Arun project final.docx

TABLE OF CONTENTS

Chapter No.TitlePage No.

1INTRODUCTION1.1 Introduction of the study

2INDUSTRY PROFILE2.1 What is insurance2.2 History of Insurance global 2.3 Private Players in Insurance Sectors2.4 contribution of the insurance sector to Indian economy2.5 government policies regarding life insurance

3COMPANY PROFILE3.1 About IDBI3.2 Vision and Values3.3 Product profile

4RESEARCH METHODOLOGY4.1 Introduction4.2 Methods of Data Collection

5REVIEW OF LITERATURE

6DATA ANALYSIS AND INTREPRETATION

7FINDINGS AND SUGGESTIONS

8LIMITATIONS

9CONCLUSION

10APPENDIX

11REFERENCE

LIST OF TABLESTable No.TitleDATA ANALYSIS INTREPRETATIONPage No.

1Gender

2Age

3Annual income

4What percentage of your Salary do you usually save / Invest?

5What kind of investment do you prefer?

6On a scale of 1 to 5 Rank these various investment alternatives according to your preference.

7State your expectation on investment alternatives by ticking according to its importance.

8Do you have life Insurance Policy? ( If NO then please go to question no. 14)

9If Yes Which Insurance Company Policy do you have?

10What scheme of Insurance Policy have you taken?

11What parameters do you look into before you take up a life insurance Policy? And tick the following parameter according to your importance.

12Among the following Life Insurance Companies in which companyyou will be willing to take a life insurance?

13Which one of these criteria highly affecting for selecting the insurance company?

14Are you aware about IDBI Federal Life Insurance?

15Are you aware about the joint venture between IDBI Bank & Federal Bank to develop its business in south India since November 2009?

16Would you like to invest in IDBI Federal Life Insurance?

17If, YES what will make you to invest in IDBI Federal Life Insurance

LIST OF FIGURES

Table No.TitleDATA ANALYSIS INTREPRETATIONPage No.

1Gender wise classification

2Age wise classifications

3Income level

4Percentage of salary saved

5Kind of investment preferred

6Investment alternatives preferred

7Expectation about investment alternatives preferred

8Have a life insurance policy

9Which companys life insurance policy is taken

10Scheme of insurance policy taken

11The company preferred to take a life insurance policy

12Parameters to look on before taking a insurance policy

13Criteria affecting in selecting the insurance company

14Aware of IDBI Federal Life insurance

15Aware of the joint venture b/w IDBI & Federal Bank

16Like to invest in IDBI

17What makes to invest with IDBI

Consumers perception towards life insuranceCHAPTER IINTRODUCTION

1.1 INTRODUCTION OF THE STUDY

The Business of Insurance is related to the protection of the economic values of the assets. Every human being has the tendency to save to protect him from risks or events of future. Insurance is one form of savings where in people try to assure themselves against risks or uncertainties of future. It is assurance against risks or events or losses. People can save their earnings either in the form gold, fixed assets like property or in banking and insurances. All the savings of people of a country account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it. Hence insurance sector is still untapped in India.Insurance is a federal subject in India and has a history dating back to 1818. Life and general insurance in India is still a nascent sector with huge potential for various global players with the life insurance premiums accounting to 2.5% of the country's GDP while general insurance premiums to 0.65% of India's GDP.[1]. The Insurance sector in India has gone through a number of phases and changes, particularly in the recent years when the Govt. of India in 1999 opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%.

2. INDUSTRY PROFILE

OVERVIEW OF CURRENT INSURANCE INDUSTRY

2.1. WHAT IS INSURANCE? Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment) collected from plenteous. Insurance is a safeguard against uncertain events that may occur in the future.It is an arrangement where the losses experienced by a few are extended over several who are exposed to similar risks. It is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premium to provide security for the purpose. Loss is paid out of the premium collected from people and the insurance companies act as trustees to the amount so collected. These companies have proposal forms which are filled to give details of insurance required. Depending upon the answers in the proposal form insurance companies assess the risk and decide on the premium.Insurance companies are risk bearers. They underwrite the risk in return for an insurance premium. the function of insurance is to provide protection, prevent losses, capital formation etc. hence insurance can be defined as a tool in which a sum of money as a premium is paid by the insured in consideration of the insurers bearing the risk of paying a large sum .it may also be defined as a contract wherein one party (insurer) agrees to pay the other party (insured) or his beneficiary, a certain sum upon a given contingency against which insurance is required.Insurance industry commands massive funds through sales of insurance products to large number of clients. Insurers also create liabilities and commit themselves to compensate for losses occurring to the policyholders on future date. It also plays an important role in process of capital formation.

NATURE OF INSURANCEa) Risk sharing and risk transfer: Insurance is used to share the financial losses that might occur to an individual or his family on the happening of specified events. The loss arising from such events are shared by all the insured in the form of premium.Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Every year one house gets burnt, resulting into a total loss of Rs 200000.If all the 250 owners come together and contribute Rs.800 each, the common fund would be Rs200000.This is enough to pay to the owner whose house gets burnt. Thus the risk of one owner is spread over 250 house owners of the village.

b) Risk assessment in advance: Insurance companies are risk bearers. They assess the risk before insuring to charge the amount of premium.

c) Its not gambling or charity: The uncertainty is changed to certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. Insurance is antithesis of gambling. Failure of insurance amounts to gambling because the uncertainty of loss is always looming. Moreover insurance is not possible without premium. So it is different from charity because charity is given without consideration.

d) Huge number of insured people: It is essential to insure larger number of people or property to make cost of insurance less consequently premium would also be less.

e) Assists in capital formation: Insurance provides capital to society. Accumulative funds are invested in productive channels.

