of

the research was concentrated in the city of Bangalore only. The

survey was conducted by visiting different Reliance web world

branches in places like koramangala and Jayanagar in the city of

Bangalore.

3.5 RESEARCH FINDINGS:

Various Investment Alternatives Available to consumers:

To begin with the analysis, let us see what are the various

investment alternatives that are available to the people and among

that which are the most preferred one. Now, from the data

collected from the 100 respondents which were surveyed through

the questionnaire, the following representation can be made:

109


Investment Alternatives Preffered by People

50, 18%

41, 15%

33, 13%33, 13%

31, 12%

26, 10%

21, 8%

19, 7%10, 4%

Insurance

Mutual Fund

PPF

Real Estate

Bank Deposits

Equity

Post Office

Gold and Silver

Bonds and Debntures

So, from the above representation it can be seen that 18% of the

people think that Insurance is the most preferred investment

alternative that is available to them, followed by alternatives such

as Mutual Fund (15%), PPF (13%), Real Estate (13%) etc. The

reason that can be attributed for the liking of people towards

insurance may be because of that insurance provides both life

cover as well as security to the holder of the policy and also to the

family members of the insurance holders. As well as now a days

insurance are also providing option to invest in the markets

through plans like ULIP, which gives the holder both the life cover

as well as an opportunity to earn income at the market rate. So,

these are the reasons why people like to invest in the insurance in

comparison to others.

109


SEGMENTATION OF THE RESPONDENTS ON THE BASIS OF

CERTAIN IMPORTANT CRITERIA’S:

Now, let turn our attention towards the respondent who were

covered under this study. These respondents can be categorized

on the basis of certain important criteria like age group, annual

income, have previous life insurance policy and awareness about

Reliance Life Insurance in the following way:

Age group: age group

58 58.0 58.0 58.0

31 31.0 31.0 89.0

7 7.0 7.0 96.0

3 3.0 3.0 99.0

1 1.0 1.0 100.0

100 100.0 100.0

< 30 yrs.

31 - 40 yrs.

41 - 50 yrs.

51 - 60 yrs.

> 60 yrs.

Total

ValidFrequency Percent Valid Percent

CumulativePercent

age group

age group

> 60 yrs.51 - 60 yrs.41 - 50 yrs.301- 40 yrs.< 30 yrs.

Fre

quen

cy

70

60

50

40

30

20

10

0

109


From this representation we can see that 58% of the respondent belonged to the age group of below 30 years, followed by 31% who belonged to the age group between 31-40 years and the other persons were who belonged to other age groups were small in number.

Annual income

From the above representation we can see that 31% of the respondents belonged to a group which has an annual income of more than 5 lakh, followed by 27% who belonged to the group of annual income between 1-3 lakh and 23 % who have an annual

annual income

17 17.0 17.3 17.3

27 27.0 27.6 44.9

23 23.0 23.5 68.4

31 31.0 31.6 100.0

98 98.0 100.0

2 2.0

100 100.0

< Rs. 1 lakh

Rs. 1.01 - 3 lakh

Rs. 3.01 - 5 lakh

> Rs. 5 lakh

Total

Valid

SystemMissing

Total

Frequency Percent Valid PercentCumulative

Percent

annual income

annual income

> Rs. 5 lakhRs. 3.01 - 5 lakhRs. 1.01 - 3 lakh< Rs. 1 lakh

Fre

quen

cy

40

30

20

10

0

109


income between 3-5 lakh. Among the 100 respondents, two of them were unwilling to express their annual income to us, which represents the missing system in the chart presented above.

Hold life insurance policyhold life insurance policy

23 23.0 23.0 23.0

77 77.0 77.0 100.0

100 100.0 100.0

no

yes

Total


CumulativePercent

hold life insurance policy

hold life insurance policy

yesno

Fre

qu

en

cy

100

80

60

40

20

0

Among the 100 respondents that were taken as a sample size, 77 of them had life insurance policy that was either taken by him/her self or it was taken by their parents on their name, while 23 of them did not have any kind of Life insurance policy from any company.

Awareness about-Reliance Life

awareness-RIL

64 64.0 64.0 64.0

36 36.0 36.0 100.0

100 100.0 100.0

no

yes

Total


CumulativePercent

109


awareness-RIL

awareness-RIL

yesno

Fre

qu

en

cy70

60

50

40

30

20

10

0

Now coming to the point of awareness among the people about

Reliance Life Insurance, the response was very disappointing from

the point of view of the company. Out of 100 respondents not less

than 64 respondents did not have the knowledge that Reliance has

also come to the life insurance sector by overtaking the Australia

based life insurance company AMP SANMAR, while the rest 36

had knowledge of the acquisition of AMP SANMAR by Reliance.

IMPOPRTANT CRITERIA’S BEFORE TAKING AN LIFE

INSURANCE POLICY:

Now, let us see what criteria’s people consider most important

before taking a life insurance policy (the criteria’s for the study

have been mentioned before). Here, the most important criteria as

perceived by the people are being rated as 1 and the least

important criteria is being rated as 8, (as there are 8 criteria’s that

have been suggested under the research study). Here the number

of respondent is only 77, because those people who do not have

109


any life insurance policy have been excluded from the purview of

the study.

