A PROJECT ON

A STUDY ON EFFECTIVNESS OF MARKETING

STRATEGY OF LIFE INSURANCE COOPERATION
OF INDIA

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

BACHELOR DEGREE IN BUSINESS ADMINISTRATION
(SESSION 2011 - 2014)

Submitted TO Submitted by

MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES

AFFILATED TO GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY
PSP AREA, ROHINI SECTOR 22

TABLE OF CONTENT

1
 PARTICULARS PAGE NO.

 STUDENT’S DECLARATION 3
 ACKNOWLEDGEMENT 4
 CERTIFICATE FROM THE GUIDE 5
 PREFACE 6
 OBJECTIVES OF THE STUDY 7
 CH-1 INTRODUCTION (8-46)
I. HISTORY OF INSURANCE INDUSTRY IN INDIA 9
II. HISTORY OF LIFE INSURANCE COORPORATION OF INDIA 12
III. OBJECTIVE OF LIC 14
IV. MISSION AND VISION 15
V. SWOT ANALYSIS 16
VI. CONCEPT OF INSURANCE 17
VII. REVIEW OF LITRATURE 43
VIII. LIMITATIONS OF STUDY 46
 CHAPTER-2 RESEARCH METHODOLOGY (47-49)
 CH- 3 DATA ANALYSIS AND FINDINGS (50-62)
 CH-4 CONCLUSION AND SUGGESTIONS (63-68)
 BIBLIOGRAPHY 69
 Questionnaire 70

2
 STUDENT’S DECLARATION

The project report on “A STUDY ON EFFECTIVNESS OF MARKETING

STRATEGY OF LIFE INSURANCE COOPERATION OF INDIA ” has been submitted
by me in partial fulfilment of the requirement for the award of degree of BACHELORS OF
BUSINESS ADMINISTRATION (BBA) SESSION 2011-2014 This is an original work done
by me. This report or any part of it has not been submitted for the award of any degree or
diploma.

3
 ACKNOWLEDGEMENT

With profound sense of gratitude and regard, I express my sincere thanks to my guide and
mentor ………………….. for his valuable guidance and the confidence he instilled in me,
that helped me in the successful completion of this project report. Without his help, this
project would have been a distant affair.

His thorough understanding of the subject and professional guidance was indeed of immense
help to me.

I am also greatly thankful to the faculty members of our institute who co-operated with me
and gave me their valuable time.

Thanking You
……………………………

4
 CERTIFICATE FROM THE GUIDE

This is to certify that AKHILESH BADOLA student of MAIMS of course BBA Batch
(2011-2014), has completed his research work titled “A STUDY ON EFFECTIVNESS OF
MARKETING STRATEGY OF LIFE INSURANCE COOPERATION OF INDIA”
under my guidance and supervision .The work submitted is genuine and authentic.

GUIDED BY:
………………………..

5
Preface
This project is focused on the marketing strategy used by the india’s biggest public insurance
company Life Insurance Corporation Of India. After privatization, insurance industry has
seen significant growth. Due to low penetration and huge potential, many foreign and
domestic players have entered the sector. Many players have joined insurance industry posing
a tough competition to LIC. LIC has been reorganizing itself in order to perform better than
the new players. LIC offers a wide variety of products, which fulfills the needs of different
segments of the society. As at the end of the financial year 2010-11, the Corporation had 52
products available for sale. The performance of LIC has been exemplary and it has been
growing from strength to strength be it customer base, agency network and branch office
network. LIC continues to remain the largest player in the Indian Life Insurance market with
a market share of 71.30% in FY 2011-12.

6
OBJECTIVES OF THE STUDY
1. To know market share of LIC of India in Life insurance business.
2. To know new market strategy adopted by LIC of India to increase the volume of
Business.

7
CH-1 INTRODUCTION

8
HISTORY OF INSURANCE INDUSTRY IN INDIA
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
( Manusmrithi ), Yagnavalkya (Dharmasastra ) and Kautilya ( Arthasastra ). The writings
talk in terms of pooling of resources that could be re-distributed in times of calamities such as
fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance.
Ancient Indian history has preserved the earliest traces of insurance in the form of marine
trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing
from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In
1829, the Madras Equitable had begun transacting life insurance business in the Madras
Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades
of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India
(1897) were started in the Bombay Residency. This era, however, was dominated by foreign
insurance offices which did good business in India, namely Albert Life Assurance, Royal
Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard
competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies

in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life business transacted
in India by Indian and foreign insurers including provident insurance societies. In 1938, with
a view to protecting the interest of the Insurance public, the earlier legislation was
consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for
effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were
a large number of insurance companies and the level of competition was high. There were
also allegations of unfair trade practices. The Government of India, therefore, decided to
nationalize insurance business.

9
 An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector
and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154
Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign
insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west and
the consequent growth of sea-faring trade and commerce in the 17th century. It came to India
as a legacy of British occupation. General Insurance in India has its roots in the establishment
of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the
Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes
of general insurance business.
1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton
of India. The General Insurance Council framed a code of conduct for ensuring fair conduct
and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general
insurance business was nationalized with effect from 1st January, 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company Ltd.,
the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United
India Insurance Company Ltd. The General Insurance Corporation of India was incorporated
as a company in 1971 and it commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last
decade and more has seen it been opened up substantially. In 1993, the Government set up a
committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose
recommendations for reforms in the insurance sector.The objective was to complement the
reforms initiated in the financial sector. The committee submitted its report in 1994 wherein ,
among other things, it recommended that the private sector be permitted to enter the
insurance industry. They stated that foreign companies be allowed to enter by floating Indian
10
companies, preferably a joint venture with Indian partners. Following the recommendations
of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development
Authority (IRDA) was constituted as an autonomous body to regulate and develop the
insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key
objectives of the IRDA include promotion of competition so as to enhance customer
satisfaction through increased consumer choice and lower premiums, while ensuring the
financial security of the insurance market. The IRDA opened up the market in August 2000
with the invitation for application for registrations. Foreign companies were allowed
ownership of up to 26%. The Authority has the power to frame regulations under Section
114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations
ranging from registration of companies for carrying on insurance business to protection of
policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July,
2002. Today there are 24 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 23 life insurance companies operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together
with banking services, insurance services add about 7% to the country’s GDP. A well-
developed and evolved insurance sector is a boon for economic development as it provides
long- term funds for infrastructure development at the same time strengthening the risk taking
ability of the country.

11
HISTORY OF LIFE INSURANCE COORPORATION OF INDIA
The demand for nationalization of life insurance industry was made repeatedly in the past but
it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was
introduced in the Legislative Assembly. However, it was much later on the 19th of January,
1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16
non-Indian companies and 75 provident were operating in India at the time of nationalization.
Nationalization was accomplished in two stages; initially the management of the companies
was taken over by means of an Ordinance, and later, the ownership too by means of a
comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the
19th of June 1956, and the Life Insurance Corporation of India was created on 1st September,
1956, with the objective of spreading life insurance much more widely and in particular to the
rural areas with a view to reach all insurable persons in the country, providing them adequate
financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate
office in the year 1956. Since life insurance contracts are long term contracts and during the
currency of the policy it requires a variety of services need was felt in the later years to
expand the operations and place a branch office at each district headquarter. Re-organization
of LIC took place and large numbers of new branch offices were opened. As a result of re-
organisation servicing functions were transferred to the branches, and branches were made
accounting units. It worked wonders with the performance of the corporation. It may be seen
that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00
crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore
mark of new business. But with re-organisation happening in the early eighties, by 1985-86
LIC had already crossed 7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8
zonal offices, 992 satallite offices and the Corporate office. LIC’s Wide Area Network covers
109 divisional offices and connects all the branches through a Metro Area Network. LIC has
1`3uitied up with some Banks and Service providers to offer on-line premium collection
facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to
customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been
commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New
Delhi, Pune and many other cities. With a vision of providing easy access to its
policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices

12
are smaller, leaner and closer to the customer. The digitalized records of the satellite offices
will facilitate anywhere servicing and many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC
has issued over one crore policies during the current year. It has crossed the milestone of
issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67%
over the corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performance
records in various aspects of life insurance business. The same motives which inspired our
forefathers to bring insurance into existence in this country inspire us at LIC to take this
message of protection to light the lamps of security in as many homes as possible and to help
the people in providing security to their families.

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OBJECTIVE OF LIC

 Spread Life Insurance widely and in particular to the rural areas and to the socially
and economically backward classes with a view to reaching all insurable persons in
the country and providing them adequate financial cover against death at a reasonable
cost.
 Maximize mobilization of people's savings by making insurance-linked savings
adequately attractive.
 Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the community as
a whole; the funds to be deployed to the best advantage of the investors as well as the
community as a whole, keeping in view national priorities and obligations of
attractive return.
 Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.
 Act as trustees of the insured public in their individual and collective capacities.
 Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
 Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
 Promote amongst all agents and employees of the Corporation a sense of
participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective

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Mission
"Explore and enhance the quality of life of people through financial security by providing
products and services of aspired attributes with competitive returns , and by rendering
resources for economic development."

Vision
"A trans-nationally competitive financial conglomerate of significance to societies and Pride
of India."