SEMANTICS1. Risk: It is defined as an uncertainty of a financial loss. It is the unintentional decline in or disappearance of value arising from contingency.2. Policy: It is the document which embodies the insurance contract3. Whole life policy: It is the policy under which the amount of policy will be paid only on death of the insured. Premiums may be payable throughout the life or for a limited period.4. Endowment policy: Endowment policies entitle the insured to receive the amount of the policy on his reaching a certain age and premiums also stops. If death occurs earlier, amount of the policy will be paid at that time and payment of premium will also stop at that time.5. Claim: It is the amount which an insurer has to pay against a policy.6. Reinsurance: It refers to placing a part of the risk by an insurer with another insurer. The object is to reduce the possible loss to be borne by the original insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure must pay commission to the original insurer.7. Premium: A periodic payment made on an insurance policy.8. Insurance penetration: It is defined as insurance premium as a share of gross domestic product.9. Insurance density: Insurance density is defined as per capita expenditure on insurance premium i.e. premium per capita.10. Actuary: The actuary is a specialist who combines an understanding of risks and mathematical technique to develop financial products to manage these risks, price these products. He helps in designing insurance plans and then evaluates the financial risk of the company which it takes while selling an insurance policy.

TYPES OF INSURANCE

Insurance is broadly divided in two segments, based on the nature of insurance, those are:

1. Life Insurance &2. Non-Life Insurance or General Insurance. It can be again subdivided into the following categories:a) Fire Insurance.b) Marine Insurance.c) Social Insurance &d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc.)

2.2. HISTORY OF INSURANCE GLOBALFor now we know the meaning of insurance, different types of insurance. Now let us know the history and reasons for and behind different types of insurance. Insurance has existed for thousands of years. The first ever type of insurance was Property Insurance. It became popular about 3000 BC in China. It all started when Chinese merchants, as well as their investors, wanted to ensure that they would see a profit from their goods that they shipped overseas. In the event that a ship was lost at sea, an insuring partner would reimburse the owners of the ship and goods. To pay for the loss the merchant would be sold into slavery to the insurer until the debt was repaid. This was so because, a merchant could not afford to pay for the lost goods or even to buy a ship unless someone invested. Property insurance was also seen in Babylon as well. In Babylon, merchants and investors entered into a contract, in which the supplier of money for a trade agreed to cancel the loan if the trader was robbed of his goods. The trader who borrowed the money paid an extra amount for this protection in addition to the usual interest. As for the lender, collecting these premiums from many traders made it possible for him to absorb the losses of the few. Later this contract was extended to include provisions for a family's home and even the death of the insured, where life insurance came into existence. Slowly this concept started to spread across other places like Greek, Roman.Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. Like, about 3500 years ago, Moses instructed the nation of Israel to contribute a portion of their produce periodically for "the alien resident and the fatherless boy and the widow."Later the origin of credit insurance, which was included in the Code of Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. Credit insurance means, in ancient times the ship owners obtained loans from investors to finance their trading expeditions. In case, if a ship was lost, the owners were not responsible to pay back the loans to the investors. The risk to the lenders was covered by the interest paid by numerous ship owners, since many ships returned safely.By the middle of the 14th century, marine insurance was one of the most popular types of insurance among nations of Europe. Things changed dramatically in the 17th century in Europe. In 1666, the Great Fire of London bought the need for fire insurance .The Great Fire of London burned for four days and nights. It destroyed 436 acres, 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other public buildings. Only six people were victims in the flames, but hundreds died from shock and exposure.By 1688, Edward Lloyd was running a coffeehouse in London. Where, London merchants and bankers met informally to do business. There financiers who offered insurance contracts to seafarers wrote their names under the specific amount of risk that they would accept in exchange for a certain payment, called premium. These insurers came to be known as underwriters. Finally, in 1769, Lloyd's became a formal group of underwriters that in time grew as an insurance company.The concept of insurance developed at a fast pace with the growth of British commerce in the 17th and 18th century. The first stock companies to engage in insurance were chartered in England in the year 1720. In 1735, the first insurance company in the American colonies was founded at Charleston. Later in the year 1787, fire insurance corporations were formed in New York. Then later in the year 1759, the life insurance corporation was started in Philadelphia, America.The New York fire which occurred in the year 1835 was the main reason to draw attention to create reserves to meet unexpected losses. In the year 1837, Massachusetts was the first state to require companies by law to maintain such reserves. After 1840, life insurance entered a boom period. The Workmen's Compensation Act of 1897 in Britain required employers to insure their employees against industrial accidents. Public liability insurance, fostered by legislation, made its appearance in the 1880s.It attained major importance with the advent of the automobile. Until the 1950s, most insurance companies in the United States were restricted to provide only one type of insurance, but then legislation was passed to permit fire and casualty companies to underwrite several classes of insurance. Many firms have since expanded and also were responsible for many mergers. From this brief accounting of history we can see how insurance came into existence. Fortunately for us we no longer have to sell ourselves into slavery if our car is stolen nor we have to be scared of losses due to absence of reserves. However we can be confident that we will be compensated for our loss. Without people wanting to secure their investments and great tragedies throughout history we may not have insurance as we know it today resulting in peace of mind.