PREMIUM:PREMIUM

42 42.0 54.5 54.5

6 6.0 7.8 62.3

6 6.0 7.8 70.1

6 6.0 7.8 77.9

11 11.0 14.3 92.2

5 5.0 6.5 98.7

1 1.0 1.3 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

Total

Valid

SystemMissing

Total


Percent

PREMIUM

PREMIUM

7654321

Fre

qu

en

cy

50

40

30

20

10

0

Now if we consider one of the criteria we can see that 54.5% of the

respondent has rated it as the most important thing that they consider

before taking any insurance policy from any company, while no body

has rated it as the least important criteria. So, it can be clearly

109


interpreted that premium that the policy holder has to pay to continue

his/her policy plays a very important role before selecting the terms

and conditions of the policy and also the company from which the

policy is to be taken.

CHARGES:CHARGES

6 6.0 7.8 7.8

7 7.0 9.1 16.9

17 17.0 22.1 39.0

20 20.0 26.0 64.9

12 12.0 15.6 80.5

9 9.0 11.7 92.2

3 3.0 3.9 96.1

3 3.0 3.9 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

CHARGES

CHARGES

87654321

Fre

qu

en

cy

30

20

10

0

Now if we consider the charges the customer has to pay to the

insurance company like Fund Management charges, administration

charges etc. most of the people consider it as a important criteria

109


which can dictate the terms before deciding on whether to take the

policy or not. But very few people (only 7.8% of the total

respondents), considers that it can be the most important criteria

before taking the decision on life insurance policy.

POLICY TERM:

policy term

policy term

87654321

Fre

qu

en

cy

20

10

0

The tenure of the policy i.e. the policy term depends on the policy

holder but sometimes the insurer can also influence the policy term

by giving some additional benefits on policies taken for a longer

period of time or vice versa. In the study that was conducted by us,

policy term

17 17.0 22.4 22.4

9 9.0 11.8 34.2

8 8.0 10.5 44.7

17 17.0 22.4 67.1

14 14.0 18.4 85.5

5 5.0 6.6 92.1

2 2.0 2.6 94.7

4 4.0 5.3 100.0

76 76.0 100.0

24 24.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

109


we found out that nearly 22% of the respondents thinks that policy

term offered by the company is the most important thing that one

should consider before taking any life insurance policy while 5.3% of

the respondents think that it is the least important thing that one

should consider before taking any life insurance policy.

RIDER BENEFITS:rider benefits

14 14.0 18.2 18.2

5 5.0 6.5 24.7

13 13.0 16.9 41.6

12 12.0 15.6 57.1

15 15.0 19.5 76.6

12 12.0 15.6 92.2

3 3.0 3.9 96.1

3 3.0 3.9 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

rider benefits

rider benefits

87654321

Fre

qu

en

cy

16

14

12

10

8

6

4

2

0

Rider benefits are the additional benefits that the insurer company

provides to its customers for attracting them. Things like accidental

109


benefit, critical illness benefit, and permanent disablement benefit are

provided as arider with the original policy with a payment of some

additional premium from the point of view of the customers.

According to the study nearly 18% of the respondents think that it is

the most important criteria before selecting an insurance policy, while

on the other hand 4% of the respondent feels it is the least important

criteria.

BONUS AND INTEREST PAID:BONUS

30 30.0 39.0 39.0

5 5.0 6.5 45.5

7 7.0 9.1 54.5

11 11.0 14.3 68.8

9 9.0 11.7 80.5

13 13.0 16.9 97.4

1 1.0 1.3 98.7

1 1.0 1.3 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

BONUS

BONUS

87654321

Fre

qu

en

cy

40

30

20

10

0

109


Bonus and interest are paid by the companies to the policy holder for

the policies which are with profit policy. I.e. if a person takes a with

profit policy, he/she also becomes liable to get a certain percentage

of the profit that the company makes in a certain financial year. 39%

of the respondent considers it as the most important criteria before

taking a life insurance policy.

SERVICES (PRE AND POST SALES):SERVICES

19 19.0 24.7 24.7

4 4.0 5.2 29.9

10 10.0 13.0 42.9

6 6.0 7.8 50.6

15 15.0 19.5 70.1

12 12.0 15.6 85.7

5 5.0 6.5 92.2

6 6.0 7.8 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

SERVICES

SERVICES

87654321

Fre

qu

en

cy

20

10

0

While conducting the study we have met many respondents who

things that many of the companies provide them satisfactory services

109


only till the policy is being taken by the respondent, but after that if

there is any requirement from the point of view of the customer, the

company does not pay the same attention to them as they had paid

earlier. So, nearly 25% of the respondents feel that services (both pre

and post sales) provided by the company is the most important thing

to consider before undertaking any kind of life insurance policy.

ACCESSIBILITY:accessibility

9 9.0 11.7 11.7

6 6.0 7.8 19.5

10 10.0 13.0 32.5

8 8.0 10.4 42.9

13 13.0 16.9 59.7

17 17.0 22.1 81.8

7 7.0 9.1 90.9

7 7.0 9.1 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

accessibility

accessibility

87654321

Fre

qu

en

cy

20

10

0

109


The term accessibility here refers to the easy availability of the

facilities that the company provides to its customer’s. The facilities

can be regarding information about the company and the various

products offered by them, which can be made available through

internet. According to the study nearly 12% of the respondent’s thing

it is the most important thing, while 9% of them feel that it is the least

important thing that one may consider before taking any life insurance

policy.

