Exploring Rural Market for Private Life Insurence Players in India

7/29/2019 Exploring Rural Market for Private Life Insurence Players in India

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Exploring Rural markets for Private Life Insurance Players in India

Dr. P.K. Gupta

Reader (Finance & Risk Management)

Centre for Management Studies,Jamia Millia Islamia, New Delhi-25

e-mail: [email protected]

Mobile: 091+9811681138

ABSTRACT

In spite of high urbanisation in India, rural India still lacks in terms of availability of various

financial products especially the risk products like insurance. Rural insurance statistics still

indicates a significantly low penetration and poor density even after the privatisation of

insurance sector in 1999. Rural India offers a tremendous scope for insurers where the

protection of human life and income generating assets is a matter of concern. Regulators

have also tried to impose rural insurance obligations for the insurance companies. Except Life

Insurance Corporation of India (LIC) representing the public sector, which has predominantly

in existence and monopoly for decades, most of the private players have not been able to tap

the opportunities in the rural life insurance market to a satisfactory level.

This paper examines the present state of affairs of rural life insurance in India and attempts to

explore the causes, which led to poor penetration of rural life insurance markets. A survey of

the rural customers has been conducted to examine their perception and attitude towards

buying life insurance products. This paper also analyses the rural insurance marketing

practices of private life insurance players in India and offers suggestive remarks for capturing

the rural potential.

Key Words: Rural Insurance, Penetration, Marketing Strategy, IRDA, GDP, Private Players

JEL Classification: G22


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INTRODUCTION

Indian life insurance industry is one of the oldest in the world and has witnessed dramatic

changes in the last two centuries. The first Indian life insurance company The Oriental Life

Insurance Company was established in Kolkata in 1818 followed by Bombay Life AssuranceCompany in 1823. Afterwards, the insurance business increased manifold in the country and

the number of insurers reached to 250, but with a regional focus and targeting a few

consumer segments. The unethical practices adopted by some players in the sector during this

development phase led the government to regulate the insurance business.

The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate

life insurance business. Later in 1928, the Indian Insurance Companies Act was enacted to

enable the Government to collect statistical information about both life and non-life insurance

business transacted in India by Indian and foreign insurers including provident insurance

societies.

In 1938 with a view to protecting the interest of insuring public, the earlier legislation was

consolidated and amended by the Insurance Act 1938 with comprehensive provisions,

detailed and effective control over the activities of insurers. The Act was amended in 1950

resulting in far reaching changes in the insurance sector. These included a statutory

requirement of equity capital for companies carrying on life insurance business, ceiling on

share holdings in such companies, stricter control on investments, submission of periodical

returns relating to investments etc. to control and put a ceiling on expenses of management

and agency commission for mismanaged companies.

By 1956, 154 Indian insurers, 16 foreign insurers and 75 provident societies were carrying on

life insurance business in India. Life insurance business was concentrated in urban areas and

confined to the higher strata of the society (Gupta, 2004). On January 19, 1956, the

management of life insurance business of 245 Indian and foreign insurers and provident

societies then operating in India was taken over by the Central Government and Life

Insurance Corporation (LIC) was formed as a statutory body.

The LIC prevailed in monopoly with the responsibility of providing life insurance protection

to the Indian masses till 1999. In tune with the economic reforms that were initiated in India

in early nineties, the Government set up a Committee on Reforms (popularly called the

Malhotra Committee) in April 1993 to suggest reforms in the insurance sector. The

Committee recommended the privatisation of insurance sector to bring competition and

choices to the consumer. Of the carious motives behind privatisation, one important one was


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to improve the penetration of insurance as a percentage of GDP, which remains low in India

even compared to some developing countries in Asia. Reforms were then initiated with the

passage of Insurance Regulatory and Development Authority (IRDA) Bill in 1999. IRDA

was set up as an independent regulatory authority, which has put in place regulations in line

with global norms. As of now, 16 life insurance companies have been registered by IRDA of

which 15 belong to private sector. Life Insurance Corporation (LIC) is the only player in the

public sector (Table 6).

