1.1 INTRODUCTION OF THE STUDY The Business of Insurance is related to the protection of the economic values of the assets.

Every human being has the tendency to save to protect him from risks or events of future. Insurance is one form of savings where in people try to assure themselves against risks or uncertainties of future. It is assurance against risks or events or losses. People can save their earnings either in the form gold, fixed assets like property or in banking and insurances. All the savings of people of a country account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it. Hence insurance sector is still untapped in India

1.1.1 What is Insurance ? Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment) collected from plenteous. Insurance is a safeguard against uncertain events that may occur in the future. It is an arrangement where the losses experienced by a few are extended over several who are exposed to similar risks. It is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premium to provide security for the purpose. Loss is paid out of the premium collected from people and the insurance companies act as trustees to the amount so collected. These companies have proposal forms which are filled to give details of insurance required. Depending upon the answers in the proposal form insurance companies assess the risk and decide on the premium. Insurance companies are risk bearers. They underwrite the risk in return for an insurance premium. the function of insurance is to provide protection, prevent losses, capital formation etc. hence insurance can be defined as a tool in which a sum of money as a premium is paid by the insured in consideration of the insurers bearing the risk of paying a large sum .it may also be defined as a contract wherein one party (insurer) agrees to pay the other party (insured) or his beneficiary, a certain sum upon a given contingency against which insurance is required. Insurance industry commands massive funds through sales of insurance products to large number of clients. Insurers also create liabilities and commit themselves to compensate for losses occurring to the policyholders on future date. It also plays an important role in process of capital formation.

1.1.2 Nature of Insurance Risk sharing and risk transfer: Insurance is used to share the financial losses that might occur to an individual or his family on the happening of specified events. The loss arising from such events are shared by all the insured in the form of premium. Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Everyyear one house gets burnt, resulting into a total loss of Rs.200000.If all the 250 owners come together and contribute Rs.800 each, the common fund would be Rs200000.This is enough to pay to the owner whose house gets burnt. Thus the risk of one owner is spread over 250 house owners of the village. Risk assessment in advance: Insurance companies are risk bearers. They assess the risk before insuring to charge the amount of premium. Its not gambling or charity: The uncertainty is changed to certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. Insurance is antithesis of gambling. Failure of insurance amounts to gambling because the uncertainty of loss is always looming. Moreover insurance is not possible without premium. So it is different from charity because charity is given without consideration. Huge number of insured people: It is essential to insure larger number of people or property to make cost of insurance less consequently premium would also be less. Assists in capital formation: Insurance provides capital to society. Accumulative funds are invested in productive channels.

1.1.3 Semantics Risk: It is defined as an uncertainty of a financial loss. It is the unintentional decline in or disappearance of value arising from contingency. Policy: It is the document which embodies the insurance contract Whole life policy: It is the policy under which the amount of policy will be paid only on death of the insured. Premiums may be payable throughout the life or for a limited period. Endowment policy: Endowment policies entitle the insured to receive the amount of the policy on his reaching a certain age and premiums also stops. If death occurs earlier, amount of the policy will be paid at that time and payment of premium will also stop at that time. Claim: It is the amount which an insurer has to pay against a policy. Reinsurance: It refers to placing a part of the risk by an insurer with another insurer. The object is to reduce the possible loss to be borne by the original insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure must pay commission to the original insurer. Premium: A periodic payment made on an insurance policy. Insurance penetration: It is defined as insurance premium as a share of gross domestic product. Insurance density: Insurance density is defined as per capita expenditure on insurance premium i.e. premium per capita. Actuary: The actuary is a specialist who combines an understanding of risks and mathematical technique to develop financial products to manage these risks, price these products. He helps in designing insurance plans and then evaluates the financial risk of the company which it takes while selling an insurance policy.

1.1.4 Types of Insurance Insurance is broadly divided in two segments, based on the nature of insurance, those are: 1. Life Insurance & 2. Non-Life Insurance or General Insurance. It can be again subdivided into the following categories: Fire Insurance. Marine Insurance. Social Insurance & Miscellaneous Insurance. (Health insurance, Liability Insurance etc.

1.1.5 Characteristics of insurance Sharing of risks Cooperative device Evaluation of risk Payment on happening of a special event The amount of payment depends on the nature of losses incurred. The success of insurance business depends on the large number of people insuredagainst similar risk. Insurance is a plan, which spreads the risk and losses of few people among a largenumber of people.

1.1.6 Functions of insurance: Primary functions: Provide protection: - Insurance cannot check the happening of the risk, but can provide for the losses of risk. Collective bearing of risk: - Insurance is a device to share the financial losses of few among many others. Assessment of risk: - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Provide certainty: - Insurance is a device, which helps to change from uncertainty to certainty.

Secondary functions: Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions. Small capital to cover large risks: - Insurance relives the businessman from security investment, by paying small amount of insurance against larger risks and uncertainty. Contributes towards development of larger industries.

1.1.7 Insurance companies have two sources of income for covering these costs: Premiums Investment income The premiums are collected on a regular basis and invested in Government Bonds, Gilt, stocks, mutual funds, real estates and other conservative avenues. However, investmentincome depends on market conditions, interest rates, economy etc. and varies from year toyear. Because of the uncertainty associated with the investment income, insurancecompanies must generate enough income from premiums to cover the bulk of their expenses.

