Finance(MBA) 103

EXECUTIVE SUMMARY

PAGE

INTRODUCTION

1

EXECUTIVE SUMMARY

Insurance is the pooling of fortuitous losses by transfer of such risks to insures, who agree to provide other pecuniary benefits on their occurrence, or to render services connected with the risk. It is the transfer of financial responsibility for the risk at the point of occurrence, and conventionally involves the insurer in a commitment to pay. The insured is thus exchanging the uncertain cost of losses for certain and known cost of the premium. The insurance services lead to efficient and productive allocation of capital resources, facilitate growth of trade and commerce, substitute for governments social security programs, and assist individuals and firms in efficient management of risks. The insurance market may tremendously improve as India represents huge untapped market. However, globalization will certainly increase insurance penetration and all professional shall equip themselves to exploit the opportunities offered by this sector.

A study titled Comparative Analysis and Trend Analysis of Insurance Industry after Privatization- conducted at Bajaj Allianz Life Insurance Company Private Limited, Bangalore, is held by seeing the tectonic shift of insurance industry after privatization.

This study is an effort to give ideas to the people for their investment decisions by showing a comparative analysis of various companies and the future trend of the life insurance companies. At the same time this study could be helpful to the company to see its position in the industry and to find a way to improve its performance.

The study mainly aims to make a comprehensive study on Indian insurance industry after privatization and the comparative analysis of Allianz-Bajaj Life Insurance Company Limited vis--vis the industry.

In order to build the above objective an attempt is made-

To study the existing business of insurance industry.

To study the awareness level towards insurance among the

people.

To study the impact of privatization on Indian insurance

business.

To study the behavior of existing customers in the industry

market.

To study the trend of private insurers in India.

In order to achieve the above mentioned objectives a primary analytical survey was conducted by the researcher to collect the primary data and questionnaire was prepared as an instrument of the survey. Magazines, journals, books on insurance, dailies, previous project reports made on similar field and websites were accessed to get the secondary data. Chi-square test was done to test the hypothesis on collected data. Data collected were finely tabulated and deeply analyzed. Tables, graphs, charts are presented to give a clear picture of the collected data.

The study finds that almost all the companies are unanimous on this aspect that most of people are underinsured. It is surprising fact that while calculating the insurance companies are not considering existing savings of the people. Also most of the people do not like to divulge their true net worth (including black money) so while one may look underinsured whereas reality may be different.

Most of the people were found to be satisfied with their insurers in urban area, none was found to be completely satisfied in rural area, where only LIC exists. Service provided by LIC is found to be less effective than private insurers in all cases.

Generally, people think that insurance in necessary for everybody and but sometimes people of urban area like to have more freedom on their investment decisions. People of rural area want to be insured to get risk-cover of life and to make some savings.

A Brief of the suggestions given by the researchers to the company is as follows:

The life insurance companies have to calculate Human Life Value (HLV) for everybody to know the net worth of insurance policy that can be given to the individuals before selling any policy.

Since, rural population is more in India; the company should concentrate equally to rural and urban population. More reputation is needed for the company, as insurance policies are sold only on reliability.

Advertisement can not sell insurance policies but through advertisement people would be aware of the companys existence which, in turn, would bring reliability, popularity, belief in peoples mind.

Word of Mouth plays a great role in insurance industry, so company has to give ultimate satisfaction to the existing customers in order to retain them and get some more customers through themResearch shows that 30 years is the age range when people should take insurance policies. Company should target this age-group as this group people generally have money in hand and no idea to invest their money.

So, as the face of life insurance in India is changing, with the changes come a host of challenges, and it is only the credible players with a long-term vision and a robust business strategy can make an impact. Whatever the developments, the future of this industry will surely be exciting.2.1 BACKGROUND OF THE STUDY

Risk Management today has become a very complex and demanding profession. Risk managers have greater responsibilities than ever before. Increasingly they are being asked to manage both risk and opportunities with an eye on improving shareholder value.

The probability of something happening which is not going to have favorable effect on its environment can be termed as risk. More the probability higher the risk. Since the risk itself depends upon the happening of a future event, one cannot assure himself that risk can be entirely eliminated. That is why to reduce the impact of that unfavorable event; every enterprise tries to manage the risk so that its impact may be minimized in case of happening of that event. Risk is a burden not only to the individual but to the society as well. There exist several techniques of meeting the problem of risk, of which insurance is the most practical method for handling major risks. The commission on Insurance Terminology of the American Risk and Insurance Association has defined Insurance as follows:

Insurance is the pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify insured for such losses, to provide other pecuniary benefits on their occurrence, or to render services connected with the risk.

Insurance is based on the principle of risk pooling. It is the transfer of financial responsibility for the risk at the point of occurrence, and conventionally involves the insurer in a commitment to pay. Provided the terms and conditions of the policy are met, payment of the premium secures a source of funds in the event of loss. The insured is thus exchanging the uncertain cost of losses for the certain and known cost of the premium. The cost arising from pure losses during the period of cover are then fixed for the insured. The stabilization of loss costs means that earnings are less susceptible to the effects of pure loss than when these are retained.

HISTORY OF INSURANCE

The roots of insurance might be traced to Babylonia, where traders were encouraged to assume the risks of the caravan trade through loans that were repaid (with interest) only after the goods had arrived safely-a practice resembling bottomry and given legal force in the Code of Hammurabi (c.2100b.c).

With the growth of towns and trade in Europe, the medieval guilds undertook to protect their members from loss by fire and shipwreck, and to provide decent burial and support in sickness and poverty. By the middle of the 14th century, as evidenced by the earliest known insurance contract (Genoa, 1347), marine insurance was practically universal among the maritime nations of Europe. In London, Lloyds Coffee House (1688) was a place where merchants, ship owners, and underwriters met to transact business. By the end of the 18th century Lloyds had progressed into one of the first modern insurance companies. In 1693, the astronomer Edmond Halley constructed the first mortality table, based on the statistical laws of mortality and compound interest. The table corrected in the year 1756 by Joseph Dodson, made it possible to scale the premium rate to age; previously the rate had been the same for all ages.

Insurance developed rapidly with the growth of British commerce in the 17th and 18th century. Prior to the formation of corporations devoted solely to the business of writing insurance, policies were signed by a number of individuals, each of whom wrote his name and the amount of risk he was assuming underneath the insurance proposal, hence the term underwriter. The first stock companies to engage in insurance were chartered in England in 1720, and in 1735, the first insurance company in the American colonies was found at Charleston, S.C Fire insurance corporations were formed in New York City (1787) and in Philadelphia (1794). The Presbyterian Synod of Philadelphia sponsored (1759) the first life insurance corporation in America, for the benefit of Presbyterian ministers and their dependents. After 1840, with the decline of religious prejudice against the practice, life insurance entered a boom period. In the 1830s the practice of classifying risks began.

The New York fire of 1835 called attention to the need for adequate reserves to meet unexpectedly large losses; Massachusetts was the first state to require companies by law (1837) to maintain such reserves. The great Chicago fire (1871) emphasized the costly nature of fires in structurally dense modern cities. Reinsurance, whereby losses are distributed among many companies, was devised to meet such situations and is now common in other lines of insurance. The Workmens 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 advent of the automobile.HISTORY OF INSURANCE IN INDIA

The Indian Insurance Industry is as old as it is in any other part of the world. India had a number of foreign and Indian insurers operating in the Indian market till the nationalization of the industry took place. In the year 1818, the first of the insurance companies, Oriental Life Insurance Company, was started by Europeans in India at Kolkata. In 1870, the first Indian Insurance Company, Bombay Mutual Life Insurance was established. In the same year (1870) the British Government enacted The Insurance Act. In the year 1912, First Indian Insurance Act was passed with an enactment again in 1938.

The reason for the nationalization of the industry are rather well known and concerned mostly with the unethical practices adopted by some of the players against the interests of the insurance consumers. In 1956, 245 Indian and foreign insurers and provident societies were taken over by the central government and were nationalized. Life Insurance Corporation (LIC) was formed by an Act of Parliament, viz. LIC Act, with a capital contribution of rupees five crores from the government of India.

Nationalization has lent the industry solidity, growth and reach which is un-paralleled. However, along with these achievements there also grew a feeling of insensitivity to the needs of the market, tardiness in adoption of modern practices to upgrade the public that the insurance industry was not fully responsive to customer needs.

In April 1993, Government set up a high power committee headed by Mr. R.N.Malhotra to suggest reforms in the insurance sector to make it more efficient and competitive. Also, it was a hope of the committee that such a broad basing of the industry will ensure a better penetration of the insurance market of the country in terms of the Gross Domestic Product, which remains at very low level in comparison to some of the developing countries. The committee recommended the establishment of a strong and effective insurance regulatory authority in the form of a statutory autonomous board on the line of SEBI (Security Exchange Board of India).In December 1999, the insurance sector was thrown open to private sector, followed by the establishment of Insurance Regulatory and Development Authority (IRDA) in April 2000. realizing the vast potential in Indian market, companies all over the globe rushed to find a foothold in the lucrative Indian market. Evolution of technology and convergence of services witnessed the insurance products being offered by banks also.

