CHAPTER – I

INTRODUCTION

SUMMARY OF THE PROJECT

The project entitled “CONSUMER SATISFACTION WITH REFERENCE

TO TATA-AIG - A STUDY IN VISHAKAPATNAM”. Insurance means

protection against financial loss which will happen in unexpected events such as

fire, accident, illness, or death. Insurance divided into two types:

1. Life Insurance 2. General Insurance

Business of Life Insurance in India started in the year 1818 with the

establishment of the Oriental Life Insurance Company in Calcutta. Insurance

sector is commenced with the enhancement of the Insurance Regulatory and

Development Authority Act 1999, which facilitated the entry of private insurance

companies into the Indian Insurance market. Tata-AIG Life Insurance Company

Private Limited entered the Private Life Insurance Industry in India in April 2001,

and in pass of 6 years has established itself as a distinctive Life Insurance brand

with an Innovate, attractive and customer friendly product portfolio and a

professional advisor force. It also distributes products in close operation with the

Tata network. Currently, it has over 10000, active advisors working from 46

branches in 30 cities across the country and over 1200 Employees. The company

with a customer base of over 1, 65,000. This topic contains – what is insurance,

what is the position of Tata-AIG, in what way Tata-AIG is differ from other

private insurance players, what are the Tata-AIG products and what are its

features, customer awareness about Tata-AIG, what is the market share of Tata-

AIG, with compare to other private insurance players, how much percentage of

customer have in Tata –AIG in present situation. It also includes study of-----

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The products offered by the top private insurance companies with compare

to Tata-AIG.

The need of the customers [protection, pension, investment, savings, tax

effect, loan.]

Acceptance of privatization of insurance companies without feel any

insecurity.

All the above helps in differentiating the company through customers in

terms of return, asset, services and satisfaction. It will help to the know the

following:

Who is a close competitor, what products are they deal in, what features it

has and how many customers really know the Tata-AIG Life Insurance Company.

Primary data collection is with the help of survey through a questionnaire, by

interacting with all individuals who have Insurance policies in different

companies. Secondary data is collected through Web sites, News papers, Journals

and Magazines etc….

The limitations of the study are there is possibility of collecting biased

opinion from the customers and limited time period allocated for the survey is not

sufficient to allocate the satisfaction levels of customers. Due to irrelevant sample

and biased option the results derived may not be appropriate. The study done

through only half of the questionnaire so it is not the represent of total concept.

Strategy

To Recruit advisors collection of data regarding various fields like

chartered accountants Pharma distributors, postal agents goldmercahants, retailer

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medical owners, cement and steel traders) those who are potential advisors of

TATA AIG life insurance company. Make telecalling and take appointment their

convenient time. Completions of telecalling go to their appointment places and

explain the concept of financial advisor recruitment with the help of company

flyers. Completion of concept explanation, give a company flyers with phone

number.

Synopsis :

After privatization of insurance companies, every insurance company

entered into global market implementing various strategies to gain good market

share. Every company is trying to outsmart others in fighting with changing

business environment. And adaptability is the main thing followed by every

insurance company. One insurance calibirize other competitor company it will put

more efforts. Company to withstand in the competition, followed the strategies

such as product differentiation, service quality, agent service satisfaction,

maintaining good relationship with customers. Company withstood in the global

market ready to anticipate challenges and immediately reacting to meet customers’

changing needs by establishing goals keeping customers needs and preferences in

mind. .

Value Addition to Self

Through this project I had gained some exposure to real market conditions,

gained some experience regarding company products and understood corporate

culture. I am able to follow time management, stress management and developed

communication skills and interpersonal relationship skills.

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Content and Scope of the Study

This project deals with a study of consumer begaviour in TATA-AIG LIFE

INSURANCE COPMANY VISHAKAPATNAM. Under the esteemed guidance

of C. JAGADISH, Branch Manager and Prof. G.SATYANARAYANA, Ph.D.,

Project Guide. The project started on Jan 17, 200, where our company guide

provided details regarding the company and its products.

A service is any act of performance that one party can offer to another that

is essentially intangible and does not result in the ownership of any thing .its

production may or may be tied to a physical production, may or may not be tied to

physical products.

The word insurance instills a sense of security in the minds of

people .insurance is a part of financial system that takes care of the financial

consequence of certain specific contingencies both incase of individuals and

corporate bodies. Such contingencies are called risk and they cause losses when

they take place .insurance neither prevents risk nor alters the probability of its

occurrence. But reduces the extant of financial loses by transferring risk from one

individual to a group.

Economic activity and growth are greatly facilated by the existence of a

financial system. Developing in terms of efficiency of the market in mobilizing the

savings and allocating them among competing user. Economy needs institutions

that impartially enforce property rights and contracts. Economic growth depends

on the existence of well functioning financial market. It is essential that the

financial infrastructure is developed sufficiently so that the market operation is

efficient

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Need for the Study:

To know the Awareness levels of existing and new customers

To analyses the customer satisfaction levels of customers of TATA-AIG LIFE INSURANCE COMPANY.

To know the whether the customers are satisfied with the company services are not

Objectives of the study

To study customers awareness level regarding products of TATA-AIG.

To find out changing needs and preferences of the customers of TATA_AIG

To find out how the company is maintaining close relationship with the customers

To study how the customers are benefiting out of the insurance products.

To find out insurance agent service levels

Methodology

TYPE AND SOURCES OF DATA.

Proposed method of approach towards this project to collect primary data and secondary data on customer awareness and general information about life insurance companies in India.

PRIMARY DATA:

Primary data is the original data collection by market survey and Telecalling, through which data is collected from the questionnaires.

QUESTIONNAIRE:

The questionnaire was prepared on the basis of CUSTOMER BEGAVIOR.the questionnaire we have chosen both the open and close ended questions, which helps in collecting source information

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such as customer satisfaction and customer relationship management.

MARKET SURVEY

Conduct a market survey and telecalling the existing customer of the Tata AIG and take an opinion of the customer based on that questionnaire.

SECONDARY DATA:

For present project it has been collected data from journals and take little bit of opinions with official of the Tata Aig office.

Sampling Technique;

The random sampling technique was used in collecting data from 200 customers

Limitations of the study

The respondent may not be aware of Tata Aig life insurance products .so response may not be fair.

. The sampling technique like random sampling and satrified sampling

adopted may not provide desire results.

This survey restricted with in Andhra Pradesh boundaries only.(Existing customers of Tata AIG only.)

.Some of the respondents are may hesitate to reveal the accurate

information required  for survey

CHAPTER – II

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INDUSTRY PROFILE

INSURANCE INDUSTRY :

It is a plan in which individuals and organization who is concerned about

potential risks will pay premiums to an insurance company, who in return, will

reimburse them if there is loss. To generate profit, the insurer will invest the

premiums he receives. Examples of the different types of insurance available are

automobile, home, health and worker's compensation. Whereas in most cases the

insured is paid for their loss, with life insurance a beneficiary is paid when the

insured person passes away

policy: written contract or certificate of insurance; "you should have read

the small print on your policy"

indemnity: protection against future loss

The Buyer shall provide at its expense property damage insurance or “all

risk” builder's risk insurance covering all of its property on the basis of full

replacement cost value without depreciation which will name the Seller and any

manufacturer of the Product(s) as additional insured with a waiver of subrogation

against all insured parties there under

Insurance, in law and economics, is a form of risk management primarily

used to hedge against the risk of potential financial loss. Ideally, insurance is

defined as the equitable transfer of the risk of a potential loss, from one entity to

another, in exchange for a reasonable fee. ...

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Liberalisation of Insurance in India

The eagerly awaited Insurance Regulatory and Development Authority

(IRDA) Bill to open the insurance sector in India to private and foreign players,

was passed by the Lok Sabha on December 2, 1999 and by the Rajya Sabha on

December 7, 1999. The Bill seeks to grant statutory status to the interim Insurance

Regulatory Authority and amend the 1938 Insurance Act, the 1956 Life Insurance

Corporation Act and the 1972General Insurance Business (Nationalization) Act to

end the public sector monopoly. The IRDA Bill incorporates the recommendations

made by the parliamentary Standing Committee on Finance.

“India is the fifth largest economy in the world and the country is expected

to have 500million middle class consumers within next eight years. The demand

for consumer and industrial product and services has been expanding rapidly and

removal of some investment and trade barriers has given new momentum to this

A Brief history of Insurance Sector

The business of life insurance in India in its existing form started in India in

the year1818 with the establishment of the Oriental Life Insurance Company in

Calcutta.

Some of the important milestones in the life insurance business in India are:

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.

