Report of Summer Training At
ON THE TOPIC
A Study of Consumer Behaviour in Relation to Insurance Products in IDBI
Submitted To: Dr. Puneet Dublish
Industry guide:
Submitted By:
Mr. Chandra Shekhar Singh
Ashutosh Agarwal
Senior Manager
Roll No.: 2013009 PGDM BATCH 2013-15
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INFORMATION SHEET
1. Name of the Company:
IDBI Federal Life Insurance Co. Ltd.
2. Address:
Office No. 907&908, 9th Floor Kanchanjunga Building Barakhamba Road Cannaught Place, New Delhi- 110001
3. Phone no of the company:
1800-209-0502(Toll Free)
4. Date of internship Commencement: 5th May 2014 5. Date of internship Completion:
30th June 2014
6. Name of industry Guide:
Mr. Chandra Shekhar Singh
7. Designation:
Senior Manager
8. Student‟s Name:
Ashutosh Agarwal
9. Student‟s Roll Number:
2013009
10. Student‟s E-mail ID:
[email protected]
11. Student‟s Mobile no:
9911637653
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Certificate of Completion from faculty Guide
This is to certify that Summer Project Report on "A Study of Consumer Behaviour in Relation to Insurance Products in IDBI" prepared by ASHUTOSH AGARWAL Roll No- 2013009 of PGDBM 2013-15 BATCH is his genuine effort under my guidance and supervision.
Signatures of the faculty guide
Name of the faculty guide
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Signatures of the student
Name of the student
ACKNOWLEDGEMENT
The meaning of adding this page at the beginning of my project is much than a clique acknowledge page. As this study comes to an end I feel indebted to all those who have lent a helping hand during my research. I owe immensely to my faculty mentor Mr. Puneet Dublish for his valuable time, guidance and encouragement during the entire period. I also want to express my sincere gratitude to Mr. C S Singh for his suggestions and conceptual knowledge imparted by them during my project.
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EXECUTIVE SUMMARY
A Study of Consumer Behaviour in Relation to Insurance Products in IDBI Influencing the ways that people act in their daily consumption lives is a concern for researchers in a number of disciplinary areas, including consumer behaviour psychology, sociology and marketing. This project is focused on analysing the Internal and the External factors which aim at determining the customers buying behaviour towards insurance products of IDBI Federal. It is mainly focused in trying to understand the various factors responsible for the buying decision. Understanding these factors is a critical task. The purchase decision in general is prompt by number of factors viz. Psycho graphical, Economical, Socio Political, Legal and Demographical. There are certain other factors which need to be understood while keeping in mind the investment decisions made by customers, such as, Customer Buying Behaviour, Customer Preferences and Perception, Brand Loyalty etc.
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INDEX INTRODUCTION
HISTORY OF INSURANCE
INDUSTRY BACKGROND
A BRIEF HISTORY OF INSURANCE SECTOR IN INDIA
INDIAN INSURANCE MARKET
INDUATRY DYNAMICS
TYPE OF INSURANCE
COMPANY PROFILE
ABOUT IDBI FEDERAL LIFE INSURANCE CO. LTD
ABOUT THE SPONSORS OF IDBI FEDERAL LIFE INSURANCE CO. LTD.
COMPANY’S VISION, MISSION AND VALUES
HISTORY OF THE ORGANIZATION
Organization structure of the IDBI federal
Leadership of IDBI Federal and their Levels in the Industry
PRODUCTS OFFERED
LITERATURE REVIEW RESEARCH METHODOLOGY DATA ANALYSIS & RESULT Limitations of Study OBSERVATION AND LEARNINGS CONCLUSION RECOMMENDATIONS/ SUGGESTIONS ANNEXURE- QUESTIONNAIRE BIBLIOGRAPHY
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INTRODUCTION
Life is full of risk and uncertainties. Since we are social human beings, we have certain responsibilities too. Indian consumers have big influence of emotions and rationality on their buying decisions. They believe in future rather than present and desire to have a better and secured future. In this direction life insurance services have its own value in terms of minimizing risk and uncertainties. Indian economy is developing and having huge middle class societal status and salaried persons. Their money value for current needs and future desires generate the reasons behind holding a policy. An attempt has been made in this report to study the buying behaviour of consumers towards life insurance services.
