College final year project

 

A  Research

On

PROMOTION STRATEGIES FOLLOWED IN INSURANCE SECTOR

WITH REFERENCE TO IDBI FEDERAL KIFE INSURANCE

 

Submitted in the partial fulfilment of the requirements for the Three Year Full Time Bachelor of Commerce

                                                     (2018-2021)

Under the Guidance of :                                        Submitted By:

 

School of commerce and management

(UNIVERSITY NAME)

CERTIFICATE OF ORIGINALITY

We  hereby declare that this Summer Internship Project is my own work and that, to the best of my knowledge and belief, it reproduces no material previously published or written that has been accepted for the award of any other degree of master, except where due acknowledgement has been made in the text.

 

 

 

 

Name of Student

Roll no:

                                                         

 

 

 

 

 

 

CERTIFICATE

This is to certify that name of Student  B.Com (2018-2021 Batch) a student of UNIVERSITY, has undertaken the project on “STUDY OF THE DETECTION AND CHECK OF CLAIMS FRAUD IN INSURANCE INDUSTRY”. To the best of my knowledge, the survey, data collection, & analysis work for preparing the project has been carried out by the student in partial fulfilment of the requirements for the award of B.Com, under my guidance and supervision.

 

I am satisfied with the work of Mr /Ms …………………………..

 

Date:                                                                            Faculty Mentor’s Name:

 

                                        (Signature)

 

 

 

 

 

 

 

 

 

 

PREFACE

                                                                   

 I am the student of BACHELOR OF COMMERCE The submission of this project report is the part of the curriculum of the B.Com course. Through this project report, I would like to share our on job experience with LIC of India stander life in the insurance field. The insurance sector in India has come to a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Kolkata

During the training period I met a lot of people and learnt a lot. There were instances when I thought ‘what the hell I am doing in this company’ but then i thought everybody is doing the same thing some way or the other and therefore, i decide to sick with the company.

i played my part with complete honesty and now only the result is awaited in the time to come.

 

 

 

 

 

 

 

 

ABSTRACT

Promotional strategies play a key role in sales performance of any institution. Insurance products are generally difficult to sell and require well thought out marketing strategies that will include persuasive promotional activities. A survey by Insurance Regulatory Authority (2013) found low consumer demand for insurance products as the biggest challenge to the growth of the industry in Kenya. Engaging in promotional activities is costly and the results uncertain. Hence the purpose of this study was to determine the effect of promotional activities on sales performance of Insurance companies. The study was guided by the following specific objectives: to determine the effect of sales promotion, advertising, personal selling and public relations on sales growth of insurance companies. The study adopted a descriptive research design. The population of the study comprised of the branch managers, unit managers and salespeople of insurance companies operating in Embu County, Kenya. The sample size of the study was Some respondents. A response rate of 85.7% was achieved. Data was analyzed using both descriptive and inferential statistics. Overall, the study established that promotional activities significantly affected sales performance of insurance companies even though at an individual level, public relations did not have any significant effect on sales performance. The study recommends that insurance companies should engage in maximum utilization of the entire promotion mix to enhance sales growth. The study suggests that further research be carried out to determine the effect of the entire marketing mix on sales performance of the insurance and other related industries using different performance measurements. Future researchers will utilize this study as a reference point. Policy makers can reference the study in formulating fiscal policies for the insurance and overall financial sector.

Keywords: Insurance Companies, Promotion Strategies, Promotion Mix
CONTENT

 

·       PART A

a)     Certificate by Head of Organization

b)    Certificate by Head of Institute

c)     Acknowledgement

d)    Student Declaration

e)     Executive Summery

f)      Table of Contents

g)     Company Profile

h)    Introduction about Project

 

 

 

 

 

 

 

 

 

·       PART B

a)     Objective of the Study

b)    Scope of study

c)     Importance of the Study

d)    Research Methodology

e)     Data Analysis

f)      Finding & Conclusion

g)     Suggestions & Recommendations

h)    Bibliography

i)      Questionnaire

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY PROFILE

ABOUT IDBI FEDERAL LIFE INSURANCE

IDBI Federal Life Insurance is one of India’s growing life insurance companies and offers a diverse range of wealth management, protection and retirement solutions to individual and corporate customers. 

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Ageas, a multinational insurance giant based out of Europe. 

Having commenced operations in 2008, IDBI Federal was able to achieve breakeven within just 5 years; the Company’s passion for innovation and growth helped it achieve this feat. 

Through a nationwide network of 2, 964 branches of IDBI Bank and Federal Bank, and a sizeable network of advisors and partners, IDBI Federal Life Insurance has achieved presence across the length and breadth of the country. As on March 31, 2015, the company has issued nearly 7.88 lakh policies with a sum assured of over Rs. 41,856 crore. IDBI Federal Life Insurance has total assets under management of 4,087 crore and a robust capital base of over 800 crores, as on March 31, 2015.

 

About the sponsors of IDBI Federal Life Insurance Co Ltd

 IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial development bank. It came into being as on July 01, 1964 to support India’s industrial backbone. Today, it is amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 1717 branches and 3000 ATMs. The Bank offers its customers an extensive range of diversified services including project finance, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India’s financial sector – National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd). 

 

Federal Bank is one of India’s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 1,247 branches and 1,485 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations. 

 

Ageas is an international insurance group with a heritage spanning 190 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. These are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia and served through a combination of wholly owned subsidiaries and partnerships with strong financial institutions and key distributors around the world. Ageas operates successful partnerships in Belgium, the UK, Luxembourg, Italy, Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong and the UK. Ageas is the market leader in Belgium for individual life and employee benefits, as well as a leading Non-Life player through AG Insurance. In the UK, Ageas is the sixth largest Non-Life insurer with a number 3 position in cars insured and has a strong presence in the over 50’s market. Ageas employs more than 13,000 people in the consolidated entities and over 30,000 in the non-consolidated partnerships, and has annual inflows of more than EUR 23 billion. 

Our Vision

To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.

 

Our Mission

To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner.

To be transparent in the way we deal with our customers and to act with integrity.

To invest in and build quality human capital in order to achieve our mission.

 

Our Values

 

§  Transparency: Crystal Clear communication to our partners and stakeholders

§  Value to Customers: A product and service offering in which customers perceive value

§  Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and  having clarity in claims

§    Customer-friendly: Advice and support in working with customers and partners

§  Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholders and the community at large

KEY PERSON

Vighnesh Shahane CEO & Whole – Time Director   Ajay Oberoi Chief People Officer & Head – Administration   Aneesh Khanna Chief Strategy & Marketing Officer   Aneesh Srivastava Chief Investment Officer   Arvind Shahi Chief Risk Officer   Ashley Kennedy Chief Distribution Officer – East   Ganesha Ratnam Chief Distribution Officer – South   Karthik Raman Chief Distribution Officer – North & West   Karunanidhi Muthuswamy Appointed Actuary & Head Products   Kedar Patki Chief Financial Officer   Lalitha Bhatia Chief Operating Officer   Mahesh Keni Vice President – Internal Audit   Rajesh Ajgaonkar Chief Compliance & Legal Officer and Company Secretary

Domestic Economic Insights

 

Post a strong 2014 when both fixed income and equities rallied; asset classes in India took a breather in 1H2015 with equity markets up only 1% for 1H2015 and 10 yr G-sec yield ending June at 7.87%, similar to the start of the year.

Despite volatility, Indian equity markets ended flat in June with Sensex losing 0.2% to close at 27781. Sentiments at the start of the month was weak amid fears of a deficient monsoon and RBI’s cautious stance on monetary policy despite cutting rates as expectations of Fed liftoff amid strong job data started to build up. However, a better-than expected monsoon, lower than anticipated Kharif crop MSP increase (3.7%) and status quo on interest rates by Fed helped the market recover. Sentiment was further dampened again towards the month end on possible exit of Greece from Euro zone. Among sector indices, S&P BSE realty index fell 8% in the month, followed by IT (-4.2%) and metals (-4%) indices. FIIs were net sellers in the cash segment, selling US$883 mn over the month with DIIs continuing to buy equities worth US$1.9 bn.

The sovereign yield curve witnessed an upward shift of 15 – 25bps during June 15 despite a 25bps interest rate cut by RBI, with 10 Yr Gsec ending at 7.87%. The monetary policy stance was interpreted as hawkish and upward revision of RBI inflation estimates from 5.8% to 6.0% implied that the likelihood of further rate cuts in the near term is rather remote. The response to Government Securities auctions during the month was tepid and one auction was cancelled. The credit spreads on corporate bonds was range bound with 10 Year “AAA” rated bonds (PSU) trading at a spread of 56bps over 10 yr G-sec and 10 Year “AA+” rated bonds (PSU) spreads trading at spread of 70bps over 10 yr G-sec. The money market continued to remain in deficit zone in June due to structural liquidity factors, advance tax outflows and accumulation of Government cash balances with Reserve Bank of India.

The Rupee weakened against the US Dollar in the first fortnight of June 15 but recovered in the second fortnight and closed at Rs 63.65 from the level of Rs 63.82 at the close of the previous month.

On the economic front, data continues to show improving growth dynamics with inflationary pressures staying moderate. April IIP growth rose to 4.1% from 2.5% in March with manufacturing and capital goods having its best run in 3 yrs. CPI inflation remained soft, printing 5.01% in May compared to 4.87% in April while WPI remained in deflation printing (-)2.36% compared to (-)2.65% in April. May's trade deficit moderated to US$10.4 bn from US$11 bn in April with both exports and imports registering double digit declines.

Going forward, equity market sentiment will be driven by external developments as the Greece standoff unfolds along with unfolding concerns over highly leveraged Chinese equity market. Domestically, we would be watching at a) 1QFY16 earnings which will kick off mid July, b) further improvement in macro indicators, c) monsoon progress in key sowing month of July and d) passage of key reform bills during the monsoon session which starts on July 21st 2015.