History of insurance in India Important Milestones in the Life Insurance Business in India

1818 Europeans started the Oriental Life

Insurance Company in Calcutta.

1870 The First Indian Insurance

Company-Bombay Mutual

Life Insurance.

1870 The British Government Enacted

The Insurance Act.

1912 First Insurance Act was

passed with an enactment

again in 1938.

1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928 The Indian insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938 Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring people.

1956 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC was formed by an Act of Parliament, viz. LIC, Act, 1956, with a capital contribution of Rs.5 crore from the Government of India.

The insurance landscape in India is in the process of change. Close to foreign competition since nationalization in 1956, the Indian insurance industry was run by the government for over 40 years through the LIC that spanned the length and breadth of the country. While LIC had done a commendable job in growing the industry, the task of making an essential. Financial product such as life insurance available to the masses left scope for several more companies to participate in the arena.

Despite its more than teaming one billion population, India still has a low insurance penetration of 1.95% of GDP, indication the extent of underinsurance, 51st in the world. Only 22% of the insurable population possesses life insurance. Although India boasts a gross domestic saving rate of around 23%, less that 5% is spent on insurance. The estimate of insurable population is Rupees 240 million.

Recognizing the huge potential of the market and the need to make insurance, the international insurers Allianz of Germany, Prudential and Standard Life of the United Kingdom, Sunlife of Canada and AIG, Metlife and New York of the United States tied up with leading companies in India holding 26% of the total paid-up equity capital to reach out to this vast market. While four private sector companies had underwritten life business during the financial year 2000-2001, the number of private players competing for business during the year 2001-2002 increased to 11 and today the Indian insurance industry has over a dozen private players, each of which is making strides in raising awareness levels introducing innovative products, deserving the attention of the customer, and increasing the penetration of life insurance in the vastly underinsured country.

In this regard, entry of life insurance business requires a prospective entity to bring Rupees 100 crores (Rs.1 billion) as a start up capital in cash besides the stringent test or criteria set by the regulator IRDA. The regulator has kept such a high requirement of capital so as to create an entry barrier so that only serious and committed players enter this business, who understand that it is a capital intensive business.

The success of the efforts in note-worthy private players have captured 8% of new business premium income in two years of operations and possibly the Indian insurance market is one of the fastest growing markets. The industry is today slowly emerging from the shadows of insurance being a synonym to Life Insurance Corporation (LIC).

In the increasingly competitive environment, the corporation is likely to face difficulties in maintaining the stupendous growth, recorded in the year 2001-2002.

The profile on the Indian consumer is also evolving. Consumers are increasingly more aware and are actively managing their financial affairs. Today, while boundaries between various financial products are blurring, people are increasingly looking not just at products, but at integrated financial solutions that can offer stability of returns along with total protection. A wide range of products, customer-focused service and professional advice has become the mainstay of the industry. With the heightened awareness comes a willingness to evaluate life insurance as an integral part of the financial planning kit, a significant change from the earlier attitude, where insurance was purchased as a tax-saving tool.

No only has there has been a shift in the perception of life insurance, but also in the way it is sold. From being a purely advisor-driven business, the sector has seen the emergence of a number of channels, including banc assurance, corporate agents and direct marketing. These channels, though very new, are quickly gaining importance particularly because they present customer multiple ways of approaching life-insurers.

There is also been a huge improvement in service attitude and delivery, making the customer the focus of each initiative. Technology has become to peoples aid, giving them a platform, the reach and ability to service each customer seamlessly. Multiple touch points have emerged contact centres, e-mail, facsimile, websites and of course snail-mail which enable the customer to get in touch with insurance companies quickly, easily and directly.

In this view the insurance-managers need to understand more about the details that go into the formulation of insurance products to make it attractive in a competitive market. Overcoming challenges to development requires leadership, commitment, creativity and flexibility. For any private insurer, competing with LIC as well as with other private insurers is not a cup of tea.

At the same time customers are also confused to invest their money in any insurance company. On the products front, there is a wide range of products with different premium rates and guaranteed returns of different companies. Introduction of liquid, transparent and flexible policies, with unit-linked products added more attractiveness with the existing products. More the options, more the confusion in peoples mind and there is a need of an analysis in this industry.

Hence, this study is carried out to put some light on different products of major insurance companies and to find the trend of the private insurers to help the customers in making their decision as well as the company to perform well.

MAIN CONCEPTS OF LIFE INSURANCE PRODUCTS:

The life Insurance Products are called Plans of Insurance. The plans, offered by all companies, are basically of four types.

a) Term Insurance

b) Whole Life Insurance

c) Endowment

d) Annuities

a) Term Insurances:

Such a plan provides cover for a specified period or term only also known as temporary assurance. The policy benefits are only payable if the insured person dies during a specified period. Premiums are low because majority of such contracts do no result in payment (claim).

b) Whole Life Insurance:

This contract has no fixed term. Premiums are paid up to death, the sum assured becomes payable on death. Premiums can be also paid for a limited term selected by the proposed.c) Endowment Policy:

An endowment plan provides for payment of sum assured at the end of a specified term (maturity) or upon earlier death. Technically, this plan is combination of term insurance and pure endowment.

Pure endowment:

A pure endowment is a contract under which the benefit is payable only if the life insured survives the term. No payment is made if the insured dies during the term.d) Annuities:

A series of periodic payments to an annuitant (the person receiving the benefit for life or on other agreed terms or conditions, in return of single payment or a series of payment (premium) is called annuity.

COMPANY PROFILE

Bajaj Allianz Life Insurance Company Private Limited is joint venture between two leading conglomerates- Allianz AG and Bajaj Auto Limited, the flagship company of Bajaj Group. It is characterized by global presence with a local focus and driven by customer orientation to establish high earnings potential and financial strength. Bajaj Allianz Life Insurance Co. Ltd was incorporated on 12th march 2001. the company received the Insurance Regulatory and Development Authority (IRDA) Certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life Insurance business in India. The key to Allianzs success has been its ability to use its global presence and experience while adapting to local market conditions and develop customer-focused solutions. Under Indias insurance regulations, a foreign insurer entering into a joint venture with a local company is limited to a maximum ownership stake of 49%. The rest is owned by Bajaj Group.

Allianz AG is one of the largest global composite insurers with operations over 110 years in over 70 countries through over 700 subsidiaries. In Asia Pacific alone, the Allianz Group is present in 18 markets. One of Europes most highly valued stock corporations, Allianz is number one by gross written premiums and world number two by market capitalization. It has assets under management worth approximately 713 billion euros (US $633 billion).

Bajaj, an Rs.8000 crore group is a household name in India with a strong brand image and brand loyalty, synonymous with quality and customer focus. Bajaj Auto, the Rs.4000 crore auto giant and the flagship company of Bajaj group, has been in operation for over 55 years with over 15000 employees. It is the largest two and three wheeler manufacturer in India and the fourth largest in the world. It is rated AAA by Crisil.

STATEMENT OF THE PROBLEM

The insurance landscape in India is undergoing a tectonic shift. The shift is dramatic and it is only because of the open-door decision of India in the year 1999.

In pre-1999 scenario, since nationalization in 1956, the Indian Insurance Industry was run by the government for over 40 years through the LIC had done a commendable job in growing the industry, still there was a need of other private insurance companies to meet the satisfaction level of customers.

Post-1999 scenario sees a drastic change in terms of insurance awareness among the people. As the number of private insurance companies is increasing, varieties of products are offered to the customers. The boom in insurance industry brought a highly competitive nature in the market. Benefits offered by each company are not only traditional risk-cover but also many innovative, flexible benefits like Rider are added which make the insurance policy to be a competitive investment tool.

Having many insurance companies in the industry with different attractive products, customers are really confused while choosing their insurance plans and are even confused to choose one particular company to invest their money. And a few years down the line, there would be further more companies with many more innovative products, which may lead the industry to a further more complex situation.

This confusion among the people made the researcher to know the actual picture of insurance industry, and as one among the strong private insurers Allianz-Bajaj Insurance Company Limited was chosen for conducting the study.

This study is an effort to give ideas to the people for their investment decisions by showing a comparative analysis of various companies and the future trend of the life insurance companies. At the same time this study could be helpful to the company to see its position in the industry and to find a way to improve its performance.

NEED AND IMPORTANCE OF THE STUDY To study the existing insurance industry in India as a whole.

To recognize the uniqueness of insurance among all other investment instruments.