COMPANY IMAGE:company image

25 25.0 32.5 32.5

10 10.0 13.0 45.5

5 5.0 6.5 51.9

9 9.0 11.7 63.6

2 2.0 2.6 66.2

9 9.0 11.7 77.9

10 10.0 13.0 90.9

7 7.0 9.1 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Percent

company image

company image

87654321

Fre

qu

en

cy

30

20

10

0

109


Company image also plays an very important role in influencing the

decision of a prospective customer while taking the final decision.

From the study it has been found out that nearly 33% of the people

feel that it is the most important thing that influences ones decision

regarding taking of life insurance policy, while for 9% of people it

does not provide any significant importance in their decision making.

So, to conclude from the above representations, it can be said that

the premium that the policy holder has to pay for taking any life

insurance policy, plays the most important role in influencing their

decision, followed by the factors like bonus and interest paid by

the company, company image and so on. So, those companies

who are charging the least premium as well as providing all other

complementary services, has a better chance of succeeding in the

life insurance sector in comparison to other companies who are

also operating in the same field.

Now to further analyze the perception of the respondents about

what they think as the important criteria before taking an insurance

policy. I have taken two independent parameters, namely:

a) Age of the People.

b) Annual Income of the People.

After taking these two independent parameters, the analysis is being

made to see which age group people think what criteria is important

or what is difference in perception among the people who have

annual income which are significantly different from each other. The

109


number of respondents here is taken as 77 (76 in case of annual

income, as one of the respondents did not disclose his income) only

as those people who are not having any life insurance policy have

been excluded from the purview of the study..

AGE OF PEOPLE – CRITERIAS BEFORE TAKING AN LIFE

INSURANCE POLICY:

For conducting the study the ages of respondents are divided into

five categories, those are as follows:

a) Less than 30 years.

b) Between 31- 40 years.

c) Between 41 – 50 years.

d) Between 51 - 60 years.

e) More than 60 years.

i) Age Group – Premium:

PremiumAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

28 66.7%

37.1%

2 4.8%

37.1%

5 11.9%

1 2.4%

- -

31-40 yrs

26 100%

13 50%%

2 7.7%

3 11.5%

27.7%

2 7.7%

311.5%

1 3.8%

-

41-50 yrs

5 100%

- 120%

1 20%

1 20%

1 20%

1 20%

- -

51-60 yrs

3 100%

1 33.3%

- - - 266.7%

- - -

>60 yrs

1 100

- - - - 1 100%

- - -

109


%Total 77

100%

42 54.5%

67.8%

6 7.8%

6 7.8%

11 14.3%

5 6.5%

1 1.3%

Now, from the above representation we can see that nearly 67% of

the people who belong to the age group of less than 30 consider

premium as the most important criteria in comparison to only 50% of

the people who belong to an age group of 30-40. So, people who

have started their professional life consider more about the money

that have to spend on the insurance policy in comparison to the

people who are working for a relatively longer period of time. Again, if

we consider those people who have come to the end of their working

life, we can see that those people also thing that the expense

regarding the premium to be paid is the most important criteria for

them.

ii) Age Group – Charges:

ChargesAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

5 11.9%

49.5%

9 21.4%

10 23.8%

6 14.3%

5 11.9%

2 4.8%

1 2.4%

31-40 yrs

26 100%

1 3.8%

2 7.7%

6 23.1%

7 26.9%

5 19.2%

3 11.5%

1 3.8%

1 3.8%

41-50 yrs

5 100%

- - 1 20%

3 60% - - - 1 3.8%

51-60

3 100

- 1 33.3%

1 33.3%

- 1 33.3

- - -

109


yrs % %>60 yrs

1 100%

- - - - - 1 100%

- -

Total

77 100%

6 7.8%

7 9.1%

17 22.1%

20 26%

12 15.6%

9 11.7%

3 3.9%

3 3.9%

Now, if we consider the different charges (like Fund management

charges, administration charges etc.) that the companies take from

their policy holders, we can see that people who are having age less

than 30 years and those who belong to the group of 30 -40 years

think in the same way in this matter. They consider these charges

important, but not as much as they consider the cost relating to the

premium they have to pay to the company.

iii) Age Group – Policy Term:

Policy TermAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

8 19% 5 11.9%

3 7.1%

12 28.6%

9 21.4%

1 2.4% 1 2.4%

3 7.1%

31-40 yrs

26 100%

9 36% 3 12%

4 16%

3 12%

1 4%

1 4%

14%

1 4%

41-50 yrs

5 100%

- - 2 40%

- 2 40%

1 20% - -

51-60 yrs

3 100%

- 1 33.3%

- 1 33.3%

- 1 33.3%

- -

109


>60 yrs

1 100%

- - - - - 1 100%

- -

Total

77 100%

17 22.4%

9 11.8%

8 10.5%

17 22.4%

14 18.4%

5 6.6% 2 2.6%

4 5.3%

The policy term mainly depends on the wishes of the policy holder, so

here we can see that only 19% of the people whose age is below 30

years, think this is an important criteria, but people who are little bit

more experienced know that insurer companies sometime provide

extra benefits for longer policies in comparison to policies which have

a shorter span of life, that’s why nearly 36% of people belonging to

the age group of 31-40 years think that it is an very important criteria

which affects the decision regarding insurance.

