A Study on Consumer Perception Regarding Insurance Companies In rural areas of Ludhiana Distt.

A dissertation submitted to Department of Management In partial fulfillment of the requirement for the award of degree of BACHELOR OF BUSINESS ADMINISTRATION (HONS.)

Submitted by: Gurwinder Singh Regd. No.7020070004

Supervisor: Dr. Anjanay Pandey Prof. Management

LOVELY PROFESSIONAL UNIVERSITY PHAGWARA

(2010)

LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

Format of Certificate of Completion by the Faculty Advisor

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the project report titled A Study on Consumer perception Regarding Insurance Companies in rural areas of Ludhiana Distt. carried out by Mr.Gurwinder Singh, S/o Mr. Bhajan Singh has been accomplished under my guidance & supervision as a duly registered BBA (Hons) student of the Lovely Professional University, Phagwara. This project is being submitted by him in the partial fulfillment of the requirements for the award of the Bachelor of Business Administration (Hons) from Lovely Professional University.

His dissertation represents his original work and is worthy of consideration for the award of the degree of Bachelor of Business Administration (Hons).

Dr.Anjanay Pandey Faculty Advisor.

Date: ______________________________

LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

DECLARATION

I, "Gurwinder Singh", hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.

Gurwinder Singh Regd. No. 7020070004

Date: __________________

ACKNOWLEDGEMENT

With profound veneration, first of all we recline ourselves before ALMIGHTY without whose blessings ourselves is cipher. It is my pleasure to be indebted to various people, who directly or indirectly contributed in the development of this work and who influenced my thinking, behavior, and acts during the course of study. As a student specializing in Marketing, I came to know about the ground realities in topics like A Study on Consumer Perception Regarding Insurance Companies in rural areas of Ludhiana Distt.. For this I am indebted to Dr.Anjanay Pandey, Faculty, LSB who took personal interest in my project and bore the associated headaches. I am thankful to him for his support, cooperation, and motivation provided to me during the study. It would be unfair if I do not mention the name of Ms. Mega Mehta, Faculty, LHSB who gave me valuable tips to complete this project and Mrs. Dr. Rajesh Verma, HoD, LHSB for her inspiring presence and blessings. Lastly, I would like to thank the almighty and my parents for their moral support and my colleagues with whom I shared my day-to-day experience and received lots off suggestions that improved my work quality.

Gurwinder Singh

Table of Contents
Title Page Authentication Certificate Declaration Acknowledgement Executive Summary Chapters Chapter-1 ITRODUCTION TO THE SUBJECT 1.1 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.2 1.3 1.4 Theoretical Foundation Meaning of Insurance Need for Insurance Types of insurance Need for Life Insurance Meaning of Consumer perception Need of the Study Objectives Research Methodology ii iii iv vii

1-13 1 2 3 4 7 8 8 9 14-40 15 15 16 18 19 20 28 29 31 32 37 41-50 42 51-87 52 87

Chapter-2 INTRODUCTION TO THE INSURANCE INDUSTRY 2.1 Overview of Insurance Industry 2.1.1 Life Insurance in India 2.1.2 History of the Insurance Industry 2.1.3 Major Policy Changes 2.1.4 Insurance Companies 2.1.5 Growth of the Insurance Industry in India 2.1.6 Landmarks 2.1.7 Major Players 2.1.8 Market Share 2.1.9 Product Range of the Insurance Industry 2.1.10 Future Possibilities Chapter-3 SURVEY OF LITATURE 3.1 Review of Literature

Chapter-4 DATA ANALYSIS, INPRETATION AND FINDINGS 4.1 Data Analysis And Interpretation 4.2 Observations and Findings

Chapter-5 CONCCLUSIONS, RECOMMENDATION AND LIMITATION 5.1 5.2 5.3 Conclusions Recommendations Limitations

88-91 89 90 92

Bibliography Annexure

Executive Summary
The subject consumer behavior regarding insurance companies is a very wider. In this study touches some important aspects of the consumer behavior regarding public and private insurance companies like preference between both insurance companies, factors that people keep in mind during the time of taking any policy, prefer regarding mode of premium payment etc. The study also deals with background and current scenario of insurance industry in India. This study also puts light on the History, current market position, product range, financial status, future plans of Insurance industry. A thriving insurance company is of vital importance to every modern economy. First because it encourages the savings habit, second because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates long-term investible funds for infrastructure building. The nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related. This characteristic of their business makes insurance companies the biggest investors in long-gestation infrastructure development projects in all developed and aspiring nations. This is the most compelling reason why private insurance (and foreign) companies which will spread the insurance habit in the societal and consumer interest are urgently required in this vital sector of the economy. With the nations infrastructure in a state of imminent collapse, India couldnt have afforded to be lumbered with sub-optimally performing monopoly insurance companies and therefore the passage of the Insurance Regulatory & Development Authority Bill on December 2, 1999 heralds an era of cautious optimism where stakes are high for all parties concerned. For the Govt. of India, Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers, investments must start yielding returns and for the domestic insurance industry - their market penetration should remain intact. On the fringe, the customer is pondering whether all the hype created on liberalization will actually benefit him. The IRDA Bill provides for the establishment of an authority to protect the interests of the holders of insurance policies, to regulate, promote and insure orderly growth of the insurance industry and amend the Insurance Act, 1938, the Life Insurance Act, 1956 and the General Insurance Business (Nationalization) Act, 1972. The bill allows foreign equity stake in domestic private insurance companies to a maximum of 26 per cent of the total paid-up capital and seeks to provide statutory status to the insurance regulator. The insurance business in India is pegged at $ 6.6 Billion whereas industry leaders feel privatization will increase it to $ 40 Billion within next 3-5 years.

OBJECTIVES OF STUDY: 1. To study the awareness level of people about insurance companies in rural areas. 2. To identify the factors people consider at the time of buying any insurance policy. 3. To find out the customer preference between public and private Insurance companies in rural areas.

NEED AND SCOPE OF THE STUDY

SCOPE OF THE STUDY The study was mainly limited to the six villages of The Ludhiana Distt.(Punjab). The study also covers the analysis of different products offered by the Insurance Companies and market position of different players of public and private Insurance companies (i.e. market share of different players).

NEED OF THE STUDY To study the awareness among rural people about the insurance. This study is helped insurance companies to know about the perception of rural people about the insurance.

RESEARCH METHODOLOGY Meaning of research Research is the search for knowledge. Its an art of science investigation discover the hidden trust. Its the movement from the known to the unknown to discover real fact. Systematized efforts to gain new knowledge.

Research Design The study was conducted as an exploratory sampling survey method to collect primary secondary data. and

Population of the study Those entire people whose age was more than 18 years and living in rural areas (Ludhiana Distt.).

Sample Size 90 people.

Sampling Frame (area) People whose age was more than 18 will be asked to fill questionnaire, in order to know responses

and priorities. Research was done around six villages of Ludhiana distt. (Punjab) The geographical distribution of sample is given below.

Sr No.

Villages Ludhiana Distt.

of No. of People

Chhourian

20

Hedon Bet

20

Katala

10

Sherpur

20

Raipur

10

Gari Bet

10

Total

90

SOURCE OF DATA Primary Source of Data Primary data are those collected by the investigator himself for the first time and thus they are original in character, they are collected for a particular purpose. A well-structured questionnaire was personally administrated to the selected sample to collect the primary data. Secondary Source of Data Secondary data are those, which have already been collected by some other persons for their purpose and published. Secondary data are usually in the shape of finished products. External Data was generated from magazines, research books and internet (websites).

Sampling Technique Simple random sampling technique was used in sampling but keeping in view to those whose age is more than 18 and living in rural areas of Ludhiana Distt. (a) METHOD 0F DATA COLLECTION Questionnaires were asked to fill in order to collect the data from the respondents. The method was chosen mainly because of the speed, accuracy and other benefits added to this particular method. (b) TOOLS OF DATA COLLECTION A structure questionnaire was used as an aid to collect data. The questionnaire was included close ended, multiple choice and ranking questions, which was very well bring out the responses from the respondents. (c) DATA ANALYSIS The collected data was statistically analyze using various analysis techniques such as Hypothesis Test, percentage analysis, ratio analysis, cross tabulation and ranking etc.

LIMITATIONS OF THE STUDY

Due to the time and financial constraints, the research is limited to the six villages of Ludhiana Distt. (Punjab) only. Some of the respondents were less co-operative. They did not show any interest in filling the questionnaire. They had taken this work just as wastage of time. Some respondents did not know the English language very well, it also leads to inaccurate responses. Personal biasness is also one of the major limitations of the study because some people who are related to public companies they give more importance to public sector and those who are engaged in private companies. They give more weight age to private companies without considering the advantages and disadvantages of both companies

Findings

Still near about 45% people of six villages of Ludhiana Distt.(Punjab) give the more preference to LIC to get insured. There is lot of potential in the Punjab for insurance companies mainly in the villages of Ludhiana Distt. Near about the 33% people have no need of life insurance during the time of research. So, Most of people still are not aware about the importance and necessity of the insurance in their life. They are not aware how useful life insurance can be for their family members if something happens to them.

Near about 40% People still consider insurance just as a tax saving device. So today also there is always a rush to buy an insurance policy only at the end of financial year like in January, February and March making the other 9 months dry for this business.

In this study I have also found that now people have started to take interest in private insurance companies. They have started to think beyond the issue of public and private companies because now they want better returns and better services. Now which company gives them to these things they go for that?

RECOMMENDATIONS AND SUGGESTIONS The private and public insurance companies should reposition their products in a better way by adding few attributes to their products. Office in every major city/town and big villages will help companies as it will the confidence of people and they invest in these companies without having the feel of risk. Mostly insurance buyers are service conscious, so service of these private insurance companies should be the better.. Insurance business depends a lot on the insurance agents/consultants/life advisors. So, companies should select these candidates according to its best recruiting policy. Advertising through electronic media i.e T.V. must be helpful. Also wall advertisement may be very fruitful. Printed media of advertisement is also proved very helpful where electronic media does not reach. Like Banners, Posters etc. in every village, town must help to grab the attention of people. Gifts or incentives scheme should be there for life advisors/agents. Who show to job, so as to motivate them to do the best in future. After every month, there should be meeting by the companies, as it helps to solve any problem faced by them. Private and public insurance companies should offer sponsorship to various helpful events from time to time. This would certainly enhance the brand image plus an impetus to the sale.

CHAPTER-1 INTRODUCTION TO THE SUBJECT

1.1THEORETICAL FOUNDATON INSURANCE Man is a social animal. He contributes to societys well being and gets livelihood protection from the society in which he lives. Man has always sought protection from risks which in fact compelled him to live in groups. He remained exposed to various kind of risks like death, accidents, loss of wealth, poverty etc. 1.1.1 Meaning of Insurance Insurance is the most important aspect a novice to insurance market should be conversant with. Insurance is a hedging instrument used as a precautionary measure against future contingent losses. This instrument is used for managing the possible risks of the future. Insurances are bought in order to hedge the possible risks of the future which might/might not take place. This is a mode of financially insuring that if such a incident happens then the loss does not affect the present well-being of the person. Thus, through insurance, a person buys the future happiness and smooth living. DEFINITION OF INSURANCE Insurance can be defined in two ways; 1. Functional Definition 2. Legal Definition

FUNCTIONAL DEFINITION: According to MAC GILL, insurance is a process in which uncertainties are made certain JHON MEGI, Insurance is a plan wherein persons collectively share the losses of the risks. Prof. R.S. SHARMA, Insurance is a cooperative device to spread loss caused due to a particular risk over a number of persons exposed to it, who agree to insurance themselves against the risk. LEGEL DEFINITION: Like other forms of the business, the business of insurance is also based on Law of Contract. According to Chief justice Tindal, Insurance is a contract in which sum of money is paid by the insured in consideration of the insurers incurring the risk of paying a large sum upon a given contingencies. Acc. To Britannica encyclopedia, Insurance may be described as a social device whereby a large group of individuals through a system of equitable contribution to reduce or eliminate certain measurable risks of economic loss common to all members of the group.

As such all contracts of insurance, except for life insurance contract are contract of indemnity. To conclude insurance is a contract in which a person whose risk is shifted is called INSURED and the party to whom it is shifted is called INSURER. Price consideration which is paid by insured to insurer is called PREMIUM. INSURANCE CONTRACT in which terms and conditions of insurance are mentioned is called INSURANCE POLICY.