15
SWOT ANALYSIS OF LIC
Strength
1) Brand Image
2) Govt Guarantee
3) Claims settlement
4) Large product portfolio
Weakness
1) Lethargic Staff
2) Large scale Corruption in Main Office
3) Ultra-Slow decision making process
4) Internal problems between Top Management and lower cadre Employees
Opportunity
1) Pension Market
2) Health Insurance
3) Large Real Estate portfolio
Threat
1) Internal discord
2) New players

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CONCEPT OF INSURANCE
An introduction to insurance
With the insurance sector in full bloom, today, it would not be wrong to say that in the
present market scenario, there is an insurance available for just about anything and
everything. With even a bourgeois family man opting for various insurance schemes, the
question today is not whether you have insurance or not. Instead it is, whether you need a
particular insurance or not? Insurance is no doubt an area of immense importance in regards
to the financial and monetary sectors of every individual. The whole idea behind Insurance as
a financial security tool was to design something which could secure the financial well-being
of an individual as well as his/her dependents, in case he/she undergoes an unforeseen loss.
These losses could be related to health, property, assets or life in general. Insurance helps
people manage monetary risks and losses related to investments, liabilities for wrong
financial actions, and risks for inability to earn income at any stage of life. Insurance
generally covers all these risks.
The basic economic principle of life insurance, therefore , is ― the risk suffered by a few is
spread over a large no. of persons who face the same risk‖ 7
Definition of Insurance – promises of reimbursement in the Case of loss; paid to people or
companies so concerned about hazards that they have made prepayments to an insurance
company" 8
Definition of life Insurance – ―Life insurance can be defined as a policy that will pay a
specified sum to beneficiaries up on the death of insured" 9
How it works
While applying for insurance, you need to fulfill a lot of paperwork formalities. A handful of
forms need to be filled in by you while applying for insurance with a particular insurance
company, some of which are compulsory by law, while the others are optional, depending
from one company to another. By filling up all the necessary formalities and agreeing to the
terms and conditions of an insurance policy of a particular company, a contract is developed
between the both of you. An insurance policy encloses in it a copy of all the terms and
conditions of the insurance company as well as providing you with the detailed information
about the monthly premium you will be paying, also specifying the life or the term of the
insurance. The policy will also enclose in it, all the accidents or mishaps which will be
covered by the insurance company in case they occur to you or any of your dependant or
property or assets, depending upon the type of insurance you have opted for. The insurance

17
company agrees to pay you a sum of money to recover the losses you underwent in the
occurrence of a specific mishap, in exchange for the monthly payments made by you to the
company, also known as the premium. The severity of that event or mishap may be varying
from a car breakdown to a medical emergency, depending on the type of insurance you have
opted for "Term insurance policies can be issued for as short as a period of one year or for
fixed terms of 5,10,15 or20 years or for protection up to a certain age say 60 or 65 years" 10
If you underwent an incident which you know has been insured by your insurance company,
you can make a claim for all the damage done in the incident and can receive a payment for d
same from them. On every claim that you make, be it a huge one or a nominal one, you will
receive an amount you are insured for, excluding a fraction of the total amount which you
must pay for, in each claim. The higher is the fraction of amount which you agree to pay for
every insured incident, the lower are the premiums which you will have to pay to the
insurance company and vice versa.
However, insurance companies underwrite proposals for term insurance policies very care
fully various restrictions as to –
"Age at entry
Amount of assurance
Period of insurance etc" 11
Hence, it is always advisable to pay a higher premium in exchange for a lower deductible
amount you pay, especially for the claims that are likely to be made by you sooner or later.
TheLoanBazaar.com provides its clients with the most suitable insurance schemes and
policies to suit their needs and requirements. We provide Insurance to cover various events
and incidents and our - Insurance Services Can Be Broadly Classified Into 6 Types, Which
Are:-
Home Insurance real estate assets or property are always at risk for theft or destruction by
various causes such as accidents, natural calamities, or any other mishap. Home insurance
with TheLoanBazaar.com helps you manage all these risks.
Health Insurance medical care these days costs much higher than what it was ten years back.
Health care insurance is necessary for every individual to assure a passable level of medical
care required to lead a healthy life. With the old aged people, a health insurance can get them
reassured about paying their medical bills in case of emergencies.
Life Insurance a life insurance is beneficiary especially for the people who are the sole bread
earners of their house or the ones with many dependants on them. In case of any mishap, if

18
their family were to lose them due to a death, their family would be forced to suffer financial
sufferings.
In case an accident leaves them disabled for their present job, although the insurance
company would not be able to payback the loss of the disability, but would at least be able to
cover your losses and keep you from going into a financial loss.
General Insurance against risk of loss to assets like car, house, accident etc. is covered under
General or Non-life Insurance. General insurance includes fire insurance, marine insurance,
motor insurance, theft insurance, health insurance, personal accident insurance etc. To buy or
get information on life insurance products offered by us, please click on the link above.
Travel Insurance this is intended to cover any of the financial or any other losses which were
incurred by the insured while traveling, be it nationally or internationally, such as mountain
trekkers, cruise travelers etc.
Auto Insurance damage of such assets like cars, trucks or any other vehicle can be
unpredictable during traveling. Any mishap or accident can take place any time. Auto
insurance protects certain assets from many forms of loss by insuring it for the damages
consequential to the asset's use.

19
The introduction of private players in the industry has added value to the industry. The
initiatives taken by the private players are very competitive and have given immense
competition to the on time monopoly of the market LIC. Since the advent of the private
players in the market the industry has seen new and innovative steps taken by the players in
this sector. The new players have improved the service quality of the insurance. As a result
LIC down the years have seen the declining phase in its career. The market share was
distributed among the private players. Though LIC still holds the 75% of the insurance sector
but the upcoming natures of these private players are enough to give more competition to LIC
in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-
05).The following companies has the rest of the market share of the insurance industry.

LIFE INSURANCE BUSINESS AT PRESENT

Name of the player market share (%) Market
Name Of The Player Share
Life Insurance Corporation of India 76.07 %
ICICI Prudential Life Insurance Co 6.91
Allianz Bajaj Life Insurance Co 4.75%
SBI Life Insurance Co 2.98%
Birla Sun Life Insurance Co 1.72 %
HDFC Standard Life Insurance Co 1.66 %
TATA- AIG Life Insurance Company 1.46 %
Max New York Life Insurance Co. 1.28 %
Aviva Life Insurance 1.08 %
Om Kotak Mahindra Life Insurance 0.71 %
ING Vysya Life Insurance Co. 0.54 %
MetLife Insurance Co. 0.37 %
AMP SANMAR 0.46%
SAHARA LIFE 0.03%

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MARKETING STRATEGY-A BRIEF
Marketing strategy is most effective when it is an integral component of corporate strategy,
defining how the organization will successfully engage customers, prospects, and competitors
in the market arena. It is partially derived from broader corporate strategies, corporate
missions, and corporate goals. As the customer constitutes the source of a company's
revenue, marketing strategy is closely linked with sales. A key component of marketing
strategy is often to keep marketing in line with a company's overarching mission statement.
Marketing strategy consists of the analysis, strategy development, and implementation
activities in: ―Developing a vision about the market(s) of interest to the organization,
selecting market target strategies, setting objectives, and developing, implementing, and
managing the marketing program positioning strategies designed to meet the value
requirements of the customers in each market target‖ 26
Strategic marketing is a market-driven process of strategy development, taking into account a
constantly changing business environment and the need to deliver superior customer value.
The focus of strategic marketing is on organizational performance rather than a primary
concern about increasing sales. Marketing strategy seeks to deliver superior customer value
by combining the customer-influencing strategies of the business into a coordinated set of
market-driven actions. Strategic marketing links the organization with the environment and
views marketing as a responsibility of the entire business rather than a specialized function.
Because of marketing‘s boundary orientation between the organization and its customers,
channel members, and competition, marketing processes are central to the business strategy
planning process. Strategic marketing provides the expertise for environmental monitoring,
for deciding what customer groups to serve, for guiding product specifications, and for
choosing which competitors to position against. Successfully integrating cross-functional
strategies is critical to providing superior customer value. Customer value requirements must
be transformed into product design and production guidelines. Success in achieving high-
quality goods and services require finding out which attributes of goods and service quality
drive customer value.

MARKETING STRATEGY IN LIFE INSURANCE BUSINESS – A PROCESS

The marketing strategy analysis, planning, implementation and management process is
described below. The strategic situation analysis considers market and competitor analysis,
market segmentation, and continuous learning about markets. Designing marketing strategy
examines customer targeting and positioning strategies, marketing relationship strategies and
21
planning for new products. Marketing program development consists of product, distribution,
price, and promotion strategies designed and implemented to meet the value requirements of
targeted buyers. Strategy implementation and management consider organizational design
and marketing strategy implementation and control" 27

Stage 1: Strategic Situation Analysis

Marketing management uses the information provided by the situation analysis to guide the
design of a new strategy or change an existing strategy. The situation analysis is conducted
on a regular basis after the strategy is under way to evaluate strategy performance and
identify needed strategy changes.

Market Vision, Structure, and Analysis markets need to be defined so that buyers and
competition can be analyzed. For a market to exist, there must be (1) people with particular
needs and wants and one or more products that can satisfy buyers‘ needs, and (2) buyers
willing and able to purchase a product that satisfies their needs and wants. A product-market
consists of a specific product (or line of related products) that can satisfy a set of needs and
wants for the people (or organizations) willing and able to purchase it. The term products
used to indicate either a physical good or an intangible service.
Analyzing product-markets and forecasting how they will change in the future are vital to
business and marketing planning. Decisions to enter new product-markets, how to serve
existing product-markets, and when to exist in unattractive product-markets are critical
strategic choices. The objective is to identify and describe the buyers, understand their
preferences for products, estimate the size and rate of growth of the market, and find out what
companies and products are competing in the market.
Evaluation of competitors‘ strategies, strengths, limitations and plans is also a key aspect of
the situation analysis. It is important to identify both existing and potential competitors.
Competitor analysis includes evaluating each key competitor. The analyses highlight the
competition‘s important strengths and weaknesses. A key issue is trying to figure out what
each competitor is likely to do in future.
Segmenting Markets market segmentation looks at the nature and extent of diversity of
buyers‘ needs and wants in a market. It offers an opportunity for an organization to focus in
business capabilities on the requirements of one or more groups of buyers. The objective of
segmentation is to examine differences in needs and wants and to identify the segments (sub-
groups) within the product-market of interest. Each segment contains buyers with similar
22
needs and wants for the product category of interest to management. The segments are
described using the various characteristics of people, the reasons that they buy or use certain
products, and their preferences for certain brands of products. Likewise, segments of
industrial product-markets may be formed according to the type of industry, the uses for the
product, frequency of product purchase, and various other factors.
Each segment may vary quite a bit from the average characteristics of the entire product-
market. The similarities of buyers‘ needs within a segment enable better targeting of the
organization‘s capabilities to buyers with corresponding value requirements.
Continuous Learning about Markets one of the major realities of achieving business
success today is the necessity of understanding markets and competition. Sensing what is
happening and is likely to occur in the future is complicated by competitive threats that may
exist beyond traditional industry boundaries. For example, CD-ROMs compete with books.
Stage 2: Designing Market-Driven Strategies
The strategic situation analysis phase of the marketing strategy process identifies market
opportunities, defines market segments, evaluates competition, and assesses the
organization‘s strengths and weaknesses. Market sensing information plays a key role in
designing marketing strategy, which includes market targeting and positioning strategies,
building marketing relationships, and developing and introducing new products.
Market Targeting and Strategic Positioning marketing advantage is influenced by several
situational factors including industry characteristics, type of firm (e.g., size), extent of
differentiation in buyers‘ needs, and the specific competitive advantage(s) of the company
designing the marketing strategy. The core issue is deciding how, when, and where to
compete, given a firm‘s market and competitive environment.
The purpose of the marketing targeting strategy is to select the people (or organizations) that
management wishes to serve in the product-market. When buyers‘ needs and wants vary, the
market target is usually one or more segments of the product-market. Once the segments are
identified and their relative importance to the firm determined, the targeting strategy is
selected. The objective is to find the best match between the value requirements of each
segment and the organization‘s distinctive capabilities. The targeting decision is the focal
point of marketing strategy since targeting guides the setting of objectives and developing a
positioning strategy. The options range from targeting most of the segments to targeting one
or few segments in a product-market. The targeting strategy may be influenced by the
market‘s maturity , the diversity of buyers‘ needs and preferences, the firm‘s size compared
0to competition, corporate resources and priorities, and the volume of sales required to
23
achieve favorable financial results. Deciding the objectives for each market target spells out
the results expected by management. Examples of market target objectives are desired levels
of sales, market share, customer retention, profit contribution, and customer satisfaction.
Marketing objectives may also be set for the entire business unit and for specific marketing
activities such as advertising.
The marketing program positioning strategy is the combination of product, value-chain, price,
and promotion strategies a firm uses to position itself against its key competitors in meeting
the needs and wants of the market target, the strategies and tactics used to gain a favorable
position are called the marketing mix or the marketing program.
Marketing Relationship Strategies marketing relationship partners may include end user
customers, marketing channel members, suppliers, competitor alliances, and internal teams.
The driving force underlying these relationships is that a company may enhance its ability to
satisfy customers and cope with a rapidly changing business environment through
collaboration of the parties involved. Relationship strategies gained new importance in the
last decade as customers became more demanding and competition became more intense.
Building long-term relationships with customers and value-chain partners offers companies a
way to provide superior customer value. Although building collaborative relationships may
not always be the best course of action, this avenue for gaining a competitive edge is
increasing in popularity.
Strategic partnering has become an important strategic initiative for many well known
companies and brands. Many firms outsource the manufacturing of their products. Examples
include Motorola cell phones, Calvin Klein jeans, Pepsi beverages, and Nike footwear.
Strong relationships with outsourcing partners are vital to the success of these powerful
brands. The trend of the 21st century is partnering rather than vertical integration.
Planning for New Plans new products are needed to replace old products because of
declining sales and profits. Strategies for developing and positioning new market entries
involve all functions of the business. Closely coordinated new-product planning is essential
to satisfy customer requirements and produce products with high quality at competitive
prices. New-product decisions include finding and evaluating ideas, selecting the most
promising for development,
designing the products, developing marketing programs, use and market testing the products,
and introducing them to the market.