1.1.8 Some of the important milestones in the life insurance business are as:1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 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 are 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 Calcutta by the British. Some of the important milestones in the general insurance business in India: 1907: The

Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance. 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: 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. 1.1.9 Insurance Sector reforms

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. There forms 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 addressthe need for similar reforms In 1994, the committee submitted the report and some of the key recommendations included. i) 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. ii) 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 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. the domestic

iii) 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 independent. iv) 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 to be brought down to this level over a period of time). v) 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 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. holdings made

1.1.10 History of Insurance Global For now we know the meaning of insurance, different types of insurance. Now let us know the history and reasons for and behind different types of insurance. Insurance has existed for thousands of years. The first ever type of insurance was Property Insurance. It became popular about 3000 BC in China. It all started when Chinese merchants, as well as their investors, wanted to ensure that they would see a profit from their goods that they shipped overseas. In the event that a ship was lost at sea, an insuring partner would reimburse the owners of the ship and goods. To pay for the loss the merchant would be sold into slavery to the insurer until the debt was repaid. This was so because, a merchant could not afford to pay for the lost goods or even to buy a ship unless someone invested. Property insurance was also seen in Babylon as well. In Babylon, merchants and investors entered into a contract, in which the supplier of money for a trade agreed to cancel the loan if the trader was robbed of his goods. The trader who borrowed the money paid an extra amount for this protection in addition to the usual interest. As for the lender, collecting these premiums from many traders made it possible for him to absorb the losses of the few. Later this contract was extended to include provisions for a family's home and even the death of the insured, where life insurance came into existence. Slowly this concept started to spread across other places like Greek, Roman. Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. Until the 1950s, most insurance companies in the United States were restricted to provide only one type of insurance, but then legislation was passed to permit fire and casualty companies to underwrite several classes of insurance. Many firms have since expanded and also were responsible for many mergers. From this brief accounting of history we can see how insurance came into existence. Fortunately for us we no longer have to sell ourselves into slavery if our car is stolen nor we have to be scared of losses due to absence of reserves. However we can be confident that we will be compensated for our loss. Without people wanting to secure their investments and great tragedies throughout history we may not have insurance as we know it today resulting in peace of mind.

1.1.19 History of Insurance Industry in India The insurance industry in India over the past century has gone through big changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from being an open

competitive market to nationalization and back to a liberalized market again. Insurance industry in India started as a fully private system with no restriction on foreign participation in the Nineteenth Century. Before independence, a few British insurance companies dominated the Market. Life insurance was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829. With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 %annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 %to the countrys GDP. Gross premium collection is nearly 2 %of GDP and funds available with LIC for investments are 8 %of GDP. Yet, nearly 80 %of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country. The growing number of wealthier as well as aging Indian middleclass is set to offer a strong business potential for the countrys untapped life insurance market. Insurance is a federal subject in India. There are two legislations that govern the sector-The InsuranceAct-1938 and the IRDA Act-1999.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.

1.1.20 Contribution of the Insurance sector to the Indian economy Some surveys have predicted that India and China will play a very vital role in the years to come. Indian economy can be termed as an emerging economy as it is doubling its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its GDP. If we look at the GDP of the Indian economy very closely over the years, we can easily come to know the changing structure of the

economy. We can also come to know the changing contribution of the various sectors like agriculture, manufacturing and the service sector. In the financial year 1993-94, agricultural sector contributed to 31%, manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus over the years as India became an emerging economy in2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8whereas service sector contributed for 51.4% of the total GDP. There has been 7.5% growth in the total GDP of the country and is estimated to grow at 8.0% in 2006-07. The Indian economy has shown signs of strong performance despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the country. The overall growth of the Indian economy has been equally supported by all the three sectors of the economy, i.e. the agriculture, manufacturing and the service sector. Insurance, together with the banking sector, contributes to about 7.3 % of the total GDP of India, and the gross premium collected contributes to about 2% of the total GDP of the country The insurance sector in India has completed 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 200 years.

1.2LIFE INSURANCE
Life insurance is a contract between an insured (insurance policy holder) and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits. The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones and lenders. It is possible for life insurance policy payouts to be made in order to help supplement retirement benefits; however, it should be carefully considered throughout the design and funding of the policy itself. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion. Life-based contracts tend to fall into two major categories: Protection policies designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance. Investment policies where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US) are whole life, universal life and variable life policies.

1.2.1 Parties to a Contract There is a difference between the insured and the policy owner, although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the guarantor and he will be the person to pay for the policy. The insured is a participant in the contract, but not necessarily a party to it. Also, most companies allow the payer and owner to be different, e. g. a grandparent paying premiums for a policy on a child, owned by a grandchild.

The beneficiary receives policy proceeds upon the insured person's death. The owner designates the beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation. If a policy has an irrevocable beneficiary, any beneficiary changes, policy assignments, or cash value borrowing would require the agreement of the original beneficiary. In cases where the policy owner is not the insured (also referred to as the celui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an insurable interest in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The insurable interest requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim.

1.2.2 Contract terms Special exclusions may apply, such as suicide clauses, whereby the policy becomes null and void if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory one-year suicide clause). Any misrepresentations by the insured on the application may also be grounds for nullification. Most US states specify a maximum contestability period, often no more than two years. Only if the insured dies within this period will the insurer have a legal right to contest the claim on the basis of misrepresentation and request additional information before deciding whether to pay or deny the claim. The face amount of the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (such as 100 years old).

1.2.3History of Life Insurance Sector in India The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta LIC Zonal Office, Night View from Connaught Place Park in 1818 by BipinBehariDasgupta and others. Europeans in India were its primary target market, and it charged Indians heftier premiums. The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the pre-independence era included Bharat Insurance Company (1956) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life) The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover.

1.2.4Nationalization In 1955, parliamentarian AmolBarate raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram KishanDalmia, owner of the Times of India newspaper, was sent to prison for two years. Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance.

1.2.5Current status LIC Zonal Office, at Connaught Place, New Delhi, designed by Charles Correa, 1986. Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7% of India's GDP in 2006. The Corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs.5 for a US $,[4] has grown to 25000 servicing around 350 million policies and a corpus of over INR8 trillion (US$145.6 billion)

1.3 Types of Insurance policy There are various types of life insurance available to an individual depending upon the sole motive of insurance in order to meet contingencies. Below are types of life insurance options available to an individual:

 Term Life Insurance: Term life insurance plans provide insurance to an individual for a fixed tenure. It is the pure and cheapest form of life insurance for an individual. This type of policy is suitable for people who are unable to pay high insurance in order to buy endowment policies. Whole Life insurance: Whole life policies are totally opposite to term life plans. A whole life insurance policy covers risk to an individual for their whole life and generally no pay backs are provided under these types of policies. Endowment Life Insurance policy: Endowment life insurance policies are referred as traditional policies as well. Endowment policies covers risk to an individual for a specific period of time as per the opted policy and it also pay backs sum assured and promised bonuses at time of maturity as well. Money Back Insurance policy: Money back insurance policy is a type of life insurance under which money is paid to an individual at different stages of life yet covering their risk for a specific period of time. Unit Linked Insurance Plans: Unit linked insurance plans are the modern form of insurance. In addition to insurance cover provided by the provider, money is also invested in various avenues therefore providing opportunity to derive good returns as well. So, it serves as an insurance policy and investment plan. Retirement Plans: These policies are specially meant to provide steady income to an individual after their retirement. These kinds of policies enable a person to be independent maintaining good lifestyle. Savings and investment plans: These plans help you to save money and also provide you investment opportunity to grow your money.