1.1.2 Need for Insurance Insurance is desired to safeguard oneself and one's family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events. By taking life insurance a person can have peace of mind and need not worry about the financial consequences in case of any untimely death. Certain Insurance contracts are also made compulsory by legislation. For example, Motor Vehicles Act 1988, stipulates that a person driving a vehicle in a public place should hold a valid insurance policy covering Act" risks. Another example of compulsory insurance pertains to the Environmental Protection Act, wherein a person using or carrying hazardous substances (as defined in the Act) must hold a valid public liability (Act) policy.

1.1.3 Basically there are two types of insurance 1. Life Insurance 2. General Insurance Insurance - Life Your family counts on you every day for financial support: food, shelter, transportation, education, and much more. Insurance provides you with that unique sense of security that no other form of investment provides. It gives you a sense of financial support especially during that time of crisis irrespective of the fluctuations in the stock market. Insurance provides for your career goals right from your childhood years. Life insurance is all about making sure your family has adequate financial resources to make those plans and dreams come true. It provides financial protection to help your family or business to manage after your death.

Few of the Life insurance policies are: Whole life policies - Cover the insured for life. The insured does not receive money while he is alive; the nominee receives the sum assured plus bonus upon death of the insured.. Endowment policies - Cover the insured for a specific period. The insured receives money on survival of the term and is not covered thereafter. Money back policies - The nominee receives money immediately on death of the insured. On survival the insured receives money at regular intervals during the term. These policies cost more than endowment with profit policies. Annuities / Children's policies - The nominee receives a guaranteed amount of money at a pre-determined time and not immediately on death of the insured. On survival the insured receives money at the same predetermined time. These policies are best suited for planning children's future education and marriage costs. Pension schemes - are policies that provide benefits to the insured only upon retirement. If the insured dies during the term of the policy, his nominee would receive the benefits either as a lump sum or as a pension every month. Since a single policy cannot meet all the insurance objectives, one should have a portfolio of policies covering all the needs. Insurance - General Every asset has a value and the business of general insurance is related to the protection of economic value of assets. Assets would have been created through the efforts of owner, which can be in the form of building, vehicles, machinery and other tangible properties. Since tangible property has a physical shape and consistency, it is subject to many risks ranging from fire, allied perils to theft and robbery. Concepts of insurance have been extended beyond the coverage of tangible asset. Now the risk of losses due to sudden changes in currency exchange rates, political disturbance, negligence and liability for the damages can also be covered. But if a person judiciously invests in insurance for his property prior to any unexpected contingency then he will be suitably compensated for his loss as soon as the extent of damage is ascertained. Few of the General Insurance policies are: Property Insurance: The home is most valued possession. The policy is designed to cover the various risks under a single policy. It provides protection for property and interest of the insured and family.

Health Insurance: It provides cover, which takes care of medical expenses following hospitalization from sudden illness or accident. Personal Accident Insurance: This insurance policy provides compensation for loss of life or injury (partial or permanent) caused by an accident. This includes reimbursement of cost of treatment and the use of hospital facilities for the treatment. Travel Insurance: The policy covers the insured against various eventualities while traveling abroad. It covers the insured against personal accident, medical expenses and repatriation, loss of checked baggage, passport etc. Liability Insurance: This policy indemnifies the Directors or Officers or other professionals against loss arising from claims made against them by reason of any wrongful Act in their Official capacity. Motor Insurance: Motor Vehicles Act states that every motor vehicle plying on the road has to be insured, with at least Liability only policy. There are two types of policy one covering the act of liability, while other covers insurers all liability and damage caused to one's vehicles. Since a single policy cannot meet all the insurance objectives, one should have a portfolio of policies covering all the needs.

1.1.4 Need for Life Insurance Today, there is no shortage of investment options for a person to choose from. Modern day investments include gold, property, fixed income instruments, mutual funds and of course, life insurance. Given the plethora of choices, it becomes imperative to make the right choice when investing your hard-earned money. Life insurance is a unique investment that helps you to meet your dual needs - saving for lifes important goals, and protecting your assets.

Let us look at these unique benefits of life insurance in detail. Asset Protection From an investors point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation. The core benefit of life insurance is that the financial interests of ones family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously,

insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer. Goal based savings Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for ones retirement will begin to take precedence.Clearly, as your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage. Life insurance is the only investment option that offers specific products tailor-made for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met. The table below gives a general guide to the plans that are appropriate for different life stages Table 1 Life Stage Young & Single Young & Just married Primary Need Asset creation Asset creation & protection source RIDA Life Insurance Product Wealth creation plans Wealth creation and mortgage protection plans Married with kids Childrens education, Asset creation and protection Education insurance, mortgage protection & wealth creation plans Married with kids Planning for retirement & asset protection Across all life-stages Health plans Retirement solutions & mortgage protection Health Insurance

1.1.5 Meaning of Consumer perception Consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It blends elements from psychology, sociology, sociopsychology, anthropology and economics. It attempts to understand the buyer decision processes|buyer decision making process. It studies characteristics of individual consumers such as demographics, psychographics, and behavioural variables in an attempt to understand peoples wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Belch and Belch define consumer behavior as the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires.

Consumer perception and Insurance Companies The subject consumer behavior regarding insurance companies is a very wider. In this study touches some important aspects of the consumer behavior regarding insurance sector like why people make demand of insurance, preference between public insurance companies and private insurance companies, factors that people keep in mind during the time of taking any policy, prefer regarding mode of premium payment etc.

1.2 OBJECTIVES OF STUDY To study the awareness level of people about insurance companies in rural areas. To identify the factors people consider at the time of buying any insurance policy. To find out the customer preference between public and private Insurance companies in rural areas.

1.3 NEED AND SCOPE OF THE STUDY SCOPE OF THE STUDY The study was mainly limited to the six villages of The Ludhiana Distt.(Punjab). The study also covers the analysis of different products offered by the Insurance Companies and market position of different players of public and private Insurance companies (i.e. market share of different players). NEED OF THE STUDY To study the awareness among rural people about the insurance. This study is helped insurance companies to know about the perception of rural people about the insurance.

1.4 RESEARCH METHODOLOGY Meaning of research Research is the search for knowledge. Its an art of science investigation discover the hidden trust. Its the movement from the known to the unknown to discover real fact. Systematized efforts to gain new knowledge. Research Design The study was conducted as an exploratory sampling survey method to collect primary secondary data. Population of the study Those entire people whose age was more than 18 years and living in rural areas (Ludhiana Sample Size 90 people. Sampling Frame (area) People whose age was more than 18 will be asked to fill questionnaire, in order to know responses Distt.). and

and priorities. Research was done around six villages of Ludhiana distt. (Punjab) The geographical distribution of sample is given below. Table-2 Sr No. Villages of No. of People

Ludhiana Distt. 1 Chhourian 20

Hedon Bet

20

Katala

10

Sherpur

20

Raipur

10

Gari Bet

10

Total

90

SOURCE OF DATA Primary Source of Data Primary data are those collected by the investigator himself for the first time and thus they are original in character, they are collected for a particular purpose. A well-structured questionnaire was personally administrated to the selected sample to collect the primary data. Secondary Source of Data Secondary data are those, which have already been collected by some other persons for their purpose and published. Secondary data are usually in the shape of finished products. External Data was generated from magazines, research books and internet (websites). Sampling Technique Simple random sampling technique was used in sampling but keeping in view to those whose age is more than 18 and living in rural areas of Ludhiana Distt. (a) METHOD 0F DATA COLLECTION Questionnaires were asked to fill in order to collect the data from the respondents. The method was chosen mainly because of the speed, accuracy and other benefits added to this particular method. (b) TOOLS OF DATA COLLECTION A structure questionnaire was used as an aid to collect data. The questionnaire was include close ended, multiple choice and ranking questions, which was very well bring out the responses from the respondents. (c) DATA ANALYSIS The collected data was statistically analyze using various analysis techniques such Hypothesis Test, percentage analysis, ratio analysis, cross tabulation and ranking etc. as

LIMITATIONS OF THE STUDY Due to the time and financial constraints, the research is limited to the few villages of Ludhiana Distt. (Punjab) only. Some of the respondents were less co-operative. They did not show any interest in filling the questionnaire. They had taken this work just as wastage of time. Some respondents did not know the English language very well, it also leads to inaccurate responses. Personal biasness is also one of the major limitations of the study because some people who are related to public companies they give more importance to public sector and those who are engaged in private companies. They give more weight age to private companies without considering the advantages and disadvantages of both companies

CHAPTER-2 INTRODUCTION TO THE INSURANCE INDUSTRY

2.1 Overview of Insurance Industry With a large population and untapped market, insurance happens to be a big opportunity in India. The insurance business (measured in the context of first year premium) grew at 47.93 per cent in 2005-06, surpassing the growth rate of 32.49 percent achieved in 2004-05. However, insurance penetration in the country continues to be low. Insurance penetration or premium volume as a share of a countrys GDP, for the year 2005 stood at 2.53 per cent for life insurance and 0.62 per cent for non-life insurance. The level of penetration tends to rise as income increases, particularly in life insurance. India, with its huge middle class households, has exhibited potential for the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance market has witnessed dynamic changes which includes presence of a fair number of insurers in both life and non-life segment. 2.1.1 Life Insurance in India Life insurance industry recorded a premium income of Rs.105875.76 crore during 2005-06 as against Rs.82854.80 crore in the previous financial year, recording a growth of 27.78 per cent. The contribution of first year premium, single premium and renewal premium to the total premium was Rs.21275.75 crore (20.09 per cent); Rs.17509.78 crore (16.54 per cent); and Rs.67090.21 crore (63.37 per cent), respectively. In the year 2000-01, when the industry was opened up to the private players, the life insurance premium was Rs.34,898.48 crore which constituted of Rs.6996.95 crore of first year premium, Rs.25191.07 crore of renewal premium and Rs.2740.45 crore of single premium. Post opening up, single premium had declined from Rs.9, 194.07 crore in the year 2001-02 to Rs.5674.14 crore in 2002-03 with the withdrawal of the guaranteed return policies. Though it went up marginally in 2003-04 to Rs.5936.50 crore (4.62 per cent growth) the year 2004-05 witnessed a significant shift with the single premium Income rising to Rs.10336.30 crore showing 74.11 per cent growth over 2003-04, accounting for 12.74 per cent of the total premium underwritten in that year. As against 34.62 percent in 2005-06.While the number of single premium individual policies underwritten by the private insurance companies grew by 103 percent, the non-single premium individual policies grew by 64 percent. The new insurers have improved their market share from 9.33 per cent in 2005-06 to 14.25 percent in 2006-07.

It reflects increase in their persistency ratio and enables insurers to bring down overall cost of doing business. The renewal premium underwritten by the life insurance industry, during 2006-07 recorded a growth of 18.46 per cent as against 20.85 per cent in 2005-06. The private insurers and LIC reported growths of 122.56 per cent and 14.32 per cent respectively during the year. Segregation of the first year premium reflects a definite consolidation towards linked products with premium underwritten at Rs.16060.67 crore in 2006-07 as against Rs.8247.74 crore in 2005-06, i.e., a growth of 95 per cent. The non-linked premium was Rs.19804.33 crore as against Rs.17069.37 crore in

2004-05, i.e., a growth of 16 per cent. The linked and non-linked business accounted for 44.78 and 55.22 per cent as against 32.54 and 67.46 per cent respectively in the year 2005-06.

2.1.2 History of the Insurance Industry The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. 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. The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms

In 1994, the committee submitted the report and some of the key recommendations included: 1) Structure Government stake in the insurance Companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate. 2) Competition Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry.

No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only One State Level Life Insurance Company should be allowed to operate in each state. 3) Regulatory Body The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) should be made independent. 4) Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time). 5) Customer Service LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition.

But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crores. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as

independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body. 2.1.3 MAJOR POLICY CHANGES Insurance sector has been opened up for competition from Indian private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private players into the insurance market which was hitherto the exclusive privilege of public sector insurance companies/ corporations. Under the new dispensation Indian insurance companies in private sector were permitted to operate in India with the following conditions: Company is formed and registered under the Companies Act, 1956; The aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed 26%, paid up equity capital of such Indian insurance company; The companys sole purpose is to carry on life insurance business or general insurance business or reinsurance business. The minimum paid up equity capital for life or general insurance business is Rs.100 crores. The minimum paid up equity capital for carrying on reinsurance business has been prescribed as Rs.200 crores. The Authority has notified 27 Regulations on various issues which include Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-insurance, Obligation of Insurers to Rural and Social sector, Investment and Accounting Procedure, Protection of policy holders interest etc. Applications were invited by the Authority with effect from 15th August, 2000 for issue of the Certificate of Registration to both life and non-life insurers. The Authority has its Head Quarter at Hyderabad.