24
The new-product planning process starts by identifying gaps in customer satisfaction. The
differences between existing product attributes and those desired by customers offer
opportunities for new and improved products.

Stage 3: Market-Driven Program Development

Market targeting and positioning strategies for new and existing products guide the choice of
strategies for the marketing program components. Product, distribution, price, and promotion
strategies are combined to form the positioning strategy selected for each market target" 28
The marketing program (mix) strategies implement the positioning strategy. The objective is
to achieve favorable positioning while allocating financial, human, and production resources
to markets, customers, and products as effectively and efficiently as possible.

Strategic Brand Management products (goods and services) often are the focal point of
positioning strategy, particularly when companies or business adopt organizational
approaches emphasizing product or brand management. Product strategy includes: (1)
developing plans for new products, (2) managing programs for successful products, and (3)
deciding what to do about problem products (e.g., reduce costs or improve the product).
Strategic brand management consists of building brand value (equity) and managing the
organization‘s portfolio for overall performance.
Value-Chain, Price, and Promotion Strategies one of the major issues in managing
program is deciding how to integrate the components of the mix. Product, distribution, price,
and promotion strategies are shaped into a coordinated plan of action. Each component helps
to influence buyers in their positioning of products. If the activities of these mix components
are not coordinated, the actions may conflict and resources may be wasted. For example, if
the advertising messages for a company‘s brand stress quality and performance, but
salesperson emphasize low price, buyers will be confused and brand damage may occur.
Market target buyers may be contacted on a direct basis using the firm‘s sales force or by
direct marketing contact (e.g., Internet), or instead, through a value-added chain (distribution
channel) of marketing intermediaries (e.g., wholesalers, retailers, or dealers). Distribution
channels are often used in linking procedures with end user household and business markets.
Decisions that need to be made include the type of channel organization to use, the extent of
channel management performed by the firm, and the intensity of distribution appropriate for
the product or service. The choice of distribution channels influences buyers‘ positioning of
the brand.
25
Price also plays an important role in positioning a product or service. Customer reaction to
alternative prices, the cost of the product, the prices of the competition and various legal and
ethical factors establish the extent of flexibility management has in setting prices. Price
strategy involves choosing the role of price in the positioning strategy, including the desired
positioning of the product or brand as well as the margins necessary to satisfy and motivate
distribution channel participants. Price may be used as an active (visible) component of
marketing strategy, or, instead, marketing emphasis may be on other marketing mix
components (e.g., product quality).
Advertising, sales promotion, the sales force, direct marketing, and public relations help the
organization to communicate with its customers, value-chain partners, the public, and other
target audiences. These activities make up the promotion strategy, which performs an
essential role in communicating the positioning strategy to buyers and other relevant
influences. Promotion informs, reminds, and persuades buyers and others who influence the
purchasing process.

Stage 4: Implementing and Managing Market-Driven Strategy

Selecting customers to target and the positioning strategy for each target moves marketing
strategy development to the action stage. This stage considers designing the marketing
organization and implementing and managing the strategy.

Designing Effective Market-Driven Organizations an effective organization design

matches people and work responsibilities in a way that is best for
accomplishing the firm‘s marketing strategy. Deciding how to assemble people into
organizational units and assign responsibility to the various mix components that make up the
marketing strategy are important influences on performance. Organizational structures and
processes must be matched to the business and marketing strategies that are developed and
implemented. Organizational design needs to be evaluated on a regular basis to assess its
adequacy and to identify necessary changes.

Strategy Implementation and Control marketing strategy implementation and control

consist of: (1) preparing the marketing plan and budget; (2) implementing the plan; and (3)
using the plan in managing and controlling the strategy on an ongoing basis. The marketing
plan includes details concerning targeting, positioning, and marketing mix activities. The plan

26
spells out what is going to happen over the planning period, who is responsible, how much it
will cost, and the expected results (e.g., sales forecasts).
The marketing plan includes action guidelines for the activities to be implemented, who does
what, the dates and location of implementation, and how implementation will be
accomplished. Several factors contribute to implementation effectiveness including the skills
and commitment of the people involved, organizational design, incentives, and the
effectiveness of communication within the organization and externally.
Marketing strategy is an ongoing process of making decisions, implementing them, and
tracking their effectiveness over time. In terms of its time requirements, strategic evaluation
is far more demanding than planning. Evaluation and control are concerned with tracking
performance and, when necessary, altering plans to
keep performance on track. Evaluation also includes looking for new opportunities and
potential threats in the future. It is the concerning link in the strategic marketing planning
process. By serving as both the last stage and the first stage (evaluation before taking action)
in the planning process, strategic evaluation assures that strategy is an ongoing activity.

TYPES OF MARKETING STRATEGIES

Every marketing strategy is unique, but can be reduced into a generic marketing strategy.
There are a number of ways of categorizing these generic strategies. A brief description of the
most common categorizing schemes is presented below:-

Strategies Based On Market Dominance - In this scheme, firms are classified based on
their market
Share or dominance of an industry. Typically there are three types of market dominance
strategies:

Challenger

Porter Generic Strategies - strategy on the dimensions of strategic scope and strategic
strength. Strategic scope refers to the market penetration while strategic strength refers to the
firm‘s sustainable competitive advantage

27
Innovation Strategies - This deals with the firm's rate of the new product development and
business model innovation. It asks whether the company is on the cutting edge of technology
and business innovation. There are three types:

s" 31

Growth Strategies - In this scheme we ask the question, ―How should the firm grow?‖.
There are a number of different ways of answering that question, but the most common gives
four answers:

sification

ROLE OF MARKETING STRATEGIES IN LIFE INSURANCE BUSINESS

As we‘ve seen the key objective of an organization‘s marketing efforts is to develop
satisfying relationships with customers that benefit both the customer and the organization.
These efforts lead marketing to serve an important role within most organizations and within
society.
At the organizational level, marketing is a vital business function that is necessary in nearly
all industries whether the organization operates as a for-profit or as a not-for-profit. For the
for-profit organization, marketing is responsible for most tasks that bring revenue and,
hopefully, profits to an organization. For the not-for-profit organization, marketing is
responsible for attracting customers needed to support the not-for-profit‘s mission, such as
raising donations or supporting a cause. For both types of organizations, it is unlikely they
can survive without a strong marketing effort.
Marketing is also the organizational business area that interacts most frequently with the
public and, consequently, what the public knows about an organization is determined by their
interactions with marketers. For example, customers may believe a company is dynamic and
creative based on its advertising message.
At a broader level marketing offers significant benefits to society. These benefits include:
28
of life
lps lower product prices

customers and many geographic regions

techniques that have the ability to convey messages that change societal behavior
in a positive way (e.g., anti-smoking advertising)

Marketing is to make the name of the company familiar to others by means of television
commercials, handling out pamphlets, hanging banners in populated areas and by providing
exciting offers.

telephone companies send messages about various offers and they even make phone calls.
Web Insurance Marketing is another good strategy to promote insurance policies. The pop
ups that one sees while using Internet are actually a very effective way of sending messages
across the potential insurance customers.

insurance policy holders and listen to what people who actually matters have to say. One
common problem that the insured persons face is that the insurance companies do not inform
its clients about the hike in the premium rates. These things should be kept in mind. Not only
that, a client should be informed about everything related to his policy and the Life insurance
company should keep the transparency as much as possible.

recognition for the Life insurance Company. Eminent workers join local community
institutions, such as Chamber of Commerce, and by signing up there one can help out various
projects that take place. These kinds of activities and social works on behalf of the Life
insurance company helps the company to get free publicity as their names are published in
news paper and in media also. Doing charity works also helps the Life insurance companies
to come across various people who act as volunteers and can act as their potential Life
insurance clients. People also like to deal with like minded people and companies and this is
how many deals are made.

charges for the same policy. This kind of policy gives the Life insurance policy holders the
29
feeling that they are being treated unfairly and also that the Life insurance companies are
only looking for profits and not the betterment of customer welfare

insurance Company should help out the policy holder in processing out the paperwork. One
should not let bureaucracy enter and make it so difficult for the one making the claim so that
he gives his claim .This has always been a common tactic on the insurance company's part to
avoid paying claims claimed by the policy holder. This though makes a short term profit for
the company but it hurts in the long run as the reputation of the company is hampered
severely.

the existing customers as well. The competition in the insurance market is so fierce today that
no company wants to loose out on a customer to another company. Clients who are not
contacted for a longer period of time normally fail to remain loyal to the insurance company
and look for a different Life insurance company. The company can keep the records of the
client's birthday and days like anniversary and sent him or her small tokens of love or loyalty
at a regular basis. If the company can afford a little more it can send dinner coupons to the
Life insurance policy holder. These things play a major role and can be considered as an
effective Life Insurance Marketing strategy.

honesty while dealing with a business. A Life Insurance Holder can find so many frauds in
various life insurance companies today, that life insurance customers are going for products
and services which are trustworthy to them. Feeling safe is about insurances and other things
are most important as far as the insurance holder is concerned. So, if a company remains
loyal to its customers it will itself do Life Insurance Marketing for itself. So, only by
remaining loyal to its customers the company can do a world of good to its reputation and
this would in itself bring more potential Life Insurance Holders to the company, because the
customers prefer safety more than anything else these days.

