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Project On

COMPARATIVE STUDY

OF

TATA AIG LTD.

&

HDFC STANDARD

LIFE INSURANCE CO. LTD.

Master of Business Administration (Marketing)

Submitted in partial fulfillment of the requirement for award of


Master of Business Administration of
Tilak Maharashtra University, Pune.

Submitted by

Vinay Kumar
09-AIT-MBA-006

PRN No.-07209007647

of
Ansal Institute of technology
Gurgaon
Guided By Prof. Ashok Malhotra
Tilak Maharashtra University, Pune
(Deemed under section 3 of UGC act 1956 vide Notification
No. F.9-19/85-U3 dated 24th April 1987 By the Government of
India.)
Vidyapeeth Bhavan, Gultekdi, Pune-411037.

CERTIFICATE

This is to certify that the project titled Comparative study of TATA AIG &
HDFC Standard Life Insurance ltd.
Is a bona fide work carried our by Mr. Vinay Kumar a student of Master Of
Business Administration Semester 3rd, Specialization Marketing PRN.
under Tilak Maharashtra University, in the year 2010.

Head of the Department Examiner Examiner


Internal External
Date:

Place: University Seal


Certificate of Internal Guide

This is to certify that the project titled Comparative study of TATA AIG & HDFC
Standard Life Insurance ltd. is a bonafide work carried out by Vinay kumar a candidate
for the award of Master of Business Administration of Tilak Maharashtra University,
Pune under my guidance and direction.

Signature of Guide

Date: Name: Ashok Malhotra


Designation: Prof. Ait, Gurgaon
Place: Institute: Ansal Institute of
Technology
STUDENT’S DECLARATION

I hereby declare that the project work titled Comparative study of TATA AIG & HDFC
Standard Life Insurance ltd.
is an authentic work carried out by me at HDFC Standard Life Insurance.
under the guidance of Prof. Ashok Malhotra (lecturer Ansal Institute of Technology and
Management Studies, Sec-55 Gurgaon.) For partial fulfillment for the award of the
degree of Master of Business Administration.

Dated: 31August, 2010

Vinay Kumar

MBA – 3rd Semester

Ansal Institute of Technology and Management Studies.

Sector-55,

Gurgaon (Haryana)
ACKNOWLEDGEMENT

Summer training project is essentially a learning process in which apart from learning the
subject, one learns to work in real life environment. It is very difficult to prepare a project
report of such a nature because of limited time. But every time I feel encouraged because
the whole staffs and executives of the company who have helped me by providing the
much-required information about the company, its operations and have helped in
structuring and completion of the project.

It gives me a great pleasure to present this report that is an outcome of my implant


training in TATA AIG LIC LTD., Panipat. I would like to express my heartfelt
gratitude towards Prof. Ashok Malhotra who extended his whole-hearted and
undeserved help to me throughout this project and enabled me to give the project its
present shape. I am grateful to marketing department in TATA AIG LIC LTD.for giving
me opportunity to work in the TATA AIG. I would like to thank to all those people who
directly or indirectly contribute to this project and in my Training.
TABLE OF CONTENT

• Chapter 1. Rationale for the Study.


• Chapter 2. Objective of the Study.
• Title of the project.
• Objective of the study.
• Scope of the study.

• Chapter 3. Profile of the Company.


• Chapter 4 Literature Review..
• Chapter 5. Research Methodology.
• Research Design
• Data collection methods/sources
• Sampling plan which should include sampling unit,
Sampling size and sampling methods viz questionnaire method,

• Chapter 6 Data Analysis and Interpretations(using


Various charts and graphs).

• Chapter 7 Findings and Conclusions


• Chapter 8 Limitations
• Chapter 9 Expected Contribution from the study.
• Appendices
• Copies of questionnaire.
• Copies of form(s) if any from the company
• Bibliography
Chapter 1: RATIONALE FOR THE STUDY

Practical training constitutes an integral part of management studies. Training gives an


opportunity to the students to expose themselves to the industrial environment, which is
quite different from the classroom teaching. The practical knowledge is an important
suffix to the theoretical knowledge.

One cannot rely merely upon theoretical knowledge. It has to be coupled with practical
for it to be fruitful. Classroom lectures make the fundamental concept of management
clear but not their application in actual practice. Positive and correct result of the
classroom learning needs realities of the practical situation. The working conditions under
later when they join any organization.

With the largest number of life insurance policies in force in the world, Insurance happens
to be a mega opportunity in India. It’s a business growing at the rate of 32-34 per cent
annually and presently is of the order of $ 41 billion (for the financial year 2009 – 2010).
Together with banking services, it adds about 7% to the country’s Gross Domestic
Product (GDP).

