arpita major research project.docx

8/18/2019 Arpita MAJOR RESEARCH PROJECT.docx

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MAJOR RESEARCH PROJECT

On

“A STUDY OF AWARENESS OF LIFE INSURANCE PRODUCTS: WITH

SPECIAL REFERENCE TO RURAL AREAS NEAR INDORE”

For partial !lill"#nt o t$# r#%!ir#"#nt or t$# 'r## o

Ma(t#r o )!(in#(( A&"ini(tration *F!ll+Ti"#,

)at-$ ./01+./02

S!3"itt#& to: S!3"itt#& 34:

Pro5 A"it 6!"ar Arpita 7ai89a&

I)MR IPS ACADEMY

Ra;#n&ra Na'ar A5)5 Roa& In&or#+1


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PREFACE

The bookish knowledge of any program, which we get from educational institutions, is

not enough to be used in our day-to-day life. The more practical knowledge we have, the

more beneficial it is for our learning.

To make the students aware of the working of the business world every student of

MASTE !" #$S%&ESS A'M%&%STAT%!& () th Semester* has to undergo a ma+or

research pro+ect where heshe eperiences many aspects of business under the

supervision of rofessional Managers.

% strongly believe that the knowledge gained from this eperience is more than the

knowledge gained from the theories in the book.

/A0E1 %&'!E

&ame1 Arpita 2aikwad

'ate1

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CERTIFICATE

This is to certify that M(5 Arpita 7ai89a& student of %nstitute of #usiness Management

and esearch, %S Academy, %ndore of M#A ("ull time* program has prepared Ma+or

research pro+ect report on topic “A STUDY OF AWARENESS OF LIFE INSURANCE

PRODUCTS: WITH SPECIAL REFERENCE TO RURAL AREAS NEAR

INDORE” under my guidance.

%nternal Eaminer (2uide* Eternal Eaminer

'irector

%#M, %S Academy

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STUDENT DECLARATION

% Arpita 2aikwad, student of %nstitute of #usiness Management and esearch, %S

Academy, %ndore of M#A ("ull time* program has prepared Ma+or research ro+ect report

on topic “A STUDY OF AWARENESS OF LIFE INSURANCE PRODUCTS: WITH

SPECIAL REFERENCE TO RURAL AREAS NEAR INDORE”.

The esearch as per my knowledge is original and genuine and not published in any

research +ournal previously.

St!nt Na"# = Si'nat!r#

Arpita 7ai89a&

M)A *1t$ S#",

./01+./02

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AC6NOWLED7EMENT

% often wondered why the pro+ect reports always began with acknowledgement. &ow

when % have undertaken pro+ect myself, % did reali3e that pro+ect report involves not +ust

the researcher but so many people that help in making the research possible. Therefore, %

take pleasure in beginning the most beautiful part of the report.

% fall short of words to epress my gratitude to my guide Pro5 A"it 6!"ar who despite

their busy schedule were able to find some time to guide me through trouble and solve

my problems to the best of abilities. 4ithout their unfailing guidance, encouragement and

patience this pro+ect would not have been possible. %t has been a great learning

eperience under him.

% am thankful to my faculty guide Pro5 A"it 6!"ar who gave me detailed instructions

during M.

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INDE>

Parti-!lar( Pa'# No5

%ntroduction

ationale of Study!b+ective of Study

/iterature eview

esearch Methodology

'ata Analysis 5 %nterpretation

Summary of "indings 5 'iscussion

%mplications 5 Scope

Suggestions 5 /imitations

0onclusion

#ibliography

6uestionnaire

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CHAPTER ONE

INTRODUCTION

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050 INTRODUCTION OF INSURANCE:

%nsurance occupies an important place in the comple modern world since risk, which

can be insured, has increased enormously in every walk of life. This has led to growth

in the insurance business and evolution of various types of insurance covers. The

insurance sector acts as a mobili3er of savings and a financial intermediary and is also

a promoter of investment activities. %t can play a significant role in the economic

development of a country, while economic development itself can facilitate the

growth of the insurance sector. This chapter provides an overview of the insurance

sector in %ndia, its origin and growth. %t begins by defining insurance as a concept,

followed by a discussion on the importance of insurance for individuals, households,

and the economy. The penetration of the insurance business and insurance density in

%ndia are compared with those in other countries. The need to create and enhance the

level of awareness about different aspects of insurance is also discussed.