NEW TREND IN LIFE INSURANCE BUSINESS

"Today‘s market is rapidly-changing world; the term life insurance market is on the move.
Learn about what kinds of new and innovative products life insurance companies are offering
today. Like other industries, the term life insurance industry is constantly finding new ways
to meet consumers‘ needs. While there are still the basic sorts of term life insurance offerings

30
out there on the market, many life insurance companies are becoming more and more
innovative as they struggle to create exactly what customers want to see"33
This has led to a number of new and interesting trends in the life insurance marketplace,
many of which may appeal to you. From new options for payouts to things like combined
insurance, life insurance companies have plenty of interesting choices for you to consider
.Take, for example, payout options. As you know, one of the sources of revenue for a life
insurance company is the interest that they make on accumulated funds. The longer the life
insurance company holds onto its premiums, the more money it makes. If the life insurance
company can hold onto a portion of those funds for a longer
period of time, it will not only increase the company‘s profits but it may be able to increase
your policy‘s benefits.
Instead of paying out your life insurance policy as a single lump sum, for example, it may
offer death benefits as an annuity. This annuity will pay out the death benefit over time. In
the long run, your beneficiaries will receive a larger payment than if they were to take it all at
once. of course, traditional one-time lump sum payments are still an option. Many customers
still want their policy to pay the full benefit on their death. They don‘t see their life insurance
policy as an investment for their beneficiaries, but rather as a safety net should anything
happen to them. Another rising trend in the term life insurance industry is that more and more
companies are finding ways to offer products to older customers. As life expectancy
increases, the older population becomes more and more of a potential market. It also becomes
much more feasible to offer term life insurance products to older customers. While it may not
have made much financial sense for a term life insurance company to offer products to
someone over the age of 60 just a few decades ago, today it is much more likely that the
individual will live into their 80s and beyond.
"Many term life insurance companies are now bundling their products with other insurance
products, too. For example, some companies offer private medical insurance, long-term care
insurance as well as term life insurance. By combining products in this way, the company can
create a synergy that increases their bottom line but also the customer‘s security and well-
being" 34
There is much discussion these days, in both the public and private sectors, about not letting
our current financial crisis go to waste. For life insurance agents, this "seize the
day" attitude is more than just a dose of positive thinking to treat a case of sales paralysis. It
is a strategy that has proven effective over our industry's long, often dramatic history.

31
Following are three trends that come to mind and suggestions for how to use them to open
doors to new life cases -

The New Fiscal Conservatism

"It may seem counterintuitive, but economist‘s project that cash-strapped Americans are
expected to save a larger percentage of their income over the next few years. When stocks
and real estate were riding high, many Americans didn't feel a need to save money. The brisk
collapse of the stock and real estate markets has changed the country's collective feelings on
saving, however, and increased the preference for guarantees and conservative financial
strategies. Far less attractive these days are promises of higher returns from riskier asset
classes" 35
This trend puts life insurers in the sweet spot. Guaranteed protection and accumulation-based
life insurance products can offer renewed value for clients now recognizing the need to
manage downside risks and balance their portfolios with more conservative financial options.
To satisfy this trend, new products are hitting the market, such as universal life products with
more flexible guarantees that put less drag on cash accumulation and make pricing more
accessible. These products can also appeal to business owners struggling to protect and retain
key employees and provide for their financial futures at competitive rates.

Rising Employment Insecurity

"As people save more and spend less, many companies are being forced to cut expenses.
Thousands of jobs and their corresponding benefits--including group life insurance coverage-
-have been cut, and more are in danger of being eliminated. It's especially difficult for
somebody to lose work coverage if they don't have a separate policy in place. The risk of
unemployment today is a very real concern for many Americans. For agents, these same
Americans can be viewed as prospects for affordable, individual life coverage. In an
uncertain job market, having a separate policy in place, in addition to employer coverage, can
more adequately protect a family's future" 36
Even if you have clients who are confident their jobs are secure, would the free or low-cost
coverage provided by their employer be enough to replace their income and support a family?
Many Americans, including high-net-worth individuals, have a misguided reliance on their
group life insurance benefits, since the term coverage provided is usually just a small portion
of their annual salary. Will it be enough to pay for future college tuition? Help pay a

32
mortgage and keep a family in their home? Would a separate term life policy fill the gap, fit
the budget, and provide peace of mind?

A Sense Of Panic Among The Affluent

Another trend appears to be that no one--not even affluent consumers--is immune from the
effects of this crisis. Results from an April 2009 AXA Equitable survey indicate that
consumers' behaviors and attitudes today vary significantly by the degree of affluence, as
well as the age of the affluent person polled. Six in 10 affluent people surveyed said that they
are worried that they may not be able to pay their mortgage if they
were to lose their job, compared with slightly more than half (54 percent) of the non-affluent.
Less than half (48 percent) of the younger affluent consumers polled believe their personal
financial situation has declined in the past year, while 66 percent of the older affluent feel
they are worse off today" 37
Market losses among many older affluent Americans have some consumers rethinking their
wealth transfer planning. Now maybe a good time to discuss with them how, when used in
the right circumstances, a life insurance death benefit offers an income tax-free mechanism to
provide a guaranteed inheritance to beneficiaries, regardless of the performance of their non-
life insurance investment portfolio. Life insurance can offer a strategy to protect inheritances
simply through the use of the death benefit paid to beneficiaries. Particularly relevant today,
the death benefit can have a stabilizing effect in the face of a potentially widely fluctuating
portfolio. Premium payments and policy design can enhance the effect to a client and their
beneficiaries.
Today, people of all incomes need financial guidance. Life agents are uniquely positioned to
help people impacted by market volatility and insecurity, because we represent the only
industry that can protect families, retirement incomes, and legacies with guaranteed financial
products.

PRESENT SCENARIO OF INSURANCE INDUSTRY

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. Indians, have always seen life insurance as a tax saving device, are now suddenly
turning to the private sector that are providing them new
33
products and variety for their choice. 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 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. At present the distribution channels that are
available in the market are listed below.

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 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

34
NEW MARKETING STRATEGY
LIC have been taken following steps to increase its market competitiveness and
retains its dominant position in the insurance market.
1. PRODUCT DEVELOPMENT
In a competitive market, there is a greater need to provide insurance products that
meet the needs of our customers. LIC therefore offers a wide variety of products,
which fulfills the needs of different segments of the society. As at the end of the
financial year 2010-11, the Corporation had 52 products available for sale. During the
Year Corporation introduced 5 new plans viz. LIC’s Pension Plus, LIC’s Endowment
Plus, LIC’s Bima Account –I, LIC’s Bima Account –II and LIC’s Samridhi Plus. As a
result of product innovation by private players, LIC’s market share has gradually
reduced in the post liberalisation period. Despite that, the Life Insurance Corporation
of India continues to remain the largest player in the Indian Life Insurance market
with a market share of 71.30% in FY 2011-12.
AARJSH VOLUME 1 ISSUE 5 (NOVEMBER 2012) ISSN : 2278 –
2. COMPETITION
Private and foreign entrants in the insurance industry have made others difficult to
retain their market. Higher customer aspirations lead to new expectations and forced
him or her to move towards the insurer who provides him the best service in time. It
becomes less viable for them even to maintain the functional networks or competitive
standards and services. To survive in the industry they analyse the emerging
requirements of the policyholders /insurers and they are in the forefront in providing
essential services and introducing novel products. Thereby they become niche
specialists, who provide the right service to the right person in the right time. Today, a
public giant LIC is facing direct competition with the rest 23 private life insurers.

3. INFORMATION TECHNOLOGY
LIC has been a pioneer in using information technology for enhancing the quality
of its service to customers. Being the largest insurer in India, LIC has always explored
all the avenues that technology offers to provide the best of services to its valued
customers and other stakeholders.
Today, LIC customers can pay their premium not only in any one of its offices,
but also through LIC’s Premium Payment Gateway on our website through partner
Banks like Corporation Bank, Axis Bank or through associate agencies like
35
APOnline, MPOnline, etc. Customers can also use their Net Banking accounts, Debit
Cards and Credit Cards to pay premiums online.
LIC reaches out to its customers through IVRS, Call Centres, Customer Zones,
SMS, e-mail, website and now even the Social Networking sites. LIC has also
undertaken many other customer-centric initiatives like Enterprise Document
Management System,Portal for Customers, Agents, Development officers and
Employees, etc. All LIC officesand Training Centres have been connected to a Wide
Area Network for more than 10 years now. Last year Central Office, Zonal Offices,
Zonal Training Centres and the 113 Divisional Offices are connected through high
definition Video-Conferencing. In order to safeguard its IT infrastructure from
external threats, LIC has also installed the latest IT Security products in its setup. To
keep pace with changes in the business environment and the technology platforms,
LIC migrated our Core Insurance Application to web based architecture. The project
called e-FEAP helps LIC to deliver quality service to its Policyholders and marketing
force. In 2011-12, LIC also set up the infrastructure necessary for the on-line sale of
policies.

4. CHIEF LIFE INSURANCE ADVISORS (CLIAs)

LIC introduced the above Scheme on 12.04.2008 with an objective of increasing
its market presence through more agents by utilizing capabilities of existing high
performing agents for organizational growth.
In order to increase market presence, more number of agents should be in the
field. Understanding this well, the Corporation decided to utilize the capabilities of
existing senior agents for organizational growth by incentivizing them for identifying,
training and mentoring new agents. Retired employees and Financial Service
Executives (FSE) are also allowed to become Chief Life Insurance Advisors under
certain conditions. More than 1,47,200 agents were being supervised by the CLIAs as
on 31.03.2012. The table 3 shows that new business procured by the chief life
insurance advisor channel.