For fixed income markets, we expect the market to be cautiously optimistic with liquidity situation expected to moderate. However, given that RBI has raised its inflation forecast; monetary policy is expected to remain stable for the time being to anchor inflationary expectations. The Greek fiscal crisis situation and its resolution or deterioration will have its bearing on the market sentiment in the fixed income market.

 

 

 

 

 

 

 

1. BRIEF ABOUT PROMOTIONAL STRATEGIES FOLLOWED IN INSURANCE SECTOR

 

 

 

 

 

 

 

 

I. INTRODUCTION

Promotion is the direct way an organization attempts to reach its publics and is performed through the five elements of promotion mix namely advertising, sales promotion, personal selling, public relations, and direct marketing (Czinkota & Ronkainen, 2004). Promotion is one of the elements of marketing mix among other elements like Product, Price, and Place, which constitute the 4ps of marketing (Mc Carthy, 1996). Marketing mix decision must be made with the objective of influencing the trade channels as well as the final consumer and in return sales. Promotion brings an interactive dialogue between an organization and its customers and it takes place during the preselling, selling, consuming and post- consuming stages. Marketers use the marketing mix that are defined as the set of tools that a firm uses to pursue its marketing objectives in the target market (Kotler & Armstrong, 2000). The importance of promotion s has been increasing rapidly due to the ever increasing competitive market conditions. Companies need to find the best way to access the customers and make sure that they are satisfied with their own products and services. The companies’ way of communicating and promoting their product affects the companies’ market performance and it leads to financial success or failure (Chen, 2009). Consequently, good marketing practices by insurance companies in Kenya are imperative if the industry is to effectively play a key role in the overall development of the country. According to Richard, Timothy, George and Gerry (2009) sales performance encompasses three specific areas; product market performance where sales and market share are involved; firm performance encompassing return on assets and investment and lastly, shareholders’ return where shareholder return and economic value added are involved. Performance in a company is typically expressed in terms of sales, market share or profitability. Marketing decision variables according to Gatingnon (1993) are basically of two types.

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

According to study texts of The Chartered Insurance Institute, there are the following categories of risk:^[1]

1.    Financial risks which means that the risk must have financial measurement.

2.    Pure risks which means that the risk must be real and not related to gambling

3.    Particular risks which mean that these risks are not widespread in their effect, for example such as earthquake risk for the region prone to it.

It is commonly accepted that only financial, pure and particular risks are insurable.

An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.

Insurance in India refers to the market for insurance in India which covers both the public and private sector organizations. It is listed in the Constitution of India on the in the Seventh Schedule meaning it can only be legislated by the central government.

The insurance sector has gone through a number of phases by allowing private companies to solicit insurance and also allowing foreign direct investment. India allowed private companies in insurance sector in 2000, setting a limit on FDI to 26%, which was increased to 49% in 2014.^[1] However, the largest life-insurance company in India, Life Insurance Corporation of India is still owned by the government and carries a sovereign guarantee for all insurance policies issued by it.^[2]

ii. HISTORY

The first life insurance policies were taken out in the early 18th century. The first company to offer life insurance was the Amicable Society for a Perpetual Assurance Office, founded in London in 1706 by William Talbot and Sir Thomas Allen. Edward Rowe Mores established the Society for Equitable Assurances on Lives and Survivorship in 1762..

In the late 19th century, "accident insurance" began to become available. This operated much like modern disability insurance. The first company to offer accident insurance was the Railway Passengers Assurance Company, formed in 1848 in England to insure against the rising number of fatalities on the nascent railway system.

By the late 19th century, governments began to initiate national insurance programs against sickness and old age.

In India, Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. The pre-independence era in India saw discrimination between the lives of foreigners (English) and Indians with higher premiums being charged for the latter. In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer.

At the dawn of the twentieth century, many insurance companies were founded. 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 disparity still existed as discrimination between Indian and foreign companies. The oldest existing insurance company in India is the National Insurance Company, which was founded in 1906, and is still in business.

The Government of India issued an Ordinance on 19 January 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. In 1972 with the General Insurance Business (Nationalization) Act was passed by the Indian Parliament, and consequently, General Insurance business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on 1 January 1973.

The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC). GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.

iii. Industry structure

By 2012 Indian Insurance is a US$72 billion industry. However, only two million people (0.2% of the total population of 1 billion) are covered under Mediclaim, whereas in developed nations like USA about 75% of the total population is covered under some insurance scheme. With more and more private companies in the sector, this situation is expected to change. ECGC, ESIC and AIC provide insurance services for niche markets. So, their scope is limited by legislation but enjoy some special powers.

Legal structure

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.

The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Life insurance in India was completely nationalized on 19 January 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India.

The General Insurance Business Act of 1972 was enacted to nationalize the about 100 general insurance companies then and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four metropolitan cities. Until 1999; there were no private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies.

In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company Secretaries. A minimum capital of US$80 million (Rs.400 Crore) is required by legislation to set up an insurance business.

Authorities

The primary regulator for insurance in India is the Insurance Regulatory and Development Authority (IRDA) which was established in 1999 under the government legislation called the Insurance Regulatory and Development Authority Act, 1999.

 

 

 

 

 

 

 

 

iv. About Life Insurance

Life Insurance is a policy provided by an insurance company, according to which in exchange for premium payments, the insurer is obliged to pay a certain sum (a lump sum or portions of smaller sums) to the beneficiary in the event of insured death. Life Insurance is literally a matter of life and death, since purchasing Life Insurance is basically planning for after the death. When healthy and well, people from all walks of life prefer not to think that one day they would pass away. However planning for after the death may be as important as planning other significant actions in life. By paying a very small sum of money a person can safeguard himself and his family financially from an unfortunate event. Life insurance provides economic support to the dependent in family and in some cases can even create an estate for heirs.

 

v. Factor to be considered before buying a Life Insurance Policy

 Before buying a Life Insurance Policy it is always important to find out why do I want to buy Insurance and for what purpose. How much Life Insurance Cover do I need, comes second. Few factors which need to be considered are:

•Age and number of dependents.

•Annual Income and Annual Expenses.

•Outstanding Liabilities like Home Loan, Car Loan etc. Investments and Savings.

•Life Style Expenses.

Money require in Future. As a rule of thumb when buying first Life Insurance Policy it is suggested that person should have Insurance Cover of at least 15 to 20 times of their annual income. A wide range of insurance products are available in the market. Each insurance product is different from the others having some unique attributes which are devised to meet specific needs of different individuals. However, with such a wide range of products available, it becomes very difficult for an individual to choose an insurance plan that is best suited to meet his requirements. Based on the financial plans and needs and one's affordability to pay premium, an individual can choose any of the plans available in the market. Some of those plans are listed in the table below:

 

 

vi. Types of Insurance Promotions

1. Term Insurance

Term Insurance, as the name implies, is for a specific period, and has the lowest possible premium among all insurance plans. Person can select the length of the term for which they would like coverage, up to 35 years. Payments are fixed and do not increase during the term period. In case of an untimely death, dependents will receive the benefit amount specified in the term life insurance agreement. Term policies; cover only the risk during the selected term period. If the policyholder survives the term, the risk cover comes to an end. Person can renew most Term Insurance policies for one or more terms even if their health condition has changed. Each time the policy is renewed for a new term, premiums may climb higher. When a policy holder survives the policy term person is not entitled to any payment; the insurance company keeps the entire premium paid during the policy period. So, there is no element of savings or investment in such a policy. It is a 100 percent risk cover. It simply means that a person pays a certain premium to protect his family against his sudden death. He forfeits the amount if he outlives the period of the policy. This explains why the Term Insurance Policy comes at the lowest cost. No surrender, loan or paid-up values are granted under term life policies because reserves are not accumulated. If the premium is not paid within the grace period, the policy lapses without acquiring any paid-up value. A lapsed policy can be revived during the lifetime of the life assured but before the expiry of the period of two years from the due date of the first unpaid premium on the usual terms. Accident and / or Disability benefits are not granted on policies under the Term plan. 

 

 

 

2. Endowment Insurance

Combining risk cover with financial savings, endowment policies is the most popular policies in the world of life insurance. Endowment insurance are policies that cover the risk for a specified period and at the end the sum assured is paid back to the policy holder along with all the bonus accumulated during the term of the policy. The Endowment insurance policies work in two ways, one they provide life insurance cover and on the other hand as a vehicle for saving. If the insured dies during the tenure of the policy, the insurance firm has to pay the sum assured just as any other pure risk cover. A pure endowment policy is also a form of financial saving, whereby if the person covered remains alive beyond the tenure of the policy, he gets back the sum assured with some other investment benefits. In addition to the basic policy, insurers offer various benefits such as double endowment and marriage/ education endowment plans. The cost of such a policy is slightly higher but worth its value. They are more expensive than Term policies and Whole life policies. Normally the bonus in calculated on the sum insured but the only drawback is that the bonuses are not compounded. Endowment insurance plans are best for people who do not have a saving and an investing habit on a regular basis. Endowment Insurance Plans can be bought for a shorter duration period. Endowment Insurance is ideal if person has a short career path, and hope to enjoy the benefits of the plan (the original sum and the accumulated bonus) during life time. Endowment plans are especially useful when person retire; by buying an annuity policy with the sum received, it generates a monthly pension for the rest of the life.

