Ramji Keshari

SUMMER TRAINING PROJECT REPORT ON

A STUDY OF MARKETING & PRODUCT FINANCING STRATEGIES .

OF

Submitted in Partial Fulfillment for the Award of Degree of MASTER OF BUSINESS ADMINSITRATION (Year 2006-2009)

TRAINING SUPERVISOR SUBMITTED BY MR. VIKRAM CHOPRA VIBHOUR AHUJA REGIONAL HR MANAGER ENROLLMENT NO: 0601471706

SESSION 2006-2009

Topic Page No.

EXECUTIVE SUMMARY 1

INTRODUCTION

Objective

Overview of Industry

Historical Aspects

Insurance Sector Reforms

Max Newyork Financial advice

3

4

5

9

12

RESERACH METHODLOGY

Data Collection Tools21

COMPANY PROFILE

Corporate Profile

Products and Services

22

29

DATA ANALYSIS

Comparison and Analysis

SWOT Analysis

57

62

FINDINGS AND ANALYSIS 63

RECOMMENDATIONS 69

LIMITATIONS 70

CONCLUSION 71

BIBLIOGRAPHY 72

ANNEXURE

Questionnaire

73

TABLE OF CONTENTS

EXECUTIVE SUMMARY

Title of the project: A MARKETING RESEARCH ANALYSIS OF MAX LIFE INSURANCE CO. LTD.

Objectives: •Working of the insurance plans•Comparative study of the competition

Comparative analysis done on:•Life insurance corporation•HDFC Standard Life insurance and various other players.

Research Methodology: Primary data collected by personally visiting the leading insurance players. Eg: LIC, Bajaj Alliance, Birla Sunlife, HDFC Stan life. And of course Max Life Where I did my summer training.

Data Collection:•Primary data collected through market survey, ATM Survey•SAMPLE SIZE : 100•SAMPLE AREA : DELHI•Secondary database of subscribers of India Today

INTRODUCTION

OBJECTIVE OF THE STUDYThe project undertaken by me as a part of my M.B.A course is an effort made to study the insurance policies and activities in Max Newyork Life Insurance with special emphasis on products of the company.In this era of cutthroat competition, any organization needs to select and retain the best talent. People selected should have positive attitude, ability to inspire others and must be dynamic.

The main objectives of this study are:

•Working of Insurance Plans•SWOT analysis of the product sold•Comparative study with the competition•To assess the marketing & financila strategies of Max Newyork.

AN OVERVIEW OF THE INSURANCE INDUSTRY IN INDIA

Indian economy is in transition over the last ten years owing to the initiation of major economic reforms affecting almost all sectors. The paradigm shift from a mixed economic organization to a market oriented organization has exposed all sectors to an intense competition. Insurance being one among the players in the financial services sector. Indian insurance business is the most significant one among them. The industry covers two dimensions viz. Life insurance and General insurance. While Life Insurance Corporatin (LIC) of India is a financial intermediary which mobilizes people’s savings and invests large amounts of premiums, the General Insurance Companies (GIC) do not collect savings, yet they raise crores of rupees from premiums. General insurance deals with exposure of risks to goods and property, whereas life insurance is a way to meet the contingencies of physical death and economic death. In case of prematured death of the assured, the proceeds of policy are paid to the beneficiaries and annuities protect the assured against economic death when he lives too long to arrange for his necessities. In simple language, insurance promises a compensation of monetary loss sustained by a particular person, due to the damage or destruction of a particular piece of property owned by him, provided it happens due to certain courses. In other words, it is perfectly a simple promise to make good the loss.