36
5. MICRO INSURANCE (MI)
The huge untapped market for insurance is the rural and social sector. Microinsurance
is defined as the protection of low income households against specific perils in
exchange for premium payments proportionate to the likelihood and cost of the risk
involved. It provides an opportunity to the insurance companies to meet their social
responsibility as well as secure a strong footing in the rural market. The active
distribution channels for micro insurance in India are NGOs, MFIs, and SHGs (self-
help groups), Micro agents, Cooperative Banks and RRBs (regional rural banks), and
Post Offices. The MFIs/NGOs have been identified as main delivery channels by
most of the insurance companies. These have a large network, catering to huge
number of clients.The year 2011-12 has been another successful year for the Micro
Insurance vertical of LIC. The vertical exceeded the budget of 32 lacs Policies by a
hefty margin of more than 6 lacs policies with 119.59 % A2B.The total number of
Policies stood at 38.27lacs with a growth rate of 29.67%. As many as 7 Zones crossed
their budget with good margin. Similarly 80 MI Units have achieved their budget. 7
MI Units have procured more than 1 lac policies during the year. During this financial
year MI vertical crossed magical figure of 1crore policies and completed 1.12 crore
policies as on 31.03.2012 since inception. The table 4 shows the new business of
Micro Insurance.

6. DIRECT MARKETING
In its 3 years of operations, Direct Marketing has successfully established itself as
a Value Pioneer. Through the years, it had striven to take a fresh view of the
environment, capture changes, identify new business opportunities and orchestrate
appropriate response. Direct Marketing has achieved reasonable success in creating a
professional and disciplined work force comfortable with approaching and tapping
emerging segments in the market. The channel, through the effective use of LMS has
been able to ensure fast response to queries to successfully position the Corporation as
a responsive organization sensitive to changing customers’ expectations. The table 6
shows the direct marketing channel wise new business of LIC.
AARJSH VOLUME 1 ISSUE 5 (NOVEMBER 2012) ISSN : 2278 – 859X

37
7. BANCASSURANCE AND ALTERNATIVE CHANNELS (B&AC)
Under Bancassurance, at present LIC have tie-ups with 8 PSU Banks, 4 Private

Banks and 33 UCBs / RRBs / CO-OP Banks under Corporate Agency agreement.
These Banks procure New Business for LIC through their Branch Outlets. At present,
approximately 19,000 Outlets under these Banks. The share of Banks in the total
business of B&AC in the year 2011-12 was 91% in FPI and 77% in Policies while
Corporate Agents contributed 8% & 22% respectively. In the current year, there is
substantial growth in Bancassurance Premium. The table 5 shows the banking and
alternative channel wise new business.

8. HEALTH INSURANCE
During 2010-11, 67,668 Health Insurance Policies were sold for a Premium
Income of Rs.58.02 crore. LIC settled an amount of Rs. 8.38 crore towards health
insurance claims under 5,096 lives. Incidence of claims under Health Policies is
1.39%, of which 51% are settled. As at 31.03.2011 LIC covering 7,23,752 lives under
Health Insurance Policies. LIC started Health Insurance Division in 2007-08, to tap
the vast potential for Health Insurance Business and to devise Health Products and
Services. The first product ‘Health Plus’ was launched in February, 2008 and the
second product ‘Health Protection Plus’ in April, 2009. Both are Unit Linked Health
Insurance policies providing for hospitalization and major surgery cover for 49
specified surgeries. The plans also have a facility of withdrawal, linked to domiciliary
treatment. Following IRDA regulations on cap of charges, Health plus Plan was
withdrawn from 01.01.2010. After LIC of India introduced to Health product of
Jeevan Arockya plan.

9. INDEPENDENT FINANCIAL ADVISORS (IFAs)

IFAs are authorised agents of insurance companies having tie-ups with more than
one insurance company. They are qualified persons or institution who can provide
advice on financial products. Independent financial advisors are commissioned agents
whose primary business is the sale of property and casualty insurance for several
insurers. IFA assembles different financial products in accordance to customer needs
and provide value added product by creating customized financial product. Today,

38
 IFA show their significant presence as distribution channel in both life and non-life
insurance business.

10) INTERNATIONAL OPERATIONS

Life Insurance Corporation of India operates in 13 countries abroad through its
various branches and Joint Venture Companies/ Wholly Owned Subsidiaries. Branch
Offices in the U.K., Mauritius & Fiji and operate through Joint Venture Companies in
Bahrain, Qatar, Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, Nepal & Sri Lanka. A
wholly owned subsidiary – Life Insurance Corporation (Singapore) Pte. Ltd. has been
incorporated in Singapore and we are in the process of applying for an operating
license.
1. Our Foreign Units collectively procured a First Premium Income (FPI) of around
Rs. 349 Crores in the 12 months’ period of each unit ended during 2011-12,
thereby registering a growth of 15.69%.
2. The Total Net Premium Income (TPI) of our units was around Rs. 1,247 Crores
during the same period in 2011-12 registering a growth of 28.2%. LIC (International)
B.S.C. (c), Bahrain and LIC Fiji are market leaders in their respective geographies.

11. DISTRIBUTION CHANNEL

Traditionally agents have been the primary channel in the distribution of insurance in the
Indian market. The Agency channel was the only channel catering to the needs of the market.
It was generally felt that there was demand side as well as supply side gaps in the Agency
channel. The Life Insurance Intermediary did not enjoy a professional image and was found
inadequate and not keeping with the expectations. Finally, after privatization IRDA came out
with new Regulations. The Regulations introduced Composite Agency enabling the Agents to
do both Life and Non-Life Business. Corporate Agency and Broker channels were opened up.
The private companies visioned this as an opportunity to get a wide reach into the market and
hence started to make attempts for getting the maximum benefit from the available alternate
channels. To quote a few examples BSLI tied up with IDBI Bank Ltd. For distribution of its
policies. Banks are the primary sales channel for a few insurers such as HDFC Standard Life
and SBI Life, and they contribute about 40% of their new business.
Through the Banc assurance partnerships, insurance companies are catering to the defined
segments and are designing strategies to sell insurance to them. For example, ICICI
Prudential has tied up with Lord Krishna Bank, ICICI Bank, Bank of India, Citibank,
39
Allahabad Bank, Federal Bank, South Indian Bank, and Punjab and Maharashtra Cooperative
Bank to cater to a mix of high-income urban and rural segments. The alternative distribution
channels, viz., brokers, direct field force, telesales, banc assurance, alliances, and the internet
with the conventional network of branches offer the customers a variety to choose from
keeping in mind the maximum benefits they seek from them.Due to this wave of change,
LIC, which was distributing its products only through agents also started to look for
alternative channels. LIC also tied up with the banks in urban and with Regional Rural Banks
(RRB) to spread its business. LIC tied up with Corporation Bank, Central Bank of India,
IOB, UCO Bank, Bank of Punjab, Oriental Bank of Commerce and fourteen cooperative
Banks. LIC has attempted to enlarge the distribution channels to build a real marketing
environment by involving cooperatives and panchayats in its market areas.

12. FOREIGN BRANCHES

Before privatization, LIC did not have any foreign branch. After privatization, as a part
of change in marketing policy LIC thought of expanding outside boundaries of the country
and to fulfill this thought, LIC opened its first international branch in Nepal in 2001. The
Corporation directly operates through its branch offices in Mauritius (Port Louis), Fiji (Suva
& Lautoka) and United Kingdom (Wembley). Currently, no private company has overseas
branches.

13. ADVERTISEMENT
Marketing and sales promotion activities were very limited in LIC with small number of
advertisements in print media and television. LIC was the only player, most advertising
tended to be either merely informative or plain dull. With the insurance bill being passed in
2000, the Indian insurance sector saw a host of private players enter the market with
multinationals as their partners. These new players resorted to aggressive marketing and
advertisement strategies – something the market had never seen earlier. This sudden spurt of
advertisements and awareness programs was visible on all the media channels. Print,
electronic and outdoor advertisements of the new private insurers flooded could be seen
everywhere. In response to this LIC launched various advertising campaigns to meet its
corporate objectives. The new insurance companies used all channels of advertising from
newspapers and the television to insurance agents and direct mailers. A fierce battle seemed
to have begun among Indian insurance companies to make one’s own brand win over the
other. The new companies focused their campaigns primarily on building an image of
40
trustworthiness and reliability for themselves. Secondly, their advertisements focused on
insurance as an investment option and not a mere tax saving tool – another first for the Indian
market. Most of these advertisements carried messages like the family’s happiness, human
bonding, etc., with underlying emphasis on the security that insurance could provide. Also,
instead of projecting the idea, that an insurance policy actually starts working only after the
death of the insured, the new campaigns projected that insurance protects people throughout
their lives. In one of its TV commercials, ICICI Prudential showed a series of scenes
depicting the childhood, marriage and old age of an individual. The purpose of using these
visuals was to translate the company’s message ‘I will protect’ into real-life incidents. In
order to project its commitment towards consumers to ‘protect at every stage of life,’ the
company brought in the concept of sindoor, which symbolizes protection. Sindoor was shown
throughout the commercial as a mark of auspiciousness and protection, and at the end, it
became the red line below the ICICI Prudential logo. Max New York also resorted to
depicting positive emotions such as trust and protection in its print advertisements. The
company released two print advertisements. HDFC came up with advertisement which
projected insurance a wealth creation tool.
With private players paying much attention to advertising and promotional activities, LIC,
too, was forced to make efforts to increase its visibility and enhance its brand image. The
company commenced intense, systematic and well-focused public relations and publicity
activities both at the corporate and operational levels.LIC came out with a corporate
advertisement on TV with the punch line, ‘Zindagi Tumhari Roshan Rahe’ (May your life be
glorious). In addition, LIC established abroad-based frame for external communication aimed
at building a stronger brand image. Several sports events were co-sponsored by the company
and special publicity activities with a social purpose were undertaken. Traditionally, LIC
used to target either middle-aged people or elderly ones. But private insurers targeted
individuals in all age groups, in their advertisement campaigns. Analysts pointed out that LIC
was also biased against women; most of its policies were designed with men in mind,
whereas private insurers’ products covered women’s needs, too. Thus, LIC was forced to
modify its advertisement campaigns and communication in order to appeal to all groups. It
made its advertisements carry universally applicable messages, focusing particularly on the
young executive or the working woman, in order to tap the market comprised of people in the
age group of 18-35years.
As a provider over the years the various advertising and publicity campaigns of the LIC were
conceived to meet the following objectives
41
▲ Creating awareness in the mind of the public about the need for life insurance
▲ Promoting and positioning various life insurance products
▲ Corporate branding and societal marketing
▲ Highlighting the various customer centric activities including consumer education

42
REVIEW OF LITRATURE

Carrow Kenneth A. and Heron R. ―Capital market reactions to the passage of the Financial
Services Modernization Act of 1999‖. The Quarterly Review of Economics and Finance 42
(2002)

The authors investigate how the passage of the Financial Services Modernization Act of 1999
(FMA) affected stock prices of banks, thrifts, finance companies and insurance companies.
The study looks at stock excess returns across sectors and company size. The idea is that the
passage of the FMA opens doors for potential mergers and consolidations across banking,
financial and insurance sectors, translating into abnormal positive returns for businesses that
are the likely candidate for mergers and consolidation. The results of the study suggest that
the largest returns to the FMA passage were realized by large investment banks and insurance
companies. The stock prices of banks, both small and large, seemed to be unaffected by the
new legislation while thrifts, finance companies and foreign banks lost value.