05. CONCEPT OF INSURANCE:

%nsurance is a form of risk management which is used primarily to hedge against the

risk of a contingent, uncertain loss. %nsurance is defined as the e7uitable transfer of

the risk of loss, from one entity to another, in echange for payment. %nsurance is

essentially an arrangement where the losses eperienced by a few are etended among

many who are eposed to similar risks. %t is a protection against financial loss that

may occur due to an unepected event. The transaction involves the insured assuming

a guaranteed and known, relatively small, loss in the form of payment to the insurer in

echange for the insurer8s promise to compensate or indemnify the insured in the case

of a large, possibly devastating loss. The insured receives a contract called an

insurance policy which details the conditions and circumstances under which the

insured will be compensated.

%nsurance can be classified broadly into1 (a* life insurance, and (b* general or non-life

insurance.

(a* /ife insurance or life assurance is a contract between the policy owner and the

insurer, where the insurer agrees to pay the designated beneficiary a sum of money

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upon the occurrence of the insured individual9s death or other event, such as

terminal or critical illness. %n return, the policy owner agrees to pay a stipulated

amount at regular intervals or in lump sums. /ife-based contracts tend to fall into

two ma+or categories1

• rotection policies1 designed to provide a benefit in case of a specified event,

typically against lump sum payment. A common form of this policy is term

insurance.

• %nvestment policies1 the main ob+ective is to facilitate the growth of capital by

single or regular premiums. The common forms in this category include whole

life, universal life and variable life policies.(b* 2eneral insurance or non-life insurance policies, including automobile and

homeowners9 policies, provide payments depending on the loss from a particular

financial event. 2eneral insurance typically comprises any insurance cover that is

not deemed to be life insurance. Some categories of general insurance policies are1

vehicle, home, health, property, accident, sickness and unemployment, casualty,

liability, and credit. The terms of insurance generally depend on the company

providing the cover.

05? IMPORTANCE OF INSURANCE:

/ife insurance is generally considered a means of protecting one9s family against the

unforeseen circumstance of the death of an earning member. :owever, there are a

number of other benefits that are not apparent. Some benefits accrue to the individuals

and their families, while others assist economic development. "or instance, an

insurance company takes the risk of large and uncertain losses in echange for small

premiums. This gives a sense of confidence and security to the insured individual

through the protection of insurance in the event of an unfortunate incident. %n large

si3ed commercial and industrial organi3ations, it facilitates operations as many of the

risks are transferred to the insurer. %nsurance, particularly life insurance, is one of the

ways of providing for the future. A life insurance policy which gives an annuity is a

combination of protection and investment. %t increases the creditworthiness of the

assured person because it can provide funds for repayment in the event of death. %t

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also reduces losses owing to theft, robbery, fire accidents, etc. %n addition, it serves as

a solution to social problems. "or instance, while compensation is available to victims

of industrial in+uries and road accidents, financial difficulties on account of old age,

disability or death is minimi3ed.

%nvestment of accumulated resources by the insurer facilitates the overalldevelopment of the country. 0apital is usually risk averse, but if insurers provide

protection against risks, then several investors would come forward to invest their

funds.

%n many developed countries, citi3ens are to a certain etent protected by social

security schemes provided by the government. These schemes offer financial aid to

citi3ens who are eligible on grounds of unemployment, old age, sickness, disability,

etc. The social security scenario in %ndia is 7uite different, having traditionally been

the responsibility of the family or community. :owever, with industriali3ation,

urbani3ation, breakup of the +oint family system and weakening of family bondage, it

has become necessary to provide social security arrangements that are

institutionali3ed and regulated by the state rather than the society.

%ssues relating to social security are listed in the directive principles of state policy.