2.1.4 Insurance companies IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are included, there are currently 13 insurance companies in the life side and 13 companies operating in general insurance business. General Insurance Corporation has been approved as the Indian reinsurer for underwriting only reinsurance business. Particulars of the life insurance companies and general insurance companies including their web address is given below

LIFE INSURERS Public Sector Life Insurance Corporation of India Private Sector Allianz Bajaj Life Insurance Company Limited Birla Sun-Life Insurance Company Limited HDFC Standard Life Insurance Co. Limited ICICI Prudential Life Insurance Co. Limited ING Vysya Life Insurance Company Limited Max New York Life Insurance Co. Limited MetLife Insurance Company Limited Kotak Mahindra Life Insurance Co. Ltd. SBI Life Insurance Company Limited TATA AIG Life Insurance Company Limited AMP Sanmar Assurance Company Limited Dabur CGU Life Insurance Co. Pvt. Limited GENERAL INSURERS Public Sector National Insurance Company Limited New India Assurance Company Limited Oriental Insurance Company Limited United India Insurance Company Limited Private Sector Bajaj Allianz General Insurance Co. Limited ICICI Lombard General Insurance Co. Ltd. IFFCO-Tokio General Insurance Co. Ltd. Reliance General Insurance Co. Limited Royal Sundaram Alliance Insurance Co. Ltd. TATA AIG General Insurance Co. Limited Cholamandalam General Insurance Co. Ltd. Export Credit Guarantee Corporation HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India

Websites

www.licindia.com

www.allianzbajaj.co.in www.birlasunlife.com www.hdfcinsurance.com www.iciciprulife.com www.ingvysayalife.com www.maxnewyorklife.com www.metlife.com www.kotakmahnidra.com www.sbilife.co.in www.tata-aig.com www.ampsanmar.com www.avivaindia.com

www.nationalinsuranceindia.com www.niacl.com www.orientalinsurance.nic.in www.uiic.co.in

www.bajajallianz.co.in www.icicilombard.com www.itgi.co.in www.ril.com www.royalsun.com www.tata-aig.com www.cholainsurance.com www.ecgcindia.com

www.gicindia.com

2.1.5 Growth of Insurance Industry in India A thriving insurance sector is of vital importance to every modern economy. First because it encourages the savings habit, second because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates long-term investible funds for infrastructure building. The nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related. This characteristic of their business makes insurance companies the biggest investors in long-gestation infrastructure development projects in all developed and aspiring nations. This is the most compelling reason why private sector (and foreign) companies which will spread the insurance habit in the societal and consumer interest are urgently required in this vital sector of the economy. With the nations infrastructure in a state of imminent collapse, India couldnt have afforded to be lumbered with sub-optimally performing monopoly insurance companies and therefore the passage of the Insurance Regulatory & Development Authority Bill on December 2, 1999 heralds an era of cautious optimism where stakes are high for all parties concerned. For the Govt. of India, Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers, investments must start yielding returns and for the domestic insurance industry - their market penetration should remain intact. On the fringe, the customer is pondering whether all the hype created on liberalization will actually benefit him. Recent economic liberalization started few years ago have started bringing in new investments from global giants and the government was hard pressed to facilitate global integration by lowering trade barriers for the free flow of technology, intellectual and financial capital. Additionally, reforms are essential if the Indian economy is to achieve and sustain a growth rate of 7 to 8 per cent per annum. Reaching a faster growth path also implies attracting foreign direct investment inflows of $ 10 Billion every year, up from the current level of $ 3 to $ 3.5 Billion. Thus liberalization of insurance creates an environment for the generation of long term contractual funds for infrastructural investments. Multinationals interest Multinational insurers are indeed keenly interested in emerging insurance because their home markets are saturated while emerging countries have low insurance penetrations and high growth rates. International insurers often derive a significant part of their business from multinational operations. As early as 1994, many of the UKs largest life and general insurers derived 40 per cent to 60 per cent of their total premium from outside their home markets. The figure at Commercial Union was 76 per cent in that year.

While the impact of global operations on their business may be large, typically foreign insurers take only a small share of an individual countrys market. In Taiwan for example, foreign companies took only a 3 per cent share even seven years after opening up. In Korea, their share was 1 per cent after 20 years. In China, a large and complex market like India, private insurers have not made much headway. Yet, new entrants find insurance attractive because even a small share of a large and growing market can be profitable. The Korean insurance market for example, was only the 30th largest market in the world by premium volume in 1971. It moved up to 6th largest in 1996. In any case, in India multinational insurers will be restricted to a minority shareholding in new companies. The new entrants will therefore be private Indian companies. The other reason why these large MNCs are interested in India is the economies of the insurance market. Insurance companies survive on the principle of spreading of risk. No matter what the size of each player, an insurer cannot afford to operate in a niche market. Operating in a particular region would expose them to the economic downtrends in the region and derail their profits. Insurance companies, being long-term players, also have to avoid sudden dips in earnings to inspire confidence among investors to invest long-term funds. This can be achieved by spreading their operations over a wide geographical area. Moreover, for them, big is not just beautiful, but essential for survival. Which brings us to the avenues for growth. According to the Sigma report on global insurance brought out by the worlds second largest reinsurer Swiss Re - the international market is completely saturated. In the developed world, the growth in life insurance premium has been a meager 1.5%. As compared to this, LIC despite all its handicaps has been growing at a healthy clip of around 20%. Nationalized Sector: A Performance Review In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LICs income grew at a healthy average of 10 per cent as against the industrys 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US). LIC has even provided insurance cover to five million people living below the poverty line, with 50 per cent subsidy in the premium rates. LICs claims settlement ratio at 95 per cent and GICs at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth rate for Life insurance business has been 19.22 per cent per annum and for General insurance business it has been 17 per cent per annum.

However, there is other side of the coin too. Their large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized insurers. The field staff and the agents of the GIC and its four wholly owned subsidiary companies have seldom bothered to venture out into the rural hinterland to sell crop or any other personal line insurance. Given the woeful lack of penetration of the rural market by the

GIC subsidiaries, it is hardly surprising that a growing number of farmers across the country are resorting to the extreme remedy of suicide when their usually uninsured crops fail The highest paid employees of the public sector, the estimated half-a-million employees of the nationalized insurance companies, are characterized by abysmal productivity, utter ignorance of the basic principles of the insurance business, endemic corruption, gross indiscipline and sheer laziness. Dominating the inevitably weak management of the nationalized insurance companies, the militant and strongly unionized employees of the nationalized monopoly insurance companies have transformed Indian insurance from volume-driven into class-based business. The domestic insurance companies, despite meeting their social objectives of going into the deepest interiors of the country, have lagged behind in meeting customer expectations in products and services. Privatization: Start Up Strategy Potential private entrants therefore expect to score in the areas of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. Critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently. This might seem a logical strategy from the point of view of new players. Start-up costs-such as those of setting up a conventional distribution network-are large and high-end niches offer better returns. However, in the long run middle-market offers the greatest potential as in terms of it is the second largest market in the world. This may still be an urban market but goes beyond the affluent segment. Insurance, even more than banking, is a volume game. A very exclusive approach is unlikely to provide meaningful numbers. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped. Regulatory Issues The IRDA Bill lays down that the Indian promoter must dilute the stake in the private insurance firms from 74 per cent to 26 per cent in ten years. The bill stipulates tough solvency marginsRs 500 million for life insurance firms, Rs 500 million or a sum equivalent to 20 per cent of net premium income for general insurance and Rs 1 billion for reinsurance business. The insurer has to maintain separate accounts relating to fund of shareholders and policyholders. The funds of policyholders should be retained within the country but does not cover repatriation of profits and dividends. Insurance companies under the new regime will have to have exposure to rural and social sectors.

Foreign investment in insurance, the bill states, is crucial to financing infrastructure and better insurance cover. The key to success in opening up the insurance sector in India is regulation. An example of how poor regulation can destroy a market is the mutual fund industry. A combination of improper marketing practice and unfullfilable promises has resulted in a loss of investor faith in that industry. Incidentally, the insurance industry in India itself has gone through the same phase. One of the reasons for nationalization of the insurance industry (LIC in 1956 and GIC in 1973) was the mismanagement and malpractice of erstwhile private players. But if the statements of IRA officials are anything to go by, the new regulations are expected to be on the right track. N I Rangachary, chairman, IRA, has already provided the time table for the changes once the Bill is passed. The IRA has already indicated that it will have tough norms for new participants. Repositioning by Nationalized Sector Floodgates of competition opened up by the privatization of insurance industry did throw a challenge to the well-protected nationalized sector and it seems they have picked up the gauntlet. LIC and GIC, both are trying to reposition themselves by having re-engineering done on the structure and operations of their respective organizations. Life Insurance Corporation is at present going through presentations from top management consultants. These consultants have been asked to narrate their experiences in countries where the insurance sector has been opened up for private competition so that the public sector player can draw lessons. Based on these, LIC will appoint a consultant which can provide them broad terms of reference on what changes are required to tackle the impending competition. GIC has already identified the areas that need to be activated and given a shape through the four subsidiary companies. Foremost is the area of providing health insurance services. A change in the GIC Act will enable the corporation to float a joint venture company for health insurance. Other areas that the GIC is looking at are savings-linked insurance products and use of alternate distribution channels including banc assurance. Also in progress is the co-ordination of all foreign operations of the group.

Even state-owned entities, SBI and UTI have serious plans for insurance sector as the banks have unsurpassed advantages over any other player. The intermediaries are also getting more organized with a little nudging from the IRA. The Reinsurance Consultants Association is planning to convert itself into the Insurance Brokers Association of India in anticipation of the laws being amended to allow insurance broking. Cross Border Experience A cross-country experience show that nowhere in the world has the entry of foreign firms threatened the position of domestic companies. Whether it is Malaysia, where the insurance sector has been open for more than 50 years and foreign companies account for about 10 per cent of market penetration or it is Indonesia, Thailand, China or the Philippines, where the market has been opened more recently, the total market share of foreign companies is less than 10 per cent except in Indonesia where it is about 20 per cent. Closer home, we have the experience of the banking sector where despite the presence of 42 foreign banks, their share in total banking assets is less than 10 per cent. Today hardly 20 per cent of the population in India is insured and insurance premium (life as well as nonlife) account for just 2 per cent of GDP as against the G-7 average of 9.2 per cent. Consequently, the fear that new companies will displace public companies is misplaced. There is room for more for not only the existing companies but also for any number of competitors. In China, insurance premium accounted for just over 1 per cent of Chinas GDP in 1995 but in the four years since the market has been liberalized (albeit partially), spending on insurance has grown at a compound annual rate of 33 per cent. It is not just foreign companies alone that have grown but also the national PICC as well. The story is no different in S Korea. There, the opening of the sector saw the Big Six domestic players, who initially controlled the entire market, increase their business from 7 to 37 trillion won by 1997. Meanwhile foreign companies were not able to capture more than a miniscule 0.7 per cent of the market.

Structure of insurance industry: Snapshot Historical Perspective: Snapshot (1) Prior to 1956, 242 companies operating (2) 1956-2001 Nationalization LIC Monopoly Player Government control (3) 2001 Opened up Sector Market Share

Table -3

Sector Public(LIC) Private

2001-02 98% 2%

2002-03 94% 6%

2003-04 87% 13%

2006-07 77% 23%

2007-08 74% 26%

Source IRDA
Potential of life Insurance in India

Table -4
Total population 1.9 billion

Total population of insurable class Total population insured

253 million

88.5 million

Source: Financial Expert Delhi (2008)

Contribution to Indian Economy (1) Life Insurance is only companies which garner long term savings. (2) Spread of financial services in rural areas and among socially less privileged. (3) Long term fund for the infrastructure. (4) Strong positive correlation between development of capital market and insurance companies. (5) Employment generation.