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1938: Earlier legislation consolidated and amended to by the Insurance Act with

the Objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident fund societies taken over by

the central government and nationalized. LIC formed by an Act of Parliament, viz.

LIC Act,1956, with a capital contribution of Rs. 5 core from the Government of

India. The General insurance business in India, on the other hand, can trace its

roots to the Triton Insurance Company Ltd., the first general insurance company

established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

Mercantile Insurance Ltd. set up, the first company to transact all Classes of

general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized

the general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd. and the United India Insurance Company. GIC

incorporated as a company.

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PUBLIC AND PRIVATE PLAYERS IN INDIA

LIFE INSURERS Websites

Public Sector

Life Insurance Corporation of India www.licindia.com

Private Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com

ING Vysya Life Insurance Company Limited www.ingvysayalife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com

SBI Life Insurance Company Limited www.sbilife.co.in

TATA AIG Life Insurance Company Limited www.tata-aig.com

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

GENERAL INSURERS

Public Sector

National Insurance Company Limited www.nationalinsuranceindia.com

New India Assurance Company Limited www.niacl.com

Oriental Insurance Company Limited www.orientalinsurance.nic.in

United India Insurance Company Limited www.uiic.co.in

Private Sector

Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in

ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in

Reliance General Insurance Co. Limited www.ril.com

Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com

TATA AIG General Insurance Co. Limited www.tata-aig.com

Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com

Export Credit Guarantee Corporation www.ecgcindia.com

HDFC Chubb General Insurance Co. Ltd.  

REINSURER

General Insurance Corporation of India www.gicindia.com

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INSURANCE COMPANIES

IRDA has so far granted registration to 12 private life insurance companies

and 9 general insurance companies. If the existing public sector insurance

companies are included, there are currently 13 insurance companies in the life side

and 13 companies operating in general insurance business. General Insurance

Corporation has been approved as the "Indian reinsurer" for underwriting only

reinsurance business. A particular of the life insurance companies and general

insurance companies including their web address is given below:

MARKET SHARE OF THE INSURANCE COMPANIES

NAME OF THE PLAYERMARKET SHARE (%)

LIC 71.44

ICICI PRUDENTIAL 7.34BIRLA SUN LIFE 3.01

BAJA ALLIANZ 7.56SBI LIFE 1.80

HDFC STANDARD 3.20TATA AIG 3.09

MAX NEW YORK 0.90AVIVA 0.79

OM KOTAK MAHINDRA 0.51ING VYASA 0.37

AMP SANMAR 0.26METLIFE 0.21

Insurance is system by which the losses suffered by a few are spread over

many, exposed to similar risks. Insurance is a protection against financial loss

arising on the happening of an unexpected event. Insurance policy helps in not

only mitigating risks but also provides a financia ushion against adverse financial

burdens suffered. Insurance policies cover the risk of life as well as other assets

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and valuables such as home, automobiles, jewelry et al. On the basis of the risk

they cover, insurance policies can be classified into two categories:

1. Life Insurance Policies

2 General Insurance

Before insurance sector was opened to the private sector Life Insurance

Corporation (LIC) was the only insurance company in India. After the opening up

of Insurance sector in India there has been a glut of insurance companies in India.

These companies have come up with innovative and flexible insurance policies to

cater to varying needs of the individual. Opening up of the Insurance sector has

also forced the Lic to tighten up its belt and deliver better service. All in all it has

been a bonanza for the consumer.

Major Life insurance Companies in India are:

Aviva Life Insurance

Bajaj Allianz

Birla Sun Life Insurance

HDFC Standard Life Insurance

ICICI Prudential

ING Vysya

Kotak Mahindra

LIC

Max New York Life Insurance

MetLife India Insurance

Reliance Life Insurance

SBI Life Insurance

Shriram Life Insurance

Tata AIG Life Insurance

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TYPES OF INSURANCE:

Life Insurance

Term Life Insurance: is life insurance for a set period of time. If the insured dies

during this period, the beneficiary receives a lump sum of tax-free money. Term

Insurance is ideal for young families with a limited budget where as much

insurance as possible is required to secure the family's well being, or in business

situations such as buy-sell agreements, for mortgage coverage, or to fulfill other

temporary needs.

Whole Life Insurance: provides permanent coverage with level premiums and a

guaranteed death benefit. It is perfect for people who think long term and whish to

have plan that is not subject to investment gains and losses. The policy also gains

cash value over time, allowing for flexible cancellation options. Furthermore,

though coverage is life-long, you do not have to pay premiums for life. You can

purchase the insurance in a predefined number of payments: the shorter the

payment period, the large the discount.

Universal Life Insurance: is permanent insurance with the added feature of

having a tax-sheltered investments portion built into the plan. Universal Life pays

off precisely at the moment when significant costs and tax implications are

triggered. This timing, along with the tax-sheltered savings feature, makes

Universal Life Insurance a powerful financial tool in estate preservation,

leveraging, buy-sell agreements, charitable giving, and pension maximization. The

tax-sheltered status of its investments component can also allow it to help pay for

itself.

Disability Insurance provides an alternate income in case of injury or illness that

leaves you unable to work for an extended period of time. It is ideal for anyone

who earns an income and does not have disability insurance through their

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employer. Depending on your profession, it could provide income during times of

inability to perform your "own occupation," even though other sources of income

continue. More importantly, it can provide the family's income when you can't.

Insurance: pays a lump sum of tax-free money 30 days after the diagnosis of a

covered illness. It is like having your own private health care program: If you do

not wish to wait in line for health care, you can seek professional services

elsewhere. Insurance companies now cover up to 21 major illnesses, and you

decide how to use the money (to pay down the mortgage, take a vacation, or

provide family income).

Long Term Care Insurance provides a daily benefit for in home or nursing home

care. Ideal for those approaching retirement age, long term care insurance means

peace of mind knowing that you will never be a burden to your loved ones. Long

Term Care easily erodes one's life savings costing upwards of 40 to 60 thousand

dollars a year, making this form of insurance a must for retirees.

Health & Dental Insurance covers many common medical expenses that the

Government Health Insurance Plan does not, such as dental work, prescription

drugs, eyeglasses, private and semi-private hospital rooms. If you do not have an

employer group health plan – and, therefore, are vulnerable to health care costs

not covered by your Government Health Insurance Plan – supplemental health

care coverage is important.

Why to get a Life Insurance Policy?

Planning for our own death or the death of a loved one is not something that many

of us want to do. But having support in place when the unfortunate happens can

help those left behind take care of arrangements and recover from the loss easier.

A life insurance policy can be an important part of that support.

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Life Insurance basics

A life insurance policy can help you:

Provide income to surviving family members so they can maintain their

lifestyle.

Pay off the mortgage if an income earner were to die so the house is free

and clear of debt.

Provide for a college education if there are dependent children in the

household.

Pay for final expenses of a funeral or estate settlement costs.

Provide an emergency fund to handle an unexpected financial crisis.

Provide for settlement of personal debts.

Life Insurance in India

Life is very fragile and death is a certainty. We cannot control the

uncertainties of life. But, we can cover the risks surrounding us. Life insurance,

simply put, is the cover for the risks that we run during our lives. It protects us

from the contingencies that could affect us.

Life insurance is not for the person who passes away, it for those who survive.

It is the responsibility of every bread earner to guard against the events that

could affect the family in the unfortunate circumstance of his / her demise.

Thus, having a life insurance policy is very vital. Before going for a life

insurance policy it is imperative that you know about various types of life

insurance policies. Major among them are:

Endowment Policy

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Whole Life Policy

Term Life Policy

Money-back Policy

Joint Life Policy

Group Insurance Policy

Loan Cover Term Assurance Policy

Pension Plan or Annuities

Unit Linked Insurance Plan

Life insurance sector grew by 41 per cent in 2005-06 due to better

performance of country's largest life insurer, LIC, and private players like Bajaj

Allianz and ICICI Prudential.

The 15 life insurance companies together collected Rs 35,898 crore in the

fiscal ended March this year, compared to Rs 25,343 crore in the previous fiscal,

according to data compiled by regulator IRDA. Life Insurance Corporation's

premium income rose more than 28 per cent to Rs 25,645 crore after it sold 3.16

crore policies as against Rs 19,972 crore collected a year ago.

However, LIC's market share dipped by 6.63 per cent to 71.44 per cent

from 78.07 per cent in the year ago period due to stiff competition and aggressive

marketing of private life insurers.

The 14 private players were able to steadily increase their market share from 21.93

per cent to 28.56 per cent in a year's time by collecting Rs 10,252 crore during the

period under review.