HISTORICAL ASPECTS OF INSURANCE IN INDIA

Insurance activity in India is going on for more than 150 years. In India, life insurance in its modern form was brought for the first time by the Britishers. The Oriental Life Insurance Company started in 1818 in Calcutta was the first to be founded in India by Europeans to help the widows of their community. The general insurance business in India, on the other hand, can trace its roots to him Triton Insurance Company Ltd, the first general insurance company established in the year 1850 in Kolkata by the British. The year 1870, saw the birth of first Indian Insurance Company namely, Bombay Mutual Life Assurance Society. The basic aim of this company was to insure Indian lives at normal rates since in the earlier period. Indian lives were treated as subnormal and loaded with an extra premium of fifteen to twenty per cent. However, right up to the end of 19th century, the foreign insurance companies in India had an upper hand in matters of Insurance business. Insuring Indian lives with 10 percent of extra premium was a common practice prevalent in those times. The Indian Life Assurance Companies were the first to regulate the life insurance business in 1912

INSURANCE SECTOR REFORMS

The government in a bid to complement the reforms initiated in the financial sector established a committee headed by former finance secretary and Reserve Bank of India (RBI) governor, Mr R.N. Malhotra to evaluate the insurance industry and to recommend its future direction. This committee suggested the following changes:

•Government stake in insurance companies be brought down to 50 percent.

•The take over of the holding of GIC and its subsidiaries in order to facilitate their functioning as independent corporations.

•Allowing private enterprise in the sector with companies with a paid up capital of a minimum of Rs 100 crore.

•No single entity to function in both Life and General insurance segments.

•Foreign companies to be allowed only in combination with an Indian partner.

•Changed to be made to the insurance Act.

•An independent insurance regulatory authority to be set up.

Max Newyork-Financial advice to investors

Buying the right insurance product for your children can be confusing. There are large hoardings goading parents to take care of their children's future that can be compelling. In order to take care of the concern for your children's welfare, it is pertinent to know about child insurance policies. Overall, products offered by life insurance companies in India have more offerings to make and therefore have a larger share of the market size with regards to the child products market, leaving a negligible portion of the business to their mutual fund counterparts. The first step in analysing a life insurance product is to clearly understand the benefits your child gets. Traditionally, life insurance products launched by insurers where a child is insured, strictly work on the old notion of 'insurable interest.' Apparently, there exists no insurable interest, where the father is insuring his son or daughter, as the death of the child does not bring any 'financial loss' as such to the father. And lack of insurable interest makes a life insurance contract void ab initio. In other words such a contract does not hold good in the court of law.To avoid such circumstances, child life insurance products are designed in such way that they provide for the child's future.

PRIVATE PLAYERS IN THE MARKET

The new insurance companies used all channels of advertising from newspapers and the television to insurance agents and direct mailers. Most of these advertisements carried messages like the family’s happiness. It has been more than 5 years since private insurance companies’ lunched operations in India, which is depicted in the Table given below.

TABLE : PRIVATE PLAYERS IN THE INDIAN INSURANCE MARKETCompany Indian partner Foreign insurer Area

Birla Sunlife Aditya Birla Group Sunlife, Canada Life

Om Kotak Kotak Mahindra Finance Old Mutual, South Africa Life

HDFC-Standard Life HDFC Standard Life UK Life

Royal Sundaram Sundaram Finance Roya Sun, UK Life & Non life

ICICI-Prudential ICICI Prudential, UK Life

Max New York Life Max India New York Life USA Life

Tata-AIG Tata group AIG USA Life & non Life

ING Vysya Vysya Bank ING Insurance, Netherlands Life

Aviva Dabur CGU life, UK Life

Metlife India Jammu & Kashmir Bank Metlife, USA Life

Bajaj Allianz Bajaj Auto Allianz Life & non Life

AMP Sanmar Sanmar Group AMP, Australia Life

SBI Life Insurance SBI Cardiff, Frnce Life

RESEARCH METHODLOGY

DATA COLLECTION TOOLS •QUESTIONNAIRE•A questionnaire is a structured technique for data collection consisting of a series of question, written or verbal, to which a respondent replies , is interpret as questionnaire.

•MODE OF DATA COLLECTION

The data has been collected through filling up of the questionnaire from different company’s managers and financial consultants and interviewing them about their various options of investments.

Primary data collected from these managers and financial consultants only. This is first hand data. This is gauged by personally conducting interviews, observation and by means of questionnaire.

COMPANY PROFILE

COMPANY PROFILE OF MAX NEWYORK LIFE INSURANCEMax New York Life Insurance Company Ltd. is a joint venture between New York Life, a Fortune 100 company and Max India Limited, one of India's leading multi-business corporations. The company has positioned itself on the quality platform. In line with its vision to be the most admired life insurance company in India, it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business.