iv) Age Group – Rider Benefits:

Rider BenefitsAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

7 16.7%

3 7.1%

11 26.2%

8 19%

5 11.9%

7 16.7%

- 1 2.4%

31-40 yrs

26 100%

5 19.2%

2 7.7%

2 7.7%

3 11.5%

9 34.6%

2 7.7%

2 7.7%

1 3.8%

41-50 yrs

5 100%

1 20%

- - - 1 20%

2 40%

- 1 20%

51-60 yrs

3 100%

1 33.3%

- - - - 1 33.3%

1 33.3%

-

>60 yrs

1 100%

- - - 1 100%

- - - -

109


Total 77 100%

14 8.2%

5 6.5%

13 16.9

12 15.6%

15 19.5%

12 15.6%

3 3.9%

3 3.9%

Out of 14 respondents who think that rider benefits is the most

important criteria in taking an decision regarding life insurance

policy, 7 belong to the age group of less than 30 and 5 belong to

the age group of 30 -40 years. So, most of them think that rider

benefits are not so important and it does not influence their

decision in a broad way.

v) Age Group – Bonus and Interest Paid:

Bonus and interest paidAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

17 40.5%

2 4.8%

4 9.5%

4 9.5%

8 19%

7 16.7%

- -

31-40 yrs

26 100%

10 38.5%

3 11.5%

2 7.7%

5 19.2%

1 3.8%

3 11.5%

1 3.8%

1 3.8%

41-50 yrs

5 100%

2 40% - 1 20%

- - 2 40%

- -

51-60 yrs

3 100%

1 33.3%

- - 1 33.3%

- 1 33.3%

- -

>60 yrs

1 100%

- - - 1 100%

- - - -

Tota 77 30 5 7 11 9 13 1 1 1.3%

109


l 100% 39% 6.5% 9.1% 14.3%

11.7%

16.9%

1.3%

In this scenario we can see that the thinking of the people

belonging to different age group is quite similar, as nearly 40% of

the respondents belonging to three different age groups, namely:

<30, 30 – 40 and 40 – 50, think that it is the most important criteria

which influences the decision regarding life insurance policy and

only 1.3% of the total respondent think that it is the least important

criteria among all.

vi) Age Group – Services ( both pre and post sales):

Services (pre and post sales)Age grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

10 23.8%

3 7.1%

4 9.5%

4 9.5%

5 11.9%

9 21.4%

4 9.5%

3 7.1%

31-40 yrs

26 100%

8 30.8%

- 4 15.4%

- 8 30.8%

3 11.5%

1 3.8%

2 7.7%

41-50 yrs

5 100%

1 20%

- - 2 40%

2 40%

- - -

51-60 yrs

3 100%

- 133.3%

1 33.3%

- - - - 1 33.3%

>60 yrs

1 100%

- - 1 100%

- - - - -

Tota 77 19 4 10 6 15 12 5 6

109


l 100% 24.7% 5.2% 13% 7.8% 19.5%

15.6%

6.5% 7.8%

In this case, we can see that the people who belong to the age group

of less than 30 years and may be taking an life insurance policy for

the first time ( on their own), do not give much importance on services

in comparison to the people belonging to the age group of 30 – 40 ,

who put more emphasize on the services provided by the company,

the percentage is almost 31.

vii) Age Group – Accessibility:

AccessibilityAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

7 16.7%

2 4.8%

6 14.3%

6 14.3%

7 16.7%

4 9.5% 5 11.9%

5 11.9%

31-40 yrs

26 100%

2 7.7%

3 11.5%

1 3.8% 2 7.7%

4 15.4%

11 42.3%

2 7.7%

1 3.8%

41-50 yrs

5 100%

- 1 20%

1 20% - 2 40%

1 20%

- -

51-60 yrs

3 100%

- - 1 33.3%

- - 1 33.3% - 1 33.3%

>60 yrs

1 100%

- - 1 100%

- - - - -

109


Total 77 100%

9 11.7%

6 7.8%

10 13%

8 10.4%

13 16.9%

17 22.1%

7 9.1%

7 9.1%

Here, we can see that not much importance is given to the

accessibility criteria by any group of respondents. Most of them

consider accessibility as an criteria which will not affect the decision

of a prospective customer, when he/she decides to take an life

insurance policy.

viii) Age Group – Company Image:

Company ImageAge grou

p.