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

structural changes took place in the sector especially the competition, products and

distribution channels. In 2006, insurance companies mobilized over $31 billion, nearly four

times as much as in 1999 when investments were $8 billion. The private sector market share

has also increased sharply in the last few years (Hogan, 2007).

In spite of this development, the critical issues before the Indian insurance sector that still are

to be addressed are the penetration levels in response to GDP, geographical distribution and

availability of customised insurance products. Of these, the growth of the rural life insurance

market and the role of private sector is the central issue in this paper.

The growth of Indias GDP has been above 7.0% in the last few years and is expected to

cross 8% mark in the near future well ahead of the developed economies of the world.

However, the growth in insurance as a percentage of GDP is quite low. In 2000, the insurance

penetration as percentage of GDP was 1.77% compared to the various developed countries

where it ranged from 5%-14%. It has improved marginally afterwards. IRDA reports of

2004-05 suggest that insurance penetration in India is still low compared to the developed

countries. In 2005, the penetration level (measured as premium as a %age of GDP) was

2.53% compared to 8.90% in U.K. and 10.84% in South Africa.

The insurance density in the year 2005 was 18.30 compared to 3278.10 in U.K., 2956.30 in

Japan and 30.50 in China. Though there is an improvement, but it is not sufficient (Table 1).

The factors responsible for the growth in the penetration level inter alia includes rising

income levels, growing industry competition and long term perceived profitability. But, the

focus is primarily on urban insured population. The untapped/underinsured sectors that need

careful intention include rural, individual pensions, High Net worth individuals and the

weaker sections of the society (Majumdar, 2005).

According to Assocham predictions, the Indias Insurance business is likely to jump by 500%

in 2010. By any yardstick, India, with about 200 million middle class households, presents a

huge untapped potential for players in the insurance industry (Ranjan Das, 2007). The


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growth rates observed for total premium income generated by insurers during 2001-02 to

2005-06 registered a sharp increase. The total premium mobilised by life insurance

companies has gone up from Rs. 50,094.46 crores to more than double viz. Rs. 1,05,875.77

crores in 2005-06. However, the share of LIC vis--vis private sector is declining (Table 7).

The IRDA Regulations, 2000 makes it compulsory for the insurers, existing and new to

promote the rural insurance. The regulations prescribed for undertaking benchmark

percentages for insurances in the rural insurance sector for the players. The regulations

provide that those who are proposing to carry on the life insurance business in the year 2000

or later, are required by these regulations to write in the rural sector, at least 5% of the total

policies written directly in the first financial year, and 7%, 9%, 12%, 14% and 16%

respectively in the subsequent financial years.

However, the notable feature is that most of players including the LIC have been able to just

fulfil the statutory requirements. There is no growth observed in the rural market shares,

rather the proportion of LIC rural business to total business is declining sharply, after

privatisation. It is only after the definition of rural sector was amended in 20041, the

contribution to rural sector has improved for LIC.

Rural population constitutes 70% of the Indias population and 90% of them are in villages

with less than 2000 people (Rao, 2005). The penetration rate in rural markets as per figures of

2002-03 published by IRDA was 20% (Table 3).

The agriculture development programs of the government in the past few years have helped

to increase the income in agriculture sector, which in turn has created greater purchasing

power in rural markets. Studies by NCAER provide evidence of the increased income of the

rural households. Households in the lower income group have reduced while there is a strong

growth in the number of households in upper middle and higher income households. Never

the less, a large part of rural India is still untapped due to poor distribution, large distances

and high costs relative to returns, however the projected figures for the Rural & Semi-urban

life insurance sector are $20 Billion (Assocham, 2007).

The rural business of the insurance sector before privatisation solely represented by LIC rose

sharply from 1993-84 till 1999 and then declined (Figure 1).