 

 

 

3. Whole Life Insurance

 

Whole Life Policies have no fixed end date for the policy; only the death benefit exists and is paid to the named beneficiary. In whole life insurance plan the risk is covered for the entire life of the policyholder, irrespective of when it happens that is the reason they are called whole life policies. The policy holder is not entitled to any money during his or her own lifetime, i.e., there is no survival benefit. This plan is ideal in the case of leaving behind an estate. Primary advantages of Whole Life Insurance are guaranteed death benefits, guaranteed cash values, and fixed and known annual premiums. This policy, however, fails to address the additional needs of the insured during his post-retirement years. It doesn't take into account a person's increasing needs either. While the insured buys the policy at a young age, his requirements increase over time. By the time he dies, the value of the sum assured is too low to meet his family's needs. As a result of these drawbacks, insurance firms now offer either a modified Whole Life Policy or combine in with another type of policy.

 

4. Money-Back Plan

Money back policies are quite similar to endowment insurance plans where the survival benefits are payable only at the end of the term period, plus the added benefit of money back policies is that they provide for periodic payments of partial survival benefits during the term of the policy so long as the policy holder is alive. An additional and important feature of money back policies is that in the event of death at any time during the term of the policy, the death claim comprises full sum assured without deducting any of the survival benefit amounts. The insurance premium of Money Back Policies is higher than Term Insurance Policy because in Term Insurance there is no survival benefit after the expiry of the insurance period. Money Back Policies are good for people who want to insure their life and also want to some return from their investment's at a later date. These policies are structured to provide sums required as anticipated expenses (marriage, education, etc.) over a stipulated period of time. With inflation becoming a big issue, companies have realized that sometimes the money value of the policy is eroded. That is why with-profit policies are also being introduced to offset some of the losses incurred on account of inflation. Money-Back plans are ideal for those who are looking for a product that provides both -insurance cover and savings. It creates a long-term savings opportunity with a reasonable rate of return, especially since the payout is considered exempt from tax except underspecified situations.

 

5. ULIP

 

Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of risk protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time. In a ULIP, the invested amount of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policyholders are pooled together to form a Unit fund. A Unit is the component of the Fund in a Unit Linked Insurance Policy. The returns in a ULIP depend upon the performance of the fund in the capital market. ULIP investors have the option of investing across various schemes, i.e., diversified equity funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the investment risk is generally borne by the investor.  In a ULIP, investors have the choice of investing in a lump sum (single premium) or making premium payments on an annual, half-yearly, quarterly or monthly basis. Investors also have the flexibility to alter the premium amounts during the policy's tenure. For example, if an individual has surplus funds, he can enhance the contribution in ULIP. Conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). ULIP investors can shift their investments across various plans/asset classes (diversified equity funds, balanced funds, debt funds) either at a nominal or no cost.

 

 

 

Expenses Charged in a ULIP Premium Allocation Charge:

 

A percentage of the premium is appropriated towards charges initial and renewal expenses apart from commission expenses before allocating the units under the policy.

·       Mortality Charges: These are charges for the cost of insurance coverage and depend on number of factors such as age, amount of coverage, state of health etc.

·       Fund Management Fees: Fees levied for management of the fund and is deducted before arriving at the NAV.

·       Administration Charges: This is the charge for administration of the plan and is levied by cancellation of units.

·       Surrender Charges: Deducted for premature partial or full encashment of units.

·       Fund Switching Charge: Usually a limited number of fund switches are allowed each year without charge, with subsequent switches, subject to a charge.

Service Tax Deductions: Service tax is deducted from the risk portion of the premium

 

 

vii. Need Analysis in life Stages

Different Life Stages	Need/ Purpose		Recommended Insurance Plan
Childhood	At this stage there are two basic needs for parents/ guardians ·       To secure their children’s financial position, if they die prematurely ·       To provide for their education, marriage and other living expenses
Young Unmarried	·       With no dependents -        protection need is low -        invest in instruments giving high return -        saving money for upcoming future needs, e.g. their marriage etc. ·       With dependents -        looking to protect their income -        investing in long-term wealth accumulation		·       ULIP ·       Mutual Fund ·       Shares
Young Married	·       Double income family -        an individual term plan for both partners -        investing in products yielding high returns ·       Single income family -        income protection is high priority -        income earner should buy a term plan
Young Married with    Children	·       Double income family -        an individual plan for both partners -        suitable child plan -        family floater health plan covering the couple and their children -        small contribution by couple towards retirement plan ·       Single income family -        suitable term plan -        suitable child plan -        family floater health plan covering the couple and their children -
Married with older Children		·       Save sufficient fund for higher education and marriage of their children ·       Focus towards their retirement fund ·       Couple should look at enhancing their health cover
Pre- Retirement		·       Entire focus is towards the retirement fund and health protection ·       Review their health cover and see if it is adequate
Retirement		·       If the return on investments are not sufficient little can be done now ·       Can use their accumulated retirement fund and their employee benefits amount to buy an annuity plan ·       Should review their health cover and see if it adequate and look for their estate planning

 

 

 

 

 

2. CHALLENGES FACED BY INSURANCE INDUSRTIES IN PROMOTIONAL STRATEGIES

 

 

 

 

 

 

 

 

 

 

 

 

 

The Indian insurance industry seems to be in a state of flux. After a decade of strong growth, the Indian insurance industry is currently facing severe headwinds owing to:

• Slowing growth
• Rising costs
• Deteriorating distribution structure
• Stalled reforms

Indian economy and the insurance industry landscape

.

Despite strong improvement in penetration and density in the last 10 years, India largely remains an under-penetrated market. The market today is primarily dependent on push, tax incentives and mandatory buying for sales. There is very little customer pull, which will come from growing financial awareness and increasing savings and disposable income.

In the long run the insurance industry is still poised for a strong growth as the domestic economy is expected to grow steadily. This will lead to rise in per capita and disposable income, while savings are expected to be stable.

 

 

 

 

i. Insurance growth drivers in India

The demand for insurance products is likely to increase due to the exponential growth of household savings, purchasing power, the middle class and the country’s working population. Listed below, are the various underlying growth drivers for India’s insurance industry:

• Growing of the financial industry as a whole
• Growth of life and non-life industry
• Promoting innovation and removing inefficiency
• Competition and orderly growth
• Growth of specific insurance segments such as motor insurance

ii. Emerging trends

• Multi-distribution i.e. increasing penetration through new modes of distribution such as the internet, direct and telemarketing and NGOs
• Product innovation i.e. increased levels of customization through product innovation
• Claims management i.e. timely and efficient management of claims to prevent delays which can increase the claims cost
• Profitable growth i.e. expanding product range, developing innovative products and expanding distribution channels
• Regulatory trends i.e. mandated regulatory changes by the IRDA to promote a competitive environment in both the life and non-life insurance sectors

 

 

iii. Life insurance: key challenges

In FY13, the life insurance industry witnessed a decline in the first year premium collected which dropped from INR1, 258 billion in FY12 to INR1, 142 billion, a drop of approximately 10%. This was owing to the following challenges that the industry faced in

• Products strategy and design
• Cost
• Taxation
• Distribution
• Prospects and challenges of various channels
• Compensation
• Customer service
• Governance and regulatory issues

iv. Way forward

The Indian insurance market is poised for strong growth in the long run. It stands at the threshold of moving towards a stable position, delivering “stable profitable growth.”

Significant latent market - The insurance market has a considerable amount of latent potential, given the fact that the Indian economy is expected to do well in the coming decades leading to increase in per capita incomes and awareness.

Channelizing industry focus - In meeting the significant potential, the industry has an increased role and responsibility. Three areas of focus could be — a) product innovation matching the risk profile of the policy holders b) reengineering the distribution and more significantly c) making sales and marketing more responsible and answerable.

Distribution - Distribution channels evolved in response to market dynamics and changing consumer preferences. The alignment of economic incentives with distribution dynamics should be driven by market forces rather than regulatory intervention.

Regulation - The industry should be given time to adjust to regulatory changes in a phased manner aligned with a regulatory impact assessment. Regulations need to drive transparency and simplification of products and services.

The stakeholders should eventually work toward maintaining a favorable environment for stable growth, increasing the penetration of insurance to rural and underpenetrated areas and increasing the contribution to the economy.

 

 

v. Liberalization and Privatization

Global integration of financial markets resulted from de-regulating measures, technological information explosion and financial innovations. Liberalization and Globalization have allowed the entry of foreign players in the Insurance sector. With the entry of private and foreign players in the Insurance business, people have got a lot of options to choose from. Radical changes are taking place in customer profile due to the changing life style and social perception, resulting in erosion of brand loyalty. To survive, the focus of the modern insurers shifted to a customer-centric relationship

Liberalization on the Insurance sectors has allowed the foreign players to enter the market with their Indian partners. Most of the foreign Insurers have joined within the local market. India offers immense possibilities to foreign Insurers since it is the world's most populous country having over a billion people. Insurance industry had ten and six entrants in life and non-life sector respectively in the year 2000-2001. The industry again saw two and three entrants in the life and non-life business respectively in the year 2001-2002. One additional entrant was made both in the life and in non life business in 2004 and 2005 respectively. At present there are fourteen companies each in Life.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. ABOUT IDBI FEDERAL LIFE INSURANCE COMPANY LTD.

 

 

 

 

 

 

 

 

I. INTRODUCTION

IDBI Federal is a joint venture of IDBI Bank, Federal Bank and Fortis Insurance International with shareholding of 48%, 26% and 26% respectively. There will be no change in the shareholding pattern of the company.

The name change follows Fortis's decision to globally change its name to Ageas in April 2010. At the same time, as IDBI Bank and Federal Bank are joint venture shareholders and bancassurance partners of the company, it was felt that including both their names in the insurance company name would establish a better brand connect with the over ten million customers of both banks. The shareholders thus unanimously decided to change the name of the joint venture company to IDBI Federal Life Insurance Company Ltd. To emphasize the parentage of Ageas (formerly Fortis) and the global insurance expertise they bring to the business, the company's logo will incorporate the line "in association with Ageas". The logo unit of the company remains the same with only exchange of places between Federal and Ageas.