To know the reason behind the sudden shift in insurance industry in India.

To see the impact of privatization on LIC (Life Insurance Corporation).

To find out the awareness level of insurance, sector wise, among the people of Bangalore.

To make a comparative analysis of different products of various insurers for the sake of bringing awareness among the people.

To see the trend of the insurance industry in Bangalore.

To see the position of Allianz-Bajaj Life Insurance Company in Bangalore as well as in the industry.

To find out the trend of Allianz-Bajaj Life Insurance Company in near future as one among the private insurers.

To help people to make their investment decision on insurance policy.

To determine the amount of insurance needed for different individuals by calculating Human Life Value (HLV).

OBJECTIVES OF THE STUDY

Primary:

The study mainly aims to make a comprehensive study on Indian insurance industry after privatization and the comparative analysis of Allianz-Bajaj Life Insurance Company Limited vis--vis the industry.

Secondary:

In order to the study the above objective an attempt is made-

To study the existing business of insurance industry.

To study the awareness level towards insurance among the people.

To study the impact of privatization on Indian insurance business.

To study the behavior of existing customers in the industry.

To study the trend of private insurers in India.

LIMITATIONS OF THE STUDY

During the course of conducting the study the following limitations were encountered.

Responses may be bias

The study was conducted according to the convenience of the researcher. So, the samples collected may not giving proper information.

Chances of non-response error

The researcher was found to face difficulty to get responses from all the people. Due to that reason, all the information collected may not be perfect. Time constraint

Due to the time factor more number of samples could not be collected by the researcher.

The area of research is only limited to Bangalore city and Anekal Taluk of Bangalore district.

The study is a one time study and may not be useful in the future.

No study is devoid of limitation and honest and sincere effort has been made to extract the best possible information.

PURPOSE

To find out the research gap.

To add additional theory to existing theory.

To know the previous findings.

To know the link between previous and current scenario.

The study was carried out to see the change in insurance industry after privatization and to find out the trend of private insurers. The purpose was even to find out the awareness level regarding private insurers among the people of the different sectors of Bangalore. This is an effort to give solution to the investors on their investment decision regarding insurance.

METHODOLOGY

The literature was collected by: Browsing different websites on Internet.

Visiting all major libraries in Bangalore.

Referring various articles, reports, journals, magazines on insurance.

Referring several books on investment alternatives.

Referring different books and previous project reports in college library.

CONCLUSION

The central concept in review of literature is data gathering. So, review of literature is carried on. A researcher should carefully scrutinize the available information and user her discretion to find out whether the gathered data is adequate and sufficient for the problem, one enquires. The data that are suitable for one enquiry may not be found suitable in another enquiry. Hence, if the available data are found unsuitable they should not be used by the researcher.

The previous project reports referred for this study are as follows:

Shabna.K of Mount Carmel Institute of Management, Bangalore University, made a study on Portfolio Building for Mutual Fund Investors- a study conducted at Cholamandalam Investment and Finance Private Limited.

Her contribution is as follows:

The majority of the Indian investors are ready to take high risk.

Age is one of the important demographic characteristics that influence the investment habits.

Padmashree.B of K.K.E.C.S Institute of Management, Bangalore University, made a study on Privatization of Insurance in India- a study conducted at LIC of India, Chikkodi.


The private insurance companies spread huge amount of money and management waste in training the agents.

People believed that HDFC provides premium waiver benefit to the policy holders since it introduced many schemes. LIC should introduce more number of schemes like private insurers. They must become prominent in their work.

Priya.M of K.K.E.C.S Institute of Management, Bangalore University, made study on Customer Perception and Attitude towards investment in LIC in Bangalore


From the survey it was observed that majority of the customers i.e. 40% have ranked safety and reliability as the somewhat important factor for choosing an insurance company for investment.

From the survey it was that majority of the customers i.e. 66% perceive life policy as very important.

After reviewing all above project reports it is found that nobody held such kind of research on the topic of present researcher ever before.BENEFITS DERIVED FROM THE LITERATURE REVIEW

1. It facilitates to know

Types of Primary data. Advantages of Primary data. Disadvantages of Primary data. Evaluation of Primary data.2. It helps to know the following

Topic on which the similar research has been done. Purpose of the earlier research. Methodology adopted in earlier research. Conclusion derived from earlier research.3. It facilitates to know how this research is different from the earlier one.

4. It helped the researcher to know the area in which more concentration is needed i.e. (The area, which has been neglected by the earlier researcher).

5. Helped in making this research more specific and precise there by enabling analysis the problem systematically.

TYPE OF RESEARCH

The research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific situation facing the company.The type of research is Primary Analytical or Survey Method.

The survey was conducted in and out of Bangalore city. The data was collected by the researcher for the purpose of knowing the penetration level of private insurers in rural and urban areas of Bangalore and to find out the trend of private insurers.

SAMPLING TECHNIQUE

Stratified Random Sampling technique was adopted for conducting the survey.The population was divided into two mutually exclusive groups viz. Urban and Rural areas of Bangalore and simple random samples were drawn from each group.

Universe or Population:

City Bangalore for urban area survey and Anekal Taluk of Bangalore District for rural area survey.

SAMPLE SIZE

The total sample size is 70, among which 50 samples were collected from urban area of Bangalore city and 20 samples were collected from rural area of Bangalore District like Chandapura, Marsure of Anekal Taluk.SAMPLE DESCRIPTION

70 samples were collected from different age groups, income groups of different sectors. 50 urban area samples were collected from different parts of Bangalore city like Jayanagar, Koramangala, Madiwala, Jakksandra, Padmanavanagar, R.M Nagar, BTM Layout, Rajajinagar, Indiranagar, Vijayanagar, Maruthinagar, Yalahanka, J.P Nagar, Jalahalli, Balahalli, Anjanapura, S.G Palya, SBM Colony, Viveknagar etc.20 rural area samples were collected from Chandapura and Murusure of Anekal Taluk of Bangalore District.INSTRUMENTAION TECHNIQUE

Questionnaire was designed as main instrument to conduct the survey.A questionnaire consists of a set of questions presented to respondents for their answers. Because of its flexibility, the questionnaire is by far the most common instrument used to collect primary data.

The first part of the questionnaire consists of Investors Profile or Socio Demographic Data Sheet or Personal Data Sheet like name, age address, contact number, e-mail ID, marital status, number of dependents and sector.

The second part of the questionnaire consists of 22 questions on Investors Profile Regarding Insurance with or without different options. Among the close-ended questions there are Dichotomous questions which have two possible answers, Multiple Choice questions which have three or more answers, Importance Scale questions which rate the importance of some attribute and Rating Scale questions which rate some attribute from Poor to Excellent.

The areas covered under the questionnaire are financial status of the people, investment status in insurance, factors affecting the investment decisions, satisfaction level regarding the investment in insurance and awareness level of different individual regarding insurance. The researcher was able to get sufficient information by using the questionnaire and the main instrument for conducting the survey.ACTUAL COLLECTION OF DATA

The study was done based on the collection of Primary and Secondary data.

Primary Data:

These are data gathered for a specific purpose or for a specific research project.

Secondary Data:

These are data that were collected for another purpose and already exist somewhere. The researcher started her investigation by first examining the secondary data to see whether her problem can be partly or wholly solved without collecting primary data. Since the secondary data were not sufficient to solve the entire problem primary data were collected to fill the gap.

Survey method was adopted to get the relevant primary data and Questionnaire was designed as an instrument of survey method.

Secondary Data was collected by:

Browsing different websites on Internet.

Visiting all major libraries in Bangalore.

Referring various articles, reports, journals, magazines on insurance.

Referring several books on investment alternatives.

Referring different books and previous project reports in college library.

TOOLS USED FOR TESTING OF HYPOTHESIS

Chi-square ( 2 ) test is used as the main statistical tool for testing the hypothesis.OTHER SOFTWARE USED FOR ANALYSING THE DATA

Microsoft Excel is the software used to show the Line-Graph, Bar Graphs, and Pie Charts for the purpose of analyzing the data.

HYPOTHESIS

No.1 Ho : Insurance is depending on the rural and urban

people

H1 : Insurance is not depending on the rural and urban

people.

FactorsRuralUrbanTotal

Insured133750

Not Insured71320

Total205070

Under Ho:

N[ad-bc]2

2 =

(a+b) (c+d) (a+c) (b+d)

Where, a=13, b=37, c=7, d=13

Follows with 1 Degree of freedom

Degree of freedom=df=(r-1) (c-1)=(2-2) (2-1) = 1

Where, r= Number of rows

C= Number of columns

So, 2 = 70[13*13) - (37*7)}2

50*20*20*50

= 70 [169-259]2

1000*1000

= 70*8100

1000*1000

= 567

1000

= 0.567Level of significance = = 5%

2 tab value for 1 df, a @ 5%

Since 0.567 9.48

2 Cal > 2 tab

Reject Ho.