1 Discussed later in this paper.


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Figure 1

Rural New Business of LIC

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

1 96 9- 70 19 74 -7 5 1 983 -8 4 1 98 9- 90 1 99 5-9 6 1 99 7-9 8 1 99 8-9 9 1 99 9- 00 2 00 0-0 1 2 00 1-0 2 2 00 2-0 3 2 00 3- 04 2 00 5- 06

Years

Percentage

%age to total policies %age to total sum assured

However in 2005-06, the New Business of LIC from rural areas amounts to sum assured of

Rs. 60,971.85 crore under 74,66,484 policies representing 23.65% and 21.21% share of

policies and sum assured respectively completed during the financial year 2005-06. This

shows an improvement and the current statistics shows that 52% of the total policies were

sold to the rural sector by LIC (Kishore, 2006). But it is not the case with private players 2.

Some of them have not been able to fulfil the targets.

One possible reason for lesser inclination of private sector towards rural insurance is the

competition leading to losses in initial years of operation. This leads the companies to rush

towards urban customers so that the costs can be recovered at the earliest. Of these costs,

advertising expenses and training of agents. Agents attrition rate is the highest in the

insurance industry (Businessworld, 2006). As per the Swiss Re November 2005 report, 85%

of the premiums are generated by agents in India (Asif et. al., 2006). According to the

officials of LIC, the premiums of LIC rural products are low but the servicing costs are higher

(Adhikari, 2005).

The growth in the number of rural agents and their proportion to urban agents has been erratic

and it can be seen that in the last couple of years the proportion of rural agents to total agents

in LIC and the private sector has declined (Figure 2).

2 Based on discussion with experts, precise data not available.


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Figure 2

Agent Statistics(2001-2006)

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2001-02 2002-03 2003-04 2004-05 2005-06

Years

NumberofAgents

LIC(Rural) Private Sector(Rural) LIC(Urban) Private Sector(Urban)

IRDA 2000 regulations defined rural sector as the one, which is not urban. Urban sector was

defined to include all locations with a municipality/corporation, cantonment board or a

notified town area and all other locations specifying the criteria (a) a minimum population

of 5,000 (b) at least 75% of the male workforce engaged in non-agricultural activities and (c)

a population density of over 400 per sq. km. The definition of rural sector was changed in

2002 to census definition. The change resulted to increase in the rural premises from 42% to

72%(Holloway & Krishnamurthy, 2006). Also, rural savings to income ratio is more than

30%, which is higher than the urban population (www.watsonwyatt.com, 2007). This

indicates the rural potential for life insurers, both public and private.

The rural consumer in India is perceived to be a consumer with limited educational

background, limited choice of products and brands, choosing price over quality strongly

influenced by word-of-mouth communication. The literacy rates are as low as 65% in India

and communicating the benefits and features of insurance policy and selling them to the

illiterates is not easy (Surjan, 2004).

Rural consumer buying behaviour is significantly influenced by the income levels and

distributions and marketers efforts on promotional activities. Life insurance is a hard financial

product to sell and essentially requires a product-use situation to develop a market for it. The


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entry of new players in brand loyal market is a difficult proposition. Rural consumer is

different from urban consumer, therefore selling of insurance products by private players is

not easy. Brand loyalty and competition from substitutes are threats to new entrants. The

brand loyalty of the pioneer LIC is a long lasting one, and its brand image is difficult for the

private insurers to break. The life insurance players have to compete with the conventional

postal life insurance, which has been in existence for years. Also, the size of the market in

first instance (entry) is not convincing, which the private players have experienced.

The marketing segmentation employed by private life insurance players is based on value

chain approach which identifies rural marketing as one dealing not only with rural

consumers, but also rural producers (such as farmers). It analyses the rural producer and his

value chain and identifies the players involved in rural input functions and the significance of

these players in rural production functions and the significance of these players in the rural

production function. Rural groups are then segmented based on the requirements posed by

them on these rural input suppliers.

The service based approach to life insurance marketing works but partially. The price-based

approach with a personal touch has been more effective in rural India. However, this has

reduced profitability of the players and had made their portfolio more risky.

OBJECTIVES & METHODOLOGY

Objective of this paper is to examine the present state of affairs of rural life insurance in India

and attempts to explore the causes, which led to poor penetration of rural life insurance

markets. The paper also suggests strategies for the private players to generate business in the

rural life insurance market. The primary data used in the research consists of survey

conducted on a sample of 2000 consumers arrived at using relative precision technique

(Kennor & Taylor, 1997). The samples have been classified on the basis of gender and

education profile.

