CHAPTER - 1 INTRODUCTION
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CHAPTER - 1 INTRODUCTION Introduction to the topic This chapter will outline and overview the research topic and rational of this study, the objectives and the reason for the personal interest of the author for this study and will help readers to understand what is going to follow in this project Insurance is a federal subject in India and has a history dating back to 1818. Life and general insurance in India is still a nascent sector with huge potential for various global players with the life insurance premiums accounting to 2.5% of the country's GDP while general insurance premiums to 0.65% of India's GDP.[1]. The Insurance sector in India has gone through a number of phases and changes, particularly in the recent years when the Govt. of India in 1999 opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%.
Definitions and theoretical concept framework Customer loyalty has been examined by many researchers in the past and many of them have given various definitions around this concept. According to Heskett (2002), customer loyalty has been regarded as the sina qua non of an effective business strategy. Dick and Basu (1994, p.99) give a stronger conceptualization for customer loyalty. They view it as the “strength of the relationship between an individual’s relative attitude towards an entity (brand, Products, store, or vendor) and repeat patronage”.
Customer satisfaction What is customer satisfaction? Social psychologists, marketing researchers, and students of consumer behaviour, have extensively studied the concepts of customer satisfaction and dissatisfaction. The increasing importance of quality in both Products and manufacturing industries has also
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created a proliferation of research, with more than 15,000 academic and trade articles having been published on the topic of customer satisfaction in the past two decades (Peterson and Wilson, 1992). Several conferences have been devoted to the subject and extensive literature reviews have been published (Day, 1977; Hunt, 1977; LaTour and Peat, 1979; Smart, 1982; Ross, et al., 1987, Barsky, 1992: Oh and Parks, 1997) The result of all this research has been the development of nine distinct theories of customer satisfaction. The majority of these theories are based on cognitive psychology, some have received moderate attention, while other theories have been introduced without any empirical research. The nine theories include: expectancy disconfirmation; assimilation or cognitive dissonance; contrast; assimilation-contrast; equity; attribution; comparison-level; generalized negativity; and value-precept (Oh and Parks, 1997). Recently, numerous researchers have attempted to apply CS theories developed by consumer behaviourists in the areas of lodging (Barsky, 1992; Barsky and Labagh, 1992; Saleh and Ryan, 1991; Ekinci and Riley, 1998), restaurant (Dube et al., 1994; Bojanic and Rosen, 1994; Lee and Hing, 1995; Oh and Jeong, 1996), foodProducts (Almanza et al., 1994), and tourism (Pizam and Milman, 1993; Danaher and Arweiler, 1996; Ryan and Cliff, 1997; Hudson and Shepard, 1998) in order to investigate CS applicability to the hospitality and tourism industries. For several decades the word or concept customer satisfaction was of crucial importance for marketing, managers and the organizations and it is regarded today central issue to many definitions (Parker and Mathews, 2001). The Oxford Library of Words and Phrases (1993) emphasize satisfaction as a “release from uncertainty”. Customer satisfaction can be defined in many ways. Kotler (2000, pg.36) defines customer satisfaction as one of 3
which is “a person's feelings of pleasure or disappointment from comparing a product's perceived performance (or outcome) in relation to his or her expectations”. Another conceptualization given from Homburg et al. (2005) is that customer satisfaction is a cumulative, worldwide assessment based on different experiences with a firm. Similarly, Kotler (1991) and Fornell (1992) characterized satisfaction as an evaluation of quality of products after customers purchase them and he argues that “high customer satisfaction ratings are widely believed to be the best indicator of a company’s future profits” (Kotler 1991, pg.19).
Customer perception of value Theoretical concept framework and definitions The creation of consumer value has been taken into consideration from many managers during the 1990s and it was the result of companies’ need to be more competitive and to fulfill the increasing customer demands (Cravens and Piercy, 2003). Consumer perceived value depends on “how the customer perceives the benefits of an offering and the sacrifice that is associated with its purchase” (Jobber, 2004, pg.13). That’s why, Monroe (1991) and Sweeney (1994) define customer perceived value as the ratio between perceived benefits and perceived sacrifice. Also, Monroe and Chapman (1987) suggest that perceived value is a weighted sum of acquisition and transaction value. “Customer perceived value can be broadly defined as the customer’s overall assessment of the utility of a product based on perceptions of what is received and what is given” (Zeithaml, 1988, p. 14).
Importance of customer perception of value Many discounters, retail stores and supermarkets now focus to the offering of valueadded Productss and highlight the importance of them to become more competitive (Kim and Jin, 2002). Examining the effects and impact of consumers’ perception of value, generally value is very important and crucial to marketers for the success of companies (Dodds, 1991; Fredericks and Salter, 1995). 4
The relationship between customer perception of value and customer satisfaction McDougall and Levesque (2000, p. 394) argued that “customers who perceive they received value for money are more satisfied than customers who do not perceive they received value for money”.
Backgrounds of the study After we have referred to the Introduction (Chapter 1) about the background of this research project and determine the research problem that we are going to analyze, we are moving to the part of the Literature Review. In this chapter we are going to find and say about the relevant past research in regard to our research problem, a fact that will help to the better understanding and clarification of the topic and how we proceed in the next chapters.