Aggregation of long term savings (a) Total assets of life insurance companies Table-5 2005-06 4,23,000 cr. 2006-07 5,42,000 cr. 2007-08 6,53,780 cr. Source IRDA (2008)

(b) Total premium generated Table-6 2005-06 94,000 cr. 2006-07 1,12,000 cr. 2007-08 1,33,000 cr. Source IRDA (2008) (c) The insurance industry is growing at 19% p.a. Spread of financial services in rural areas and amongst socially underprivileged (1) IRDA regulations provide certain minimum business to be done (a) In rural areas (b) In the socially weaker sector

(2) Life insurance offices are spread over nearly 1400 centers. (3) Presence of representatives in every tensile for deeper penetration in rural areas. (4) Insurance agents numbering over 7.24 lakhs in rural areas.

2.1.6 Landmarks .Some of the important milestones in the life insurance business in India are: 1870 Bombay mutual life insurance society is the first Indian owned life insurer 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 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 are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

2.1.7 MAJOR PLAYES Public Player: LIC Life Insurance Corporation of India (LIC),facing a major challenge from 15 new players including international majors, has clawed its way back slightly, raising its share from 71 per cent to 77.51 per cent during the first four months of the current fiscal. T S Vijayan, recently appointed chairman of LIC, told a news conference that the government-controlled company has seen premium income rise by 182.26 per cent, as against an industry average of 177.44 per cent. New premium income has soared by 191 per cent. The life insurance industry in India has grown largely because of LICs growth in the current fiscal, said a confident Vijayan. For financial year 2006-07, LIC expects premium income to rise to Rs24,000 crore, about 40 per cent higher than in the previous year. The corporation, which turns 50, will be launching a new product, Bima Gold-2, to mark the occasion on September 4. This follows the success of the first version of Bima Gold. According to Vijayan, LIC has set a world record by settling 11.8 million claims worth Rs28,512 crore in 2005-06. Every day, the corporation settles nearly 45,000 claims, and 97 per cent of the claims are settled on or before the due date. And in the case of death claims, 93 per cent are paid within 20 days of intimation of death, he added. LIC is also toying with the idea of entering the credit card business, following a report by KPMG, which suggested it could be a viable business. We are currently looking for partners, said Vijayan.

The corporation has invested nearly Rs300,000 crore in central and state government bonds, about Rs60,000 crore in the infrastructure sector, and just around Rs3,000 crore in the equity markets. A bulk of its bond investments (about Rs240,000 crore) was in central government bonds, representing over 50 per cent of its total assets. According to the Insurance Regulatory and Development Authority (IRDA), new business premium income from April 2006 to February 2007 amounted to INR579.38 billion (US$13.18 billion), registering an impressive 120% growth over the same period last year. The Life Insurance Corporation (LIC) represented 75.2% of the market share in new business.

Private Players: A large number of players are working in Indian insurance sector very successfully. Name of some major players of this sector are as below:

ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Life HDFC Standard Life Birla Sunlife Max New York Life Reliance Life Aviva

2.1.8 MARKET SHARE (in %)

Table-7 Companies Market Share (in %) 2005-2006 LIC ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Life Birla Sunlife Max New York Life Reliance Life Aviva Kotak Life Insurance Tata AIG Others 71 7 8 2 3 2 1 1 1 1 1 1 2006-2007 73 7 6 3 2 1 1 1 1 2 1 2 Source: Irda

Fig 1 show the market share of insurance companies

2.1.9 PRODUCT RANGE OF THE INSURANCE INDUSTRY Product means offering capable of satisfying a need or a want, which is offered to a target market for attention, acquisition, use, or consumption. A product can be an object, service, activity, person, place, organization, or idea. Life Insurance Products Life insurance products are usually referred to as plans of insurance or insurance policies. These plans have two basic elements. One of the Death cover providing for the being paid on the death of the insured person within specified period. The other is the survival Benefit providing for the benefit being paid on survival of a specified period.

Product mix of Life insurance companies: Table-8

Types of Insurance Plans 1. Term plan Term plans are the purest from of insurance. These are no-frills policies that cover only the risk of your dying. In the event of your death during the policy term, your nominees receive the cover amount---in insurance parlance, the sum assured; you get no benefits if you survive the policy term. Since the entire premium paid by you ---the cost of buying insurance cover---on term policies goes towards covering the risk of your life, insurers offer you this cover at the least cost. 2. Endowment plans While term plans covers just the risk of death, endowment plans also offer some return on the premium is paid by you. So, if you die during the policy term, your nominee gets the sum assured plus some returns; if you survive the policy term, you still get back the sum assured and returns. As much as this money if you die, money if you live philosophy is an enticing proposition, it comes at a price; high premiums, which drag down the returns from endowment plans, to barely 4-6 per cent a year. In an endowment plan, you pay premiums for a pre-defined tenure and sum assured. The premium will depend upon your age, the sum assured, the plans tenure and the nature of returns. A portion of the premium paid by you is invested by the insures on your behalf. Another portion goes towards your cover and a third towards meeting the insurers administrative expenses, which lowers the effective yield on your investment in endowment plans. 3. Money back plans Money back plans are variant of endowment plans, with one basic difference: unlike endowment plans, where the survival benefits are distributed at the end of the policy term, the pay back in money back plans is staggered through the policy term. Typically, a part of the sum assured is returned to you at periodic intervals through the policy tenure. 4. Whole-life plan The three categories of insurance plans mentioned above provide you life cover for a defined period, up to a certain age (generally, 70 years), Whole-life plan, on other hand, provide you cover through your lifetime--the only class of insurance policies to do so. Typically, whole-life plan are structured such that the

policyholder has the option to pay premium up to a certain age (referred to as the maturity age which is generally 80-100 years) or for a specified period. On reaching maturity age, the insurer gives you the option to either continue with the cover through the lifetime (for which no further premiums will have to be paid) or encase the maturity benefits (sum assured plus bonuses). Some insurers do give the option to encase the bonus during the term per it self, which can serve as a useful income stream during your later years, if you so desire. 5. Unit-linked insurance plans In insurance-cum investment plans of the kind listed above, you have little say in where your money is invested. Your insurer too is governed by certain investment restrictions: it can invest just 10 per cent of the premium paid by you in equities; the greater chunk of 90 percent has to be invested in debt paper. While such restrictions are intended to insure safety of your investment, they also lead to rigidity in investment are rein in your returns to low single digits. Unit-linked insurance plans get around such restrictions, by giving you greater control over where your premium is invested. Think of them as insurance plans that double as mutual funds. The annual premium you pay on unit-linked plans is linked to the sum assured and the policy tenure. You can switch from one plan to another free of cost once a year (a nominal amount is charged for additional switches). So, if you think stocks are going cheap, you can move to the growth plan; or, if you think stocks are overvalued, you can move your money to the income plan. You can switch from one plan to another free of cost once a year (a nominal amount is charged for additional switches). So, if you think stocks are going cheap, you can move to the growth plan; or, if you think stocks are overvalued, you can move your money to the income plan.

Unit Linked Insurance Product ULIPs have gained high acceptance due to attractive features they offer. These include: 1. Flexibility 1. Flexibility to choose Sum Assured. 2. Flexibility to choose premium amount. 3. Option to change level of Premium /Sum Assured even after the plan has started. 4. Flexibility to change asset allocation by switching between funds. 2. Transparency 1. Charges in the plan & net amount invested are known to the customer. 2. Convenience of tracking ones investment performance on a daily basis. 3. Liquidity

1. Option to withdraw money after few years (comfort required in case of exigency). 2. Low minimum tenure. 3. Partial / Systematic withdrawal allowed 4. Fund Options 1. A choice of funds (ranging from equity, debt, cash or a combination). 2. Option to choose your fund mix based on desired asset allocation. 6. Traditional Plans These are the oldest types of plans available. These plans cater to customers with a low risk appetite. Some of the common features of traditional plans are: 1. Steady Investment 1. Major chunk of investible funds are in debt instruments. 2. Steady and almost assured returns over the long term. 2. Features 1. Death benefit is Sum Assured + guaranteed & vested bonus. 2. Helps in asset creation as they are for a long tenure. 3. Premium to Sum Assured ratios are fixed for each plan and age.

General insurance products Property Insurance : The home is most valued possession. The policy is designed to cover the various risks under a single policy. It provides protection for property and interest of the insured and family. Health Insurance : It provides cover, which takes care of medical expenses following hospitalization from sudden illness or accident. Personal Accident Insurance : This insurance policy provides compensation for loss of life or injury (partial or permanent) caused by an accident. This includes reimbursement of cost of treatment and the use of hospital facilities for the treatment. Travel Insurance: The policy covers the insured against various eventualities while traveling abroad. It covers the insured against personal accident, medical expenses and repatriation, loss of checked baggage, passport etc.

Liability Insurance: This policy indemnifies the Directors or Officers or other professionals against loss arising from claims made against them by reason of any wrongful Act in their Official capacity. Motor Insurance: Motor Vehicles Act states that every motor vehicle plying on the road has to be insured, with at least Liability only policy. There are two types of policy one covering the act of liability, while other covers insurers all liability and damage caused to one's vehicles. Since a single policy cannot meet all the insurance objectives, one should have a portfolio of policies covering all the needs.

2.1.10 Future Possibilities (Next 5-10 Years) Job opportunities are likely to increase manifold. The number of people working in the insurance sector in India is roughly the same as in the UK with a population that is 1/7 Indias; the US with a population the size of India has nearly 4 times the number. In the emerging markets, the picture is no less encouraging. In S Korea, the no of full time employees more than doubled over a ten year period. Thailand added 50 per cent more jobs in four years. The liberalization of the insurance sector promises several new jobs opportunities for those employed in the finance sector who are equipped with degrees in finance. Finance professionals who had witnessed a slump in the job market would be a much-relieved lot to hear about the privatization of the insurance sector. Let us look into the type of jobs that will be created once the private players come on the scene. Certainly, it wont be far different from the traditional streams in any other industry. There will be demand for marketing specialists, finance experts, human resource professionals, engineers from diverse streams like the petrochemical and power sectors, systems professionals, statisticians and even medical professionals. Apart from this, there will be high demand for professionals in the streams like Underwriting and claims management and actuarial sciences. There could be a huge inflow of funds into the country. Given the industrys huge requirement of start-up capital, the initial years after opening up are bound to see a strong inflow of foreign capital. Moreover, given that the break-even, typically, comes much later than in the case of other sectors, odds are that the first remittance of dividend will not happen before a good 10-15 years. In the areas of reinsurance, huge capacity is likely to be created with players like Swiss Re and Munich Re keenly observing the unfolding saga of liberalization of insurance industry in India. Not only the outward reinsurance will reduce, it is bound to attract inward reinsurance from the neighboring countries and regions. If the regulator is forward looking and legislature is supportive, this trend may well lead to the creation of a Lloyds like market for the direct as well as reinsurance businesses.

However, increased competition is very likely to result in rate reductions in certain classes of business, but in those areas that have so far been cross subsidized, an increase in rates may be possible. Overall, the rate reductions may outweigh the increases, thus bringing down the re-insurance premium volume available. Apart from pure re-insurance activities, which is providing insurance protection, a revolution will come in service related fields like training, seminars, workshops, know-how transfer regarding risk assessment and rating, risk inspections, risk management and devising new policy covers, etc. Also, with more players in the market, there will be significant increase in advertising, brand building, and keen pricing not ridiculous pricing and this will benefit whole lot of ancillary industries. Another effect of de-regulation will be that, projects, especially mega-projects where one needs the capacities of the international re-insurance market, will get exposed to international trends to an even greater extent than is the case today. This will affect rates too. Areas like the personal lines segment, where we also expect to see substantial growth as also new types of covers, would usually not be affected by international trends in the same way as, there is much less need for global re-insurance support. Substantial shift in the distribution of insurance in India is likely to take place. Many of these changes will echo international trends. Worldwide, insurance products move along a continuum from pure service products to pure commodity products. Initially, insurance is seen as a complex product with a high advice and service component. Buyers prefer a face-to-face interaction and place a high premium on brand names and reliability. As products become simpler and awareness increases, they become off-the-shelf, commodity products. Sellers move to remote channels such as the telephone or direct mail. Various intermediaries, not necessarily insurance companies, sell insurance. In the UK for example, retailer Marks & Spencer now sells insurance products. In some countries like Netherlands and Japan, insurance is marketed using post offices distribution channels. At this point, buyers look for low price. Brand loyalty could shift from the insurer to the seller. In other markets, notably Europe, this has resulted in bancassurance: banks entering the insurance business. The Netherlands led with financial services firms providing an entire range of products including bank accounts, motor, home and life insurance, and pensions. Other European markets have followed suit. In France over half of all life insurance sales are made through banks. In the UK, almost 95% of banks and building societies are distributing insurance products today. In India too, banks hope to maximize expensive existing networks by selling a range of products. Various seminars and conferences on bancassurance are taking place and many bankers have clearly shown their inclination to enter insurance market by leveraging their strengths in the areas of brand image, distribution network, face to face contact with the clients and telemarketing coupled with advanced information