HISTORY OF INSURANCE INDUSTRY IN INDIAThe insurance industry in India over the past century has gone through big changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from being an open competitive market to nationalization and back to a liberalized market again.Insurance industry in India started as a fully private system with no restriction on foreign participation in the Nineteenth Century. Before independence, a few British insurance companies dominated the Market. Life insurance was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829.All of these companies operated in India but did not insure the lives of Indians. They were there insuring the lives of Europeans living in India. Some of the companies that started later did provide insurance for Indians. But, they were treated as "substandard" and therefore had to pay an extra premium of 20% or more. The first company that had policies that could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871.The first general insurance company, Triton Insurance Company Ltd., was established in 1850. It was owned and operated by the British. The first general insurance company was the Indian Mercantile Insurance Company Limited set up in Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies (both life and non-life).

After the independence, the industry went to the other extreme. It became a state-owned monopoly. The industry started to witness a problem like fraud. Hence many regulations were put in place to reduce and control the problems in the industry. After which Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukh announced nationalization of the life insurance business and then the general insurance business was nationalized in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a maximum of 26% of foreign holding.

INDIAN SCENARIO

INDIAN INSURANCE INDUSTRYPrivate Sector (15)Public Sector (1)PublicSector (4)Private Sector (9)LIFE INSURANCE NON LIFE INSURANCE

LIFE INSURANCEAfter the entry of new players and increase in the penetration levels, could see the insurance sector cross the Rs 2,00,000-core mark in business by 2010.The current size of the sector is estimated to be at Rs 50,000 crore, which has seen a compound annual growth rate (CAGR) of around 175 percent in the last few years.The insurance sector, both life and non life, is likely to grow by over 200 percent, and private insurers are expected to achieve a growth rate of 140 percent as a result of aggressive marketing technique. It added that state owned insurance companies are likely to be 35-40 percent.On account of intense marketing strategies adopted by the private insurance players, the market share of state-owned insurance companies like GIC, LIC and others has come down to 70 percent in last 4-5 years from over 97 percent. Despite regulation, the private players are offering 35 percent rate of return to is policy holders against 20 percent by public-sector insurers. The industry body also noted that Indias life insurance premium is 1.8 percent as a percentage of GDP whereas it is 5.2 percent in the US, 6.5 percent in the South Korea.The services sector offers immense opportunities for expansion opportunities for expansion opportunities and the rural market, also, offers tremendous growth opportunities for insurance companies.

GENERAL INSURANCEGeneral insurance in India has been expecting growth except in some portfolios like motor insurance, fire and engineering. These portfolios are still under tariff- this means that premium depends on a fixed predetermined rate structure.In India, GDS as a proportion of GDP at current prices increased from 26.1% in 2002-03 to 28.1% in 2003-04.house hold sector continued to be the major contributor to GDS at 24.3% in 2003-04.this can be attributed to soft interest rates prevailing in housing sector. General Insurance has low market penetration. It is 1.95% and ranks 51st. However in collection of premium it is ranked 23rd. The ratio of the premium collected to that of GDP is 0.58. The main reason for the general insurance industry to perform very poorly was because of the slow settlement of claims. Moreover the rates of claim in India were highest in the world. It was 70 percent compared to 40 percent internationally. This meant that out of 100 people who had insured their commodities 70 claimed for a loss or damage. The main reason for the lack of demand for general insurance is that people consider it as an unnecessary expenditure. However it must be noted that the general insurance has been earning consistent profits and has an efficient dividend paying record accompanied by a steady growth in its financial resources. The industry is recognized as one of the largest financial Institutions in the country. Some of the private players in this sector are- ICICI Lombard, Reliance, Royal-Sundaram, Chholamandalam etc.

2.3 PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR

The different private players in the life insurance sector and their associations with foreign companies are being given below:

COMPANYINDIAN PROMOTER/PARTNERFOREIGN INSURERTOTAL CAPITAL(RS MN.)FDI(%)FOREIGN CAPITAL(RS MN.)

AMP SANMARRELIANCE GROUP(ADAG)None2,17000

Aviva LifeDaburAviva (UK)4,590261193.4

Bajaj-AllianzBajaj AutoAllianz (Germany)368026960

Birla Sun LifeAditya Birla GroupSunLife (Canada)4,000261,040

HDFC StandardHDFCStandardLife (UK)2,50018.9470

ICICI Prudential ICICI BankPrudential (UK)10,850262,820

ING Vysya Vysya BankING Ins.(Netherlands)4,40026680

Kotak Mahindra Old MutualKotak Mahindra BankOldMutual (South Africa)2,60026680

Max NewyorkMax India NewYorkLife (US)5,000261,300

IDBI Federal lifeIDBI Bank, Federal BankAegas(Europe)26975

Met Life J&K Bank Met Life (US)3,55026920

Sahara Life Ins. ISahara IndiaNone1,00000

SBI LifeSBICardiff (France)3,50026910

TATA AIGTATA GroupAIG (US)3,81026990

ShriramShriramSanlam Life Ins.