Having started in March 2008, within just five months of inception the company became one of the fastest growing new insurance companies to garner Rs 100 Cr in premium collected. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of agents and partners. As on June 30th, 2010, the company has issued over 2 lakh policies with a sum assured of over Rs 9,160 Cr.

ii. About the sponsors of IDBI Federal Life Insurance Co Ltd

IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial development bank. Created in 1956 to support India’s industrial backbone, IDBI Bank has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 725 branches and 1228 ATMs. The Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India’s financial sector –National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd)

Federal Bank is one of India’s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 708 branches and 755 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations.

Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally, Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. The company also has subsidiaries in France, Germany, Turkey, Ukraine and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand. Ageas employs more than 11,000 people and has annual inflows of almost EUR 16 billion.

Mission- We aim to be recognized as a leading provider of wealth management, protection and retirement proposition that satisfy the needs of and add value to our key customer segments. We shall continually strive to enhance the customer experience in relationship management and service delivery and interact with customer in the most convenient manner. We shall be transparent in our dealings and act with integrity. We shall invest in and build quality human capital in order to achieve our mission.

Vision-vision is to be a customer centric channel, while setting benchmark in life insurance industry, in terms of presence, productivity and profitability.

 

 

 

IV. SWOT ANALYSIS

Strength-

·       Availability of manpower

·       High quality products

·       Good customer service

·       Gets a wide range of  network due to their joint venture

 

Weakness

·       Weak marketing and promotional skills

·       Narrow product line.

 

Opportunities

·       Positive outlook of people toward insurance.

·       Introduce new product line such as term plan etc.

·       Expand their geographic area.

·       Take market share from rival companies such as HDFC, ICICI etc

·       Better promotional techniques using media etc.

 

Threats

·       Presence of various other insurance companies in market.

·       Uncertain market

·       Adverse shift in political and economical condition

 

 

 

 

 

IDBI Federal Life INSURANCE Co. Ltd. - Milestones

 

 

March 2008		IDBI Federal starts operations with two products-  Homesurance& Wealthsurance
August 2008		IDBI Federal becomes one of the fastest growing new life insurers to collect premiums worth Rs100 crore
October 2008		IDBI Federal launches Bondsurance
January 2009		IDBI Wealthsurance Cup 2009- India v/s Sri Lanka held in Sri Lanka
March 2009		Collected premium of over 328crores and 87,000 policies and a Sum assured of Rs 2825crores since inception
November 2009		IDBI Federal launches Incomesurance
June 2013	IDBI achieved break even posting a maiden profit of Rs9.24crore in F.Y. 2012-2013

 

 

 

 

IDBI Federal in News

 

IDBI Federal breaks-even in Five years; posts maiden profit of Rs 9.24 crore

Mumbai, June 04, 2013

• New Business Premium grows by 23%, compared to industry’s negative growth of -15%.
• Achieves 44% increase in the number of new business policies sold.
• Product mix further shifts to long-term traditional products, thereby driving profitability through product-mix. Traditional products account for 83% of new business premium.
• 13^th month persistency improves to 76%. Among top 5 companies in persistency experience.
• AUM (Assets under Management) up by 24% to Rs 2,732 crore. For the calendar year 2012, IDBI Federal’s Equity Fund ranked No 1 among 72 ULIP funds bearing testimony to the company’s fund management expertise.

Mumbai, June 04, 2013: IDBI Federal Life Insurance has achieved break even in 2012-13, its fifth year of operations. The company has reported a maiden profit of Rs 9.24 crore in 2012-13, thus making it one of the fastest to break-even in the Life Insurance industry. In an industry challenged by falling margins, shrinking new business volumes, high cost ratios and low profitability, this is a significant achievement.

IDBI Federal started its operations in March 2008 and is amongst the most successful start-ups in the Indian Life Insurance market. A pioneer in product innovation, IDBI Federal’s approach is very innovative and reflects a fresh way of looking at and thinking about life insurance. The Company’s innovative products with trademarked names such as Wealthsurance^TM, Incomesurance^TM, Retiresurance^TM, etc have been well-received by its customers and have been an important contributing factor to its success.

IDBI Federal’s New Business Premium (APE) grew by 23% in 2012-13, which compares with the negative growth of -15% posted by the industry. The company also witnessed a 44% increase in the number of new business policies sold as compared to the previous year. IDBI Federal has also been driving profitability through the right product mix. The product mix has continuously been shifted to long-term, traditional products. Share of traditional products in the new business premium increased to 83% as compared to 67% in the previous year. Share of regular premium products increased to 78% as compared to 69% in the previous year.

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4. COMPETITORS

 

 

 

 

 

 

 

 

 

 

Private and Foreign entrants in the Insurance Industry made others difficult to retain their market. Higher customer aspirations lead to new expectations and compel him to move towards the insurer who provides him the best service in time. It becomes less viable for them even to maintain the functional networks or competitive standards and services. To survive in the Industry they analyze, the emerging requirements of the policyholders / insurers and they are in the forefront in providing essential services and introducing novel products. Thereby they become niche specialists, who provide the right service to the right person in right time.

THE FOLLOWING TABLE SHOWS THE MARKET SHARE OF LIFE AND NON-LIFE INSURERS

MARKET SHARE (%)
LIFE INSURERS			NON – LIFE INSURERS
1.	LIC	76.07	1.	New India	21.41
2.	ICICI Prudential	6.91	2.	National	17.11
3.	Bajaj Allianz	4.75	3.	United India	17.11
4.	HDFC Standard	2.98	4.	Oriental	17.02
5.	Brila Sunlife	1.72	5.	ICICI- Lombard	8.04
6.	Tata AIG	1.66	6.	Bajaj Allianz	6.15
7.	SBI Life	1.46	7.	IFFCO-Tokio	4.00
8.	Max New York	1.28	8.	Tata-AIG	2.89
9.	Aviva	1.08	9.	ECGC	2.50
10.	Kotak Mahindra Old Mutual	0.71	10.	Royal Sundaram	2.17
11.	ING Vysya	0.54	11.	Cholamandala m	1.22
12.	AMP Sanmar	0.46	12.	HDFC-Chubb	0.89
13.	Met Life	0.37	13.	Reliance General	0.75
14.	Sahara Life	0.03	14.	Agriculture Insurance Co.	--
Private total		23.93	Private total		27.35
Public total		76.07	Public total		72.65
Grand total		100.00	Grand total		100.00

 

Above table shows, the private players in the life insurance business have increased their market share to 23.93 per cent. Among them ICICI prudential is ranked first in capturing the market followed by Bajaj Allianz and HDFC Standard. In the General Insurance sector the private players have captured 27.35 per cent. Among them ICICI-Lombard is ranked first, followed by Bajaj Allianz and IFFCO-Tokyo.
The healthy competition in the sector enabled the State owned insurers of our mother country to reduce its market share to 76.07 per cent and 72.65 percent in life and non-life business respectively. Moreover, private insurers have planned to increase their market share in the next five years. The public insurers have to enrich its approach to withhold its share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5. BRIEF ABOUT IDBI PRODUCTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IDBI Federal Life Insurance deals in life insurance and has mainly four types of products. They are-

·       Childsurance

·       Incomesurance

·       Wealthsurance

·       Lifesurance

·       Micro Insurance

 

1. Childsurance                                                                        

 

IDBI Federal Childsurance Savings Protection Insurance Plan

                                                                        

 

Being a good parent means making sure your child gets good education so that her future stays secure. The cost of education has shot up significantly and is expected to rise further. Add to that the cost of your child’s marriage or giving her a head start in career. It is therefore important for you to stay prepared. Presenting, IDBI Federal Childsurance Savings Protection Insurance Plan; a non-linked participating endowment plan that ensures your child’s future financial needs are fulfilled. Childsurance Savings is designed to give you guaranteed annual payouts and aid the important milestones in your child’s life. What’s more, this plan also provides financial protection to your child’s future by ensuring plan continuity with waiver.

2. Incomesurance                                                                      

 

IDBI Federal Incomesurance Guaranteed Money Back Insurance Plan

Life is full of uncertainties, as a result of which we always try and predict what lies in store for the future, so that we are prepared. However, our minds are full of doubts as there is no way to guarantee the future. Incomesurance Guaranteed Money Back is a plan which will enable you to stop predicting the future, and guarantee it instead.
IDBI Federal Incomesurance Guaranteed Money Back Insurance Plan is a non-linked non-participating money back plan which gives you guaranteed returns on your investment, so that you stop worrying about the future. With Incomesurance, you can guarantee a secure future for your family even when you are not around.

 

3. Lifesurance                                                               

 

IDBI Federal Lifesurance Savings Insurance Plan

 

Often, the first step towards a long and arduous journey is the toughest. However, once you have taken that first stride, the rest of the journey seems easier and more enjoyable. With your investments, it is the same approach that will ensure you build the right corpus to fulfill your dreams for yourself and your family– start small, save big.

IDBI Federal Lifesurance Savings Insurance Plan is a fixed term non-linked participating plan that provides you the twin benefits of long-term savings and life cover. With Lifesurance Savings, your small savings will help you realize the big dreams that you have for yourself and your family. This plan also offers you the benefit of life cover that will provide financial security to your family in your absence.

 

4. Wealthsurance                                                                  

 

IDBI Federal Wealthsurance Suvidha Growth Insurance Plan

 

Creating, building and managing wealth has always been a time consuming process. Those who have already built their wealth often describe the journey as time consuming and arduous. All of us still dream to build personal wealth and manage it well. What if there is a plan that helps you build wealth, yet keep it simple? Introducing IDBI Federal Wealthsurance Suvidha Growth Insurance Plan, a simple unit linked plan that helps you take your first step towards wealth creation through an easy process. This plan helps to not only build wealth to fulfill your future dreams but also protects your loved ones in case of any unfortunate incident.