technology systems. The mergers of Citibank with Travellers in USA and of Winterthur, the largest Swiss Co. with Credit Suisse are recent examples of the phenomenon likely to sweep India too. Insurers in India should also explore distribution through non-financial organizations. For example, insurance for consumer items such as refrigerators can be offered at the point of sale. This piggybacks on an existing distribution channel and increases the likelihood of insurance sales. Alliances with manufacturers or retailers of consumer goods will be possible. With increasing competition, they are wooing customers with various incentives, of which insurance can be one. Another potential channel that reduces the need for an owned distribution network is worksite marketing. Insurers will be able to market pensions, health insurance and even other general covers through employers to their employees. These products may be purchased by the employer or simply marketed at the workplace with the employers co-operation. Worldwide interest in E-commerce and Indias predominant position in information technology and software development is also likely to be a major factor in the marketing of insurance products in the immediate future. The internet account is increasing in arithmetic progression and the trend has already been set by some of the leading insurers and insurance brokers worldwide. Finally, some potential Indian entrants into insurance hope to ride their existing distribution networks and customer bases. For example, financial organizations like ICICI, HDFC or Kotak Mahindra intend to tap the thousands of customers who already buy their deposits, consumer loans or housing finance. Other hopeful entrants anticipate specific alliances such as with hospitals to provide health cover. Over the past three years, around 40 companies have expressed interest in entering the sector and many foreign and Indian companies have arranged anticipatory alliances. The threat of new players taking over the market has been overplayed. As is witnessed in other countries where liberalization took place in recent years we can safely conclude that nationalized players will continue to hold strong market share positions, but there will be enough business for new entrants to be profitable. Opening up the sector will certainly mean new products, better packaging and improved customer service. Both new and existing players will have to explore new distribution and marketing channels. Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing. Recognizing the potential, in the past three years, the nationalized insurers have already begun to target niches like pensions, women or children.

CHAPTER-3 SURVEY OF LITERATURE

3.1 REVIEW OF LITERATURE Heubner (1942) who postulated that human life value has certain qualitative aspects that gives rise to its economic value. But his idea was normative in nature as it suggested how much life insurance to be purchased and not what will be purchased. There were no guidelines regarding the kind of life policies to be selected depending upon the consumers capacity and the amount of risk to be carried in the product. The ongoing discussion also reveals that individuals current income and future anticipated consumption expenditure plays a crucial role in determining the amount of insurance purchased (we are, for a while ignoring the form in which insurance is purchased). The importance of rate of interest or the impatience factor is also worth considering. Preferences over different consumption pattern vary from person to person and there are qualitative factors which affects such preferences. Yaari (1965) studied the problem of uncertain lifetime and life insurance . Including the risk of dying in life cycle model, he showed conceptually that an individual increases expected lifetime utility by purchasing fair annuities. Simple models of insurance demand were proposed by Pratt

Mossin et al. (1968) considering a risk averse decision maker with an initial wealth.. The results indicate that demand for life insurance varies inversely with the wealth of the individuals.

Headen et al. (1974) studied the effects of short run financial market behavior and consumer expectations on purchase of ordinar life insurance and developed structural determinants of life insurance demand. They considered three different sets of variables: first, variables stimulating demand as a result of insurer efforts (e.g. industry advertising expenditure, size of the sales force, new products and policies, etc.); second, variables affecting household saving decision (e.g. disposable, permanent and transitory income, expenditure expectation, number of births, marriages, etc.) and lastly, variables determining ability to pay and size of potential markets (e.g. net savings by households, financial assets, and consumer expectation regarding future economic condition). They concluded that life insurance demand is inelastic and positively affected by change in consumer sentiments; interest rates playing a role in the short run as well as in the long run. Bjrn Ekman (1989) Health policy makers are faced with competing alternatives, and for systems of health care financing. The choice of financing method should mobilize resources for health care and provide financial protection. This review systematically assesses the evidence of the extent to which communitybased health insurance is a viable option for low-income countries in mobilizing resources and providing financial protection. The review contributes to the literature on health financing by extending and qualifying exiting knowledge. Overall, the evidence base is limited in scope and questionable in quality. There is strong evidence that community-based health insurance provides some financial protection by reducing out-ofpocket spending. There is evidence of moderate strength that such schemes improve cost-recovery. There is weak or no evidence that schemes have an effect on the quality of care or the efficiency with which care is produced. In absolute terms, the effects are small and schemes serve only a limited section of the population.

The main policy implication of the is review that these types of community financing arrangements are, at best, complementary to other more effective systems of health financing. To improve reliability and validity of the evidence base, analysts should agree on a more coherent set of outcome indicators and a more consistent assessment of these indicators. Policy makers need to be better informed as to both the costs and the benefits of implementing various financing options. The current evidence base on community-based health insurance is mute on this point. CC Griffin (1989) adverse selection, moral hazard, and sometimes high administrative costs necessitate government intervention in health care to achieve universal insurance coverage. Private health insurance addresses the risk problem. Government should provide personal health services, including curative care, in rural areas in developing countries. Movements to enhance private health providers should begin in urban areas, thereby relieving governments of a considerable burden, since most of their health budgets now are targeted to cities. In developing countries, the greatest potential for private sector involvement lies in hospital care. Third party payment mechanisms would need to be developed to pay for such care, however. They would also relieve the government of its regulatory burden and result in more efficient and equitable health systems in developing countries. A reevaluation of government's role in areas where the governments are most heavily involved is also needed. The private sector should supply government health facilities, which should almost exclusively be in rural areas, with drugs, medical supplies, lab tests, and X-rays, resulting in more diversified private markets and supply lines. Chile has restructured its health care delivery system to increase incentives for greater internal efficiency and to use a less expensive mix of providers. In the late 1970s and early 1980s the government reduced subsidies to people who can afford to pay for their own care. China has transformed its public curative system in rural areas into an almost completely private system. Health financing in China encompasses user fees, state funds, health insurance, cooperative health insurance, and brigade subsidies to rural and barefoot doctors. Zimbabwe has attempted to reduce the private sector and to reallocate health budgets to rural areas, yet private care still exists with the government providing it large subsidies. Truett et al. (1990) discussed the growth pattern of life insurance consumption in Mexico and United States in a comparative framework, during the period 1964 to 1984. They assumed that at an abstract level demand depends upon the price of insurance, income level of individual, availability of substitute and other individual and environment specific characteristics. Further, they experimented with demographic variables like age of individual insured(s) and population within the age group 25 to 64 and also considered education level to have some bearing on insurance consumption decision. They concluded the existence of higher income inelasticity of demand for life insurance in Mexico with low income levels. Age, education and income were significant factors affecting demand for life insurance in both countries. Cleeton, D. L. et al. (1993) expanded the discussion on life insurance demand by adding newer variables namely, average life expectancy and enrollment ratio of third level education. The study based on 45 countries for two separate time periods (1980 and 1987) concluded that income and social security

expenditures are significant determinants of insurance demand, however, inflation has a negative correlation. Dependency ratio, education and life expectancy were not significant but incorporation of religion, a dummy variable, indicates that Muslim countries have negative affinity towards life insurance.

Currie (1995) look at the effects that having public or private insurance has on health care utilization. They find that there are racial differences in how whites respond to having insurance versus how blacks respond. They find that white children covered by either form of insurance are more likely to visit a doctor when sick. White children covered by Medicaid are more likely to receive preventive care than white children with private insurance or no insurance. The authors find that for blacks Medicaid coverage has less effect on increasing preventive care and no increase in health care utilization. They also find that private insurance coverage for blacks has no increased effect of health care utilization over no coverage.

Gruber (1996) previous work on the effects of public insurance on health outcomes includes. They looked at how two different Medicaid expansion covering low-income pregnant women affected the rates of low birth weight and infant mortality rates. They find that the more narrowly targeted expansion had an effect on reducing infant mortality by about 8.5%. They estimate that this reduction in infant mortality came at a cost of $840,000 per life saved. One innovation they developed was to create an instrumental variable to correct the problem that the number of women eligible for the expansion depended on not just state eligibility limits, but state demographic and economic conditions. They simulate eligibility in each state using a national sample of 3000 women. This simulated fraction eligible was used as an instrument for the number of women eligible in each state. This IV only depends on the legislative environment that created the guidelines.

F Ellis (1998) this article reviews the recent literature on diversification as a livelihood strategy of rural households in developing countries, with particular reference to sub-Saharan Africa. Livelihood diversification is defined as the process by which rural families construct a diverse portfolio of activities and social support capabilities in order to survive and to improve their standards of living. The determinants and effects of diversification in the areas of poverty, income distribution, farm output and gender are examined. Some policy inferences are summarised. The conclusion is reached that removal of constraints to, and expansion of opportunities for, diversification are desirable policy objectives because they give individuals and households more capabilities to improve livelihood security and to raise livingstandards. Atmanand (2003) Key elements of disaster management are prevention, mitigation, preparedness, response and relief, rehabilitation. The various stakeholders in the process of disaster mitigation are policy makers, decision makers, administration, professionals, professional institutions, R&D institutions, financial institutions, insurance sector, community, NGOs and the common man. Insurance has played a very important role. The advanced countries have developed the insurance system and made it effective and mandatory as a result the loss of lives and property is comparatively less. In India, most of the losses suffered in natural disasters are not insured, for reasons such as lack of purchasing power, lack of interest in

insurance, theory of karma attitude and ignorance of availability of such covers. Quite large numbers of agencies provide the insurance cover and foreign insurance companies have already ventured in such areas. This implies that the commercial and private sector can also play an essential role in disaster mitigation. The present study attempts to fill the gap in studies on the role of the insurance sector in disaster management. Saliba AJ. Charles (2003) Rurality is associated with a number of direct and indirect causes of eye disease. The direct causes are best described as lifestyle factors, such as exposure to UV light and occupational risks. Indirect factors are those where the occurrence of a predisposition is magnified due to rural population distributions, for example gender and age. ISSUE: Research into rurality and optical health is limited, so definitive increases in the prevalence of vision disease are difficult to ascertain. Furthermore, establishing the need for additional optometrists in rural areas has been mixed in the literature. The current review addresses the relationship between rurality and optical health and suggests an increase in available optometrists in rural areas. LESSONS LEARNED: Age is the single largest correlate of vision disease, with an increase in age over 40 years correlating significantly with a range of vision diseases. Rural New South Wales (NSW) Australian areas contain a higher proportion of 'older' residents than urban equivalents. Gender is also a correlate of vision disease, although the phenomenon is more complex than for age. Rural NSW populations contain a higher ratio of men to women than do urban areas, which is significant. Rural residents are exposed to higher levels of UV radiation than their urban counterparts, increasing the prevalence of pterygium. Rural residents experience higher levels of occupational eye injury and may have less stringent eye safety standards. The interaction between vision and hearing loss can accentuate occupational safety vulnerability and general living difficulties. Rural communities experience higher levels of noise-induced hearing loss. Rural communities experience higher levels of certain eye disease and may be exposed to an increased risk from indirect factors such as age, gender and private health insurance ownership. Rural communities may have lower access to optometrists and this review suggests increasing the number of optometrists in rural Australia. The amount of research conducted on factors associated with rurality and optical health should be increased.

HansP.Binswanger (2004) It has long been recognized that rural credit markets are incomplete. This is because many classes of borrowers have little or no access to credit from formal institutions, and they often borrow small amounts informally at what appear to be excessive interest rates. It has now also become clear that the market for comprehensive crop yield insurance has, in nearly all cases, failed. While some specific yield Insurance (hail, flooding) is provided by private companies in developed Countries on a profit-making basis, general yield insurance come sintoexistence or survives only because of government subsidies. The failure of crop yield insurance markets does not arise from lack of demand for the stabilization of consumption and income. Recent experimental studies indicate that farmers in developing countries are poor and typically risk-averse. Furthermore, capital markets are also poorly developed, which in principle should increase the demand for insurance on the Part of risk adverse farmers. Finally, yield risks are primarily

weather related and probability information on weather is not exceptionally difficult to find. This chapter attempts a systematic exploration of the causes of the serious difficulties of both rural credit and yield insurance markets. I trace these difficulties to an identical set of information, incentive, and management problems that arise in spatially dispersed agricultural production systems. It is a common observation that people do not freely provide their transaction partners with information. Indeed, people normally attempt to take advantage of lenders' and insurers' information difficulties unless the contracts and information-gathering procedures are structured to preclude such opportunistic behaviour. In the insurance literature, these problems are known as moral hazard and adverse selection.