 Child Insurance policy: These types of policies are meant especially for children. The basic motive of these policies is to provide financial assistance to a child at various stages of their education and thus making their bright future.

1.4 Government Policies Regarding Life Insurance Insurance Regulatory and Development Authority (IRDA) 1999 Reforms in the insurance sector were initiated with the passage of the IRDA bill in December 1999.it was set up as an independent body and it has been able to frame globally compatible legislations. The IRDA was set up to protect the interests of holders of insurance policies, to regulate , promote and insure orderly growth of the insurance industry and for matters connected therewith or incidental there to. This act extends to whole of India. With the establishment of this act, government amended Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972.IRDA was formed on the recommendations of Malhotra Committee. In 1999 government of India has set up Malhotra Committee to examine the structure of insurance industry and recommend changes, under R.N Malhotra former governor of RBI.

1.5 Indias life Insurance Industary First year premium underwritten by Indias life insurance industry rose by 6.43% year-on-year during the quarter ended June 2012. This rise marked the second consecutive quarterly increase since March 2012 and reversed the decline that had lasted five consecutive quarters since December 2010.For the quarter ending June 2012, the state-owned Life Insurance Corporation (LIC) saw year-on-year growth of 8.31% in first year premium underwritten, and the company accounted for approximately 74.29% of total premium underwritten, an increase from 73.00% during the previous year. LIC is Indias largest insurance group and its market share has grown to more than 60% since the quarter ended March 2009.

1.5.1 Life Insurance: Keeping Up with Economic Growth With relatively low insurance coverage density and insurance penetration, India has been a largely untapped market with, hence, abundant scope for expanding its insurance businesses. After the liberalization of the industry in late 1999, which allowed private players to participate in Indias insurance businesses, insurance coverage density grew by a compound annualised growth rate of 19.63% between 2001 and 2011, amounting to a premium of INR 2,458.73 per capita. Indias insurance penetration, measured as total premium over gross domestic product, rose from 1.61% during the financial year (FY) ended in March 2001 to a record high of 4.11% during FY 2010. Private insurance providers such as SBI Life, ICICI Prudential, and HDFC Life Insurance have all made headway into the insurance market, with first year premiums amounted to INR 8.88 billion, INR 7.21 billion, and INR 6.74 billion, respectively, during the quarter ended June 2012. Although private insurance providers saw first year premium growth at a mere 1.34% on average, MetLife India Insurance, for one, saw its first year premiums grow in excess of 80% since the quarter ended December 2011. Despite the liberalisation of Indias insurance market, much still need to be done towards the ultimate goal of improving the nations insurance penetration and coverage. In the short run, market observers might remain cautious as the modest rise in first year premiums during the quarter ended June 2012 was accompanied by a 4.52% y-o-y decline in the number of policies sold. However, with improving product awareness and increasing demand for long-term financial investment solutions from rising household income, long-term growth opportunities in the insurance industry overshadows threats implied by present prevailing macroeconomic situation.

1.6 India Market Life Insurance Update March-2012 The life insurance industry continues to experience a fall in new premiums during the current fiscal year ending March 2012. Over the past 18 months, the growth of the sector had stalled with the insurers grappling with new products to cope with changing regulations and new distribution strategies. The sector is expected to close the year with a contraction in premiums of 13-15 per cent. Meanwhile, there have been some reports of potential shareholding changes in Indian life insurance

joint ventures. There are reports that New York Life might exit from its joint venture with the local Max Group and ING might do likewise in respect of its stake in ING Vysya Life, both due to global developments and as part of their overall Asia strategy. The Fiscal Budget for the next financial year beginning April 2012 was recently presented in the Parliament. While the life insurance industry had earlier submitted a long wish list seeking changes in the direct taxes and rules to stimulate the industry, due to compulsions of fiscal discipline, the government has proposed no major changes, except proposing to make higher life cover in investment products mandatory for seeking tax relief, and hiking the VAT (service tax) on the insurance premiums.

1.6.1 Changing Trends in the life Insurance: Along with the other objectives of insurance like financial security, tax benefits etc. one of the major objectives is saving and investment. Traditional life insurance policies like endowment were becoming unattractive and not meeting the aspirations of the policyholders as the policyholder found that the sum assured guaranteed on maturity had really depreciated in real value because of the depreciation in the value of money. The investor was no longer content with the so called security of capital provided under a policy of life insurance and started showing a preference for higher rate of return on his investments as also for capital appreciation. It was, therefore found necessary for the insurance companies o think of a method whereby the expectation of the policy holders could be satisfied. The objective of providing a hedge against the inflation through a contract of insurance pushed insurer to link the insurance policy with market and thus the industry observed the beginning of Unit linked insurance policy (ULIP).

1.7 India insurance 2012: All factors are in place for the Indian life insurance industry to blossom into one of the fastest growing financial services markets in the world. The still nascent market is at an inflection point rising incomes driven by economic growth are boosting demand, and increasingly sophisticated consumers with differing needs are driving some differentiated plays. For companies wanting to address this opportunity, a me too approach will prove insufficient. To emerge as winners, they

must re-examine their strategies and commit to a few bold, breakthrough approaches. This will not only put them in pole position in the race for customers, but will also help them build sustainable and profitable businesses.

