shriram life insurance
TRANSCRIPT
A COMPREHENSIVE PROJECT REPORT A COMPREHENSIVE PROJECT REPORT
ONON
““Factors Affecting Consumer Purchase Decision of Laptops”
Prepared By Prepared By
Anil Rukeja (097440592016) & Umesh Thawani (097440592035)
M.B.A. Sem – 4 Marketing
Academic Year Academic Year
2009 - 2011
Submitted ToSubmitted To
Gujarat technological University
Submitted ForSubmitted For
Partial fulfillment for the award of the
Master in Business Administration (MBA)
Guided By Guided By
Mr Nilesh Limbasiya
R K COLLEGE OF BUSINESS MANAGEMENT (RKCBM)
Affiliated with Gujarat Technological University - MBA ProgramRecognized by All India Council for Technical Education (AICTE) Kasturbadham,
Rajkot-Bhavnagar Highway, Rajkot-360020
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DECLARATION
We, ANIL C. RUKEJA & UMESH THAWANI, student of R.K. COLLEGE OF BUSINESS
MANAGEMENT, RAJKOT hereby declare that the project work presented in this report is my
own work and has been accomplished under the supervision of Mr. NILESH LIMBASIA of
M.B.A. DEPARTMENT, R.K. COLLEGE OF BUSINESS MANAGEMENT, Gujarat
Technological University.
The report has not been previously submitted to any other university for any other examination.
DATE:
PLACE:
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PREFACE
A man without practical knowledge is just like a rough diamond. To shine like a real diamond
one must have practical exposure of what he has learnt. For the students of management
theoretical knowledge is just like lock without key so practical knowledge is of so much
important.
It is quite true that world outside; your cozy home is many times quite different from what you
have perceived. Similarly it is possible that theoretical knowledge acquired in the classroom may
differ from the practical knowledge.
Practical knowledge is the best experience and on this basis, we can easily understand about
what they want to say. Firstly each student knows about the theory, so that on the basis of
theory, he can easily learn how to do the work and what is the best way to achieve satisfaction.
That is why we can say that theory is guidelines for practical.
As a curriculum part of course of M.B.A., I have taken my practical training and conducted a
research project at SHRIRAM LIFE INSURANCE CO. LTD.
It is my pleasure to present this project work after I had finished my 45 days of training at
SHRIRAM LIFE INSURANCE CO. LTD. This training has expanded my horizon of
knowledge in practical as well as theoretical, which is vital for student in management level
studies. Only the basic understanding of the principles of management is not sufficient but their
application is also equally important.
Such type of training promotes a student to boost his potentialities and the inner qualities and
thereby students come to know about how the theoretical knowledge works in actual sense in any
unit. And this has indeed proved to be very useful to students.
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ACKNOWLEDGEMENT
I am heartily thankful to Shriram Life Insurance Co Ltd., which gave me an opportunity to
take training in the company.
I am also very thankful to Mr. Prashant Namdeo Regional Manager, Rajkot, and Mr. Mehul
Dodiya for their kind support and valuable guidance.
I am also thankful to my professors and especially to my project guide Ms. Varsha Virani She
had guided me a lot during the summer training and also to Director of R.K College of Business
management Dr. N.M.Khandelwaal.
At last, I am grateful to all those respondents without whose co-operation my research would
have not been completed.
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EXECUTIVE SUMMARY
I feel pleasure to present this project report as a part of curriculum of M.B.A. course. The
objective of this research project is to know the consumer awareness of Shriram Life Insurance
Company Ltd. This research project with Shriram Life has been very informative and
inspirational.
For this project the random respondents are taken various areas of Rajkot. I had to meet them and
to collect information through structured questionnaire by taking interview of responsible person
in the respondent companies. I visited 50respondents of Rajkot and gathered information about
this project.
Consumer awareness of Shriram Life is present among the people of Rajkot. However it is quite
lower than the public sector general insurance companies.
From this research project the awareness level of consumer about Shriram Life Insurance is
known which would be helpful to the company
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INDEX
No Content Page No1 OVERVIEW OF INDUSTRY1.1 History of insurance 81.2 Introduction to Insurance Sector 111.3 Reforms of Insurance Sector 131.4 What is Insurance? 151.5 Functions of Insurance 161.6 Life Insurance 191.7 Life Insurance Scenario In India 231.8 Current Status 251.9 Insurance Regulatory Authority 272 COMPANY INFORMATION2.1 Introduction to Shriram Life Insurance 302.2 Joint Venture with Sanlam Group 312.3 Vision of the Company 322.4 Functional Departments2.4.1 Finance Department 332.4.2 Marketing Department 352.4.3 Human Resource Department 372.5 Products 412.6 Major Players In Life Insurance 432.7 SWOT Analysis 443 RESEARCH METHODOLOGY3.1 Introduction to Research Topic 463.2 Research Problem 473.3 Literature Review 483.4 Rationale of the Study 503.5 Hypothesis 513.6 Source of Data 513.7 Research Instrument 513.8 Sampling Process 513.9 Scope of the Study 523.10 Limitation 524 RESULTS AND INTERPRETATION 535.1 FINDING AND RECOMMENDATIONS 695.2 CONCLUSION 716 LEARNING FROM SIP 73
Bibliography 75AppendixQuestionnaire 77
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OVERVIEW OF INDUSTRY
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HISTORY OF INSURANCE
Insurance has been around since ancient times. The Babylonians and Phoenicians had ocean
marine insurance to protect a merchant against losses incurred when a ship did not reach its
intended destination with its load of goods or did not return with payment. This form of
insurance, called Respondentia, evolved because the goods on board often were used as
collateral for a loan. The lender charged the borrower interest on the loan and levied an
additional sum, the premium, to cover the cost of the respondentia contract. If the ship reached
its destination and returned, the merchant received payment for the goods and in turn paid the
moneylender. If the ship failed to return, the debt was cancelled. This system was profitable to
lenders because many respondentia contracts were sold, and debts were paid more often than
cancelled. In ancient Rome, associations had a form of insurance for their members. Each
member made regular payments to the association in return for coverage of funeral expenses or
for assistance to family members who were injured or ill.
Insurance also existed in 17th-century England, which was then one of the world's principal
maritime powers. Those seeking marine insurance would post a list of their cargo and voyages in
a London coffee house owned by Edward Lloyd. Private investors would examine the list and
sign their name by the entries they were willing to guarantee for a fee. These private investors
were the first insurance underwriters, and the coffee house became the world center of marine
insurance. Today the organization is known as Lloyds of London, and it brings together
individuals, most often working in syndicates, who write all types of insurance.
Insurance in the modern form originated in the Mediterranean during 14th century. The earliest
references to insurance have been found in Babylonia, the Greeks and the Romans. The use of
insurance appeared in the account of North Italian merchant banks who then dominated the
international trade in Europe at that time. Marine insurance is the oldest form of insurance
followed by life insurance and fire insurance. The patterns that have been used in England
followed in other countries also in these kinds of insurance
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The oldest and the earliest records of marine policy relates to a Mediterranean voyage in 1347. In
the year 1400, a book written by a merchant of Florence, indicates premium rates charged for the
shipments by sea from London to Pisa. Marine Insurance spread from Italy to trading routes in
other countries of Europe.
Fire insurance has its origin in Germany where it was introduced in municipalities for providing
compensation to owners of the property, in return for an annual contribution, based on the rent of
those premises. The fire insurance in its present form started after the most disastrous fire in
human history known as the 'Great Fire' in London, which had destroyed several buildings. It
drew the attention of the public and the first fire insurance commercially transacted in 1667. The
Industrial Revolution (1720-1850) gave much impetus to fire insurance. The Nineteenth century
marked the development of fire insurance.
Due to the increasing demands of the time, different forms of insurance have been developed.
Industrial Revolution of 19th century had facilitated the development of accidental insurance,
theft and dacoits, fidelity insurance, etc. In 20th century, many types of social insurance started
operating, viz., unemployment insurance, crop insurance, cattle insurance, etc. This way the
business of insurance developed simultaneously with human and social development. Today, the
use of computers in the field of insurance is frequently increasing. Insurance becomes an
inseparable part of human development.
The early developments of life insurance were closely linked with that of marine insurance. The
first insurers of life were the marine insurance underwriters who started issuing life insurance
policies on the life of master and crew of the ship, and the merchants. The early insurance
contracts took the nature of policies for a short period only. The underwriters issued annuities
and pension for a fixed period or for life to provide relief to widows on the death of their
husbands. The first life insurance policy was issued on 18th June 1583, on the life of William
Gibbons for a period of 12 months.