The survey includes data from the four regions of India, instrument being questionnaires

filled up from the consumers and personal discussions with them. A survey of the 300

respondents who have not yet insured for life has also been conducted. An extensive

exploration of the marketing practices of the private players and discussions with 70

executives at various levels both in the public (LIC) and the private sector has been carried

out in the study.


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Given the exploratory research model and the objectives, the study partially ignores the

regional disparities especially with respect to geographical location and income distribution.

However attempt has been made to generalise and the variances have been factored into the

data results. A comprehensive study of life insurance products suitable to rural markets is a

step towards further research. Also, mortality rates and life conditions differ significantly in

the various parts of India. As such products specific conclusions are difficult to derive.

ANALYSIS & FINDINGS

Consumer Analysis

Results indicate that males who have qualified the senior school more in the age group of 31-

43 represent the highest potency to buying life insurance. Those rural households with headof the family more educated but with less family income are more likely to purchase a life

insurance policy than those with better social security but lesser education.

Factorial analysis of rural customer preferences for life insurance products indicates the

consistency of income is on the top of the rural consumers mind. The second rank is for old

age provision, followed by provision for the spouse life and others. This argument can be

further substantiated from the results obtained for buying behaviour.

The rural customers considersafety of invested funds as the most important factor in buying a

life insurance followed by claims settlement and assistance in policy purchases. This is

obvious because of the low-income levels and money available for investment. Rural

consumers predominantly are risk avoiders, therefore, the insurance companies cannot project

the similar appearance and image they maintain for an average urban insured. (Table 9)

Also, it is observed that rural customers having bank accounts have higher potential for

buying insurance, which implies the possibility of cross selling or bancassurance. The agents

play an important role in assisting the rural customers in buying a right kind of product.

Claim settlement is also vital for rural consumers. Whereas the legal grievance redressel

system is considered effective in urban India, rural customers expect hassle-free claims and

dispute settlement machinery without resorting to judiciary. Traditionally, the agents play an

important role in claims settlement, since they mostly do all the work relating to submission

of documents with the insurer for claims till release of payments. It therefore implies that

efficiency of the agents is an important aspect of rural marketing for the private insurance

players. LIC has been predominantly very successful in this aspect.


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Assistance in purchase and first level underwriters (the agents) has an important role to play.

Rural customers need more advisory services, rely only on people of trust. The onus is also in

the agents to offer a product affordable to customers and profitable to the insurer. Flexibility

in premiums conventionally a strategy of LIC should also work well for private players

Results suggest that 31.30% of the respondents couldnt recall even a single brand of private

life insurer. This indicates poor promotional efforts on part of the private life insurance

players. The brand recall of the SBI Life is higher than the ICICI Pru Life, though the ICICI

Pru Life holds the second position in the Indian Life insurance market. This may be due to

the deep penetration of the State Bank of India (SBI) in the rural banking gamut. This

logically implies that bancassurance can be an effective means of capturing rural market

(Table 8). Factorial analysis also supports the importance of distribution channels (Table 11).

A significant proportion (33.40%) of uninsured rural population thinks that life insurance is

not needed (Table 10). This may be due to no risk of life perception, guided by belief in

God and superstition. Contrarily, the commercialisation hazards have accentuated the demand

for insurance among urban masses (Lakshmi, 2004). Also, possibly, the fear of life has not

been commercially communicated to the rural masses since long. The income levels and the

lack of awareness are the other important reasons for rural population not being insured. This

is an important implication for private players.

Insurers Analysis

The private insurers have been relying on the traditional channels of distribution especially

agents for capturing the market which was in monopolised by LIC for many years. There is

firm belief among these companies that agents are best suited for tapping the rural segments.

But increased awareness levels have already transformed this thinking of rural people and

they are relying more on unorthodox channels of distribution like bancassurance. Success of

HDFC Standard Life and ICICI Prudential Life Insurance almost proves this fact.

The problem of high distribution costs is a problem for private insurers. This may not be the

case for LIC in the public sector since it has huge corpus and wide distribution network.