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With an annual growth rate of 15-20% and the largest number of life

insurance policies in force, the potential of the Indian insurance industry is huge.

Total value of the Indian insurance market (2004-05) is estimated at Rs. 450

billion (US$10 billion). According to government sources, the insurance and

banking services’ contribution to the country's gross domestic product (GDP) is

7% out of which the gross premium collection forms a significant part. The funds

available with the state-owned Life Insurance Corporation (LIC) for investments

are 8% of GDP.

Till date, only 20% of the total insurable population of India is covered

under various life insurance schemes, the penetration rates of health and other

non-life insurances in India is also well below the international level. These facts

indicate the of immense growth potential of the insurance sector.

 The year 1999 saw a revolution in the Indian insurance sector, as major

structural changes took place with the ending of government monopoly and the

passage of the Insurance Regulatory and Development Authority (IRDA) Bill,

lifting all entry restrictions for private players and allowing foreign players to

enter the market with some limits on direct foreign ownership.

 Though, the existing rule says that a foreign partner can hold 26% equity

in an insurance company, a proposal to increase this limit to 49% is pending with

the government. Since opening up of the insurance sector in 1999, foreign

investments of Rs. 8.7 billion have poured into the Indian market and 21 private

companies have been granted licenses.

 

Innovative products, smart marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster than

anyone expected. Indians, who had always seen life insurance as a tax saving

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device, are now suddenly turning to the private sector and snapping up the new

innovative products on offer.

 

The life insurance industry in India grew by an impressive 36%, with

premium income from new business at Rs. 253.43 billion during the fiscal year

2004-2005, braving stiff competition from private insurers. RNCOS’s report,

“Indian Insurance Industry: New Avenues for Growth 2012”, finds that the

market share of the state behemoth, LIC, has clocked 21.87% growth in business

at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was

still not enough to arrest the fall in its market share, as private players grew by

129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.

 

Though the total volume of LIC's business increased in the last fiscal year

(2004-2005) compared to the previous one, its market share came down from

87.04 to 78.07%. The 14 private insurers increased their market share from about

13% to about 22% in a year's time. The figures for the first two months of the

fiscal year 2005-06 also speak of the growing share of the private insurers. The

share of LIC for this period has further come down to 75 percent, while the

private players have grabbed over 24 percent.

 

There are presently 12 general insurance companies with four public sector

companies and eight private insurers. According to estimates, private insurance

companies collectively have a 10% share of the non-life insurance market.

 

Though the focus of this market research report is on the potential growth

on the Indian Insurance Sector, it also talks about the market size, market

segmentation, and key developments in the market after 1999. The report gives

an instant overview of the Indian non-life insurance market, and covers fire,

marine, and other non-life insurance. The data is supplied in both graphical and

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tabular format for ease of interpretation and analysis. This report also provides

company profiles of the major private insurance companies.

GENERAL INSURANCE

General Insurance provides much-needed protection against unforeseen

events such as accidents, illness, fire, burglary et al. Unlike Life Insurance,

General Insurance is not meant to offer returns but is a protection against

contingencies. Almost everything that has a financial value in life and has a

probability of getting lost, stolen or damaged can be covered through General

Insurance policy.

Property (both movable and immovable), vehicle, cash, household goods,

health, dishonesty and also one's liability towards others can be covered under

general insurance policy. Under certain Acts of Parliament, some types of

insurance like Motor Insurance and Public Liability Insurance have been made

compulsory.

Major insurance policies that are covered under General Insurance are:

HOMEINSURANCE

HEALTH INSURANCE

MOTOR INSURANCE

TRAVEL INSURANCE

Today the Indian general insurance market is valued at Rs 14,000 crore. It

is growing at a rate of 20 per cent and is expected to reach Rs 45,000 crore in

about 10 years. Private players have already gained a 10 per cent share in three

years. No mean achievement when compared to the growth rates of countries like

South Korea and Thailand, where the private sector took 15 years to gain a 15 per

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cent share of the market. India has 14 private players in life insurance and 12

players in the general insurance sector.

CURRENT SCENARIO OF THE INDUSTRY

Composition of Household Financial Savings 1991 1996-97 2005-06Currency 10.6% 8.6% 8.5%Deposits 33.3% 48.2% 41.5%Of which Deposits with non banking companies 2.2% 16.4% 1.6%Shares and debentures 14.3% 6.6% 2.7%Small savings (central govt .schemes) 13.2% 7% 14.3%Life insurance 9.5% 10.1% 15.5%Provident and  pension funds 16.9% 19.1% 14.3%

INSURANCE MARKET IN INDIA

India with about 200 million middle class household shows a huge

untapped potential for players in the insurance industry. Saturation of markets in

many developed economies has made the Indian market even more attractive for

global insurance majors. The insurance sector in India has come to a position of

very high potential and competitiveness in the market.

Innovative products and aggressive distribution have become the say of the

day. Indians, have always seen life insurance as a tax saving device, are now

suddenly turning to the private sector that are providing them new products and

variety for their choice. Life insurance industry is waiting for a big growth as

many Indian and foreign companies are waiting in the line for the green signal to

start their operations. The Indian consumer should be ready now because the

market is going to give them an array of products, different in price, features and

benefits. How the customer is going to make his choice will determine the future

of the industry.

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CUSTOMER SERVICE

Consumers remain the most important centre of the insurance sector. After

the entry of the foreign players the industry is seeing a lot of competition and thus

improvement of the customer service in the industry. Computerization of

operations and updating of technology has become imperative in the current

scenario. Foreign players are bringing in international best practices in service

through use of latest technologies. The one time monopoly of the LIC and its

agents are now going through a through revision and training programmes to catch

up with the other private players. Though lot is being done for the increased

customer service and adding technology to it but there is a long way to go and

various customer surveys indicate that the standards are still below customer

expectation levels.

DISTRIBUTION CHANNELS

Till date insurance agents still remain the main source through which

insurance products are sold. The concept is very well established in the country

like India but still the increasing use of other sources is imperative. It therefore

makes sense to look at well balanced, alternative channels of distribution. LIC has

already well established and have an extensive distribution channel and presence.

New players may find it expensive and time consuming to bring up a distribution

network to such standards. Therefore they are looking to the diverse areas of

distribution channel to have an advantage. At present the distribution channels that

are available in the market are:

DIRECT SELLING

Corporate Agents

Group Selling

Brokers and Cooperative Societies

Bancassurance

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To make all these channels a success the companies have to be very alert and

skillful to Know how to use these channels in a proper way. Banc assurance is on

of the most upcoming channels of distribution and therefore is being discussed in

details.

BANCASSURANCE

India has an extensive bank network established over the years. What

Insurance companies have to do is to just take advantage of the customers' long-

standing trust and relationships with banks. This is a mutually beneficial situation

as banks can also expand their range of products on offer to customers, while the

insurance company will also earn profits from the exposure. Another advantage is

that banks, with their network in rural areas, help to fulfill rural and social

obligations stipulated by the Insurance Regulatory and Development Authority

(IRDA) recently. Insurance companies should see banc assurance as a tool for

increasing their market penetration in India. It is also good for the one who sees

banc assurance in terms of reduced price, high quality product and delivery at

doorsteps. Everybody is a winner here. The creation of banc assurance operations

has made an important impact on the financial services industry at large. This is

though a new concept but it has gained a lot of importance in the industry at

present and has a great future.

PRODUCT INNOVATION

There has been a plethora of new and innovative products offered by the

new players. Customers have tremendous choice from a large variety of products

from pure term (risk) Insurance to unit-linked investment products. Customers are

offered unbundled products

with a variety of benefits as riders from which they can choose. More customers

are buying products and services based on their true needs and not just traditional

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money back policies, which is not considered very appropriate for long-term

protection and savings. There is lots of saving and investment plans in the market.

However, there are still some key new products yet to be introduced - e.g. health

products.