4hile social security and insurance, employment and unemployment form %tem ;< of

the concurrent list, the welfare of labour including conditions of work, provident fund,

employee9s liability, workmen9s compensation, invalidity and old age pension and

maternity benefits form %tem ;), also of the concurrent list. 'uring the initial years of

development planning, it was believed that with the process of development, a greater

number of workers would +oin the organi3ed sector and eventually get covered by

formal social security arrangements. :owever, the actual eperience has proved

otherwise. There is now almost a stagnation of employment in the organi3ed sector

with increase in the inflow of workers into the informal sector. The unorgani3ed

workforce is characteri3ed by scattered and fragmented areas of employment,

seasonality, lack of +ob security and low legislative protection. 0urrently, out of an

estimated workforce of nearly )== million, only less than >= per cent have the

benefits of formal social security protection. Although the government has a few

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centrally funded social assistance programmes like &ational !ld Age Schemes and

&ational "amily #enefit Schemes, the number of people covered as well as the

benefits is very meager. "urthermore, in a country like %ndia, where there is no

provision for unemployment benefits, the concept of insurance becomes etremely

important.

051 ORI7IN OF INSURANCE:

Maritime insurance is the oldest form of insurance and is followed by life insurance

and fire insurance. %nsurance was prevalent in ancient 2reece and among the maritime

peoples with whom the 2reeks traded. %t developed first as a means of spreading the

huge risks involved in early maritime enterprises, evolving much later during the

fourteenth century in the commercial cities of %taly. This practice of marine insurance

gradually spread to /ondon during the siteenth century. The history of marine

insurance is closely associated with the origin and rise of /loyd9s group of ship-

owners. Today, /loyd9s is considered the largest underwriter in the world. %n the $SA,

the first insurance company was established by #en+amin "ranklin in >?@;. Since the

mid nineteenth century, insurance has developed significantly to cover other kinds of

risks.

%n %ndia, the history of life insurance can be traced to >> when Anita #havsar

started the !riental /ife %nsurance 0ompany in Bolkata. This organi3ation was

basically founded to serve European clients and hence %ndians who opted for an

insurance cover were charged a much higher premium. The reason given was that

%ndians had a lower life epectancy on account of their lifestyle, while in fact this was

a planned effort to keep %ndians out of any kind of progress The 0ompany failed in

>?= the #ritish %nsurance Act was passed and the last three decades of

nineteenth century saw the emergence of the #ombay Mutual /ife Assurance Society

(>?>*, which became the first organi3ation to charge the same premium from all

residents of %ndia irrespective of their origin or nationality. The !riental (>?)* and

Empire of %ndia (>C?* insurance companies began their activities in the #ombay

esidency in the late nineteenth century. This period, however, was dominated by

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foreign insurance offices such as Albert /ife Assurance, oyal %nsurance, and

/iverpool and /ondon 2lobe %nsurance, which did good business in %ndia.

The history of general insurance can be traced to the %ndustrial evolution in the 4est

and the conse7uent growth of sea-faring trade and commerce. A legacy of #ritish rule,

2eneral %nsurance in %ndia has its roots in the establishment of Triton %nsurance0ompany /td in >@= in 0alcutta. %t9s first %ndian counterpart, the %ndian Mercantile

%nsurance /td, which launched its operation in #ombay in >C=?, was the first

company of its type to transact all general insurance business.

05< O@ER@IEW OF THE INDIAN INSURANCE SECTOR:

%nsurance business has been traditionally classified into life insurance and non-life

insurance (also known as general insurance*. The insurance industry of %ndia consists

of @; insurance companies of which ;) are in life insurance business and ; are non-

life insurers. Among the life insurers, /ife %nsurance 0orporation (/%0* is the sole

public sector company. !ut of ; non-life insurance companies, there are si public

sector insurers, which include two speciali3ed insurers namely Agriculture %nsurance

0ompany /td for 0rop %nsurance and Eport 0redit 2uarantee 0orporation of %ndia

for 0redit %nsurance. Moreover, there are @ private sector insurers are registered to

underwrite policies eclusively in :ealth, ersonal Accident and Travel insurance

segments. They are Star :ealth and Allied %nsurance 0ompany /td, Apollo Munich

:ealth %nsurance 0ompany /td, Ma #upa :ealth %nsurance 0ompany /td, eligare

:ealth %nsurance 0ompany /td and 0igna TTB :ealth %nsurance 0ompany /td.

%n addition to @; insurance companies, there is sole national re-insurer, namely,

2eneral %nsurance 0orporation of %ndia. !ther stakeholders in %ndian %nsurance

market include approved insurance agents, licensed 0orporate Agents, #rokers,0ommon Service 0entres, 4eb-Aggregators, Surveyors and Third arty

Administrators servicing :ealth %nsurance claims.