Incentivisation of rural agents is not adequate leading to a cause and effect relationship

between the number of agents, their efforts and the rural business. Probably this may be

reason for decline in the number of rural agents. Some players are also not happy with the

mandatory requirement of 100 hours training prescribed by IRDA for agents. They feel that

the training requirements must be relaxed especially for the rural agents.


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The results show that in the rural market there is a strong tilt towards long term saving

products. Endowment policies for definite term with low premiums and standard money back

policies that offer return of the accumulated saving at regular intervals rank high in

popularity. The pure term insurance plans meant for only risk coverage are not popular. Most

of the private players are still struggling to design and offer effective products to rural

masses. Joint family system still prevailing significantly in rural areas is a hindrance for

marketing of life insurance products. The payment frequency of life premiums is not found

suitable in case of some players.

LIC has been able to build an image of corporate responsibility and social development,

which is difficult for the private players. It is communicating development as its thrust area.

On similar lines, private life insurer have started organising health check-up programs,

children recreation programs, and similar other activities to capture the rural market.

Some of the private insurers have not been able to meet the statutory requirements especially

in the initial years. However, some of them have now become proactive in their strategies and

have now realised the rural potential.

According to Shobit & Shukla (2004), professional style of working has failed to generate

confidence and goodwill, as rural population prefers personalised approach and that too in

accordance with the regional culture.

Private companies somewhat lack in coordinating between their underwriting practices and

marketing activities especially with their risk selection process and pricing for rural

consumers. The methodology of setting premiums well above the actual risk exposure in

urban markets does not work in rural markets where lower margins or cost-to-cost basis

approach is quite successful.

Sales communication (literature and media) in some case of private players is traditionally in

English language, which makes little or no impact on potential rural customer. The use of

regional languages by LIC is an effective publicity tool.

Another noticeable feature of the private players is that marketing strategists are urban

executives having no knowledge of rural India, which is an area of concern. Contrarily, the

LIC has wide representations from the various regions of India and communities.

The positioning strategies used by players are overlapping. LIC is following access based

positioning strategy for market penetration, which has worked well. Some players like Birla

Sun Life are following a variety based positioning and focussing on specific products like

investment related schemes. Niche marketing strategy used by ICICI Pru Life has been useful

to tap High Net worth Individuals (HNIs) in certain states but failed in others. Some life


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insurance companies focusing on rural markets have adopted innovative means of distribution

like instead of using agents; gramsevaks are used as distribution channels, which have

enabled them to utilise their special knowledge for gaining local competitive advantage.

CONCLUSION

In order to reap the benefits of rural market, private insurers must change their business

models. Insurers must put in appropriate resources to develop the distribution network in

order to grasp the vast potential of the rural market. Private players should explore the

alternative channels of distribution. Agents for rural market must be trained and incentivised

exclusively.

Integrating marketing efforts with local level institutions and Self-help groups could be baseto penetrate. Another strategy could be partnerships with general insurance players and other

financial institutions operating in rural market. Some players have now started tying up with

Cooperative banks, Regional Rural Banks and NGOs for selling their products. Use of kisan

credit card holders for cross selling has proved to be useful in tapping the rural market.

Products need to be suitably designed keeping the rural complexion in mind. Investment

linked insurance products with marginal premiums may work. Researches have shown that

payment schedule of premiums on policies may be linked to the harvest, since agricultural

income is the prime source for the rural masses. The focus has been on breaking even early,

rather it should be devoted to building wide customer base. Private insurers should also focus

on awareness programs and associate the ethnical and cultural component of the product

promotion for gaining competitive advantage. Advertising efforts need to be systematised and

intensified in rural markets.

In developed markets, Life and Health insurance are sister products, but in India health

insurance is classified as non-life product. Some regrouping or arrangement is also expected

from the regulators.

To conclude, the keys to success in insurance penetration in rural areas for private players are

accessibility, reasonably priced products, effective communication and after-sales service.