Bharti AXABharti GroupAXA(Australia)

2.4. CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY

Some surveys have predicted that India and China will play a very vital role in the years to come. Indian economy can be termed as an emerging economy as it is doubling its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its GDP. If we look at the GDP of the Indian economy very closely over the years, we can easily come to know the changing structure of the economy. We can also come to know the changing contribution of the various sectors like agriculture, manufacturing and the service sector. In the financial year 1993-94, agricultural sector contributed to 31%, manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus over the years as India became an emerging economy in 2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8 whereas service sector contributed for 51.4% of the total GDP. There has been 7.5% growth in the total GDP of the country and is estimated to grow at 8.0% in 2006-07. The Indian economy has shown signs of strong performance despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the country. The overall growth of the Indian economy has been equally supported by all the three sectors of the economy, i.e. the agriculture, manufacturing and the service sector. Insurance, together with the banking sector, contributes to about 7.3 % of the total GDP of India, and the gross premium collected contributes to about 2% of the total GDP of the countryThe insurance sector in India has completed a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost 200 years.

2.5 GOVERNMENT POLICIES REGARDING LIFE INSURANCE

Insurance Regulatory and Development Authority (IRDA) 1999Reforms in the insurance sector were initiated with the passage of the IRDA bill in December 1999.it was set up as an independent body and it has been able to frame globally compatible legislations.The IRDA was set up to protect the interests of holders of insurance policies ,to regulate ,promote and insure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.This act extends to whole of India. With the establishment of this act, government amended Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972.IRDA was formed on the recommendations of Malhotra Committee. In 1999 government of India has set up Malhotra Committee to examine the structure of insurance industry and recommend changes, under R.N Malhotra former governor of RBI.

3. COMPANY PROFILE3.1 About IDBI Federal Life InsuranceIDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, Indias premier development and commercial bank, Federal Bank, one of Indias leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. At IDBI Federal, we endeavor to deliver products that provide value and convenience to the customer. Through a continuous process of innovation in product and service delivery we intend to deliver world-class wealth management, protection and retirement solutions to Indian customers. Having started in March 2008, in just five months of inception we became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on September 30th 2010, the company has issued over lakh 2.35 lakh policies with over Rs 11,577 Cr in Sum Assured. About the sponsors of IDBI Federal Life Insurance Co LtdIDBI Bank Ltd. continues to be, since its inception, Indias premier industrial development bank. Created in 1956 to support Indias industrial backbone, IDBI Bank has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst Indias foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 758 branches and 1295 ATMs. The Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in Indias financial sector National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd)Please visit www.idbibank.com to know more.Federal Bank is one of Indias leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 719 branches and 761 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, and Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations. Please visit www.federalbank.co.in to know more.Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. The company also has subsidiaries in France, Germany, Ukraine and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand. Ageas employs more than 11,000 people and has annual inflows of almost EUR 16 billion.

Distribution Network:There are four different ways of distributing a Life insurance product namely;1. Agents (Financial Advisors):- Anybody possessing the minimum qualification of 10+2 after completing 100 hrs of training from the training institute approved by IRDA can sell life insurance products of any particular company which has sponsored him to take the training. This is the most popular distribution channel.2. Corporate Agents Any corporate may apply for license to sell insurance after complying with the requirements of IRDA.3. Bank assurance If the corporate agent is a bank, and then it is known as banc assurance. Banks can sell the policies to their existing as well as prospective clients. This is becoming quite popular these days and the bank earns huge fund based income. Bancassurance has 1% share in total premium collection in 2004-05.4. Broker they are like corporate agents with only difference that they can sell the products of more than one insurance company.Departments:The various departments that can be seen in an insurance organization and that has been observed by me are as follows:a) Marketing Department: This department mainly deals with the marketing and promotion part of the Insurance Company. They spend most of their time in formulating strategies to make their products known to the common people and to promote the same in an easy and cost effective way.b) Sales Department: This department mainly deals with the sales part of the Insurance Company; the department includes designations like Sales Manager and Financial Advisor who personally contacts with people for performing the task of sales of various products.c) Accounts/ Financial Department: This department has the task of keeping track of the various expenses incurred by the various other departments of the organization and also performs the task of allocating various funds to different departments according to their requirements.d) Human Resource Department: This department is handled by the Human Resource manager of the company. The function of this department involves the well being of the employees of the company, I,e, to see whether there is employee grievance in the organization or not and if it is there what are the possible causes for that and also try to find out solutions for the same if possible.e) Investment Department: This department deals with the task of investing the money of the policy holders in such way that will ensure both safety of the money and also a steady return on the same. The task of this department is very difficult as it deals with the money given by the policy holders, so it requires lot of thinking on the part of the personnel of this department before deciding where to invest the money.f) Actuarial Department: This department is under the supervision of an Actuary who decides the premiums and charges to be taken from the policy holder on the basis of certain informations (like Age, Annual Income etc.) provided by the prospective customer. The task also involves the calculation of mortality charges which requires high statistical knowledge from ones point of view. So, this department involves in the calculation of various amounts to be charged from the prospective customers.

3.2 Vision and Values: Maintaining integrity through our values Our Vision To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.

Our Mission To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner. To be transparent in the way we deal with our customers and to act with integrity. To invest in and build quality human capital in order to achieve our mission.

Our Values Transparency: Crystal Clear communication to our partners and stakeholders Value to Customers: A product and service offering in which customers perceive value Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and having clarity in claims Customer-friendly: Advice and support in working with customers and partners Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholders and the community at large.

4. RESEARCH METHODOLOGY4.1 INTRODUCTION:Methodology is a systematic way of solving a problem it includes the research methods for solving a problem it includes the research methods for solving the problem.Type of research - Descriptive research Data source -Primary and Secondary dataData collection method -Interview and surveyData collection tool -QuestionnaireSampling Method -Non-ProbabilitySampling technique - Convenience SamplingSampling universe - ChennaiSample size - 1254.2 METHODS OF DATA COLLECTIONDATA COLLECTION METHOD: For given project, the primary data, which needed to collect for the first time, were much significant. This type of information gathered through survey technique, which is the most popular and effective technique for correct data collection. The survey was completed with use of questionnaires.SAMPLE DESIGNThe target population of the study consists of various respondents of various places. This survey was done by collecting the data from the respondents.