In India, life insurance has begun in 1818 when It was conceived as a means to provide
for English widows. In those days a higher premium was charged for Indian lives than the
non-Indian lives, as the Indian lives were considered more risky to cover.

Life insurance sector is very important in our country’s economy. This sector is very big
and is still growing. There are many opportunities in this sector to grow. Today everyone
wants to get insured. This sector is not at it’s maturity stage. It’s generating employment
at a high rate. This service has reached to everywhere whether it’s rural, remote or urban
areas. That’s why I studied this sector.
Chapter 2

Objective of the Study

• Title of the Project: Comparative study of TATA AIG LTD. & HDFC SLIC
LTD.

• Objective of the study:

o To understand the life insurance sector in India.

o To understand the importance of this sector.

o To know the position of TATA AIG LTD. in private life insurers.

o To know about all the life insurance plans of TATA AIG LTD.

o To analyze the data and information of TATA AIG LTD.

o To study about the growth of life insurance sector by taking two


companies TATA AIG LTD. & HDFC SLIC LTD.

• Scope of the study:

o TATA AIG LTD. is one of the leading life insurance company in


insurance sector. It has many types of life insurance plans. The
company has 540 branches all over India. The company is using all
marketing strategies to grow and to capture life insurance market as
much as possible.TATA AIG LTD. is doing it’s marketing work very
effectively at all India level and growing day by day by its marketing
strategies.
Chapter 3.
Profile of the Company

Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,
formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life
combines the Tata Group’s pre-eminent leadership position in India and AIG’s global
presence as the world’s leading international insurance and financial services
organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG
holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals
and corporate. Tata AIG Life Insurance Company was licensed to operate in India on
February 12, 2001 and started operations on April 1, 2001.

THE TATA GROUP

The Tata Group is one of India's largest and most respected business conglomerates, with
revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per
cent of the country's GDP. Tata companies together employ some 215,000 people. The
Group's 32 publicly listed enterprises - among them standout names such as Tata Steel,
Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market
capitalization that is the highest among Indian business houses in the private sector, and a
shareholder base of over 2 million. The Tata Group has operations in more than 40
countries across six continents, and its companies export products and services to 140
nations.

AIG
American International Group, Inc. (AIG), world leaders in insurance and financial
services, is the leading international insurance organization with operations in more than
130 countries and jurisdictions. AIG companies serve commercial, institutional and
individual customers through the most extensive worldwide property-casualty and life
insurance networks of any insurer. In addition, AIG companies are leading providers of
retirement services, financial services and asset management around the world. AIG's
common stock is listed on the New York Stock Exchange as well as the stock exchanges
in London, Paris, Switzerland and Tokyo.

Tata AIG has strong brand name and recall factor which most of its competitors lack in.
Other than the public behemoth Life Insurance Corporation (LIC) of India which has a
major hold in the market share (of approximately 79%), the private players too are having
more and more opportunities to tighten their hold of the market. Of the private players,
ICICI Prudential comes first with an almost 4.50% of the market share followed by Tata
AIG with about 2.10% of the pie. The private players have everything to work for,
especially with LIC not meeting the needs of its clientele with respect to the services they
need. This provides a prospect for the private sector players to increase their share of the
market. Companies with a familiarity such as Tata AIG can especially achieve their
targets due to the brand image that the Tata group has.
(Source: www.tata-aig-life.com)

A recent survey conducted by the Voluntary Organization in Interest of Consumer


Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the
clear winner in terms of customer satisfaction in the life insurance category. This is
India's first-ever customer satisfaction study for the insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed brand name.
The ability to provide innovative and customer-focused service such as allowing the
maximum grace period for premium payment has not only further distinguished Tata AIG
Life from other life insurance companies but also appealed to consumers.
PRODUCTS & SERVICES:

Corporate life insurance products:

• Employee Benefits
• Credit Life
• Group Pensions
• Workplace Solutions

Individual life insurance products:

• Health First
• Health Protector
• Mahalife
• InvestAssure II, InvestAssure Gold
• Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to
suit the needs and requirements of all age groups viz, children, students, adults, retirees
etc.

The ‘SUPPORT’ arm of Tata AIG Life is constituted of Operations, Human Resources,
Marketing, Corporate Training, Finance and Compliance.
Tata AIG Life possesses the philosophy and drive to customize retirement obligations (for
the company) which occur in the form of cash outflows, for the maximum benefit of both
the employer and the departing employee.

