CAPSTONE PROJECT REPORT

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

MASTER OF MANAGEMENT STUDIES (MMS)

on Buying Behavior of Consumers for Insurance Products

(Topic of the Capstone Project)

Submitted to SIES COLLEGE OF MANAGEMENT STUDIES

Submitted by Paritosh Mangal Roll No. - 33 Batch 2012-14

SIES COLLEGE OF MANAGEMENT STUDIES NERUL, NAVI MUMBAI

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DECLARATION

I, _Paritosh Mangal_, studying in the second year of MASTER OF MANAGEMENT STUDIES (MMS) at SIES College of Management Studies, Nerul, Navi Mumbai, hereby declare that I have completed the Capstone Project titled Buying Behaviour of Consumers for Insurance Products as a part of the course requirements for MASTER OF MANAGEMENT STUDIES (MMS) Program.

I further declare that the information presented in this project is true and original to be best of my knowledge

Date:

Place:

Signature of the Student

CERTIFICATE

This is to certify that Mr. / Ms. Paritosh Mangal, studying in the second year of MASTER OF MANAGEMENT STUDIES (MMS) at SIES College of Management Studies, Nerul, Navi Mumbai, has completed the Capstone Project titled Buying Behavior of Consumers for Insurance Product as a part of the course requirements for MASTER OF MANAGEMENT STUDIES (MMS) Program.

Date:

Place:

Signature of the Guide

TABLE OF CONTENTS

[Link]. 1 2 3 4 5 6 7 8 9 10 11

Particulars Executive Summary Introduction of the Topic Industry Scenario Literature Review Research Methodology Findings and Analysis Outcome and Conclusion Future suggestions Limitation of the Project References Appendix (Tables / Figures, Graphs)

Page No. 06 07 08 10 17 18 25 31 36 37 38

ACKNOWLEDGEMENT
No significant achievement can be solo performance especially when doing a research project. This project has by no means been an exception. It took many very special people to enable it and support it. Here I would like to acknowledge their precious co- operation and express sincere gratitude towards them.

I would like to thank my project guide Mrs. Vatsala Bose, Chairperson, MMS and Prof. Vikram Parekh (Dean Marketing) for their support and suggestions towards the development of the project. I would also like to thank my colleagues at Kotak Mahindra Old Mutual Life Insurance Ltd., Infinity Tower, Malad for their support and assistance.

I also take this opportunity to acknowledge S.I.E.S. College of Management Studies, Nerul to provide me the opportunity to accomplish this project. Also I would like to convey my gratitude to the respondents of this survey, who enabled the smooth and successful completion of the project.

Without the valuable co- operation of these people who have resourcefully provided their inputs, this project would have remained just an idea, without form or content.

EXECUTIVE SUMMARY
India is opening up in a big way as an insurance market. From being a sector that was dominated by just one player the market dynamics in todays scenario has changed completely. With consumer awareness increasing, regular monitoring and policy updates from IRDA (insurance industry regulator) and perceptions regarding insurance as a product changing, the insurance sector is witnessing a major change. The insurance market in India is one of the fastest growing sectors in the economy. Any company be it Indian or foreign would be interested in understanding the Buying Behavior of Consumers prevailing in the insurance sector. OBJECTIVE: Understanding the buying pattern for insurance products among the existing policy holders taking into consideration the private players. DATA COLLECTION METHOD: A primary data and secondary data analysis has to be conducted keeping in reference our objective of study. SECONDARY DATA: Past studies in this topic will act as a source of secondary data. This data is needed in order to give a theoretical background of the subject matter of the research. The secondary data is to be collected from Referred Journals, Websites and Magazines. PRIMARY DATA: The primary data has to be collected with a Sample Size of 100 and Demographic segmentation of people living in MATUNGA (west) and DADAR (west) having Age 16+

INTRODUCTION
A BRIEF HISTORY OF THE INSURANCE SECTOR
The business of insurance in India in its existing form started in the year 1818 with the establishment of the Oriental Life Insurance Company in Kolkata. Some of the important milestones in the insurance businesses 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 by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies were 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 crore 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 Kolkata by the British. Some of the milestones in general insurance business in India are: 1907: The Indian Mercantile 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 Act, 1972 nationalized the general insurance business in India 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.