H1 is accepted.Therefore, there is an impact of LPG (Liberalization, Privitisation, Globalisation) on LIC.

Conclusion:

The industry is today slowly emerging from the shadows of insurance being a synonym to Life Insurance Corporation.The fact that the new players have as their co-promoter an insurance company of proven repute and long life (often more than hundred years old) strengthens the belief that the commitment of the new joint ventures to the development of the insurance business in India as long term strategy which will result in the growth of the economy. This belief is real and achievable.

TABLE: PRESENTATION OF DATAIntroduction:Primary:

The study mainly aims to make a comprehensive study on Indian insurance industry after privatization and the comparative analysis of Bajaj Allianz Life Insurance Company Limited vis--vis the industry.Secondary:

In order to build the above objective an attempt is made: To study the existing business of insurance industry. To study the awareness level towards insurance among the people. To study the impact of privatization on Indian insurance business. To study the behavior of existing customers in the industry market. To study the trend of private insurance in India.

All of the five objective of the study are dealt in detail in this chapter. The data was collected by administrating questionnaires to common public and was carefully tabulated. On the basis of the analysis and reference are drawn. Charts, Graphs and diagrams support the analysis wherever necessary.

Objective No.1

To study the existing business of insurance industry.Table # 1Table Showing Company wise investment Details of Life Insurance Companies for the Year ending 31st March 2004.No.

Company NameCentral Government SecurotiesSG&Oguaranteed SecutritiesInfrastructure InvestmentsSocial Sector InvestmentApproved InvestmentOther than Approved InvestmentTotal Investment

1ING Vysya42.847.9814.99-17.44-80.41

2HDFC Std: life86.4386.4332.12-23.679.18142.22

3Birla Sunlife42.4861.5715.18-32.725.26114.72

4ICICI Prudential117.94117.9432.55-35.7214.1200.31

5SBI Life76.3276.3226.93-12.3815.7131.33

6Om Kotak life59.8273.7123.57-45.8312.64143.11

7Metlife57.5957.5915.23-15.6615.5103.98

8Bajaj Allianz73.4573.4524.44-38.510.26136.66

9Max New York Life42.19106.9327.17-27.677168.76

10LIC128139131400.720498.72-77046.2916442245387.7

11Tata AIG74.8674.8629.98-34.76-139.59

12AMP Sanmar----119.75-119.75

Total128813.1132177.520740.87-77450.3816521.65246868.6

GRAPH # 1 A

Graph showing sector wise investment of life insurance as on 31.03.04

ANALYSIS:

From the above diagram, it is observed that 35% of premium income is invested in SG & other guaranteed securities by the life insurers, followed by 34% in Central Government securities.

INFERENCE:

From the data available, it is inferred that the money which the life insurers collect from common people in term of premium, most of that goes to Government securities which is said to be secure.

GRAPH # 1B Graph showing the total investment of life insurance as on 31.03.04

ANALYSIS:

From the above diagram it is noticed that 99% of total investment is made by LIC and the rest 1% is invested by all private life insurers.

INFERENCE:

From the data available, it is inferred that major portion of total investment is made by LIC.Private insurers are also investing their money in Government Securities to be in safe side.

MARKET SHARE:TABLE # 2 Table showing the market share of all the insurance companies in percentage for the year 2003-2004.

Life InsurersMarket Share

Tata AIG0.48

Om kotak0.25

Birla Sunlife1.21

Max New York0.62

ING Vysya0.14

HDFC Standard Life1.08

Metlife0.05

Bajaj Allianz0.44

ICICI Prudential2.97

SBI Life0.59

Aviva0.1

AMP Sanmar0.04

LIC92.03

Total100

ANALYSIS:

From the above table, it is noticed that LIC has the market share of 92% and other private insurers all together have the market share of 8% during the year 2003-2004.Among them ICICI Prudential holds the highest market share of nearly 3%, followed Bajaj Allianz1.21%, Birla Sunlife 0.44% of total market being very new in the industry.INFERENCE:

From the source of data available, it is inferred that since over 40 years only LIC was there in Indian life insurance industry the major market share is held by the LIC. Among the private Life insurers ICICI Prudential holds the major market share.

GRAPH # 2Graph showing the market share of all the insurance companies in percentage for the year 2003-2004.

Table No. 3 Table Showing the market share of private insurers for the year 2003-2004

Life InsurersMarket Share

Tata AIG6

Om kotak3

Birla Sunlife15

Max New york8

ING Vysya2

HDFC Standard Life14

Metlife1

Bajaj Allianz5

ICICI Prudential38

SBI Life7

Aviva1

AMP Sanmar0

Total100

Chart No. 3

Analysis :

From the above table, it is observed that among the private life insurers the major market

Share of 38% is held by ICICI Prudential, followed by Bajaj Allianz 5% and Birla sunlife 15%, HDFC Standard Life 14%.

Inference:

From the data available, it is inferred that being very new in the industry Bajaj Allianz Company is doing well along with other companies whose establishment were before Bajaj Allianz Company.

Premium Income :

Table No. 4: Table showing the premium income of private insurers for the year 2003-004

Life InsurersPremium Income(In lakhs)

Tata AIG5975.22

Om kotak3068.33

Birla Sunlife14956.9

Max Newyork7681.07

ING Vysya1747


Metlife620.09

Bajaj Allianz5378.39


SBI Life7275.16

AMP Sanmar460.42

Total98184.25

Graph No.2

Analysis:

From the table, it is noticed that premium income during the year 2003-04 of all private insurance was Rs.96923.19 lakhs.ICICI Prudential was having maximum premium of Rs.36494.40Lakhs followed by Bajaj Allianz Rs. 5378.39 and Max New York RS.7681.07

Inference:

From the data available, it is inferred that the business of private life insurers has been

astonishing the last year.

Table No. 5 Table showing premium income of private insurers for the year

2004 05

Life InsurersPremium Income(In lakhs)

Tata AIG30022.07

Om kotak37475.21

Birla Sunlife62128.31

Max Newyork22469.01

ING Vysya28162.46


Metlife5603.71

Bajaj Allianz86001.8


SBI Life48293.56

AMP Sanmar9118.44

Total536298.11

Graph No : 3

Analysis :

From the above table, it is noticed that during the year 2003-04, the total premium income

Has jumped to Rs .536298.11 lakhs from the last year premium income of Rs.98184 individually ICICI Prudential has earned Rs.158408.46 lakhs, followed by Bajaj allianz Rs.86001.80

Inference :

From the data available, it is inferred that the business of private life insurers has been astonishing during the last year.

Number of Policies:

Table No. 6 showing the number of policies sold by private insurers during the year 2004-2005

Private Life InsurersNo of Policies

Tata AIG228894

Om kotak63468

Birla Sunlife198370

Max Newyork216671

ING Vysya111141

HDFCStandard Life206320

Metlife46682

Bajaj Allianz288191

ICICI Prudential614673

SBI Life129974

AMP Sanmar35268

Aviva83209

Total 2222861

Graph No. 6

Analysis :

From the above table, it is observed that among the private life insurers ICICI Prudential has sold 214673 policies.& Followed by Bajaj Allianz 288191 policies.

Inference :

From the data available, it is inferred that Bajaj Allianz Company has sold a good number of policies in the last year, competing with previously established companies.

Objective No 2

To study the awareness level towards insurance among the people.

Table No. 7: Table showing International Comparison of Insurance Penetration

(Premiums as % of GDP-2000)

CountriesTotalNon-LifeLife

United State8.764.284.48

Canada6.553.283.27

Brazil2.111.750.36

Mexico1.720.850.86

Chile4.071.152.92

United Kingdom15.783.0712.71

Germany6.543.553

France9.42.816.59

Russia2.421.291.13

Japan10.922.228.7

South Korea13.053.169.89

China1.790.671.12

India2.320.551.77

Malaysia3.721.592.13

Indonesia1.180.640.54

South Africa16.862.8314.04

Nigeria0.660.530.13

Kenya2.631.910.72

Australia9.413.376.04

Graph No. 7

Analysis:

From the above table, it is noticed that the life insurance penetration in India is only 1.77% of GDP of the year 2000, being very low. South Africa has premium penetration of 14.04% followed by countries like United Kingdom 12.71%, South Korea 9.89%, Japan 8.7%

Inference:

From the data available, it is inferred that most of the developed countries have more

insurance penetration. India being fast developing country has to have more insurance

penetration. More insurance awareness is needed among the people of India.