INSURANCE Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
Characteristics of insurance Commercially insurable risks typically share seven common characteristics.[1] 1. A large number of homogeneous exposure units. 2. Definite Loss. 3. Accidental Loss.
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The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable. 1. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer. 2. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113) 3. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a
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claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim. 4. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies
becomes constrained, not by factors surrounding the individual
characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurer's appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.
Indemnification The technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1. an "indemnity" policy and 2. a "pay on behalf" or "on behalf of"[3] policy.
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The difference is significant on paper, but rarely material in practice. An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; for example, a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000)[4]. Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay on behalf" language[5]. An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss covered in the policy. When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.
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Insurers' business model Underwriting and investing The business model can be reduced to a simple equation: Profit = earned premium + investment income - incurred loss - underwriting expenses. Insurers make money in two ways: (1) through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insured parties. The most complicated aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Of course, from the insurer's perspective, some policies are winners (i.e., the insurer pays out less in claims and expenses than it receives in premiums and investment income) and some are losers (i.e., the insurer pays out more in claims and expenses than it receives in premiums and investment income). An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss. 9
Insurance companies also earn investment profits on “float”. “Float” or available reserve is the amount of money, at hand at any given moment, that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. The Association of British Insurers (gathering 400 insurance companies and 94% of UK insurance services) has almost 20% of the investments in the London Stock Exchange.[6] In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held. Naturally, the “float” method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. [7] Property and casualty insurers currently make the most money from their auto insurance line of business. Generally better statistics are available on auto losses and underwriting on this line of business has benefited greatly from advances in computing. Additionally, property losses in the United States, due to unpredictable natural catastrophes, have exacerbated this trend.
Claims Finally, claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for, though one hopes it will never need to be used. Claims may be filed by insureds directly with the insurer or through brokers or agents. The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form such as those produced by ACORD.
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Insurance company claim departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes a thorough investigation of each claim, usually in close cooperation with the insured, determines its reasonable monetary value, and authorizes payment. Adjusting liability insurance claims is particularly difficult because there is a third party involved (the plaintiff who is suing the insured) who is under no contractual obligation to cooperate with the insurer and in fact may regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge. In managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation; see insurance bad faith.
History of insurance In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in
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some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union). Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.[8] Chinese merchants travelling treacherous river rapids would redistribute their wares 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 practised 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 the lender's guarantee to cancel the loan should the shipment be stolen. Achaemenian monarchs of Iran were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices. The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much.”
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A thousand years later, the inhabitants of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage. 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. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, 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 Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed. Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick and frame homes.
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The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and national banks.
Types of insurance Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are (non-exhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property. Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional
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liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owner's policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs. [9]
Auto insurance Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: 1. Property coverage pays for damage to or theft of your car. 2. Liability coverage pays for your legal responsibility to others for bodily injury or property damage. 3. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. An auto insurance policy is comprised of six different kinds of coverage. Most countries require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year. In the United States, your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium. [10]
Home insurance Home insurance provides compensation for damage or destruction of a home from disasters. In some geographical areas, the standard insurances excludes certain types of disasters, such as flood and earthquakes, that require additional coverage. Maintenancerelated problems are the homeowners' responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In
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some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets.[11]
Health Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance.
Disability
Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards.
Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work.
Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.
Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expenses incurred because of a job-related injury.
Casualty Casualty insurance insures against accidents, not necessarily tied to any specific property.
Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.
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Political risk insurance is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.
Life Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance. Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed. In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death. In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles
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(e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return.
Property Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.
Automobile insurance, known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. Throughout the United States an auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits. Credit card companies insure against damage on rented cars. o
Driving School Insurance insurance provides cover for any authorized driver whilst undergoing tuition, cover also unlike other motor policies provides cover for instructor liability where both the pupil and driving instructor are equally liable in the event of a claim.
Aviation insurance insures against hull, spares, deductibles, hull wear and liability risks.
Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.
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Crop insurance "Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance."[12]
Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary homeowners insurance policies do not cover earthquake damage. Most earthquake insurance policies feature a high deductible. Rates depend on location and the probability of an earthquake, as well as the construction of the home.
A fidelity bond is a form of casualty insurance that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.
Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some portions of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.
Home insurance or homeowners' insurance: See "Property insurance".
Landlord insurance is specifically designed for people who own properties which they rent out. Most house insurance cover in the U.K will not be valid if the property is rented out therefore landlords must take out this specialist form of home insurance.
Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.
Surety bond insurance is a three party insurance guaranteeing the performance of the principal.
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Terrorism insurance provides protection against any loss or damage caused by terrorist activities.
Volcano insurance is an insurance that covers volcano damage in Hawaii.
Windstorm insurance is an insurance covering the damage that can be caused by hurricanes and tropical cyclones.
Liability Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured.
Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes made by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.
Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance".
Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament. 20
Professional liability insurance, also called professional indemnity insurance, protects insured professionals such as architectural corporation and medical practice against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called malpractice insurance. Notaries public may take out errors and omissions insurance (E&O). Other potential E&O policyholders include, for example, real estate brokers, Insurance agents, home inspectors, appraisers, and website developers.
Credit Credit insurance repays some or all of a loan when certain things happen to the borrower such as unemployment, disability, or death.
Mortgage insurance insures the lender against default by the borrower. Mortgage insurance is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.