total 1 2 3 4 5 6 7 8

<30 yrs

42 100%

10 23.8%

6 14.3%

3 7.1%

7 16.7%

1 2.4%

3 7.1%

6 14.3%

6 14.3%

31-40 yrs

26 100%

12 46.2%

3 11.5%

1 3.8%

1 3.8%

1 3.8%

3 11.5%

4 15.4%

1 3.8%

41-50 yrs

5 100%

2 40% - - - - 3 60%

- -

51-60 yrs

3 100%

- 1 33.3%

1 33.3%

1 33.3%

- - - -

>60 yrs

1 100%

1 100%

- - - - - - -

109


Total

77 100%

25 32.5%

10 13%

5 6.5%

9 11.7%

2 2.6%

9 11.7%

10 13%

7 9.1%

In the case of company image also, we see a significant difference

between the opinions of respondents who belong to different age

groups. Only 24% of people belonging to the age group of less than

30 years think that it is very important and almost 14% think that it is

not at all important. On the other hand, nearly 46% of the people

belonging to the age group of 30 – 40 years think it is very important

and only 4% think that this criteria is not at all important. People

belonging to the age group of more than 60 years also consider

company image as the most important criteria.

So, to conclude it can be said that the thinking of people belonging to

different age group are quite different in most of the aspects whole it

comes to decide the important criteria regarding life insurance, it may

be due to the fact that they have started their career, so they worry

about the money they have to spend on insurance or it may be

related to the fact that for many of the newcomers it is the first time

that they are taking a life insurance policy on their own, so they do

not have experience when it comes to life insurance in comparison to

others who are having their own policy or those who are working for a

longer span of time and are quite settled in their respective area of

operation,

ANNUAL INCOME OF PEOPLE – CRITERIAS BEFORE TAKING

AN LIFE INSURANCE POLICY:

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For conducting the study the annual income of respondents is

divided into four categories, those are as follows:

a) Less than rs. 1 lakh.

b) Between rs 1.01 – 3 lakh.

c) Between rs. 3.01 – 5 lakh.

d) More than rs. 5 lakh.

Now, let us see the perception of people about the important

criteria’s before taking a life insurance policy who belong to

different income groups.

i) Annual Income – Premium:

PremiumAnnl. Inc(rs.)..

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

12 85.7%

- 1 7.1%

- 1 7.1%

- - -

1.01-3

lakh

18 100%

8 44.4%

3 16.7%

3 16.7%

1 5.6%

3 16.7%

- - -

3.01-5

lakh

16 100%

7 43.8%

1 6.3%

- 2 12.5%

4 25%

2 12.5%

- -

> 5 lakh

28 100%

14 50%

2 7.1% 2 7.1%

3 10.7%

3 10.7%

3 10.7%

1 3.6%

-

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Total 76 100%

41 53.9%

67.9%

6 7.9%

6 7.9%

11 14.5%

5 6.6%

1 1.3%

-

In this scenario a clear difference in opinion can be seen, people

who have annual income of less than 1lakh, think premium to be

paid in a policy is the most important criteria ( nearly 86%), but as

the income increases, less importance is given on the premium

decreases. So, people having less income put more emphasize on

the money to be spent in comparison to people who have relatively

higher income.

ii) Annual Income – Charges:

ChargesAnnl. Inc(rs.)..

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

2 14.3%

2 14.3%

1 7.1%

3 21.4%

3 21.4%

2 14.3%

- 1 7.1%

1.01-3

lakh

18 100%

- 1 5.6%

6 33.3%

6 33.3%

3 16.7%

2 11.1%

- -

3.01-5

lakh

16 100%

1 6.3%

2 12.5%

4 25%

3 18.8%

1 6.3%

2 12.5%

2 2.5%

1 6.3%

> 5 28 3 1 6 8 5 3 1 1

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lakh 100% 10.7%

3.6% 21.4%

28.6% 17.9% 10.7% 3.6% 3.6%

Total 76 100%

6 7.9%

67.9%

17 22.4%

20 26.3%

12 15.8%

9 11.8%

3 3.9%

3 3.9%

As the charges taken by the companies is very less as compared to

the premium they take, so here we can see that people pay less

importance on it. Bit, here also we can see that nearly 14% of the

people who are having annual income of less than 1 lakh, thing this is

the most important criteria, while on the other hand people who are

having income between 1.01 – 3 lakh, don’t thing at all that this is the

most important criteria. So, here also difference in income generates

difference in opinion.

iii) Annual Income – Policy Term:

Policy TermAnnl. Inc(rs.)..

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

4 28.6%

- - 4 28.6%

2 14.3%

1 7.1%

- 3 21.4%

1.01-3

lakh

18 100%

2 11.1%

1 5.6%

3 16.7%

6 33.3%

6 33.3%

- - -

3.01-5

lakh

16 100%

5 31.3%

1 6.3%

1 6.3%

4 25%

3 18.8%

1 6.3%

- 1 6.3%

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> 5 lakh

28 100%

6 22.2%

6 22.2%

4 14.8%

3 11.1%

3 11.1%

3 11.1%

2 7.4%

1 3.6%

Total 76 100%

17 22.7%

8 10.7%

8 10.7%

1722.7%

14 18.7%

5 6.7%

2 2.7%

5 6.7%

In case of policy term we can see that there is no such difference in

opinion among the people who belongs to different income groups.