RURAL MARKETING

Rural India seems to have an appetite for mobile phones, computers, and

cars and to add to it we have insurance. In India with the private players having

entered into the insurance industry, the expected explosion in job opportunities

may not actually happen but for them the catchments area is the opportunities in

the rural India. In India the insurance business can be said to be "a marathon, not a

sprint". This is because of the nature of the business being long term. With merely

two years of the industry being opened, not surprisingly, the new comers are

making losses. The public sector companies, notably the LIC, have gained in

strength, thanks to the deepening of the market consequent to the awareness

created by the new companies. However this does not deterred the private sector,

which knows know that the race is a marathon, not a sprint. However it seems that

they if not anything, are only increasing their spending, though only out of the

capital. Today, there are 18 insurance companies in India excluding the PSU’s,

with 12 in the life insurance business and the rest in non-life .As insurance

companies go more and more rural in search of business, there will be

opportunities in the rural sector. Those who understand rural India better will be in

demand. Already United India

The rural consumer is now exhibiting an increasing propensity for

insurance products. A research conducted exhibited that the rural consumers are

willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each

year. In the insurance the awareness level for life insurance is the highest in rural

23

India, but the consumers are also aware about motor, accidents and cattle

insurance. In a study conducted by MART the results showed that nearly one third

said that they had purchased some kind of insurance with the maximum

penetration skewed in favor of life insurance. The study also pointed out the

private companies have huge task to play in creating awareness and credibility

among the rural populace. The perceived benefits of buying a life policy range

from security of income bulk return in future, daughter's marriage, children's

education and good return on savings, in that order, the study adds.

Regulatory and Development Authority (IRDA) have set stiff rural targets

for insurance Companies. For the life sector, in the first year, 5 per cent of the total

policies written Should come from the rural sector. This will go up to 15 per cent

in five years. Similarly, for the non-life sector, two per cent of the total gross

premium income should come from the rural sector going up to 5 per cent in five

years, according to the regulation. All these Moves will make the investment the

rural area a big start.

IRDA ruling on `special discounts' — Insurance brokers, an unhappy lot

IRDA’s latest ruling on the "special discount" given to insurance customers has

been termed "Tughlaqian" by one broker. The allusion is to the flip-flop on the

issue by IRDA, like Mohammad-bin-Tuglaq changed his Capital frequently.

Four months ago, within a month of having issued licenses’, the IRDA

came up with a notification saying that insurance companies could give either a

`special discount' (of 5 per cent of the premium) to the customer, or (the 12.5 per

cent) commission to the broker, but not both.

This move sparked outrage among brokers. They argued that their business

would be affected, as no customer would want to forgo the 5 per cent discount.

Arguing that the ground rules of the game could not be changed within such a

24

short time of issuing the licenses, they managed to prevail upon the then IRDA

Chairman, Mr. N. Rangachary, and got the order cancelled — on May 30.

Now, the new Chairman, Mr. C.S. Rao, with a notification on July 16, has

effectively cancelled the May 30 order and the brokers are back to square one. The

Secretary of the Insurance Brokers Association deplored the decision and said it

was a "death blow to fledgling insurance brokers business." He hoped that IRDA

would reconsider the matter as over 80 brokers had obtained licenses at

considerable cost and effort. Frequent changes in the law regulating the

commissions would plunge the market into confusion and result in loss of

confidence, he said. Some international brokers who had obtained licenses are also

said to be reconsidering their decision to set up shop in India.

Brokers point out that when the first ruling (saying `either a discount to the

customer or a brokerage, but not both') was brought in, the IRDA argued that the

idea was to force the brokers to provide value-added service, not just sell policies.

The objective was that customers should find it worthwhile forgoing the discount

and make use of the brokers. For example, if a broker with some deft risk

management is able to help slash a company's premium expenditure from say, Rs

10 crores per year to Rs 8 crores, then the company would happily forgo the 5 per

cent or Rs 50 lakhs discount, because by using the broker, it saves Rs 2 crores!

Sound logic, but the ground realities are different, say brokers. There have

been instances when the corporate customer took all the advice from the broker,

then dumped him and went directly to the insurance company. Secondly, while the

broker may be able to provide such an excellent, value-adding advice in the first

year, it may be difficult for him to do that year after year.

Mr. R. Thyagarajan, Chairman of the Shriram group, which owns of the

broking firm Armour Consultants points out, that it is unrealistic to expect the

nascent broking industry to provide such value-added services in the first few

25

years of the industry's birth. The broking industry is a baby of 4-months and the

community should allow some time for it to develop expertise. And till such time,

it should be ensured that the brokers first survive.

"We feel like orphans," says Mr. N. Raveendran, Director, Alegion

Insurance Services Ltd, a Chennai-based broking firm. "The law is not helpful, the

regulator is not helpful, the insurance companies do not want us, and the

customers do not want us."

Above all, brokers complain of the "air of uncertainty," given that the

policies are frequently changed.

.

Indian Insurance Industry Forecast (2007-2009)

The market research report “Indian Insurance Industry Forecast (2007-

2009)” gives an in-depth analysis of the present and future of the Indian Insurance

Industry. The market research report looks in to the details as well as gives an

overview of the Indian insurance market with focus on the performance of the key

players. With the initiation of the deregulation in the Indian insurance market, the

monopoly of big public sector companies in life insurance as well as general

(non-life insurance) market has been broken. New private players have entered

the market and with their innovative approaches and better use of distribution

channels and technology, they are eating in to the shares of established public

sector companies in Indian Insurance Market. Since the deregulations have been

put in to place, the market share of LIC has come down to 71.4% in life insurance

market while the private players have captured around 17% market in the general

insurance segment. Having said that, public sector insurance companies such as

LIC and New India Assurance are registered impressive double-digit growths,

which reflects on the overall health of the Indian insurance sector.

26

This report includes the key private players in the insurance market such as ICICI

Prudential, Bajaj Allianz, Birla Sun life, ICICI Lombard and TATA AIG. It also

includes the leading competitors in the life insurance and general insurance

segments along with their market shares.

Wage and salary employment in the insurance industry is projected to grow

about 10 percent between 2004 and 2014, compared to the 14 percent growth

projected for wage and salary employment in all industries combined. While

demand for insurance is expected to rise, corporate downsizing, productivity

increases due to new technology, and increasing use of direct mail, telephone, and

Internet sales will limit job growth. However, some job growth will result from the

industry’s expansion into the broader financial services field, and employment in

the medical service and health insurance areas is anticipated to grow. Also,

thousands of openings are expected to arise in this large industry to replace

workers who leave the industry, retire, or stop working for other reasons.

Medical service and health insurance is the fastest growing sector of the

insurance industry. In recent years, increasing health insurance premiums and

relatively high unemployment have left some unable to afford health insurance,

but over the long term, significant growth is expected. As the share of the elderly

population rises, more people are expected to buy health insurance and long-term-

care insurance, as well as annuities and other types of pension products sold by

insurance sales agents. If legislation is passed to make health insurance affordable

to more people, demand should increase further for this type of insurance.

Population growth will stimulate demand for auto insurance and homeowners

insurance. Population growth also will create demand for businesses to service the

needs of more people, and these businesses will need insurance as well. Moreover,

large liability awards are motivating growing numbers of individuals and

businesses to purchase liability policies to protect against lawsuits brought by

people claiming injury or damage from a product.

27

Many successful insurance companies will recognize the Internet’s

potential as a powerful marketing tool. Not only might this reduce costs for

insurance companies, but it also could enable many clients to turn to the Internet

first to get information on their policies, obtain quotes, or submit claims. As

insurance companies begin to offer more information and services on the Internet,

employment in some occupations, such as insurance sales agent, could be

adversely affected.

Sales agents working in the property and casualty market, particularly in

auto insurance, will be most affected by increasing reliance on the Internet. Auto

policies are relatively straightforward and can be issued more easily without the

involvement of a live agent. Also, auto premiums tend to cost more per year than

do other types of policies, so people are more likely to shop around for the best

price. The Internet makes it easier to compare rates among companies.

Insurance companies will continue to face increased competition from

banks and securities firms entering the insurance markets. As more of these firms

begin to sell insurance policies, increasing numbers of insurance sales agents will

be employed in them, rather than in insurance companies. In order to stay

competitive, insurance companies have begun to expand their financial service

offerings or to establish partnerships with banks or brokerage firms.

Productivity gains caused by the greater use of computer software will

continue to limit the growth of certain jobs within the insurance industry. For

example, the use of underwriting software that automatically analyzes and rates

insurance applications will limit the employment growth of underwriters. Also,

computers linked directly to the databases of insurance carriers and other

organizations have made communications easier among sales agents, adjusters,

and insurance carriers, so that all have become much more productive.

Furthermore, efforts to contain costs have led to an increasing reliance on

28

customer service representatives to deal with the day-to-day processing of policies

and claims. In addition, the Internet has made insurance investigators more

productive by drastically reducing the amount of time it takes to perform

background checks and by allowing investigators to handle an increasing number

of cases, thus limiting their employment growth.

Sales agents and adjusters still are needed to meet face-to-face with clients,

many of whom prefer to talk directly with an agent, especially regarding

complicated policies. Opportunities will be best for sales agents who sell more

than one type of insurance or financial service. Adjusters will still be needed to

inspect damage and interview witnesses, and although the number of available

jobs for actuaries will be limited due to the small size of the occupation,

employment opportunities should be good as stringent qualifying requirements

resulting from the examination system limit the number of new entrants.