Insurance in India Insurance is a federal subject in India and has a history dating back to 1818. Life and general insurance in India is still a nascent sector with huge potential for various global players with the life insurance premiums accounting to 2.5% of the country's GDP while general insurance premiums to 0.65% of India's GDP.[1]. The Insurance sector in India has gone through a number of phases and changes, particularly in the recent years when the Govt. of India in 1999 opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%. Ever since, the Indian insurance sector is considered as a booming market with every other global insurance company wanting to have a lion's share. Currently, the largest life insurance company in India is still owned by the government.
History of Insurance in India 21
Insurance in India has its history dating back till 1818, when Oriental Life Insurance Company was started by Europeans in Kolkata to cater to the needs of European community. Pre-independent era in India saw discrimination among the life of foreigners and Indians with higher premiums being charged for the latter. It was only in the year 1870, Bombay Mutual Life Assurance Society, the first Indian insurance company covered Indian lives at normal rates. At the dawn of the twentieth century, insurance companies started mushrooming up. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. However, the disparage still existed as discrimination between Indian and foreign companies. The oldest existing insurance company in India is National Insurance Company Ltd, which was founded in 1906 and is doing business even today. The Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance Corporation of India (GIC). GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have been de-linked from parent company and made as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.
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Related Acts The insurance sector went through a full circle of phases from being unregulated to completely regulated and then currently being partly deregulated. It is governed by a number of acts, with the first one being the Insurance Act, 1938.
The Insurance Act, 1938 The Insurance Act, 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. You can download the act by clicking here
Life Insurance Corporation Act, 1956 Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that life insurance in India was completely nationalized, through a Government ordinance; the Life Insurance Corporation Act, 1956 effective from 1.9.1956 was enancted in the same year to, inter-alia, form LIFE INSURANCE CORPORATION after nationalization of the 245 companies into one entity. There were 245 insurance companies of both Indian and foreign origin in 1956. Nationalization was accomplished by the govt. acquisition of the management of the companies. The Life Insurance Corporation of India was created on 1 September, 1956, as a result and has grown to be the largest insurance company in India as of 2006.[2]
General Insurance Business (Nationalisation) Act, 1972 The General Insurance Business (Nationalisation) Act, 1972 was enacted to nationalise the 100 odd general insurance companies and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance, United India Insurance which were headquartered in each of the four metropolitan cities.[3]
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Insurance Regulatory and Development Authority (IRDA) Act, 1999 Till 1999, there were not any private insurance companies in Indian insurance sector. The Govt. of India, then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies into the insurance. Further, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies. In recent years many private players entered in the Insurance sector of India. Companies with equal strength competing in the Indian insurance market. Currently, in India only 2 million people (0.2 % of total population of 1 billion), are covered under Mediclaim, whereas in developed nations like USA about 75 % of the total population are covered under some insurance scheme. With more and more private players in the sector this scenario may change at a rapid pace.
Existing Insurance Companies/Corporations
Bajaj Allianz Life Insurance Company Limited
Birla Sun Life Insurance Co. Ltd
LIC Life Insurance Co. Ltd
ICICI Prudential Life Insurance Co. Ltd.
Life Insurance Corporation of India
Max New York Life Insurance Co. Ltd
Met Life India Insurance Company Ltd.
LIC Mahindra Old Mutual Life Insurance Limited
SBI Life Insurance Co. Ltd
Tata AIG Life Insurance Company Limited
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Aviva Life Insurance Co. India Pvt. Ltd.
Sahara India Life Insurance Co, Ltd.
Shriram Life Insurance Co, Ltd.
Bharti AXA Life Insurance Company Ltd.
Future Generali Life Insurance Company Ltd.
IDBI Fortis Life Insurance Company Ltd.
Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd
AEGON Religare Life Insurance Company Limited.
DLF Pramerica Life Insurance Co. Ltd.
Star Union Dai-ichi Life Insurance Comp. Ltd.
HYPOTHESIS So finally below the hypothesis are: LIC Life Insurance is preferred because of its returns. Most of the customer are satisfied with LIC Life Insurance.
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CHAPTER - 2 COMPANY PROFILE
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CHAPTER - 2 COMPANY PROFILE
BOARD OF DIRECTORS Members On The Board Of The Corporation Shri D.K. Mehrotra, (CHAIRMAN, LIC ) Shri T. S. Vijayan, (Managing Director, LIC ) Shri Thomas Mathew T. (Managing Director, LIC ) Shri Sushobhan Sarker (Managing Director, LIC ) Shri R. Gopalan, (Secretary, Department of Economic Affairs, Ministry of Finance, Govt. of India.) Shri D.K. Mittal, (Secretary, Department of Financial Services, Ministry of Finance, Govt. of India.) Shri A.K. Roy, (Chairman cum Managing Director, GIC.) Shri M.V. Tanksale, (Chairman & Managing Director, Central Bank of India ) Lt. General Arvind Mahajan (Retd.) Shri Anup Prakash Garg Shri Sanjay Jain Shri Ashok Singh Shri K.S. Sampath Shri Amardeep Singh Cheema
MISSION/ VISION 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."
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VISION "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."