VISION & MISSION

Vision To become the most admired life insurance company in India. Mission •Become one of the top quartile life insurance companies in India •Be a national player •Be the brand of first choice •Be the employer of choice •Become principal of choice for agents Values This vision to become India's most admired life insurance company will be realized through our unique set of values, which are as follows: Knowledge Knowledge leads to expertise; and our expertise is in helping people protect themselves. Perfectly combining global expertise with local knowledge, we are India's life insurance specialist. Max New York Life believes that for knowledge to be of value it must be focused, current, tested and shared.

•Corporate Responsibility At Max

The company donates a part of the total money collected on all policies sold, to SOS Children's Villages of India at the end of the year.

Max New York Life has been instrumental in changing the paradigm of life insurance in India. It is the first life insurance company in India to introduce cause related marketing.

LEVEL TERM PLAN

Level Term Plan provides you with an insurance cover during the tenure of the policy. KEY BENEFITS On death of life insured: Sum Assured Tax benefits: You are entitled to the following tax benefits under Income Tax Act 1961: Your premiums are eligible for deduction u/s 80C up to Rs.100,000/- every year. Your DD rider premiums are eligible for an additional deduction u/s 80D up to Rs.10,000/- every year.

Customize your policy to meet your specific needs:

We offer you the flexibility to enhance the value of your policy by using the following riders/options: Dread Disease (DD) Rider: Pays a lump sum amount in case you contract any of the ten diseases covered e.g. Heart Attack, Cancer, etc.

CHILDREN PLANS

Children's Endowment 18 & 24 Policy enables you to provide for specific needs of your growing children viz Child Endowment to Age 18 enables you to provide for higher education of your child. Child Endowment to Age 24 enables you to provide for the best possible wedding of your child and also builds cash value, which you can use during to fund any unforeseen needs by taking a loan. In addition this policy is also eligible for bonuses. KEY BENEFITS On death of life insured: Refund of premiums plus interest. On Maturity: Sum Assured. On Surrender of Policy: Surrender value. Bonus: From 3rd policy year, we will declare bonuses every year

STEPPING STONES™ CHILD MONEY BACK PLAN (PARTICIPATING) POLICY

Stepping Stones™ Child Money Back Plan (Participating) Policy is a smart way to plan for and secure your child's future irrespective of whether you are there or not. It provides you with regular money when it is required. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs by surrendering accumulated PUAs (explained below). In addition this policy is also eligible for bonuses. KEY BENEFITS On death of life insured: Sum Assured along with additional insurance coverage purchased in way of bonuses. Five years before maturity 30% of Sum Assured, Two years before maturity – 35% of Sum Assured, at maturity – 35% of Sum Assured plus 30% of Guaranteed Sum Assured. On Survival / maturity: Five years before maturity 30% of Sum Assured, Two years before maturity – 35% of Sum Assured, at maturity

SAVINGS PLANS

Life Gain™ Endowment Policy provides you with an insurance cover that is guaranteed during the tenure of the policy. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses. KEY BENEFITS On death of life insured: Sum Assured plus accured bonus On maturity: Sum Assured plus Guaranteed Addition @ 10% of Sum Assured plus accrued bonus plus terminal bonus (if any). On Surrender of Policy: Surrender value.

ULIP PLANS

A Winning Plan From Every DirectionThe journey of life is full of wonderful dreams. To make them come true, your need for protection, investment, and financial liquidity keeps changing at different stages of life. The birth of a child will require you to increase your insurance cover; a marriage in the family will require additional money. Similarly on a promotion you may want to increase your investments, to create a large kitty for future expenses. Usually you would require multiple financial products to meet all your needs and would have to actively manage them. However with the Life Maker™ Unit Linked Investment Plan you can meet all your financial needs, without the tedium of managing multiple products. How does the Life Maker™ Unit Linked Investment Plan work?In the Life Maker™ unit linked plan; the premiums you pay are invested in funds offered by us. You will determine the appropriate ratio of investments into these funds in consultation with your Agent Advisor. These funds are invested in assets such as equities, money market instruments, investment grade corporate bonds, and government securities

LIFE MAKER PENSION PLAN

The Life Maker™ Pension Plan is a comprehensive investment linked pension plan to meet your post retirement financial needs, ensuring you complete peace of mind. In this pension plan, you can invest your premium moneys in our investment funds that offer investments of different types; with different combinations of debt and equity assets ranging from potentially high risk - high returns to potentially low risk - low returns to match your risk taking appetite.