1.7.1 Strong growth and profit potential for Indias life insurers Indias life insurance market has grown rapidly over the past six years, with new business premiums growing at over 40 per cent per year. This impressive growth has been driven by liberalization of the sector, that enabled the entry of a host of new players with significant growth aspirations and capital commitments. These players have contributed to the sectors development by significantly enhancing product awareness, promoting consumer education and information, and creating more organized distribution channels. But the market is still at a nascent stage in its evolution. The ratio of life insurance premium to GDP in India is currently about 4 per cent, much lower than developed market levels of 6 to 9 per cent. In several segments of the population, penetration is lower than potential. For example, in urban areas, penetration of life insurance in the mass market is about 65 per cent, and it is considerably less in the low-income unbanked segment. In rural areas, life insurance penetration in the banked segment is estimated to be about 40 per cent, while it is marginal at best in the unbanked segment. This will change as India sees strongly accelerating household income and a more favourable demographic profile over the next two decades. Annual Premium Equivalent (APE) of 19 to 23 per cent from 2007 to 2012. Such exponential growth is likely to be fuelled by the following factors: Greater insurance intensity per capita, as the average per capita income increases. The emergence of a larger insurable population with a greater appetite to purchase protection products is likely to drive increase in per household insurance premiums from about Rs. 1,300 to Rs. 3,000 - Rs. 4,100 by 2012. Broader and inclusive coverage, with the emergence of newly bankable households in significantly large numbers and considerable supply-side growth. Both these factors will augment penetration in urban and rural areas. Rural penetration is likely to increase, from about 25 per cent at present to 35 42 per cent in 2012, and penetration in the low-income segment in urban India will rise from 30 per cent today to 35 - 40 per cent in 2012.

 A more balanced, sustainable and annuity-based business profile as life insurance players adjust their product mix by reducing share of single premiums from about 48 per cent currently to between 35 and 40 percent in 2012.

1.7.2 Key challenge: current business models traditional and undifferentiated Indias life insurance market has grown rapidly from 2001 to 2007. New business premiums have grown at the compounded annual growth rate (CAGR) of 41 percent, and combined total premium growth has been around 28 per cent per year over this period. But while this growth is impressive, the industry is still at an ascent stage. While players are at different stages of development and market presence, their strategies and business models are largely one-size-fits-all: low-margin singlepremium policies and ULIPs have mainly driven premium growth, and the distribution models are still fairly undifferentiated. Over the next few years, life insurance players need to overcome key challenges to create a winning proposition.

1.7.3 Need to strengthen core product proposition While life insurance premiums have grown over the last few years, low-margin single-premium products and potentially volatile ULIPs have accounted for mostof the growth. These products have proven easier to sell, but focusing exclusively on these could impair growth and long-term profitability for Indias life insurers. Single-premium policies doubled their share of overall industry new business premium (NBP) from 24 per cent in 2005 to 48 per cent in 2007. With low charge structures, single-premium product profitability is marginal. Unit-linked policies accounted for as much as 49 per cent of NBP in 2007, a substantial increase from 9 per cent in 2004.

1.7.4 Untapped opportunity in health and pensions Life insurance players have only just begun addressing areas beyond traditional life products. There is an untapped opportunity in health insurance and pensions, where life insurance players so far have no meaningful presence:

Health insurance. Currently, only around 14 per cent of the population is covered by health insurance of any form, of which only about 15 to 20 percent is covered through health insurance provided by insurance players. As a result, only about 1.5 to 2 per cent of total healthcare expenditure in India is covered by insurance players. Further, adjusting policy size for purchasing power parity shows that health insurance in India is about one-fifth the size of that in countries such as the United States, Germany and South Africa.

Pensions. According to the Old Age Social and Income Security (OASIS report, 1999), there will
be 113 million Indians over 60 years of age by 2016 and 179 million by 2026. For this segment, longevity risks are on the riseas advanced healthcare has improved life expectancy, it has also increased the risk that people will outlive their savings. Indians will have an expected lifespan of 80 years, i.e., live a full 20 non-earning years. Healthcare costs have outstripped general inflation, eroding retirees purchasing power. Savings and investment risks are intensifying, with rising inflation.

REVIEW OF LITERATURE
Horton (2007) Stated that embedded value has been widely adopted by European and Canadian life insurance companies for supplementary performance reporting and increasingly by US insurers for management purposes. It has important implications for the international debate over the appropriate use of fair values in financial reporting. But EV has still not been accepted by standard setters (e.g. IASB) for inclusion in the main financial statements. The concept of Market Consistent Embedded Value has been developed primarily by actuaries utilizing modern financial economics. This paper analyzes how both top-down and bottom-up methodologies for estimating MCEV may lead to unrealistic allowance for risk and explores the dangers of double counting of elements in the MCEV 'economic balance sheet', of a misunderstanding of the synergistic nature of overall firm value, and of a nave belief in market efficiency. It outlines potential empirical research with wider implications for 'fair value' accounting and reporting.

Jeffrey (2008)Presented that the Internet has the potential to significantly reduce search costs by allowing consumers to engage in low-cost price comparisons online. This paper provides empirical

evidence on the impact that the rise of Internet comparison shopping sites has had for the prices of life insurance in the 1990s. Using micro data on individual life insurance policies, the results indicate that, controlling for individual and policy characteristics, a 10 percent increase in the share of individuals in a group using the Internet reduces average insurance prices for the group by as much as 5 percent. Further evidence indicates that prices did not fall with rising Internet usage for insurance types that were not covered by the comparison websites, nor did they in the period before the insurance sites came online. The results suggest that growth of the Internet has reduced term life prices by 8 to 15 percent and increased consumer surplus by $115-215 million per year and perhaps more. The results also show that the initial introduction of the Internet search sites is initially associated with an increase in price dispersion within demographic groups, but as the share of people using the technology rises further, dispersion falls.

Ibbotson (2008)Surveyed thatfinancial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors. But human capital is not just another pre-endowed asset class that must be included as part of the portfolio frontier. An investor's human capital contains a unique mortality risk, which is the loss of all future income and wages in the unfortunate event of premature death. However, life insurance in its various guises and incarnations can hedge against this mortality risk. Thus, human capital affects both the optimal asset allocation and the optimal demand for life insurance. Yet historically, asset allocation and life insurance decisions have consistently been analyzed separately both in theory and practice. In this paper, we develop a unified framework based on human capital in order to enable individual investors to make both decisions jointly. We investigate the impact of the magnitude of human capital, its volatility, and its correlation with other assets as well as bequest preferences and subjective survival probabilities on the optimal portfolio of life insurance and traditional asset classes. We do this through five case studies that implement our model. Indeed, our analysis validates some intuitive rules of thumb but provides additional results that are not immediately obvious.