The history of life insurance in India dates back to 1818 when it was conceived as a means to
provide for English Widows. Interestingly in those days a higher premium was charged for
Indian lives than the non-Indian lives as Indian lives were considered more riskier for coverage. 10
The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company
to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company
was established in 1880. The first general insurance company- Tital Insurance Company Limited
was established in 1850. Till the end of nineteenth century insurance business was almost
entirely in the hands of overseas companies.
Insurance regulation formally began in India with the passing of the Life Insurance Companies
Act of 1912 and the Provident Fund Act of 1912. Several frauds during 20's and 30's sullied
insurance business in India. By 1938 there were 176 insurance companies. The first
comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict
State Control over insurance business. The insurance business grew at a faster pace after
independence. Indian companies strengthened their hold on this business but despite the growth
that was witnessed, insurance remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life insurers and provident
societies under one nationalized monopoly corporation and LIC was born. Nationalization was
justified on the grounds that it would create much needed funds for rapid industrialization. This
was in conformity with the Government's chosen path of State- led planning and development.
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INTRODUCTION TO INSURANCE SECTOR
The insurance sector in India has come 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 190 years. 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 Calcutta.
Some of the important milestones in the life insurance business in India are:
1912– The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.
1928 – The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938 – Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.
1956 – 245 Indian and foreign insurers and provident societies taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956,
with a capital contribution of Rs. 5 crores from the Government of India.
The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British.
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Some of the important milestones in the general insurance business in India are:
1907 – The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.
1957 – General Insurance Council, a wing of the Insurance Association of India, frames a
code of conduct for ensuring fair conduct and sound business practices.
1968 – The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.
1972 –The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies’ viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd.
and the United India Insurance Company Ltd. GIC incorporated as a company.
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REFORMS OF INSURANCE SECTOR
In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor R.N.
Malhotra was formed to evaluate the Indian insurance industry and recommend its future
direction.
The Malhotra committee was set up with the objective of complementing the reforms initiated in
the financial sector. The reforms were aimed at "creating a more efficient and competitive
financial system suitable for the requirements of the economy keeping in mind the structural
changes currently underway and recognizing that insurance is an important part of the overall
financial system where it was necessary to address the need for similar reforms…"
In 1994, the committee submitted the report and some of the key recommendations included:
1 STRUCTURE :
Government stake in the insurance Companies to be brought down to 50% Government should
take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as
independent corporations. All the insurance companies should be given greater freedom to
operate
2 COMPETITION:
Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the
industry No Company should deal in both Life and General Insurance through a single entity.
Foreign companies may be allowed to enter the industry in collaboration with the domestic
companies Postal Life Insurance should be allowed to operate in the rural market. Only One
State Level Life Insurance Company should be allowed to operate in each state.
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3 REGULATORY BODY :
The Insurance Act should be changed An Insurance Regulatory body should be set up Controller
of Insurance (Currently a part from the Finance Ministry) should be made independent
4 INVESTMENTS :
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to
50% GIC and its subsidiaries are not to hold more than 5% in any company (There current
holdings to be brought down to this level over a period of time)
5 CUSTOMER SERVICE :
LIC should pay interest on delays in payments beyond 30 days Insurance companies must be
encouraged to set up unit linked pension plans. Computerization of operations and updating of
technology to be carried out in the insurance industry The committee emphasized that in order to
improve the customer services and increase the coverage of the insurance industry should be
opened up to competition.
But at the same time, the committee felt the need to exercise caution as any failure on the part of
new players could ruin the public confidence in the industry. Hence, it was decided to allow
competition in a limited way by stipulating the minimum capital requirement of Rs.100 crores.
The committee felt the need to provide greater autonomy to insurance companies in order to
improve their performance and enable them to act as independent companies with economic
motives. For this purpose, it had proposed setting up an independent regulatory body.
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WHAT IS INSURANCE?
Insurance is a contract that provides compensation for specific losses in exchange for a periodic
payment. An individual contract is known as an insurance policy and the periodic payment is
known as the insurance premium. Insurance provides a mechanism for shifting risk from a
person, business, or organization to an insurance company in exchange for the payment of the
insurance premium.
There are many types of insurance and our guide provides information about the most common
types. The most important ones for most individuals are health insurance, life insurance, and auto
insurance. Health insurance provides protection against sickness and bodily injury. Auto
insurance provides can pay for injuries or damage resulting from an auto accident or when an
auto is vandalized or stolen. Life insurance makes a payment to your beneficiaries in the event of
your death.
Life insurance pays a specified sum to the beneficiaries upon the death of the insured. It is
generally used to provide cash to your family in the event of your death. There are several types
of life insurance policies. The most common types are whole life insurance and term life
insurance. Whole life insurance provides a lifetime of protection as long as you pay the
premiums to keep the policy active.
They also accrue a cash value and thus offer a savings component. Term life insurance
provides protection only during the term of the policy and the policies are usually renewable at
the end of the term.
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FUNCTIONS OF INSURANCE
The functions of Insurance can be bifurcated into two parts:
1. Primary Functions
2. Secondary Functions
3. Other Functions
The PRIMARY FUNCTIONS of insurance include the following:
Provide Protection
The primary function of insurance is to provide protection against future risk, accidents
and uncertainty. Insurance cannot check the happening of the risk, but can certainly
provide for the losses of risk. Insurance is actually a protection against economic loss, by
sharing the risk with others.
Collective bearing of risk
Insurance is a device to share the financial loss of few among many others. Insurance is a
mean by which few losses are shared among larger number of people. All the insured
contribute the premiums towards a fund and out of which the persons exposed to a
particular risk is paid.
Assessment of risk
Insurance determines the probable volume of risk by evaluating various factors that give
rise to risk. Risk is the basis for determining the premium rate also.
Provide Certainty
Insurance is a device, which helps to change from uncertainty to certainty. Insurance is
device whereby the uncertain risks may be made more certain.
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The SECONDARY FUNCTIONS of insurance includes the following:
Prevention of Losses
Insurance cautions individuals and businessmen to adopt suitable device to prevent
unfortunate consequences of risk by observing safety instructions; installation of
automatic sparkler or alarm systems, etc. Prevention of losses cause lesser payment to the
assured by the insurer and this will encourage for more savings by way of premium.
Reduced rate of premiums stimulate for more business and better protection to the
insured.
Small capital to cover larger risks
Insurance relieves the businessmen from security investments, by paying small amount of
premium against larger risks and uncertainty.
Contributes towards the development of larger industries
Insurance provides development opportunity to those larger industries having more risks
in their setting up. Even the financial institutions may be prepared to give credit to sick
industrial units which have insured their assets including plant and machinery.
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The OTHER FUNCTIONS of insurance include the following:
Means of savings and investment
Insurance serves as savings and investment, insurance is a compulsory way of savings
and it restricts the unnecessary expenses by the insured's For the purpose of availing
income-tax exemptions also, people invest in insurance.
.
Source of earning foreign exchange
Insurance is an international business. The country can earn foreign exchange by way of
issue of marine insurance policies and various other ways.
Risk Free trade
Insurance promotes exports insurance, which makes the foreign trade risk free with the
help of different types of policies under marine insurance cover.
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LIFE INSURANCE
Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured
covered in the policy. Essentially, a life insurance policy is a contract between the named insured
and the insurance company wherein the insurance company agrees to pay an agreed upon sum of
money to the insured's named beneficiary so long as the insured's premiums are current.
Life insurance is a guarantee that your family will receive financial support, even in your
absence. Put simply, life insurance provides your family with a sum of money should something
happen to you. It thus permanently protects your family from financial crises.
In addition to serving as a protective cover, life insurance acts as a flexible money-saving
scheme, which empowers you to accumulate wealth-to buy a new car, get your children married
and even retire comfortably.
Usually the insurance contract provides for the payment of an amount on the date of maturity or
at specified dates at periodic intervals or at unfortunate death if it occurs earlier. Obviously, there
is a price to be paid for this benefit. Among other things, the contract also provides for the
payment of premiums by the assured. Life Insurance is universally acknowledged as a tool to
eliminate risk, substitute certainty for uncertainty and ensure timely aid of the family in the
unfortunate event of the death of the breadwinner. In other words, it is the civilized world's
partial solution to the problems caused by death.
In a nutshell, life insurance helps in two ways: premature death, which leaves dependent families
to feed for itself and old age without visible means of support.
