Name: Manoj Rajput (2008 – 2010)
Title: Comparative Study of Risk-Covered and Returns of Various Policies of LIC and ICICI Prudential
Summary
Liberalization of insurance sector has infused competition and widened insurance market. Now consumers have a wide array of choice of products even customized to their needs with riders & add on benefits, Prompt customer service etc. All types of distribution (Bancassurance, Brokers, Telemarketing, internet, work site marketing) already tested or experimented with in rest of world are also being adopted in India.
The life Insurance sector boom in India is resultant of rising- per capita incomes, literacy rate, awareness level, service sector.
In pursuit of above objectives sensing green pastures 12 private players have entered arena of life insurance.
But since 2000, with three and a half years of insurance liberalization and combating 12 private players L.I.C monopoly & supremacy is questioned but not yet challenged, as LIC’s business is growing at the rate of 20% per annum and still holds 77.52% market share in financial year 2006-07. On the other hand ICICI prudential is No. 1 Pvt. Insurer grabbing 48% of private insurance market. This prompted me to have an insight into proactive & reactive strategies and stand of L.I.C. vis-a-vis ICICI prudential in liberalized scenario giving rebirth to life insurance industry.
Objective of Study:
Since privatization of insurance sector in India is a new concept for insurance market in India hence people are not much aware of the products being offered by these new private players. Moreover, after studying the insurance scenario in India & keeping the needs of the customers in mind the companies are introducing new products. The customers is finding difficulty in comparing these products & choosing the right one for himself since each product is unique in itself but the deciding factor is still the monetary investment.
Based on current market trends the researcher finds that not much has been done in this regard so I have decided to analyze the risk involved and returns of various products being offered by the insurance companies.
Based on the problem of the study the following objectives have been outlined:
Title: Comparative Study of Risk-Covered and Returns of Various Policies of LIC and ICICI Prudential
Summary
Liberalization of insurance sector has infused competition and widened insurance market. Now consumers have a wide array of choice of products even customized to their needs with riders & add on benefits, Prompt customer service etc. All types of distribution (Bancassurance, Brokers, Telemarketing, internet, work site marketing) already tested or experimented with in rest of world are also being adopted in India.
The life Insurance sector boom in India is resultant of rising- per capita incomes, literacy rate, awareness level, service sector.
In pursuit of above objectives sensing green pastures 12 private players have entered arena of life insurance.
But since 2000, with three and a half years of insurance liberalization and combating 12 private players L.I.C monopoly & supremacy is questioned but not yet challenged, as LIC’s business is growing at the rate of 20% per annum and still holds 77.52% market share in financial year 2006-07. On the other hand ICICI prudential is No. 1 Pvt. Insurer grabbing 48% of private insurance market. This prompted me to have an insight into proactive & reactive strategies and stand of L.I.C. vis-a-vis ICICI prudential in liberalized scenario giving rebirth to life insurance industry.
Objective of Study:
Since privatization of insurance sector in India is a new concept for insurance market in India hence people are not much aware of the products being offered by these new private players. Moreover, after studying the insurance scenario in India & keeping the needs of the customers in mind the companies are introducing new products. The customers is finding difficulty in comparing these products & choosing the right one for himself since each product is unique in itself but the deciding factor is still the monetary investment.
Based on current market trends the researcher finds that not much has been done in this regard so I have decided to analyze the risk involved and returns of various products being offered by the insurance companies.
Based on the problem of the study the following objectives have been outlined:
- To find out the various life insurance products offered by the insurance companies.
- To find out the annual premium collected under each plan.
- To do a comparative analysis of the products.
Scope of Study:
In life, losses are sometimes unavoidable. People may fall seriously sick or lose income or savings to pay off medical bills. Individuals or their relatives may come across untimely death, whatsoever the reason may be. The assets of people may get damaged due to some heavenly act or by some nuisance creater.
No one knows in advance when a loss will occur or how serious that loss will be. The uncertainty surrounding potential losses is known as Risk. Insurance offers a way for people to replace risk with known costs- the costs of buying & maintaining insurance policies.
Insurance pools risks shared by many people, thereby, reducing the risks faced by a group. People pay to buy insurance coverage (protection from risk). In exchange, all policy holders (people who own insurance policies) receive a promise that the group of policy holders as represented by the insurance organization will pay when any policy holder experience any kind of loss.
Findings of the Study:
In life, losses are sometimes unavoidable. People may fall seriously sick or lose income or savings to pay off medical bills. Individuals or their relatives may come across untimely death, whatsoever the reason may be. The assets of people may get damaged due to some heavenly act or by some nuisance creater.
No one knows in advance when a loss will occur or how serious that loss will be. The uncertainty surrounding potential losses is known as Risk. Insurance offers a way for people to replace risk with known costs- the costs of buying & maintaining insurance policies.
Insurance pools risks shared by many people, thereby, reducing the risks faced by a group. People pay to buy insurance coverage (protection from risk). In exchange, all policy holders (people who own insurance policies) receive a promise that the group of policy holders as represented by the insurance organization will pay when any policy holder experience any kind of loss.