Mikhail Frolov (2004) this paper reviews the main results of the economic literature explaining the existence of deposit insurance in its modern form. It is shown that deposit insurance is not the only means to cope with the problem of bank runs. Yet it is a prevailing solution for the banks dominate the credit channels in most economies the world over, and the modern payment systems are based on the convertibility of the bank deposits into cash. Being a part of the general public policy of financial sector stability, deposit insurance is structured in accordance with a core objective adopted for the entire policy, and this explains why many world schemes, besides the intrinsic DIS objective of bank run prevention, also Choose to follow the objective of small (unsophisticated) depositor protection. In practice, atrade-off between the ability of a DIS to prevent bank runs and the soundness of incentives it induces forces policymakers to choose between the twoobjectives. The review of the related literature helps to distinguish four basic approaches regarding the balance of the run-prevention capacity and sound incentives in deposit insurance design. Further analysis also shows that three of the basic structuring options (the limited, partial, and selective guarantees) are likely to be employed in the ordinary (non-crisis) circumstances and the choice among them needs to be based on the country-specific factors. T Ensor (2005) Health care can be funded in a number of ways ranging from direct user charges (out of pocket) payments to indirect methods that pool across time (prepayment) and across different risk and wealth groups (insurance and general taxation). All these methods can be used to finance maternal health services. When assessing the impact of financing mechanisms it is important to be aware of the different ways they effect service delivery patterns and utilisation. Specifically most systems have both equity and efficiency aspects that combine to impact on health service utilisation and health status. In general indirect methods that help families to pool the costs of maternal health services are preferable to direct methods of payment. It is also clear, however, that user charges may sometimes help to mitigate deficiencies in systems of pooled funding. Available literature suggests that financing mechanisms for maternal health services could be improved by systems that increase transparency help to mitigate demandside costs of services and provide funding for that promotes transparent charging for services. While the limited experience of demand-side mechanisms for improving access to maternal health services more evaluation is required.

Hussels et al. (2005) has reviewed the efforts of researchers to explain consumer behaviour concerning the purchase of life insurance for almost 50 years. The review of earlier studies concludes that bulk of the empirical studies undertaken finds a positive association between increase in savings behaviour, financial services industry and demand for life insurance. Taking this forward, our first issue is to see whether or not per capita gross domestic savings and financial depth influences life insurance consumption. GDP and Percapita GDP are often highly correlated with the proxy variables measuring insurance demand- density and penetration. We therefore ignore these two variables and assume that as income grows, it will add to insurance demand via rise in the savings component i.e., GDS. Guptahima (2007) Health insurance in India has shown little development. It has not been able to evoke enthusiasm among Indian insurers. Consequently, several reports on Indian health care insurance have been produced. The purpose of this paper is to offer a review of this matter. Almost 79 per cent of health expenditure is borne by private bodies and the rest by the public. Authors argue that to stimulate private health insurance growth, the Indian government should recognize health insurance as a separate line of business and distinguish it from other non-life insurance. Particular emphasis is placed on the present health care scenario in India and international field generally. A global comparison of selected Asian countries, regarding their national incomes and health expenditure in public and private sectors, generates insights. Third party administrators (TPAs) facilitate a cashless health services for their customers and offer back-up services to the insurance companies. Desired strategies and ways of furthering the role of the Insurance Regulatory and Development Authority in acting as a regulator for the purpose of ensuring the industry's smooth functioning is an issue for India's health services. Joyce et al. (2008).They look at the effect that the mandatory coverage of vaccinations had on the likelihood of children being up to date on vaccinations, and if coverage changed the number receiving all shots from a single private provider. Using the National Immunization Survey (NIS), they find that SCHIP only increased the use of the new vermicelli vaccine, and that instead of seeing more vaccines done bya single private provider, the percentage actually decreased.

Joglekar rama (2008) In India, the out-of-pocket health expenditure by households accounts for around 70 percent of the total expenditure on health. Large out-of-pocket payments may reduce consumption expenditure on other goods and services and push households into poverty. Recently, health insurance has been considered as one of the possible instruments to reduce impoverishing effects of large out-of-pocket health expenditure. In India, health has insurance limited coverage and the present paper studies whether it has been effective so far. Litecture defines out-of-pocket health expenditure as catastrophic if its share in the household budget is more than some arbitrary threshold level. In the present paper, we argue that for households below poverty line any expenditure on health is catastrophic as they are unable to attain the subsistence level of consumption. Thus, we take zero percent as a threshold level to define catastrophic

health expenditure and examine the impact of health insurance on probability of incurring catastrophic health expenditure. Our findings show that the extent of OOP health expenditure is lower for insured households in urban areas. Thus, health insurance may prove to be an important policy instrument to reduce OOP health expenditure.

To sum up, the Theoretical and Empirical review yields macroeconomic variables like income, rate of interest, and accumulated savings in wealth form; along with a set of demographic or social variables having potential impact on an individuals decision to opt for or not to demand insurance. Life insurance consumption increases with the breadwinners probability of death, the present level of familys consumption and the degree of risk aversion.

CHAPTER-4

DATA ANALYSIS, INTERPRETATION AND FINDINGS

Q1. What is your monthly income? Table 9 showing the monthly income of the respondents PARTICULARS Less than 10000 10000-20000 20000-30000 30000-40000 More than 40000 FREQUENCY 11 22 24 18 15 PERCENTAGE 12% 24% 27% 20% 17%

Total

90

100%

From the above table it can be inferred that: 12% of the 90 respondents have a monthly income of less than 10000 24% of the respondents have a monthly income of 10000 20000 27% of the respondents have a monthly income of 20000 30000 20% of the respondents have a monthly income of 30000 40000 17% of the respondents have a monthly income of more than 40000

Monthly income of the respondents

25

24

20 no of respondents

18 15

15

11

12

10

less than 10000 20000 - 30000 more than 40000

Fig 2

10000 - 20000 30000 - 40000

INTERPRETATION: It can be interpreted from above results that 12% income of the respondents less than 10000, 24% of respondents 10000-20000, 27% of 20000-30000, 20% of 30000-40000 and 17% more than 40000 in villages of Ludhiana Distt.(Punjab).

Q2. What is your monthly saving? Table 11 showing the monthly savings of respondents PARTICULARS Lessthan2000 2000-4000 4000-6000 6000-8000 More than 8000 TOTAL FREQUENCY 15 22 21 19 13 90 PRECENTAGE 17% 24% 23% 21% 15% 100%

From the above table it can be inferred that: 17% of the 90 respondents have a monthly savings of less than 2000 24% of the respondents have a monthly savings of 2000 4000 23% of the respondents have a monthly savings of 4000 6000 21% of the respondents have a monthly savings of 6000 8000 15% of the respondents have a monthly savings of more than 8000

monthly savings of the respondents

22 25 20
no of respondents

21 19

15 13

15 10 5 0
less than 2000 4000 - 6000 more than 8000 2000 - 4000 6000 - 8000

Fig 3

INTERPRETATION: It can be interpreted from above results that 17% monthly saving of the respondents less than 2000, 24% of respondents monthly saving is 2000-4000, 23% of 4000-6000, 21% of 6000-8000 and 15% of more than 8000 in villages of Ludhiana Distt.(Punjab).

Q3. Are you aware about the Insurance? Table 12showing the awareness of people about insurance

AWARE ABOUT INSURANCE

NO.OF RESPONDENTS

PERCENTAGE

Yes

60

67%

No Total

30 90

33% 100%

From the above table it can be inferred that: Out of 90 only 60 feel the need of insurance. It means 67% of respondents aware about insurance &33% do not aware about insurance.

Awareness about insurance

33% Yes 67% No

Fig 4

INTERPRETATION: It can be interpreted from above results that there is still a very big segment of the population of the villages of Ludhiana Distt.(Punjab) is not aware about the importance of the life insurance. So, if insurance companies adopt right approach in Punjab they can grab this portion of the population.

Q4. If yes, then from which medium you came to know about the Insurance companies (i.e. source of advertisement)?

This question is put forward in order to know, which is strongest medium of advertisement that provide the information about the private insurance companies to the people. Table 13 show the source of advertisement SOURCE OF ADVERTISEMENT NO. OF RESPONDENTS PERCENTAGE

Electronic Media Printed Media Through Others Total

54 18 18 90

60% 20% 20% 100%

From the above table it can be inferred that: 60% of the respondents came to know through the electronic media. 20% of the respondents came to know through the print media. 20% of the respondents came to know through the other medium.

20% 20% 60%

ELECTRONIC MEDIUM PRINT MEDIUM OTHERS

Fig 5 INTERPRETATION: It can be interpreted from above results that people give most preference to T.V. as a source of information. So, insurance companies should make attractive T.V ads to promote their products.

Q5. in your opinion to whom the customer give more preference Insurance? The question was put forward in order to know the preference of people about the companies through which they want to be get insured. Table 14 show the consumers insurance preference INSURANCE PREFERENCE NO.OF RESPONDENTS PERCENTAGE

Public Co. Private Co. Total

59 31 90

65% 35% 100%

From the above table it can be inferred that: o Out of 90, 65% of respondents like the public companies i.e. LIC and remaining 35% respondents like the private insurance companies.

INSURANCE PREFERENCE
Public Co. Private Co.

35%

65%

Fig 6

INTERPRETATION: It can be interpreted from above results that public insurance companies (i.e LIC) has a very strong position in the market of Punjab as comparative to private insurance companies. Q 6. Do you have any Insurance policy? The question was put forward in order to know how many people have any insurance policy. Table 15 show how many people have insurance policy INSURANCE POLICY NO.OF RESPONDENTS PERCENTAGE

Yes No Total From the above table it can be inferred that:

60 40 90

66% 44% 100%

66% of the respondents have insurance policy. 44% of the respondents do not have any insurance policy.

INSURANCE POLICY

40%

Yes 60% No

Fig 7 INTERPRETATION: It can be interpreted from above results that most of the people have insurance policy. Q7. Which Insurance policy do you have? Table 16 showing various insurance policies taken by respondents INSURANCE POLICY NO. OF RESPONDENTS PERCENTAGE

Life Insurance General Insurance Both Total

15 20 55 90

17% 22% 61% 100%

From the above table it can be inferred that: 17% respondents have life insurance 22 % respondents have General insurance policy 61% respondents have both insurance policy

insurance policies taken by respondents

17

22

61

Life insurance

General insurance

both

Fig 8 INTERPRETATION: It can be interpreted from above results that most of the people bought both insurance policies. Because no. of people having vehicles and General insurance is compulsory Government and 17% respondents have life insurance poliies. Q8. Which Cos Insurance policy you prefer the most? Table 17 showing the companys preferred for taking life insurance policies by the respondents by

PARTICULARS LIC ICICI ING-VYSYA Birla Sun life Others TOTAL

FREQUENCY 40 30 07 10 03 90

PRECENTAGE 45% 33% 08% 11% 03% 100%

From the above table it can be inferred that: 45% of the 90 respondents are the holders of life insurance policies of LIC 33% of the respondents are the holders of life insurance policies of ICICI 08% of the respondents are the holders of life insurance policies of ING VYSYA 11% of the respondents are the holders of life insurance policies of Birla sunlife 3% of the respondents hold the life insurance policies of other companies, which include Max New York, Metlife etc.

Companies preferred for life insurance policies

3% 8% 11% 45%

33%

LIC

ICICI

ING - VYSYA

Birla sunlife

others

Fig 9 INTERPRETATION: It can be interpreted from above results that in public insurance company LIC has most strong position in Ludhiana Distt.(Punjab) and in private sector insurance companies ICICI Prudential has most strong position in Ludhiana Distt.(Punjab).

Q9. Form how many years do you have Insurance policy? Table 18 showing the years of insurance policies of respondents YEARS OF INSURANCE NO. OF RESPONDENTS PERCENTAGE POLICY

<-5 years 5-10 years 10-15years

24 36 18

27% 40% 20%

Any others

12

13%

From the above table it can be inferred that: 27% respondents have <-5 years insurance policy. 40% respondents have 5-10 years insurance policy 20% respondents have 10-15 years insurance policy. 13% respondents have any others insurance policy.