As. 22.7% of the total respondents thinks it is the most important

criteria and on the other hand 22.7% of the respondents think it is

moderately important. The reason for the same can be that, people

who are having less income now, may have a feeling that as the time

goes on the income of them will increase, so they don’t put so much

emphasis on policy term as compared to the other criteria’s.

iv) Annual Income – Rider Benefits:

Rider BenefitsAnnl. Inc(rs.)..

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

2 14.3%

17.1%

5 35.7%

2 14.3%

1 7.1%

2 14.3%

- 1 7.1%

1.01-3

lakh

18 100%

4 22.2%

1 5.6%

3 16.7%

1 5.6%

6 33.3%

3 16.7%

- -

3.01-5

16 100%

4 25% 2 12.5%

1 6.3%

3 18.8%

1 6.3%

4 25%

- 1 6.3%

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lakh> 5 lakh

28 100%

4 14.3%

1 3.6%

4 14.3%

5 17.9%

7 25%

3 10.7%

3 10.7%

1 3.6%

Total 76 100%

14 18.4%

56.6%

13 17.1%

11 14.5%

15 19.7%

12 15.8%

3 3.9%

3 3.9%

Here, we can see that people who are having relatively greater

income think that rider benefits are very important criteria in

comparison to people who are having less income. The reason for

the same may be as the income of a person increase he/ she will be

liable to get more rider benefits in comparison to people who are

having lesser income, so they put less importance on rider benefits.

But, one thing is clear very few people (3.9% of the total respondents)

from all income class think that rider benefits do not carry any

importance.

v) Annual Income – Bonus and Interest Paid:

Bonus and interest paidAnnl. Inc.(rs)..

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

5 35.7%

- 1 7.1%

2 14.3%

1 7.1%

5 35.7%

- -

1.01-3

lakh

18 100%

8 44.4%

2 11.1%

2 11,1%

2 11.1%

3 16.7%

1 5.6%

- -

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3.01-5

lakh

16 100%

8 50%

- 1 6.3%

2 12.5%

2 12.5%

2 12.5%

- 1 6.3%

> 5 lakh

28 100%

9 32.1%

2 7.1%

3 10.7%

5 17.9%

3 10.7%

5 17.9%

1 3.6%

-

Total 76 100%

30 39.5%

4 5.3%

7 9.2%

11 4.5%

9 11.8%

13 17.1%

1 1.3%

1 1.3%

In case of bonus and interest paid by the insurer company, we can

see that people who belong to the income groups of 1.01 – 3 lakh

and 3.01 – 5 lakh puts more emphasis on this, in comparison to the

people who have income less than 1 lakh or those who are having

income of more than 5 lakh. The reason for the same may be due to

the fact, that people who belong to the range of 1- 5 lakh as annual

income, have an tendency to earn more than what they are earning

and that’s why they thing it as important criteria, on the other hand

people who have income less than 1 lakh, does not have such

income to invest in the company ( more emphasis is given by them

on the safety of the money) and those who are having income of

more than 5 lakh, does not crave for more money and that is why

they don’t put so much importance on bonus and interest paid by the

company.

vi) Annual Income – Services ( Both pre and post sales):

Services (pre and post sales)Annl. Inc(rs.)..

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

2 14.3

17.1%

2 14.3%

2 14.3%

2 14.3%0

1 7.1% 2 14.3%

2 14.3%

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%1.01-

3 lakh

18 100%

5 27.8%

- 2 11.1%

1 5.6%

4 22.2% 6 33.3% - -

3.01-5

lakh

16 100%

4 25%

- 5 31.3%

- 3 18.8% 4 25%

- -

> 5 lakh

28 100%

7 25%

3 10.7%

1 3.6%

3 10.7%

6 21.4% 1 3.6% 3 10.7%

4 14.3%

Total 76 100%

18 23.7%

45.3%

10 13.2%

6 7.9%

15 19.7%

12 15.8%

5 6.6%

6 7.9%

Now if we consider the services provided by the company we can

see that the people who are having less income put less emphasis

on this criteria (14.3%) and on the other hand people having

income of more than 1 lakh put more emphasis on this criteria ( on

an average 26%), the reason may be due to the fact people who

are earning more have more job responsibilities, so they have to

depend on the services provided by the company personnel when

compared to others.

vii) Annual Income – Accessibility:

AccessibilityAnnl. Inc

.(rs).

total 1 2 3 4 5 6 7 8

< 1 lakh

14 100%

3 21.4%

- 3 21.4%

2 14.3%

2 14.3%

0

2 14.3%

1 7.1%

1 7.1%

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1.01-3 lakh

18 100%

3 16.7%

- 3 16.7%

1 5.6%

4 22.2%

3 16.7%

3 16.7%

1 5.6%

3.01-5 lakh

16 100%

1 6.3%

2 12.5%

1 6.3%

4 25%

1 6.3%

3 18.8%

- 4 25%

> 5 lakh

28 100%

2 7.1%

4 14.3%

2 7.1%

1 3.6%

6 21.4%

9 32.1%

3 10.7%

1 3.6%

Total 76 100%

9 11.8%

6 7.9%

9 11.8%

8 10.5%

13 17.1%

17 22.4%

7 9.2%

7 9.2%

If we consider the accessibility as one of the criteria for taking

insurance policy, we can see that as the income of the person

increases , they put less importance on the accessibility criteria

( 21.4% of people having income less than 1 lakh, 16.7% for 1.01 – 3

lakh, 6.3% for 3.01 – 5 lakh and 7.1% for more than 5 lakh). But the

same trend can not be seen when they consider it as the least

important criteria in taking a decision regarding life insurance. So,

most of the people thing it, as a criteria which is not so important

while taking their decision (22.4% of the total respondents).