INDUSTRY SCENARIO
All factors are in place for the Indian Life insurance industry to blossom into one of the fastest growing financial services market in the world. The still nascent market is at an inflection pointrising incomes driven by economic growth are boosting demand, and increasingly sophisticated consumers with different needs are driving some differentiated plays. For companies wanting to address this opportunity a me-too approach will be insufficient. To emerge as winners they need to reexamine their strategies and commit a few breakthrough approaches. This will not only put them in pole position in the race of customers, but will also help them build sustainable and profitable businesses.

Indias life insurance market has grown rapidly in past few years. This impressive growth is driven by liberalization in the sector, which enabled the entry of host of new players with significant growth aspirations. These players have contributed to the sectors development by significantly enhancing the product awareness, promoting consumer education, and information and creating more organized distribution channels.

But, the market is still in nascent stage in its evolution. The ratio of life insurance premium to GDP in India is currently about 4%, much lower than developed market levels of 6-9%. In several segments of the population, penetration is lower than potential. For example in urban areas, penetration of life insurance in mass market is about 65%, and is considerably low in lower income segment. In rural areas life insurance penetration is 40% in banked segment and considerably low in the non- banked segment.

This might change as India sees strongly accelerating household incomes. According to the recent Mckinsey Global Institute study, disposal income is expected to increase by 5.3% annually which is significantly more since the last decades. This will accelerate insurance penetration and per capita coverage.

Rising income levels and dramatic demographics shifts will lead to the emergence of distinct consumer segments that need to be served in fundamentally different ways.

The effluents with an annual income of more than 10 lakhs, will increase rapidly by 2015. The middle class comprising of seekers (income: 2-5 lakhs/annum) and strivers (income: 510lakhs/annum) will grow to 16% of the population by 2015. The aspirers (annual income: Rs.90000-2lakhs), will comprise 46% of the population by 2015, representing a formidable emerging bankable class.

Larger set of urban and rural towns Indias urban and rural population will increase from 320million to 380 million by 2015 and nearly double by 2025. And it will grow beyond existing big cities, into 2nd and 3rd tier cities and small towns. Based on MGI forecasts, 26 tier-two cities (with population greater than 1million) and 33 tier-three towns (population greater than 5,00,000) will account for 25% middle class and newly bankable class by 2025.

Although incomes will rise in urban areas, rural areas will not be left behind. The income will grow at a rate of 3.8% annually as compared to 2% in the last two decades. By 2015, about 10.3 million rural households (with annual household income greater than 2 lakhs), will control 22% of the total rural consumption. Many of these household will probably for the first time spend on discretionary products and services.

LITERATURE REVIEW
Insurance industry has always been a growth oriented industry globally. On the Indian scene too, the insurance industry has recorded noticeable growth vis--vis other Indian industries.

The Triton General Insurance Co. ltd. was the first general insurance company to be established in India in 1850, which was a wholly British owned company. The first general insurance company to be set up by an Indian Mercantile Insurance Co. ltd was established in 1907. There emerged many players on the Indian scene thereafter.

The general insurance business was nationalized after the promulgation of General Insurance Business (Nationalization) Act, 1972. The post- nationalization general insurance business was undertaken by the General Insurance Corporation of India (GIC) and its 4 subsidiaries: 1. Oriental Insurance Company Limited; 2. New India Assurance Company Limited; 3. National Insurance Company Limited; 4. United India Insurance Company Limited.

Towards the end of 2000, the relation ceased to exist and the four companies are, at present, operating as independent companies.

The Life Insurance Corporation (LIC) was established on 1.9.1956 and had been the sole corporation to ride the Life insurance business in India.