SWOT ANALYSIS ABOUT COMPANY Life Insurance Corporation of India is one of the most powerful, world class Life Insurance Co, gaining appreciation for their strong word ethics, excellent performance, professionalism and team work which lead them to progress in today’s challenging environment. Though with the its excellence performance every efforts has been made to present the most authentic and truly representative findings, but some uncontrollable factors do affect the performance and thus bring about some deviations and hurdles in progress. So, with its strengths and good quality, the company is having some weakness, and threats and opportunities. Its SWOT analysis is as below:
STRENGTHS: Life Insurance Corporation of India is the First largest Govt. player in the insurance industry. Excellent Services. Brand Image is the strongest point of Life Insurance Corporation of India Insurance Company. Business Experience. Strong Financial Base. Innovative Products. The company has a large network on branches which is helped to customer for the payment.
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WEAKNESSES Lot of competitors are in the market offer same product by the different title and different in their premium and offering. A premium is high as compared to other companies. Targets for financial advisors and for the sales department are high. Clients face problems to get insured due to large number of formalities.
OPPORTUNITIES Huge market is literally untapped. Out of estimated 320 million insurable markets only 20% of the population is insured. Indian people are more emotional toward their child that’s why children plans are selling like hot cakes.
THREATS: Weak perception of private players in the minds of Indian people due to frequent financial scams. Large number of insurance players. strength for foreign partners making the competition difficult and saturating the urban markets. For the insurance sector Government set the authority that is IRDA (Insurance Regulatory and Development Authority) which is undertaken to track record of all the companies and change rules day by day more rigid which is very difficult for the companies.
SWOT ANALYSIS (ABOUT PRODUCT STRENGTHS) 1) GUARANTEED EDUCATIONAL BENEFITS: Life Insurance Corporation of India is so designed that it provides money at important mile stones whatever be the uncertainty, these payments will be made to your child at the critical milestones in your child’s Life. Life Insurance Corporation of India recognize that Graduation and Post Graduation are important milestones and Life Insurance Corporation of India Children,s dream plan provides money at these junctures. 2) DEATH OF PARENT/ CHILD:
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Life Insurance Corporation of India is the only company who gives you the risk cover of both the policy holder and the children. 3) FAMILY INCOME BENEFIT: In case of death or accidental total permanent disability of the policy holder during the term of the policy, a monthly income benefit 1% of the sum assured (12% per annum) subject to a maximum of Rs. 10,000 p.m. becomes payable till the end of the policy term. This benefit will not be available in the event of accidental permanent total disability after age 65 of the policy holder.
WEAKNESS NO MEDICAL RIDERS: Under this plan no medical rider are provided. GROWTH RATE: Growth rate of invested money is limited at Compare to money invested in share market. LIQUIDITY: Under this plan parent cannot get the money when they want. Instead it will be provided at fixed pre-determined intervals. AGE LIMIT:
The main drawback of this plan is that financial benefits can be availed
for the child in the age group of 0-13 years.
OPPORTUNITES Life Insurance Corporation of India should provide financial benefits to children above 13 yrs of age. Children’s Dream Plan can enhance its market by catering the rural area.
THREATS Policies with no age limit of children are the main threat to Child Gain. P r e m i u m r a t e is so high as compare to other private companies. The "literature" of a literature review refers to any collection of materials on a topic, not necessarily the great literary texts of the world. "
HISTORY 30
Brief History of Insurance The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years. 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 Babu Muttylal 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. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical 31
valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. 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 32
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 tied 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 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.
Some of the important milestones in the life insurance business in India are:
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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. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
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1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance
Company
Ltd.,
the
New
India
Assurance
Company
Ltd.,
the
Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Shri.P.Chidambaram Union Finance Minister “In the year 1956, 245 Indian and foreign companies were nationalized and today, the three letters ‘LIC’, stands as a synonym for insurance, for services, for excellence in strengthening the economic fibre of this country. I dare to say that no other three letters taken together are more recognised to the length and breadth of India than LIC.” “The performance figures of LIC give an indication why LIC is dear to us, why LIC is a Jewel in our crown and why we will continue to nurture LIC and grow it into a great organization rendering service to the people of India.” “LIC’s footprints are now to be found in many other countries in the world. Wherever Indians go - and they go everywhere now, wherever Indians are welcome - and they are welcome in every part of the world, wherever Indians settle down – they have found many new homes, wherever Indians excel – and they excel in every walk of life, they want LIC – they want LIC to protect them, to look after their savings, and provide for protection as well as their retirement.” P. Chidambaram Union Finance Minister
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Excerpts from speeches at the inaugural function of LIC’s Golden Jubilee Celebrations. Lucknow, September 1, 2005. LIC has been one of the pioneering organizations in India who introduced the leverage of Information Technology in servicing and in their business. Data pertaining to almost 10 crore policies is being held on computers in LIC. We have gone in for relevant and appropriate technology over the years. 1964 saw the introduction of computers in LIC. Unit Record Machines introduced in late 1950’s were phased out in 1980’s and replaced by Microprocessors based computers in Branch and Divisional Offices for Back Office Computerization. Standardization of Hardware and Software commenced in 1990’s. Standard Computer Packages were developed and implemented for Ordinary and Salary Savings Scheme (SSS) Policies.