SAMPLE SIZEAfter due consultation with the company supervisor as well as with the college guide, also keeping in mind the requirements of the company for the research, the sample size that was found to be appropriate for the study was 125.

SAMPLING TECHNIQUEThe sampling technique that adapted to conduct the survey was Convenience sampling and the area of the research was concentrated in the city of Chennai only. The survey was conducted by visiting different places like colleges, corporate offices, respondents home etc... DATA SOURCEThe task of data collection begins after a research problem has been defined. In this study data was collected through both primary and secondary data source.

A. PRIMARY DATAA primary data is a data, which is collected for gathering information first time and to analyze the problem. In this study the primary data was collected among the consumers using questionnaire.

B. SECONDARY DATASecondary data consist of information that already exists somewhere, having been collected for some other purpose. In this study secondary data was collected from company websites, magazines and brochures.

STATISTICAL TOOLS USED:Ranking method and chi square analysis is the main statistical tool used for the study.

RANKING METHOD (WEIGHTED AVERAGE METHOD)This technique was used to rank out the opinion about the consumers preference towards different investment alternatives. The order of merit given by the respondents was converted into ranks by using the following formula.Weight age Score = Wi * XjWhere Wi = Weight age value and Xj = Ranking position value

CHI SQUARE TESTChi Square is a statistical measure used in the context of sampling analysis for comparing the variance to a theoretical variance. In order to judge the significance of association between two attributes, we make use of chi square test by finding the values of chi square using the chi square distribution.The Chi-square test is given by the formula, 2 = (Oi - Ei)2 / Eiwhere, O = Observed frequency E = Expected frequency.5. REVIEW OF LITERATURE:Quality of service has been difficult to measure, probably due to the intangible quality of the purchasing experiences. (Armstrong & Symonds,1991; Kotler & Bloom,1984)In fact consumers have reported general satisfaction when purchasing goods, but where much less satisfied when it comes to services.(Zemke & Schaaf,1989)Consumer Perception of quality of serviceA number of researchers view quality to be an overall evaluation of a product or service, similar to attitude.(Holbrook & Corfman,1985: olshavsky,1985)The evaluation of service relies solely on the customers level of satisfaction and is made more difficult since the sale, production and consumption of a service takes place simultaneously(Zeithaml & Berry,1985)Consumer Gender:There is same suggestion that complaining behavior may be affected by gender(Martin, 1985)In a study found that males and females have different attitude in choosing a Product / Services.(Mayer,1983)

What are Consumers Expectations and Priorities?A recent survey of European consumer responses to the major utilities (Candidate Countries Euro barometer, 2003) shows that satisfaction with water supplies is high compared with most other utilities with only postal services performing better over a range of service features (price, quality, access, contract conditions etc.). Across all countries (old EU15 and new accession countries) the quality of water supplies is rated at 3.31 (new states) and 3.26 (old EU15) on a 4 point scale where 4 indicated very good. Only 1% of all EU citizens regarded the quality as 1, very poor. Across the whole of the EU 90% are satisfied with the quality of the water they receive. Levels of satisfaction were particularly low; however, in Latvia, Lithuania and Estonia with between 18% and 23% of the populations of these countries feeling that the quality of their supplies was bad or very bad. People in these countries (and Slovakia) were the least happy with customer services provided by suppliers with Cypriots and the Maltese being happiest with them.

SCOPE OF THE STUDY

The result of this research would help the company to have a better understanding about the consumers perception towards life insurance. The study helps the company by creating awareness about the consumers of different ages and income levels. The study also enables the company to focus the consumers preferences and expectations on the product which they offer.

OBJECTIVES OF THE STUDIESPRIMARY OBJECTIVE: To study about the general investment pattern of the public with special reference to IDBI Federal life insurance.

SECONDARY OBJECTIVE:

To know about the various Investment alternatives that is mostly preferred by the People. To find out the important criteria that people think about before investing in a life Insurance policy. To find out whether gender bias involved in investing life insurance or not. To find out the awareness of IDBI Federal life insurance among the public.

6. DATA ANALYSIS AND INTREPRETATION

Personal Factors:1. Gender:Table: 1GenderNo. of. Respondent

Male78

Female47

Total125

Figure: 1

Analysis:Figure 1 infers that 78% of the respondent is male and 47% of them are female.

2. Age Group:Table: 2

Age GroupNo. of. Respondent

Below 3042

31-4037

41-5029

51-6012

Above 605

Total125

Figure: 2

Analysis:The respondent belongs to the age groups, 42% below 30, 37% 31-40, 29% 41-50 and only 5% above 60.

5. Annual Income Level:Table: 3Income LevelNo. of. Respondent

Below 1 Lakh30

1.01 3 Lakh 47

3.01 5 Lakh29

Above 5 Lakh19

Total125

Figure: 3

Analysis:The income levels of the respondents were, 30% below 1 Lk, 47% 1.01-3 Lk, 29% belong to 3.01-3 Lk, and 19% above 5Lk.