The Insurance industry saw a new sun when the Insurance Regulatory & Development Authority (IRDA) invited the applications for registration as insurers in August, 2000. With the liberalization and opening up of the sectors to the private players, the industry has presented promising prospects for the coming future. The transition has also resulted into introduction of ample opportunities for the professionals including Chartered Accountants The Indian insurance industry is featured by the attributes:
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Low market penetration; Ever growing middle class component in the population; Growth of consumer movement with an increasing demand for better insurance products; Inadequate application of information technology for business; Adequate fillip from the Government in the form of tax incentives to the insured

The industry formations need to keep vigil on these characteristics of the Indian market and formulate their strategies to entail maximum contribution to the output sector. In 1997, the Indian life and non- life insurance business accounted for merely 0.42 percent of the worlds life and non- life business. The figures of the basic parameters of the industrys performance viz. Insurance Density and Insurance Penetration also are evident of the hitherto existing low-yield Indian market conditions. The term Insurance Penetration broadly measures the contribution of the insurance industry in relation to a nations entire economic productivity. The figure of premium vis--vis the GDP of 1999 stood at 0.54 percent for non-life insurance business and 1.39 percent for the life insurance business. The term Insurance Density reflects the insurance purchasing power. The premium per capita in India amounted to US $ 2.40 for non-life insurance and US $ 6.10 for life insurance in 1999 but with the deregulation of the sector, a sea change in the scene is most likely. 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 two centuries.

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BASIC FUNCTIONS OF THE INSURANCE INDUSTRY

1. RISK PERCEPTION AND EVALUATION: The fundamental function of an insurer is to provide a cover against the detriment caused to the insured due to the happening of certain specified and agreed events. Thus, prior to providing such umbrella through a product, the insurer has to assess the risk involved in the transaction. The insurer has to identify the element of risk prevalent in the concerned industry or a particular unit. The perception of risk requires the study of variables through various methods including the application of scientific and statistical techniques and correlation thereof with the industry or unit under study in light of their basic environmental and infra- structural characteristics. After the identification and categorization of the risks perceived, the probability of the happening of loss-causing events and the severity of loss has to be assessed.

2. DESIGNING THE INSURANCE PRODUCT: On the basis of the risks perceived, the insurer develops a product to cover the stipulated risks. While designing an insurance product, an insurer decides its cost to be charged from the insured in the form of the premium, reduction thereof in certain cases like not lodging any claim during the previous covered period(s), suggesting the implementation of risks mitigating measures, etc. the features of a product should be flexible enough to provide for determination of premiums, rebates, additional premiums, etc. depending upon the risks benchmark as determined.

3. MARKETING OF THE PRODUCT: The core function of the marketing force of the insurance company is to generate awareness about the insurance products among the target market. But in the Indian scenario, where the insurance penetration is too low as compared to the other nations, the marketing force needs to perform the proactive role in developing an insurance culture. It is through the efficiency of sales force of an insurance company that the desirability and the success of a product are determined.

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In Indian insurance market, the function is basically performed by the agents. The persons desiring to function as insurance agents have to obtain license to act as such from the IRDA or an officer authorized by the Authority in this behalf. The agents approach the prospective buyers and apprise them of the basic features of the products. Further the marketing personnel should be adequately backed by the back-office setup.

4. SELLING OF THE PRODUCTS: The term selling in the term of insurance industry connotes the issuance of policies to the applicant. The non-life insurance policy basically embodies the covenant between the insurer and the insured wherein the former agrees to indemnify the latter for the loss caused to him on the happening of the certain agreed events to a specified limit. The life insurance policy generally contains the agreement whereby the insurer agrees to pay to the insured or the beneficiary of the policy an agreed amount on the expiry of the term of the policy or the event of death of the insured respectively. The additional benefits in the shape of riders viz. Accidental Death Benefit, Double Sum Assured, Critical Illness benefits, Waiver of Premiums, etc. can also be appended with the policy on the payment of additional premium.

In Indian industry, the function is generally performed by the insurer. In addition, the insurance companies depute their Direct Selling Representatives to look after the function. They receive the proposal documents, vet them and issue policies to the proposers.

