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A Report on Perception Towards Life Insurance After Privatisation

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Text of A Report on Perception Towards Life Insurance After Privatisation


A report submitted in partial fulfillment of The requirements of MBA ProgramBY: xxxxxxxxxxx

Distribution list1

1) xxxxxxxxxxxxxxxxxxxxx 2) xxxxxxxxxxxxxxxxxxxxx


ACKNOWLEDGMENTLearning is a lifelong process; one should not stop learning until dead. I am thankful to ICFAI Business School for giving me an opportunity to learn and perform under SBI Life Insurance. I take this opportunity to express my sincere gratitude and profound regards to Dr. xxxxxxxxx, my faculty guide, who has always given me motivational boost to go and perform. I would further like to thank her for her persistence to listen to my problems and to give apt solutions . I would like to thank my company guide Mr. Thirumalai Who in spite of busy schedule has co- operated with me continuously and indeed, his valuable contribution and guidance have been certainly indispensable for my project work . It would be really injustice on my part if didnt thank Mr. E. Thirumudi Pandian, Area sales manager and Mr. M. Arjunan, branch sales manager for their invaluable advice and enlightening my path at every stage of my project . I take this opportunity to thank all the senior executives and every associate of SBI Life Insurance Co Ltd, without their cooperation I would not be able to complete this project.

xxxxxxxxxxxxxxxx IBS-CHENNAI 3

LIST OF ILLUSTRATIONSLIST OF FIGURES S.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TITLE OF FIGURES No of males and females surveyed Educational qualifications of males Educational qualifications of females Popularity percentage of life insurance companies Familiarity of schemes among people Purpose of Insurance Ranking of some benefits of insurance (figures expressed in %) Insurance as the viable option for investment Availability of Insurance Cover Estimate of IT professionals enrolled into insurance Type of investment interested in Mode of premium payment Services provided by the insurance company (figures expressed in %) Returns given by the insurance company (figures expressed in %) Ratings of various insurance companies Privatization of insurance Availability of good services after privatization PAGE No. 34 35 35 36 37 38 39 40 40 41 42 42 43 44 44 45 46


LIST OF TABLES S.No 1 2 3 4 5 6 7 TITLE OF TABLES Popularity percentage of life insurance companies Familiarity of schemes Purpose of Insurance Ranking of some benefits of insurance (figures expressed in %) Estimate of IT professionals enrolled into insurance Mode of premium payment Ratings of various insurance companies PAGE No. 36 37 38 39 41 42 44


ABSTRACTThe project deals with the perception of the people towards insurance after the privatization of the insurance sector. The report tries to find the reason for opening up of insurance sector and discuss factors which completely change the picture of the insurance industry in India. We are trying to understand the perception of people when there are so many national and international companies have now entered in the Indian market. Whether they still see insurance as a tax saving product or they start looking towards it as a good investment opportunity. To actually understand this one need to conduct some primary and secondary research. In primary research one need to find out persons monthly income, age, risk appetite, his thinking towards insurance as an investment or tax benefit product and most importantly about his awareness of insurance companies and products offered by them in the market. As well as his knowledge about other investment products in the market and what is his feedback when they had already invested in such products. We also look towards one insurance product available in the market as ULIP. We see what its important features and good aspects of this product, what the risk of investing in this product are, what are the returns it offered etc. PURPOSE, SCOPE AND LIMITATIONS

The purpose of this report is to find out the change in the perception of the people towards life insurance after privatization and to understand and compare the current insurance market with the market existing before opening up of the industry for the private and outside players with some current issues and latest development. This report also takes in to consideration the new innovative and 6

contemporary products available to the customers in the market and to which level they are satisfied with these products and what is their recommendation for any changes that should be done in the products. The project report is structured according to the data procured from the websites of life insurance companies, IRDA annual report, and insurance council of Indiaand through the survey conducted by means of preparing a questionnaire. A small sample size is taken for conducting the survey. The survey is conducted only in the Chennai so the statistical data collected, analyzed and results drawn only reflects views and perception of local residents, professionals the actual findings and proceedings. about the life insurance and insurance products. So the results through this effort may vary and deviate from



The main source of materials for collecting and procuring the data includes the annual IRDA report, the regulatory body for insurance in India and the insurance council of India and data is also collected by conducting a survey among general mass using a carefully prepared questionnaire which tries to take in to account the investment behavior of the people towards life insurance which includes their yearly investment, investment in a particular product, their satisfaction level with the service and returns and their recommendations for further improvement in the product. The analysis and interpretation is done using the data collected by means of using Microsoft Excel software and represented by means of pie charts, bar graphs etc. some of the results are also include an element of assumption where ever the data is not available and incomplete due to some inevitable reasons so results may vary from the actual findings.


INDUSTRIAL ANALYSISHistorical Background: The Indian econom y is currentl y showing signs of vibrancy; it is also depicting a qualitative change in its composition. which had been essentially built on agricultural The econom y wealth, has

transformed itself in stages over the period of the five year plans, initiall y into an econom y, where industr y assumed a leadership role accompanied by a perceptible change in the last few years or so with an accent on information technolog y and other service sectors. Toda y, the Gross Domestic Product of the countr y is predominantly derived from the services sector. integral part. Government's decision to accept the recommendations of the This will naturally have its effect on the state of capital market of which insurance sector is an

Committee on Reforms in the Insurance Sector and to constitute an interim Insurance Regulatory Authority, by an executive order in Januar y 1996, to look into the modifications, the regulator y frame work of the insurance sector, has resulted in the establishment of a statutor y body, for regulating the players and in broadening the sector by admission of new players from the private sector. Such a development has had a ripple effect leading to the establishment and development of professional institutions that are connected with the industr y. Subsequent sections of this report deal with theseaspects. As more than 42% of the country's current GDP is being generated b y the services sector, obviousl y necessary steps are required to be taken to sustain this process of growth and towards this end a coordinated approach is necessar y. And insurance being a service 9

industr y could prima facie act as an engine of growth. been one of under-performance and

In this

regard, the history of development of insurance industry in India has under-achievement. Appreciation for the necessity to cover risks of both personal lives and property has been very poor. insurance market has been In fact, the growth in the life driven by income tax mainl y

considerations and this had been the primary reason wh y the urban population has been a major beneficiary of life policies. Coverage of property to risks of different types has alwa ys been a secondar y consideration of its owners and has been prompted by lenders' requirements. Unless there exists a compulsion on the part of All these characteristics of the current owners to cover the risks of loss, the industr y shall not move in the high gear for development. market are changing, albeit slowly, as a result of the transformation that has been ushered in with the current developments in the insurance sector. The compelling reason for the same which was to provide an opportunity for the consumers to have a choice in the matter of selection of their risk bearers is slowl y unfolding into a s ystem whereby newer and newer dimensions are being added to the product profiles that the companies produce. There is still considerable work to be done in this area by insurance companies. But decidedly the first step in this direction has now been taken by admission of new players and the Authority hopes that this step, though small in nature, will be a significant one. In the statements that follow, the Authority portrays some basic and fundamental statistics that relate to the Indian econom y which are relevant to the insurance industry. Also added to these statements is a short table which depicts the state of insurance penetration in the Indian context. A discerning reader may note that the level of 10 development of insurance in the country is still not on the same

level as the development noticed in the neighborhood but the increa