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TYPES OF LIFE INSURANCE
Whole Life Insurance
Whole life insurance, also known as traditional, straight, or permanent life insurance is a policy
that is kept in force for a person's whole life as long as the scheduled Premiums are paid. Whole
insurance policies can be a great value because they accrue cash value--you get savings as well
as insurance. Some even pay a dividend which depending on how well the insurance is doing. If
the company is doing well then the premiums are paid backto the policyholder in the form of
dividends. The policyholder can use the dividend to offset his premiums, to purchase more
insurance, or to purchase additional term life insurance.
Term Life Insurance
Term life insurance is a low-cost form of life insurance that covers the insured for only a certain
period of time (the term), not for his entire life. If the insured dies during the coverage period,
the beneficiary receives the death benefit. If the insured survives the time period, the policy
expires and no benefit is paid.
Term life insurance is best when coverage is only needed for a certain period of time or the
short-term cost is the most important factor. In early years, term life insurance costs significantly
less than whole life or other types of policies. It becomes increasingly expensive, as the insured
grows older.
Based on a "risk profile" created by the insurance company, you will be offered an insurance
"premium" (monthly or yearly cost) for the amount of life insurance coverage you request. This
risk profile takes into consideration a number of factors (including your age, weight, gender,
personal health history, family health history, smoking/drinking habits, where you live, and
various other aspects about your life like your marital status). Like other forms of insurance,
saving money on Life Insurance is really just about shopping around for the best quote (since
different companies have different opinions on risk profiles).
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BENEFITS OF LIFE INSURANCE
Superior to Any Other Savings Plan
Unlike any other savings plan, a life insurance policy affords full protection against risk
of death. In the event of death of a policyholder, the insurance company makes available
the full sum assured to the policyholders' near and dear ones. In comparison, any other
savings plan would amount to the total savings accumulated till date. If the death occurs
prematurely, such savings can be much lesser than the sum assured. Evidently, the
potential financial loss to the family of the policyholder is sizable.
Encourages and Forces Thrift
A savings deposit can easily be withdrawn. The payment of life insurance premiums,
however, is considered sacrosanct and is viewed with the same seriousness as the
payment of interest on a mortgage. Thus, a life insurance policy in effect brings about
compulsory savings.
Easy Settlement and Protection against Creditors
A life insurance policy is the only financial instrument the proceeds of which can be
protected against the claims of a creditor of the assured by effecting a valid assignment of
the policy.
Administering the Legacy for Beneficiaries
Speculative or unwise expenses can quickly cause the proceeds to be squandered. Several
policies have foreseen this possibility and provide for payments over a period of years or
in a combination of installments and lump sum amounts.
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Ready Marketability and Suitability for Quick Borrowing
A life insurance policy can, after a certain time period (generally three years), be
surrendered for a cash value. The policy is also acceptable as a security for a commercial
loan, for example, a student loan. It is particularly advisable for housing loans when an
acceptable LIC policy may also cause the lending institution to give loan at lower interest
rates.
Disability Benefits
Death is not the only hazard that is insured; many polices also include disability benefits.
Typically, these provide for waiver of future premiums and payment of monthly
installments spread over certain time period.
Accidental Death Benefits
Many policies can also provide for an extra sum to be paid (typically equal to the sum
assured) if death occurs as a result of accident.
Tax Relief
Under the Indian Income Tax Act, the following tax relief is available
a) 20 % of the premium paid can be deducted from your total income tax liability.
b) 100 % of the premium paid is deductible from your total taxable income. When these
benefits are factored in, it is found that most polices offer returns that are comparable/ or
even better than other saving modes such as PPF, NSC etc. Moreover, the cost of
insurance is a very negligible.
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LIFE INSURANCE SCENARIO IN INDIA
Life Insurance in its existing form came to India from the United Kingdom with the
establishment of a British firm Oriental Life Insurance Company in Calcutta in 1818 followed by
Bombay Life Assurance Company in 1823.
The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life
insurance business. Later in 1928 the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life insurance business
transacted in India by Indian and foreign insurers including provident insurance societies. In
1938 with a view to protecting the interest of insuring public earlier legislation was consolidated
and amended by the Insurance Act 1938 with comprehensive provisions detailed and effective
control over the activities of insurers.
The Act was amended in 1950 resulting in far reaching changes in the insurance sector. These
included a statutory requirement of equity capital for companies carrying on life insurance
business, ceiling on share holdings in such companies, stricter control on investments,
submission of periodical returns relating to investments and such other information to the
controller. The controller could also call for appointment of administrators and put a ceiling on
expenses of management and agency commission for mismanaged companies.
By 1956, 154 Indian insurers, 16 foreign insurers and 75 provident societies were carrying on
life insurance business in India. Life insurance business was concentrated in urban areas and
confined to the higher strata of the society. On January 19, 1956, the management of life
insurance business of 245 Indian and foreign insurers and provident societies then operating in
India was taken over by the Central Government. ‘Life Insurance Corporation’ was formed in
September 1956 by an Act of Parliament, viz. LIC Act 1956 with a capital contribution of Rs.50
mn.
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The then Finance Minister Mr. C. D. Deshmukh while piloting the bill for nationalization
outlined the objectives of LIC thus:
"To conduct the business with utmost economy with the spirit of trusteeship; to charge premium
no higher than warranted by strict actuarial considerations; to invest the funds for obtaining
maximum yield for the policy holders consistent with safety of capital; to render prompt and
efficient service to policy holders thereby making Insurance widely popular."
Since 1956, with the nationalization of insurance industry, the state-run Life Insurance
Corporation of India (LIC) has held the monopoly in that country's life insurance sector. General
Insurance Corporation of India (GIC), with its four subsidiaries, was its counterpart in the
casualty sector. Over time, taking advantage of its monopoly and virtual prerogative in
establishing premiums, LIC has evolved into a monolith. With around 600,000 agents in every
nook and corner of the vast country, it has created an enviable brand name, particularly among
the rural population of the country. It has around $40 billion as its life fund and is a strong player
in the financial sector. With a huge unionized, rigid workforce mostly in the clerical category,
LIC runs the risk of high fixed cost, which will be the deciding factor in productivity in the
competitive scenario. The new players, with the state-of-the-art technology under their belt, will
be in an advantageous position. 80% of LIC's business is procured by 20% of its ill-trained agent
force.
The well-publicized failures of world famous consumer goods companies like Electrolux,
Whirlpool, Reebok, Nike etc. to gauge the Indian psyche and sentiments demonstrate the
concept. They failed in the areas of realistic pricing, product promotion and reaching to the
consumer. The foreign companies need to know the "ground realities" to the details. Today the
Life Insurance Corporation of India has 2046 branches. It is made up of 100 divisions, which are
divided, into 7 zones. There are 558,000 LIC agents in the country.
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CURRENT STATUS
The IRDA bill had been introduced in the Lok Sabha during the Vajpayee government’s last
tenure with the expected mixed reactions. Surprisingly, the Congress chose to keep mum on the
issue. The left parties staged a walkout registering strong protest. While the eager international
and domestic players have to continue waiting in the wings for the curtains to rise, the
government has made another landmark announcement. It is expected to be introduced again
during the ongoing winter session of the parliament The Banking Regulation Act is to be
modified to allow banks to become active players in the insurance sector. This comes as a major
move and a precursor to the sweeping insurance reforms that have been opposed by the swadeshi
bandwagon and the various labour unions operating in the insurance sector.
The takeout of the amendment made to Section 6 (0) of the Banking Regulation Act, 1949 is this:
The current act does not permit banks to handle insurance products. The proposed change will
permit banks to either distribute or to market insurance products. In addition to this, banks will
also be allowed entry to the insurance sector through the joint venture route and bank assurance.
It is understood that only strong banks with three-year track records will be allowed to enter the
business - entry is a strict no-no to the weaker banks. The Insurance Regulatory and
Development Authority (IRDA) Bill provides for three levels of players - An Insurance
Company, Insurance Broker and an Agent. Banks will work as agents and brokers in this
proposed structure.
This is an attempt to make the insurance sector more dynamic - this is likely to happen as banks
will use their formidable branch network to market and distribute the insurance products. This
amendment could also forge alliances in the banking sector. Initial reports indicate that the State
Bank of India and Bank of Baroda have expressed interest in entering into joint ventures. ING
Barings, who already has a 20%, stake in Vysya Bank, plans to broad base its alliance to add on
insurance-based activities.
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This could be a timely move - one that will allow the domestic players to prepare for the
competition ahead. It would also bring them on par with international players who are
accustomed to operate in a liberalized environment. This is also a sensible move by the
government to allay the fears of its more conservative and swadeshi-oriented allies and cement
cracks, if any have appeared, given the BJP's new pro-liberalization avataar.