5. MANAGEMENT OF PORTFOLIO: The management of portfolio includes the assessment of requirements of funds, identification of various sources of finance, the evaluation of the sources in the light of their cost, availability, timing, etc., reconciling the features of various sources with needs of the company and the selection of appropriate conjunction of sources. The insurer possesses huge amount of funds, which need proper management. The management of the portfolio of an insurance company requires the identification of Investment avenues evaluation thereof and the selection of the most appropriate mix of alternatives where the funds of the company can be invested. The selection requires the knowledge of finance related functions and techniques apart from the in-depth know of the patterns of requirement of funds in the company as well as industry as a whole.

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BASIC FUNCTIONS THAT INSURANCE PRODUCTS NEED TO FULFILL

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 losses of the 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 person 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 a 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 a device whereby the uncertain risks may be made more certain.

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The secondary functions of insurance include 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 causes lesser payment to the assured by the insurer and this will encourage more savings by way of premium. Reduced rate of premiums stimulate 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 maybe prepared to give credit to sick industrial units which have insured their assets including plant and machinery.

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 insureds 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 export insurance, which makes the foreign trade risk free with help of different types of policies under marine insurance cover.

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TYPES OF INSURANCES
Motor Insurance : It is also known as auto insurance/car insurance and is the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the vehicle itself. Property Insurance : It provides protection against risk to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insurance. Health Insurance covers medical bills incurred because of sickness or accidents. Life Insurance : It provides benefit to a descendants family or other designated beneficiary, usually to make for their loss of his or her income. Accidents Insurance provides a benefit to a policy holder if is an accident. Theft Insurance provides benefit to policyholder in case of any theft.

TYPES OF COMPANIES PROVIDING THE INSURANCE

Insurance companies maybe classified as a) Life insurance companies: Sell life insurance, annuities and pensions products b) Non-life or general insurance companies: Sell other types of insurance.

In mostly, life and non-life insurers are subject to different regulations, tax and accounting rules. The main reason for distinction between the two types of company is that life business is very long term in nature- coverage for life assurance or pension can cover risks over many decades. By contrast, non-life insurance cover usually covers shorter periods, such as one year. Companies may sell both life and non-life insurance, in which case they are known as composite insurance companies.

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RESEARCH METHODOLOGY
OBJECTIVE
Understanding the buying pattern for insurance products among the existing policy holders taking into consideration the private players.

PILOT SURVEY
Initially a pilot survey was done and the questionnaire was prepared based on the findings of the pilot survey.

METHODOLOGY (RESEARCH DESIGN)

1) Sampling method The sampling method used in this research is as follows: Sample sizeThe sample size for research is 100 correspondents Target Population The research targeted 100 households The target population included professionals, people from service sector, housewives, and businessmen with adequate family income. Sampling Technique CONVINIENCE 2) Data collection Medium of survey: Face to Face Tool for survey: Questionnaire 3) Data analysis The data analysis has been done using graph charts and pie- charts.

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FINDINGS AND ANALYSIS

PERCENTAGE OF RESPONDENTS HAVING POLICY

Life Insurance
25% YES NO 75%

Motor Insurance
17% YES NO 83%

Life insurance and motor insurance are the most popular insurances among the respondents. In case of life insurance, the first thing that comes to customers mind is LIC. Thus, LIC is almost synonymous with life insurance. Also motor insurance is famous because a motor owner does not need to take extra efforts to get the insurance as it is provided when a person buys the motor.

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PERCENTAGE OF RESPONDENTS HAVING POLICY (CONTD.)

Health Insurance

48%

52%

YES NO

Although 52% of the respondents have health insurance policies, majority of them have got it through the companies where they are employed. Very few respondents have bought it directly through insurance companies. Thus, health insurers need to make efforts to make health insurance products more popular among the consumers at an individual level.

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PERCENTAGE OF RESPONDENTS HAVING POLICY (CONTD.)

Accident Insurance
Yes

No

Theft Insurance
Yes No

Accident and theft insurances are not very popular among consumers. Some consumers do not even know about the existence or availability of such products in the market.

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AGE AT WHICH POLICIES WERE BOUGHT Life Insurance

As the graph suggests, majority of the insurance holders fall in the age group of 40-50 years followed by the age group of 30-40 years. Probably as consumers approach old age their tendency to buy life insurance increases, so that they can ensure a secured life for their dependents in their event of death. However, the age group of 20-30 is the one where consumers have lesser responsibilities and high disposable income. In this segment there is scope for growth. Hence, insurance can tap this segment for life products.