Years of insurance policy

<-5years 5-10years 10-15years Any other

13% 20%

27%

40%

Fig 10 INTERPRETATION: It can be interpreted from above results that most of the people have from years insurance policies. 5-10

Q10. What do think are the benefits of Insurance cover? Table 19 showing to know about which factor leads them to get insured.

BENEFITS OF INSURANCE

NO. OF RESPONDENTS

PERCENTAGE

50 Cover Future Uncertainty 20 Future Investment Tax Deductions Any other Total 12 8 90

55% 22% 13% 10% 100%

From the above table it can be inferred that:

55% of the respondents get insured for the sake of risk coverage. 22% respondents get insured for the sake of investment. 13% respondents get insured for saving the tax. Remaining 10%respondents buy insured for other purposes.

Benefits of insurance
60 50 40 30 20 10 0 Future Uncertainty Future Investment Tax Deductions Any other

Fig 11 INTERPRETATION: It can be interpreted from above results that most of the people get insured for risk coverage and investment purposes.

Q11. Which feature of your policy attracted you to pay it? Table 20 showing the attractive feature of insurance policies ATTRACTED POLICY No. OF RESOPNDENTS PERCENTAGE

Low Premium

15

17

Larger Risk Conversance Money Back Guarantee Easy Access to Agents Any Other

43 14 12 6

48 15 13 7

From the above table it can be inferred that: 17% respondents attracted insurance policy for low premium. 48% respondents attracted insurance policy for larger risk covers. 15% respondents attracted insurance policy for money back guarantee. 13% respondents attracted for easy access to agents. 7% respondents attracted for any other feature.

Attracted policy
50 45 40 35 30 25 20 15 10 5 0 Low premium LARGER risk COVERS Money Back guarantee Easy access to agents Any other

Fig 12 INTERPRETATION: It can be interpreted from above results that most of the people prefer larger risk covers and low premium buying any insurance policies.

Q12. What is your perception about insurance? Table 21 showing the perception of respondents about insurance PERCEPTION ABOUT NO. OF RESPONDENTS PERCENTAGE INSURANCE

Protect future Tax saving device Saving tool Total

42 36 12 90

47% 40% 13% 100

From the above table it can be inferred that: o 47% respondents perception about insurance are protected future. o 40% respondents perception about insurance is tax saving device. o 12% respondents perception about insurance are saving tool.

perception about insurance

Saving tool 13%

Tax saving device 40%

Protect future 47%

Fig 13 INTERPRETATION: It can be interpreted from above results that most of the people perception about insurance is that insurance is a tax saving device and good for future portect.

Q13. What type of insurance plan would you like to prefer? Table 22 showing that the liking of people regarding different insurance plans. PREFER OF INSURANCE NO.OF RESPONDENTS PLANS Child plans Money back plans Pension plans Term insurance plans Employment plans Others plans Total 18 23 18 9 13 9 90 20 25 20 10 15 10 100 PERCENTAGE

From the above table it can be inferred that: 20% people like to buy child insurance plans. 25% people like to get money back insurance plans. 20% people like to buy pension plans. 10% people like to buy term insurance plans. 15% people like Employment plans. 10% people like to get insured in other insurance plans.

30 25 20 15 10 5 0

Fig 14

INTERPRETATION: It can be interpreted from above results that Money back insurance plans, child insurance plans and pension plans are more popular in Ludhiana Distt. of Punjab than other plans.

TESTING OF HYPOTHESIS The test of hypothesis begins with an assumption about the population from which the sample is drawn. According to Prof.Morris Ham bury, A hypothesis is simply a quantitative statement about a population. Hypothesis testing deals with a procedure, which accepts or rejects the hypothesis. Hypotheses are of two types: 1. Null Hypothesis 2. Alternate Hypothesis

Null Hypothesis The null hypothesis is a very useful tool in testing the significance of difference. It states that there is no real difference in the sample value and population value in the particular value under consideration. This means that the observed difference is due to the random fluctuations. The null hypothesis is denoted by Ho.

Alternate Hypothesis As against the null hypothesis the alternative hypothesis specify those values that the researcher believes to hold true, and he hopes that the sample data lead to acceptance of this hypothesis as true.

Types of Errors When a statistical hypothesis is tested there are four possibilities: 1. The hypothesis is true but the test reject it (Type 1 error) 2. The hypothesis is false but the test accepts it (Type 11 error).

Level of Significance

Confidence with which the null hypothesis is accepted or rejected depends on what is called significant level. The probability, with which we may reject a null hypothesis, when it is true, is called the level of significance. Therefore the level of significance is the risk, statisticians running in his decision. The level of significance is denoted by a. It is better to keep level of significance at a low percentage. It means that we should not reject a true hypothesis.

Acceptance Region

This represents the region with which the calculated value of the statistics must lie to accept the null hypothesis. If calculated value lies in this region then the null hypothesis will be rejected.

Procedure for Testing Hypothesis 1. Set up a null hypothesis (Ho) and alternative hypothesis (H1) appropriate to the test to be conducted. 2. Specify the suitable level of significance. 3. Decide the test criterion suitable to the test statistics 4. Calculate the value of the test statistics using the appropriate formula 5. Make decisions about accepting or rejecting the null hypothesis. If calculated value is less than tabulated value, Ho is accepted, else, HA is accepted by rejecting Ho.

Tools used for testing of hypothesis Chi- square Test: It is a non- parametric test. It describes the magnitude of discrepancy between observed value and expected value. Higher the value of Chi-square 2, greater the discrepancy between the observed values from sample to sample. It is a statistic whose value is always positive and varies from zero to infinity. It is the sum of difference between the expected value and observed value. This distribution is a limiting approximation of multinomial distribution with as the mean and 2 (nu) as the variance of the distribution. The test depends on the set of observed and expected values and the degree of freedom (nu). It is a continuous distribution, which can be applied to discrete random variables.

Degree of Freedom (DOF) It is the number of classes to which the values can assigned arbitrarily without violating the restrictions or limitations placed. It is calculated using the following formulae. DOF = (r- 1)* (c 1) where r is the no: of rows C is the no: of columns DOF = (n-1), where n is the no: pairs of observed and expected values.

Condition for Applying Chi-square Test: The total sample size must be reasonably large. No theoretical cell frequency should be less than 5. Incase, the cell frequency is less than 5, then Yates correction factor will be applied. The constraints on the cell frequency, if varies, should be linear.

Uses of Chi-square Test:

It is used as a test of independence of attributes. This test brings association, if any, between the attributes.

It is used as a test of goodness of fit. In other words, it tests whether the given set of observation will fit in to the distribution (normal, binomial etc)

It is used as a test of homogeneity. In other words, it tests whether a set of readings are more uniform or nonuniform. So with this test we can determine whether two or more independent random samples are drawn from the same population or not. Q14. How much you are satisfied with the Insurance products and investment plans provide by your company?

TEST OF HYPOTHESIS . Whether the consumers are satisfied with insurance products and investment plans of insurance companies. Table 23 Customer Satisfaction Satisfied Dissatisfied TOTAL Insurance products 25 5 30 Investment plans 20 10 30 TOTAL 45 15 60

Hypothesis: Ho: Consumers are satisfied. Ha: Consumers are not satisfied. Level of Significance: 5% Degree of Freedom (DOF)= (R-1)(C-1) = (2-1)(2-1) = 1
tab = 7.88

Test of Statistics: (O-E)2 / E

Observed Value (O) 25 5 20 10 TOTAL

Table 24 Expected Value (O-E)^2 (E) 22.5 5 7.5 5 22.5 5 7.5 5

(O-E)^2/E 0.277778 0.833333 0.277778 0.833333 2.222222

cal = 2.22 tab = 7.88

ITERPRETATION: Since, the calculated value ( cal) is lesser than tabulated value ( tab), null hypothesis (Ho) is accepted, i.e. alternate hypothesis (Ha) is rejected. it means consumers are satisfied Insurance products and Investment plans of your company.

Q15. How much you are satisfied with the service provide by your Insurance agent? Table 25 showing whether the respondents are satisfied with the service of the insurance agents.

PARTICULARS Satisfied Not Satisfied TOTAL

FREQUENCY 45 15 60

PRECENTAGE 83% 17% 100%

From the above table it can be inferred that: 83% out of the 90 respondents are satisfied with the service of insurance companies. 17% of the respondents are not satisfied with its service

service provide by insurance agents

17% 83%

Fig 15

INTERPRETATION: It can be interpreted from above results that 83% respondents are satisfied by the insurance service provider and 17% respondents do not satisfied in villages of Ludhiana Distt(Punjab).

Q16. Do you pay income tax? Table 26 showing the income tax

PAY INCOME TAX Yes No TOTAL

FREQUENCY 30 60 90

PRECENTAGE 33% 67% 100%

From the above table it can be inferred that: o 33% respondents pay income tax o 67% respondents do not pay income tax.

pay income tax

Yes No

33%

67%

Fig 16

INTERPRETATION: It can be interpreted from above results that mostly respondents of six villages of Ludhiana Distt. Do not pay income tax and only some people pay income tax. Q17. In your opinion what is the preferred form of investments? Table 27 showing the investment preference of the respondents PARTICULARS Bank deposit Insurance Shares Debentures Real estate Gold Mutual funds Chit funds Others TOTAL FREQUENCY 22 18 13 09 12 04 07 05 00 90 PRECENTAGE 24% 20% 14% 10% 13% 05% 08% 06% 00% 100%

From the above table it can be inferred that: 24% of the 90 respondents preferred to make investments in bank deposits 20% of the respondents preferred to make investments in insurance 14% of the respondents preferred to make investments in shares 10% of the respondents preferred to make investments in debentures 13% of the respondents preferred to make investments in real estate 05% of the respondents preferred to make investments in gold 08% of the respondents preferred to make investments in mutual funds 06% of the respondents preferred to make investments in chit funds

Investment preferences

25 22 20
no of respondents

18 13 9 7 4 5

15 10 5 0

12

bank deposit debenture mutual funds

insurance real estate chit funds

shares gold

Fig 17

INTERPRETATION: It can be interpreted from above results that mostly people of Ludhiana villages are invested in bank deposit and 05% people in gold.

Q18. Which mode of Premium do you prefer? Table 28 showing that which mode of payment people like most. MODE OF PREMIUM PREFER NO. OF RESPONDENTS PERCENTAGE

Cash

58

65%

Cheque Draft Total

18 14 90

20% 15% 100%

From the above table it can be inferred that: 65% people like cash as mode of payment of mode. 20% people like cheque as mode of payment 15% people like draft as mode of payment.

70 60 50 40 30 20 10 0 CASH CHEQUE DRAFT

Fig 18 INTERPRETATION: It can be interpreted from above results that cash payment is the most convenient mode of payment for the people. This tendency of six villages people of Ludhiana Distt. Can help to insurance companies in time savings and quick payments of claims and mature funds.

Q19. What would you look for in Insurance Cos? Table 29 showing that before buying any insurance policy look for in insurance co. LOOK FOR IN INSURANCE COS A trust name Friendly service & Responsiveness Good plans Accessibility 35 15 39 17 30 10 33% 11% NO. OF RESPONDENTS PERCENTAGE

Total

90

100

From the above table it can be inferred that: 33% respondents before buying any insurance policy see a trust name of insurance co. 11% respondents before buying any insurance policy see Friendly service & Responsiveness of insurance co. 39% respondents before buying any insurance policy see a Good plan of insurance co. 17% respondents before buying any insurance policy see a accessibility of insurance co.

before buying any insurance policy look for insurance co.

40 35 30 25 20 15 10 5 0 A trust name Friendly service & Responsiveness Good plans Accessibility

Fig 19

INTERPRETATION: It can be interpreted from above results that mostly respondents before buying any insurance policies look for good plans, accessibility, a trust name of any insurance company.

4.2 Findings

Still near about 45% people of six villages of Ludhiana Distt.(Punjab) give the more preference to LIC to get insured. There is lot of potential in the Punjab for insurance companies mainly in the villages of Ludhiana Distt. Near about the 33% people have no need of life insurance during the time of research. So, Most of people still are not aware about the importance and necessity of the insurance in their life. They are not aware how useful life insurance can be for their family members if something happens to them. Near about 40% People still consider insurance just as a tax saving device. So today also there is always a rush to buy an insurance policy only at the end of financial year like in January, February and March making the other 9 months dry for this business. In this study I have also found that now people have started to take interest in private insurance companies. They have started to think beyond the issue of public and private companies because now they want better returns and better services. Now which company gives them to these things they go for that?