A closer look at the amendment indicates that it is tantamount to creating stronger public sector
monopolies with behemoths like SBI and BOB entering the fray. It is unlikely that the private
sector banks would contemplate entering the business, as they may not have the requisite capital
to meet the prescribed capital adequacy for the insurance sector. The government may have
made a move that could be counter-productive in that the protests against entry of foreign players
will only get more vociferous and strong with many more strong arms entering the rally.
The manner and style of operations of the public sector banks leaves a lot to be desired. In an
industry where service quality at the moment of truth or the moment of service delivery is non-
existent for the public sector players, one wonders what vibrancy these players will impart to the
insurance business. The insurance agent as stereotyped currently is but the personification of a
nationalized bank. Any marketing professional and every consumer will describe such a person
as a semi-retired, balding, sloppy individual who drags his feet as he walks.
One shudders to even conjure up images of insurance marketing in a nationalized bank branch.
One has to search for a semblance of marketing in the existing set-up for student loans and
housing finance. Business school aspirants and young couples will bear witness to this fact. I
have recently been both and have strained my eyes searching for the proverbial needle in a
haystack.
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INSURANCE REGULATORY AUTHORITY
On the recommendation of Malhotra Committee, an Insurance Regulatory DevelopmentAct
(IRDA) passed by Indian Parliament in 1993. Its main aim is to activate an insurance regulatory
apparatus essential for proper monitoring and control of the Insurance industry. Due to this Act
several Indian private companies have entered into the insurance market, and some companies
have joined with foreign partners.
In this economic reform process the Insurance Companies will boost the socio-economic
development process. The huge amount of funds that will be at the disposal of Insurance
Companies will be directed as desired avenues like housing, safe drinking water, electricity,
primary education and infrastructure. The growth of the debt market will also get a boost. Above
all the policyholders will get better pricing of products from competitive insurance companies.
The Government of India (GOI) opened the insurance sector to private players on October 24,
2000, thus unraveling a new chapter in this field. This new policy of the GOI is an outcome of
India’s policy of liberalization and also the result of its obligation as a signatory to the WTO to
conform to its principles and guidelines relating to the reduction of barriers to trade in services.
This epoch-making decision has ushered in a new era that has transgressed four decades of
complete control by the public sector over the insurance sector (life insurance was nationalized
in 1956 by merging 245 private insurance companies to form the Life Insurance Corporation of
India (LIC) while general insurance was nationalized with the formation of the General
Insurance Corporation (GIC) in 1972).
This decision of the GOI has been accompanied by a set of laws and regulations governing this
domain. Accordingly, the Insurance Regulatory and Development Authority Act, 1999 (the
28
IRDA Act) was enacted with the predominant aim of setting up an autonomous body known as
the Insurance Regulatory and Development Authority (IRDA) to regulate, promote and ensure
orderly growth of the insurance industry. Further, the Insurance Act, 1938 has been significantly
amended so as to bring it in conformity with the IRDA Act.
The IRDA has a twin role, i.e., regulation as well as development of the insurance sector.
Insurance is a federal subject in India and the legislation that governs insurance in India is:
1. The Insurance Act, 1938; and
2. The IRDA Act.
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in
December 1999. The IRDA since its incorporation as a statutory body in April 2000 has
fastidiously stuck to its schedule of framing regulations and registering the private sector
insurance companies.
The other decisions taken simultaneously to provide the supporting systems to the insurance
sector and in particular the life insurance companies were the launch of the IRDA’s online
service for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured that the insurance
companies would have a trained workforce of insurance agents in place to sell their products,
which are expected to be introduced by early next year.
Since being set up as an independent statutory body the IRDA has put in a framework of globally
compatible regulations. In the private sector 12 life insurance and 6 general insurance companies
have been registered.
29
COMPANY INFORMATION
30
SHRIRAM LIFE INSURANCE CO LTD
The Shriram group is one of the largest and well respected financial services conglomerats in
India. The group’s main line of activities in financial services include, chit funds, truck
financing, consumer durable financing, stock broking, insurance broking, and life insurance. The
group has a customer base of 30 lack chit subscribers and investors and operates through a
network of 630 offices all over the country. The group has the largest agency force in the privet
sector consisting of more than 75000 loyal and dedicated agents.
Shriram Life insurance Co Ltd. was launched in January 2006. India currently accounts for 16%
of the world’s population. 70% of the populations is below 35 years of age. Between 2001 and
2006, Indian demography has changed with the higher income classes constituting about 79%.
This presents huge market for insurance products.
This is amply reflected in the growth of insurance industry in the last recent years. However this
growth has not reached to rural and semi urban areas. Shriram group with its network of
branches particularly in these areas a unique opportunity for reaching out a wider audience and
sustain the growth story of the insurance industry. Most of the products of Shriram life were
designed by advisors working in the field and based on need analysis done through intense
market research.
During the first year of operation the company earned a profit of 2 crores which doubled to 4
crores in the subsequent year. For the fiscal ended march 2009 the company earned a profit of 8
crores adding the total premium at the end of 2008-09 stood at 1000 crores. The company aims
to garner new business premium of Rs 1000 crores in the next 3-4 years. The company also
intends to increase in 100 cities in next couple of years.
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THE JOINT VENTURE
Shriram Life Insurance Company Ltd is a joint venture of Shriram group and Sanlam with South
Africa holding 26% of the stack.
Sanlam Life insurance Limited, a part of the Sanlam Group, is one of the largest providers of life
insurance in South Africa with 3.2 million individuals policies under administration
It has a significance presence across South Africa, United Kingdom and Namibia and is a major
provider of life insurance, retirement annuities, saving and investment products, personal loans,
home loans and trust services to individuals. The shareholder's funds of Sanlam Life equates to
USD 4.4 billion
.
The Sanlam Group was established in 1918 and has a leadership position in financial services in
South Africa. Demutualized in 1998, the group is listed on the JSE Securities Exchange in
Johannesburg and on the Namibian Stock Exchange. It has a current market capitalization of
USD 5.4 billion. The Sanlam Group also operates in the areas of group schemes, retirement
funds, short-term insurance, asset management and other financial services. It has employee
strength of 8,000 and has shareholder funds in excess of USD 4.6 billion. On 31st December
2004 it had more than USD 48 billion assets under management
.
32
VISION OF THE COMPANY
The Shriram Life Insurance Company is set out with the objective of reaching out to the common
man with a host of products and services that would be helpful to him in his path to prosperity.
Efficiency in operations, integrity and a strong focus on catering to the needs of the common
man, by offering him high quality and cost-effective products and services, are the values driving
the organization. These core values are deep-rooted within the organization and have been
strongly adhered to over the decades.
The company prides itself on its perfect understanding of the customer. Each product or service
is tailor-made to perfectly suit the needs of the customer. It is this guiding philosophy of putting
people first that has brought the Company closer to the grassroots and has made it the preferred
choice for all the truck financing requirements amongst the customers
33
FUNCTIONAL DEPARTMENTS
FINANCE DEPARTMENTS
Something must be direct the how of economic activity and facilities its smooth operation.
Finance is the agent that produces this result. Nature of financial management refers to its
functions, scope and objectives.
Financial management is that managerial activity which is concerned with the planning and
controlling of the firm’s financial resources. In modern times finance is the life-blood of the
business. No matter, whether the business is big or small financial is the equally important. The
financial resources must proper planned and control in order to achieve the best out of available.
So, financial resources should be very properly
Generally, financial planning means deciding in advance, the financial activities are to be carried
on to achieve the objective of the firm. In broader séance, in the words of Walker and Boughn as;
“financial planning includes the determination of firm’s financial objectives, formulating and
promulgating financial polices and developing and procedures.”
Financial planning is necessary to achieve both long term and short term objectives. A sound
financial planning includes how much need of funds for both the terms. Then from where they
are to be received and utilized.
Shriram life would evaluated different proposal placed before them and selects the best out of
them. It estimates how much capital is going to be required for various proposals and how much
is the return on the capital employed. The financial manager lays down the estimate on the
capital of cash per week, per month and per year.
34
CAPITALIZATION
At the time of incorporation of any business, it is the first problem before the promoters to decide
how much capitalization should be made in a business. The amount of capital of any time should
not exceed nor less than the amount required. So, it is necessary to have proper capitalization for
the success of the enterprise. But Gerstenberg defines it as;
“The total accounting value of all capital regularly employed in business, it includes
owner’s capital, borrowed capital and any other sources.”