Management

Gaurav Garg

Tata AIG General Insurance Company (Tata AIG General) appointed Mr.
Gaurav Garg as the Managing Director of company

effective July 1, 2007. Previously, Mr. Garg was the president (field operation) of AIG,
New York. He succeeds Michael Carlin.
Based in Mumbai, Gaurav is responsible for providing overall leadership for
managing the operation of Tata AIG general in India and for driving all business and
market development activities.
Commenting on these changes Farrokh Kavarana, Chairman, Tata AIG General
Insurance Company said, “We welcome Mr. Garg on board as the takes over the reins
from Mr. Carlin as the Managing Director of Tata AIG General Insurance. We would;
like to thank Mr. Carlin for his contribution during his tenure in India and wish him
success for the future. Mr. Garg was a part of the start up team in the year 2000 of Tata
AIG General Insurance Company, as the Personal Lines Profit Center head. Since 2004,
in AIG New York, he has been a part of various multifunctional task forces set up to
improve operations and transfer best practice. With solid domestic and international
experience, Mr. Garg is well equipped to build on the momentum that the company has
achieved over the last six years and we wish him all the best as he takes on this
challenging assignment.”
Before joining Tata AIG, Gaurav has had a long career with the National Insurance
Company of India where he held various responsibilities. Gaurav has completed an MBA
from the University of Lucknow in India and is also a fellow of the Insurance Institute of
India.
CHAPTER- 4:
REVIEW OF LITERATURE

2.1 INTRODUCTION

Different investment avenues are available to investors. Insurance also offer


good investment opportunities to the investors. Like all investments, they also
carry certain risks. The investors should compare the risks and expected yields
after adjustment of tax on various instruments while taking investment
decisions. The investors may seek advice from experts and consultants
including agents and distributors of insurance schemes while making
investment decisions. With an objective to make the investors aware of
functioning of insurance, an attempt has been made to provide information in
question-answer format, which may help the investors in taking investment
decisions.

A Insuranceis a trust that pools the savings of a number of investors who share
a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income
earned through these investments and the capital appreciation realized are
shared by its unit holders in proportion to the number of units owned by them.
Thus a Insuranceis the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally Insuranceis a
mechanism for pooling the resources by issuing units to the investors and
investing funds in securities in accordance with objectives as disclosed in offer
document.

Investments in securities are spread across a wide cross-section of industries


and sectors and thus the risk is reduced. Diversification reduces the risk because
all stocks may not move in the same direction in the same proportion at the
same time. Insuranceissues units to the investors in accordance with quantum of
money invested by them. Investors of insurance are known as unit holders.

The investors in proportion to their investments share the profits or losses. The
insurance normally come out with a number of schemes with different
investment objectives, which are launched from time to time. A insuranceis
required to be registered with Securities and Exchange Board of India (SEBI),
which regulates securities markets before it can collect funds from the publican
aged basket of securities at a relatively low cost.

A insuranceis set up in the form of a trust, which has sponsor, trustees, Asset
Management Company (AMC) and custodian. The trust is established by a
sponsor or more than one sponsor who is like promoter of a company. The
trustees of the insurancehold its property for the benefit of the unit holders.
Asset Management Company (AMC) approved by SEBI manages the funds by
making investments in various types of securities. Custodian, who is registered
with SEBI, holds the securities of various schemes of the fund in its custody.
The trustees are vested with the general power of superintendence and direction
over AMC. They monitor the performance and compliance of SEBI Regulations
by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee
company or board of trustees must be independent i.e. they should not be
associated with the sponsors. Also, 50% of the directors of AMC must be
independent. All insurance are required to be registered with SEBI before they
launch any scheme.

Previous Academic Studies:

There are various studies undertaken by many intellects on insurance some of


them are
The early studies on performance persistence of MF gave many contradictory
opinions. Sharpe(1966) used ratio developed by him called Sharpe Ratio to

15
measure the fund performance. he had taken into consideration two periods i.e.
1944-53 and 1954-63 and a significantly positive not very perfect , relationship
between two ranking periods.
A Study of Monthly Insurance Returns and Performance Evaluation Techniques

Mark Grinblatt, Sheridan Titman undertaken in 1992 which is licensed by


university of Washington school of business administration. This paper
empirically contrasts the Jensen measure Treynor measure and the positive
period weighting measure on a sample of 279 insurance . The study finds that
the measure generally yields same inferences when using the same benchmark
and that inferences can vary, even from the same measure, when using different
benchmarks. This paper also analyses determinants of MF performance.
During 1992, positive results were also obtained in studies carried out by
Brown, Goetzmann, Ibbotson and Ross, wherein they analysed the relationship
between volatility and returns .Their study period ranged from 1976-87 with at
three year evaluation period. They presented some numerical examples to show
that the effect could be strong enough to account for the strength of the
evidence favoring return predictability.

Hendricks, Patel, and Zeckhauser (1993) study 165 no-load growth-oriented


funds over the period 1974 to 1988 and obtain similar results. In a study of 728
insurance returns over the period 1976 to 1988, Goetzman and Ibbotson (1994)
find that two-year performance is predictive of performance over the successive
two years. Volkman and Wohar (1995) extend this analysis to examine factors
that impact performance persistence. Their data consists of 322 funds over the
period 1980 to 1989, and shows performance persistence is negatively related to
size and negatively related to levels of management fees.