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%nsurance /aws (Amendment* Act, ;=>@ provides for enhancement of the "oreign

%nvestment 0ap in an %ndian %nsurance 0ompany from ;D to an Eplicitly

0omposite /imit of )C with the safeguard of %ndian !wnership and 0ontrol.

%nsurance penetration of %ndia i.e. remium collected by %ndian insurers is @*

T4p# o )!(in#(( P!3li- S#-tor Priat# S#-tor Total

/ife %nsurance > ;< ;)

&on-/ife

%nsurance

HD HH;; ;

e-insurance > = >

Total B 1<


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concerned. 4hile the density of life insurance in %ndia grew from $SG C.> in ;==> to

$SG )?.? in ;==C, the density in the non-life insurance industry for the same period

grew from $SG ;.) to $SG D.?. Similarly, penetration in the life insurance sector

increased from ;.>@ per cent in ;==> to ).D= per cent in ;==C and very marginally in

the non-life insurance sector from =.@D per cent in ;==> to =.D= per cent in ;==C.Thus, penetration in the non-life insurance sector has remained virtually constant over

the years. %ndia9s insurance penetration is lower than the world average which in ;==C

was ?.= percent, while for %ndia it was @.; per cent. Although, the penetration of

%ndian insurance is higher than that of some South Asian countries like akistan

(=.?*, #angladesh (=.C* and Sri /anka (>.)*, it lags behind other Asian countries

like Japan (C.C*, South Borea (>=.)* and Singapore (D.*.

Several factors are responsible for the low levels of insurance penetration in the

country. These include low consumer preference, untapped rural markets and

constrained distribution channels. %n urban areas, life insurance penetration in the

market is approimately D@ per cent, and is considerably lesser in the low-income

unbanked segment. %n rural areas, life insurance penetration in the banked segment is

estimated to be approimately )= per cent, and at best is marginal in the unbanked

segment. #efore opening the sector to private insurers, it was felt that low levels of

insurance penetration were due to ineffective market strategies adopted by /%0. #eing

a monopoly, the company had no strategic market plan. Advertising initiatives were

limited to the print and electronic media, which mainly promoted /%09s products as

being ta saving tools for salaried individuals. Although the level of penetration has

increased after the entry of other players, it is still low compared to other countries.

According to consumer feedback, the problem has been eacerbated due to1

• Agents9 inability to clearly eplain the features of the productsI

• /engthy documents that are not user friendlyI and• The perception that agents are only concerned with their commissions.

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CHAPTER TWO

RURAL INSURANCE

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.50 INTRODUCTION:

%ndia lives in villages. !ut of the total of >;>=.; million people in the country, the si3e

of rural population is >. 'uring ;==>-;=>> the rural population increased by

C=.) million, and the number of villages increased by ;,;?C. The ma+ority of world9s

rural population lives in rural %ndia. 4ith its vast si3e and widespread array of

consumers, the marketers of financial products such as life insurance have been

eploring the opportunities to understand and penetrate into rural markets.

The life insurers in %ndia had underwritten >>.< million policies in the rural sector, out

of )).> million new policies underwritten by them in ;=>;->)*. Approimately one-fourth of %ndia9s population

lives in D


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%nsurance can truly be a direct link between macroeconomic needs of the country for

productive resources by capital accumulation and micro need for better and secure life

of the individual.

/%0 claims that over @> of its new policies are sold in rural areas. KThe impetus on

rural thrust can be further visuali3ed from the fact that nearly half of /%09s agents arefrom rural areas and over half of its branches are in no facility areas.L#ut the well

known but not admitted fact is that, in /%0 the classification of business secured is on

the basis of residency of the Agent than the residency of the insured population in

rural areas. %t is only rural ostal /ife %nsurance that really covers rural population.

Li# In(!ran-# in R!ral C$ann#l( o In&ia:

At present ->= rural households are covered under life insurance schemes and

remaining C= can be targeted for new innovative insurance schemes. About ;==

million rural populations out of ?== million have the surplus money to save money to

their available option post offices and a few limited commercial banks rural etension

counters. 4ith the ma+ority of the population still residing in rural areas, the

development of rural insurance will be critical in driving overall insurance market

development over the longer term. There is a need to create a broader awareness about

life insurance in all geographic areas in %ndia through specific collective campaigns.