 

 

5. Microsurance                                                                  

 

 IDBI Federal Group Microsurance Plan    

 

IDBI Federal Group Microsurance Plan provides affordable life insurance cover to groups. The plan is extremely useful to Micro Finance Institutions, Self Help Groups and NGOs to insure the lives of their group members and thus provide security to the group members’ families.
The plan can also be used for providing loan protection to the group members’ families.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6. PROMOTIONAL STUDY IN INSURANCE INDUSTRY

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                 i.          INTRODUCTION:

 

Wherever there is uncertainty there is risk. We do not have any control over uncertainties which involves financial losses. The risks may be certain events like death, pension, retirement or uncertain events like theft, fire, accident, etc. Insurance is a financial service for collecting the savings of the public and providing them with risk coverage. The main function of Insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. It also provides capital to the society as the funds accumulated are invested in productive heads. Insurance comes under the service sector and while marketing this service, due care is to be taken in quality product and customer satisfaction. While marketing the services, it is also pertinent that they think about the innovative promotional measures. It is not sufficient that you perform well but it is also important that you let others know about the quality of your positive contributions. The creativity in the promotional measures is the need of the hour. The advertisement, public relations, word of mouth communication needs due care and personal selling requires intensive care.

The most important element of marketing mix is promotion. For different industries promotion has different aspects. The promotional strategy adopted by any company is informing, persuading, and influencing in a consumers decision making. It is important for nonprofit and profit oriented organization .The main objective of promotional strategy is:

·       To expand the market.

·       To sustain the current market position.

·       To reach a selected market.

·       To provide information to customer for differentiating between product and services.

·       To increase and stabilize the sale.

Different organizations have multiple promotional strategies. Today all insurance companies rely on promotional strategy as it is one of the important tools to provide competitive advantage in this competitive world. So this increases the need to study the promotional strategies of different insurance companies (public and private companies). The types of promotion strategies adopted are advertising, sales promotion, publicity, personal selling, telemarketing, Direct marketing. One cannot deny this fact that every component of promotional mix need to be given full attention. From previous research done by different researcher we find that public sector organization is going through an image problem so they need to adopt the push strategy to in which all these components of promotion need to contribute to meet the organizational goal and to meet the challenges of this industry. While making promotional decision the insurance professional needs to concentrate on creativity so as to enhance profitability.

Advertising

Many firms they have advertising as most effective non-personal promotion. It is a paid non-personal communication usually directing a large number of potential buyers. Advertising expenses vary from company to company and from industry to industry. There are basically two types of advertising product advertising and institutional advertising. Product advertising involves the selling goods and services. Institutional advertising is mainly done for ideas, philosophy, or for goodwill of any company or organizations.

 

Publicity

With advertising now insurance company need to think in favor of publicity ,this component of promotion if used in right fashion makes the professional effort proactive. The ad’s can be insensitive, but the insurance sectors find publicity find it more effective, since the views messages, opinion facts and figures a publicized by media. Publicity is a device to promote business without making any expenses and therefore is called an unpaid form of persuasive communication bearing high rate of sensitivity.

Word of mouth promotion

Word of mouth communication results into a wider publicity which sensitize the process of influencing the impulse of prospect in insurance service provided. The satisfied customers, the social reformist, the opinion leaders, act as word of mouth communicator for the company. The organization involved in selling insurance like banks, brokers, need to assign due weightage to the quality of service provided to the user so that they are satisfied and accept the responsibility of promoting the services. The word of mouth is also known as the hidden sales force for the insurance industry. The other component of word of mouth is to seek cooperation and advice from the satisfied customer. Since they are habitual user of the services provided so they talk about this to their friends and relatives about their experience. The other promotional strategies like advertising, publicity, sales promotion may be insensitive and ineffective but the positive feeling of friends and relatives cannot be ineffective. So this makes us understand that service provided by insurance company to their customer .That is why the most important thing that of promotion of a company product is the quality of service provided by the insurance company. It cannot be denied that private insurance company use hidden sales force, so public insurance organization need to give full concentration on their promotional strategies .

INSURANCE MARKETING:

The term Insurance Marketing refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction

 The Insurance Marketing focuses on the formulation of an ideal mix for Insurance business so that the Insurance organization survives and thrives in the right perspective.

 

              ii.          MARKETING –MIX FOR INSURANCE COMPANIES:

 

The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weightage in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 P’s of marketing i.e. the product, its price, place, promotion, people, process & physical attraction. The above mentioned 7 P’s can be used for marketing of Insurance products, in the following manner:

 

1. PRODUCT:

 

A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product.

In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the two leading companies offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services.

When a person or an organization buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the rural prospects but the process is at infant stage and requires more professional excellence. The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development.

 

2. PRICING:

In the insurance business the pricing decisions are concerned with:

i) The premium charged against the policies,

ii) Interest charged for defaulting the payment of premium and credit facility, and

iii) Commission charged for underwriting and consultancy activities.

With a view of influencing the target market or prospects the formulation of pricing strategy

becomes significant. In a developing country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders. The strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors.

• Mortality (deaths in a particular area):

When deciding upon the pricing strategy the average rate of mortality is one of the main

considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases.

• Expenses:

The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of installments and premium sum and forms the integral part of the pricing strategy.

• Interest:

The rate of interest is one of the major factors which determine people’s willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums.

 

 

 

3. PLACE:

This component of the marketing mix is related to two important facets –

i) Managing the insurance personnel, and

ii) Locating a branch.

The management of agents and insurance personnel is found significant with the viewpoint of maintaining the norms for offering the services. This is also to process the services to the end user in such a way that a gap between the services- promised and services – offered is bridged over. In a majority of the service generating organizations, such a gap is found existent which has been instrumental in making worse the image problem.  The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism. The front-line staff and the branch managers also are found not assigning due weightage to the degeneration process. The insurance personnel if not managed properly would make all efforts insensitive. Even if the policy makers make provision for the quality up gradation, the promised services hardly reach to the end users. It is also essential that they have rural orientation and are well aware of the lifestyles of the prospects or users. They are required to be given adequate incentives to show their excellence.

While recruiting agents, the branch managers need to prefer local persons and provide them

Training and conduct seminars. In addition to the agents, the front-line staff also needs an intensive training program to focus mainly on behavioral management.

Another important dimension to the Place Mix is related to the location of the insurance branches. While locating branches, the branch manager needs to consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises. In addition it is also significant to provide safety measures and also factors like office furnishing, civic amenities and facilities, parking facilities and interior office decoration should be given proper attention. Thus the place management of insurance branch offices needs a new vision, distinct approach and an innovative style. This is essential to make the work place conducive, attractive and proactive for the generation of efficiency among employees. The branch managers need professional excellence to make place decisions productive.

 

4. PROMOTION:

The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents play an important role. Due attention should be given in selecting the promotional tools for agents and rural career agents and even for the branch managers and front line staff. They also have to be given proper training in order to create impulse buying. Advertising and Publicity, organization of conferences and seminars, incentive to policyholders are impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders.

 

 

 

5. PEOPLE:

Understanding the customer better allows designing appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level, is one of the important areas to look into.

6. PROCESS:

The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance. The processing method should be easy and convenient to the customers. Installment schemes should be streamlined to cater to the ever growing demands of the customer. IT & Data Warehousing will smoothen the process flow.

IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It can also help to improve customer service levels. The use of data warehousing management and mining will help to find out the profitability and potential of various customers product segments.

7. PHYSICAL DISTRIBUTION:

Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. If the insurers are willing to take advantage of India’s large population and reach a profitable mass of customers, then new distribution avenues and alliances will be necessary. Initially insurance was looked upon as a complex product with a high advice and service component. Buyers prefer a face-to-face interaction and they place a high premium on brand names and reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf commodity products. Today, various intermediaries, not necessarily insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer sells insurance products. The financial services industries have successfully used remote distribution channels such as telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads and increase profitability. A good example is UK insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of the largest motor insurance operators. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India.

In India also, banks hope to maximize expensive existing networks by selling a range of products. It is anticipated that rather than formal ownership arrangements, a loose network of alliance between insurers and banks will emerge, popularly known as bancassurance.

Another innovative distribution channel that could be used are the non-financial organizations. For an example, insurance for consumer items like fridge and TV can be offered at the point of sale. This increases the likelihood of insurance sales. Alliances with manufacturers or retailers of consumer goods will be possible and insurance can be one of the various incentives offered.

 

 

 

 

 

                               iii.          Sales Promotion in Life Insurance Companies

The study is designed to evaluate the marketing strategies in life insurance service sector & how these strategies boost sales & marketability of a product which ultimately lead to customer satisfaction. The insurance scenario faces multiple challenges such as increased costs of operation, regulatory pressures, and inflexible technology infrastructure. These pressures are compounded by low to moderate premium growth & the increasing burdens of regulatory compliance. Marketing strategy is the basic approach that the business units will use to achieve its objectives, and it consists of broad decisions on target markets, market positioning and mix, and marketing expenditure levels. As the financial services sector has become more competitive, financial institutions need to consider , ways of developing relationships with their existing customers in order to defend their market share.

 

 

Sales process is presented through eight steps-

·       Prospecting

·       Pre-approach

·       Approach

·       Presentation and demonstration

·       Meeting objection

·       Closing

·       Follow up

Prospecting

Selling anything begins with prospecting -- finding people who are interested enough in your product to listen long enough for you to make a sale. Any good agent is constantly finding prospects through as many tactics as possible. Many rely on general prospect generators like business card collection, print and online advertising and word-of-mouth. Some techniques that work particularly well for life insurance is forming partnerships with financial planners, blogging or writing guest posts giving financial advice, and attending community meetings like PTA and the Chamber of Commerce.