HOW DOES THE PLAN WORK? Life Maker™ Pension Plan is the accumulation part of our deferred annuity plan. Our deferred annuity plan has two parts: a deferment period (during which you accumulate your savings) and a payout phase (during which you use these accumulations to buy an annuity from a life insurance company). This product covers the accumulation part, and our Immediate Annuity product covers the payout phase, which you can subscribe to by using the maturity value of this Plan.

DATA ANALYSIS

Max Newyork Life Insurance

Emp. (Pvt.sector)

62%

Emp. (Pubic.sector)

18%

Self - employed14%

others.6%

Comparision of the distribution of occupation of the respondents

Analysis18 respondents belonged to the employee in the private sector, 62 belong to the employee in the private sector, 14 are self employed and 6 are in the other category. The average score received was calculated by adding the score given by each respondent divided by the total number of respondent. Also it was noted that in case of LIC there were total of 13 respondents who give rating of 5 or less than 5 but the same in case of Max Newyork Life Insurance were only 3.

Advt. Frends DSAs

Max Newyork Life

Insurance

34 4 26

Inference – It is inferred that though the difference between the average score obtained on the satisfaction of financial needs is not much, the customers of Max Newyork Life Insurance seemed to be satisfied

Comparison of the effectiveness of means of communication

05

101520253035

Advt. Frends DSAs

Max Newyork LifeInsurance

Max Newyork Life Insurance

Analysis – In the above figure all the respondents marked more than one option given in the questionnaire advertisements in print media, television, radio etc, and 11 responses went in favor of word of mouth communication through friends and relatives. Of the total respondents of Max Newyork Life Insurance, 34 responses went in favor of advertisements, 26 went in favour of DSAs, and only 4 went in favor of friends and relatives.

Inference – Any specific inference cannot be drawn from this information, but still word of mouth communication plays a great role in case of life insurance policies and Max Newyork Life Insurance life insurance is quite lagging behind in this area. Comparision of incentive schemes

0

5

10

15

20

25

30

Highsatisfied

Moderate Highlyunsatisfied

LIC

LIC HDFC Standard Life Insurance

Analysis – Of the total respondents of LIC (as shown in figure 4.10), 28 responded that they are very much satisfied with the incentive schemes associated with their policies, 7 were only satisfied with the incentive scheme, 9 were moderate with regards to the incentive scheme and 6 people were either unsatisfied or highly unsatisfied with the incentive schemes. However, of the total respondents of the Max Newyork Life Insurance, 24 were highly satisfied with the incentive scheme associated with their life policy while only 6 people were highly unsatisfied with regards to the same.Inference – The customers of both the organizations hold positive perception towards the incentive provided by them. This is very well visible from the total numbers of “highly satisfied” and “satisfied” category, wherein close to 70% of the customer interviewed for both the organizations have responded in these categories

SWOT ANALYSIS

Strengths

Right products, quality and reliability.

Superior product performance vs. competitors.

Brand Image

Products have required accreditations.

High degree of customer satisfaction.

Weaknesses

Not very popular in the international market

Customer service staff need training.

Processes and systems, etc

Management cover insufficient.

Opportunities

Profit margins will be good.

Could extend to overseas.

Could seek better supplier deals.

An applied research centre to create opportunities for developing techniques to provide added-value services

Threats

Vulnerable to reactive attack by major competitors.

Lack of infrastructure in rural areas could constrain investment.

High volume/low cost market is intensely competitive.