This is an important precondition to developing insurance and increasing penetration.

Awareness is lacking not only in rural areas, small towns and among the less educated

persons. Even in urban areas, vast segments of population seem to have erroneous

perception or impression which needs to be corrected. #efore proceeding to rural

channels we try to give concepts of perception.

R!ral C!(to"#r P#r-#ption o Li# In(!ran-#

0ustomer awareness or perception as a concept is of universal concern for all

economies of the world. %n the contet of a booming %ndian economy and

unprecedented growth being witnessed by %nsurance industry - especially life

insurance -, it would be interesting to eamine this concept in depth. erception is

defined as the process by which an individual receives, selects, organi3es, and

interprets information to create a meaningful picture of the world. erception is the

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process by which an individual selects, organi3es and interprets information to create

a meaningful picture of the world. %ndividuals act and react on the basis of their

perceptions, not on the basis of ob+ective reality. :ence, for a marketer to know the

customers9 perception is more important than their knowledge of ob+ective reality.

4hat consumers think about a product, and what it actually is affects their actions.%ndividuals make decisions and take actions based on what they perceive to be reality

is very important to marketers to understand the whole notion of perception and is

related concepts, so they can more readily determine what factors influence

consumers to buy. The companies are trying to trigger growth in rural areas. They are

identifying the fact that rural people are now in the better position with disposable

income. The low rate finance availability has also increased the affordability of

purchasing the insurance products by the rural people. Marketer should understand the

price sensitivity of a consumer in a rural area. The buying behavior of the rural

consumers in %ndia is influenced by several factors, such as socio-economic

conditions, cultural environment, literacy level, occupation, geographical location,

etensive efforts on the part of sellers, eposure to the media, etc.

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CHAPTER THREE

COMPANY PROFILE

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?50 INTRODUCTION TO LIFE INCORPORATION OF INDIA *LIC,:

/ife %nsurance 0orporation is an %ndian state-owned insurance

group and investment company head7uartered in Mumbai. %t is the largest

insurance company in %ndia with an estimated asset value

of >@D=);₹ crore ($SG;< it had total life fund of

₹>)>.

!riental /ife %nsurance 0ompany started by Europeans in 0alcutta was the first

life insurance company on %ndian Soil. All the insurance companies established

during that period were brought up with the purpose of looking after the needs of

European community and %ndian natives were not being insured by these

companies. :owever, later with the efforts of eminent people like #abu Muttylal

Seal, the foreign life insurance companies started insuring %ndian lives. #ut %ndian

lives were being treated as sub-standard lives and heavy etra premiums were

being charged on them. #ombay Mutual /ife Assurance Society heralded the birth

of first %ndian life insurance company in the year >?=, and covered %ndian lives at

normal rates. Starting as %ndian enterprise with highly patriotic motives, insurance

companies came into eistence to carry the message of insurance and social

security through insurance to various sectors of society. #harat %nsurance

0ompany (>CD* was also one of such companies inspired by nationalism. TheSwadeshi movement of >C=@->C=? gave rise to more insurance companies. The

$nited %ndia in Madras, &ational %ndian and &ational %nsurance in 0alcutta and

the 0o-operative Assurance at /ahore were established in >C=D. %n >C=?,

:industan 0o-operative %nsurance 0ompany took its birth in one of the rooms of

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https://en.wikipedia.org/wiki/State_ownedhttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Investment_companyhttps://en.wikipedia.org/wiki/Investment_companyhttps://en.wikipedia.org/wiki/Mumbaihttps://en.wikipedia.org/wiki/Crorehttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Insurance_grouphttps://en.wikipedia.org/wiki/Investment_companyhttps://en.wikipedia.org/wiki/Mumbaihttps://en.wikipedia.org/wiki/Crorehttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/Parliament_of_Indiahttps://en.wikipedia.org/wiki/State_owned


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the Jorasanko, house of the great poet abindranath Tagore, in 0alcutta. The

%ndian Mercantile, 2eneral Assurance and Swadeshi /ife (later #ombay /ife*

were some of the companies established during the same period. rior to >C>;

%ndia had no legislation to regulate insurance business. %n the year >C>;, the /ife