Pre- approach

Pre – approach is the second step in the selling process which emphasizes that the sales man should know, after identifying the prospect in the prospecting stage, the prospect’s likes and dislikes, his needs, his preferences, habits, nature, behavior, economic and social status etc. Based on all this information, the sales man has the necessary tools to plan his visit with the prospect and can give an effective sales presentation. This kind of preparation to meet the prospect is called Pre - approach. 

Approaching

In this stage the prospect and the sales man come in contact with each other face to face, here the sales man has an opportunity to understand and interact with the prospect in better way. Hence, the sales man should put forward his best efforts to make the best use of this opportunity in getting the attention of the prospects and to conveyance him to buy the product.

Presentation and Demonstration

A good presentation is as important as a good product. If the product is stored at conspicuous location within the store or the shop, the salesman can promptly present it to the prospects. This quick presentation creates good impression in the mind of the customer as he feels that he is being dealt with promptly and this satisfies his feeling of self-importance.

Demonstrating a product helps create a positive impression in the mind of the customer and increase his interest. This helps his salesman to prove the features of the product and emphasize its genuineness.

Closing

This is the last stage of any sales presentation. The whole exercise becomes useless if the sale does not take place .Therefore, it is the most crucial stage for salesman. The main aim of the close is to convince the prospect to sign the order form or to place an order form or to place an order immediately rather than in the future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7. PROMOTIONAL STRATEGIES ADOPTED BY IDBI FEDERAL LIFE INSURANCE COMPANY

 

 

 

 

 

 

IDBI Federal has brought many interesting and humorous ads of their products such as wealtsurance, incomesurance etc. which has got very good response from customer. They have also conducted events with an aim to create interest around financial planning with life insurance at branches which was critical in getting prospects interested in IDBI Federal products.

They have been building an engagement process around the solution being offered gives an additional boost to this cause. Spelling Bee was a specially created spelling contest to connect with children. The philosophy of this module hinged around making learning fun. The event was timed to coincide with Children’s day in November 2010. The spellings to be completed revolved around visual and verbal cues to words related to saving, money and finance and aimed at teaching children the value of money early in life. The engagement started with the spelling contest for kids and gave their IRMs a natural opening for a discussion with parents about financial planning for their children’s future needs like education. This is a sort of channel marketing which IDBI Federal had adopted to create awareness as well as to educate the future generation about the company and the importance of saving.

Also IDBI Federal involved them in developing their business by joining hands with SAMHITA, a community development organization based out of Bhopal which works towards bringing financial literacy to the underprivileged population in Madhya Pradesh. They believe that such financial literacy among the under banked population will help bring a holistic change in the way people perceive and understand financial products and their utility at various stages in their life. This will ultimately help bring them closer to financial inclusion. They started this journey with SAMHITA in 2008 by providing low cost group coverage female members of SAMHITA under Group Microsurance. This way they have covered 86,721 lives for a sum assured of Rs. 66.7 crores since then. They also offer the protection of Termsurance Grameen Suraksha to the family members of these people. IDBI Federal Termsurance Grameen Suraksha is especially designed to make life insurance affordable to rural customers with options of four convenient premium slabs of Rs 49.08, Rs 98.17, Rs 147.25 and Rs 196.33 (inclusive of taxes) with corresponding sums assured of Rs 5,000, Rs 10,000, Rs 15,000 and Rs 20,000.In this way IDBI Federal has made intelligent moves to capture the rural market which has lot of potential and promise in the future. Promotional strategies are very important for any intangible product especially like life insurance and financial savings where people should be given complete education about such products be given complete education about such products because of which all insurance companies take due care while formulating their promotional strategies.

Apart from these activity, IDBI federal also organizes-

·       Market survey activity

·       Health Check-up Camps

·       Canopy Activity

IDBI Federal Life Insurance, Connaught place (New Delhi) organizes free health check-up and market survey with the help of questionnaire two times a week.

Market survey includes fact-finding sheets and questionnaires. These methods help the company to directly interact with the customers and know about their needs and expectation from IDBI Federal. Questionnaire also helps people make themselves aware of their financial planning they have done for their own or their family.

IDBI Federal also organizes Health check-up camps. Here, doctors do free health check-up of various patients which IDBI sees as a probable prospects. By participating in such activities, the company believes it is creating a good image of itself. This creates a positive image about the company and customers are satisfied with such strategies. They pay due weightage to the quality of service provided to the user so that they are satisfied and accept the responsibility of promoting the services. This is the word of mouth promotion strategy. The word of mouth is also known as the hidden sales force for the insurance industry. Since they would be with the services provided so they talk about this to their friends and relatives about their experience.

 

 

 

 

 

 

 

 

 

i.                Childs protection plan

It is well known that in India, the major priority for a family is its child education or child marriage.  IDBI Federal very well understands this problem and tries to promote itself through this.

They issue a questionnaire that contains child future plans analysis. This form gives a picture of the all expenses that the parent bear after the child grows up. By explaining them the real picture and giving solution for the saving method, most of the customers are bound to feel happy and satisfied. And a satisfied customer is always the target of the company.

ii.              Techno Marketing

Company engaged in large projects and the HO manages all the operations and the policies of these projects. The techno marketing department caries out various functions.

·       Guiding for new projects and informing for new project.

·       Keeping touch with brokers, bidder, financiers.

·       Conducting seminars and work shop for clients.

iii.            Personal selling

This fact cannot be denied the personal selling is one of the important components of promotional mix, so we can say that insurance business is substantially influenced by incrementing of agents. IDBI Federal trains its insurance agent to enhance its personal selling. If an agent has an art of informing, sensing and persuading the potential policy holder then the task of company is simplified. Company is aware of this fact that that personal selling is based on excellence of an individual (who are agents). All this make it significant that the agents have some outstanding properties such as patience, communicative ability, attractive personality and commitment to the profession. This business cannot exist if the agents stop working. Therefore IBDI Federal assigns due weight age in training the individual who is assigned these responsibility. These agents need to be incentivized satisfactorily to keep moving the process of informing and persuading the prospect policy holder.

                                                                                     iv.          Telemarketing

Telemarketing is one of the emerging trends in the promotion strategies adopted by the company. It promotes the product by using communication devices like telephone .It is not always possible for the company to do personal selling face to face with a customer as it incur more cost and time and at one time only one customer is there so as to save time ,money and attract more customer telemarketing is used.. Telemarketing is a device which promotes business in which telemarketer with high communicative ability keeps on moving the process of convincing a customer. IDBI Federal promotes telemarketing as in India market is huge and opportunities are more.

However this technique is not very effective as these are considered cold calls and customers rejects or avoids such kinds of calls.

                                                                                 v.          World Wide Web

In Financial industries more importance is given to the online facilities provided by the companies. IDBI Federal has observed that there are many quarries and complaint so if this mechanism is improved by the company to address their customer then there will never be communication barrier. The more communication is easy, effective and cheap it attracts the customer. Today online information is available about the company and customer can easily access them whenever required.

                                                                           vi.          Summer Internship

Also, IDBI Federal has come up with a strategy of hiring interns for summer internship through which they can expand more deeply into the market. Each intern is given a target that he/she has to achieve. By adopting this technique they have not only increased their business but also deepen their roots in the market. People are becoming more aware as the interns approach different prospects in different parts of the country.

 

After studying the IDBI Federal annual Report and interacting with the employees of the company it was observed that IDBI Federal doesn’t spend much on its marketing directly. Instead it goes for options that include direct interaction with the customers like personal sales, word of mouth, etc. They don’t promote their products through advertisements on television. They believe in saving expense on advertisements and rather helping the advisors so that they can provide good customer service. Their main focus is on word of mouth promotion which has attracts large number of customers.

 

 

 

 

 

 

 

 

 

8. CONSUMER BEHAVIOR TOWARD LIFE INSURANCE PRODUCTS

 

 

 

 

 

 

 

 

 

 

 

 

Consumer behavior: Consumer behavior is stated as the behavior that consumer display in searching for, purchasing, using, evaluating, and disposing of products, services and ideas that they expect will satisfy their needs. The study of consumer behavior is concerned not only with what consumers buy, but also with why they buy it, when and how they buy it, and how often they buy it. It is concerned with learning the specific meanings that products hold for consumers. Consumer research takes places at every phase of consumption process, before the purchase, during the purchase and after the purchase.

One "official" definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society."

i. Need for the study

The study of consumer helps firms and organizations improve their marketing strategies by understanding issues such as reason behind customer dissatisfaction, brand image etc.
Since the opening up of insurance market to private operators, India is considered one of the hottest places with the majority of market being untapped. The change in the nature and structure of competition has changed the nature of the insurance products offerings.
The perception of the market about the insurance, which was earlier negative, is gradually becoming positive. It is necessary to understand what make people to buy insurance products; who influence the buying decision and market attitude towards insurance products.
In this perspective, the present study has concentrated to analyze the behavior exhibited by the consumers of IDBI Federal life insurance company ltd. It necessities to understand the attitude of consumers towards products and services offered by IDBI Federal life insurance company ltd. The study about consumers helps the company to improve their marketing strategies by understanding the consumers. For example by understanding that a number of different messages compete for our potential customer’s attention, company learns that to be effective, advertisement should usually be extended extensively. Company also learns that consumers will sometimes be persuaded more by logical arguments, but at other times will be persuaded more by emotional or symbolic appeals. By understanding the consumers the will be able to make a more informed decision as to which strategy to employ.