Siddiqui (2009)Stated that In India, the history of life insurance dates back to the year 1818, with the Oriental Lie Insurance Company in Calcutta. At that time a higher premium was charged for Indian

lives than the English lives, as Indian lives were considered riskier for coverage. In 1870, the first company to charge same premium for both Indian and non-Indian lives was, The Bombay Mutual Life Insurance Society. The life insurance regulation formally began in India in 1912 after the passage of The Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. The Government of India liberalized the insurance sector in March 2000, with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill. This act lifted all entry barriers for private and foreign companies to enter the Indian market. Two legislations, which govern this sector, are: The Insurance Act - 1938, and the IRDA Act - 1999.

Mihir (2006) Stated that Life insurance policies are no longer seen solely as a means of insuring life. Due to many new features introduced by life insurers, they are seen in the new light of serving savings and even investment purposes besides the basic purpose of insuring life. The present study discusses the rates of return given by different types of policies, and the effect of mortality on these rates of return across age, sum assured, and maturity period in each type of policy studied. Comparisons in different categories were made for both the unadjusted and mortality-adjusted rates of return. Analysis was made to determine the type of relationship that the unadjusted and mortalityadjusted rates of return follow and to determine their degree of sensitivity to mortality. The findings indicate that different types of policies give different rates of return and that mortality does have an effect on the rates of return. Endowment plans have higher rate of return with mortality incorporated, while for unit-linked investment plans, the rate of return is higher when it is treated purely as an investment instrument. The study also revealed that the unadjusted and mortalityadjusted rates of return follow a linear relationship that is very similar to the capital asset pricing model. The study opens a further scope of research by extending the methodology to include other relevant risk factors besides mortality, and for different types of policies across companies.

3.1 Need of the Study

To analyze the customer perception towards the public and private life insurance companies. To study the level of satisfaction among customers. To study the overall functioning of life insurance companies.

3.2 Scope of the Study

The study is limited only to Phagwara city due to shortage of time. The study focuses on Consumers perception towards life insurance or life insurance companies.

RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research problem. Advanced learners dictionary of current English lays down the meaning of research as `` A careful investigation or inquiry especially through search for new facts in any branch of knowledge. Research is thus an original contribution to an existing stock of knowledge making for its advancement. It involves systematic collection, analysis and reporting of data and finding relevant solution to a specific situation or problem.

4.1 Research Design

Research design specifies the methods and procedure for conducting a particular study. It is a series of advance decisions that taken together comprise a master plan or model for the conduct of an investigation. So research design provides a framework of plan for study which guides the collection, measurement, analysis and interpretation of data. The researcher should select the research design which is appropriate in achieving the objective of the study. The Research design was descriptive in nature.

4.2 Sampling Design

Sample size of the study: For the current study sample size was 150 respondents. Sample unit: Various Plans of Insurance are taken for comparison in Phagwara. Sample procedure: The sample procedure used was convenience sampling.

4.3 Data collection & analysis

The data collection was the process of forming an inventory of the required information and finally sorting the information, so that only desirable information is left with us. The sources of data may be either primary or secondary.

Primary sources: The primary data was that which was collected a fresh and for the first time for
the problem at hand, Method of collecting primary data may include observation, survey by means of questionnaire, interviews etc.

Primary data in this project was collected by way of structured questionnaire containing both the open ended and close ended questionss.

Secondary sources: The Secondary data which has been collected by someone else and may be
used by some other person. Secondary sources of data include use of Books, Journals, and internet services.The data was collected for this project through book and internet services.

Analysis of data and interpretation :

After collecting the data the analysis of data had been done through various statistical tools and techniques. The analysis of data requires a number of closely related operations such as establishment of categories, the applications of these categories to raw data through tabulation. Thus it helps to classify the raw data into some purposeful and usable categories. After analysis interpretations are done i.e. to explain the findings on the basis of analysis.

4.4 Limitations of Study:Every research work does have some limitations and so this research work is also having its limitations. The following are the limitations of this research study. Some respondents might not given the correct information due to their lack of interest and shortage of time. Lack of time availability Objectives and the purposes of the study and the STATEMENTs had to be explained to the respondents and their responses may be biased.

OBJECTIVES OF THE STUDY

To identify the position insurance companies holds among other private players.

To find out the strengths and weaknesses of the companys insurance schemes

To study consumers awareness towards insurance products

To identify the customers perception about the company and its products.

Demographic Profile of Respondents: Table 5(a): Demographic Profile

Demographic Factors Age ( in years) 18-25 26-35 36-45 Above 45 Total Gender Male Female Total 90 60 150 60 40 100 10 50 60 30 150 10 30 40 20 100 No. of Respondents Percentage of Respondents

Analysis and Interpretation: Itwas found that majority of the respondents i.e.40% were between the age group of 36-45 and majority of the respondents i.e.60% were male.

STATEMENT .1 HOW MANY SHOWING THE NECESSITY OF HAVING A INSURANCE COVER ? 5.1 TABLE SHOWING THE NECESSITY OF HAVING A INSURANCE COVER S.No 1 2 Opinion Yes No Total Respondents 120 30 150 Percentage 80 20 100

5.1 CHART SHOWING THE NECESSITY OF HAVING A INSURANCE COVER

60 60 50 40 No.of 30 respondents 20 10 0 yes

60

RSA Other companies 0 no 0

STATEMENT 2. NUMBER OF GENERAL INSURANCE POLICIES HELD BY YOU ? 5.2 TABLE SHOWING NO. OF GENERAL INSURANCE POLICIES HELD BY RESPONDENTS S.No 1 2 3 No. of policies 1 2-4 More than 4 Total No. Of Respondents 62 41 17 120 Percentage (%) 51.67 34.17 14.17 100

Findings: The above table shows that 51.67% of respondents hold 1 policy, 34.17% holds 2 to 4 policies and the rest 14.17% holds more than 4 general insurance policies. Inference: It is inferred that a higher percentage (51.67%) of respondents holds 1 general insurance policy.