Analyzing consumer behaviour is perceived as cornerstone of a successful marketing strategy. Consumer behaviour is a mental and emotional process and the observable behaviour of consumers during searching, purchasing and post consumption of a product and service. Similarly consumer behaviour is action and decision process of people who purchase goods and services for personal consumption. Now if these defining criteria are closely observed, it is evident that analyzing consumers‟ decision making process is the foundation of entire notion of consumer behaviour.
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HISTORY OF INSURANCE
In some sense we can say that insurance appeared simultaneously with appearance of human society. In earlier economies, we can see insurance in the form of people helping each other. For example, if a house is burnt, the members of the community help build a new one. Should the same thing happen to one‟sneighbour, the other neighbours must come to help? Otherwise, neighbours will not receive help in the future. Insurance in the modern sense, started as a methods of transferring or distributing risk, were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute theircargo across many vessels to limit the loss due to any single vessel‟s capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c.1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for thelender‟s guarantee to cancel the loan should the shipment be stolen. Greek monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. They invented the concept of The general average. Merchants whose goods were being shipped together would pay a proportionallydivided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinking of the vessel in the sea. The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called ―benevolent societies which cared for the families and paid funeral expenses of members upon death. Guilds in the middle Ages served a similar purpose. Before insurance was established in the late 17th century, friendly societies existed inEngland, in which people donated amounts of money to a general sum that could be used for emergencies. Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Greeks rulers in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed
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insurance to be separated from investment, a separation of roles that first proved useful in marine insurance.Insurance became far more sophisticated in post-RenaissanceEurope,and specializedvarieties developed. Insurance as we know it today can be traced to theGreat Fire of London, which in 1666 A.D devoured 13,200 houses. In the aftermath of this disaster,NicholasBarbonopened an office to insure buildings. In 1680, he established England„s first fireinsurance company, The Fire Office to insure brick and frame homes. The first insurance company in theUnited Statesunderwrote fire insurance and was formedin Charles Town (modern-dayCharleston),South Carolina,in 1732.
INDUSTRY BACKGROUND The insurance industry of India consists of 51 insurance companies of which 24 are in life insurance business and 27 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the non-life Insurers, there are six public sector insurers. In addition to these, there is sole national reinsurer, namely, General Insurance Corporation of India. Other stakeholders in Indian Insurance market include Agents (Individual and Corporate), Brokers, Surveyors and Third Party Administrators servicing Health Insurance claims. Out of 27 non-life insurance companies, 4 private sector insurers are registered to underwrite policies exclusively in Health, Personal Accident and Travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd and Religare Health Insurance Company Ltd. There are two more specialized insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for Crop Insurance. Insurance penetration of India i.e. Premium collected by Indian insurers is 4.10% of GDP in FY 2011-12. Per capita premium underwritten i.e. insurance density in India during FY 201112 is US$ 59.0. The insurance sector in India has come to a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reviles the 360-degre turn witnessed over a period of almost two centuries.
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A BRIEF HISTORY OF INSURANCE SECTOR IN INDIA
Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like BabuMuttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Insurance is an Rs 450 billion industry in India. The life insurance segment writes about 80% of the overall market value. Indian Insurance market was at its all time high in 2003 with a growth of about 17.4% over the previous year. Since 2001 Insurance is growing at the rate of 15-20 % annually. The growth in the insurance industry is affected by volatility in real estate rates, GDP rates and long term interest rates. Fluctuations in exchange rates also affect the growth in this sector. The gross premium as a percentage of the GDP has gone up from 2.3 in the year 2000 to 4.8 in 2006. The premium as percentage of the country‟s gross domestic product (GDP) has increased from 4.8 percent in 2006 to 5.2 percent in 2011. Together with banking services, it adds about 7% to the country‟s GDP. Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.
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1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crores from the Government of India.
Indian Insurance in 21st Century: 2000: IRDA starts giving licenses to private insurers: ICICI prudential and HDFC Standard Life insurance first private insurers to sell a policy 2002: Banks allowed selling insurance plans. As TPAs enter the scene, insurers start setting non-life claims in the cashless mode 2007: First Online Insurance portal, www.insurancemall.in set up by an Indian Insurance Broker, Bonsai Insurance Broking Pvt Ltd.