Findings of the Study:
- Most of the people are satisfied with the extent of their life insurance cover. They are not interested in buying more life insurance.
- Majority of the respondent believed that larger risk coverage of their policy was the main feature of their policy that attracted them to buy that policy, though low premium was the next important feature.
- People do not consider life insurance as a good savings because of low returns.
- As life insurance is a long-term contract. Maximum people do not have faith on private life insurance companies they still prefer LIC.
- Because of less advertising not many people are aware about private life insurance companies.
- Due to the increasing concern of people towards their health and life, the life insurance business has good prospects.
- Most of the people do not know about broker, corporate agents and banc assurance, they rely on their agents only
- Some people have no idea about what type of cover they have.
- Most of the people feel that life insurance is essential but they think returns are low.
- Some people have their doubts on the credibility and long stay of private insurance companies.
- Due to increased in consumerism new product is launched everyday. Thus non-life/general insurance business is also going to have boom period.
- Looking as a whole, Male respondents are not affected by the advertisement while the case is entirely reverse to Female respondents as their decisions are affected by the advertisements.
- Male respondents are keenly looking for better return of Investments while this is not the case with female respondents. Their responses do not reflect such factor.
Conclusions:
Reforms have marked the entry of many of the global insurance majors into the Indian market in the form of joint ventures with Indian companies. Some of the key names are AIG, New York Life, Allianz, Prudential, Standard Life, Sun Life Canada and Old Mutual. There is presently building in India an upsurge in consumer awareness, putting immense and unavoidable pressure on the insurance industry.
With the entry of competition, the rules of the game are set to change. In such a scenario, the differentiator among the different players will be the service. Meanwhile, the profile of the Indian consumer is also evolving. Consumers are increasingly more aware and are actively managing their financial affairs. Today, while boundaries between various financial products are blurring, people are increasingly looking not just at products, but at integrated financial solutions that can offer stability of returns along with total protection. To satisfy these minor needs of customers, insurance products will need to be serviced to the customers in an effective way. Insurance today has emerged as an attractive and stable investment alternative that offers total protection — Life, Health and Wealth.
Given the current levels of dissatisfaction experienced by customers, the new insurance companies should concentrate on providing high-quality services for differentiating their offerings. Some areas on which they should concentrate are like, Enhance post-sale services in such areas as sending all renewal notices in time, expeditious settlement of claims and refunds etc. Empathize with the customers and employees coming in contact with customers must show courtesy and good behavior and Gear up pre-sale services particularly those that will help in reducing customers’ anxieties and simplify documents wherever necessary.
Suggestions:
There are some of the recommendation had come up with while doing this project. It will help to make insurance more important sector in today’s economy.
Reforms have marked the entry of many of the global insurance majors into the Indian market in the form of joint ventures with Indian companies. Some of the key names are AIG, New York Life, Allianz, Prudential, Standard Life, Sun Life Canada and Old Mutual. There is presently building in India an upsurge in consumer awareness, putting immense and unavoidable pressure on the insurance industry.
With the entry of competition, the rules of the game are set to change. In such a scenario, the differentiator among the different players will be the service. Meanwhile, the profile of the Indian consumer is also evolving. Consumers are increasingly more aware and are actively managing their financial affairs. Today, while boundaries between various financial products are blurring, people are increasingly looking not just at products, but at integrated financial solutions that can offer stability of returns along with total protection. To satisfy these minor needs of customers, insurance products will need to be serviced to the customers in an effective way. Insurance today has emerged as an attractive and stable investment alternative that offers total protection — Life, Health and Wealth.
Given the current levels of dissatisfaction experienced by customers, the new insurance companies should concentrate on providing high-quality services for differentiating their offerings. Some areas on which they should concentrate are like, Enhance post-sale services in such areas as sending all renewal notices in time, expeditious settlement of claims and refunds etc. Empathize with the customers and employees coming in contact with customers must show courtesy and good behavior and Gear up pre-sale services particularly those that will help in reducing customers’ anxieties and simplify documents wherever necessary.
Suggestions:
There are some of the recommendation had come up with while doing this project. It will help to make insurance more important sector in today’s economy.
- From the research I could find out that people are not aware about the policies and features of insurance. Therefore LIC and ICICI are recommended to shed light on policies and explain the benefits, thus increasing the awareness.
- The need of the hour is to devise a comprehensive strategy that will help the firms face the challenges of the future. It is very important that trained marketing professionals who are able to communicate specific features of the policy should sell the policy.
- The returns of the policies are not properly managed and never given in time. So, these must be looked at.
- Pricing of insurance products, as empirically available in India, shows that pricing is not in consonance with market realities. Life Insurance premium is generally perceived, as being too high while general insurance is priced too low.
- The future seems to belong to financial supermarkets that will offer a host of services and products to the consumer. Due to increased in consumerism new product is launched everyday. Thus non-life/general insurance business is also going to have boom period.
Limitation of Study:
- Time constraint was there as we have got very little time to collect data.
- The update data of different policies was not available very easily.
- Reluctance of respondents to provide information as they were not always ready to give feedback.
- Limited location.
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