Studies of performance persistence in insurance are not without contrary


evidence. Carhart (1997) shows that expenses and common factors in stock
returns such as beta, market capitalization, one-year return momentum, and

16
whether the portfolio is value or growth oriented "almost completely" explain
short term persistence in risk-adjusted returns. He concludes that his evidence
does not "support the existence of skilled or informed insuranceportfolio
managers" (Carhart, 1997, p. 57). In the Kahn and Rudd 1995 study of 300
equity funds and 195 bond funds between 1983 and 1993, only the bond funds
show evidence of persistence. In an article in this issue, Detzel and Weigand
(1998) use a regression residual technique to control for the effects of
investment style, size and expense ratios. They find, after controlling for these
variables, no evidence of performance persistence.

Two other studies have used performance ranks. Dunn and Theisen (1983) rank
the annual performance of 201 institutional portfolios for the period 1973
through 1982 without controlling for fund risk. They found no evidence that
funds performed within the same quartile over the ten-year period. They also
found that ranks of individual managers based on 5-year compound returns
revealed no consistency. Bauman and Miller (1995) studied the persistence of
pension and investment fund performance by type of investment organization
and investment style. They employed a quartile ranking technique because they
noted that "investors pay particular attention to consultants' and financial
periodicals' investment performance rankings of insurance and pension funds"
(Bauman & Miller, 1995, p. 79). They found that portfolios managed by
investment advisors showed more consistent performance (measured by quartile
rankings) over market cycles and that funds managed by banks and insurance
companies showed the least consistency. They suggest that this result may be
caused by a higher turnover in the decision-making structure in these less
consistent funds. This study controls for the effects of turnover of key decision
makers by restricting the sample to those funds with the same manager for the
entire period of study.

17
Global Financial Management, Quantitative Performance Evaluation1997 by
Campbell R. Harvey and Stephen Gray. This class considers the efficiency of
capital markets and how to measure the performance of individual stocks and
insurance over time. Three notions of efficiency are introduced based on the
type of information being used to forecast returns. A number of technical
trading rules are introduced and their success is evaluated. Three traditional
measures of portfolio performance are reviewed, and some more recent
measures of performance are introduced. The relative strengths and weaknesses
of the various measures are compared and contrasted.

INSURANCE OPERATION FLOW CHART

Investors

Pool their money with


Passed back to

Returns Fund Manager

Generates Invest in

Securities

Figure: 2.1 Insurance operation flow chart

2.2 GENESIS OF INSURANCE

The goal of security industry is to create a nation of shareholding capitalists to


make every man and woman a participant in the corporate activities. A small
investor is unsophisticated so far as corporate investment is concerned. With the

18
limited resources, he cannot buy shares of 'blue chip companies'. He may not, in
the most cases get allotment of the shares, applied for, in the Primary Market.
On the other hand, he will get full allotment of some dud shares. His
investments would, therefore, be not balanced and diversified. He is not thereby
able to minimize his risks by spreading his limited funds over different
industries. He has limited access to price sensitive information of the stock
exchanges. He may not even know the developments that take place in the share
markets and corporate bodies. 'Insurance' have come to a boon to the small
investors and they have emerged as the popular medium through which small
and medium investors can reap the benefits of good investing. The Institution of
Insurance collectively manages the funds from different small investors. It
mobilizes savings from the public and provides them attractive returns, security
and liquidity by investing in Capital Market.

Insurance emerged in the UK and the US as 'investment management


institutions' in the early Twentieth century, during the 1920s. The origin of
Insurance may however be traced back to the days ancient Greek where
'merchants' banded together to take shares in the commercial undertakings.
Similar arrangements existed in Rome and Europe also when merchants in
colonial America used to take shares in voyages which when completed would
be liquidated and assets divided among themselves. The Scottish American
Investment Trust was formed in 1873 to hold portfolio of American Railroads
bonds shares in trust were issued to the interested citizens of Dundee. Most of
these schemes were a closed type and the shares were sold and purchased at the
market rates and the 'law of demand' and supply set the price.

The concept of Insurancewas experimented in the US from 1920s and the


institutional business was becoming popular in the late 1940s. As the financial
climate during the early 1980s enhanced the competitiveness of certain
investment products the Insurance Industry responded to investors demand by
increasing the number and type of Insurance.

19
In the UK, during the 1920s, 'the accepting houses' emerged as a major force in
the business of investment management agencies. Investment management has
its genesis in the deployment of the large fortunes made by some of the
Victorian merchant bankers. But only in 1950, the accepting houses rapidly
built up on their existing skills and knowledge to deal with increasing capital.
The investment trust was superseded by the Unit Trust as small savers means of
access to professional management.