COMMON DETAILS:6. What percentage of your Salary do you usually save / invest?Table: 4% of savingsNo. of. response

Less Than 15%44

15-20%39

20-25%26

Greater Than 25%16

Total125

Figure: 4

Analysis: The above figure infers that, 44% of the respondent save less than 15%, 39% save 15-20%, 26% of the consumers save 20-25% and 16% saves greater than 25%

7. What kind of investment do you prefer?

Table: 5Kind of investmentNo. of respondent

Short term36

Long term67

Both22

Total125

Figure: 5

Analysis:36% of the respondent prefers short term investments, 67% prefers long term and 22% prefers both kinds.

8. On a scale of 1 to 5 Rank these various investment alternatives according to your Preference.

Table: 6

Investment alternatives / Ranking12345

Bonds & Debentures2127382118

Equity/Shares1133293121

Mutual Fund1321235315

Public Provident Fund(PPF)2429174213

Post Office1631461715

Insurance364814243

Bank Deposits49343084

Real Estate1823273621

Gold & Silver332933228

Others-----

Figure: 6

Analysis:The above figure shows the ranking done for various investment alternatives according to the preference of the consumers.

9. State your expectation on investment alternatives by ticking according to its importance Table: 7Expectations on investmentHighly (1) important(2)Important(3)Neutral Least (4) importantNot (5) important

Safety10322---

Capital Growth8936---

Liquidity85368--

Return1214---

Tax Benefit86363--

Company Profile & Brand Name

932012--

Figure: 7

Analysis:The above figure infers, the expectations out from investing in the various investment alternatives according to the importance given by the respondents.

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

Table: 8Yes / NoNo. of. Respondent

Yes98

No27

Total125

Figure: 8

Analysis:

Inferred out from our total of 125 respondents, 98% do possess a life insurance and 27% do not have.

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

Table: 9

Insurance CompanyNo. of. Respondent

Lic16

Icici18

IDBI Federal9

SBI Life19

Others36

Total98

Figure: 9

Analysis:The above figure shows, the companies in which the respondent possess the life insurance. 19% have their policy in SBI, 18% in ICICI, 16% in LIC, 9% in IDBI and the rest of them from other companies.12. What scheme of Insurance Policy have you taken?

Table: 10

Scheme Of InsuranceNo. of. Respondent

Life protection plan33

Education plan21

Retirement plan9

Health plan19

Money growth plan16

Total98

Figure: 10

Analysis:33% of the respondent has taken LPP scheme, 21% Education plan, 19% in health plan and 9% from retirement plan.

13. Among the following Life Insurance Companies in which company you will be willing to take a life insurance?Table: 11

Insurance CompanyNo. of. Respondent

Lic6

Icici2

IDBI Federal4

SBI Life9

Others5

Total27

Figure: 11

Analysis:9% of the respondents willing to take a policy in SBI, 6% in LIC, 4% in IDBI, 2% in ICICI and the rest 5% from other companies.

14. What parameters do you look into before you take up a life insurance Policy? And tick the following parameter according to your importance.

Table: 12ParametersHighly (1) important(2)Important(3)Neutral Least (4) importantNot (5) important

Premium9821600

Charges8639000

Policy Term10314800

Rider Benefits8531900

Bonus & Interest9332000

Services (Pre & Post Sales)9629000

Accessibility1187000

Company Image10322000

Figure: 12

Analysis:The respondents think that, the above shown parameters are important to look in before taking up an insurance policy.15. Which one of these criteria highly affecting for selecting the insurance company?

Table: 13

CriteriaNo. of. Respondent

Brand name63

Reliability54

Flexibility-

service8

Others-

Total125

Figure: 13

Analysis:63% of the respondents say that brand name is the criteria highly affecting for selecting the insurance company, 54% as reliability and 8% says service.

16. Are you aware about IDBI Federal Life Insurance?


Yes93

No32

Total125

Figure: 14

Analysis:93% of the respondents are aware about IDBI, and only 32% are unaware of it.

17. Are you aware about the joint venture between IDBI Bank & Federal Bank to develop its Business in south India since November 2009?


Yes54

No71

Total125

Figure: 15

Analysis:The above figure infers that 54% of the respondents are aware of the joint venture between IDBI and FERERAL BANK, 71% are unaware.

18. Would you like to invest in IDBI Federal Life Insurance?


Yes86

No39

Total125

Figure: 16

Analysis:86% of the respondents are willing to invest in IDBI, 39% are unwilling.

19. If, YES what will make you to invest in IDBI Federal Life Insurance

Table: 17Your Choice of investment with IDBINo. of. Respondent

Brand image28

Diversity19

Growth potential9

Transparency6

Utmost good faith24

Total125

Figure: 17

Analysis:The above figure shows the reason for investment with IDBI, 28% because of brand name, 24% for utmost god faith, 19% diversity, 9% in their growth potential, and 6% for the transparency.

STATISTICAL TOOLS:Chi-Square Test:

1. Finding the relationship between the annual income and the percentage of salary do you save?

Null hypothesis H0: There is relationship between the annual incomes of the respondent with the percentage of salary that they save.Alternate hypothesis H1: There is no relationship between the annual incomes of the respondent with the percentage of salary that they save.

Annual income

Observed NExpected NResidual

below 1 Lk3025.05.0

1.01 - 3 Lk3225.07.0

3.01 - 5 Lk1925.0-6.0

above 5 Lk1925.0-6.0

Total100

what percentage of salary do you usually save/invest?


less than 15%4425.019.0

15 - 20%1925.0-6.0

20 - 25%2625.01.0

greater than 25%1125.0-14.0

Total100

Test Statistics

Annual incomewhat percentage of salary do you usually save/invest?