IMPACT OF BUDGET IN INSURANCE

The 2005-06 Budget has dampened the spirit of insurance companies.

Hardly any changes have been made in the general insurance sector. The change in

the tax structure may have some impact on the life insurers. With the removal of

the Section 88 relief there is not much for the insurance players to cheer for.

FDI hike in Insurance Sector:

The Finance Minister commended on the growth in the insurance sector,

there was no mention of the steps being taken for increasing FDI in insurance

sector. There is a dire need to attract more foreign capital in the sector. However it

seems that the Union Finance Ministry is looking at proposals to decline the FDI

limit from the Insurance Act, when it is amended. This move would empower any

29

future government to increase the FDI limit through an executive order without

taking the issue to the Parliament. Removal of Sec 88 tax relief: With the removal

of the Section 88 tax relief on life insurance products there would be a sever blow

on the life insurance companies. Removal of tax relief will have an adverse impact

on the flow of investments into life Continuation of Sec 10(10) (d): The

continuations of this section create sever blow for the insurance players. Here by

the life insurance companies for availing the optimum benefit under this section

need to change their strategy. Till now, life insurers were selling life insurance

products mostly on tax-benefit grounds. However, now they will have to sell

products with an investment pitch.

The investment limit in pension plans is unaltered at Rs 10,000 so these

plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowed for

investments/expenditures that could be claimed as a deduction from income. This

is likely to have an adverse impact on the overall growth of the sector. Pension

plans are the only Investment Avenue

where specific limits continue to apply.

BPO Industry in India- IT WILL HELP INSURANCE SECTOR BY WAY OF

1. Insurance Processing

Our insurance processing services provide specialized solutions to the

insurance sector and support critical business processes applicable to the

industry right from new business acquisition to policy maintenance to

claims processing.

30

INSURANCE SECTOR BY 2012

With an annual growth rate of 15-20% and the largest number of life

insurance policies in force, the potential of the Indian insurance industry is huge.

Total value of the Indian insurance market (2005-06) is estimated at Rs. 450

billion (US$10 billion). According to government sources, the insurance and

banking services' contribution to the country's gross domestic product (GDP) is

7.5% out of which the gross premium collection forms a significant part. The

funds available with the state-owned Life Insurance Corporation (LIC) for

investments are 8% of GDP. Till date, only 20% of the total insurable population

of India is covered under various life insurance schemes, the penetration rates of

health and other non-life insurances in India is also well below the international

level. These facts indicate the of immense growth potential of the insurance sector.

The year 1999 saw a revolution in the Indian insurance sector, as major structural

changes took place with the ending of government monopoly and the passage of

the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry

restrictions for private players and allowing foreign players to enter the market

with some limits on direct foreign ownership.

Though, the existing rule says that a foreign partner can hold 26% equity in

an insurance company, a proposal to increase this limit to 49% is pending with the

government. Since opening up of the insurance sector in 1999, foreign investments

of Rs. 8.7 billion have poured into the Indian market and 21 private companies

have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have

enabled fledgling private insurance companies to sign up Indian customers faster

than anyone expected. Indians, who had always seen life insurance as a tax saving

31

device, are now suddenly turning to the private sector and snapping up the new

innovative products on offer.

The life insurance industry in India grew by an impressive 36%, with

premium income from new business at Rs. 253.43 billion during the fiscal year

2004-2005, braving stiff competition from private insurers. This report "Indian

Insurance Industry: New Avenues for Growth 2012", finds that the market share of

the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86

billion by selling 2.4 billion new policies in 2004-05. But this was still not enough

to arrest the fall in its market share, as private players grew by 129% to mop up

Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.

Though the total volume of LIC's business increased in the last fiscal year

(2004-2005) compared to the previous one, its market share came down from

87.04 to 78.07%. The 14 private insurers increased their market share from about

13% to about 22% in a year's time. The figures for the first two months of the

fiscal year 2005-06 also speak of the growing share of the private insurers. The

share of LIC for this period has further come down to 75 percent, while the private

players have grabbed over 24 percent. There are presently 12 general insurance

companies with four public sector companies and eight private insurers. According

to estimates, private insurance companies collectively have a 10% share of the

non-life insurance market.

Though the focus of this market research report is on the potential growth

on the Indian Insurance Sector, it also talks about the market size, market

segmentation, and key developments in the market after 1999. The report gives an

instant overview of the Indian non-life insurance market, and covers fire, marine,

and other non-life insurance. The data is supplied in both graphical and tabular

32

format for ease of interpretation and analysis. This report also provides company

profiles of the major private insurance companies.

Now with real competition coming in with most of the global insurance

players setting footprints here, it is felt that the time for merger has come and to

enjoy the benefits if the size. It is to be sated that size does matter in insurance

business. All over the world’s mergers and acquisitions in the risk-underwriting

sector is common. The benefits if the four insurance companies merge will be

enormous. The merged entity will enjoy higher underwriting and risk retention

capacity; increase in reinsurance premium, reduction in reinsurance outflow,

healthy solvency margins, setting right the asset –liability mismatch and reduction

in cost. The insurance market thus becomes a gambling place. Had the public

sector companies made into a single entity, perhaps the total premium of the four

public sector companies in the year 2003-04 would have gone up but 25 percent.

But the public sector alone is forced to underwrite the loss making motor third

party liability (TPL) insurance. The public insurance companies insured a loss of

Rs 1943 crore on this portfolio on just one year (03-04). The cumulative loss

under this portfolio is astronomical. The loss of profitable business in view of

undeserved competition among the public sector companies is hampering the

subsidization of social insurance including the motor TPL.

It is thus clear that it is good for the public sector companies to merge

immediately when they are still strong, lest a merger becomes inevitable later after

the independent public sector companies fail one after another. This does not bid

well for the public sector, nor fort he insuring public and not for the economic

development either. For a progress me require merger of strong public sector

companies. Else it would render public sector companies weak and destroy them.

33

CHAPTER – III

COMPANY PROFILE

Tata AIG Life Insurance Company Limited is a joint venture between Tata

Group and American International Group, Inc. (AIG). Tata Group is one of the

oldest and leading business groups of India. Tata Group has had a long association

with India's insurance sector having been the largest insurance company in India

prior to the nationalization of insurance. The Late Sir Dorab Tata was the founder

Chairman of New India Assurance Co. Ltd., a group company incorporated way

back in 1919.

American International Group, Inc is the leading U.S. based international

insurance and financial services organization and the largest underwriter of

commercial and industrial insurance in the United States. AIG has one of the most

extensive life insurance networks in the world.

Tata-AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad

array of life insurance products to individuals, associations and businesses of all

sizes, with a wide variety of additional coverage to ensure our customers can

findinsuranceproducttomeettheirneeds.

Tata AIG is a joint venture of the Tata Group and American International

Group, Inc. (AIG).

THE TATA GROUP

The Tata Group is one of India's best-known industrial groups with an

estimated turnover of around US $14.25 billion (approximately 2.6% of India's

34

GDP). With more than 220,000 employees across 91 major companies, it is also

India's largest employer in the private sector. The Tata Group pioneered several

firsts in Indian industry firsts, including: India's first private sector steel mill, first

private sector power utility, first luxury hotel chain and first international airline,

amongst others. Recently, the Tata Group's pioneering spirit has been showcased

by companies such as Tata Consultancy Services (TCS), Asia's largest software

and services company, and Tata Motors, the first car maker in a developing

country to design and produce a car from the ground up.

The Tata Group stable of brands also includes many national and some

internationally renowned product and service brands, including Tata Indica, Tata

Indigo, Indigo Marina, Tata Safari, Tata Indicom, the Taj Group of Hotels

(Luxury, Business and Leisure), indiOne, Tata Tea, Tetley, Tata Salt, Tata

Steelium, Tata Shaktee, Tata Tiscon, By combining ethical values with business

acumen, globalization with national interests and core businesses with emerging

ones, the Tata Group aims to be the largest and most respected global brand from

India whilst fulfilling its long-standing commitment to improving the quality of

life of its stakeholders

AIG :

American International Group, Inc. is the world's leading international

insurance and financial services organization, with operations in more than 130

countries and jurisdictions. AIG member companies serve commercial,

institutional and individual customers through the most extensive worldwide

property-casualty and life insurance networks of any insurer. In the United States,

AIG companies are the largest underwriters of commercial and industrial

insurance and AIG American General is a top-ranked insurer. AIG's global

businesses also include retirement services, financial services, and asset in asset

35

management for the individual and institutional markets, with specialized

investment management capabilities in equities, fixed income, alternative

investments and real estate. AIG's common stock is listed in the New York Stock

Exchange and ArcaEx, as well as the stock exchanges in London, Paris,

Switzerland and Tokyo.