viii) Annual Income – Company Image:

Company ImageAnnl. Inc.(rs).

total 1 2 3 4 5 6 7 8

109


< 1 lakh

14 100%

5 35.7%

2 14.3%

2 14.3%

2 14.3%

- 1 7.1%

17.1%

1 7.1%

1.01-3

lakh

18 100%

5 27.8%

3 16.7%

1 5.6%

1 5.6%

1 5.6%

4 22.2%

1 5.6%

2 11.1%

3.01-5

lakh

16 100%

7 43.8%

2 12.5%

- - - 2 12.5%

4 25%

1 6.3%

> 5 lakh

28 100%

8 28.6%

3 10.7%

2 7.1%

5 17.9%

1 3.6%

2 7.1%

4 14.3%

3 10.7%

Total 76 100%

25 32.9%

10 13.2%

5 6.6%

8 10.5%

2 2.6%

9 11.8%

1013.2%

79.2%

Here, also a fluctuating trend can be seen in which people who are

having income less than 1 lakh and people who are having income of

3.01 – 5 lakh are putting more emphasis on company image in

comparison to others. The reason for the same may be people who

have less income want to see their money in a secured hand, so they

consider the company profile before taking any life insurance policy.

So, to conclude it can be said that in most of the aspects the opinion

of the people belonging to different income groups differ from each

other. The reason for the same can be the importance that they give

on the sum they invest in taking a life insurance policy I.e. a person

who is having income of less than 1 lakh will put more emphasis on a

sum of rs, 10000, in comparison to a person who is having an income

of more than 5 lakh. So, the difference in income does show

difference in opinion also.

109


5. CONCLUSION:

The conclusions that can be drawn from the survey that was

conducted by us can be summarized in the following way:

a) Insurance is the most preferred investment alternative which is

available to people followed by alternatives such as Mutual

Fund, PPF, Real Estate etc.

b) Only 36% of the total respondents are aware of the fact that

Reliance has recently come into the Life insurance sector.

Those people who are aware of the fact that Reliance has

come into the life insurance sector are willing to invest in

Reliance because of the brand name and growth potential that

reliance has.

c) According to the survey Premium to be paid for taking an life

insurance policy is the most important criteria which people

consider before taking an life insurance policy followed by

factors like Bonus and Interest paid by the company, Company

Image etc.

109


d) People who belong to different age groups have different

perception regarding the most important criteria before taking

the decision on a life insurance policy.

e) People who belong to different income groups also have

different perception regarding the important criteria’s concerned

with the life insurance.

LIMITATIONS OF THE RESEARCH

The following limitations can be pointed out from the research that I

conducted in relation to the problems that were given to me by

Reliance Life Insurance Company Limited:

a) The sample size chosen for the questionnaire was only

100 and that may not represent the true picture of the

consumer perception about the Life Insurance sector.

b) The research got confined to the city of Bangalore and

there also it was conducted in places like Reliance Web

World. So, the respondent only belong to a particular

group who only go to places like Reliance web world and

could not get the responses of people who do not go to

places like that.

109


c) Nearly 90% of the respondent belonged to the age group

of 20-50 years and only 10% were above 50 years old.

So, in collecting the responses the opinion of the

experience and aged people were not available. So, the

findings may not be correct when we think about the

opinion of the elderly people about the life insurance.

d) The people who were selected for the questionnaire was

done on the basis of simple random sampling, so, there

were certain cases in which the person selected did not

have any life insurance policy, so he could not gibe any

positive feedback regarding the important criteria to be

considered before taking an life insurance policy. So, this

further reduced the actual number of respondents to 75

from 100.

e) For conducting the comparative analysis I had to depend

mostly on secondary data about the company products as

primary data about the same was not available. The

problem pf this is that many useful information about the

products is not readily available in sources like internet,

so it made the job of comparison a little bit difficult for me.

f) The plan offered by different companies had different

options in them, so at times the comparison became very

109


difficult. The parameters for the comparison were also

different in the selected companies.

g) As Reliance has just entered the Life Insurance sector, it

did not have any financial statement so far, so no analysis

could be done on the basis of financial statements

between the companies as well as of Reliance life.

h) One of the important criteria that were selected by the

respondents which they consider before taking an

insurance policy was ‘Company Image’, but there were no

parameters available to compare criteria’s like this

between the companies.

i) The changes that have come into the ULIP products

recently were not taken into consideration for the

comparative study.

j) The products for comparison was also only four, due to

lack of information as well as time constrain.

LEARNING OUTCOME:

In this time span of eight (8) weeks, many aspects have come to my

knowledge both from the perspective of academic as well as

corporate world. Those aspects of my learning can be summarized in

the following way:

109


a) Initially we had a training of 8 days, which was helpful in giving

a broader perspective of the total life insurance scenario

prevailing in India, which was helpful in conducting the study. It

explained all the pros and cons about the insurance industry

and the different practices followed by insurance companies.