Hogan, John D (2001). ―Financial Services Reform: The Gramm-Leach-Bliley Act and its
implications for insurance‖, Journal of Financial Service Professionals, January 2001.
In this paper, the author contends that the impact of the GLB Act on the insurance industry is
unclear. It had been widely assumed that the banking industry would quickly expand into
non-banking activities, as synergies could be expected from the large bank customer
information base and frequent contacts with customers.
However, this quick response has not taken place, partly because of perception of risk in the
insurance business.

The author also cites a research study by The Federal Reserve Bank of Atlanta that suggests
that bank holding companies will add insurance products to their lines of business for sound
reasons such as: 1) small increment costs involved, 2) the presence of existing customer
relationships, 3) revenue diversification, 4) absence of interest rate risk in insurance
compared with loans and 5) banks‘ web-based marketing capability.

McDaniel, David (1995): ―Agents‘ worst nightmare: Banks are gaining the edge to sell
insurance in a big way‖. Best’s Review [Property/Casualty],

43
The article explains that insurance agents are afraid of banks cutting into their business as
they have in Europe where banks are far more efficient than agents. The article lays out how
to make the proposed legislation ineffective, by warning of unsubstantiated tie-ins and bank
coercion, proposing 10-day waiting periods, state legislation, and tough fire walls
[email protected] ABSTRACT This paper describes Nigerians attitudes towards
the insurance institution.
The attitudes, most often negative, are mirrored through low patronage of insurance services.
It discusses such social-cultural factors that account for these attitudes and what role
marketing strategies can play to change such negative tide. Drawing from theoretical
foundation, an empirical survey was conducted among 392 members of the public—insuring
and non-insuring—to gauge their awareness level and general attitudes towards insurance
companies and their operations. The findings present different demographical factors and
their attitudes towards insurance companies and their services. It is expected that findings
from such survey would constitute vital input for insurers in designing marketing strategies
that would further stimulate and boost patronage and perception of insurance services. Key
words: insurance, attitude, Nigeria, demography, marketing, strategies African Journal of
Accounting, Economics, Finance and Banking Research Tajudeen Olalekan Yusuf, Ayantunji
Gbadamosi, & Dallah Hamadu

The demand for life insurance in a country may be affected by the unique culture of the
country to the extent that it affects the population‗s risk aversion (Douglas and Wildavski,
1982). Henderson and Milhouse (1987) argue that an individual‗s religion can provide an
insight into the individual‗s behaviour; and understanding religion is an important
component of understanding a nation‗s unique culture. Also, Zelizer (1979) notes that
religion historically has provided a strong source of cultural opposition to life insurance as
many religious people believe that a reliance on life insurance results from a distrust of
God‗s protecting care. Until the nineteenth century, European nations condemned and
banned life insurance on religious grounds. Zelizer also states that religious antagonism to
life insurance still remains in several Islamic countries. In similar vein, Wasaw and Hill
(1986) tested the effect of Islam on life insurance consumption using an international data set.
The results of their study indicate that, ceteris paribus, consumers in Islamic nations purchase
less life insurance than those in non-Islamic nations. This becomes more evident in the fact
that there is comparatively very low ratio of Muslims in developed countries with the
majority residing in medium to low human development countries. From the thirty-five low
44
human development countries as defined by the Human Development Report (2004),
seventeen have a majority Muslim population and a further five have a Muslim population of
over 20 percent. Muslims around the world are commonly faced with low-income levels, and
African Journal of Accounting, Economics, Finance and Banking Research Tajudeen
Olalekan Yusuf, Ayantunji Gbadamosi, & Dallah Hamadu
Berman, Peter. "Rethinking Health Care Systems: Private Health Care Provision in India."
Harvard School of Public Health Working Paper, November 1996.
Business Today. "The Monitory Group Study on Insurance I and II." March 22 and April 7,
2000.
Mitra, Sumit and Nayak, Shilpa. "Coming to Life." India Today, May 7, 2001.
Asian Economies, Vol. 27(2), June 1997, 5-31. U.S. Department of State FY 2001 Country
Commercial Guide: India. Commercial Guide for India was prepared by U.S. Embassy New
Delhi and released by the Bureau of Economic and Business in July 2000 for Fiscal Year
2001

45
LIMITATIONS OF THE STUDY
 This study is based on the secondary data hence the possibilities are there that this
data is outdated.
 This study is done on urban areas hence this study does not have records of rural
areas.
 As the data is secondary so it can be different from the actual data.

46
 CHAPTER-2
RESEARCH
METHODOLOGY

47
RESEARCH
Research is process of a systematic enquiry into facts and in depth study of probing into a
particular topic or subject, backed by the collection, complication, presentation and
interpretation of relevant data. It is an intelligent and scientific work, which is an Endeavour
to discover valuable facts.

RESEARCH METHOLODOLY
A Research methodology is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It is the blue print that is followed in completing
the study. The basic objective of research cannot be attained without a proper research
design. It specifies the methods and procedures for acquiring the information needed to
conduct the research effectively. It is the overall operational pattern of the project that
stipulates what information needs to be collected, from which sources and by what methods.
Research must be based on the facts. Observable data forms a sound basis for research.
Inductive investigation leads greater support to research findings, for analyzing facts, a
scientific methodology of analysis must be developed and result interpreted logically.

48
 DATA COLLECTION

The data can be collected in the following two ways:

1. Primary Data:
The data collected by the person himself/herself for personal use with the help of
questionnaires, pie-charts, graphs, etc. This set of information is not available to anyone
before the person collects it himself/herself.

2. Secondary Data:
The data collected by a person which is already been collected and used by some other
individual. It can be said as the re-usage of the data being collected. No questionnaires,
etc are involved in this as the person seeks the information which is already present to
him/her.
THIS PROJECT REPORT IS BEING MADE ONLY BY THE USE OF
SECONDARY DATA.

SOURCES OF SECONDARY DATA:

Secondary Data can be collected from any magazines, newspapers, journals, articles,
books or from the internet.

ADVANTAGES OF SECONDARY DATA:

The main advantage of secondary data is that it can be found easily. Nowadays in the
21st century, it is very easy to find anything on the internet. However, there are books
and articles in periodicals to get the data more precise.

49
 CH- 3
DATA ANALYSIS
AND
FINDINGS

50
DATA ANALYSIS
Distribution channel used by the Life Insurance Corporation of India
Agents and Brokers 91.7%
Through Banks 03.09%
Direct Selling 0.30%
Through others 2.79%
Any Other 2.12%

Distribution channel
100.00% 91.70%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00% Distribution channel
30.00%
20.00%
10.00% 3.09% 2.79% 0.30% 2.12%
0.00%
Agents Through through Direct Any other
Banks other selling

As we can see that most of the distribution of products of Life Insurance corporation of India
is done through the channel of agents and brokers (91.70) which consist of the largest share
in distribution channel though there are many other channels like through banks (3.09), direct
selling(0.30), through others(2.79) but LIC uses the agents as LIC has a huge work force of
agents and brokers.

Type of long term investment which people use or prefer

Life Insurance 53.6%
Fixed Deposits 32.4%
Investment 09.7%
Mutual fund 05.3%

51
 Type of long term investment
60 53.6

50

40 32.4
30

20 Type of long term investment

9.7
10 3.3 2
0

From above graph and figures we can conclude that the ratio of life insurance as a long term
investment is increased . Some years ago most of the people use Fixed Deposits as along term
investment but now that trend is changing now life insurance is 53.6% followed by fixed
deposits (32.4%), investment(9.7%),mutual funds(3.3%) and others(2%).

Source through which people know about the product of LIC

News papers and Magazines 10%
Television 18%
Agents 54%
Internet 07%
Radio 01%
Friends and other 10%

52
 sources from where people know about the
product
60% 54%
50%
40%
30% 18%
20% 10% 10%
7%
10% 1% sources from where people
0% know about the product

From above information we can know that how people are getting information about the
insurance products offered by LIC . We can see that mostly used source of information is
through Agents (54%).Through which we can conclude that most effective source of giving
information is by agents which is followed by Television Ads (18%), news paper and
magazines(10%), Internet(7%), radio(1%).

What is important for people to buy the product from insurance company
Brand Name 76.4%
Excellent past record 19.3%
Friends /acquaintances have brought 6.7%
Impressed by ad 11.6%
Any other 3%

53
 76.40%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00% 19.30%
20.00% 11.60%
6% 3%
10.00%
0.00%

From above graph we can know that what is the thing which consumer thinks most important
. from here we can clearly see that Brand Name(76.40%) is most of the consumers think of
before buying the insurance product. Other factors like previous record (19.30%), suggested
by friend or other person (6%), impressed by ad (11.60%) and others (3%). It is due to good
brand name of LIC that even today also it is the leading insurance company of the country.

Characteristics of the policyholders on the basis of Age groups (N=1000)

Age Group Frequency Percent

Below 25 years 195 19.5%
25-34 years 309 30.9%
35-44 years 192 19.2%
45-54 years 96 9.6%
55-64 years 176 17.6%
64 or Above 32 3.2%
Total 1000 100.0%

54
People buy goods and services during their life time. Segmenting the market by age provides
useful insight into the potential size of markets. As shown in the table 5.3 the policyholders
were grouped in six categories and 195 (19.5%) policyholders were below 25 years of age,
309 (30.9%) policyholders were 25-34 years old, 192 policyholders (19.2%) were 35- 44
years old, 96 (9.6%) policyholders were 45-54 years old, 176 (17.6%) policyholders were 55-
64 years old and only 32 (3.2%) policyholders were those above 64 years of age. The graph
also indicates there was a fair representation of young policyholders who purchased life
insurance.