Management

Trevor Bull Managing Director TATA AIG LIFE INSURANCE COMPANY

Mr. Dalip Verma, Managing Director, Tata AIG General Insurance

company. Mr. Trevor Bull joined Tata AIG Life as Managing Director in January

2006. Prior to this, Trevor was Senior Vice President and General Manager at

American International Assurance in Korea. Trevor has over 28 years of

experience in the life insurance industry and has spent considerable time working

in Japan and Britain. His experience covers an array of skills at various authority

levels including Director, Regional Executive, Senior Line Management and

Project Management. Additionally, Trevor has acquired keen insights into Unit

Linked, conventional life and health insurance/ reinsurance and all major products

& distribution channels.

Tata AIG Life Insurance Company adopts a new brand identity Anticipation,

innovation and infinity reflects "A new look at life"

Tata AIG Life's new brand identity

The new baseline represents 'A new look at life'

Anticipation of present and future requirements of the insured

Innovative and path breaking products that fulfils the anticipated

needs of the insured

36

Opening the upper and lower boundaries of the Tata AIG logo represents

Infinite space for product innovation

Product development will not be confined to definite boundaries

Launches a multimedia brand campaign to communicate the new identity.

India's premier private life insurance company, Tata AIG Life Insurance Company

Limited today announced the launch of its new brand logo and corporate baseline

-- A new look at life - simultaneously with a new multimedia brand campaign. The

act of opening the upper and lower borders of its logo aptly reinforces Tata AIG

Life's corporate ethos and philosophy of being an innovator. The company will

leverage its unique capability of anticipating the present and future needs of the

insurable population of India and will look beyond the regular realm while

designing its product offerings.

Announcing the new brand identity of Tata AIG Life Insurance Company

Limited, its managing director, Ian J. Watts said, "It gives me great pleasure in

announcing the new brand identity of Tata AIG Life Insurance Company - A new

look at life. We stand committed to our customers and also the Indian population

that even as Tata AIG Life is taking 'A new look at life', it will remain 'With you

always' and our product suite will be designed taking into consideration our

consumers present and future insurable and savings needs."

"The opening-up of the upper and lower boundaries of our logo endorses

our commitment that we will go beyond the usual boundaries to find solutions that

meet the present and future insurance and savings needs of the Indian customers

and will design products which are not hitherto available in India. Going forward,

37

'Anticipation' and 'Innovation' will be integral parts of our corporate philosophy

and ethos."

Tata AIG Life Insurance Company combines the strength and integrity of

the Tata Group with the international expertise and financial strength of the

member companies of AIG Inc- the leading U.S. based international insurance and

financial services organization.

On the backing of this strong foundation and keeping in mind the long-term

aspect of the insurance industry, Tata AIG Life commenced operations in India in

April 1, 2001, with its base line of 'With you always' signifying Tata AIG Life

would always be there to take care of the insurance and financial needsoftheir

customers.

Having established the same, the new corporate identity - A new look at life

- is the next logical step forward to the endorsement of the fact that it is walking

the talk of its commitment and will continue to offer path-breaking products to its

customers.

To support its new identity the company is launching a multimedia brand

campaign across television, press, outdoor, cinema and the Internet.

 Over the past three years since the company commenced its operations in

India, Tata AIG Life Insurance Company has designed its insurance, pension and

superannuation products by anticipating the present and more importantly the

future savings and insurance requirements of the insurable population of this

country. Tata AIG Life has carved out a differentiated position in the Indian

insurance market and is a leader in the insurance sector for introducing innovative

insurance and pension products. These unique products have not been just the

building blocks for the company but have redefined the way insurance, savings

and pension needs are understood, keeping both the present and future needs of the

insured in mind.

38

In the past Tata AIG Life has introduced several innovative products in

India. Mahalife Gold - synonymous with the whole life market, and where it owns

over half the market. Heath First - where Tata AIG Life was the first off the block

with a unique health product, in fact the first from any life company. And Nirvana

- which continues to be the only guaranteed pension product in the market today.

The company has also launched unique juvenile endowment products and was the

first life insurance company to introduce simplified products including Special

Life.

          Recently, Tata AIG Life also launched its ULIP - Invest Assure - which is a

unique unit linked insurance plan, which has the option to invest in five funds plus

the security of a life cover.

TATA-AIG products:

Tata AIG has a range of flexible insurance products to help you secure your

children’s financial future. Our products include:

AssurecreerBuilder

        This money-back policy provides financial assistance at key stages of your

child’s life, from education to their first steps into a new career.

Assure Educare

This first of its kind juvenile endowment policy is geared toward funding

your child’s education. You can choose between Educare 18 and Educare 21,

depending on your child’s needs.

Assure Money Saver

This savings plan provides you with cash payments in the form of survival

benefits at regular intervals to fund your child’s needs at critical milestones or

39

support your financial obligations. You get the dual benefits of life insurance

coverage plus the flexibility of periodic payments.

Tata AIG Life Insurance Company Limited is a joint venture between Tata

Group and American International Group, This exceptional policy ensures that

you have a steady income and insurance coverage for life! Premiums are payable

only for the first 12 years. You can even use this to create a steady stream of post

retirement income. To learn more,

MahaLifeGold

This unique policy ensures that your child will have a steady income and

insurance coverage for life! Premiums are payable only for the first 15 years.

NirbhayLife

Tata AIG Life has a whole new participating plan which will surprise you

continually with its remarkable benefits. Premiums are payable only for the first 9

years, after which you will receive all your money and much more!

STARKID

An exceptional endowment policy that ensures you can afford to give your child

the very best for his career & marriage.

ADULTS:

Assure Lifeline

You get the luxury of high coverage but at an affordable cost. You also get

automatic renewals and the flexibility to choose the term of cover

40

Assure Money Saver

This plan offers you cash payments at the end of every 3 years during the

term of the policy. You also get the dual benefits of life insurance coverage plus

the flexibility of periodic payments.

Assure Security & Growth

This amazing endowment policy enables you keep your money safe and

have it grow. In the unfortunate event you die while under this cover, your

dependants will get the sum assured. However, if you outlive the term, you still

get the sum assured along with a whole range of bonuses

Assure Golden Years

This endowment policy gives you safety AND returns. In case of death,

your dependants get the sum assured otherwise your savings grow. If you live past

the term you still get that sum assured along with a whole host of bonuses.

Health Protector

The average cost for a major surgery or treatment in hospital is between

three to five lakh. Health Protector is the first product of its kind in India that

offers you protection in case ANYONE in your family has an accident or falls ill.

Life plus

This plan lets you win no matter what happens. Get your premiums back if

you outlive the term. Get sum assured in case of death by natural causes. Get

DOUBLE the sum assured in case of death by accidental causes.

41

MahaLife

This exceptional policy ensures that you have a steady income and

insurance coverage for life! Premiums are payable only for the first 12 years. You

can even use this to create a steady stream of post retirement income.

MahaLifeGold

This is the ideal planning vehicle for your retirement. It provides you a

steady income and insurance coverage for life! Premiums are payable only for the

first 15 years. You can even use this to cover future expenses of your children.

NirbhayLife

Tata AIG Life has a whole new participating plan which will surprise you

continually with its remarkable benefits. Premiums are payable only for the first 9

years, after which you will receive all your money and much more! To

ShubhLife

This plan provides you 100% life insurance protection and high returns on

your investment but the premiums you pay are among the lowest of any similar

endowment policy

Health First

Quality healthcare is incredibly expensive. You need a policy that covers

all contingencies including prolonged hospitalization, major surgery, critical

illness, post hospitalization fees and even the unfortunate event of your death.

42

Invest Assure

This highly flexible plan gives you full life cover AND high returns AND

the flexibility of deciding the Length of your life cover term, the amount of Cover

you receive & where the rest of your premium is invested

For Retirement:

Keep your capital safe and growing with Assure Golden Years.

Provide a stable, lifetime income for you and your family with MahaLife

Gold.

Give you the flexibility to choose when to retire and where to invest with

Nirvana.

Guarantee additions to your sum assured with Nirvana Plus.

Most popular products in TATA-AIG:

In 2004, the first year of its launch, Invest Assure accounted for 38 per cent of the

total premiums issued. Maha Life made up 30 per cent of the total number of

policies sold so far this year.