The first significant stage, where the process of insurance consumer behavior begins, is that of insurance decision making. Here making a resolve by the insured is, in a certain way, decisive and should be highlighted as a turning-point or a switchover moment to another stage, which flows out as a result of one’s mental considerations and evaluation of his/her financial capacity of periodically paying a certain amount of insurance premiums to the insurer. The insured can take a decision concerning the need of an insurance service consciously as well as unconsciously. After a resolve is made and a clear insurance decision is taken, the preparation of the insurance contract making starts. The insured contacts the insurance company, discusses questions concerning the insurance contract and signs documents certifying the completion of the contract. In this stage, all actions necessary for the completion of the insurance contract are made.

When the insurance contract comes into force (usually it is the case if the insured pays the first or onetime insurance premium), the insured in some way returns to the very first state of his/her insurance decision making consideration, i.e., during the time of the insurance period, the insurance service consumer observes, analyses and evaluates the actions made by the insurer, including the interpersonal communication experience as well as the flow of claim regulation in the case an insured accident happened. This is how the insured reconsiders and verifies the correctness of his decision. As the insurance service is purchased, the insured accumulates his “lively” insurance experience and ascertains (or not) its usefulness and necessity. Here the impact of the insurer, whose services have been selected by the insured, plays a significant role: a negative insurance experience can choke the insured off the services provided by the same insurer as well as off insurance services in general. The experience gained by the insured confirms or disproves his initial decision, which allows making a resolve concerning insurance of the same or other objects. Under the group of internal factors one can find the psychological and individual ones. External factors include cultural and social factors.

 

 

 

ii. Personal interaction

During the internship, we intern were asked to sell insurance policies to other people. It was a tough task as people are still reluctant in buying insurance policies and generally have a negative perception regarding it. However with the changing scenario and by constant efforts of insurance sector, people are becoming aware of the products and are adopting a positive attitude towards it. When I interacted with customers I observed few points which are-

·       Customers were generally not interested at beginning and required a lot of persuasion and knowledge.

·       They had a belief that private insurance companies are not reliable enough and if they ever want to get insured, LIC would be their first choice.

·       It was observed that customer would want to buy a policy with small premium but would expect a larger amount in return.

·       To some customers products of IDBI federal Life Insurance Company didn’t seemed appealing enough.

·       Sometimes it might be possible that consumer would have lots of confusion regarding the policy and unnecessarily argue with you. In such situation it is advised to remain calm and do your best to solve the problem of the customer. If not done so, there are high chances that he may withdraw the policy which would ultimately be your loss.

·       Most of the customer preferred to buy lifesurance policy as they find it attractive due to its 9.2% guaranteed return on the maturity sum assured.

·       Due to high competitive market and presence of large number of other life insurance companies, customers were not fully aware of IDBI Federal Life Insurance Company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.                   RESEARCH METHODOLOGY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title of the study:-

Marketing Mix and Promotional Strategies of Life Insurance Companies

Duration of the Project

The duration of the project is 60 days

1.    Literature Review

Trevor Watkins (1989) while studying the current state of the financial services industry worldwide identified four major trends: the trend towards financial conglomeration, globalization, information technology in service marketing; and new approaches to financial services marketing. These trends, it was concluded, will affect the marketing of banks and other financial services in the 1990s

Sankaran M (1999) studied the measures that would help domestic players in financial services sector to improve their competitive efficiency, and thereby to reduce the transaction costs. The study found that the specific set of sources of sustainable competitive advantage relevant for Financial Service Industry are: product and process innovations, brand equity, positive influences of 'Communication Goods ' ,corporate culture, experience effects, scale effects, and information technology.

Marisa Maio Mackay (2001) examined whether differences exist between service and product markets, which warrant different marketing practices by applying ten existing consumer based measures of brand equity to a financial services market. The results found that most measures were convergent and correlated highly with market share in the predicted direction, where market share was used as an indicator of brand equity. Brand recall and familiarity, however, were found to be the best estimators of brand equity in the financial services market. P. Kotler rightly states that a company's marketing strategy depends on many factors, one of which is its size and position in the market.

.Kyeva (2005) did a survey of the marketing mix used by life insurance companies in Kenya in responding to the challenge of HIV/Aids pandemic, however this study was limited only to the relation between life insurance companies and HIV/Aids pandemic

 

Wamwati (2007) did a study on the critical success in the insurance industry in Kenya, however this study was too broad and failed to look critically to the marketing strategies and their influence on performance

 

Karanja (2008) did a study on the innovation strategies adopted by insurance companies in Kenya, however this study only served to inform us but failed to establish the relation between innovation and performance

 

Walker (2008) observed that consumers today value information. We live in the information age, and the savvy, faithful customer is one that has knowledge about the products and services offered. The next most valuable insurance marketing tips include the salesperson being the source of financial information for the client. Newsletters, email

updates, and notifications will keep customers informed about issues surrounding insurance and other financial programs. There are creative ways to approach these insurance marketing strategies. Newsletters could include contests, special interest areas for kids, safety concerns, and economic updates. There could even be an area for customer spotlights, or encouraging testimonies of how the customers were helped

Through the office. Of course, all new products and services should be showcased in anyinformative hard copy or e-mail communication

 

 

ii. Objective of the study

To study the marketing mix and promotional strategies focusing on the consumer behavior toward the promotional strategies of life insurance companies.

Sample Size

A sample size of 100 customers was chosen to meet the earlier mentioned objective

 

 

Research Design

This research is Explorative and conclusive in nature because it aims to collect the data about the behavior of customer for insurance products and their awareness towards it. The research approach used is survey based and the analysis is based on the primary and secondary data.

 

Research Instrument: Questionnaire

 

 

iii. Types of data

1. Primary Data: - Primary Data is that data which is collected by the researcher as per his/her needs.

2. Secondary Data: - Secondary Data is that data which is collected through references as websites, journals, books, magazines, etc.

1. Primary Data

For collection of Primary Data, I used various techniques like-

·       Questionnaire (Financial health forms)

·        fact finding sheets

·       child protection scheme

·       personal sales

I was provided with all these sources by the company through which I tried to collect information about the consumer behavior toward IDBI Federal products. This technique also helped in promoting the products as well.

 

2. Secondary Data 

For secondary data I referred to company’s websites and journals. Promotional strategies of the company were mainly collected through secondary data.

 

 

FINANCIAL HEALTH FORM

It has questions about the financial planning of the customers. This form made customer understand the financial responsibilities they have toward their family and loved ones which they don’t realize immediately.

This process included field work for data collection. I met different prospects on various location of Delhi- Connaught place, Anand Vihar, Noida City Centre etc. Responses of the customers were mixed, some agreed to fill the form while some refused.

After the collection of the data it was analyzed and conclusion was drawn.

Fact Finding Sheet and Child Insurance Scheme  

These forms consisted of questions related to future goals of a person. This form held better chances of converting a prospect into a probable customer.

Child protection scheme was a questionnaire in which the future goals of children were targeted. It contained questions like amount needed for education of the child, savings done till date for it etc.

Fact- finding sheet also had the same questions but was not only for child but covered all aspects of life like buying a house, car, retirement planning etc.

Location chosen for the survey was the same. But it yielded better response than comparison to financial health form.

Personal Sales

During the time of internship we interns were asked to sell some insurance policies. Market is divided into two categories for sales- favorable and unfavorable. Favorable market is the market where we are acquainted and unfavorable market means the market we are not aware of. I chose to work under favorable market. So I tried to sell the policies in my home town- Patna. 

IDBI Federal has majorly four kinds of products which catered the need of different age group. I approached about 25 customers but succeeded in selling the policies to 5 only. Customers were approached either by phone calls or direct interaction. Every customer expressed different views about the products.

I personally met all the customers and analyzed their need. Then explained all the products 

of IDBI Federal to them but suggested only those that was beneficial for them.

At the end, I managed to get 5 people insured. They were-

Mrs. Chand Singh – Child Insurance

Mr. Sanjay Singh – Income Insurance

Mr. Balram Roy- Life Insurance

Mr. Praveen Kumar- Life Insurance

Mr. Amit Sahay- Life Insurance

I also received a certificate of appreciation by the national head of IDBI Federal for doing so.

 

DATA ANALYSIS

1.    AGE OF THE RESPONDENTS

PARTICTULARS	NO.OF.RESPONDENT	PERCENTAGE
Less than 25	11	11%
25 - 35	40	40%
35 – 45	20	20%
Above 45	29	29%
TOTAL	100	100

ANALYSIS:  From the survey it was found that amongst 100 respondents a)      11% of the respondents are less than 25 years old. b)     40% of the respondents are between 25 and 35 years of age. c)      20% of the respondents are between 35 and 45 years of age. d)     29% of the respondents are more than 45 years of age.

 

 

2. QUALIFICATION OF THE RESPONDENTS.

PARTICUALR	NO.OF.RESPONDENT	PERCENTAGE
Graduate	52	52%
Post Graduate	29	29%
Diploma	8	8%
Other discipline	11	11%
TOTAL	100	100%

 

ANALYSIS:  From the survey it was found that amongst 100 respondents a)      52% of the respondents were graduate b)     29% of the respondents were post graduate c)      8% of the respondents were diploma d)     10% of the respondents were other discipline

      

 

 

 

 

3. OCCUPATIONS OF THE RESPONDENTS

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Business man	34	34%
Professionals	18	18%
Job holders	37	37%
Others	11	11%
TOTAL	100	100%

ANALYSIS:   From the survey it was found that amongst 100 respondents   a)      34% of the respondents are businessmen. b)     18% of the respondents are professionals. c)      37% of the respondents are jobholders. d)     11% of the respondents are background.