5.2 CHART SHOWING NO. OF GENERAL INSURANCE POLICIES HELD BY RESPONDENTS

51.67 60

No.of respondents

50 40 30 20 10 0 1

34.17 14.17

2 to 4 No.of policies

More than 4

STATEMENT . 3 DO YOU WHETHER THE GENERAL INSURANCE POLICIES ARE TAKEN FROM THE SAME COMPANY 5.3 TABLE SHOWING WHETHER THE GENERAL INSURANCE POLICIES ARE TAKEN FROM THE SAME COMPANY S.No 1 2 Opinion Yes No Total No. Of Respondents 66 54 120 Percentage (%) 55 45 100

Findings: The above table shows that 55% of respondents hold general insurance policy with the same company and 45% of respondents hold it in various other companies. Inference: It is inferred that a higher percentage (55%) of respondents holds general insurance policy with the same company.

5.3 CHART SHOWING WHETHER THE GENERAL INSURANCE POLICIES ARE TAKEN FROM THE SAME COMPANY

55 60

No.of respondents

45

50 40 30 20 10 0 Yes No

INTERVAL ESTIMATION: WHETHER THE GENERAL INSURANCE POLICIES TAKEN FROM THE SAME COMPANY Formula:

p Z/2

pq n

No. of respondents who have taken policies from the same company: 66 No. of respondents who have not taken policies from the same company: 54 n = sample size = 120 p= Number of yes = 66 = .55 Sample size q = 1-p = 1-.55 = .45 Z / 2 = 1.96 at 95% confidence level __________ Standard error = 120

pq = n

.55 * .45 120

= 0.0454

Interval estimation= p Z / 2 pq
n

= (0.55 1.96(0.0454) = 0.4610>p>0.639 = 46.1%, 63.9% Conclusion Hence, we conclude that the percentage of respondents who have taken policies from the same company lies between 46.1% to 63.9%

STATEMENT.4 WHERE DO PRIVATE INSURANCE SECTOR NEED TO IMPROVE ? This STATEMENT was asked to know where private companies are lacking. It might be in term of service, return, information, verity or easy claim. 5.4 TABLE SHOWING DO PRIVATE LIFE INSURANCE COMPANIES NEED TO IMPROVE No. of respondents 36 12 18 6 48 % of respondents 30 10 15 5 40

Service Return Information Verity Easy claim

5.4 Figure showing do private life insurance companies need to improve

Need to improve

30 40 Service return 10 5 15 Information verify Easy claim

INTERPRETATION From the research it was found that there is a need for the private player to improvement in certain sector to complete with the government sector companies, majority of the people t h i n k t h a t p e o p l e t h i n k t h a t p r i v a t e c o m p a n i e s n e e d t o i m p r o v e i n e a s y c l a i m a n d information.

STATEMENT .5 WHICH SECTOR THEY CHOOSE PUBLIC OR PRIVATE? reason

5.5 TABLE SHOWING SECTOR CUSTOMER CHOSE PUBLIC OR PRIVATE No. of respondents 72 48 120 % of respondents 60 40 100

Public Private Total

5.5 Figure showing sector customer chose public or private

sector chose

40 Public Private 60

INTERPRETATION After the survey it was found that still major portion of customers go for public insurance companies, but with the entry of more and more private companies the scenario is changing rapidly, people need of more and better returns are opting for private companies, and this can be justified by the increasing market share of private companies in the Indian insurance sector. There are various ways in which private companies are found much more lucrative than public companies and the fact which support this statement are as follows: 1.Versatility of products 2.Efficient fund managers 3.Better customer s e r v i c e s 4. More return 5.rgular follow up. 6.quick settlement

STATEMENT .6 WHICH LIFE INSURANCE COMPANY WILL YOU PREFER? o LIC o HDFC o ING Vysya o Met life India insurance o Birla sun life o ICICI Prudential o TATA AIG

Table 5.6 LIFE INSURANCE COMPANY THEY PREFER 5.6 TABLE SHOWING Life insurance Company they prefer Options Number of Respondents % age

LIC

60

50%

HDFC

18

15%

ING Vysya

5%

Met life India insurance

5%

Birla sun life

5%

18 ICICI Prudential 6 TATA AIG

15%

5%

Figure 5.6 Life insurance Company they prefer

5 15

LIC HDFC ING Vysya

5
Met life India insurance

5 5 60
Birla sun life ICICI Prudential

15

TATA AIG

Interpretation The respondents were asked which life insurance company they will prefer. As indicated by above table, 55% voting was given to LIC, 13% to HDFC, 5% to ING vysya, 3% to Met life india insurance, 7% to Birla sun life, 15% to ICICI Prudential and rest of the 2% toTATA AIG.

STATEMENT. 7 DO YOU SATISFIED WITH THE POLICY ? The STATEMENT was asked to know that what percentage of customers is satisfied with the policies 5.7 : Table showing that you Satisfied with the policy No. of respondents 72 24 24 120 5.7 Figure showing you Satisfied with the policy % of respondents 60 20 20 100

Satisfied Not satisfied Cant say Total

satiscation

20

satisfed not satidfied 20 60 cant say

INTERPRETATION It was founded that majority of customer are not satisfied with their current policy

STATEMENT . 8 WHAT IS YOUR OPINION TOWARDS INSURANCE COMPANIESS OFFERING OF CUSTOMER CENTRIC PRODUCTS 5.8 TABLE SHOWING RESPONDENTS OPINION TOWARDS insurance OFFERING OF CUSTOMER CENTRIC PRODUCTS S.No 1 Opinion Highly agree Agree 2 3 4 5 Neither agree nor disagree Disagree Highly disagree Total 6 6 120 5 5 100 No. Of Respondents 12 96 Percentage (%) 10 80

companiesS

Findings: The above table shows that 10% of respondents, who are policy holders with insurance companies highly agree, 80% of them just agree, 5% of them neither agree nor disagree and the rest 5% of them disagree that insurance companies is known for offering customer-centric products. Inference: It is inferred that a higher percentage (80%) of respondents, who are policy holders with insurance companies have agreed that insurance companies is well known for offering customer centric products.