Characteristics of the policyholders on the basis of Income

groups (N=1000) Income Group Frequency Percent

(Annual)
Less than 1 Lakh 88 8.8%
1 to 1.5 Lakh 109 10.9%
1.5 to 2.5 Lakh 184 18.4%
2.5 to 5 Lakh 275 27.5%
5 to 10 Lakh 264 26.4%
10 Lakh and above 80 8.0%
Total 1000 100%

55
It is obvious that unless people have money or assurance of acquiring it, they cannot be
regarded as potential policyholders. The amount of money they can spend will also affect the
types of goods they are likely to buy. For this reason most of the analyst study income data.
On the social scene the emergence of a large middleclass perhaps the most significant of all
developments from the marketing point of view. The middle class in now emerging as the
“Consumption Community’ in the country are recognized as educated and rational
policyholders. On the basis of income groups of the policyholders it was observed that 88
(8.8%) policyholders were those earning less than `1 lakh, 109 (10.9%) policyholders were
those earning between ` 1-1.5 lakh, 184 (18.4%) policyholders were those earning between `
1.5-2.5 lakh, 257 (27.5%) policyholders were those earning between ` 2.5-5 lakh, 264
(26.4%) were those earning between 5-10 lakh and only 80 (8%) were earning `10 lakh and
above as shown in the table 5.4. The graph also represents that there was a fair percentage of
policyholders’ falls in the middle class income group of ` 2.5-5 lakh followed by 5-10 lakh.

Characteristics of the policyholders on the basis of owner’s wealth (N =1000)

Owner’s Wealth Frequency Percent
Below 10 Lakh 283 28.3%
10-50 Lakh 325 32.5%
50 Lakh-1 Crore 192 19.2%
1-5 Crore 72 7.2%
5-10 Crore 104 10.4%
More Than 10 24 2.4%
Crore

56
Consumption is also shaped by family wealth and expenditure pattern therefore it is
important to consider owners’ wealth for analysis. As shown in the table above the
policyholders grouped in six groups on the basis of owner’s wealth.
The table 5.5 shows that 283 (28.3%) policyholders had wealth below ` 10 lakh, 325 (32.5%)
policyholders had wealth of ` 10-50 lakh, 192 (19.2%) policyholders had wealth of ` 50 lakh-
1 crore, 72 (7.2%) policyholders had wealth of ` 1-5 crore, 104 (10.4%) policyholders had
wealth of ` 5-10 crore and only 24 (2.4%) policyholders had wealth of more than ` 10 crore.
The graph also represents that there was a fair percentage of policyholders acquired wealth
between ` 10-50 lakh.

Characteristics of the policyholders on the basis of occupations of the policyholders (N

=1000)
Occupation Frequency Percent
Agriculture 72 7.2%
Self Employed- 109 10.9%
Shop
Self Employed- 80 8.0%
Other
Business Owner 125 12.5%
Service 302 30.2%
Professionals Pvt.
Govt. Employees 208 20.8%
Dependent 56 5.6%

57
Retired from Pvt. 8 .8%
Job
Retired from Govt. 40 4.0%
Job
Total 1000 100.0%

The rapid social and economic development taking place in the country is more apparent in
the economic activities of policyholder in insurance. With growth in urbanization large
number of policyholders entering in the job market. As shown in the table 5.7 policyholders
were surveyed from different occupational backgrounds. Seventy two (7.2%) policyholders
were farmers, 109 (10.9%) policyholders were shop owners, 80 (8.0%) policyholders were
self employed, 125 (12.5%) policyholders were business owner, 302 (30.2%) policyholders
were serving private sector, 208 (20.8%) were government employees, 50 (5.6%)
policyholders were dependent, 8 (0.8%) were retired from private jobs and 40 (4.0%)
policyholders were retired from government jobs. The graph also represents that there was a
fair percentage of service professionals followed by government employees in the sample
size

58
Earning members in family of
policyholder (N =1000) Earning Members
Frequency Percent
1 269 26.9%
2 571 57.1%
3 120 12.0%
4 or more 40 4.0%
Total 1000 100.0%

Family may be extended, joint or nuclear. Policyholder behaviour researches have revealed
that in every family there is role specialisation for example ‘Karta’ in joint family decides the
household products to be bought, in extended family the decider may be one of the grand
parent and in nuclear it is the housewife who has a more decisive role to play. The table 5.11
shows that 269 (26.9%) policyholders had only one earning member in their family, 571
(57.1%) policyholders had two earning members in their family, 120 (12%) policyholders
had three earning members in their Chapter 5: Data Analysis, Findings and Interpretation
223
family and only 40 (4.0%) policyholders had four or more earning members in their family.
The graph also represents that there was a fair percentage of policyholders who had 2 earning
members in their family.

59
Policyholders of Different Life Insurance Companies
Insurance Company No. of Policyholders
Bajaj 189
HDFC 112
SBI Life 355
Aviva 16
Canara Bank HSBC 24
AMP Sanmar 0
ICICI 200
ING Vysya 24
Birla Sunlife 24
Sahara 16
Max New York 149
Shriram Life 8
LIC 920
Tata AIG 235
Reliance Life 32
Kotak Mahindra 40
Metlife India 0
Others 16
Total 2360
The table values indicated that the approached policyholders were holding different life
insurance policies from different companies and there were many policyholders who had
more than one policy from the same or different companies. The majority of policyholders
bought LIC policy and they preferred to continue the association with the company. SBI life,
Tata AIG and ICICI are also holding good position in the minds of policyholder.

60
MARKET SHARE OF LIFE INSURERS (IN PER CENT)
Insurer 2009-10 2010-11
Regular Premium
LIC 43.13 56.73
Private Sector 56.87 43.27
Total 100.00 100.00
Single Premium
LIC 92.19 81.26
Private Sector 07.81 18.74
Total 100.00 100.00
First Year Premium
LIC 65.08 68.85
Private Sector 34.92 31.15
Total 100.00 100.00
Renewal Premium
LIC 73.64 70.49
Private Sector 26.36 29.51
Total 100.00 100.00
Total Premium
LIC 70.10 69.78
Private Sector 29.90 30.22
Total 100.00 100.00

61
Findings
 Most of the people gets knowledge about the products of lic through the
channel of its Agents and Brokers followed by news papers and
Magazines and Television
 The most prominent cause due to which people don’t go with Insurance is
lack of awareness.
 The market share of Insurance sector is mostly with LIC followed by
other private players like
1. ICICI Prudential Life Insurance Co (6.91)
2. Allianz Bajaj Life Insurance Co (4.75%)
3. SBI Life Insurance Co (2.98%)
4. Birla Sun Life Insurance Co (1.72 %)
5. HDFC Standard Life Insurance Co (1.66 %)
 Brand name also severs in the favour of LIC thus affecting the market
share which is highest even more then the sum of all other companies
combined together
 Most of the people go with insurance for risk coverage followed by
protection for the family and tax savings
 Most of the people thinks AD’s are affective but they like the concept of
personal selling and agents

62
 CHAPTER-4
CONCLUSION AND
SUGGESTIONS

63
CONCLUSION
After privatization, insurance industry has seen significant growth. Due to low penetration
and huge potential, many foreign and domestic players have entered the sector. Many players
have joined insurance industry posing a tough competition to LIC. LIC has been reorganizing
itself in order to perform better than the new players. LIC offers a wide variety of products,
which fulfills the needs of different segments of the society. As at the end of the financial
year 2010-11, the Corporation had 52 products available for sale. The performance of LIC
has been exemplary and it has been growing from strength to strength be it customer base,
agency network and branch office network. LIC continues to remain the largest player in the
Indian Life Insurance market with a market share of 71.30% in FY 2011-12.
India being a developing country, the importance of life insurance in the national economy is
paramount .Life insurance is a pool of small savings or inviduals that make up cores of
rupees. Even in industrially advanced countries, the life insurance plays a significant role in
supplying long - term capital to national economy and accelerating the process of self
generation of the gross production of national saving. This is applicable much more to india
where the need for much providing long – term capital is of vital importance. It is economic
vehicle for accelerating industrialization in the country. Much has been said about the life of
corporation. It started as an infant, a brain of child of its own time it is well said that people
purchase insurance not only because the live too long. In other words, Life insurance policies
are not mere risk cover vehicles but expected to be income producing vehicles. Life insurance
has become the need of the day is tourism that can not be disputed in any way. Life has
become uncertain in this modern mechanical and dynamic world where various kinds of
accidents take place. This results in the death of the breadwinner or his liability to earn his
living incidentally, in this world of individualism where joint family is losing grounds a
provision for the maintenance of the family is very essential and not wise men goes without
having some life insurance policy. When the breadwinner meets premature death, his family
is saved from devastation misery and chaos. Life Insurance covers the risk of death
incapacity of the breadwinner of provide for his family and stands as a friend in need.
Life insurance business in India had been carried on mostly by private insurers till January,
1956 when the life insurance (Emergency Provision ) order was promulgated vesting in the
govt. of India. The life insurance corporation (LIC), to which all assets and liabilities of
existing insurance companies carrying on life business in India were to be transferred, was in
the mean while passed on 19th January 1956, life insurance was nationalized and the LIC was

64
not up in September, 1956. One of the objects of nationalization was to spread life insurance
to remotest village and mobilize resources to maximum possible extent for the country
planned development.
The main objective of nationalization were to spread the gospel of life insurance to the
hitherto neglected rural areas, to provide life insurance protection to every eligible man and
women in the country to safeguard the saving of policy holders and to invest their moneys for
their welfare as well as for that the nation.
How far the life insurance corporation lies full filled the aforesaid objectives. This is a
question which even now, after its 50 years tenure after the nationalization of life insurance
business, cannot be answered with certainly. It is true that the corporation has made rapid
progress on many fields, by stream ling its organization structure and there by increasing its
effectiveness, but it is also true that is has failed to give the desired result in many fields.
Such shortfalls seem to be the results partly of the failure of the human side of corporation
and partly of some external forces and constraints which have impeded its growth. Such
constraints and limitations have been examined and analysis from time to time so that some
on the basis of the suggestions gives concrete step may be taken by the state as well as by the
top management of the corporation the serve the society in a better way. There can be no gain
saying the facts that operational efficiency of the service organization like the life insurance
corporation of India can be efficient in its operations only when the external forces having
their direct impact on its business are favorably inclined to promote its growth. This change
however demands certain changes in its internal structure and policies as well also the
business in take can be improved if its services are improved premium structure is
streamlined, publicity is propagated, claims are timely settled and investment to multiply its
earning and share them with the policy holders in the from of bonus, are made in the various
sectors of the economy.
Conclusions of the Study
have limited number of policies offer to their subscribers while in case of private
insurance companies , their policy numbers are many more and the premium amount as well
as the maturity period is much competitive as against those of public insurance companies.
g in the
services sector and this is more pronounced in the domain of insurance sector.

customer might start shifting from the public and to the private sector.