Thus term includes;
1. The value of ordinary and preference shares
2. The value of all surplus earned and capital
3. The value of bonds and security still not redeemed
4. The value of long term loans
However the modern view includes short term funds or liabilities under the firm. It
should be properly capitalized.
Shriram Life Insurance issue shares. So, all these terms do apply.
FUND OPTIONS
There are six funds having different proportional investment in equity, debt, market
money and cash. The funds are Preserver, Defender, Balancer, Maximus, Accelerator, and
Tyaseer.
35
MARKETING DEPARTMENT
Traditionally, insurance products have been promoted and sold principally through agency
systems in most countries. With new developments in consumer behaviour, evolution of
technology and deregulation, new distribution channels have been developed successfully and
rapidly in recent years.
Shriram Life Insurance make use of various distribution channels:
Career Agents
Advertisements
Direct Response
Internet
The main characteristics of each of these channels are:
Career Agents: Career Agents are full-time commissioned sales personnel holding an
agency contract. They are generally considered to be independent contractors.
Consequently an insurance company can exercise control only over the activities of the
agent, which are specified in his contract. Despite this limitation on control, career agents
with suitable training, supervision and motivation can be highly productive and cost
effective. Moreover their level of customer service is usually very high due to the
renewal commissions, policy persistency bonuses, or other customer service-related
awards paid to them.
Many insurance companies, however avoid this channel, believing that agents might
oversell out of their interest in quantity and not quality. Such problems with career agents
usually arise, not due to the nature of this channel, but rather due to the use of improperly
designed remuneration and/or incentive packages.
36
Direct Response: In this channel no salesperson visits the customer to induce a sale and
no face-to-face contact between consumer and seller occurs. The consumer purchases
products directly by responding to the company's advertisement, mailing or telephone
offers. This channel can be used for simple packaged products, which can be easily
understood by the consumer without explanation.
Advertisements: This very popular medium among the entire medium any person can
see this advertisement of the products and buy the product from nearest branch.
Internet: Internet banking is already securely established as an effective and profitable
basis for conducting banking operations. The reasonable expectation is that personal
banking services will increasingly be delivered by Internet banking. Company can also
feel confident that Internet banking will also prove an efficient vehicle for cross selling of
insurance savings and protection products. It seems likely that a growing proportion of
the affluent population.
37
HUMAN RESOURCE DEPARTMENT
HUMAN RESOURCE MANAGEMENT
“Human Resource Management function that helps managers recruits select, train and develop
members for an organization. Obviously, HRM is concerned with the people’s dimension in
organizations
In all business concerns, there is one common element. i.e. HUMAN RESOURCE. Work force
of an Organization is one of the most important inputs of components. It is said that people are
our single most important assets. Because of the unique importance of HUMAN RESOURCE
and its complexity due to ever changing psychology, behavior and attitudes of men and women
at work, personnel function, i.e., manpower management function is becoming increasingly
specialized. The personnel function or system can be broadly defined as the management of
people at work- management of managers and management of workers. Personnel function is
particularly interested in personnel relationship and interaction of employees-human relations.
In a sense, management is personnel administration. Management is the development of people,
and not mere direction of material resources. Human capital is the greatest asset of a business
enterprise. The essential ingredient of management is the leadership and direction of people.
Each manager of people has to be his own personnel man. Personnel management is not
something you really turn over to personnel department staff.
38
MANPOWER PLANNING
Human Resource Planning is the process by which an organization ensures that it has the right
number and kind of people, at the right place, at the right time, capable of effectively and
efficiently competing those tasks that will help the organization achieve its overall objectives.
Human Resource Planning translates the organization’s objectives and plans into the number of
workers meet those objectives. Without a clear-cut planning, estimation of an organization’s
human resource need is reduced to mere guesswork
Manpower planning is needed with respect to persons who can work as sub-broker for the
companies. Companies focus on Advisors of Mutual Fund product and ELSS schemes of
Shriram and focused on Insurance Advisor and post office agent, Tax consultants and CAs for
making sub-broker.
Shriram Life Insurance follows the following process:
The first step is forecasting the need of man power in terms of divisions, department or
functions. Along with the estimate of the number of the people required in different departments
it is also decided that at which level they will be needed.
After estimating the man power requirement, next step is to have a look at the current human
resource. The current human resource is assessed so as to know whether the requirement can be
filled by the existing personnel or not.
At last detailed policies for recruitment, selection, training, promotion, retirement, replacement
etc.
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EXCLUSIVE EMPLOYMENT
The employee position is that of full time employed with Shriram Life. The company strictly
prohibits the employees from seeking employment of any nature with any other entity.
The employees have to take prior approval from the superior and the Human Resource
department before engaging in activities like addressing seminars, teaching etc. and ensure that
these official duties do not suffer on this account and no monetary benefit is derived there from.
The employee or its relatives should also not be empanelled as an authorized / unauthorized
distributor / agent / broker or in any other similar capacity of any entity engaged in distribution
and selling of financial products.
RECRUITMENT & SELECTION
The upper level members like zonal managers, regional managers, branch managers and senior
executives are recruited by publishing recruitment advertisement in leading national level
newspaper. The qualified applicant are then called for interview and selected.
The regional manager has authority to select lower level employee like peon, marketing
executives, financial accountant etc. by approval of zonal manager.
PERFORMANCE APPRAISAL
Objective of Performance appraisal if for Developmental uses for agents and financial
consultants, for wages, transfer, promotion, for documentation and for organizational purpose
like Human Resource Planning, Job analysis and for training and development
40
TRAINING
Continuous training and upgrading technical, behavioral and managerial skills is a way of life in
Shriram. Shriram Life encourages agent or sub-broker to hone their skills regularly to enable
them to face the challenges of the changing requirements of customers that fit market up and
down
The successful candidates of the AMFI Exam are given the product training. The primary
purpose is to become quite conversant with the product that one sells. In other words, product
knowledge is very important for any advisor. Product knowledge is not just about knowing the
broad terms and conditions of the various schemes of policies. The advisors are explained about
the schemes, the terms related with it, the benefits it provides to investor. This training is aimed
at making the advisors fully equipped with the companies’ product information. This training is
aimed at making the advisors experts in selling the products
41
PRODUCTS
Broadly, insurance plans can be distinctly divided into ULIPs and traditional plans. A brief detail
of both segments:
Unit Linked Insurance Products
ULIPs have gained high acceptance due to attractive features they offer. These include:
1. Flexibility
1. Flexibility to choose Sum Assured.
2. Flexibility to choose premium amount.
3. Option to change level of Premium /Sum Assured even after the plan has started.
4. Flexibility to change asset allocation by switching between funds
2. Transparency
1. Charges in the plan & net amount invested are known to the customer
2. Convenience of tracking one’s investment performance on a daily basis.
3. Liquidity
1. Option to withdraw money after few years (comfort required in case of exigency)
2. Low minimum tenure.
3. Partial / Systematic withdrawal allowed
4. Fund Options
1. A choice of funds (ranging from equity, debt, cash or a combination)
2. Option to choose your fund mix based on desired asset allocation
ULIP Plans:
1. Future Wealth 2,
2. Pension Plan 2,
3. Shri Plus 2,
42
4. Shri Vidya Plus 2,
5. Shri Vikas 2,
6. Shri Vishram 2.
TRADITIONAL PLANS
These are the oldest types of plans available. These plans cater to customers with a low risk
appetite. Some of the common features of traditional plans are:
1. Steady Investment
1. Major chunk of investible funds are in debt instruments
2. Steady and almost assured returns over the long term
2. Features
1. Death benefit is Sum Assured + guaranteed & vested bonus
2. Helps in asset creation as they are for a long tenure
3. Premium to Sum Assured ratios are fixed for each plan and age.
4. Generally withdrawals are not allowed before maturity
1. Shri Laabh,
2. Shri Life,
3. Shri Raksha,
4. Akshya Nidhi,
5. Shri Surksha,
6. Shri Vidya,
7. Shri Vivah
43
MAJOR PLAYERS IN LIFE INSURANCE
Sr. No. Name of the Company1 Bajaj Allianz Life Insurance Company Limited
2 Birla Sun Life Insurance Co. Ltd
3 HDFC Standard Life Insurance Co. Ltd
4 ICICI Prudential Life Insurance Co. Ltd
5 ING Vysya Life Insurance Company Ltd.
6 Life Insurance Corporation of India
7 Max New York Life Insurance Co. Ltd
8 Met Life India Insurance Company Pvt. Ltd.
9 Kotak Mahindra Old Mutual Life Insurance Limited
10 SBI Life Insurance Co. Ltd
11 Tata AIG Life Insurance Company Limited
12 Reliance Life Insurance Company Limited.
13 Aviva Life Insurance Co. India Pvt. Ltd.
14 Sahara India Life Insurance Co, Ltd.
15 Bharti AXA Life Insurance Company Ltd.
SWOT ANALYSIS
44
Strength:
Quality of products
Quality of services
Highly cooperative and efficient staff & crew members
Wide distribution network across the whole country.