FRONT END OPERATIONS With a view to enhancing customer responsiveness and services , in July 1995, LIC started a drive of On Line Service to Policyholders and Agents through Computer. This on line service enabled policyholders to receive immediate policy status report , prompt acceptance of their premium and get Revival Quotation, Loan Quotation on demand. Incorporating change of address can be done on line. Quicker completion of proposals and dispatch of policy documents have become a reality. All our 2048 branches across the country have been covered under front-end operations. Thus all our 100 divisional offices have achieved the distinction of 100% branch computerisation. New payment related Modules pertaining to both ordinary & SSS policies have been added to the Front End Package catering to Loan, Claims and Development Officers’ Appraisal. All these modules help to reduce time-lag and ensure accuracy.
METRO AREA NETWORK
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A Metropolitan Area Network, connecting 74 branches in Mumbai was commissioned in November, 1997, enabling policyholders in Mumbai to pay their Premium or get their Status Report, Surrender Value Quotation, Loan Quotation etc. from ANY Branch in the city. The System has been working successfully. More than 10,000 transactions are carried out over this Network on any given working day. Such Networks have been implemented in other cities also.
WIDE AREA NETWORK All 7 Zonal Offices and all the MAN centres are connected through a Wide Area Network (WAN). This will enable a customer to view his policy data and pay premium from any branch of any MAN city. As at November 2005, we have 91 centers in India with more than 2035 branches networked under WAN. INTERACTIVE VOICE RESPONSE SYSTEMS (IVRS) IVRS has already been made functional in 59 centers all over the country. This would enable customers to ring up LIC and receive information (e.g. next premium due, Status, Loan Amount, Maturity payment due, Accumulated Bonus etc.) about their policies on the telephone. This information could also be faxed on demand to the customer.
LIC ON THE INTERNET Our Internet site is an information bank. We have displayed information about LIC & its offices . Efforts are on to upgrade our web site to make it dynamic and interactive.The addresses/e-mail Ids of ur Zonal Offices, Zonal Training Centers, Management Development Center, Overseas Branches, Divisional Offices and also all Branch Offices with a view to speed up the communication process.
PAYMENT OF PREMIUM AND POLICY STATUS ON INTERNET
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(You have to register for these services) LIC has given its policyholders a unique facility to pay premiums through Internet absolutely free and also view their policy details on Internet premium payments.There are 11 service providers with whom L I C has signed the agreement to provide this service.
INFORMATION KIOSKS We have set up 150 Interactive Touch screen based Multimedia KIOSKS in prime locations in metros and some major cities for dissemination information to general public on our products and services. These KIOSKS are enable to provide policy details and accept premium payments.
INFO CENTRES We have also set up 8 call centres, manned by skilled employees to provide you with information about our Products, Policy Services, Branch addresses and other organizational information.
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CHAPTER - 3 OBJECTIVES OF THE STUDY
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CHAPTER - 3 OBJECTIVES OF THE STUDY
The main objective of this study is to carry on brief study on customer satisfaction survey on insurance products of lice other objectives of this project are as follows:
To identify the insurance needs of the Indian population with respect to their emotional, physical and financial conditions.
Comparative study of various insurance players in the market.
To study the varied reasons of availing life insurance plans.
To clearly understand the rationale behind the investment in policies of LIC and private sector insurance companies.
To test the awareness of customers on various aspect s of life insurance policies offered by LIC and other private sector insurance companies and find whether there is any relation between them.
The prime objective of the study is to find out the level of satisfaction of a so far the settlement of claims.
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CHAPTER - 4 RESEARCH METHODOLOGY
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CHAPTER - 4 RESEARCH METHODOLOGY This chapter will discuss the research design and process, and methodology used in this investigation which can be done in the following manner Research Design and Process Sampling Issues
Types of Research
Type of Data Data Collection Methods
Method Used in this Research
Questionnaire Design and Development
Pre-Testing
Data Collection Procedure
Limitation of Method
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Research Design and Process In the most elementary sense, the design1 is the logical sequence that connect the empirical data in the study’s initial research questions and ultimately, to its conclusions. The research design is much more a than a work plan. There are three types of research designs, namely: (a) Exploratory (b) Descriptive, (c) Causative Exploratory Research: Exploratory research is conducted when the researcher does not know how and why a certain phenomenon occurs, for example, how does the customer evaluate the quality of a bank, hotel or an airline? While in the case of a manufactured product, quality is assessed on the basis of tangible features, replacement policy, warranty, and so forth in the case of Products, there are no tangibles. To understand this phenomenon, several researchers have conducted focus group discussions to identify these quality parameters. For example, Zeithaml, Parsuraman and Berry identified variables which they clubbed under five groups. In doing so, they used focus groups. Since the prime goal of an exploratory research is to know the unknown, this research is unstructured. Focus groups, interviewing key customer groups, experts and even search for printed or published information are some common techniques. Descriptive Research: Descriptive research is carried out to describe a phenomenon or market characteristic. For example, a study to understand buyer behavior and describe characteristics of the target market is a descriptive research. Continuing the above example of Products quality, a research done on how customers evaluate the quality of competing Products institutions can be considered as an example of descriptive research. Likewise, research done on 1
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media habits and TV viewing habits is an illustration of descriptive research. Generally, descriptive research is carried out only when the researcher understands the phenomena or behavioral characteristics. Causative Research: Causative research is done to establish a cause and effective relationship, for example, the influence of income and life style on purchase decision. Here the researcher may like to see the effect of rising income and changing life style on consumption of select products. He/she may test the hypothesis that as income increases or life-style changes, more elite and state-of-the-art products are likely to be bought. Or in other words, choice of technology is a function of the customer's income and life style. Likewise, a firm may like to test the effect of a 10 percent raise in its product's prices. In a causative research, unlike exploratory or descriptive, hypotheses are tested. Sampling Issues “Sampling may be defined as the selection of some part of an aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made” (C.R. Kothari, 2005, p-152). It is the method of obtaining information about a complete population by examining only a part of it. In this research work, the approach has been made to draw inferences based on samples taken from the Indian population. Since India is the second largest populated country in the world so it is next to impossible to take the data from even apart of its population. Hence it is best to adopt the Sampling method. That is why the sample data will enable us to estimate the population parameters. Here care has been taken to select the sample so that it should be truly representative of population characteristics without any bias as a result that it may outcome in valid and reliable conclusions (Research Methodology, C.R. Kothari, 2005). Some of the decisions to be taken here by us is one the most difficult step faced during the entire dissertation are the size of the sample (number of people to be contacted), how their responses will be tabulated, analyzed or interpreted (sample stratification), and how the sample will be drawn (sampling procedure).