65
 But still if it is a matter of first life insurance policy one wants to buy if from public sector
insurance company after being paid a high premium as compare to the private insurance
company.
the finding the guidelines
offered in this study hold promise, they should not be viewed as panacea. The ultimate
success of any quality program implemented by insurance sector can duly be ganged by
creation and retention of satisfied customers.
the biggest obstacles insurance companies face in building brand equity that spans
both insurance and financial services in the preconceived notions about financial service
companies.
-building strategy are required to help insurance companies
grow organically b providing more innovative products and services, achieving higher level
of motivation among employees, adopting up-to-date technology creating awareness and
creating awareness and creating a direct link with the customers.

Suggestion of the Study

relationship companies need to treat their employee well if customers have to be served well
by their employees.
he prospects for insurance companies in rural India , it is very important to
understand the requirements of India‘s villagers, their daily lives, their peculiar needs and
their occupational structures.
ities for insurance companies and
insurers should develop viable and cost- effective distribution channels, build consumers
awareness and confidence.
- contact personnel in the attainment of there goals is of paramount
improtance therefore, in their efforts to delivery high quality services to their customers so as
to attain satisfaction for their customers, insurance should not ignore the specific needs of
their customer.
competitive it is there fore it is
suggested that the player should adopt customer centric approach. A company which adopts
the customer centric approach will able to plan its competitor to have an edge over other
players.

66
 to maintain edge over competitors the product differentiation
should not only be cosmetic in nature but also should be genuine.

and rural close to the urban areas, it is believed that these areas (semi urban and rural) do
have influence from urban local and media, there fore the awareness as possessed by them
may be converted in to actual business deal.
to play more discerning role so
far for the interest of small, marginal perhaps play the role of not only the watch dog but also
blood hound where ever required.

heartening to note that knowledgeable investors and clients are emerging. This shows that
there is need for specific investors training program.

time to time by conducting preventive audit and guilty, if found should be punished
accordingly.

imbibing transparency fair value and customer interest at the top.

time to time by conducting preventive audit and guilty, if found should be punished
accordingly.
ance products for defense
personnel, NRI, Farmers, and small business entrepreneurs.

suggested at every state level and the redress mechanism should be made simplified and time
saving.

system touch screen facility where by a customer can know the status of his polices.

rengthen in the industry so as to bring out

better products customer friendly approach and the real growth in the industry.

It is irony to note that the percentage of population insured is much smaller than the
potentials possessed by industry. Against the population base of more than 110crores the

67
number of lives insured is not even 20% . It is expected that above suggestion will go a long
way in realizing the full potentials of the industry.

68
 BIBLIOGRAPHY

BOOKS:
 Kothari, C.R, “Research Methodology”, 3rd edition, 1997, Vikas Publishing House
Pvt.ltd., NEW DELHI
 "Kotler Philip” , Marketing Management"-12th edition,2003 Pearson Education
Publishing House
 Mathew M J (1998) Insurance ( Theory And Practices ) , rbsa Publishers Pg 225
 Avdhani V.A.(2004) Marketing Of Financial Services, Himalyapublication Pg 29

WEBSITES:
 www.LIC.in/About Us / Mission and Value
 www.LIC.in/About Us / Objectives
 www. wikipedia.com/ Concept of insurance
 www.Google.Co/ In History Of Insurance / Insurance in india

69
 Appendix
Questionnaire
Kindly respond to all questions.
You need not disclose your identity
Tick () the appropriate answer where required
1 Which of these long-term savings you are aware of?
(a) Life Insurance

(b) Fixed deposit

(c) Mutual Funds

(d) Securities (Shares and Debentures)

(e) Post Office Savings

(f) Any other

2 Have you taken any life insurance policy

Yes No
3 If “Yes”
From which source did you come to know about life insurance?
News Papers and Magazines Radio
Television Direct Sales Executive
Agents/ Field sales Friend
representative
Bank Others (pl. Specify)
Telemarketing
Internet
Direct Mail
If “No”

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4 What are the reasons that may have held you back from investing in life insurance
products? (Please rate them on extent of impact)
Very low Very High
(a) Lack of awareness 1 2 3 4 5

(b) Returns not lucrative enough 1 2 3 4 5

(c) Promotional measures not 1 2 3 4 5

attractive

(d) Not approached by the 1 2 3 4 5

intermediaries

(e) Inclination to short term 1 2 3 4 5

lump sum gain

(f) Not affordable 1 2 3 4 5

(g) Any other ( ) 1 2 3 4 5

5 If you are holding a life insurance policy, please mention the name of the policy that
you taken and the name of the company?
Name of the Policy :
Name of the company :
6 What prompted you to buy the life insurance policy from the company named by you?
(please rate them on scale of importance)
Very low Very High
(a) Brand image of the 1 2 3 4 5
Company

(b) Excellent past record of 1 2 3 4 5

performance

(c)My friend/acquaintances 1 2 3 4 5

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have bought from this company
(c) Marketing people insisted 1 2 3 4 5
me to buy

(d) Impressed the company‟s 1 2 3 4 5

Ads and promotion

(e) Desire to try out a new 1 2 3 4 5

company

(e )Any other ( ) 1 2 3 4 5
7 Are you able to recall any “Ad‟ about life insurance in general and / or life insurance
product in particular
Yes No
8. If “Yes” What in the main message that you get from the “Ad”?
Low High
(a) Risk coverage 1 2 3 4 5

(b) Protection for the family 1 2 3 4 5

(c) Long term savings 1 2 3 4 5

(d) Tax savings 1 2 3 4 5

(e) Provision for old age 1 2 3 4 5

(f) Any other (Please Specify ) 1 2 3 4 5

9 do you think that advertises (the life insurance company) wants you to know belief or
do?
Low High
(a) life insurance, a must for 1 2 3 4 5
family protection

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(b) should go for compulsory 1 2 3 4 5
long term savings

(c) should express my love for 1 2 3 4 5

family through life insurance

(d) should have adequate risk 1 2 3 4 5

coverage

(e) can save tax through life 1 2 3 4 5

insurance

(f) can have peace and mental 1 2 3 4 5

satisfaction

(g)should have economic 1 2 3 4 5

independence and dignity in old
age
(h) any other (Please specify ) 1 2 3 4 5

10 How likely is it that the „Ad‟ will influence you to buy a life insurance product?
(a)„Ad‟ is only a good source of Agree Disagree
information to me
(b)Too many Ads by different companies Agree Disagree
create confusion
(c) The actual product I buy in usually Agree Disagree
the same as advertised
(d) It in hard to make a buying decision Agree Disagree
because of all the products to choose
from
(e) „Ads‟ sometimes make high Agree Disagree
promises than actually experienced later

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on
(f) I get promoted to make further Agree Disagree
enquires about the idea /product
particularly it‟s features and price.
(g) The main reason a company comes Agree Disagree
out with „Ads‟ is to make more sales
(h) Advertising tempts people to think Agree Disagree
seriously about their „ourselves‟ and
their family
(i) I like to buy products that have well Agree Disagree
known brand name

(j) It seems wasteful for so many Agree Disagree

companies to produce the products with
similar features.
(k) Advertising and promotional costs Agree Disagree
unnecessarily raise the price which the
consumer has to pay for a product
(l) Even with so much advertising it is Agree Disagree
difficult to know which brand is best
(m) The wide variety of competing Agree Disagree
products makes intelligent buying
decisions more difficult
(n) Advertising usually present correct Agree Disagree
and true picture of the product
11. How do you made your purchase decision for life insurance product?
(a) Consult other people to help choose the best YES NO
alternative available from a product class
(b) Try to buy the same brand that my friends/ YES NO
colleagues have bought
(c) Consult an Agent / Advisor before making YES NO
final decision to buy
(d) Base my decision on the brand value of the YES NO

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company and the product.
(e) Achieve a sense of belonging by purchasing YES NO
the same brands and from the same company that
other purchase
12. In selecting form many types and brands of the insurance products available in the
market, would you so that
I would not care at all as to 1 2 3 4 5 I would care a great deal
which one by one buy as to which
13. How important would it be to you to make a right choice of the brand?
Not at all important 1 2 3 4 5 very much concerned
14. Do you tend to stick to the same brand and remain loyal to a particular insurance
company and its product?
(a) I would rather stick with a brand I usually buy Yes No
than try something I am not sure of
(b) If I like a brand, I really switch from it just to Yes No
try something different.
(c) I got bored with buying the same brands and Yes No
even if they are good.
(d) When I see a new brand some what different Yes No
from the usual, I make enquires.
(e) I rarely read „Ads‟ that just seen to contain a lot Yes No
of information
(f) I feel the urge to buy something really different Yes No
from the brands I usually buy
(g) I take chances in buying unfamiliar brands just Yes No
to get some variety in my purchase
15. While purchasing a life insurance policy of a particular brand would you so that the
commercial / Ads and other promotional campaigns used by the insurance company.
(a) Remind you of the brand Yes No
(b) I feel as though I were right there in the Yes No
commercial expensing the same thing
(c) I am compare the brand with other competing Yes No
brands on matters that are important to me.

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(d) This commercial leaves me with a good feeling Yes No
about using the brand that I have bought.
16. Personal data (optional)
i) Sex Male Female
ii) Age group 18-25 yrs 26-35 yrs 36-45yrs 46-55 yrs Above 55
iii) Occupation
Government /Public sector employee
Pvt. Sector employee
Self employed
Professional (Doctor / Lawyer etc)
Agriculturist
Urban Marginal (wage earners)
NRI‟s
Media Person
Others (Please Specify )

iv) Annual Income Less than Rs. 3,00,000

Between Rs.3,00,000 to 5,00,000

Between Rs.5,00,000 to 8,00,000

Between Rs.8,00,000 to 10,00,000

Above 10,00,000

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