Weakness:
Less promotional activities
Less advertising efforts
Low market share compared to PSUs
Opportunities:
By making some good promotional efforts Shriram can gain more number of
customers who will be loyal.
Increasing awareness will result in increase in customer base.
Company has already proved it’s strength in market so, soft work required to
launch this product
Huge potential of insurance business in India.
Threats:
Challenges posed by other competitor in the market.
Lower customer base may hinder prompt service
Social scenario.
Government policies
Aggressive Marketing strategy by competitors
45
Research Methodology
46
INTRODUCTION TO RESEARCH TOPIC
For my research work the selected topic is of consumer awareness. Consumer awareness refers
to the familiarity of the brand, company or product among the customers. For any company it is
very essential that the company should be present in awareness set in the minds of customers.
Products of any company will not be sold until buyers of those products or services are aware
about it. Hence brand awareness plays crucial role for the success of any company in the market.
And so new companies spend lot of efforts for making their brands aware among mindset of
customers. Once customers get aware about the brand then the brand will come into the
consideration set followed by choice set and finally it will get purchased by the customers.
Hence the finally purchase decision greatly depends on the brand awareness. So companies
heavily advertise their brands and products through different means to make their brands familiar
with target market.
47
RESEARCH PROBLEM
The Government of India (GOI) opened the insurance sector to private players on October 24,
2000, thus unraveling a new chapter in this field. Before that there were only 4 public sector
government hold companies were in the general insurance business in India. Then private
companies entered in the general insurance business. And at presently 4 public sector companies
and more than 12 private sectors companies are doing business of life insurance in Indian
market. All these companies entered after the year of 2000. And so their business is many times
less then PSUs. At present 4 PSUs have 90 % market share in India and private players’ together
account for only remaining 10%. As many firms and industrial persons are not aware about these
private companies and their insurance services.
Shriram Life Insurance entered in the Indian market in the year 2006. Among the all private
players with market share is it is quite less compare to all public sector companies. Many reasons
are behind it but one of them is unawareness of people about Shriram Life Insurance. Many
industrialists and entrepreneurs are not aware about the presence of Shriram Life Insurance in the
insurance business and if they are aware about it then they do not know about the policies and
services offered by the company.
Hence the research work has been done to check the consumer awareness of Shriram Life
Insurancein the Rajkot city. Efforts have been put to know at what extent they are aware about
the company and the services of the company
48
LITERATURE REVIEW
Kirchler and Angela-Christian Hubert (1999) found that the present study aims at describing
spouses ‘relative dominance in decisions concerning different forms of investment. As
determinants of spouses’ dominance, partnership characteristics, such as partnership role
attitudes, marital satisfaction and individual expertise in relation to different investments, were
considered. A questionnaire on spouses’ dominance in making decisions on various investments,
on the characteristics of particular investments and on partnership characteristics was completed
by 142 Austrian couples. Basically, wives appeared to adapt to the dominance exerted by their
husbands insavings and investment decisions. Wives’ dominance was highest in egalitarian
partnerships, whereautonomic and wife-dominated decisions were reported more frequently than
in traditional partnerships. Additionally, spouses’ relative expertise in relation to the investments
in question showed strong effects on dominance distribution: Spouses with higher expertise than
their partners exerted more dominance in decision-making processes.
Evan Mills, Ph.D. (1999) Studied the insurance industry is rarely thought of as having much
concern about energy issues. However, the historical involvement by insurers and allied
industries in the development and deployment of familiar technologies such as automobile air
bags, fire prevention/suppression systems, and anti-theft devices, shows that this industry has a
long history of utilizing technology to improve safety and otherwise reduce the likelihood of
losses for which they would otherwise have to pay. We have identified nearly 80 examples of
energy-efficient andrenewable energy technologies that offer “loss-prevention” benefits, and
have mapped these opportunities onto the appropriate segments of the very diverse insurance
sector (life, health, property, liability, business interruption, etc.).
Slovic, Fischhoff, Lichtenstein, Corrigan, and Combs (1977) found that subjects were more
likely to buyinsurance against small, high-probabilitylosses than insurance against large, low
probability losses, Hershey and Schoemaker (1980) reported the opposite result.
49
Michael L. Walden (1985) told that the option's package view of the whole life insurance policy
suggests that a whole life policy is a package of options, each of which has value and is expected
toinfluence the price of the policy. This viewpoint implies the general hypothesis that price
differences between whole life policies can be explained by differences in policy contract
provisions anddifferences in selected company characteristics. The option's package 3 theories
were empirically investigated using regression analysis on data from a sample of policies
marketed in NorthCarolina. The results suggest support for the options package theory.
Roger. A. Formisano (1981) examined, via consumer interviews, the impact of the National
Association of Insurance Commissioner's Model Life Insurance Solicitation Regulation as
implemented in New Jersey. A substantial portion of the insurance buyers sampled did not
become aware of the provisions of the regulation aimed to improve their buying ability. Further,
many life insurance buyers were not well informed concerning the nature and operation of life
insurance contracts, and in particular, the life insurance policies that they had purchased.
Michael L. Smith (1982) said that a typical life insurance contract provides a package of options
or rights to the policy owner that is not precisely duplicated by any other combination of
commonlyavailable contracts. Viewed from this perspective, life insurance enjoys a unique
position in the field of investments and should be judged in this light. The paper shows that an
options viewpoint provides a more complete explanation of policy owner behavior towards life
insurance than theconventional savings-and-protection view.
50
RATIONALE OF THE STUDY
After government opened the doors for the private insurance players to conduct insurance
business in Indian market in the year 2000, many private life and non-life (general) insurance
companies entered in Indian market. And at present there are 4 public sector companies and
more than 12 private sector companies are doing business of life insurance in Indian market.
However till the date public sector companies are in dominant position and private general
insurance companies have very less market share as compared to PSUs.
The reason behind this less business of private insurance companies is the lack of awareness
among the people about these private general insurance companies. Shriram has started its
operation in Rajkot in the recent years. It is essential to know for the company that at what extent
industrial areas of Rajkot are aware about Shriram Life Insurance Co. Ltd. and familiarity of
industries with the insurance products and services offered by the company.
So this research study is conducted with the objective to know the Consumer Awareness of
Shriram Life Insurance Co. Ltd among the people of Rajkot.
OBJECTIVE OF THE STUDY
To know awareness of people in Rajkot about insurance.
To know awareness of people in Rajkot about Shriram Life Insurance.
To know the general preference of people for investment.
51
HYPOTHESIS
Null Hypothesis: There is significance difference between Male and Female for awareness about Shriram Life insurance.
Alternative Hypothesis: There is no significance difference between Male and Female for awareness about Shriram Life insurance
SOURCE OF DATA
Primary Data:
For my project primary data I have collected through structured questionnaire and interview with
respondents from different location in areas of Rajkot city.
Secondary Data:
For this project secondary data is the information collected from catalogues of the Company,
Internet, books, articles, magazines and interaction with company professionals.
RESEARCH INSTRUMENT
For this project research instrument is the personal interview with the structured questionnaire
containing related questions for the selected topic of the research study
SAMPLING PROCESS
For this research project random respondents are taken from areas of Rajkot city
Sampling universe: Rajkot city
Sampling technique: Random sampling
Sample size: 50 respondents
Research instrument: Personal interview with structured questionnaire
52
SCOPE OF THE STUDY
This project study is helpful in following aspects.
It will be helpful to the professionals of Shriram life insurance co. ltd. to know the level
of brand awareness among the industrial units of Rajkot city.
It will be helpful in knowing awareness about the competitors.
It will be helpful in knowing the awareness level about the policies offered by Shriram
life insurance.
It will be helpful to know the satisfaction level of the customers to the insurance
companies.
LIMITATION OF THE STUDY
There are some limitations of this study are as follows:
Personal Bias: Some respondents may have biasness towards some other insurance company, so
they may have not given correct information, which may affect the conclusion of this study
Time Limit: Time for this research work was limited otherwise more information could have
been collected.
Area: The area for this research work was limited to Rajkot only, so we cannot know about other
customers outside this area.