Health Insurance

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As the graph on the previous page suggests, 35% of health insurance holders fall in the age bracket of 41-50 years. This is the age group when people are more prone to health implications. Probably that is the reason for this statistic.

Motor Insurance

Majority of the motor insurance holders fall within the age bracket of 21-30 years. Maximum motor owners today fall in this age bracket and the majority of motor companies have tie-ups with insurance companies, thus supporting the increase of policy holders within this age bracket. Even between 31-50 years of age the number of motor insurance holders is high. Between 16-20 years of age, majority population is usually that of consumers who do not have very high disposable incomes, majority being students. This could be the reason for less policy holders within this age group.

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COMPANY WISE MARKET SHARE

Motor Insurance

These are the three major market players which share the market equally United India Insurance NIC New India Insurance

In the private insurance players Bajaj alliance holds a good pergentage of the market.

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Health Insurance

Majorly people are not aware of the health insurance. When they say health insurance they relate to life insurance. Therefore not much importance is given to health insurance in India. New India insurance and Oriental insurance are the major players in the health sector.

However, in case of both health and motor insurance, there is no clear-cut market leader. In order to gain a strong hold in this market companies need to differentiate themselves from other players.

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Life Insurance

LIC is the market leader with maximum customer base. Reasons are as follows: Reputation and crdibility Strong distribution network Integrated training and development Financial stability Sophisticated technology and systems Risk management skills Fund management skills Strategic selection of segments

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TRUST GOVERNMENT OR PRIVATE PLAYER MORE

Private 26%

Trust

Government 74%

People trust government players more compared to private players, as they feel that government players are old players in the market and hence there is a feeling of security when buying their policies. Although there are a lot of private players entering the market with more innovative products as compared to the public players, yet the trust factor is more with the public players. In case of financial matters the trust factor counts a lot and at times becomes becomes a decisive factor.

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REASONS FOR BUYING A POLICY

Majority of the respondents took policies due to tax benefits followed by consumers who need a secure future. Although insurance is also being considered as an investment option these days, very few people take insurance policies for investment purposes as per the research.

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SOURCE OF KNOWLEDGE ABOUT THE INSURANCE POLICY

Majority of the consumers get information regarding insurance products from insurance agents. Hence, insurance agents should be selected with care by companies and they should be given adequate training regarding products. Also, family and friends play an important role, i.e. word of mouth publicity. However, media seems to be the least effective in providing information. Hence, companies should focus on this area, as media can play an important role in educating the customers regarding the insurance products.

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FACTORS INFLUENCING THE PURCHASE OF A POLICY

Majority, people select an insurance provider based o good customer service. Hence, private players have an edge over government players in this regard. Also, today customers require products that are tailored to suit their needs as every customer has his own reasons for buying insurance policies. Also, brand name is an important consideration as financial products are usually associated with trust and every consumer looks at the credibility of the company before putting in his/her money.

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SATISFACTION LEVELS WITH THE CURRENT INSURER

Level of satisfaction for the existing policies is very poor among the consumers because majority of the consumers have insurance policies provided by the government companies which do not provide:

Prompt response Good customer service A policy holder has to make many efforts to get his claim from the company.

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FUTURE SUGGESTIONS
On the basis of Primary research
1. As seen from the survey a number of potential customers do not buy insurance products due to certain attitudinal and product related barriers. Insurance companies should therefore work towards tackling these barriers. The following measures could be taken: To tackle attitudinal barriers Companies could position insurance as a means to fulfilling ones filial duties during ones lifetime. Trepidation relating to thefts, ailments, death could be addressed through sensitive communication. Companies could design products that appeal to women to improve her self worth. Through a change in perception, she can be a powerful influencer in financial planning. To tackle product related barriers in order to eliminate the fear of money getting blocked and low returns, companies could reposition their products as risk cover, security instrument and promote it as long term investments. Fears relating to claims can be diminished from the minds of customers by promoting the trust factor. Testimonials by existing customers could be promoted through the company websites, newspapers and other media of communication used by the company. This will help build trust among the minds of potential customers. 2. As survey suggests, majority of the people taking health insurance, usually get it from the companies they work in, very few customers buy it on individual level. Hence, companies need to make efforts to make health insurance more popular through appropriate promotions.