Chi-square5.840a23.760a

df33

Asymp. Sig..120.000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0.

Analysis:The calculated value is greater than the table value 0.5; hence the alternate hypothesis is accepted. Therefore, there is no relationship between the annual incomes of the respondent with the percentage of salary that they save.

2. Between the companies in which they possess insurance policy with the scheme of insurance they have taken:

Null hypothesis H0: There is relationship between the company in which they have taken the life insurance policy and the scheme they have investedAlternate hypothesis H1: There is no relationship between the company in which they have taken the life insurance policy and the scheme they have invested.

if "yes" which insurance company policy do you have?


0814.3-6.3

LIC1314.3-1.3

ICICI1814.33.7

SBI1914.34.7

IDBI914.3-5.3

OTHERS1914.34.7

Total86

what scheme of insurance policy have you taken?


life protection plan2515.69.4

education plan1415.6-1.6

retirement plan915.6-6.6

health plan1915.63.4

money growth plan1115.6-4.6

Total78

Test Statistics

if "yes" which insurance company policy do you have?what scheme of insurance policy have you taken?

Chi-square8.884a10.718b

df54

Asymp. Sig..114.030

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 14.3.

b. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 15.6.

Analysis:The calculated value is greater than the table value 0.5; hence the alternate hypothesis is accepted. Therefore, there is no relationship between the company in which they have taken the life insurance policy and the scheme they have invested.

WEIGHTED AVERAGE: Among the various investment alternatives.1. Bonds & debentures:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)

1Highly Important215105

2Important274108

3Neutral283114

4Least Important21242

5Not Important18118

Totalw= 125wx= 387

Formulae: X=wx/w = 3.096

2. Equity / Shares:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important334124

3Neutral29387


5Not Important21121

Totalw= 125wx= 357


3. Mutual fund:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important21484

3Neutral23369


5Not Important15115

Totalw= 125wx= 339


4. PPF :S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important294116

3Neutral17351


5Not Important13113

Totalw= 125wx= 384


5. Post office:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important314124

3Neutral463138


5Not Important15115

Totalw= 125wx= 391


6. Insurance:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important484192

3Neutral14342


5Not Important313

Totalw= 125wx= 465


7. Bank Deposits:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important344136

3Neutral30390


5Not Important414

Totalw= 125wx= 491


8. Real estate:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important23492

3Neutral27381


5Not Important21121

Totalw= 125wx= 356


9. Gold & silver:S.NoopinionNumber Of respondents(W)Weighted value (X)Values (W*X)


2Important294116

3Neutral33399


5Not Important818

Totalw= 125wx= 432


Investment Alternatives Weight AvgRank

Bonds and debentures3.096VIII

Equity/ shares2.856II

Mutual fund2.712V

PPF3.072IX

Post office3.128VII

Insurance3.72IV

Bank Deposits3.928I

Real estate2.848III

Gold & silver3.456VI

Analysis: According to the weighted average done for the above question, the first five ranking were given to the following. Most of the respondent prefers to invest in Bank deposits, as their savings would be safer. The second ranking was given to equity / shares as the invested amount would give more return. Third ranking goes to real estate investments, as this type of investment gives value appreciation towards the assets. Fourth is gold and silver, this investment can generate higher return and gives more prestige value for the investor. Fifth ranking is towards mutual fund; in the current scenario this type of investment is given more preference.

7. FINDINGS & SUGGESTIONS

FINDINGS:The findings that can be drawn from the survey conducted by us can be summarized in the following way:a) Among the 98 insurance holders 64% male and 34%Female.b) Only 54% of the total respondents are aware of the joint venture between IDBI Bank and Federal Bank in the year 2009. 86 respondents are interested to invest in IDBI because of the companys good faith and brand image that IDBI has. c) The scheme mostly preferred by insurance holders was life protection schemes like death benefits followed by health plans and education plan.d) It was found that more than 44% of the respondents usually save less than 15% and the kind of investment mostly preferred by the respondents was long term. e) According to the survey safety is the most important criterion which is accepted among all the respondents towards their investment alternatives followed by Return, Brand Name, Tax Benefits, Liquidity and Capital Growth.f) According to the study Accessibility, company image, Services is to be the highly important criteria which we consider before taking up a life insurance is mainly because people expect safety and security for their money which they invest, followed by the factor Premium which we pay to the insurer and then Bonus and Interest paid by the company, services etc.g) People who belong to different age groups have different perception regarding the most important criteria before taking the decision on a life insurance policy.h) People who belong to different income groups also have different perception regarding the important criteria concerned with the life insurance.