Table No. 8: Table showing International Comparison of Insurance Density

(Premiums Per Capita in USD-2000)

CountriesTotalNon-LifeLife

United State3152.11540.71611.4

Canada1516.8759.6757.2

Brazil75.662.712.9

Mexico101.250.450.8

Chile175.849.7126

United Kingdom3759.2730.73028.5

Germany1491.4808.2683

France2051.1613.71437.4

Russia41.822.319.5

Japan3973.3808.23165.1

South Korea1234.1298.5935.6

China15.25.79.5

India9.92.37.6

Malaysia150.964.686.4

Indonesia8.64.64

South Africa472.179.1329.9

Nigeria21.60.4

Kenya8.96.52.4

Australia1859.3665.81193.5

Graph No. 8

Analysis:

From the table, it is observed that the insurance density 7.6. Japan has insurance

density of 3165.1, followed by United Kingdom 3028.5.

Inference:

From the data available, it is inferred that premium density of India is very low compare to the developed countries.

Q.4. Have you planed financially for your future?

Table No.9:

Table showing the nature of the respondents towards their financial matter in future.

FactorsNo. of respondentsPercentage

Yes4386

No.714

Total50100

Chart No. 9

Analysis:

From the above table, it is that 86% of the respondents are found to have they

Worry of their financial status in future 14% of them are yet to plan financial for their future

Inference:

From the sources of data available, it is inferred that people of Bangalore are aware of the

rising cost of life and are knowledgeable life enough to invest their money in different

financial instruments so, there exist a huge market for insurance companies to establish

their insurance plans as attractive instrument alternative.

Table No. 10:

Table showing behavioral pattern of the respondents of rural area regarding finance

for future.


Yes1470

No.230

Total20100

Chart No.10

Analysis :

From the above table it is clear that 70% of the respondents have planned financially for

heir future. 30% of them have not yet planned for their future.

Inference:

From the data available, it is inferred that Rural area people are not satisfactorily aware of all investment alternatives. Insurance companies have to see that everybody plans for his/her future and takes insurance policy to make his/her family financially.

Q.5.If yes, are you insured?

Table No. 11:

Table showing the penetration level of insurance in Bangalore city.


Yes3774

No.1326

Total50100

Chart No. 11

Analysis:

From the above table, it is noticed that 74% of the respondents are insured and 26% of them are not insured.

Inference:

From the data available, it is inferred that insurance penetration in Bangalore city is

satisfactory. Still insurance companies are expected to reduce the percentage of non insured people.

Table No.12

Table showing insurance penetration in rural area.


Yes1365

No.735

Total20100

Chart No. 12

Analysis:

From the above table, it is observed that 65% of the respondents are insured, and 35% of

them are not insured.

Inference:

From the data available, it is inferred that in rural area insurance penetration is comparatively low.

Table No. 13 : Table showing customer rating of urban area for the factors of Insurance.

FactorsVery HighHighAverageLowVery LowTotal

Risk Cover32221037

Security220132037

Tax Shelter62362037

Savings18

1450037

Investments121582037

Convenience171460037

Return062010137

Analysis:

From the above table, it is observed that out of 37 respondents have taken insurance policy to cover the risk of their lives. 23 of them stated that insurance is used to get some tax shelter. All of them stated that security is in higher side in case of insurance. It can be even used for some kind of savings cum investment. Return is said to be average in case of Insurance.

Inference:

From the data available, it is inferred that insurance is not only the tax-saving tool but also serves the purpose of saving and investment.

Graph No. 13Graph showing customer rating of urban area for the factors of Insurance.

TABLE # 14

Table showing customer rating of rural area for the factors of Insurance.FactorsVery HighHighAverageLowVery LowTotal

Risk Cover9400013

Security6430013

Tax Shelter0123713

Savings1930013

Investments0931013

Convenience9400013

Return02101013

ANALYSIS:

From the above table, it is observed that all 13 respondents have taken insurance policy to cover the risk of their lives. All of them stated that security is in higher side in case of insurance. It can be even used for some kind of savings cum investment. Return is said to be average in case of Insurance.

INFERENCE:

From the data available, it is inferred that insurance is not only the tax-saving tool but also serves the purpose of saving and investment. In rural area, since there were very few in numbers having monthly family income of more than Rs.5000 insurance is not used as tax saving tool.

GRAPH # 14Graph showing customer rating of rural area for the factors of Insurance.

TABLE # 15

Table showing different reasons of the respondents of Bangalore city for not being insured.


Not aware of it00

Lack of money538.46

Doesn't satisfy you323.07

No need215.38

Planning to take323.07

Any other00

Total13100

ANALYSIS:

From the above table it is seen that 38.46% of the respondents are not insured because of lack of money 23.07% of them are not satisfied by the characteristics insurance policy, and other 23.07% of them are planning to take the policy 15.38% of them think that it is not needed.INFERENCE:

By looking at the above table it is clear that people are all aware of insurance even though they not insured. In some cases, people prefer other investment instruments like equity to invest their money, since they get more return from that.

GRAPH # 15Graph showing different reasons of the respondents of Bangalore city for not being insured.

TABLE # 16Table showing the different reasons of the respondents for not being insured in rural area.FactorsNo. of respondentsPercentage

Not aware of it228.571

Lack of money571.428

Doesn't satisfy you00

No need00

Planning to take00

Any other00

Total7100

ANALYSIS:

From the data collected, it is noticed that 71.428% of the respondents are not aware of insurance and 28.57% of them are not insured because of lack of money.INFERENCE:

From the analysis, it is inferred that insurance is not taken by the people because of lack of money and low awareness level. Insurance is needed for everybody in rural area.

GRAPH # 16Graph showing the different reasons of the respondents for not being insured in rural area.

TABLE # 17Table showing the need of in India of insurance according to the respondents perception in Bangalore City.FactorsNo. of respondentsPercentage

Yes3672

No.1428

Total50100

ANALYSIS:

From the above table, it is observed that 72% of the respondents think that insurance should be compulsory in India 28% of them think that it should not be compulsory in India.

INFERENCE:

From the above table it is inferred that most of the people think that insurance should be compulsory in India as it compulsory in India as it cultivates the habit of saving and secures the lives. Sometimes people like to have freedom on their investment decision and they think insurance should not be compulsory in India.

GRAPH # 17Graph showing the need of in India of insurance according to the respondents perception in Bangalore City.

TABLE # 18Table showing the perception of the respondents regarding the necessity of insurance.FactorsNo. of respondentsPercentage

Yes20100

No.00

Total20100

ANALYSIS:

From the above data, it is noticed that 100% of the respondents are found to say that insurance is needed for everybody in India.

INFERENCE:

From the above analysis it is inferred that insurance is needed for everybody in India, as complete security can be give to the family and savings habit can be cultivated by investing money in insurance. Everybody can be kept safe by taking insurance policy.

GRAPH # 18Graph showing the perception of the respondents regarding the necessity of insurance.

OBJECTIVE NO. 3:To study the impact of the privatization on Indian insurance business.TABLE # 19 Table showing premium income of LIC vis--vis the private Insurers in the year 2003-04CompaniesPremium Income (Rs.in Lakhs)

LIC1134299.12

Other Private Insurance98184.25

Total1232483.37

ANALYSIS:

From the above table, it is noticed that premium income of LIC was Rs.1134299.12lakhs in the Year 2002-2003.Private life insurers all together earned Rs.98184.25lakh premium income.

INFERENCE:

From the data available, it in inferred that private life insurance slowly placed them in a good position as their premium income is appreciable.

GRAPH # 19Graph showing premium income of LIC vis--vis the private Insurers in the year 2003-04.

TABLE # 20Table showing the premium income if LIC vis--vis the private

insurers for the year 2003-04.CompaniesPremium Income (Rs. in Lakhs)

LIC1978593.2

Other Private Insurance536298.11

Total2514891.31

ANALYSIS:

From the above table, it is noticed that LIC earned Rs.1978593.2 lakhs during the last year and private life insurers earned Rs.536298.11 lakhs.

INFERENCE:

From the data available, it is inferred that private life insurers have captured a good market during the last year.

GRAPH # 20Graph showing the premium income if LIC vis--vis the private

insurers for the year 2003-04.

TABLE # 21Table showing the number of policies sold by LIC vis--vis the private insurers during the year 2003-2004.Life InsurersNo. of policies

LIC24545583

Other Private Insurers837107

Total25382690

ANALYSIS:

From the above table, it is noticed that in the year 2003-2004 LIC s sold 24545583 policies whereas private life insurers have sold 837107 policies.INFERENCE:

From the data available, it is inferred that even though LIC has the history of over 40 years private insurers started grabbing the market very fast.

GRAPH # 21Graph showing the number of policies sold by LIC vis--vis the private insurers during the year 2003-2004.