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Table 1

COUNTRY WISE INSURANCE PENETRATION AND DENSITY

Insurance Penetration

(Premiums as a % of GDP)

Insurance Density

Ratio (in %) of premium tototal population

Countries

2003 2004 2005 2003 2004 2005

United Kingdom 8.62 8.92 8.90 2617.10 3190.40 3287.10

Japan 8.61 8.26 8.32 3002.90 3044.00 2956.30

United States 4.38 4.22 4.14 1565.70 1617.20 1686.30

Australia 4.42 4.17 3.51 1129.30 1285.10 1366.70

South Korea 6.77 6.75 7.27 873.60 1006.80 1210.60

South Africa 12.96 11.43 10.84 476.50 545.50 558.30

Malaysia 3.29 3.52 3.60 139.80 167.30 188.00

Brazil 1.28 1.36 1.33 35.80 45.90 56.80

China 2.30 2.21 1.78 25.10 27.30 30.50

India 2.26 2.53 2.53 12.90 15.70 18.30

{Source: IDRA Annual Report 2005-06}

Table 2

RURAL NEW BUSINESS OF LIC

%age share of the rural new business in the

total business

Year No. of Policies

(in Lakhs)

Sum Assured

(in Rs.

Crores) Policies Sum Assured

1969-70 4.61 251.76 33.00 24.50

1974-75 5.72 464.27 35.70 14.90

1983-84 8.30 1260.24 35.00 28.54

1989-90 30.48 8086.35 41.19 34.68

1995-96 52.57 21,263.59 47.70 41.00

1997-98 68.40 27,550.69 51.40 43.30

1998-99 81.23 35,372.94 54.70 47.00

1999-00 97.04 44,168.19 57.50 48.70

2000-01 109.20 59,676.42 55.53 47.76

2001-02 37.02 25,461.94 16.94 13.65

2002-03 45.23 22,574.69 18.90 13.37

2003-04 62.20 35,651.22 22.79 17.85

{Source: Mishra (2004), Majumdar (2005), LIC Annual Report 2006}


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Table 3

RURAL POPULATION AND PENETRATION

Total population (as on July 2003) 1.05 billion

Rural Population 72.22%

Urban Population 27.78%

Penetration level in rural market 20%

{Source: IRDA Report 2002-03}

Table 4

SIZE OF INSURANCE SECTOR(IN US $ BILLION)

Projections*

Category Rural & Semi-Urban** Urban Total

Life Insurance 20 15 35

Non-Life Insurance 15 10 25

Total 35 25 60

Projected figures by 2010

** A town/village where population is less than 25000

{Source: Assocham Predictions on www.financialexpress.com/fe_full_story.php}

Table 5

RESPONDENTS DEMOGRAPHIC INFORMATION: AGE-GENDER RELATIONSHIP

GenderAge Groups

Male Female

% age of

Total

18-30 58.33% 41.67% 30.00%

31-43 58.82% 41.18% 42.50%

44-56 66.67% 33.33% 18.75%

Above 56 50.00% 50.00% 8.75%

%age of Total 57.50% 42.50% 100.00%


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EducationAge Groups

Below High

School

High

School

Senior

School

Graduate Post-

Graduate

and above

% age of

Total

18-30 9.09% 31.82% 27.27% 27.27% 4.55% 30.99%

31-43 15.15% 33.33% 18.18% 33.33% 0.00% 46.48%

44-56 7.69% 30.77% 46.15% 15.38% 0.00% 18.31%

Above 56 33.33% 33.33% 0.00% 33.33% 0.00% 4.23%

%age of Total 12.68% 32.39% 25.35% 28.17% 1.41% 100.00%

Table 6

LIST OF REGISTERED LIFE INSURANCE COMPANIES

Sl. No. Name of the Life Insurance Company

1. LIC of India

2. Allianz Bajaj Life Insurance Co. Ltd.

3. ICICI Prudential Life Insurance

4. Tata AIG Life Insurance Co. Ltd.

5. HDFC Standard Life Insurance Co. Ltd.

6. AMP Sanmar Insurance Co. Ltd.

7. ING Vyasya Life Insurance Co. Pvt. Ltd.

8. Max New York Life Insurance Co. Ltd.

9. Birla Sun Life

10. AVIVA Life Insurance Co. India Pvt. Ltd.

11. Metlife India Insurance Co. Pvt. Ltd.

12. Om Kotak Mahindra Life Insurance Co. Ltd.

13. Shri Ram Life Insurance Co. Ltd.

14. SBI Life Insurance Co. Ltd.

15. Sahara India Life Insurance Co. Ltd.

16. Bharti AXA Life Insurance Company Ltd.

{Source: www.irdaindia.com}


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Table 7

TOTAL PREMIUMS MOBILISED POST PRIVATISATION

(Rs. in Crores)