Highly disagree Disagree Neither agree nor disagree Agree Highly agree

0 3.3 8.3 80 8.3 0 20 40 60 80 100

No.of respondents

STATEMENT .9 WHAT IS YOUR OPINION ON THE SERVICE OF insurance

companies ?

5.9 TABLE SHOWING THE RESPONDENTS COMMENT ON THE SERVICE OF insurance

comapnies
Sr.No 1 2 3 4 5 Comment Excellent Very good Moderate Poor Very poor Total No. Of Respondents 48 60 12 120 Percentage (%) 40 50 10 100

Findings: The above table shows that 40 % of respondents have indicated the service of

insurance

companies as excellent, and 50% of them have stated it as very good and 10% of them have indicated it as
moderate. Inference: It is inferred that a higher percentage (50%) of respondents have indicated that the service rendered by as very good.

5.9 CHART SHOWING THE RESPONDENTS COMMENT ON THE SERVICE OF insurance

comapnies

60 50 50

No. of respondents

40 30 20

38.33

11.67 10 0 0 Excellent Very good Moderate Poor Very poor 0

STATEMENT .10 WHICH SOURCES BY WHICH THE RESPONDENTS BECAME FAMILIAR OF INSURANCE 5.10 TABLE SHOWING SOURCES BY WHICH THE RESPONDENTS BECAME FAMILIAR OF S.No 1 2 3 4 Source of information Ads (print, radio, TV) Insurance agents Friends & Relatives Others Total No. Of Respondents 42 27 51 120 Percentage (%) 35 23 42 100

Findings: The above table shows that 35% of respondents have indicated advertisement, 23.33% of them have stated insurance agents and 41.67% of them have indicated friends & relatives as means by which they came to know about insurance companies. Inference: It is inferred that a higher percentage (41.67%) of respondents has indicated friends and relatives as means by which they came to know about insurance companies. 5.10 CHART SHOWING SOURCES BY WHICH THE RESPONDENTS BECAME FAMILIAR OF insurance companies

Others 0% Friends & Relatives 42%

Ads (print, radio, TV) 35%

Insurance agents 23%

STATEMENT .11 THE PERIOD OF INSURANCE COVER HELD BY RESPONDENTS.? 5.11 TABLE SHOWING THE PERIOD OF INSURANCE COVER HELD BY RESPONDENTS. S.No 1 2 3 4 5 Period of insurance cover Annual policy 1-5 year 5-10 year 10-15 year Greater than 15 years Total No. Of Respondents 61 35 11 13 120 Percentage (%) 50.83 29.17 9.17 10.83 100

Findings: The above table shows that 50.83% of respondents hold annual policy, 29.17% of them hold 1-5 year policy cover, 9% of them hold 5-10year policy and 10.83% of them hold 10-15 year policy. Inference: It is inferred that a higher percentage (50.83%) of respondents holds annual policy. 5.11 CHART SHOWING THE PERIOD OF INSURANCE COVER HELD BY RESPONDENTS.

period of insurance cover

greater than 5 years 10-15 year 5-10 year 1-5 year Annual policy

0 10.83 9.17 29.17 50.83 0 10 20 30 40 50 60

No.of respondents

STATEMENT .12 THE AMOUNT OF YEARLY INSURANCE PREMIUM PAID ? 5.12 TABLE SHOWING THE AMOUNT OF YEARLY INSURANCE PREMIUM PAID S.No 1 2 3 4 Yearly premium paid Less than Rs.5000 Rs.5000-15000 Rs.15000-25000 Greater than Rs.25000 Total No. Of Respondents 43 58 12 7 120 Percentage (%) 35.83 48.33 10 5.83 100

Findings: The above table shows that 35.83% of respondents have been paying insurance premium less than Rs.5000 yearly, 48.330% of them have been paying premium between Rs.5000-15000 yearly, 10% of them have been paying between Rs.15000-25000 as yearly premium and 5.83% of them have been paying more than Rs.25000 as yearly premium. Inference: It is inferred that a higher percentage of respondents (48.3%) have been paying yearly insurance premium between Rs.5000-15000

5.12 CHART SHOWING THE AMOUNT OF YEARLY INSURANCE PREMIUM PAID

Greater than Rs.25000 Rs.15000-25000 Rs.5000-15000 Less than Rs.5000 0

5.83 10 48.33

35.83 10 20 30 40 50

No.of respondents

APPLYING KARL PEARSONS CORRELATION COEFFICIENT BY COMPARING ANNUAL INCOME AND THE YEARLY PREMIUM AMOUNT PAID Premium amount Less than Rs.5000 No. of respondents Annual income 43 Less than Rs.2 lakhs No. of respondents 31 51 20 58 Rs.2-5 lakhs Rs.5-10 lakhs Rs.5000 15000 Rs.15000 25000 12 Rs.10-20 lakhs 9 More than Rs.25000 7 Above Rs.20 lakhs 9

Premium amount (X)

Annual income (Y)

43 58 12 7 0

31 51 20 9 9

xy r = -------------------_________ x2 - y2 __ __

x = (X - X) ; y = (Y - Y)

A Premium (X) 43 58 12 7 0 X = 120 x 13 28 -18 -23 0 x

2

Annual income (Y) 31 51 20 9 9 Y= 120 y 7 27 -14 -15 -15 y2 49 729 16 225 225 y2= 1244 xy 91 756 72 345 0 xy = 1264

169 784 324 529 0 x2= 1806 __

X = 120 = 30 4 __ Y = 120 = 24 5

x2 = 1806 ; y2 = 1244 ; xy = 1264

1264 r= -------------------------= .8433

_____________ 1806 * 1244

Conclusion: The variables annual income and premium amount paid are positively correlated. Hence, the annual income has an impact on the premium amount paid. STATEMENT .13 THE SATISFACTORY LEVEL TOWARDS VARIOUS FEATURES OF GENERAL INSURANCE POLICY TAKEN 5.13 TABLE SHOWING RESPONDENTS SATISFACTORY LEVEL TOWARDS VARIOUS FEATURES OF GENERAL INSURANCE POLICY TAKEN S.No Attributes of general insurance cover 1 2 3 4 Low premium Claim settlement Larger risk coverage Money back guarantee 5 Easy access to agents Total 84 341 149 26 0 21 39 58 2 120 9 26 21 7 92 86 83 41 Highly satisfied Satisfied Neither satisfied nor dissatisfied 9 7 13 62 10 1 3 10 120 120 120 120 Dissatisfied Highly dissatisfied Total