Some aspects of Insurance like Premium Calculation. Unit

calculation was explained to us.

b) The comparative analysis part helped to know about the

different products offered by different companies as well as the

different benefits that they are offering with their respective

products.

c) Then I came to know about the operations that go on in an

organization in the daily routine. It helped us to prepare our self

for the future when we have to join a organization and work

under similar conditions.

d) The concept of ULIP which was not known to me was explained

briefly as well as the difference between ULIP and Mutual Fund

was also made clear.

e) The skill of how to approach a person for convincing him/her to

do a particular thing was learned by us at the time of filling up

the questionnaire.

109


So, finally it can be said that although my intended specialization is

Finance, this internship gave me the opportunity to learn the various

aspects of Marketing which can help me in the future as when I enter

the corporate world, I should be able to handle any job that is being

offered to me by the company in which I am doing my job. So, from

that point of view it was a great learning experience for me to know

the various aspects of customer handling that are being adapted by

modern business houses as well as to have the knowledge about the

total Insurance sector which is an integral part of the total finance

industry in this little time span. This will help me immensely in the

future as Insurance sector is growing at a rapid speed and there will

be lots of job opportunities in this sector in the future time to come.

109


8.0 ANNEXURE

Consumer Perception about Life Insurance

Questionnaire

Dear respondent, This questionnaire is aimed at understanding your perception about life insurance .Your response will be dealt with strict confidentiality and it will be used only for academic purpose. Thank you for spending your valuable time to fill this questionnaire.

1. Name: Gender: Male Female

Contact No:

2. Age Group:

3. Educational Qualification:

4. Profession:

Under Graduate

41-50

Above 60

Below 30 31-40

Post Graduate

Others (Specify)………….

Graduate

Student Self-Employed

Others (Specify)………….

Employed

51-60

109


5. Annual Income:

6. What percentage of your Salary do you usually save?

7. What kind of investment do you prefer?

8. What are your various investment alternatives?

9. State your preference among the following investment alternatives and Rate them on a 6 Point Scale. ( 6 – Most important, 5- Very important, 4- Quite important,

3- important, 2- Less important, 1- Least important )

10.Do you have life Insurance Policy? ( If ‘NO’ then please go to question no. 14)

11.If ‘Yes’ Which Insurance Company Policy do you have?

Below 1 Lakh 3.01-5 Lakh

Above 5 Lakh

1.01-3 Lakh

Less Than 15% 20-25%

Greater Than 25%

15-20%

Short Term BothLong Term

Bonds & Debentures

Post Office Scheme

PPF

Equity/Shares Bank DepositsInsuranceMutual Fund Gold & SilverReal Estate

Others (Specify)…………….

Safety LiquidityCapital GrowthReturn Company Profile & Brand NameTax Benefit

Yes No

LIC Birla Sun lifeBajaj AllianzICICI Prudential

109


12.What kind of Insurance Policy have you taken?

13.What parameters do you look into before you take up a life insurance Policy? Please rank them between 1-8. (1-most important, 8-Least important)

14.Are you aware about the take over of AMP SANMAR by Reliance Group to form Reliance Life Insurance in October 2005?

15.Would you like to invest in Reliance Life Insurance?

16.If, ‘YES’ what will make you to invest in Reliance Life Insurance?

17. Among the following Life Insurance Companies in which company you will be Willing to take a life insurance?

Others (Specify)……..HDFC Standard

Term Insurance Money BackEndowmentChild Plan Market Return Plan

(ULIP)Annuity/Pension

Premium Policy TermChargesRider Benefits Services (Pre & Post Sales)Bonus &

Interest Paid

Accessibility Company

Yes No

Yes No

Brand image Diversity

Transparency Utmost Good Faith

Growth Potential

Others (Specify)……….

Others (Specify)…………….

109


.

BIBLIOGRAPHY:

WEBSITES:

1) www.irda.org

2) www.relianceadagroup.com

3) www.reliancecapital.com

4) www.reliancelife.co.in

5) www.bimaonline.com

6) www.iciciprulife.com

7) www.hdfcinsurance.com

8) www.birlasunlife.com

9) www.allianzbajaj.com

10) www.site.securities.com

11) www.anandrathi.com

12) www.indiainfoonline.com

Bajaj Allianz Birla SunlifeHDFC Standard LifeSBI Life TATA- AIGICICI Prudential

Reliance Max NewyorkMet Life

Sahara ING Vysya Aviva Dabur

OM- Kotak Mahindra

Shriram

http://www.indiainfoonline.com/

http://www.anandrathi.com/

http://www.site.securities.com/

http://www.allianzbajaj.com/

http://www.birlasunlife.com/

http://www.hdfcinsurance.com/

http://www.iciciprulife.com/

http://www.bimaonline.com/

http://www.reliancelife.co.in/

http://www.reliancecapital.com/

http://www.relianceadagroup.com/

http://www.irda.org/

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BOOKS:

1) Life Insurance (IC-33) published by Insurance Institute of India.

reliance life insurance - market research1

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