The foundation for the Insuranceoperation in India was laid by the Parliament in
1963 with the enactment of the Unit Trust of India (UTI) Act. At that time, the
then Finance Minister Mr. T.T. Krishnamachari, who initiated the Act, made it
clear to the Parliament that “UTI would provide an opportunity for the middle
and lower income groups to acquire without much difficulty, property in the
form of shares or units. This institution is intended to cater mainly to the needs
of individuals investors whose means are small.” The statement of objects and
reasons to the Unit Trust of India Act brings out critically the objects and role
of Mutual Fund. The statement stated:

“The question of establishing an institution in the public sector for carrying on


the business which is transacted by Unit Trust of India or Insurance in other
countries has been under consideration for sometimes. It is now proposed to
establish such an institution to be known as the Unit Trust of India with an
initial capital of five crores of rupees.

The Unit Trust of India will encourage saving by providing for various classes of
investors the facility of investing their money in units of the Trust. The Trust will invest
the initial capital and the capital obtained by the sale of the units in shares and other
securities and will distribute every year not less than 90 per cent of the net income
accruing to the unit holders. It is expected that the risk of losses or of depreciation on
account of the investments will be reduced or eliminated as a result of the proposed
arrangement. The Trust will also be in a position to contribute through its operations to
the growth and diversification of the country’s economy.

20
CHAPTER-5:
RESEARCH METHODOLOGY

RESEARCH DESIGN

INTRODUCTION

A Research Design is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It is the blue print that is followed in
completing the study. The basic objective of research cannot be attained without a proper
research design. It specifies the methods and procedures for acquiring the information
needed to conduct the research effectively. It is the overall operational pattern of the
project that stipulates what information needs to be collected, from which sources and by
what methods.

TITLE OF THE STUDY

21
“To Compare the products of HDFC Standard Life Insurance Company Limited
and Tata AIG Life Insurance Company Limited for HDFC Standard Life
Insurance Company Ltd.”

STATEMENT OF THE PROBLEM

This study was undertaken to identify which type of insurance plans HDFC SLIC should
market to beat Tata AIG LIC in India. A survey was undertaken to understand the
preferences of Indian consumers with respect to insurance. While marketing policies the
sole duty of an advisor/ agent is to provide insurance plans as per customer requirements.

In effect plans (insurance products) should be flexible to suit individual requirements.


This research tries to analyze some key factors which influence the purchase of insurance
like the term of the policy, the type of company, the amount of annual premium payable
(capacity and willingness to spend), risk taking ability and the influence of advertising.
Solutions and recommendations are made based on qualitative and quantitative analysis
of the data.

22
OBJECTIVES OF THE STUDY

 To analysis the product details of TATA AIG life Insurance Company limited
and HDFC Standard life Insurance Company Limited.

 To find ‘Points of Parity’ and ‘Points of Difference’ of TATA AIG Life


Insurance Company Limited and HDFC Standard Life Insurance Company
Limited.

 To find out factors that influence customers to purchase insurance policies


and give suggestions for further improvement.

23
RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data is
defined as data that is collected from original sources for a specific purpose. Secondary
data is data collected from indirect sources. (Source: Research Methodology, By C. R.
Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the
personal interview methods of data collection.

SECONDARY SOURCES

24
These include books, the internet, company brochures, product brochures, the company
website, competitor’s websites etc, newspaper articles etc.

SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a view to
draw conclusions about that universe. A sample is a representative of the universe
selected for study.

SAMPLE SIZE

The sample size for the survey conducted was 270 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is

10,00,000 which is approx population of Panipat excluding people below age of 18 years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

25
Tables were used for the analysis of the collected data. The data is also neatly presented
with the help of statistical tools such as graphs and pie charts. Percentages and averages
have also been used to represent data clearly and effectively.

STUDY AREA

The samples referred to were residing in Panipat City. The areas covered

were Bhatiya colony, Hari Bagh colony, Sukhdev nagar,Bishan Swaroop

colony,Kachha Camp, Virat nagar etc.

Chapter 6
Data Analysis and Interpretations (using
Various charts and graphs).

“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age group No. of Respondents


18 - 25 years 127
26 - 35 years 67
36 - 49 years 46
50 - 60 years 24
More than 60 years 6

26
CHART 1:

Analysis:

From the chart above we find that 47% of the respondents fall in the age group of 18 – 25

years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49

years.