FINDINGS AND INTERPRETATION

1). Are you interested in products offered by the Max Newyork Life Insurance? ` Yes 61% No 22% Will think 17%

61%22%

17%

Yes

No

Will think

INTERPRETATIONThe good thing is that at least the corporates were quite eager to find out what Max Newyork Life Insurance has to offer whereas the major 39 % of the corporates were not even interested in the products as they are quite satisfied by the LIC and they are not in breaking their long relationship with them. The private players will have to play a long battle in order to ensure that they are serious player in the market. Basically corporates think that its too early to invest in private companies as they have just entered the scene and they are unsure of the security they will have about their investment.

95%

5%

0%

20%

40%

60%

80%

100%

Yes No

Column 1

2). Are you satisfied with your present insurer? YES 95% No 5% INTERPRETATIONHere is where the challenge is. Inevitably most of the players are very satisfied with their present insurer which makes it more tough for the private players to attract the corporates. The remaining 5 % are also not very dissatisfied by the services but they are just open to new avenues and are looking forward that private companies come with good offers so that they may shift to them. Thus private players will have to be very proactive and in this regard since LIC is the leader and Max Newyork Life Insurance is lagging behind its competitors in terms of competition.

3). Where would you like to insure if given chance? LIC - 60ICICI - 10MAX NEWYORK - 15TATA AIG - 9SBI - 8KOTAK MAHINDRA - 2

60

8 9 10 152

0

20

40

60

LIC TATA AIG MAX

3-D Column 1

INTERPRETATIONThus we see that the companies are comfortable in having business with govt. owned companies as they feel its safe & secure to have business with them which is followed by Max Newyork and then followed by ICICI & TATA AIG as the name TATA is associated with it which commands huge premium in the market

4). What is people’s main concern while taking a insurance policy?1)Security 70%2)Returns 10%

3) Tax rebate 20%

TAX REBATE

20%

SAVINGS70%

SECURITY10%

TAX REBATE

SAVINGS

SECURITY

INTERPRETATION: People invest in insurance mainly because of security concern

5). Please express your opinion for the premiums paid for the above policy?

Very High, 40%

High, 30%

Moderate , 11%

Low, 10%

Very Low, 9%

Very High

High

Moderate

Low

Very Low

INTERPRETATION: Here we found that 40%people are very highly satisfied ,30% of people are highly satisfied,11% are moderate ,10% of people are low satisfied,9% are very low satisfied

RECOMMENDATIONS

I. More emphasis should be on promotional activities.

II. Plenty of advertisement should be done through T.V, Newspaper and Radio as these media’s are having maximum recall value.

III. Total financial planning and advice should be given to every customer.

IV. More business opportunity seminars should be conducted to make people aware of the offer given.

V. The company should quite frequently send their agent to the customer so that they should be aware of the latest offer.

VI. The company should attempt to open more and more of its branches in the country so as to promote their product publicity.

LIMITATIONS

I. The geographical area was very much limited to residential area & so the results are not particularly reflection of the current behavior.

II. Biases and non-cooperation of the respondents.

III. Due to limited time period and constrained working hours for most of the respondents, the answers at times were vague enough to be ignored.

IV. Most of the people in India take their policies in the period preceding March(for tax saving purposes) & so the response to initial contacts were not all encouraging and that has been the primary reason in the inability to quantify the results large enough so as to deduce any relevant outcomes.

V. People are not interested in giving personal opinion.

CONCLUSION

I. LIC enjoys credibility over other private players in the industry

II. People look for security over returns in market insurance plans

III. Lifetime is the most popular product among the people who are aware about Max Newyork Life Insurance Products.

IV. People are now showing more interest in ULIP as compared to some of the traditional plans.

V. Max Newyork Life Insurance has to counter the distribution network of LIC

VI. The product profile of Max Newyork Life Insurance is not very comprehensive

BIBLIOGRAPHY

Websites

http://www.maxlifeinsurance.comhttp:// www.standardlife.comhttp://www.hdfc.comhttp://www.sebi.comhttp://www.nse..com

Magazines

Mehra,Puja, “India Today (27th MAY’2006) – PAGE 43Sinha, Prabhakar, “The Times Of India” (16thMAY’2006) – PAGE 1“Brunch”(16th july 2006)