INDIAN INSURANCE MARKET
The insurance sector which stood at a strong US$ 72 billion in 2012 has the potential to grow to US$ 280 billion by 2020. This growth is driven by India‟s favourable regulatory environment which guarantees stability and fair play. This environment has given rise to an insurance market which encourages foreign investors to tap into the sector‟s massive potential.Ever since the Indian government liberalised the insurance sector in 2000 and opened the doors for private participation, the sector has gone from strength to strength. The resultant competition has provided the consumer with a never-before-seen range of products and providers, and also enhanced service levels markedly.The health of the insurance sector reflects a country‟s economy. This sector not only generates long-term funds for infrastructure development, but also increases a country‟s risk-taking capacity. India‟s economic growth since the turn of the century is viewed as a significant development in theglobal economy. This view is helped in no small part by a booming insurance industry.
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0.53 0.58
MARKET SHARE FOR FY'12~FY'13 (IN %)
0.41 0.41
0.42
0.39
0.99 0.99 1.05 1.27
1.02
0.33 0.20
Life Insurance Corporation of India ICICI Prudential Life Insurance Co. Ltd 0.09
HDFC Standard Life Insurance Co. Ltd
1.27
SBI Life Insurance Co. Ltd
2.30
Max Life Insurance Co. Ltd Bajaj Allianz Life Insurance Co Ltd
2.46
Birla Sun life Insurance Co. Ltd
2.73
Reliance Life Insurance Co. Ltd 3.14
Tata AIG Life Insurance Co. Ltd ING Vysya Life Insurance Co. Ltd
4.40
MetLife Life Insurance Co Ltd Aviva Life Insurance Co Ltd
5.66
Canara HSBC OBC Life Insurance Co Ltd Kotak Life Insurance Co Ltd 63.47 5.88
Star Union Dai-Ichi Life Insurance Co. Ltd Future Generali Life Insurance Co Ltd
IDBI Federal Life Insurance Co. Ltd India First Life Insurance Co. Ltd Bharti Axa Life Insurance Co. Ltd AegonReligare Life Insurance Co. Ltd Shriram Life Insurance Co. Ltd DLF Pramerica Life Insurance Co. Ltd
Market Share of Insurance Companies
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Industry Dynamics Factors that influence consistent growth in insurance sector are:
Effective distribution channels – The efficiency and cost of the various distribution strategies used by companies are significant to their success in the insurance business. This particularly holds true for the retail business.
Focus on overall financial inclusion – As time evolves, so must the approach of the insurance sector in India. The objective of the insurance sector should ideally be to offer a broader range of activities to a wider populace.
Consumer needs and preferences – The growth of India‟s insurance industry can be attributed to product innovation, dynamic distribution channels, and vibrant publicity and promotional campaigns run by insurance companies. Benefits attached to the products and the manner in which they are delivered (through various marketing tieups) have helpedbring customers and insurance companies closer to each other and made the latter more relevant.
Types of Insurances: Insurance business is divided into four classes: 1. Life Insurance 2. Fire 3. Marine 4. Miscellaneous Insurance.
Life insurers undertake the Life Insurance business; general insurers handle the rest. TheBusiness of insurance essentially means defraying risks attached to an activity (including life)and sharing the risks between various entities, both persons and organizations. Insurancecompanies are important players in financial markets as they collect and invest large amountsof premium in various investment instruments.
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COMPANY PROFILE
ABOUT IDBI FEDERAL LIFE INSURANCE CO. LTD
IDBI Federal Life Insurance Co Ltd. is a joint-venture of IDBI Bank, India's premier development and commercial bank, Federal Bank, one of India's leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. Having started in March 2008, in just five months of inception, IDBI Federal became one of the fastest growing new insurance companies by garnering Rs.100 Cr in premiums. Through a continuous process of innovation in product and service delivery IDBI Federal aims to deliver world-class wealth management, protection and retirement solutions that provide value and convenience to the Indian customer. The company offers its services through a vast nationwide network 2,308 partner bank branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on 31st December 2013, the company has issued nearly 5.5 lakh policies with a sum assured of over Rs. 32,110.48 crores.