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Determining the Target Population Sampling is intended to gain information about a population. In this study the population is clearly defined as 30 samples from Bhopal. Selecting a Sampling Procedure According to Fink & Arlene (2002), a researcher should first choose between using a Bayesian procedure and a traditional sampling procedure. Non-probability samplingAccording to Aaker, Kumar & Day (2001), In probability sampling, the theory of probability allows the researcher to calculate the nature and extent of any biases in the estimate and to determine what variation in the estimate is due to the sampling procedure. Convenience Sampling- To obtain information quickly and inexpensively, a convenience sample may be employed. The procedure is simply to contact sampling units that are convenient. Considering various limitations attached with this study like time, cost etc the most appropriate method would be to have a non-probability sample of 30 from Bhopal. Types of Data collected for the Study This research combines both secondary and primary data to achieve research objectives. Collection of Primary Data In descriptive type of research the data is collected through surveys, whether sample surveys or census surveys. In this research the researcher has resorted to sample survey. Then the researcher can obtain primary data either through observation or through direct communication with respondents in one form or another or through personal interviews. Sampling Issues “Sampling may be defined as the selection of some part of an aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made” (C.R. Kothari, 2005, p-152). It is the method of obtaining information about a complete population by examining only a part of it. In this research work, the approach has been
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made to draw inferences based on samples taken from the Indian population. Since India is the second largest populated country in the world so it is next to impossible to take the data from even apart of its population. Hence it is best to adopt the Sampling method. That is why the sample data will enable us to estimate the population parameters. Here care has been taken to select the sample so that it should be truly representative of population characteristics without any bias as a result that it may outcome in valid and reliable conclusions (Research Methodology, C.R. Kothari, 2005). Some of the decisions to be taken here by us is one the most difficult step faced during the entire dissertation are the size of the sample (number of people to be contacted), how their responses will be tabulated, analyzed or interpreted (sample stratification), and how the sample will be drawn (sampling procedure). Determining the Target Population Sampling is intended to gain information about a population. In this study the population is clearly defined as 30 samples from Bhopal. Selecting a Sampling Procedure According to Fink & Arlene (2002), a researcher should first choose between using a Bayesian procedure and a traditional sampling procedure. Non-probability samplingAccording to Aaker, Kumar & Day (2001), In probability sampling, the theory of probability allows the researcher to calculate the nature and extent of any biases in the estimate and to determine what variation in the estimate is due to the sampling procedure. Convenience SamplingTo obtain information quickly and inexpensively, a convenience sample may be employed.
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DATA COLLECTION Types of data collection
PRIMARY DATA: The primary data was collected by asking the consumers who come to the authorized service stations for the servicing of their commercial vehicles and also the new customers of the commercial vehicles to fill up the questionnaires by me. It is a very important part of the project as it is only through the properly filled up questionnaires that I can reach to any conclusion from the data which I got from the questionnaires.
SECONDARY DATA: Secondary data are the information which is attained indirectly. They are the data collected by someone else and which has already passed through statistical process. There exist two sources of secondary data. SECONDARY DATA
External sources
Internal sources
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CHAPTER - 5 DATA ANALYSIS & INTERPRETATION
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CHAPTER - 5 DATA ANALYSIS & INTERPRETATION
1. What type of Products have you taken from LIC Life Insurance? Table No. 1
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Plans Protection Plans Children’s Plans Retirement Plans Savings & Investment Plans Health Plans
No. of Respondent 25 30 15 20 10
Interpretation:It has been found that majority of respondent have use Savings & Investment Plans Products from LIC Life Insurance
2. Are you satisfied with the Products provided by LIC Life Insurance? Table No. 2 Option a) Yes b) No Total
No. of Respondents 100 0 100
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Percentage 100 0 100
Interpretation:100% of respondents satisfied with the Products provided by LIC Life Insurance.
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3.
How will you rate the Products of LIC Life Insurance? Table No. 3
Option a)Excellent b) Very Good c) Good d) Bad Total
No. of Respondents 15 35 45 0 100
Percentage 15 35 45 0 100
Interpretation: 10% of respondents feel that the Products provided by LIC Life Insurance are Excellent where as 33% thinks that they are very good, 57% respondents think that it is good.