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3. Product customization/ variety is a very important factor in selecting an insurance provider. In the context of formulating the product mix, it is essential that the insurance organizations promote innovation and in the product portfolio include even those services and schemes which are likely to get a positive response in the future. According to Theodore Levitt a product has three levels of features and hence in making its plan an insurance marketer needs to address all these levels. Currently most marketers are primarily addressing only the first two levels I.e. the coreproduct and formal product levels. However, with further expectations of the customer- again synchronised with intense competition- insurance companies should also address the augmented product level. 4. Insurance companies should not consider it as the end of the service once the customer is provided the policy. Insurance company should include the provision of the post- sales services to the customer. Among the services rendered by the insurance company is the service of processing and release of claims. The insurance company needs to verify the accuracy of facts presented in relation to the insurance claim and the documents produced in support thereof. 5. As insurance agents play a very vital role in educating the customers regarding the products, as per the survey, the agents communication skills are very important. The insurance company has to play an active role in enabling the agents to impart the best customer education through appropriate training given to the agents. Selection of these agents, their training is very crucial to the organisation. There is difference in urban and rural market. Rural customers might be uneducated/ uninformed etc. compared to the urban customers. Hence the organizations will have to make selections of the rural and urban agents accordingly. 6. Customer complaints management with regards to delay in discharge of claims must be effectively handled by the insurance company to have competitive edge over its competitors. The complaint management will help the company to get the consumer closer to the organization as the consumers fell that their grievances are taken care of. This will help in better retention of customers and might result in repurchase of products.

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7. From the survey its clear that very few people get to know about insurance policies through media. Rapport with the media is an important aspect of publicity. This makes it essential that the PR officers working in the insurance organisations maintain contacts with the media. The PROs bear the responsibility of projecting positive image of the organization. Thus it is necessary to select suitable personnel for this. 8. Quality of servicies should be maintained as that is the most important thing in promotion. It leads to word-of-mouth publicity, which according to the survey plays a very important role in educating people about insurance products. The word-of-mouth communications result into wider publicity, which substantially sensitizes the process of influencing the impulse of users/prospects of the insurance services. 9. Place/distribution, a component of marketing mix plays a major role in bridging gap between the services- promised and services-offered. Most private players lag behind government players as the latter have good distribution networks. Hence, private players need to develop strong distribution networks in order to compete the government players. 10. Insurance companies need to implement CRM with the view point of retaining customers. Insurance companies can give their customers various tangible items like pens, letter pads, calenders etc. such things try to reduce the intangibility characteristics of this industry. 11. Use of national/regional language, customer friendly forms and instruction manuals, segregation of various departments into counter etc will make entire process very simple for customers. Insurance, being a service, customers are very keen on the entire process that they go through to avail of a service.

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12. Customers involvement in case of insurance organization is quite limited. The insurance agent acts as PROs for the company, they perform majority of the necessary formalities. The customers are only involved in case of formalities like medical examinations, interviews etc. but the organizations can make it a point to let the customers express their concerns through the customers complaint cell and mail/email contacts.

On basis of secondary research

(Refer current scenario section) The affluents with an annual income of more than 10 lakhs, will increase rapidly by 2015. This segment has relatively low need of risk protection. They view insurance as an investment tool. Hence to cater to this segment of consumers companies can provide relationship managers, rather than insurance agents, as the former also provide third party investment products, brokerage and other advisory services. The middle class comprising of seekers (income: 2-5 lakhs/annum) and strivers (income: 5-10 lakhs/annum) will grow to 16% of the population by 2015. This segment uses insurance largely for tax planning, retirement planning and savings as well as for risk protection. This is an attractive segment to focus on as large volumes can be built through this segment.