27
Therefore most of the respondents are relatively young (below 26 years of age). These

individuals could be induced to purchase insurance plans on the basis of its tax saving

nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with

this and this fact has to be conveyed to the consumer. As of now many consumers have a

false perception that insurance is only meant for people above the age of 50. Contrary to

popular belief the younger you are the more insurance you need as your loss will mean a

great financial loss to your family, spouse and children (in case the individual is married)

who are financially dependent on you.

Customer profile of Served Respondents


TABLE 2:

Customer profile No. of respondents


Student 62
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 14

28
CHART 2:

Analysis:
From the chart above it can clearly be seen that 43% of the respondents are working
professionals, 23% are students and 18% are into business. Therefore the target market
would be working individuals in the age group of 18 – 25 years having surplus income,
interested in good returns on their investment and saving income tax.

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR


NAME

29
TABLE 3:
Person who have life insurance policy
Yes 103
No 167

CHART 3:

ANALYSIS:
This graph shows that out of total 270 respondents only 103 or 38% respondents have
life insurance policy in their name. Rest all don’t have a single policy in their name. So
there is a very big scope for life insurance companies to cover these people. So in future
business of life insurace will gro further.

30
MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 4:

LIFE INSURER NUMBER OF POLICIES


HDFC STANDARD LIFE 4
BIRLA SUN LIFE 3
AVIVA LIFE INSURANCE 6
BAJAJ ALLIANZ 7
LIC 55
TATA AIG 6
ICICI PRUDENTIAL 12
ING VYSYA 6
BHARTI AXA 2
OTHERS 2

CHART 4:

31
Analysis:
In India, the largest life insurance company is Life Insurance Corporation of India. It has
been in existence in India since 1956 and is completely owned by the Government of
India. Today the organization has grown to 2048 offices serving 18 crore policies and has
a corpus of over 340000 crore INR.

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE


INSURANCE

TABLE 5:

Premium paid (p.a.) No. of respondents


Rs. 5000 - Rs. 10000 40
Rs. 10001 - Rs. 15000 26
Rs. 15001 - Rs. 24900 18
Rs. 25000 - Rs. 50000 10
Rs. 50001 - Rs. 60000 4
Rs.60001 - Rs. 80000 2
Rs. 80001 - Rs. 100000 3

32
CHART 5:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE


INSURANCE

Analysis:

From the chart above we find that, 39% of the respondents surveyed pay an annual
premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an
annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs.
25000. Hence we can safely say that TATA AIG Life Insurance would be able to capture
the market better if it introduced products/plans where the minimum premium starts at
Rs. 5000 per annum.

33
Only 19% of the respondents pay more than Rs. 25000 as premium and most products
sold by TATA AIG Life Insurance have Rs.12000 as the minimum annual premium
amount. They should introduce more products like Easy Life Plus and Safe Guard where
the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would
definitely increase their market share as more individuals would be able to afford the
policies/plans offered.

POPULAR LIFE INSURANCE PLANS

TABLE 6:

Type of Plan No. of Respondents


Term Insurance Plans 105
Endowment Plans 122
Pension Plans 16
Child Plans 8
Tax Saving Plans 19

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CHART 6:

POPULAR LIFE INSURANCE PLANS

Analysis:

From the chart given above we can clearly see that 45% of the respondents hold
endowment plans and 39% of the respondents hold term insurance plans. Endowment
plans are very popular and serve two purposes – life cover and savings.

If the policy holder dies during the policy term the nominee gets the death benefit that is,
sum assured and accumulated bonus. On survival the policy holder receives the survival
benefit with a bonus.

35
A term plan is a pure risk cover plan wherein the insured pays a lower premium for a
higher sum assured. Term insurance is the cheapest form of insurance and helps the
policy holder insure himself for a relatively low premium. For the returns sensitive
investor term plans do not find favor as they do not offer a return in case the individual
does not die during the policy term.

AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 7:

Awareness of Unit Linked Plans No. of Respondents


Yes 154
No 116

CHART 7:

AWARENESS OF UNIT LINKED INSURANCE PLANS

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Analysis:

From the chart given above we find that 57% of the respondents are aware of unit linked
life insurance plans and 43% are not aware of such plans. These plans should be
promoted through advertising. The company can advertise through television, radio,
newspapers, bill boards and pamphlets. This would increase awareness and arouse
curiosity in the minds of the consumer which would enable the company to market its
products more effectively.

Unit – linked plans are those where the benefits are expressed in terms of number of units
and unit price. They can be viewed as a combination of insurance and mutual funds. The
number of units a customer would get would depend on the unit price when they pay the
premium.
When the policy matures the individual gets his fund value. The value of his fund is
calculated by multiplying the net asset value and number of units held by them on that
day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE


PREMIUM

TABLE 8:

Willingness to spend on premium No. of respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

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Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 8:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE


PREMIUM

Analysis:

From the graph above, we can clearly see that 41% of the respondents would be willing
to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to
spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend
more than Rs. 25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs.
25000 p.a. This is further reduced as most customers have already invested with LIC,
ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

38
TATA AIG Life Insurance is faced with a large amount of competition. There are 18
insurance companies in India inclusive of LIC. Hence to capture a larger part of the
market the company could introduce more reasonable plans with lesser premium payable
per annum.