Insurer 2001-02 2002-03 2003-04 2004-05 2005-06

LIC 49,821.91 54,628.49 63,167.60 75,127.29 90,792.22

ICICI Prulife 116.38 417.62 989.28 2,363.82 4,261.05

Bajaj Allianz 7.14 69.17 220.80 1,001.68 3,133.58

HDFC Standard Life 33.46 148.83 297.76 686.63 1,569.91

Birla Sunlife 28.26 143.92 537.54 915.47 1,259.68

SBI Life 14.69 72.39 225.67 601.18 1,075.32

Tata AIG 21.14 71.77 253.53 497.04 880.19

Max Newyork 38.95 96.59 215.25 413.43 788.13

Kotak Mahindra 7.58 40.32 150.72 466.16 621.85

Aviva - 13.47 81.50 253.42 600.27

ING Vyasya 4.19 21.16 88.51 338.86 425.38

Reliance Life - - - 106.55 224.21

Metlife 0.48 7.91 28.73 81.53 205.99

Sahara - - - 1.74 27.66

Shriram Life - - - - 10.33

AMP Sanmar 0.28 6.47 31.06 0 0

Public Sector (LIC) 49,821.91 54,628.49 63,167.60 75,127.29 90,792.22

Private Sector Total 272.55 1,109.62 3,120.33 7,727.51 15,083.55

Grand Total 50,094.46 55,738.11 66,287.93 82,854.80 1,05,875.77

Private Sector Share 0.54% 1.99% 4.71% 9.33% 14.25%

LIC Share 99.46% 98.01% 95.29% 90.67% 85.75%

Annual Growth Rate 46.45% 11.27% 18.93% 24.99% 27.78%

{Source: IRDA Annual Reports 2001-02 to 2005-06}


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Table 8

BRAND RECALL PRIVATE PLAYERS

Company Recalled Percentage of respondentsSBI Life 21.30

ICICI Pru Life 20.00

HDFC Standard Life 13.80

Birla Sunlife 3.80

Max New York Life 3.80

ING Yyasya 2.50

Allianz Bajaj 2.50

Tata AIG 1.30

Unable to Recall 31.30

Total 100.00

Table 9

FACTORS AFFECTING PURCHASE OF INSURANCE

Responses (%age)VariablesVery Important Important Not Important

Assistance in Policy Purchase 28.80 65.00 6.30

Safety of Invested Funds 41.30 57.50 1.30

Affordability 25.00 62.50 12.50

Usefulness 22.50 65.00 12.50

Claim Settlement 36.30 58.70 5.00

Office Environment 25.00 62.50 12.50Administrative Procedures 12.50 80.00 7.50

Post Purchase Services 23.80 63.80 12.50

Behaviour of Agents 25.50 62.50 12.50


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Table 10

UNINSURED RESPONDENTS RESPONSES

Reasons for not being insured Percentage of

RespondentsNever felt the need of it 33.40

Not enough funds for it 33.30

Lack of knowledge 25.78

Bad experiences of others 13.63

Any other reason 21.21

Total 100.00

Table 11

FACTORIAL RESULTS BASED ON MAXIMUM LIKELIHOOD METHOD

Factors Grouped Variation Explained

F1: Distribution Channels

(Post Purchase Services, Behaviour of Agents, Assistance in

Policy Purchase, Administrative Procedures, Claim Settlement)

.727

F2: Insured Specific

(Usefulness, Affordability, Safety of Invested Funds) .2 10

F3: Other

(Office Environment).063

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Documents

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