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ABOUT THE SPONSORS OF IDBI FEDERAL LIFE INSURANCE CO. LTD.
IDBI Bank Ltd. continues to be, since its inception, India's premier industrial development bank. It came into being as on July 01, 1964 to support India's industrial backbone. Today, it is amongst India's foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 1201 branches and 2156 ATMs. The Bank offers its customers an extensive range of diversified services including project finance, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India's financial sector - National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd).
Federal Bank is one of India's leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 1,142 branches and 1,312 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations. 15 | P a g e
Ageas is an international insurance group with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships with strong financial institutions and key distributors around the world. Ageas operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and UK. Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading non-life player through AG Insurance. In the UK, Ageas has a strong presence as the fourth largest player in private car insurance and the over 50's market. Ageas employs more than 13,000 people and has annual inflows of more than EUR 21 billion.
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COMPANY’S VISION, MISSION AND VALUES
VISION To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.
MISSION To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner. To be transparent in the way we deal with our customers and to act with integrity. To invest in and build quality human capital in order to achieve our mission.
VALUES
Transparency: Crystal Clear communication to our partners and stakeholders
Value to Customers: A product and service offering in which customers perceive value
Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and having clarity in claims
Customer-friendly: Advice and support in working with customers and partners Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholders and the community at large.
EXCELLENCE
"In every aspect of work ranging from the in-house training institute to the detailed Personal Insurance Plan. IDBI Federal is focused on achieving the highest standards of quality in every aspect of their business".
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Honesty “Is the heart of the Life Insurance business? IDBI Federal believes that above all, Life Insurance is based on trust. Transparency, Dependability and Integrity will form the cornerstones of the IDBI Federal experience."
KNOWLEDGE
"Is what makes experts. IDBI Federal is focused on the Life Insurance business. Perfectly combining global expertise with local knowledge, IDBI Federal is the Indian Life Insurance specialist."
CARING "For the customer IDBI Federal is redefining the Life Insurance paradigm to focus on the needs of the customers. The IDBI Federal service process is responsive, personalized, humane and empathetic."
CULTURE Our "in house culture recipe" has some of the finest ingredients going into its making. Some of the more prominent aspects of our culture are stated below: i. Customer comes first ii. Do it right the first time iii. Bias for result oriented action iv. Financial strength and discipline v. Clarity of purpose vi. International quality standards vii. Inclusive Meritocracy viii. Learning opportunities ix. Fun at work x. Commitment to published value system 18 | P a g e
TECHNOLOGY
To monitor and manage its network equipment across 34 sites, IDBI Federal uses Tulip Proactive Managed CE solution. The solution includes device management, proactive troubleshooting and notification support. With the implementation of the solution, IDBI has reported improvement of network performance and availability, with a faster, more effective change and configuration management.
PRODUCTS
IDBI Fortis launched its first set of products across India in March 2008, after receiving the requisite approvals from the Insurance Regulatory and Development Authority (IRDA). IDBI Federal offers services through a nationwide network across the branches of IDBI Bank and Federal Bank in addition to a network of advisors and partners. IDBI Federal has 60 branches across the country.
SPONSORSHIPS, AWARDS
IDBI Fortis Life Insurance Company was selected as the title sponsor for the India-Sri Lanka Cricket Series. This was followed by the IDBI Fortis Wealthsurance Twenty20. „Wealthsurance Made Easy‟ (WME), a knowledge aid by IDBI Fortis for its sales force, won The Bronze Dragon in the category for „Best Dealer/Sales Force activity‟ at the Promotion Marketing Awards of Asia (PMAA). IDBI Federal has also achieved break-even in just 5 years of service whereas it takes almost 10-15 years or more for other Insurance Companies to do so.