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4.
What are the responses of the agents? Table No.4
Option a)Excellent b) Very Good c) Good d) Bad Total
No. of Respondents 13 27 60 0 100
Percentage 13% 27% 60% 0% 100%
Interpretation:13% of respondents found that the responses are excellent & 27% of the respondents found it very good, 60% of the respondents is good. No one is with the opinion that the products are of bad quality.
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5.
What do you think regarding the personal attention by the agents of LIC Life
Insurance towards the customers? Table No. 5 Option a)Excellent b) Very Good c) Good d) Bad Total
No. of Respondents 9 7 14 0 30
Percentage 30% 23% 47% 0% 100%
Interpretation: 30% of respondents found the personal attention by the agents of LIC Life Insurance towards customers are excellent & 23% of the respondents found it very good, 47% of the respondents found are good.
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6) What do you think about the returns of different plans of LIC Life Insurance? Table No.6 Option a)Excellent b) Very Good c) Good d) Bad Total
No. of Respondents 37 37 26 0 30
Percentage 37% 37% 26% 0% 100%
Interpretation:37% of respondents found the returns of different plans of LIC Life Insurance are excellent & 37% of the respondents found it very good, 26% of the respondents found that the returns of different plans of LIC Life Insurance is good.
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Q7.How will you rate the after sale facilities provided by the LIC Life Insurance? Table No.7 Option a)Excellent b) Very Good c) Good d) Bad Total
No. of Respondents 8 12 10 0 30
Percentage 26% 40% 34% 0% 100%
Interpretation:26% of respondents found the rate after sale facilities provided by the LIC Life Insurance are excellent & 40% of the respondents found it very good, 34% of the respondents found the is good.
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8.
Are you satisfied with the LIC Life Insurance agency/dealer? Table No.8
Option a)Yes b) No Total
No. of Respondents 100 0 30
Percentage 100% 0% 100%
Interpretation:100% respondents are you satisfied with LIC Life Insurance agency/dealer. .
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9. Are you satisfied with the different plans of LIC Life Insurance. Table No.9 Option a)Yes b) No Total
No. of Respondents 97 3 100
Percentage 97% 3% 100%
Interpretation: 97% respondents are satisfied with the charges of LIC Life Insurance where as 3% are not satisfied.
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10. How will you rate the overall Products of LIC Life Insurance? Table No.10 Option a)Excellent b) Very Good c) Good d) Bad Total
No. of Respondents 30 23 47 0 30
Percentage 30% 23% 47% 0% 100%
Interpretation:30% of respondents found the rate the overall Products of LIC Life Insurance are excellent & 23% of the respondents found it very good, 47% of the respondents found that the returns of different plans of LIC Life Insurance is good.
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11. Do you think that LIC Life Insurance is preferred because of its returns? Table No.11 Option a)Yes b) No Total
No. of Respondents 97 3 100
Percentage 97% 3% 100%
Interpretation: 97% respondents think that LIC Life Insurance is preferred because of its returns.
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CHAPTER - 6 OBSERVATIONS & FINDINGS
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CHAPTER - 6 OBSERVATIONS & FINDINGS OBSERVATIONS & FINDINGS Interpretation: 10% of respondents feel that the Products provided by LIC Life Insurance are Excellent where as 33% thinks that they are very good, 57% respondents think that it is good. Interpretation:- 13% of respondents found that the responses are excellent & 27% of the respondents found it very good, 60% of the respondents is good. No one is with the opinion that the products are of bad quality. Interpretation: - 30% of respondents found the personal attention by the agents of LIC Life Insurance towards customers are excellent & 23% of the respondents found it very good, 47% of the respondents found are good. Interpretation:- 26% of respondents found the rate after sale facilities provided by the LIC Life Insurance are excellent & 40% of the respondents found it very good, 34% of the respondents found the is good. Interpretation :- 100% respondents are you satisfied with LIC Life Insurance agency/dealer. Interpretation :- 97% respondents are satisfied with the charges of LIC Life Insurance where as 3% are not satisfied. Interpretation :- 30% of respondents found the rate the overall Products of LIC Life Insurance are excellent & 23% of the respondents found it very good, 47% of the respondents found that the returns of different plans of LIC Life Insurance is good. Interpretation: - 97% respondents think that LIC Life Insurance is preferred because of its returns.
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CHAPTER - 7 LIMITATION OF THE STUDY
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CHAPTER - 7 LIMITATION OF THE STUDY In this research, researcher may under take some sort of preliminary survey. It could not do in this study. The time devoted in the reviewing of research already on related problem. Studies on related problem are useful for indicating the type of difficulties that may be in countered in the present study as also the possible analytical short coming. At time such study may also suggest useful and even new line of approach to the present problem. After the receiving the questionnaire, The researcher think that some point must be incorporated in this study. what effect is on their business, and what effect on the social status and how much growth is generated in their economy. Time factor save by the consumer. How they spent their time which they have save and what way they utilized. Such type of finding may be asked in the questionnaire.