Sample Size: The sample size for this research is of only of 50 respondents which may not
reveal adequate and correct information
53
ANALYSIS AND INTERPRETATION
54
RESULTS AND INTERPRETATION
Demographic Profile of Respondents:
The demographic profile of the respondents includes Gender, Age, Income, Occupation, and Education Level.
GENDER
The Gender ratio is 88% (44) males and 12% (6) of females.
Male88%
Female12%
Gender
AGE
For the analysis purpose, the age of respondents has been classified into four categories 17 to 30-
52%of people, 31 to 40-20%, 41 to 50-12%, and 51 to 60-16%.
17-3052%
31-4020%
41-5012%
51-6016%
Age
55
INCOME
Income has been measured as monthly income ranging from Below Rs.10000-16% (8), Rs10000
to 20000-38% (19), Rs20000 to 30000- 18% (9), more than Rs.30000-20% (10).
Below 1000017%
10000-2000041%
20000-3000020%
More than 3000022%
Income
OCCUPATION
The occupation status of respondents has been grouped as Business 40% (20), Service 52% (26),
None 8% (4).
Buisness40%
Service52%
None8%
Occupation
EDUCATION LEVEL
56
The education level of respondents has been measured in terms of Undergraduates 38% (19),
Graduates 44% (22), and Postgraduates 18% (9).
Undergraduate38%
Graduate44%
Post Graduate
18%
Education Level
INVESTMENT PREFERENCE
57
Question: When it was asked to respondents where would they like to invest their money,
among Insurance, Real Estate, Mutual Fund, Share Market, Banks & Post.
The following results were obtained
Insurance 16%Real Estate 14%Mutual Fund 18%Share Market 26%Banks & Post 26%
Insurance16%
Real Estate14%
Share Market26%
Mutual Funds18%
Banks & Posts26%
Invetment Preference
Interpretation: The results shows that there is higher group of people who are conservative and
save their money in banks and posts and also there are more number of people who wants
aggressive investing like in share market, but there is mixed opinion for insurance, mutual funds
and real estate.
PREFERENCE TO BUY INSURANCE
58
Question: The respondents were asked that which company would they prefer to buy an
insurance policy among these companies Birla Sun Life, LIC, Max New york Life insurance 8%,
ICICI, SBI, ING Vysya, TATA AIG, Bajaj Allianz, Other, and following results obtained
Birla Sun Life Insurance 22% TATA AIG 6%LIC 18% Bajaj Allianz 10%Max New york Life 8% ING Vysya 2%ICICI Prudential 4% Others 16%SBI 14%
.
Birla22%
LIC18%
MNYL8%
ICICI4%
SBI14%
ING2%
TATA6%
Bajaj10%
Other16%
Preference on Buying Insurance
Interpretation: The results shows that public sector companies are more preferred than private
sector companies, but still in private sector reputed companies like Birla Sun Life and Bajaj
Allianz is also preferred.
CURRENT INSURANCE POLICY
59
Question: When respondents were asked that which company’s insurance policy they have,
among these companies MNYL, LIC, Birla, SBI, ICICI, Shriram, HDFC, Reliance Life
Insurance, Bajaj Allianz, TATA AIG, MetLife, ING Vysya..
The Following Results were obtained
MNYL10%
LIC25%
BIRLA17%SBI
8%
ICICI10%
Shriram2%
HDFC4%
Reliance4%
Bajaj6%
TATA8%
Metlife6%
ING2%
Current Insurance Policy
Interpretation: The result shows that public sector companies like LIC, SBI as well as private
sector companies like Birla Sun Life Insurance, ICICI, and MNYL have more policy holders.
ANNUAL PREMIUM
60
MNYL 10% HDFC 4%
LIC 26% Reliance Life 4%
Birla Sun Life 28% Bajaj Allianz 6%
SBI 8% TATA AIG 4%
ICICI Prudential 10% MetLife 6%
Shriram 2% ING Vysya 2%
Question: When respondents were asked how much premium do they pay annually. Option give
to them were below Rs.3000, Rs.3000-5000, Rs.5000-7000, more than 7000.
The following results are obtained
Below 3000 Rs. 28%
3000-5000 Rs 42%
5000-7000 Rs. 20%
More than 7000 Rs. 10%
Below 300028%
3000-500042%
5000-700020%
More than 700010%
Annual Premium
Interpretation: The result shows that people prefer to pay 3000 to 5000 Rs. So Companies
should form such policies.
PURPOSE OF INVESTMENT
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Question: When respondents were asked what is the basic purpose to invest in insurance policy.
In the following options Cover future uncertainty, Tax deduction, Future investment, other
.The following result was obtained
Cover Future Uncertainty 34%
Tax Deduction 26%
Future Investment 36%
Other 4%
Cover Fu-ture Un-certainty
34%
Tax Deduc-tion26%
Future invest-ment36%
Other4%
Purpose of Investment
Interpretation: The result shows that people are investing in insurance for future investments or
cover future uncertainty rather than tax deduction.
FEATURE OF POLICY
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Question: The respondents were asked that which feature of their policy attracted them to buy
that policy and options were: Trusted Name or Reputation of the Company, Friendly Services,
Good Plans, and Low Premium.
The followings results were obtained
Trusted Name or Reputation of Company 40%
Friendly Services 16%
Good Plans 24%
Low Premium 20%
Trusted Name or Reputation
40%
Friendly Services16%
Good Plans24%
Low Premium20%
Features of Policy
Interpretation: The results shows that people while buying insurance prefer trusted name or
reputation of the company than low premium, good plans, and friendly services. So company
should create good reputation for it self.
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AWARENESS ABOUT SHRIRAM LIFE INSURANCE
Question: The respondents were asked whether they are aware about Shriram Life Insurance.
The following results were obtained
Yes42%
No58%
Awaress about Shriram Life Insurance
Interpretation: The result shows that more people are not aware about Shriram Life Insurance.
So more marketing is required from the side of the firm.
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YES 42%
NO 58%
TESTING HYPOTHESIS:
HYPOTHESIS
Null Hypothesis: There is significance difference between Male and Female about awareness about Shriram Life insurance.
Alternative Hypothesis: There is no significance difference between Male and Female about awareness about Shriram Life insurance
Particulars Male (a) Female(b) TotalAware about Shriram Life Insurance (A)
19 2 21
Not aware about Shriram life Insurance (B)
25 4 29
Total 44 6 50
On the basis of this hypothesis, the expected frequency corresponding to the number of
respondent and other are as follows.
Expected frequency
Expected of (AB) = (A × B)/N
1) Aa = 21*44/50 = 18.48
2) Ba = 44*29/50 = 25.52
3) Ab = 21*6/50 = 2.52
4) Bb = 29*6/50 = 3.48
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Calculation of Chi Square:
Group Observed
Frequency
(Oij)
Expected Frequency (Eij)
(Oij-Eij) ( Oij-Eij)2 (Oij-Eij)2
Eij
Aa 19 18.48 0.52 0.2704 0.0146
Ba 25 25.52 -0.52 0.2704 0.0105
Ab 25 2.52 -0.52 0.2704 0.1071
Bb 4 3.48 0.52 0.2704 0.0775
χ2 0.2097
Here, χ2 calculated value is 0.2097
Degree of freedom in this case = (r-1) (c-1) = (2-1) (2-1) = 1
The table value of χ2 for 1 degree of freedom at 5% level of significance is 3.841. The calculated
value is less than the table value and hence the test is accepted and shows that there is significant
difference between Male and Female about awareness about Shriram Life insurance.
The result shows that males are more aware about Shriram Life Insurance than female.
AWARENESS THROUGH CHANNELS66
Question: 18 Respondents who were about Shriram Life insurance were asked through which
medium they were aware about the company and the options were News Papers, T.V, Contacted
by Agents, Friends or Reference.
The following results were obtained
News Papers 20%
Television 0%
Contacted By Agent 29%
Friends or Other Reference 51%
News Papers20%
Contacted by Agents
29%
Friends or Reference
51%
Awareness Through Medium
Interpretation: The result shows that the respondents who know about Shriram Life Insurance,
knows from friends, reference or contacted by agents so marketing is inadequate because very
few people know through newspapers and no one through Television.
AWARENESS ABOUT SERVICES/PRODUCTS OF THE COMPANY
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Question: 18 respondents who were about Shriram Life Insurance were asked if they know
about the products of the company and following results were obtained
YES 69%
NO 31%
Yes69%
No31%
Awareness About Products
Interpretation: The result shows that who respondents who knew about Shriram Life Insurance,
most of them knew about their products because mainly they were contacted by agents or
reference.