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HISTORY OF THE ORGANIZATION
2006:-IDBI signs MoU with Fortis -IDBI - Tripartite MOU with Federal Bank & Forties Insurance International -IDBI, Federal Bank and Fortis Sign Joint Venture Agreement To Establish A New Life Insurance Company In India
2009:- IDBI Federal Life launches new plan for senior citizens. - IDBI Fortis redefines endowment & money back with Incomesurance™ - IDBI Fortis launches Termsurance™ Protection Plan - IDBI Fortis bags bronze Dragon at 'PMAA 2009' - IDBI Fortis Life Insurance uses an interactive application to help users easily calculate their taxes - IDBI Fortis launches Incomesurance™ Immediate Annuity - IDBI Fortis launches Retiresurance™ Pension Plan - 'IDBI Fortis' Boss-Ka-Boss bags PRCI Award - IDBI Fortis announces Rs 250cr capital infusion
2010:- IDBI Federal launches brand new campaigns! - IDBI Federal introduces a cover for loans, Loansurance® - IDBI Federal launches Wealthsurance Milestone Plan - IDBI Fortis Life Insurance is now IDBI Federal Life Insurance
2011:- IDBI Federal heralds the New Year with Childsurance - IDBI Federal unveils 3-in-1 Lifesurance Savings Plan - IDBI Federal launches insured wealth plan
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- IDBI Federal pioneers Medical Test-free Term Plan for Seniors - IDBI Federal launches unit linked Pension Plan - IDBI Federal targets HNIs with Wealthsurance Premier - IDBI Federal launches Retiresurance Guaranteed Pension Plan - IDBI Federal-Samhita financial literacy drive a big hit in MP
2012:- IDBI Federal launches a plan with double life cover and no medicals - IDBI Federal makes its online debut - IDBI Federal Bondsurance™ plan offers attractive guaranteed Tax-Free Returns, Life Cover - IDBI Federal and IDBI Bank reaches out to Surli through TermsuranceGrameenSuraksha
2013:-IDBI Federal breaks-even in Five years; posts maiden profit of Rs 9.24 crore - IDBI Federal in association with Phoenix Foundation organises a trek for the physically challenged 2014:-
IDBI Federal launches 7 new plans
-
IDBI Federal backs home grown talent; elevates VighneshShahane as CEO
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Organization structure of the IDBI federal IDBI Federal has line structure as its Organizational structure. Features of line organization are:
In line structure, authority flows from the top level to lower levels through various managerial positions. There is vertical flow of authority and responsibility.
There are many levels of management depending upon the scale of business and decision-making ability of managers. Each level of management has equal rights.
There is unity of command. Every person is accountable to his immediate boss.
There is limit on subordinates under one manager. A manager has control only over the subordinates of his department.
Chairman CEO/CFO/COO HOD Zonal Manager Regional Manager Branch Manager Senior Manager Relationship Manager
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Leadership of IDBI Federal and their Levels in the Industry
Regional Manager Mr. Sumit Kalra Branch Head Mr. Sanjeev Arora Sr. Manager Mr. Chandra Shekhar Singh
During the tenure of the training we interacted with various people. Among them few guided us and helped us in better understanding of the functioning of different departments of the organization. Mr. SumitKalra, Regional Manager (sales) guided us with the functioning of the branch and how employees coordinate and areaccoladed based on their performances. Mr. Sanjeev Arora (Branch Head) and Mr. Chandra Shekharsingh (Sr. Manager) helped us throughout by their guidance and support, throughout our tenure with IDBI Federal.
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PRODUCTS OFFERED 1. IDBI Federal Childsurance Savings Protection Plan is a non-linked participating endowment plan that ensures a child‟s future. Childsurance Savings is designed to give the customers, guaranteed annual payouts and also aid the important milestones in their child‟s life. In the unfortunate event of the parent not being around, the policy will continue exactly as they had planned it, without any further premiums being paid. .In other words, this plan ensures that their child gets to live his/her dream exactly as they have planned, whether or not their parents are around.
2. IDBI Federal Incomesurance Guaranteed Money Back Insurance Plan is a nonlinked non-participating money back plan which gives guaranteed returns on an investment, so that the customer stops worrying about the future. With Incomesurance, they can guarantee a secure future for their families even when they are not around.
3. IDBI Federal Lifesurance Savings Insurance Plan is a fixed term non-linked participating plan that provides twin benefits of long-term savings and life cover. With Lifesurance Savings, customers‟ small savings will help them realise their big dreams that they have for their selves and their family. This plan also offers the benefit of life cover that will provide financial security to their family in their absence.