%nsurance 0ompanies Act, and the rovident "und Act were passed. The /ife%nsurance 0ompanies Act, >C>; made it necessary that the premium rate tables

and periodical valuations of companies should be certified by an actuary. #ut the

Act discriminated between foreign and %ndian companies on many accounts,

putting the %ndian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance

business. "rom )) companies with total business-in-force as s.;;.)) crore, it rose

to >?D companies with total business-in-force as s.;C crore in >C


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?5? OR7ANIATIONAL SETUP OF LIC:

/%0 had @ 3onal offices, ; branch offices, apart from

its corporate office in the year >C@D. Since life insurance contracts are long term

contracts and during the currency of the policy it re7uires a variety of services

need was felt in the later years to epand the operations and place a branch officeat each district head7uarter. e-organi3ation of /%0 took place and large numbers

of new branch offices were opened. As a result of re-organi3ation servicing

functions were transferred to the branches, and branches were made accounting

units. %t worked wonders with the performance of the corporation. %t may be seen

that from about ;==.== crores of &ew #usiness in >C@? the corporation crossed

>===.== crores only in the year >CDC-?=, and it took another >= years for /%0 to

cross ;===.== crore mark of new business. #ut with re-organi3ation happening in

the early eighties, by >C@-D /%0 had already crossed ?===.== crore Sum

Assured on new policies.

Today /%0 functions with ;=) fully computeri3ed branch offices, >>< divisional

offices, Nonal offices, > Satellite offices and the corporate office. /%08s 4ide

Area &etwork covers >>< 'ivisional offices and connects all the branches through

a Metro Area &etwork. /%0 has tied up with some #anks and Service providers to

offer on-line premium collection facility in selected cities. /%09s E0S and ATM

premium payment facility is an addition to customer convenience. Apart from on-

line Biosks and %OS, %nfo 0entres have been commissioned at Mumbai,

Ahmedabad, #angalore, 0hennai, :yderabad, Bolkata, &ew 'elhi, une and

many other cities. 4ith a vision of providing easy access to its policyholders, /%0

has launched its SATE//%TE SAMAB offices. The satellite offices are smaller,

leaner and closer to the customer. The digitali3ed records of the satellite offices

will facilitate anywhere servicing and many other conveniences in the future.

?51 O)JECTI@ES OF LIC:

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Spread /ife %nsurance widely and in particular to the rural areas and to the

socially and economically backward classes with a view to reaching all

insurable persons in the country and providing them ade7uate financial

cover against death at a reasonable cost.

Maimi3e mobili3ation of people8s savings by making insurance-linked

savings ade7uately attractive.

#ear in mind, in the investment of funds, the primary obligation to its

policyholders, whose money it holds in trust, without losing sight of the

interest of the community as a wholeI the funds to be deployed to the best

advantage of the investors as well as the community as a whole, keeping in

view national priorities and obligations of attractive return.

0onduct business with utmost economy and with the full reali3ation that the

moneys belong to the policyholders.

Act as trustees of the insured public in their individual and collective

capacities.

Meet the various life insurance needs of the community that would arise in

the changing social and economic environment.

%nvolve all people working in the 0orporation to the best of their capability

in furthering the interests of the insured public by providing efficient

service with courtesy.

romote amongst all agents and employees of the 0orporation a sense of

participation, pride and +ob satisfaction through discharge of their duties

with dedication towards achievement of 0orporate !b+ective.

?5< MISSION AND @ISION:

Mi((ion: Ensure and enhance the 7uality of life of people through financial

security by providing products and services of aspired attributes with

competitive returns, and by rendering resources for economic development.

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@i(ion1 A trans-nationally competitive financial conglomerate of

significance to societies and ride of %ndia.