CHART SHOWING IDEAL POLICY TERM

TABLE 9:

Ideal policy term No. of respondents


3 - 5 years 51
6 - 9 years 41
10 - 15 years 95
16 - 20 years 38
21 - 25 years 24
26 - 30 years 5
More than 30 years 3
Whole life Policy 13

CHART 9:

CHART SHOWING IDEAL POLICY TERM

39
Analysis:
From the chart given above it can be seen that 35% of the respondents prefer a policy
term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9
years. This means that TATA AIG Life Insurance could introduce more plans wherein
the premium paying term is less than 15 years.
The outlook of insurance as a product should be changed from something which you pay
for your whole life (whole life policy) and do not receive any benefit (the nominee only
receives the benefit in case of your death) to an extremely useful investment opportunity
with the prospects of good returns on savings, tax saving opportunities as well as
providing for every milestone in your life like marriage, education, children and
retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE


INSURANCE

40
TABLE 10:

Parameter No. of Respondents


Advertisements 35
High returns 84
Advice from friends 46
Family responsibilities 89
Others 16

CHART 10:

Analysis:

From the chart above it can be seen that 33% of the respondents purchase life insurance
to secure their families, 33% take life insurance to get high returns, 17% purchase

41
insurance on the advice of their friends and 13% purchase insurance because of the
influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to
the family in case of the uncertain death of the policy holder. But now a days this trend is
changing. Along with protection (life cover), a savings element is being added to
insurance.

With the introduction of the new unit linked plans in the market, policy holders get the
option to choose where their money will be invested. They can invest their money in the
equity market, debt market, money market or a combination of these. The debt and
money markets usually have low risk attached whereas the equity market is a high risk
investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 11:

Type of Company No. of Respondents Percentage


Government Owned
Company 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 11:

PREFERRED COMPANY TYPE OF THE RESPONDENTS

42
Analysis:
From the graph above we find that 60% of the respondents preferred to purchase
insurance from a government owned company, 29% of the respondents preferred to
purchase insurance from a public limited company and only 4% of the respondents
preferred a foreign based company. Heavy advertising through television, newspapers,
magazines and radio is required.

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 12:

Expected Returns No. of respondents


Less than 5% 5
5% - 10% 39
11% - 15% 46
16% - 20% 49
21% - 25% 46
26% - 30% 27
31% - 40% 22
41% - 50% 14
More than 50% 22

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CHART 12:

Analysis:

From the chart above it can clearly been seen that 18% of the respondents would like 16
– 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of
11 – 15% on their investments. Therefore the average return on investment should be at
least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want some
guaranteed returns. Therefore the bulk of investment should be made in the balanced
fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as
these involve investment is government securities and the debt market. But the returns on
these instruments are low (8 – 10%). If the company invests in shares, returns are higher
(39%) but correspondingly risk borne by the policy holder is also higher. Therefore a
good combination of the two instruments is often a wise choice.

44
Chapter 7 Findings and Conclusions

The future topics for research in the organization could be setting up of an appropriate ad
campaign. It is very vital to the companies’ success that the people of India know about
TATA AIG LTD., its products and their special features and how insurance in general
can help them in their future. The advertisements have to be emotionally appealing. They
might also include a celebrity. The brand name of TATA could be used to give a push to
TATA AIG LTD. and its products. The general perception of insurance as “inauspicious”
should be done away with and individuals and corporations accept insurance on power
with other investment opportunities.

The other area of research could be in the management of funds TATA AIG Life
Insurance possesses and how it can maximize returns for its investors. A research project
could be undertaken on how to ensure that the money gets invested in the right
companies and earns a medium – high return on investment. Another area of research
could be an analysis of the sales and marketing techniques used by TATA AIG LTD. A
large number of changes could be introduced and this would help in saving operating
costs and improving the efficiency of the firm.

45
CONCLUSION
TATA AIG life insurance is first life insurance company in India. It has businesses
spread out across the globe. It started its work in India on January 22, 2001. It currently
ranks number 4 amongst the insurers in India (Source: annual premium provided by the
company

The company faces a large amount of competition. To sustain itself it must promote its
products through advertising and improve its selling techniques. Consumers must be
aware of the new plans available at TATA AIG Life Insurance. The medium of
advertising used could be television since most of its competitors use this tool to promote
their products. The company must be promoted as an Indian company since consumers
seem to have more trust in investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life
insurance has to change in India before progress is made in this field. People should not
be afraid to invest money in insurance and must use it as an effective tool for tax
planning and long term savings.