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LITERATURE REVIEW
A Study of Consumer Behaviour in Relation to Insurance Products in IDBI
DEFINING CONSUMER BEHAVIOUR: Consumer Behaviour may be defined as “the interplay of forces that takes place during a consumption process, within a consumers‟ self and his environment. - this interaction takes place between three elements viz. knowledge, affect and behaviour; - it continues through pre-purchase activity to the post purchase experience; - it includes the stages of evaluating, acquiring, using and disposing of goods and services”. The “consumer” includes both personal consumers and business/industrial/organizational consumers. Consumer behaviour explains the reasons and logic that underlie purchasing decisions and consumption patterns; it explains the processes through which buyers make decisions. The study includes within its purview, the interplay between cognition, affect and behaviour that goes on within a consumer during the consumption process: selecting, using and disposing of goods and services. Cognition: This includes within its ambit the “knowledge, informationprocessing and thinking” part; It includes the mental processes involved in processing of information, thinking and interpretation of stimuli (people, objects, things, places and events). In our case, stimuli would be product or service offering. Affect: This is the “feelings” part. It includes the favourable or unfavourable feelings and corresponding emotions towards a stimuli (eg. towards a product or service offering or abrand). These vary in direction, intensity and persistence. Behaviour: This is the “visible” part. In our case, this could be the purchase activity: to buy or not a buy (again specific to a product or service offering, a brand or even related to anyof the 4 Ps).
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The interaction is reciprocal between each of the three towards each other and with theenvironment. Studying consumer behaviour is important because it enables us to better focus our efforts where we can get the results we want. By understanding consumer behaviour; our business will provide the consumer with better goods and services. Better goods and services results in more sales and therefore more profit. Not only is it important to improve goods and services; it is necessary to know what type of products and what type of service to offer.
Consumer behaviour is strongly tied to their phase in the life cycle. Patterns of spending are dictated by what is happening at a given time. Younger couples with no children have different needs than those who have started a family. While teenagers and elderly people have more discretionary income and can spend more freely. Knowing this will help us decide who our core customer is. By using this information to influence buying decisions; we can increase sales.
It is also important to plan marketing strategies that are focused on this group. These strategies should target our market and focus on niche marketing. Resources should not be spent marketing to consumers outside of our target. We will begin to understand our market when we have satisfied certain questions about our customers. Why do they choose one product over the next? What impact does the role of culture, education and advertising has on the decision to choose a product? How and why is the consumer planning to use the product? Why are they loyal to a specific brand? What are the risks involved in using or switching to our brand? Having the answer to these questions will help us gain consumer confidence. We may have the best product, but the consumer does not know this. We will speak to them through our status in the community, our good-will, our price points and the way our product relates to them. These factors will help to determine who will become our customers and who won't. Consumers have needs and wants, and our objective is to identify the need and create the want. Our ultimate goal is to influence consumer behaviour and convert this into profits for our company. Businesses that can predict consumer behaviour have the edge over their competitors. To predict consumer behaviour requires knowledge of the consumers‟ values, goals and lifestyle. Companies with this asset use it to develop better strategies, and are better able to win over consumers. Hence, this study is very important. 26 | P a g e
RESEARCH METHODOLOGY
RESEARCH OBJECTIVE The main objective of this project is to study the consumer behaviour and various reactions of customers with reference to IDBI Federal Life Insurance Co. Ltd. And suggest ways to improve its marketing efforts. 1. To study the trends in life insurance market 2. To study the profile of IDBI Federal‟s customers. 3. To study the investors‟ behaviour with respect to IDBI Federal Life Insurance. 4. To analyse the investors‟ perception about IDBI Federal.
Source of Data Collection Data Collection is an important aspect of any type of research study. It is a term used to describe a process of preparing and collecting data from all sources and observation. Data was collected from various primary and secondary sources. These two methods of data collection are discussed below:
Data Collection
Primary Data
Secondary Data
Primary Data includes unstructured interview conducted with management trainee from head office and various employees who provided valuable information regarding the organization and its working.