?52 )OARD OF DIRECTORS:

Members on the #oard of the corporation-• Shri S.B. oy (0hairman, /%0 of %ndia*

• Shri O B Sharma (Managing 'irector, /%0 of %ndia*

• Smt $sha Sangwan (Managing 'irector, /%0 of %ndia*

• Shri Shantikanta 'as

• Smt Snehlata 'as

•

Shri Ashwani Bumar (0M', 'ena #ank*• Shri San+ay Ballapur (&on- !fficial Member*

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CHAPTER FOUR

LITERATURE RE@IEW

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105 RI@IEW OF LITERATURE:

There are various studies related to %nsurance Sector in %ndia and abroad. %t was found

that the numerous numbers of literatures is available on insurance industry and its

various aspects. "ew relevant reviews are putting here in the contet, they are as

follows1

T$# Mal$otra Co""itt## *0?, + :ighlights the importance of the rural branch

postmasters who en+oy a position of trust in the community. They have the capacity to

canvass life insurance business within their respective areas. Accordingly, the

2overnment of %ndia accepted the recommendation and permitted ostal /ife

%nsurance to etend its coverage to the rural areas to transact life insurance business

with effect from ;).CC@, mainly because of the vast network of post offices in therural areas and low cost of operations. The 'epartment of osts within a short span of

time, made a very positive impact on the rural populace. As on st March ;=>@, there

are more than ;million ural ostal /ife %nsurance policies in %ndia (/%*.

Ran&$#4 an& A$!;a *0, + Says that need for private sector entry has been

+ustified on the basis of enhancing the efficiency of operations, achieving a greater density and penetration of life insurance in the country, and for grater mobili3ation of

long-term savings for long gestation infrastructure pro+ects.

Rao Tripti D *.///, + Stated that rivati3ation of insurance industry is based on the

view that competition would enhance efficiency through increased resource

utili3ation. %t would spill over as benefits to the consumers in terms of reduction in

premium costs with proper pricing policy and wider choice. /iberali3ation may also

increase the scope of operation of insurance business from limited area to untapped

areas like health, crop and unemployment.

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Ma-$ira;! Apparao *.//., + Argues that it is an undisputed fact that about ?@ to

= of the insurance population is yet to be covered in %ndia. %t is estimated that in

terms of lives, the figure could be around ;= crores. Those who are insured also are

not ade7uately insured. %nsurance policies are sold, but not insuring the people based

on needs.

Ra;! Sat4a R5 *.//1, + "ound that the insurance agents, development officers9

employees, eecutives at different levels should work together to achieve the

ob+ectives and mission and also to face the present and future competition as a

challenge. The insurance product and services should be designed and offered as per

the customer re7uirements.

Palan et al *.//, + "ound that the %nsurance industry is going to witness sea

changes in its marketing strategies. The eisting and the new insurers will devise

different strategies to retain and enhance their market share. %t would be done by

various methods by bringing in new practices, settings new service standards and

creating new benchmarks.

M-8in(#4 = Co"pan4 *.//, + #y ;=>; about >=.< million household with income

greater than s ; lakh will control more than ;; percent of rural consumption.

"urthermore rural %ndia will not be one market. ockets of attractive rural market will

emerge in certain parts of %ndia. layers will need to understand their needs, design

products to match them and create distribution models to reach a highly fragmented

consumer base cost effectively.

Ran;an Da( = Ra##n&ra *.//B, + The rural market for life insurance is different

from the urban market in terms of needs, income levels and distribution (seasonality

for eample*, penetration of media, awareness and so on. Ecept /%0 of %ndia, no

other player has paid much attention to the rural sector in spite of their fully meeting

the %'A obligations.

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C#l#nt *.//B, + The report published says that %ndia9s life insurance market is

booming and the market has grown at a healthy 0A2 of ;) over the past @ years.

Most of this growth is from the urban areas. The increase in competition is forcing

insurance providers to look beyond urban centers and take their trade to the more

challenging rural hinterlands of the country, where only


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S#la8!"ar= Pri4an *./0/, + "ound that insurance companies are increasingly

taping the semi-urban and rural areas to take across the message of protection of life

through insurance cover. :igher level of protection implies that customers are more

conscious of the need for risk mitigation, grater security, and about the future of their

dependents. %nsurance sector has been evolving and improving its underwriting andrisk management abilities.

74an#n&ra Sin'$ L an& J4oti 6!"ar N@R *./0?, + %n their study points out that in

Mi3oram, the rural and urban ratio of /%0 policyholders during ;==C->= was >)1D,

and in the first half yearly report from April to September, ;=>= the ratio was ;=1=

indicating that only >?.;> per cent of the total &!s during the period was from rural

policyholders of Mi3oram, much below the national average of ;


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CHAPTER FI@E

RATIONALE OF STUDY

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arpita major research project.docx

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