SATISFACTION WITH THE SERVICES
13 respondents who were aware about the service or products were asked whether the services
were good enough to satisfy or not and all of them replied positively. This shows that products of
the company are very good.
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FINDING, RECOMMENDATION
AND CONCLUSION
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FINDING AND RECOMMENDATIONS TO THE COMPANY
On the basis of the research project work I did, there are some findings and recommendations
that have been mentioned under.
Public sector insurance companies have very large business as compared to private
general insurance companies. So private companies have to go long for more and
increased business.
These private companies have to build a strong image as the PSUs have to increase their
business. People put more trust on government hold companies than private insurance
companies so private insurance companies have to win confidence of people and have to
create strong corporate image.
This is clear from the research that more people want to invest in banks and mutual funds
then insurance, shares or other investments.
Even in private companies Birla Sun life Insurance, Max New York life Insurance,
TATA AIG and HDFC with trusted name are more preferred to buy insurance.
This is observed that people are willing to invest 3000-5000 Rs. So Companies should
develop plans having such premiums.
People are more willing to invest for future investments then tax deduction so such plans
should be developed.
Respondents were willing to buy policies on the basis on trusted names, good plans and
low premiums.
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Consumer awareness of Shriram Life Insurance is less as compared to the PSUs. So
efforts should be made to increase the awareness of the company.
Awareness towards the advertisement of Shriram Life Insurance is found very less among
the People and most people know about the company through agents of reference. So it is
advised to the company to go for more advertisements through different medias to
increase the awareness of the company.
The respondents who know about Shriram Life insurance, most of them Knew about the
products.
People who were about the services or products though that products were good enough
to satisfy needs. So it shows that products are good to meet needs of people.
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CONCLUSION
India has traditionally been a high savings oriented country - often described as being on par
with the thrifty Japan. Insurance sector in the US of A is as big in size as the banking industry
there. This gives us an idea of how important the sector is. Insurance sector channelizes the
savings of the people to long term investments. In India where infrastructure is said to be of
critical importance, this sector will bring the nations own money for the nation.
In 3 years time we would expect the 10% of the population to be under some sort of an
insurance cover. This assuming a premium of Rs. 5000 on an average, amounts to 100 million x
Rs.5000 = Rs. 500 bn. This has made the sector the hottest one in India after IT.
With social security and security to the public at large being the agenda for opening the sector,
the role of the regulator becomes all the more serious and one that would be carefully watched at
every step. India has an enormous middle-class that can afford to buy life, health, and disability
and pension plan products. The low level of penetration of life insurance in India compared to
other developed nations can be judged by a comparison of per capita life premium. Clearly, there
is considerable scope to raise per capita life premium if the market is effectively tapped.
There has been tremendous change in the insurance history. And with it there has been
continuous growth in this sector both in Indian as well as world context. The opening up of the
insurance sector has changed the whole look of the industry. While the LIC in order to face the
competition is coming with new strategies and new players like Shriram are leading the sector
due to their strategic management and tailored made projects.
From our study also we conclude that though the awareness and people opting for LIC plans are
more as compare to Shriram but the later are gaining momentum in the market day by day.
The demand for insurance is likely to increase with rising per-capita incomes, rising literacy
rates and increase of the service sector, as has been seen from the example of several other
developing countries. In fact, opening up of the insurance sector is an integral part of the
liberalization process being pursued by many Developing countries.
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Insurance is a Rs.400 billion business in India and yet its spread in the country is relatively thin.
Insurance as a concept has not been able to make headway in India. There has been a strong fall
in insurance business in recent years. Furthermore, it can be observed that non-life business is
not increasing as strongly as life business. On the other hand, growth fluctuations have been
relatively small with growth rates varying between 1% and 5%. Life insurance business by
contrast achieved average growth rates of 6%, although the actual rates ranged from 0% to 13%.
This shows on the one hand the increasing significance of life insurance as an instrument for old
age provisions and on the other hand indicates the sensitivity of life insurance to changes in the
institutional and economic environment. So lets conduct this business with utmost economy
with the spirit of trusteeship; thereby making insurance widely popular
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LEARNING FROM SIP
A man without practical knowledge is just like a rough diamond. To shine like a real
diamond one must have practical exposure of what he has learnt. For the students of
management theoretical knowledge is just like lock without key so practical knowledge is
of so much important.
The summer internship project has given the opportunity to learn and know about real
corporate experience and understand working environment. Practical knowledge is the
best experience and on this basis, we can easily understand about what they want to say.
Firstly each student knows about the theory, so that on the basis of theory, he can easily
learn how to do the work and what is the best way to achieve satisfaction. That is why
we can say that theory is guidelines for practical.
During my internship what we learnt in theories about financial management, human
resource management, and also about marketing, I experienced all those functional
departments working in the real situations which was quite amazing.
The working of the functional departments helped me like financial department allocated
funds, human resource department providing training, and selection of new candidates,
performance appraisal motivating employees.
Summer Internship Project also helped me to understand interaction with employees and
customers and approaches to the customers.
It was really helpful for me because Shriram Life Insurance Company is based on
insurance policy as product which is a push based product, so it helped me to learn about
real marketing exposure.
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During our summer internship project, I did research about consumer awareness about
Shriram Life Insurance, which helped me to learn general preference of people for
investment, awareness about all insurance companies, preference for buying insurance
and also awareness about Shriram life Insurance and their products.
The summer internship project also helped to analyze how a company is working with
such competition and also with competitors doing their business.
The experience with Shriram Life Insurance was really handful and very cooperative with
employees and heads of the company.
At the end it has helped that how work in real life exposure, which will ultimately help
me to work when I start working in the corporate sector.
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BIBLIOGRAPHY
Books:
I.M.Pandey: Basic Text Book of Financial Management: 9th Edition (2008): Vikas
Publication
C.B.Gupta: Human Resource Management: 4th Edition (2007): Sultanchand and Sons
Kotler, Keller, Koshy and Jha: Marketing Management: 6th Edition (2007): Pearson
Education
C.R.Kothari: Research Methodology: 4th Edition (2004): New Age International Limited
Khan and Jain: Financial Management: 4th Edition (2004): Tata McGraw Hill
Cooper and Schindler: Business Research Method: 9th Edition (2006): Tata McGraw Hill
Magazines & Journals:
Walden, Michael L. (1985); The Journal of Risk and Insurance: “Whole life policy is a
package of options“ (Vol.52 no.1,pp 44-58).
Slovic, Fischhoff, Lichtenstein, Corrigan and Combs, (1977) Decision Research:
“Insurance against small, high-probability losses” (vol.2, issue 2, pp83-93).
Formisano, Roger A. (1981); The Journal of Risk and Insurance: “Awareness of the
provisions of the regulation” (Vol.48 no.1, pp59-79)
Smith, Michael L.(1982); The Journal of Risk and Insurance, “Policy owner behavior
towards life insurance” (Vol.49 no.4, pp583-601)
Kirchler and Angela Christian Hubert: “Spouses ‘relative dominance in decisions
concerning different forms of investment” (.1999; accepted 1999; Available online
1999); Institute of Psychology, University of Vienna.
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Websites:
www.shriram.com
www.irda.com
www.apnapaisa.com
www.indiainfoline.com
www.sanlam.com
Other Materials:
The Hindu- Business Line, Catalogs, Broachers, Business Operation Prospects
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QUESTIONNAIRE:
A Study on Consumer Awareness about Shriram Life Insurance
1. Name:
2. Age:
3. Gender: Male Female
4. Occupation: Business Service None
5. Education Undergraduate Graduate Postgraduate
6. Monthly Income:
Below 10000 10000-20000 20000-30000 more than 30000
7. Where do you prefer to invest your money?
Insurance Real Estate Bank & Post Mutual Funds
Share Market Others
8. Which company’s insurance policy you prefer the most?
Birla Sun life LIC Max New York Life ICICI Prudential
SBI ING Vysya TATA AIG Bajaj Other
9. In which you have any insurance policy?
Write the name of the company
10. How much do you pay annually?
Below 3000 3000-5000 5000-7000 More Than 7000
11. What is the basic purpose of your investment in Insurance?
Cover Future Uncertainty Tax Deduction Future Investment Other
12. Which feature of your policy attracted you to buy it?
Good Plans Friendly Services Trusted Name or Reputation of Company
Low Premium
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13. Are you aware about Shriram Life insurance?
Yes No
If yes then through which medium,
Newspapers Television Contacted By Agent Friends or other Reference
14. Are you aware about services/products of Shriram Life Insurance?
Yes No
15. Are you satisfied with the services?
Yes No
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