600

5.13 CHART SHOWING RESPONDENTS SATISFACTORY LEVEL TOWARDS VARIOUS FEATURES OF GENERAL INSURANCE POLICY TAKEN

100 90 80
no. of respondents

92 86 83 Highly satisfied 62 Satisfied Neither satisfied nor dissatisfied Dissatisfied 26 21 9 910 0 13 7 10

Claim settlement

70 60 50 40 30 20 10 0
Low premium

58

41

39

21 7 0 10 0
Money back guarantee

Highly dissatisfied

20
Easy access to agents

Larger risk coverage

STATEMENT .14 GENERAL INSURANCE COVER THAT IS MOST FAVORED BY RESPONDENTS 5.14 TABLE SHOWING GENERAL INSURANCE COVER THAT IS MOST FAVORED BY RESPONDENTS
Most favored insurance cover Auto/car insurance Health insurance Hospital cash insurance Personal accident insurance Travel insurance Householders insurance Shopkeepers insurance Others 85 34 2 1 15 64 29 7 4 4 9 65 38 5 16 13 17 65 5 3 4 4 22 77 11 16 2 6 53 35 24 1 37 1 72 7 2 8 97 Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank 7 Rank 8

APPLYING WEIGHTED AVERAGE METHOD TO THE TABLE

8 Most favored insurance cover Auto/car insurance Health insurance Hospital cash insurance Personal accident insurance Travel insurance Householders insurance Shopkeepers insurance Others 85 34 2 1 1

7 2

6 3

5 4

4 5

3 6

2 7

1 8 W.A RANK

15 64 29 7 4 -

4 9 65 38 5 -

16 13 17 65 5 3 -

4 4 22 77 11 16

2 6 53 35 24 -

1 37 1 72 7

2 7 92

24.7 23.306 19.94 17.67 9.9 12.72 8.25 4.72

1 2 3 4 6 5 7 8

Formulae: Average score = [(R1*8 + R2*7 + R3*6 + R4*5 + R5*4 + R6*3 +R7*2 + R8*1)] Total weights Sample calculation: Average score = [(85*8 + 15*7 + 4*6 + 16*5 + 0*4 + 0*3 + 0*2 + 0*1)] =24.7 36 Findings: The above table clearly shows that auto/car insurance is been ranked I by majority of respondents, health insurance ranked II, hospital cash insurance ranked III followed by personal accident insurance, householders insurance, travel insurance, shopkeepers insurance and other insurance (fire insurance, marine, rural insurance, etc) which are ranked as IV, V, VI, VII and VIII respectively. Inference: It is inferred that auto/car insurance is the most favored insurance cover among majority of respondents. 5.14 CHART SHOWING GENERAL INSURANCE COVER THAT IS MOST FAVORED BY RESPONDENT

30 25 24.7 23.306 19.94 20 15 9.9 10 5 0 17.67 12.72 8.25 4.72

No.of respondents

Auto/car insurance

Health insurance

Personal accident insurance

Hospital cash insurance

Travel insurance

Householders insurance

Shopkeepers insurance

Others

6.1 FINDINGS OF STUDY

Private companies are providing better services than public companies as 64% respondents are satisfied with their services. People are aware more of the public sector insurance as it is there in the market for more than 50 years.

CONCLUSION
Life insurance is a relatively low involvement product, even for those who have voluntary cover. It is not something that occupies consumers minds at times other than the time of consideration / purchase. The result of this is a low level of awareness and understanding of life insurance products, and more generally, of the operation of life insurance companies.There is confusion in the minds of consumers between life insurance, general insurance, health insurance, and some investment products (such as endowment products).

RECOMMENDATIONS OF THE STUDY

Majority of the respondents, who are policy holders with their company have felt that the premium being paid is comparatively higher with the premium rates of other insurance companies. Hence, amendments can be made in this regard by offering insurance cover at reasonable premium rates to the customers.

The promptness of claim settlement procedure can be maintained as it is one of the important aspects which would enhance the reputation of the company, as well as build trust in the minds of the customers. Also, it helps to retain existing customers and attract new customers.

The company has to focus more on the auto/car insurance segment and health insurance segment. Majority of the respondents have preference towards auto/car insurance as it is a must to have insurance for their vehicles by law. Therefore, the company has got enough opportunities to earn huge profits from both these segments.

The company can create more awareness about its products among potential customers by
means of advertisements and efficient insurance agents, which in turn will help in increasing its customer base.

Harris, T.F. (1999). "Actuarial Aspects of Individual Life Insurance and Annuity Contracts" Winsted, Connecticut: Actex Publications.

Dash, Mihir, C., Lalremtluangi (September 15, 2006).,A Study on Risk-Return Characteristics
of Life Insurance Policies Available at SSRN: http://ssrn.com/abstract=1303350 or http://dx.doi.org/10.2139/ssrn.1303350 Horton, Joanne(January 9, 2007) Market Consistent Embedded Values as 'Fair Value' Measurements for Life Insurance Accounting:Available at SSRN:

http://ssrn.com/abstract=956104 or http://dx.doi.org/10.2139/ssrn.956104

Jeffrey R. and Goolsbee(October 2008) Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry KSG Working Paper No. 00-007. Available at SSRN: http://ssrn.com/abstract=253795 or http://dx.doi.org/10.2139/ssrn.253795

Roger G., Chen, Peng(May 2009)Human Capital, Asset Allocation, and Life Insurance Yale ICF
Working Paper No. 05-11. Available at SSRN: http://ssrn.com/abstract=723167

Siddiqui, Saif, (February 8, 2010) Indian Life Insurance Sector: An Overview Available at
SSRN: http://ssrn.com/abstract=1339447