TABLE # 22Table showing the penetration level of different insurance companies among the respondents of Bangalore city.OptionsNO. of RespondentsPercentage

Bajaj Allianz410.8


Birla Sunlife12.7


Tata AIG12.7

LIC2568

Others00

Total37100

ANALYSIS:

From the above table, it is depicted that nearly 68% of the respondents are insured by LIC Rest of them i.e., 32% of them are insured by different private insurance companies such as ICICI Prudential, Bajaj Allianz, HDFC, Standard, Birla Sunlife Tata AIG. Among 50 samples none of them was found to be insured by other private insurers like Metlife, ING Vysya, Aviva etc.

INFERENCE:

From the data available, it is inferred that since LIC has its history of ruling the insurance industry for over 40 years before privatization most of the people are insured by LIC. But effort of private players is also appreciable in urban area. Among the private insurers ICICI Prudential, Bajaj Allianz is seemed to have good position in the city.

GRAPH # 22Graph showing the penetration level of different insurance companies among the respondents of Bangalore city.

TABLE # 23Table showing the responses of the respondents of rural area towards different insurance companies.OptionsNO. of RespondentsPercentage

Bajaj Allianz00

ICICI Prudential00

Birla Sunlife00

HDFC Standard Life00

Tata AIG00

LIC13100

Others00

Total13100

ANALYSIS:

From the above table, it is noticed that 100% of the respondents are insured by LIC. No other insurer is found in rural area.INFERENCE:

From the above table, it is seen that other than LIC, none of the people is insured by any private insurer. There is no shadow of private insurers in the rural area. There exist a huge market where Bajaj Allianz company can been established as one among the major private Insurers.GRAPH # 23Graph showing the responses of the respondents of rural area towards different insurance companies.

Table # 24Table showing customer rating for Bajaj Allianz in urban area.FactorsVery HighHighAverageLowVery LowTotal

Agent Pursuance001214

Attractive Benefits121004

Attractive Return121004

Low Premium310004

Reference111104

Service211004

Reputation012104

Convenience002204

ANALYSIS:

From the above table, it is observed that all 4 respondents have taken insurance policy from the bajaj allianz Company Because of its attractive benefits, attractive return and Low premium rate.INFERENCE:

From the data available, it is inferred that Bajaj Allianz Company has to have more number of centers to serve the customers a better service. Reputation of the company has to be improved.

GRAPH # 24Graph showing customer rating for Bajaj Allianz in urban area.

TABLE # 25Table showing customer rating for ICICI Prudential in urban area.FactorsVery HighHighAverageLowVery LowTotal




Low Premium012205

Reference100135

Service032005

Reputation023005

Convenience023005

ANALYSIS:

From the above table, it is observed that all 5 respondents have taken insurance policy from ICICI Prudential because of its reputation, service and convenience. Benefits return and premium rate are average.

INFERENCE:

From the data available, it is inferred that reputation and service of ICICI Prudential Company are good.

GRAPH # 25Graph showing customer rating for ICICI Prudential in urban area.

TABLE # 26

Table showing customer rating for LIC in urban area.

FactorsVery HighHighAverageLowVery LowTotal




Low Premium02212025

Reference25511225

Service04109225

Reputation25000025

Convenience41092025

ANALYSIS:

From the above table, it is observed that all 25 respondents have taken insurance policy from LIC because of its reputation, and convenience. Benefits return and premium rate are average and service is stated to be poor of LIC.INFERENCE:

From the data available, it is inferred that reputation is the major reason to buy policy from LIC.GRAPH # 26Graph showing customer rating for LIC in urban area.

TABLE # 27Table showing customer rating for LIC in rural area.FactorsVery HighHighAverageLowVery LowTotal




Low Premium6610013

Reference01102013

Service00111113

Reputation13000013

Convenience9400013

ANALYSIS:

From the above table, it is observed that all 13 respondents have taken insurance policy from LIC because of its reputation and convenience. Benefits return and premium rate are average and service is stated to be poor of LIC.INFERENCE:

From the data available, it is inferred that reputation is the major reason to buy policy from LIC.

Graph No. 27Graph showing customer rating for LIC in rural area.

TABLE # 28Table showing the time of taking the policy of the respondents of Bangalore City.FactorsNo. of respondentsPercentage

Just a year back1232.43

2-5 years back1540.54


11 years back and above12.7

Total37100

ANALYSIS:

From the above table, it is noticed that 40.54% and 32.43% of the respondents have taken policies 2-5 years back and two to five just a year back respectively 24.32% of them have taken the policies 6-1 years back and only 2.7% six to years of them have taken the policies 11 years back and above.INFERENCE:

From the data available, it is inferred that since most of them respondents have taken policies recently LIC has faced competition from private insurers.

GRAPH # 28Graph showing the time of taking the policy of the respondents of Bangalore City.

TABLE # 29Table showing the time of taking the policy by the respondents of rural area.


Just a year back215.38



11 years back and above215.38

Total13100

ANALYSIS:

From the above table, it is noticed that 46.15% and 23.07% of the respondents have taken the policies 2-5 years back and six to ten years back respectively 15.38% of them are taken the policies just a years back and only 11% years back and above respectively.

INFERENCE:

From the source available, it is inferred that of the people are taken policies two to five years back when there were very few private insurances. So people had very few options of to take the policies. That could be the main reason, why people of rural area are taken policies only from LIC.

GRAPH # 29Graph showing the time of taking the policy by the respondents of rural area.

TABLE # 30Table showing the satisfaction levels of the respondents of Bangalore towards their insurers.FactorsNo. of respondentsPercentage

Completely Satisfied513.51

Satisfied3081.08

Some What Satisfied12.7

Not at all Satisfied12.7

Total37100

ANALYSIS:

From the above table, it is depicted that 81.08% of the respondents are satisfied with their insurers 13.51% of them are completely satisfied and 207% of them are some what satisfied and not at all satisfied.

INFERENCE:

From the data available, it is inferred that in urban area where the existence of private insurance is noticeable, the level of satisfaction is very high among the customers.

GRAPH # 30Graph showing the satisfaction levels of the respondents of Bangalore towards their insurers.

TABLE # 31

Table showing the satisfaction levels of the respondents of Rural Area towards their insurers.FactorsNo. of respondentsPercentage

Completely Satisfied00

Satisfied1076.92

Some What Satisfied215.38

Not at all Satisfied17.69

Total13100

ANALYSIS:

From the above table, it is depicted that 76.92% of the respondents are satisfied with their insurers 13.38% and 7.69% of them are some what satisfied and not at all satisfied by their insurer.INFERENCE:

From the above analysis it is inferred that even though most of the respondents are satisfied by their insurers but still there are people who are some what satisfied and not at all satisfied by their insurer.

GRAPH # 31Graph showing the satisfaction levels of the respondents of Rural Area towards their insurers.

TABLE # 32Table showing the satisfaction level of the respondents of Bangalore City towards the services of their insurers.FactorsNo. of respondentsPercentage

Excellent12.7

Very Good25.4

Good3286.486

Fair12.7

Poor12.7

Total37100

ANALYSIS:

From the above table, it is noticed that 86.48% of the respondents feel the services of their insurers is Good 5.4% of them feel that the service, is Very Good, 2.7% of them feel the service is excellent, fair and Poor.INFERENCE:

From the data available, it is inferred that the service of the insurers is satisfactory in Bangalore city.GRAPH # 32Graph showing the satisfaction level of the respondents of Bangalore City towards the services of their insurers.

TABLE # 33

Table showing the different level of satisfaction of the respondents towards the services of their insurers.FactorsNo. of respondentsPercentage

Excellent00

Very Good00

Good1184.61

Fair17.691

Poor17.691

Total13100

ANALYSIS:

From the data collected, it is noticed that 84.61% of the respondents are said to have good service from LIC 7.691% of them are said to have fair and poor service from LIC. None of them was said to have excellent and very good service from LIC.

INFERENCE:

From the data collected, it is inferred that the service offered by LIC is average to satisfactory.GRAPH # 33Graph showing the different level of satisfaction of the respondents towards the services of their insurers.

INSURANCE REPORT CARD

The year 2002-03 marked the end of the third financial year for the private sector life insurers. During the year, Aviva Life was the lone new entrant in the life segment, thereby taking the number of insurers doing Life business to 13, inclusive of the public sector Life Insurance Corporation of India (LIC).

The year witnessed tremendous growth in terms of private insurers adding new business to their portfolio. However the overall new business premium witnessed a decline vis--vis the financial year 2001-02, as the impact of declining interest rates in the economy percolated down to the insurance sector. With the interest rates moving southwards, the insurers slowly withdrew policies with guaranteed returns.

Overall the decline in new business was 18 percent with premium underwritten at Rs.15, 13,993.75 lakh in the previous year.

Performance of the Private Sector insurers

An analysis of the new business figures furnished by the insurers reveals that overall business captured by the twelve companies grew to Rs.98,184.25 lakh from Rs.29,661,68 lakh, exhibiting an increase of 231 percent.