             

 

 

 

 

 

4 AVERAGE ANNUAL INCOME OF RESPONDENTS.

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Up to 1 lakh	33	33%
1 lakh – 3 lakh	43	43%
3 lakh – 5 lakh	20	20%
5 lakh & above	4	4%
TOTAL	100	100%

ANALYSIS:         From the survey it was found that amongst 100 respondents   a)      33% of the respondents have an average annual income up to 1 lakh b)     43% of the respondents have an average annual income from 1 lakh to 3 lakh c)      20% of the respondents have an average annual income from 3 lakh to 5 lakh d)     4% of the respondents have an average annual income above 5 lakh

 

          

            

5 FAMILY SIZE OF RESPONDENTS

 

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Below 5 members	50	50%
5 - 10 members	32	32%
Above 10 members	28	28%
TOTAL	100	100%

 

ANANLYSIS:   From the survey it was found that amongst 100 respondents a)      50% of the respondents are below 5 members. b)     32% of the respondents are between 5 to 10 members. c)      28% of the respondents are above 10 members.

 

 

 

 

  

6 ACCORDING TO LIFE INSURANCE

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Risk Coverage	10	10%
Tax Savings	3	3%
Good return	4	4%
Security	3	3%
All the above	80	80%
TOTAL	100

 

ANALYSIS:         From the survey it was found that amongst 100 respondents a)      10% of the respondents say risk coverage. b)     3% of the respondents say tax savings. c)      4% of the respondents say good returns. d)     3% of the respondents say financial security. e)      80% of the respondents say all of the above.

 

 

7 AWARENESS OF IDBI FEDERALLIFE INSURANCE

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Yes	17	17%
No	83	83%
TOTAL	100	100%

            

ANALYSIS:    From the survey it was found that amongst 100 respondents a)      83% of the respondents say that they are aware of IDBI Federal life insurance co. b)     17% of the say that they are unaware of IDBI Federal life insurance co

 

 

 

8 AWARENESS REGARDING INSURANCE

 

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Yes	2	2%
No	98	98%
TOTAL	100	100%

 

ANALYSIS: From the survey it was found that amongst 100 respondents a)      98% of the respondents say that they are aware of insurance. b)     Only 2% are unaware of insurance.

 

 

 

          

9.  PERCENTAGE OF RESPONDENTS WHO ARE UNDER DIFFERENT PLANS OF IDBI FEDERAL LIFE INSURANCE CO.

     

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Invest gain plan	41	41%
Unit gain plan	36	36%
Child gain plan	8	8%
Whole life plan	15	15%
Pension plan	No	No
TOTAL	100	100%

ANALYSIS:   From the survey it was found that amongst 100 respondents a)      41% of the respondents are under invest gain plan b)     36% of the respondents are under unit gain plan c)      8% of the respondents are child gain plan d)     15% of the respondents are whole life plan     e)   No body under pension plan

          

10 PERCENTAGE OF RESPONDENT’S BENEFITS OF CHOOSING THE PARTICULAR PRODUCTS

PARTICULARS	NO.OF.RESPONDENT	PERCENTAGE
Risk coverage	60	60%
Additional benefit	20	20%
Maturity date	12	12%
Sum Assured	8	8%
TOTAL	100	100%

  

ANALYSIS: a)      36% of the respondents say that a benefit of choosing the particular        Product is for Safety of life. b)     20% of the respondents say that a benefit of choosing the particular products is for additional benefit to family c)      12% of the respondents say that a benefit of choosing the particular products is for maturity date d)     8% of the respondents say that a benefit of choosing the particular products is for sum assured

Result analysis

After the completion of result it was concluded that the major part of the population are not insured. It is studied that only 5% of the total population had any kind of insurance protection. The sheets that were filled revealed facts like

·       Most of the people are running in a risk zone. They don’t have any kind of financial protection against any unfortunate condition.

·       Although they have all the resources, they felt hesitant in buying insurance.

·       Most of the customer had the concept of earning- spending-saving in spite of earning-saving-spending.

·       IDBI Federal is not very popular choice among customers because they were not fully aware of it.

·       Although insurance is a good source of protection and investment, people feel their money is lodged for a long period of time since insurance are long term investments.

 

 

 

 

LIMITATIONS

 

·       The topic promotional strategy is itself is very vast and very important also. Due to time restraints it was not possible to study in depth.

·       The study duration of summer internship is short.

·       Limited interaction with customers as this data is collected only in Delhi region.

Consumer behavior may vary in other regions of country.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10. RECOMMENDATION

 

 

 

 

 

 

 

 

 

 

 

 

RECOMMENDATION

·       Print and electronic media advertisement should be used at high level especially TV ads should be used as it reach to the interior of the country is strong and also kind of influence it showcase on people is much higher  compared to other media.

·       After initial promotional campaign, the relative advantage of IDBI Federal on its competitor should be highlighted.

·       Hoarding at prime areas should be used to make it more visible for the people.

·       The most important of all is to create awareness about company’s product as well as a brand in the market is very necessary.

·       The company should use celebrity to create brand awareness about the brand and also collaborate with some production house of film and television serial which can reach people in mass.

·       Life insurance products are taken mainly by middle and higher income group. Hence they should be regarded as maim targeted income groups. Life insurance products which are suitable for lower income group should also be released so that the market share increases.

·       They should ask for feedback from the customer to know about their satisfaction or dissatisfaction. In case of dissatisfaction, improvements should be made in future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10. CONCLUSION

 

 

 

 

 

 

 

 

 

 

 

 

 

CONCLUSION

 

 

The purpose during the internship in IDBI Federal was to study the promotional strategy and marketing mix of life insurance companies along with consumer behavior toward it.

With regard to insurance companies, consumers respond at different rates, depending on the consumers characteristics. Hence Insurance companies should try to bring their new product to the attention of potential early adopters.

a) Due to the intense competition in the life insurance market, the life insurance Return on investment, company reputation and premium outflow are most preferred attributes that are expected by the respondents. Hence greater focus should be given to these attributes companies have to adopt better strategies to attract more customers

b) Keeping the cost, quality and return on investment in tact is necessary in order to tacklethe competition.

c) Life insurance products are taken mainly by middle and higher income group. Hencethey should be regarded as maim targeted income groups. Life insurance products whichare suitable for lower income group should also be released so that the market share increases

d) Return on investment, company reputation and premium outflow are most preferred attributes that are expected by the respondents. Hence greater focus should be given to these attributes

e) Private life insurance companies should adopt effective promotional strategies to increase the awareness level among the consumers

f) Life insurance companies should ask for their consumer feedback to know whether the consumers are really satisfied or dissatisfied with the service and product of the companies. If they are dissatisfied, then the reasons for dissatisfaction should be found out and should be corrected in future.

 

 

 

 

 

 

          

 

 

 

 

11. QUESTIONNAIRE

 

 

 

 

 

 

 

 

 

 

 

 

·       NAME:

·       AGE:

·       SEX:

( ) Male

( ) Female

·       E-MAIL ID:

·       PHONE NO:

·       OCCUPATION:

·       ANNUAL INCOME

( ) Up to 1.5 lakh p.a

( ) 1.5 lakh-3 lakh p.a

( ) 3 lakh-5 lakh p.a

( ) 5 lakh or above p.a

·       Have you ever heard about the company IDBI Federal life insurance in the sector?

( ) Yes

( ) No

·       If yes, then mention the source from where you have heard?

 ( ) TV advertisement

 ( ) Newspaper/Magazine

      ( ) Internet

 ( ) Personal E-mail/ SMS

 ( )  Word of mouth

 ( ) From IDBI Federal’s salesperson

( ) others

·       Do you plan to invest in any insurance policy in the future?

( ) Yes

( ) No

·       If yes, what options do you have in your mind?

( ) IDBI FEDERAL

( ) LIC

( ) SBI LIFE INSURANCE

( ) HDFC LIFE INSURANCE

( ) ICICI PRUDENTIAL

( ) OTHERS

·       Reasons behind taking an insurance policy?

( ) Risk Coverage

( ) Investment Purpose

( ) Pension Schemes

( ) Tax Benefits

( ) Any other

·       If the reason in the last options i.e. any other please mention the reason?

·       Which of the following IDBI FEDERAL product have you heard of?

( ) Incomesurance

( ) Termsurance

( ) Lifesurance

( ) Wealthsurance

( ) Childsurance

·       Do you know any of the following unique features and benefit of IDBI Federal life insurance?

( ) Tax Reduction

( ) Guaranteed Annual Payout

( ) Endowment or money back

( ) Flexible payout option

( ) Premium payment option

( ) Lump sum cover option

·       If you are not interested to buy IDBI Federal insurance policy, can you please write the reason?

·       Does your company provide you with insurance?

( ) Yes

( ) No

·       Which mode of advertisement attracts you most?

( ) Newspaper

( ) Television

( ) Magazine

( ) online advertisement

( ) Hoarding/ posters

( ) Others

·       How often did you see IDBI Federal advertisement in television in last week?

( ) 0

( ) 1-3

( ) 4-7

( ) More than 7

·       How did you describe the advertisement? (If you have seen any advertisement of IDBI Federal, then only answer this question)

( ) Convincing

( ) Just for the purpose of sale

( ) Building relationship between company & consumer

( ) satisfying your needs

·       Do you feel you need to see more advertisements to know about the products of IDBI Federal?

( ) Yes

( ) No

·       Your valuable feedback

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCE

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCE

https://www.idbifederal.com/

 

www.insuranceproshop.com/lifeinsurancemarketing/

 

en.wikipedia.org/wiki/IDBI_Federal_Life_Insurance

 

 

Anuroop Tony Singh. (2004). Challenging Opportunity. Asia Insurance Post, 28-29. Anil Chandok. (2006).

 

Application of CRM in the Insurance Sector. Insurance Chronicle, May,17-19

 

Balaji, B (2002), Services Marketing and Management. New Delhi, S.Chand & Company Ltd.

 

Booms, B.H. and Bitner, M.J. (1981), “Marketing Strategies and Organization Structures for Service Firms”, Marketing of Services. Donnelly J.H and George W.R. Chicago: American Marketing Association, pp. 47 – 51.