TATA AIG LTD. could tap the rural markets with cheaper products and smaller policy
terms. There are individuals who are willing to pay small amounts as premium but the
plans do not accept premiums below a certain amount. It was usually found that a large
number of males were insured compared to females. Individuals below the age of 30
(mostly male) were interested in investment plans. This was a general conclusion drawn
during prospecting clients.

46
Chapter 8
Limitations

1. Some people don’t give the remarkable answer, so the surveyor has to make his own
assumption
2. Since the survey has been conducted in Panipat, being so big market it might not give
true picture.
3. The questionnaire was too long and many a times respondents used to refuse to fill
the questionnaire as they considered it to be time consuming.
4. The time period allotted for the study was limited as it had to be completed with this
stipulated period of time.
5. The number of respondent covered in the study is limited. Although all efforts has
been taken to make this study a representative of total market of Panipat, the sample
size is too small so that data are not reliable. Most of the customer were busy in their
work and saying “sorry I don’t have time” .So it was very difficult to access
information from those people.
6. The respondents were unable to read exact data spontaneously.
It is very difficult to catch the exact word of customers through questionnaire

47
Chapter 9

Expected Contribution from the study

• The project allowed me to know the subject in a better way by practical learning.

• How the insurance sector contribute in Indian economy .

• How different aspects of an area (area under study) effect the marketing
strategies .

• How the company make strategies and move towards growth .

• How an area can be divided into various sub cities so that marketing can be done
effectively.

• How insurance sector attracts public towards their services.

• How the company insures people’s life and also makes its own profit.

• How the company decides new opportunities in the market.

48
Appendices

Bibliography

1. Management notes of TATA AIG LTD.


2. www.tata-aig-life.com
3. C.R KOTHARI
4. Journal of the company to know it in a better way.
5. Corporate mentor Mr. Pawan Sabharwal.

Websites:

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

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Copy of questionnaire

Dear Sir/Madam,

I am a student of Ansal Inst. Of Technology, Gurgaon. As part of the requirements for


my Post Graduation Degree in Management I am required to do a research based project.
Kindly spend a few minutes of your valuable time and fill in this questionnaire.

Do you have a life insurance policy/investment plan in


your name?

o Yes o No

If yes which company’s insurance policies do you hold?


o Aviva Life
o TATA AIG Life Insurance
Insurance o Bajaj Allianz Life
o Birla Sun Life Insurance
Insurance o LIC
o HDFC Standard o ING Vysya Life
Life Insurance Insurance
o ICICI Prudential o Bharti Axa Life
Life Insurance Insurance
o Others (specify name)

What is the approximate premium paid by you annually


(in Rupees)?

o Rs. 5,000 – Rs. o Rs. 50,001 – Rs.


10,000 60,000
o Rs. 10,001 – Rs. o Rs. 60,001 – Rs.
15,000 80,000
o Rs. 15,001 – Rs. o Rs. 80,001 – Rs.
25,000 1,00,000
o Rs. 25,001 – Rs.
50,000
o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in


your current stage of life?

50
o Life Insurance o Pension Plans
o Life Insurance and o Child Plans
Investment Plans
o Tax saving plans

Are you aware of the new unit linked insurance plans in


the market?

o Yes o No

How much would you be willing to spend per annum if


you were to go for an investment/insurance plan?

o Less than Rs. o Rs. 25,001 – Rs.


6,000 50,000
o Rs. 6,001 – Rs. o Rs. 50,000 – Rs.
10,000 1,00,000
o Rs. 10,001 – Rs. o More than Rs.
25,000 1,00,000
Which according to you is an ideal policy term?
(Number of years you would be willing to pay premium)

o 3 to 5 years o 21 to 25 years
o 6 to 9 years o 26 to 30 years
o 10 to 15 years o More than 30
o 16 to 20 years years
o Whole life policy

What motivates you to purchase insurance/investment


plans?

o Advertisements o Advice from


o High Returns friends
o Family
responsibilities
o Others (specify)

In which kind of company would you prefer to make a


purchase of insurance?

51
o Government o Private Company
owned company o Foreign based
o Public Limited company
Company

Typically what kind of returns would you look at from


your investments? (Please note: Higher returns involve
greater risk)

o Less than 5% o 26% - 30%


o 6% - 10 % o 31% - 40%
o 11% - 15 % o 41% - 50%
o 16% - 20 % o More than 50%
o 21% - 25%

Personal Details:

Name:

Address:

Age: Contact No. :

• Profile of Student
• Housewife
• Working
Professional
• Business
• Self – Employed
• Government
Service Employee

Date:

Respondent:

52