Overall the private insurers market share increased from two percent in the year 2001-02 to eight percent in the financial year 2003-04.

ICICI Prudential captured nearly three percent of the new business underwritten, followed by Birla Sunlife and HDFC Standard at 1.21 percent and 1.08 percent of the premium underwritten.

In terms of number of policies, while ICICI prudential had issued approximately 2.45 lakh policies, HDFC Standard and Bajaj Allianz followed with 1.25 lakh and 1.16 lakh policies respectively (Allianzs market share in terms of premium was 0.44 percent).

In terms of premium underwritten in rural sector, SBI life led with premium underwritten at Rs.504.21 lakh, followed by Metlife at Rs.215 lakh. In terms of number of policies underwritten in rural sector, ICICI Prudential led with 29,376 policies. In the social sector, SBI Life again led with premium of Rs.3945 lakh and lives covered at 37,478 lives.

OBJECTIVE NO. 4:To study the behaviour of existing customers in the industry.TABLE # 34Table showing different categories of occupation of the respondents of urban area.

CategoriesNo. of respondentsPercentage

Self Employed2040

Salaried2958

Others12

Total50100

ANALYSIS:

From the above table, it is noticed that at 58% of the total respondents were found to be salaried, 40% of them were self employed. Among all the respondents only 2% were students.INFERENCE:

From the above analysis, it is inferred that all the respondents have some earnings and are financially capable of investing their money in financial instrument to be financially sound in future.

GRAPH # 34Graph showing different categories of occupation of the respondents of urban area.

TABLE # 35Table showing the different categories of respondents in rural area in regard to their occupation.


Self Employed1260

Salaried210

Others630

Total20100

ANALYSIS:

From the above table, it is noticed that 60% of the respondents are self employed 10% of them are salaried, 30% of them are farmers.INFERENCE:

From the data available, it is inferred that salaried people in rural area are found to be very few in number.

GRAPH # 35Graph showing the different categories of respondents in rural area in regard to their occupation.

TABLE # 36Table showing the number of respondents of different groups of monthly family income in urban area.


Rs. 2500- 50001122

Rs. 5001-100001530

Rs.10001-15000918

Rs.15001-20000612

Rs. 20001- 25000510

Rs. 25001- 3000012

Rs. 30001 & Above36

Total50100

ANALYSIS:

From the above table, shows it is noticed that most of the respondents(30%) have monthly family income of Rs.5001-10000 and as the monthly family income higher the number of respondents were found to few in number having monthly family income of more than Rs.30000.

INFERENCE:

From the data available, it is inferred that thee is lack of respondents from higher income group. There exists a potential market of insurance companies in Bangalore city, since average income of the city is high.

GRAPH # 36Graph showing the number of respondents of different groups of monthly family income in urban area.

TABLE # 37Table showing different income groups of respondents in rural area.CategoriesNo of respondentsPercentage (%)

Rs. 2500-5000 1365

Rs. 5001-10000525

Rs. 10001-15000210

Rs. 15001-2000000

Rs. 20001-2500000

Rs. 25001-3000000

Rs. 30001 & above00

Total20100

ANALYSIS:

From the above table, it is observed that 65% of the respondents have the earning of Rs.2500-5000, 25% of them earn Rs.5001-10000 and 10% of them earn Rs.10001-15000.INFERENCE:

From the above analysis it inferred that people of rural area have the earning of below Rs.15000. Insurance companies have to insure not only high earning people but also low earning people.

GRAPH # 37Graph showing different income groups of respondents in rural area.

TABLE # 38Table showing the different types policies taken by respondents of Bangalore city.

OptionNo. of ResponsesPercentage

Whole life24.54

Term Insurance511.36

Endowment2454.54

Children's Policy12.27

Money Back1125

Annuity12.27

ULIP00

Total44100

ANALYSIS:

From the above table, it is noticed that 54.54% of the respondents have taken endowment policy,25% of them have taken money back policy, 11.36% and 4.54% of them have taken term insurance policy and whole life policy respectively.2.27% of them have taken childrens policy and annuity and none of them has take ULIP(Unit Link Insurance Policy).INFERENCE:

From the data available, it is inferred that people are inclined to endowment and money back policies. Along with these Bajaj Allianze has to sell more whole life, term, children, annuity, policies, ULIP is not at all known to the people, more publicity is needed for such an attractive policy.

GRAPH # 38Graph showing the different types policies taken by respondents of Bangalore city.

TABLE # 39Table showing the different types policies of the respondents of Rural Area.

OptionNo. of ResponsesPercentage

Whole life00

Term Insurance16.25

Endowment1062.5

Children's Policy00

Money Back531.25

Annuity00

ULIP00

Total16100

ANALYSIS:

From the above table, it is noticed 62.5% of the respondents are taken endowment policy, 31.25% of them are taken money back policy and 6.25% of them are taken term insurance policy.INFERENCE:

From the above analysis it is inferred that most of the respondents have very less ideas about whole life childrens policy, annuity, and ULIP. Public is needed for these attractive policies in rural area endowment and money back policies are popular enough among the people of rural area.

GRAPH # 39Graph showing the different types policies of the respondents of Rural Area.

TABLE # 40Table showing the different terms of policies chosen by respondents of Bangalore city.

FactorsNo. of ResponsesPercentage

5 years00

6-10 years25

11-15 years410

16-20 years2460

21 years & above1025

Total40100

ANALYSIS:

From the above table it is depicted that 60% of the respondents have chosen their policy term 16 years- 20 years of 25% of them have chosen term of 21 years and above 10% and 5% of them have chosen term of 11 years- 15 years and 6 years to 10 years respectively. None of them has chosen the policy of 5 years.

INFERENCES:

From the data available, it is inferred that most of the people choose long term policy to get risk-cover for a long period and as term increases premium rate comes down.

GRAPH # 40Graph showing the different terms of policies chosen by respondents of Bangalore city.

TABLE # 41Table showing the different terms of policies chosen by the respondents of rural area.


5 years00

6-10 years323.1

11-15 years323.1

16-20 years753.84

21 years & above00

Total13100

ANALYSIS:

From the above table, it is noticed that 53.84% of the respondent have taken policy for the term of 16years to 20 years 23.1% of them have taken policies for 6 years to 10 years and 11years to 15 years.

INFERENCES:

From the above analysis it is inferred that insurance is treated as long term investment instrument and as the term is increased premium rate is come down.

GRAPH # 41Graph showing the different terms of policies chosen by the respondents of rural area.

TABLE # 42Table showing the different modes of paying the premium of the respondents of Bangalore city.


Annually1947.5

Half Yearly512.5

Quarterly1230

Monthly410

Total40100

ANALYSIS:

From the above table, it is noticed that 47.5% of the respondents like to pay premium yearly, 30% of them pay premium quarterly 12.5% and 10% of them pay premium half yearly and monthly respectively.

INFERENCES:

From the data available, it is inferred that most of the people pay premium yearly and quarterly. Salaried people pay premium by monthly deduction from salary. Research shows that more lapse of policy occurs in quarterly mode of paying the premium.

GRAPH # 42Graph showing the different modes of paying the premium of the respondents of Bangalore city.

TABLE # 43Table showing the different modes of paying the premium chosen by the respondents of rural area.


Annually321.43

Half Yearly857.14

Quarterly321.43

Monthly00

Total14100

ANALYSIS:

From the above table, it is seen that 57.14% of the respondents have the yearly mode to pay the premium, 21.43%of them have chosen annum & quarterly mode of paying the premium. None of them pay premium monthly.

INFERENCES:

From the data available it is inferred that since there are very few salaried people in rural area, the number of respondents for monthly mode of paying the premium is low. Most of them are comfortable to pay the premium half-yearly as it neither become a big burden nor increase the headache of paying the premium every three months.

GRAPH # 43Graph showing the different modes of paying the premium chosen by the respondents of rural area.

TABLE # 44Table showing different premium payment term of the respondents of Bangalore city.


Regular3491.89

Single12.7

15years12.7

Others12.7

Total37100

ANALYSIS:

From the above table, it is noticed that 91.89% of the respondents have chosen regular premium payment term, 5.40% have chosen 16years and 2.70% have chosen 15 years term to pay the premium. None of them has chosen single premium payment term.INFERENCES:

From the data available, it is inferred that since in the case of limited term of paying the premium, the total amount of premium is condensed in limited term, the amount of premium looks high. And high premium cannot be bearable by most of the people. So, people usually choose regular or long term mode of payment term. In some cases businessmen who are not sure about their earning capacity in for future choose a limited term for paying the premium.

GRAPH # 44Graph showing different premium payment term of the respondents of Bangalore city.

TABLE # 45Table showing the different terms chosen by the respondents of rural area for paying the premium.