The aspirers (annual income: rs.90000-2 lakhs) will comprise 46% of the population by 2015, representing a formidable emerging bankable class. This usually uses insurance for long term savings, providing high returns at low risks, given the lack of alternative investment options. Hence, when catering to this segment it is important for companies to manage profitability as ticket size is usually low and underwriting risk is relatively high.

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As urban population is predicted to increase in small towns, with rise in the middle class and bankable class, insurers can enter these towns for further penetration and can thus tap the large middle class segment.

Also incomes in rural india are going to increase at a rapid rate. Many of these households might spend on such products for the first time. Although there is massive potential, the per capita ticket sizes will be low and rural consumers will dispersed throughout the country. In order to target these segment insurers need to understand their needs and design products accordingly. However, they need to develop appropriatedistribution channels while at the same time remain cost effective.

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LIMITATIONS OF THE PROJECT

One of the major limitations of this study is the sample size selected. A sample size of 100 people may not reveal all the facets of consumer buying behaviour.

Again, this survey was mainly conducted in Mumbai and has a geographical limitation and may not be representative of India as a whole.

Being a novice in this field inadvertently I could have had missed out on certain points though I have put in whatever I had, to make this research as fruitful as possible.

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REFRENCES
[Link] [Link] [Link] [Link] [Link] [Link] [Link] [Link] [Link] [Link]

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APPENDIX
Questionnaire
BUYING BEHAVIOR OF CONSUMETS IN INSURANCE PRODUCTS 1. Do you have a policy for any of the following : LIFE INSURANCE ACCIDENTAL INSURANCE HEALTH INSURANCE THEFT INSURANCE MOTOR INSURANCE If none, than why not?

2. At what age did you buy the following policies? 16-20 21-30 31-40 51-55 55+yrs

a)Life Insurance :

41-50

b)Health insurance:

16-20

21-30

31-40 55+yrs

41-50

51-55

c)Accidental insurance: 16-20

21-30

31-40 55+yrs 31-40

41-50 d)Theft insurance: 16-20

51-55 21-30

41-50

51-55 55+yrs

e)Motor insurance:

16-20

21-30 31-40 51-55 55+yrs

41-50

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3. Which companies policy do you have for (a)HEALTH INSURANCE: HDFC STANDARD LIFE IFFCO TOKYO NEW INDIAN INSURANCE MAX NEW YORK LIFE INSURANCE ORIENTAL INSURANCE MET LIFE RELIANCE GENERAL UNITED INDIA ASSURANCE ROYAL SUNDARAM ALLIANCE ANY OTHER INSURANCE

(b) LIFE INSURANCE: TATA AIG MAX NEW YORK LIFE INSURANCE OM KOTAK MAHINDRA BAJAJ ALLIANZ HDFC STANDARD LIFE ICICI PRUDENTIAL METLIFE LIC BIRLA SUN LIFE ANY LIFE INSURANCE

(c) MOTOR INSURANCE: BAJAJ ALLIANZ ORIENTAL ALLIANCE UNITED INDIA INSURANCE NEW INDIA INSURANCE NATIONAL INSURANCE CO. ANY OTHER

4. FROM WHERE DID YOU COME TO KNOW ABOUT THE POLICY? MEDIA COMPANY APPROACHED INSURANCE AGENT APPROACHED BY FINANCIAL INSTITUTION FRIENDS FAMILY OTHERS

5. REASONS FOR TAKING POLICY: TAX BENEFIT INVESTMENT TO OBLIGE A FRIEND OFFERED BY FINANCIAL INSTITUTION TO PROTECT AGAINST FUTURE DAMAGES OFFERED BY COMPANY OTHERS 39

6. WHICH FACTORS INFLUENCE YOU TO BUY A POLICY FROM A PARTICULAR COMPANY? PREMIUM TO BE PAID BRAND NAME SERVICE PRODUCT CUSTOMIZATION/VARIETY DISTRIBUTION

7. ARE YOU SATISFIED WITH YOUR INSURANCE SCHEME? YES NO

8. WOULD YOU TRUST GOVERNMENT INSURANCE OR A PRIVATE COMPANY? GOVERNMENT PRIVATE COMPANY

9. PERSONAL INFORMATION: MALE

FEMALE

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