SUGGESTIONS:The following were the suggestions given to the study:

1. The maximum respondents are feeling good on IDBI FEDERAL hence the company may advertise more & turn them to a customer. 2. A large no of Respondents choose insurance for saving tax. The company could benefit by coming up with appropriate measures to influence those people.3. Consumer should be aware of companys profile and returns associated with insurance. 4. The Financial advisor should be right enough to serve the consumers. The consumer should also be aware of the advisor or others who is looking after their investments.5. Company should publish their performance by comparing it with their competitors.6. Company should adopt strategies to explore that private insurance companies are safer and securer than public insurance company like LIC.7. Companys reputation is more important because bad impression on image or brand name is considered while decision making among consumers. 8. More strategies and plan are needed to be the leader in the market

8. LIMITATIONS OF THE RESEARCH

The following limitations can be pointed out from the research that I conducted in relation to the problems that were given to me by IDBI Federal Life Insurance Company, ltd

a) The sample size chosen for the questionnaire was only 125 and that may not represent the true picture of the consumer perception about the Life Insurance sector.

b) The research got confined to the city of Chennai. The respondent belonged only to Chennai and not others who were out of Chennai.

c) Nearly 42% of the respondent belonged to the age group of below 30 years and only 5% were above 60 years. So, the responses and the opinions of the experienced and aged were not much available. So, the findings may not be correct when we think about the opinion of the elderly people about the life insurance.

d) The selection of people for the questionnaire was done on the basis of convenience sampling, so, there were certain cases in which the people selected did not have any life insurance policy, so they could not give any positive feedback regarding the important criteria to be considered before taking a life insurance policy. So, this further reduced the actual number of respondents to 125 from 175.

e) The product offered by different companies had different options and names in them, so at the time of comparison it becomes very difficult. The parameters for comparison were also different in the selected companies.

f) One of the important criteria that were selected by the respondents which they consider before taking an insurance policy was Company Image, but there was no parameter available to compare criteria like this between the companies.

CONCLUSION

This study was done to analyze the Consumer Perception on IDBI FEDERAL Life Insurance. Primary and secondary data collected were analyzed in the light of objective set for the study from the survey reports; it was found that the most of the respondent are likely to invest in IDBI FEDERAL life insurance and also there is a great opportunity to have a large numbers of customers because of the brand name was excellent in market.This study would benefit to IDBI FEDERAL Life Insurance in understanding the various facts of consumers behavioral pattern and changes. Thus benefiting them to understand the wants and needs of the customer and cater their product in a more customized manner. The evaluation of the competitor strategies and performance would assess the company in devising strategies for product promotion. This study also comprise company image is the highly important criteria that consumers consider before taking up a life insurance. This is mainly because people expect safety and secure for their money which they invest, followed by the factor Premium which we pay to the insurer and then Bonus and Interest paid by the company, services etc.

10. APPENDIX

A Study on Consumers Perception towards Life Insurance with special Reference to IDBI Federal life insurance pvt.ltd

Questionnaire

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

1. Name: Gender: Male Female Contact No: 2. Age Group:

51-60 41-50 31-40Below 30

Above 60

3. Educational Qualification:

DiplomaPost GraduateUnder Graduate

Others (Specify).

4. Occupation:

Self-EmployedEmployedStudent

5. Annual Income Level:

3.01-5 LakhBelow 1 Lakh1.01-3 Lakh

Above 5 Lakh

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

20-25%15-20%Less Than 15%

Greater Than 25%

7. What kind of investment do you prefer?

Both Short Term Long Term

8. On a scale of 1 to 5 Rank these various investment alternatives according to your Preference.

S.NOInvestment AlternativesRank

1. Bonds & Debentures

2.Equity/Shares

3.Mutual Fund

4.Public Provident Fund(PPF)

5.Post Office

6.Insurance

7.Bank Deposits

8.Real Estate

9.Gold & Silver

10.Other (specify).

9. State your expectation on investment alternatives by ticking according to its importance.Expectations on investmentHighly important

Important

Neutral Least importantNot important

Safety

Capital Growth

Liquidity

Return

Tax Benefit

Company Profile & Brand Name

10. Do you have life Insurance Policy? (If NO then please go to question no. 13)

NoYes

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

SBI LifeIDBI FederalLIC

Others (Specify)ICICI Prudential

12. What scheme of Insurance Policy have you taken?

Education planRetirement planLife protection plan

Money growth planHealth plan

13. among the following Life Insurance Companies in which company You will be willing to take a life insurance?

SBI LifeIDBI FederalLIC

ICICI PrudentialOthers (Specify)

14. What parameters do you look into before you take up a life insurance Policy? And tick the following parameter according to your importance.

Parameters considered before buying a insurance policyHighly Important

Important

NeutralLeast ImportantNot Important

Premium

Charges

Policy Term

Rider Benefits

Bonus & Interest

Services (Pre & Post Sales)

Accessibility

Company Image

15. Which one of these criteria highly affecting for selecting the insurance company?Brand nameMax New York

Reliability

Flexibility

service

Others

16. Are you aware about IDBI Federal Life Insurance?

NoYes

17. Are you aware about the joint venture between IDBI Bank & Federal Bank to develop its Business in south India since November 2009?

NoYes

18. Would you like to invest in IDBI Federal Life Insurance?

NoYes

19. If, YES what will make you to invest in IDBI Federal Life Insurance

Growth PotentialDiversityBrand image

Utmost Good Faith Transparency

20. Suggestions _______________________________________ ________________________________________________ ________________________________________________

Thank you

11. REFERENCES

TEXT BOOKS

1. PHILIP KOTLER (2001) Marketing Management, Prentice Hall Pvt.Ltd., New Delhi, Millennium edition.

2. KOTHARI C.R. (1999) Research Methodology, Wishwa Prakashan, New Delhi, 2nd edition.

3. LEON G. SCHFFMAN and LESLIE LAZAR KANUK (2007)Consumer Behavior, Prentice Hall Pvt.Ltd., New Delhi, 9th edition.

WEB SITES

1. www.idbifederal.com2. www.indianinsurance.com3. www.insurancelife.com 4. www.irda.org 5. www.ssrn.com

Documents

Arun project final.docx