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Secondary Data is the data that have been already collected by and readily available from other sources. The secondary data includes information obtained from various sources that includes newspaper articles, business magazines, brochures, pamphlets and web. Sample Size: 80 respondents responded to the pre-designed questionnaire. Methodology: Obtaining first hand information by pitching to customers and getting the survey filled from them about the insurance products of IDBI and acquiring their views and beliefs about overall insurance products and hence picking up the areas where we are good and also the areas where our way of working can be improved in order to enhance customer satisfaction and increase the business.
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DATA ANALYSIS & RESULT i.
Age of Respondent
Age 70 60 50 40
Age
30 20 10 0 18-30
ii.
31-45
46-52
53-55
Gender of Respondent
Gender
70 60 50 40 30 20 10 0 Male
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Female
iii.
Occupation
Occupation
13% Students Professional 25%
50%
Home-maker Govt./Pvt. Sector Self Employed
6%
iv.
6%
How did you come to know about Insurance products?
20 18 16 14 12 10 8 6 4 2 0
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Source
v.
Do you currently have an Insurance Policy?
Possession of Policy
16
NO
Possession of Policy
64
YES
0
vi.
20
If NO, why not?
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40
60
80
vii.
If YES, which company‟s?
Company 2
2
6 LIC 2
TATA AIG SBI LIFE
6
BAJAJ ALLIANZ ICICI Prudential
2
AVIVA 44
viii.
IDBI Federal
What prompted you to buy policy from that company?
Brand Image- 14 Agents convinced me- 20 Past record of performance- 10 Impressed by ads/ promotion of the company- 5 Desire to try out new company- 5 My friends/acquintances have bought from there- 10
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ix.
Are you a customer of IDBI Federal Life Insurance?
Customer of IDBI Federal YES
NO 2%
98%
x.
If NO, why not?
Reason I am not in the financial condition to invest right now
I already have 1 or more policies and I am satisfied with them
I get better returns in other policies
0
5
Reason
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10
15
20
25
30
35
40
45
xi.
What suggestions would you give us to make our products better?
Sr. Number
Suggestion
Number of respondents
1.
Min. Premium amount
30
should be less 2.
Monthly premium payment
35
option should be available
xii.
Suggestions for better functioning of IDBI.
Sr. Number
Suggestion
Number of Respondents
1.
More marketing/promotions should be done
20
2.
Policies should have something unusual, as people
10
already possess policies from other companies, so they are not attracted by yours. 3.
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Should open more branches at remote locations.
10
Limitations of Study: 1. The study was conducted in New Delhi,Siliguri and nearby area in West Bengal; hence the results can be biased and hence not exactly accurate. 2. The survey was conducted on 80 respondents due to time constraint. 3.
The survey includes more number of responses of people within the age group of 18-30. Hence, the study may be biased, as, at that age, income is less and people take life insurance lightly.
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OBSERVATION AND LEARNINGS
1. There is a good amount of people in the age group 18-30 who have not bothered to buy a life insurance policy because they are very sure that nothing would happen to them as they are fit and fine. 2. People prefer to buy a policy which has less years of premium payment term. 3. More than life insurance, people are interested in a savings scheme. The better savings plan they get, the more is their tendency to buy the policy. 4. Very less people are interested in a pure life insurance policy. 5. Tax benefits are also a major factor why people like to buy a policy. 6. Customers are willing to pay through easy payment options such as ECS and online payment so that their valuable time gets saved. 7. They are interested more in monthly premium payment options rather than annually or half yearly. 8. Friends and family are major influencers on customers when it comes to the decision of buying a life insurance policy. 9. LIC is still the market leader in life insurance sector. 10. Brand image and past record of performance are major stimuli in buying decision. 11. IDBI Federal has limited reach to prospective customers as compared to other companies.