Regular13100

Single00

15years00

Others (16years)00

Total13100

ANALYSIS:

From the above table, it is noticed that 100% of the respondents pay premium regularly. None of them is found to pay premium in limited term.INFERENCES:

From the data available, it is inferred that since in case of limited term of paying the premium the total amount of premium gets condensed in limited term the amount of premium unaffordable by the people of rural area, and usually they choose regular term of paying the premium.

GRAPH # 45Graph showing the different terms chosen by the respondents of rural area for paying the premium.

TABLE # 46

Table showing different benefit opted by the respondents of Bangalore city.


Family Income Benefit.44.65

Critical Illness22.32

Hospital Cases22.32

Waiver of Premium1315.11

Accidental Death Benefit3540.69

Accidental Permanent total/Partial Disability2630.23

Extra cover44.65

Total86100

ANALYSIS:

From the above table, it is noticed that 40.69%, 13.23% and 15.11% of the respondents have taken the benefits related to accident, 4.6% of them have taken family income and extra cover benefit. 2.32% of them have taken critical illness and hospital cash benefits.INFERENCES:

Having a look at the table it is clear that people choose more of those benefits which are related to some uncertainty to make their family to be secured after such things happen. Generally people dont go for the benefits like critical illness and hospital cash because the possibility of getting any such critical illness is comparatively low and normally a person does not need to get admitted in hospital every year. Presently Bajaj Allianz Life insurance company is the only company who provides family increase benefit and covers 11 critical illnesses.

GRAPH # 46Graph showing different benefit opted by the respondents of Bangalore city.

TABLE # 47

Table showing different benefits chosen by the respondents of rural area.


Family Income Benefit.00

Critical Illness00

Hospital Cases00

Waiver of Premium926.47

Accidental Death Benefit1235.29

Accidental Permanent total/Partial Disability1338.23

Extra cover00

Total34100

ANALYSIS:

From the above table, it is noticed that 38.23% of the respondents have chosen accidental permanent total/partial disability benefit. 35.29% of them have chosen accidental death benefit and 26.47% of them have chosen waiver of premium. None of them was found to have family income benefit. Critical illness benefit, hospital cash and extra cover benefit.INFERENCES:

From the above analysis it is inferred that most of the benefits, which relate to some uncertainty, are chosen by the people, Nobody was found to have family income benefit because presently Bajaj Allianz company is the only one company which provides this benefit and it is inferred from the analysis that nobody was insured by any of the private insures. Critical illness and hospital cash and extra cover benefits are not opted by anybody because possibility of getting such illness is low.

GRAPH # 47Graph showing different benefits chosen by the respondents of rural area.

TABLE # 48 PRODUCTS AVAILABLE OF DIFFERENT COMPANIES

Name of the Life InsurerName of the Products

(Brand Names)Riders attached to the products

Bajaj Allianz Life Insurance Co. Ltd.Bajaj Allianz Cash care

Bajaj Allianz Life Time care

Child care

Swarna Vishranti

Invest Gain(up to quadruple cover)

Bajaj Allianz risk care

Bajaj Allianz Term Care

Bajaj Allianz Group Risk Care

Bajaj Allianz Group Credit Care

Bajaj Allianz Group EDLIs CareCritical illness Benefit

Accidental Death Benefit

Accidental Permanent

Total/Partial Disability Benefit

Waiver of Premium Benefit

Hospital Cash Benefit

Start of Life Benefit

Family income Benefit

AMP sanmar Assurance Co. Ltd.Dhana shree

Subha Shree

Yuva Shree

Nithya Shree

Raksha ShreeAccidental Death and total and permanent Disability rider Critical Condition Rider.

Birla Sunlife Insurance Co. Ltd.Group superannuation policy for Canadian High Commission

Birla Sunlife Flexi Family

Shield Term Plan

Birla Sunlife Single Premium

Group Term Product

Birla Sunlife special endowment

Birla Sunlife Group protection solutions

Birla Sunlife Young Scholar

Birla Sunlife group

Superannuation productCritical illness Rider

Accidental Death & Disability

Rider

Term Rider

HDFC Standard

Life Insurance

Ltd.HDFC Group term insurance

HDFC Protection series

HDFC Immediate Annuity

HDFC Personal Pension Plan

HDFC Group Term AssuranceAccelerated Sum assured

Accidental Death Benefit

Critical illness Benefit

ICICI Prudential Insurance Co. Ltd.ICICI-Pru-Reassure

ICICI-Pru-Assure Invest

ICICI-Pru-Life Link

ICICI-Pru-Assure Invest

(revised)Level term insurance

Accidental and disability benefit

Major surgical assistance cover

Critical Illness Cover

Income benefit rider

Name of the Life InsurerName of Products


TaTa AIG Life Insurance Co. LtdGroup Term life

Group credit card term insurance Protection plan

Assure one year lifetime plan-yearly renewable convertible term plan

Assure lifetime to Age 60- Term to age 60 plan

Assure Five years lifetime plan-5 yearly renewable convertible term plan.

Assure 10 years / 15 years / 20 years / 25 years lifetime plans 10/15/20/25 years term plan

Assure 15 years lifetime ( with return of premiums ) plan

Assure 5/10 years plan-SP

Group regular premium mortgage

Reducing term insurance plan

Group regular premium mortgage


Group single premium personal loan

Reducing regular premium personal loan


Group regular premium personal loan


Guaranteed issue 10 years endowment

Plan non participating (Assure Humrahi)

Tata AIG Comprehensive Gratuity scheme

Tata AIG Comprehensive supperannuation Policy-Defined benefit

Tata AIG comprehensive supperannuation policy-defined contribution

Single premium immediate annuity

Option with return of premium

The achiever at 21

Assure career builder

The achiever at 18 assure pay masterTerm cover rider

Accidental death benefit short scale

Permanently disability

Critical illness benefit-accelerated benefit

Critical illness benefit-limp sum benefit

ADD rider long scale

Term to 60 rider

10/15/20/25 year term rider

Name of the Life InsurerName of Products


Ing Vysya Life Insurance Co. Ltd.Reassuring life endowment plan

Fulfilling life anticipated whole life plan

Maximizing life money back plan

Securing life rural endowment plan

Rewarding life whole of life plan

Generic group term insurance for social sectorTerm benefit

Accident Death & Disability

Rider Waiver of Premium

Life Insurance Corporation of IndiaKhetihar Mazdoor Bima Yojana

Shiksha Sahayag Yogana

Bima Nivesh

New Jeevan Akshay-1

New Jeevan Dhara/Jevan

Suraksha

LICs Bima Plus Unit Linked

Insurance Policy

Jeevan Anand

New Bima Kiran

New Jeevan ShreeTerm Rider

Max New York

Life Insurance Co.LtdGroup Term Insurance

Endowment to age 60

Children endowment Dread Disease rider

Accident Death & Disability

Rider waiver of Premium

Om Kotak Life Insurance Co LtdKotak Endowment Plan

Kotak Money Back Plan

Kotak Insurance Bond

Kotak Gramin Bima Yojana

Kotak Term assurance plan

Kotak insurance bond new version

Kotak credit term group plan

Kotak investment assurance planTerm cover

Accident Death Care

Permanent disability cover

Critical Illness Benefit

Waiver of Premium

Sbi Life Insurance Co LtdYoung Sanjeevan

Sukhjeevan

SBI Life Scholar

SBI Life-super Suraksha

Swarna Ganga

SBI Life-Credit Guard

Accidental Death and

Dismemberment Permanent

Disability Critical Illness.

OBJECTIVE NO.5To study the trend of private insurers in India

TREND ANALYSISTABLE # 49Table showing the growth of private Life Insurers.

Factors 2003-042005-05

Premium Income98184.25536298.1

Growth-48113.85

ANALYSIS:

From the source of data, it is observed that in the year 2004-05 growth was 48113.85 lakh.

INFERENCE:

From the above analysis, it is inferred that business of private life insurers is in boom now. It is expected to grow tremendously in future.

GRAPH # 49Graph showing the growth of private Life Insurers.

TABLE # 50Table showing the growth of Bajaj Allianz Company

Factors 2003-042005-05

Premium Income17970.5186001.8

Growth-68031.29

ANALYSIS:

From the data available, it noticed that during the year the growth in premium income is Rs.68031.25.

INFERENCE:

From the above analysis, it is inferred that a tremendous growth is seen by the company during the year.GRAPH # 50Table showing the growth of Bajaj Allianz Company

Estimation of Growth of Life Insurance Industry in India:Life Insurance Statistics

Indian Population1Billion

GDP as in 2000Rs.20000Billion

Gross Domestic Savings as % of GDP23%

Estimation of Insurable PopulationRs.240Million

The confederation of Indian Industry (CII) projected growth of life insu

Finance(MBA) 103

Documents

Transcript of Finance(MBA) 103