Health First and Health Protector were unique since these were the first health-

related products introduced by a private life insurance company in India. These

two (products) take care of the entire gamut from hospitalization to surgery.

Nirvana Plus is a pension planning solution and MahaLife Gold has also been

received very well.

Tata AIG Life Insurance - winner of customer satisfaction

A recent survey conducted by the Voluntary Organization in Interest of

Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata

AIG Life) as the clear winner in terms of customer satisfaction in the life

43

insurance category. This is India's first-ever customer satisfaction study for the

insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed

brand name. The ability to provide innovative and customer-focused service such

as allowing the maximum grace period for premium payment has not only further

distinguished Tata AIG Life from other life insurance companies but also appealed

to consumers.

Commenting on the survey results, Trevor Bull, managing director, Tata

AIG Life Insurance Company, said, "The quest of the company has always been to

be the best at what we do rather than adopting a simplistic market share at all costs

approach. Achieving this VOICE recognition required huge effort from Tata AIG

Life team; however retaining the number one position will be tougher. Being

ranked the best in the life insurance category by an independent consumer group is

an encouraging and fitting manifestation of our successful completion of five years

of service in the insurance industry. We look forward to the challenges that lie

ahead and are confident of maintaining and improving further our current

standards of service and efficiency."

The survey, which was conducted across eight cities and covered around

1,250 life insurance customers, evaluated the different life insurance companies on

the parameters of tangibility, problem solving ability, reliability, responsiveness,

assurance and empathy. The objective of the survey was to understand and

measure overall customer satisfaction within the insurance sector.

The Voluntary Organization in Interest of Consumer Education (VOICE) is

a voluntary action group, whose objective is to protect and further the interests of

the consumer.

44

Tata AIG eyes 90% rise in premium income

(Business Standard — June 6, 2006)

Tata AIG Life Insurance Company Ltd is expecting an 85-90 per cent growth in its

premium incoming 2006-07.

"We will be looking at an 85-90 per cent increase in total premium income.

Increase in the first year premium income (FPI) is expected to be around 70 per

cent this year," said Joydeep Roy, director, alternate channels/chief distribution

officer, Tata AIG Life Insurance. The company had targeted 100 per cent

increase in premium income to more than Rs 800 crorein 2005-06.

During the first eight months of 2005-06, it recorded a 102 per cent year-on-year

growth in total premium income at Rs 678 crore whereas FPI grew by 79 per cent

at Rs351crores. The company was all set to launch around six products during the

current financial year.

"Two products are likely to be unit linked insurance product (ULIP), two

would be rural products and remaining two would be accident health product or

rider. We have already applied to the Insurance Regulatory and Development

Authority (IrDA) fort heir approval. The company would shortly apply to the

IrDA for approval for another couple of products, he noted. Meanwhile, the

company is very comfortable with its exposure in capital market. "IRDA has

strong rules about investments in capital market. Currently, we are very

comfortable with our investments in the capital market. The company had firmed

up significant network expansion plans. The company would be opening 20-

25newofficesduring2006-07.

45

"Currently, we have 85 offices in cities. We will be adding 20-25 new

offices at strategic locations to cater to a large customer base. Among the states to

get new offices will be Madhya Pradesh, Rajasthan, TamilNadu. Tata AIG Life

will also be doubling its 'mobile vans' for reaching to Remote customers.

"The company has experienced tremendous response with its mobile vans

that are being used for selling products as well as collecting premiums. We are

planning to double the number of vans to eight vans during the year," added Roy.

Currently, 35-40 per cent of the company's business comes from banc assurance,

45 per cent form agencies and remaining from other channels including corporate

agents.

Tata-AIG simplifies claims processing

Tata AIG Life Insurance has simplified the claims processing system for

policyholders. The company's staff is visiting major hospitals and advising people

on how to expedite claims.

Tata AIG's customers can also call the 24-hour toll-free help line and get

immediate assistance and advice on the claims process. A special 24-hour help line

has also been set up.

Mr. Sunil Mehta, Country Head and Chief Executive, American

International Group (AIG), said Tata AIG had activated the Claims Catastrophe

Management Plan (CCMP) that was envisaged to meet claims under such

calamities.

46

Tata AIG Life Insurance appoints Vivek Sood as CFO

Tata group company, Tata AIG Life Insurance Company Limited (Tata

AIG Life), has announced the appointment of Vivek Sood as the Chief Financial

Officer (CFO) of the company.

Prior to this appointment, Sood was the Vice-President, Finance, at

Hutchison Essar for the southern region, a release issued here today stated.

Sood will provide guidance to the financial team at Tata AIG Life in managing

and taking financial decisions, as also responsible for formulating and managing

the financial strategy of the company.

Service tax effects on policy

TATA –AIG life insurance start charging service tax from the policy holders as renewal premium due paid or after June 5th 2006.

Service tax paid along with under section 80/80ccc and 80 current tax laws. Service tax rate depend upon type of policy.

Segmentation of customers

Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products.

To suit individuals

Employees

Associations

Businesses of all sizes, with a wide variety of additional coverage to ensure our customers can find an insurance product to meet their needs

Objectives

Goal finders

A unique that tool that helps us understand your goals and needs.

Helps you understand your current financial position

47

Ensure recommendation that fits your needs and priorities.

Market share of TATA AIG

in the year of 2006 march the market share of the TATA AIG IS 3.09

COMPETITORS OF TATA-AIG

Main Competitors Market share (%)

LIC 71.44

ICICI PRUDENTIAL 7.34

BIRLA SUN LIFE 3.01

BAJAJ ALLIANZ 7.56

HDFC STANDARD 2.86

48

CHAPTER – IV

ANALYSIS OF THE STUDY

TABLE- 1

POLICY AND CATEGERY OF RESPONDENTS

TYPE OF POLICY EMPLOYEES

BUSINESS PEOPLE

OTHER PEOPLE

HEALTH 21 29 5

CHIDRENS EDUCATION

14 12 7

RETIREMENT PLANNING

26 36 14

OTHER POLICIES

11 15 12

TOTAL 72 92 36

49

2114

26

11

29

12

36

155 7

1412

0

10

20

30

40

NO OF PEOPLE

Employees Business people Others

DIFFRENT CATAGERIES OF PEOPLE

POLICY AND CATEGERY OF PEOPLEHealth

Childrens education

Retirement planning

Other policies

CHART – I

Inferences:

92 members of the business people preferred all the types of the policies. So in the near future most of the business people are potential customers of the TATA AIG life insurance company.

Second category of customers like employees (72) preferred both retirement planning and health policy because these type policies will give tax benefits and life long returns to the policy holder.

36 members of the respondents like rural people mostly preferred retirement planning they want some monthly returns.

50

TABLE-2

AGE AND PREFERENCE OF POLICY

AGE HEALTH

CHILDRENS EDUCATION

RETIREMENT PLANNING

OTHER POLICIES

2O-308

14 8 11

31-40 14 22 19 13

41-50 22 11 26 10

50 ABOVE

12 9 7 6

TOTAL 56 44 60 40

CHART - 2

51

8

14

22

1214

22

119 8

19

26

7

1113

10

6

0

5

10

15

20

25

30

NO OF RESPONDENTS

Health childernseducation

Retirementplanning

Otherpolicies

DIFFRENT POLICIES

AGE AND PREFERENCE OF POLICY

20-30

31-40

41-50

ABOVE 50

Inferences:

o Above table shows that 56 members of the customers take health policy, in that 56 included all ages of the customers .41-50 years of age of the customers preferred health policy heavily .so these customers are high net worth value customers of the TATA –AIG

o 44 members of the customers preferred children’s education policy .most of 31-40 years age of the customers preferred children’s education policy.beacuse they are just entered in to the life and they want to more investment and financial plans.

o 60 members of the respondents are preferred Retirement planning, 41-50 Middle Ages of the people preferred heavily, this type of policy helpful in future needs and wants.

o 31-40 ages of the respondents are take other policies like invest assure and Nirvana plus.

52

TABLE-3

MODE OF PREMIUM PAYMENT

MODE OF PREMIUM PAYMENT

NO OF RESPONDENTS

MONTHLY 43QUATERLY 63HALFYEARLY 42YEARLY 52TOTAL 200

MODE OF PREMIUM PAYMENT

43

63

4252

0

10

20

30

40

50

60

70

NO OF RESPONDENTS

1

MODE OF PREMIUM

MONTHLY

QUARTERLY

HALFYEARLY

YEARLY

Inferences

43 respondents are satisfied with monthly mode of premium for the reason that they felt that easy to pay premium.