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CONCLUSION 1. While the fresh air of competition in every sector of economy brings in major changes in consumer expectations, the insurance industry has experienced a few unique aspects, such as regulation-inspired efforts to educate insurance buyers and a vast change of skills and capabilities of the intermediaries involved in the distribution. 2. With respect to life insurance, potential buyers are drivers of buying a policy for one or more of these 3 major reasons: security of the money invested, saving for one or more specific purposes and the availability of tax benefits. 3. The challenge for the insurance companies is to address the motivating factors of customers and come up with genuine solutions. 4. The potential buyer primarily expects that the saving should be a painless process and that the money saved should be absolutely safe. The challenge is to provide not only convenient payment options, but also mechanisms that could offer some measure of protection and relief to the customer if he is forced to disrupt the payment arrangement for unforeseen reasons. 5. On the issue of customers‟ perception of security of the money invested, there are 2 important aspects. One is, how the features of the insurance contract are put across the buyer (whether it is unit linked policy or endowment oriented); and the second is, how to address effectively, the question about dependability of the new generation companies that potential new insurance buyers raise during sales calls. Both, the insurance companies and the regulator need to address this behavioural challenge very actively. 6. Customers in major cities appreciate the need for higher level of insurance cover with reference to their earning stage in working life. 7. Instances of customers requiring agents to arrange for loans against their policies, or change nominations etc. are rare. Therefore companies need to gear themselves to provide high service standards directly. 8. One aspect of customer service for new age companies that remains to be tested widely is the claim payment record. 9. The entry of Pvt. players into insurance sector have expanded the product segment to meetdifferent level of requirements of customers. It has brought greater choice to customers. 10. IRDA is also playing a very comprehensive role by regulating norms, mandatory to private players, which increases confidence of customers in the private companies. 37 | P a g e
RECOMMENDATIONS/ SUGGESTIONS
1. We need to tap the young crowd in the age group 18-30 and convince them that buying a life insurance policy is necessary because life is very unpredictable. 2. More plans should be made that involve less period of premium payment. 3. As friends and family members are major influencers of customers, our advertisements and promotions should be family and friend-centred. 4. Group insurance policies like „full family insurance‟ schemes should be made. 5. Our reach needs to be increased through social media (Facebook, Twitter, YouTube campaigns), television, radio, newspapers etc. 6. Our insurance policies should have a range of premiums to suit every pocket size. 7. In terms of distribution, we should increase the number of marketers- more channels of distribution and more intermediaries. 8. Our advertisements should cover the benefits of our policies and what differentiates our policies from those of other companies, in brief. 9. Our company should have more offices at smaller towns and uncovered segments in the cities. 10. Mobile Commerce is the next big thing! We can have a mobile app where our customers can get all the information related to our products as well as pay their premiums.
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ANNEXURE QUESTIONNAIRE 1. NAME.................................................................................................................................
2. AGE 18 – 30
31 – 45
46 – 52
3. GENDER Male
Female
4. OCCUPATION Student Govt/private sector Self employed Professional Media person Other (specify.............................)
5. How did you come to know about Life Insurance Policies? Newspaper Agents
Television Telemarketing
InternetOthers (specify...............................) Direct mail Radio Direct sales executive Friends/ Family
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53 – 55
6. Do you currently have an Insurance Policy? Yes
No
7. If No, why not? Lack of awareness Returns are not lucrative enough Not affordable
8. If Yes, which company’s? LIC ICICI Prudential Bajaj Allianz HDFC Standard Birla Sun Life TATA AIG SBI Life Max New York Aviva Kotak Mahindra IDBI Federal
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9. What prompted you to buy Policy from that Company? Brand Image Past Record of Performance My Friends/ acquaintances have bought from there Agents convinced me to buy Impressed by ads/ promotion of the company Desire to try out new company
10. Are you a customer of IDBI Federal life? Yes
No
11. If Not, what is the reason behind it? I get better returns in other policies I already have 1 or more policies and i am satisfied with them I am not in the financial condition to invest right now
12. If Yes, what suggestions would you like give for better products? Minimum premium amount should be less Monthly premium payment option should be available Other (specify.................................................)
13. What do you like about IDBI Federal’s policy? It gives me good returns It is short term Tax benefits are good Other (specify.............................)
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BIBLIOGRAPHY
www.idbifederal.com www.idbifederal.com/Press/PressRelease http://www.insidebusiness360.com/index.php/why-it-is-important-to-study-consumerbehavior-8478/ http://www.moneycontrol.com/company-facts/idbibank/history/IDB05 www.wikipedia.com
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