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CHAPTER-8 SUGGESTIONS
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CHAPTER-8 SUGGESTIONS On the basis of extensive study and research, here are some recommendation and suggestion which may help the company to market the product and service more profitability and increase its share in the insurance market. PROMOTIONAL ACTIVITIES The company expands the budget allocation for promotional campaign in center Bhopal. It has affected the sale service brand image of LIC insurance especially in Bhopal. Low supports in promotion have lead to fluctuation in sale. There may be some useful tools which can be summed as follows:Advertising – Advertising should have a clear objective and message, which has not been found in recent ads. Insurance is a faster growing provider service in each state .every offers and schemes they should show with proper message for benefit to the customer. In busy life customer do not remembered any offers and which service we can provided for the customer therefore they should by force showing advertisement in growing market and among customer. Customers want continuously exposure in Cable and Local newspapers. Persuasive Advertising: Now there is a need of persuasive advertising for LIC service which can be moved into the category of “comparative advertising”. It will help the company to establish the superiority of its brand service through specific comparison of one or more attributes and features. Technical Expertise: The advertisement should show the companies expertise, experience and pride in market the product service sale.
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CHAPTER - 9 CONCLUSION
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CHAPTER - 9 CONCLUSION
Customer satisfaction is a measure of how products and Products supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four perspectives of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. For this we have done project on customer satisfaction of LIC Life Insurance. It is found that majority of respondent have use Savings & Investment Plans Products from LIC Life Insurance. 97% respondents think that LIC Life Insurance is preferred because of its returns. So finally both below the hypothesis are proved: It has been found that majority of respondent have use Savings & Investment Plans Products from LIC Life Insurance. 100% of respondents satisfied with the Products provided by LIC Life Insurance. 10% of respondents feel that the Products provided by LIC Life Insurance are Excellent where as 33% thinks that they are very good, 57% respondents think that it is good. 13% of respondents found that the responses are excellent & 27% of the respondents found it very good, 60% of the respondents is good. No one is with the opinion that the products are of bad quality. 30% of respondents found the personal attention by the agents of LIC Life Insurance towards customers are excellent & 23% of the respondents found it very good, 47% of the respondents found are good. 37% of respondents found the returns of different plans of LIC Life Insurance are excellent & 37% of the respondents found it very good, 26% of the respondents found that the returns of different plans of LIC Life Insurance is good. 26% of respondents found the rate after sale facilities provided by the LIC Life Insurance are excellent & 40% of the respondents found it very good, 34% of the respondents found the is good.
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100% respondents are you satisfied with
LIC Life Insurance agency/dealer. 97%
respondents are satisfied with the charges of LIC Life Insurance where as 3% are not satisfied. 30% of respondents found the rate the overall Products of LIC Life Insurance are excellent & 23% of the respondents found it very good, 47% of the respondents found that the returns of different plans of LIC Life Insurance is good. LIC Life Insurance is preferred because of its returns. Most of the customer are satisfied with LIC Life Insurance.
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BIBLIOGRAPHY
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BIBLIOGRAPHY REFERENCES & BIBLIOGRAPHY
-
Published Sources
Aaker (1991) Building Strong Brands; New York: Free Press C.R. Kothari (1985) Methods of Data Collection: Research Methodology – Methods & Techniques, pp 95-96. C.R. Kothari (1985), Research Design: Research Methodology – Methods & Techniques, pp 31-32. Chatterjee, Jauchius, Kaas and Satpathy no. 1, (2002): 'Revving up auto branding', McKinsey Quarterly. David. A. Aaker, V.Kumar & George S. Day, (2001) Descriptive Research: Marketing Research, Seventh Edition, pp 17 David. A. Aaker, V. Kumar & George S. Day, (2001) Sampling fundamentals : Marketing Research, pp 379 Donald S. Tull & Del I. Hawkins, (2004) Sampling & Data analysis : Marketing Research – Measurement & Method, pp 537 Fink, Arlene (2002). How to sample in surveys, Vol. 7. Thousand Oaks, CA: Sage Publications.
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QUESTIONNAIRE
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QUESTIONNAIRE
I am a final year student of B.B.A. I would like to measure the satisfaction level of customers of “LIC LIFE INSURANCE,”. This being a part of my academic requirement. Please answer the following. Your name and details will be kept confidential. Personal Details: NAME : _______________________________ AGE : ________________________________ SEX : __________________________________ QUESTIONS 1) What type of LIC Life Insurance Products have you purchase? Protection Plans
Children’s Plans
Retirement Plans
Savings & Investment Plans
Health Plans 2) Are you satisfied with these Products? Yes No 3) How will you rate the Products of LIC Life Insurance? Excellent Good
Very Good Bad
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4) What is the responses of the agents? Excellent
Very Good
Good
Bad
5) What do you think regarding the personal attention by the by the agents of LIC Life Insurance towards the customers? Excellent
Very Good
Good
Bad
6) What do you think about the returns of different plans of LIC Life Insurance? Excellent Good
Very Good Bad
7) How will you rate the after sale facilities provided by the LIC Life Insurance? Excellent Good
Very Good Bad
8) Are you satisfied with the LIC Life Insurance agency/dealer? Yes
No
9) Are you satisfied with the different plans of LIC Life Insurance? Yes
No
10) How will you rate the overall plans of LIC Life Insurance? Excellent Good
Very Good Bad
11) Do you think that LIC Life Insurance is preferred because of its returns? Yes
No
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