63 of the respondents are satisfied with their quarterly yearly premium payment

42 of the respondents are satisfied with their half yearly premium payment

42 of the respondents are satisfied with their yearly premium payment

53

TABLE-4

OTHER COMPANY POLICIES OF THE TATA-AIG CUSTOMERS

DIFFERENTCOMPANIES

HEALTHRETIREMENTPLANNING

CHILDRENSEDUCATION OTHERS

LIC 18 18 10 7

TATA AIG 21 22 9 5

BAJAJ ALLIANZ

1314 15 12

BIRLA SUNLIFE

9 12 12 3

TOTAL61

66 46 27

1818

107

2122

95

13151512

91112

30

5

10

15

20

25

NO OF CUSTOMER IN EACH

COMPANY

LIC TATA AIG BAJAJALLIANZ

BIRLASUN LIFE

DIFFRENT COMPANIES

OTHER COMPANY POLICIES OF TATA AIG CUSTOMERS

HEALTH

RETIREMENT PLANNING

CHILDRENS EDUCATION

OTHERS

54

Inferences

61 members of the TATA AIG HEALTH policy customers taken other company policies, most of the customers preferred LIC.

66 members of the TATA AIG RETIREMENT PLANNING customers contain other company policies. They are also mostly invested in LIC because they felt that it gives more security compare other insurance companies

46 members of the TATA AIG CHILDERNS EDUCATION policy customers have other company policies.

27 members of the TATA AIG policies different policy customers contain other company

]

55

TABLE -5

REASONS FOR SELECTING TATA-AIG LIFE INSURANCE

CHART- 5

REASONS FOR SELECTING TATA-AIG

445898

020406080

100120

BR

AN

D N

AM

E

GO

OD

RE

LAT

ION

SH

IP

GE

T M

OR

ER

ET

UR

NS

REASONS

NO

OF

RE

SP

ON

DE

NT

S

BRAND NAME

GOOD RELATIONSHIP WITHCUSTOMRERS

GET MORE RETURNS

REASONS NO OF RESPONDENTS

Brand Name 98

Good Relationship with Customers

58

More Returns 44

TOTAL 200

56

Inferences

98 of the respondents are opting for TATA-AIG is to have good brand name.

58 of the respondents are said to TATA-AIG maintain good relationship with customer

44 of the respondents are said to be it gives good returns to their investment

57

TABLE-6

MODE OF RESPONSE ON PRODUCT DOUBTS RECEIVED

MODES OF RESPONSE NO OF RESPONDENTS

PHONE78

PERSONAL INTERACTION104

WEBSITES18

TOTAL200

CHART - 6

PRODUCT DOUBTS AND WAY OF RESPONSE RECEIVED

18

10478

020406080

100120

Phone personalinteraction

websites

WAY OF RESPOSE

NO

OF

R

ES

PO

ND

EN

TS

PHONE

PERSONALINTERACTION

WEBSITES

Inferences 104 numbers of existing customers are clarifying their doubts regarding

policy and their mode of premium through personal interaction.

78 members of existing customers are clarify their doubts through phones because they living in far away from the office.

18 of the respondents are daily visit company websites and they will see what are the happened in the company policies and clarify their doubts.

58

TABLE-7

COMPANY SERVICE LEVELS

DIFFERENT RANKS NO OF RESPONDENTS

GOOD 102

AVERAGE 67

POOR 31

TOTAL 200

CHART - 7

102

67

31

020406080

100120

NO OF RESPONDENTS

GOOD AVERAGE POOR

DIFFRENT RANK

COMPANY SERVICE LEVELS

Good

Average

Poor

Inferences

In this survey 102 numbers of respondents are said to be company service levels are good like they provide on time training to newly joining of advisors.

In this survey 67 respondents are said to be company service levels are average

In this survey 31 respondents are said to be company service levels are poor

59

TABLE -8

ADVISORS EXPLANATION REGARDING POLICY

EXPLANATIONNO OF RESPONDENTS

GOOD 69

SATISFIED 112

UN SATISFIED 21

TOTAL200

CHART – 8

69

112

21

0

20

40

60

80

100

120

NO OF RESPONDENTS

GOOD SATISFIED UNSATISFIED

DIFFRENT RANKS

ADVISORS EXPLANATION REGARDING POLICY

Good

Satisfied

Un satisfied

Inferences

112 members of the of a TATA AIG existing customer are said to be they are satisfied with advisor explanation. Advisors have enough knowledge and skills regarding policy

69 members of TATA AIG of the existing customer are said Advisors explanations are good.

21 members of members of TATA AIG of the existing customer are said Advisors explanations are poor. Because they are not provided exact requirements of the customer

60

TABLE-9

TOTAL CUSTOMER SATISFACTION LEVELS

DIFFERENT RANKS NO OF RESPONDENTS

GOOD 103

AVERAGE 69

POOR 28

TOTAL 200

CHART - 7

0

200

NO OF RESPONDENTS

DIFFRENT RANKS

TOTAL CUSTOMER SATISFACTION LEVELS

Series1 103 69 28

GOOD AVERA POOR

Inferences In this survey 103 existing customers are satisfied regarding company

service levels advisors explanation and different policies offered by the company.

69 members of the existing customers said to be company service levels advisors explanation are Average

28 members of the existing customers said to be company service levels advisors explanation are poor.

61

CHAPTER – V

FINDINGS AND SUGGESTIONS

FINDINGS :

Most of the TATA AIG existing customers are aware of the all the products

offered by the company

With regard to occupation most of the respondents are business people

Most of the respondents preferred both retirement planning and health

protector policy because health protector gives tax benefits .and

Retirement planning gives life long returns to the policy holders.

To protect their income after retirement most of the respondents preferred

to opt for the monthly income schemes.

most of the respondents aware of the insurance and its benefits

Most of the respondents felt that it is needed for the family.

with regarding to arrangement of cash for medical expenses, most of the

respondents prefer health protector

Most of the respondents are satisfied with company service levels advisors

explanation regarding policy

62

As a whole total customer satisfaction is very in TATA AIG LIFE

INSURANC COMPANY.

SUGGESITONS :

Company should give more ads like hoardings , than only people should

aware of the company

Before a policy is sold all the details of the policy should be clearly

explained to the client so they should understand what the exact

requirement of the customers is, it will helps in avoiding misunderstanding

between customer and advisors.

Company should open online transaction facility so that the transaction

need not take so much of time

Company should train the advisors in the way of innovatively then all the

potential customers are converted in to policyholders

It is cleared from the data collected the majority of the people believe in

insurance therefore, the company may grab this opportunity in the near

future to sell their products.

63

BIBLILOGRAPHY

Website visited:

www .tata-aig.com

www.tata-aiglife.com

Www. the hindubusinessline

www.irdaindia.org

List of books and other supplementary material referred to:

Hindu’s market survey

On Life Insurance by M .Anderson, Buist M.Anderson]

64

ANNEXURE

QUESTIONNAIRE OF THE PROJECT

NAME:

SEX : MALE FEMALE.

OCCUPATION

AGE

A) 20-30 years b) 31-40 years c) 41-50 years. d) 50 above.

1) Which type of policy did you take? a) health insurance b) children educationc) retirement planning d) Any other product.

2) How much amount of policy did you take with respective to TATA-            AIG? a) 50000.

b) 50000-100000c) 100000 ABOVE.

3) How much amount of premium do you pay? a) Below 10000 b) 10000 _15000 c 15000 above4) Are you satisfied with the mode of premium payment?

a) Monthly b) quarterly c) half yearlyd) yearly

Why please specify ……………………….

5) Do you have any other life insurance policy apart from TATA-AIG? If yes, with which insurance company.

a) icici prudential b) Bajaj Allianzc) Birla sun life insurance d) Any other life insurance company.

65

e) no6) Why did you opt for TATA- AIG Life Insurance Company? a) brand name b) Good relationship with customers c) Get more returns. d) Any other reasons

Please specify……………………..

7) If you have any doubt regarding insurance service how do you receive the response? a) Phone b) Personal interaction c) Websites d) Any other

8) How do you define the company service levels?a) good b) average c) Poor.

9) Do you satisfy with the advisors explanation about our products? a) Good b) Satisfactory

c) Unsatisfactory

If no, please specify reasons for dissatisfaction. ………………………….. d) no

10) Do you get any additional benefits from our company? a) Incentives.

b) Gifts/ gift vouchers. c) Conventions d) Any other benefits

11) How do you define the rank of the customer satisfaction levels?e) good f) average g) Poor.

66