CHAPTER-5

SUMMARY, CONCLUSION AND RECOMENDATION

5.1 CONCLUSION Over the past three years, around 40 companies have expressed interest in entering the insurance industry and many foreign and Indian companies have arranged anticipatory alliances. The threat of new players taking over the market has been overplayed. As is witnessed in other countries where liberalization took place in recent years we can safely conclude that nationalized players will continue to hold strong market share positions, but there will be enough business for new entrants to be profitable. Opening up the sector will certainly mean new products, better packaging and improved customer service. Both new and existing players will have to explore new distribution and marketing channels. Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing. Recognizing the potential, in the past three years, the nationalized insurers have already begun to target niches like pensions, women or children

5.2 RECOMMENDATIONS AND SUGGESTIONS The private and public insurance companies should reposition their products in a better way by adding few attributes to their products. Office in every major city/town and big villages will help companies as it will the confidence of people and they invest in these companies without having the feel of risk. Mostly insurance buyers are service conscious, so service of these private insurance companies should be the better.. Insurance business depends a lot on the insurance agents/consultants/life advisors. So, companies should select these candidates according to its best recruiting policy. Advertising through electronic media i.e T.V. must be helpful. Also wall advertisement may be very fruitful. Printed media of advertisement is also proved very helpful where electronic media does not reach. Like Banners, Posters etc. in every village, town must help to grab the attention of people. Gifts or incentives scheme should be there for life advisors/agents. Who show to job, so as to motivate them to do the best in future. After every month, there should be meeting by the companies, as it helps to solve any problem faced by them. Private and public insurance companies should offer sponsorship to various helpful events from time to time. This would certainly enhance the brand image plus an impetus to the sale.

5.3 LIMITATIONS OF INSURANCE COMPANIES After doing the research and making the analysis of the getting results the following limitations of insurance sector are come out: Lack of awareness among people: This is the biggest limitation in this insurance industry. Most of people are not aware about the importance and necessity of the insurance in their life. They are not aware how useful life insurance can be for their family members if something happens to them. Perception of people towards insurance companies: People still consider insurance just as a tax saving device. So today also there is always a rush to buy an insurance policy only at the end of financial year like in January, February and march making the other 9 months dry for this business. Insurance does not give good returns: Still people today think that insurance does not give good returns. They are not aware about the modern Unit Linked Insurance Plans which are offered by the most of the Private players. They are still under the perception of the 5-6% return on the policies. They do not know that no one can get return up to 32% in ULIPs. Lack of awareness about the earning opportunities in the insurance companies: People still today are not aware about e earning opportunities that the insurance companies gives. After the Privatization of the insurance sector many private giants have entered in the insurance sector and providing very high commissions to its advisors. Increased competition: Today 16 life insurance companies working in the market including LIC that has made the competition very stiff. Today each and every company is trying to increase their insurance Advisors so that they can increase their reach in the market.

REFERENCES & BIBLIOGRAPHY

Reference to book Insurance Institute of India (2008) , IC-33 Life Insurance, Universal Publishers Ltd, Mumbai. Reference to web pages http://business.mapsofindia.com/insurance/brief-history-of-insurance-sector.html http://business.mapsofindia.com/insurance/general-insurance-india.html http://books.google.co.in/books?id=_ZBCuBPD_6cC&printsec=frontcover&dq=histry+of+insurance+indust ry#PPP9,M1 http://www.indianmba.com/Occasional_Papers/OP85/op85.html http://www.theloanbazaar.com/insurance/types-of-insurance.html http://www.theloanbazaar.com/insurance/what-is-an-insurance-policy.html http://www.medical-billing-coding.org/Content260.htm http://www.medical-billing-coding.org/Content261.htm http://www.domainb.com/finance/insurance/2005/20050916_types_insurance.html http://www.allbankingsolutions.com/insuresub2.htm www.domain-b.com/finance/insurance/kotak_mahindra/20040914_growth.htm indiainsured.blogspot.com/2007/12/kotak-life-insurance.htm www.managementparadise.com/forums/financial-management-fm/41825-kotak-life-insurance.html

Journal and Research papers 1) Heubner (1942) Aspects of Rational Insurance Purchasing, Journal of Political Economy, Vol. 79; pp 553-568. 2) Yarri, M.E (1965), "Uncertain lifetime, life insurance, and the theory of the consumer", The Review of Economic Studies, Vol. 22 No.90, pp.137-49. 3) Headen, R. S. and J. F. Lee (1974) Life Insurance Demand and Household Portfolio Behaviour, Journal of Risk and Insurance, Vol. 41; pp 685-698. 4) Mossin, J. (1969) Smith (1968) Aspects of Rational Insurance Purchasing, Journal of Political Economy, Vol. 79; pp 553-568. 5) Bjrn Ekman (1989) Community-based health insurance in low-income countries; The Journalof Human Resources, Vol. 30; pp 104-107.

6) CC Griffin (1989) Strengthening health services in developing countries through the private sector;
International Finance Corporation, Journal of Financial Economics vol. 17, pp.211-19. 7) Truett, D. B. and L. J. Truett (1990) The Demand for Life Insurance in Mexico and the United States: A Comparative Study, Journal of Risk and InsuranceVol. 57; pp 321-328. 8) Cleeton, D. L. and B. B. Zellner (1993) Insurance Risk Aversion and the Demand for insurance, Southern Economic Journal, vol 60; pp 146-156. 9) Currie and Janet (1995) Medical Care for Children: Public Insurance, Private Insurance, and. The Journal of Human Resources, Vol. 30; pp 135-162. 10) Jonathan Gruber (1996) Health Insurance Eligibility, Utilization of Medical Care, and Child Health. The Quarterly Journal of Economics, Vol. 111; pp 431-466. 11) F Ellis (1998) Household strategies and rural livelihood diversification, Journal of Development Studies, vol. 15, pp.145-61. 12) Atmanand (2003) Insurance and disaster management, Journal of Development Studies, vol.16; pp.154-62 13) Saliba AJ. Charles (2003) Impact of rurility on optical, The Journal of Human Resources, Vol. 32; pp 103-108. 14) HansP.Binswanger (2004)

Collateral Requirements, and the Markets for Credit and insurance in

rural Areas, Journal of Financial Economics vol. 30, pp.102-105. 15) Mikhail Frolov (2 004) the existence of deposit insurance in its modern form Journal of Financial Economics vol.17; pp.503-508. 16) T Ensor (2005) Effective financing of maternal health services,Journal of Financial Economics vol. 18, pp.213-18. 17) Hussels, S., D. Ward and R. Zurbruegg (2005) Stimulating the Demand for Insurance, Risk Management and Insurance Review, Vol. 8; pp 257-278. 18) Guptahima (2007) The role of insurance in health care management in India, The Journalof Human Resources, Vol. 30; pp 135-165.

19) Joyce, Ted, and Andrew Racine.(2008) Chip Shots: Association between the State Childrens Health Insurance Programs and Immunization Coverage and Delivery. The Quarterly Journal of Economics, Vol.111; pp431-466. 20) Joglekar rama (2008) insurance reduce catastrophic out-of-pocket health expenditure, Journal of Development Studies, vol. 16, pp.145-61.

ANNEXURES

Questionnaire
Dear Sir/Madam I am a student of BBA (Hons) 4th semester (L.P.U). I am doing my this semester Research Project title: A Study on Consumer Perception Regarding Insurance Companies In rural areas of Ludhiana Distt. Sir/Madam I need to get a questionnaire filled by you .All the data and information you provide will be kept confidential and will be use only for the academics purpose

Name Age 1) Below 18 Gender 1) Male Education1) Under graduate Post graduate Address1) Rural 2) Urban 2) Graduate 4) Other 3) 2) Female 2)18-40 3)41-70 4)70 above

Q1. What is your occupation? a) Farmer b) Teacher c) Shopkeeper e) Business f) Any other_______ Q2. What is your monthly income? a) Less than 10000 b) 10000 to 20000 c) 20000 to 30000 d) 30000 to 40000 e) More than 40000 Q3. What is your monthly saving? a) Less than 20000 b) 2000-4000 c) 4000-6000 d) 6000-8000 e) More than 8000 Q4. Are you aware about the Insurance? a) Yes b) No

d) worker

Q5. If yes, then from which medium you came to know about the Insurance companies (i.e. source of advertisement)? a) Electronic Media b) Printed media c) Through others

Q6. In your opinion to whom the customer give more preference Insurance? a) Public Co. b) Private Co. Q7. Do you have any Insurance policy? a) Yes b) No

Q8. Which Insurance policy do you have? a) Life Insurance b) General Insurance

c) Both

Q9. Which Cos Insurance policy you prefer the most? a) L I C b) ICICI Prudential c) ING-VYSYA d) Birla Sun Life e) Any other _________ Q10. For how many years do you have Insurance policy? a) <-5 year b) 5-10 year c) 10-15 year d) any other__________ Q11. What do think are the benefits of Insurance cover? a) Cover Future Uncertainty b) Future Investment c) Tax Deductions d) d) Any other_________ Q12. Which feature of your policy attracted you to pay it? a) Low Premium b) Larger Risk Conversance c) Money Back Guarantee d) Easy Access to Agents e) Any other_________ Q13. What is your perception about insurance? a) A Tool to protect future b) A Tax saving device c) A saving tool Q14. What type of insurance plan would you like to prefer? a) Child Plan d) Term Plan b) Money Back Plan (e) Endowment Plan c) Pension Plan f ) Any other___________.

Q15. How much you are satisfied with the investment plans and insurance products provide by your company? a) Satisfied b) Dissatisfied

Q16. How much you are satisfied with the service provide by your Insurance agent? a) Satisfied b) Not satisfied

Q17. Do you pay income tax? a) Yes b) No

Q18. In your opinion what is the preferred form of investments? a) Bank deposits d) Debentures g) Chit funds b) Insurance e) Real estate h) Others__________. c) Shares f) Mutual funds

Q19. What would you look for in Insurance Cos? a) A trusted name c) Good plans Q20. Any suggestion _______________________________________________________________________________________ _____________________________________________________. b) friendly service & Responsiveness d) Accessibility

Address __________________________________________ __________________________________________ __________________________________________ Phone no. _________________________________ Thanks for your valuable time and co-operation

Glossary: 1. ABANDONMENT: Giving up the proprietary rights in insured property to the Underwriter in exchange for payment of a constructive total loss. 2. ACCIDENTAL DEATH: Coverage in the event of death due to an accident, usually in combination with dismemberment insurance. 3. BENEFIT OF INSURANCE CLAUSE: A clause by which the bailee of goods claims the benefit of any insurance policy effected by the cargo owner on the goods in care of the bailee. Such a clause in a contract of carriage, issued in accordance with the Carriage of Goods by Sea Act, is void at law. 4. BLANKET INSURANCE: (1) Property-liability insurance that covers more than one type of property in one location in one policy or form instead of under separate items, or one or more types of property at more than one location; (2) A contract of health insurance that covers all of a class of persons not individually identified. 5. CLAIM: (1) A formal request for payment of a loss under an insurance contract or bond; (2) The actual amount of the final settlement. 6. EARNED PREMIUM: That portion of a premium for which the policy protection has already been given during the now-expired portion of the policy term. 7. HEALTH INSURANCE: Protection against the costs of hospital and medical care or lost income arising from an illness or injury (sometimes called Accident & Sickness Insurance). 8. INSURANCE: A system to protect persons, groups, or businesses against the risks of financial loss by transferring the risks to a large group who agree to share the financial losses in exchange for premium payments. 9. INSURED: The person whose risk is transferred and shared; the party to an insurance agreement whom the insurer agrees to indemnify for losses, provide benefits for, or render services to. 10. INSURER: The company or group offering protection through the sale of an insurance policy to an insured; the party to an insurance agreement who undertakes to indemnify for losses, provide pecuniary benefits, or render services. 11. KEY MAN (KEY EMPLOYEE) INSURANCE POLICY: An insurance policy on the life of a key employee whose death would cause the employer financial loss, owned by and payable to the employer. 12. LIFE INSURANCE: Protection against the death of the Insured in the form of payment to a designated beneficiary, typically a family member or business. 13. POLICY: The written statement of a contract effecting insurance, or certificates thereof, by whatever name called and including all causes, riders, endorsements and papers attached thereto and made part thereof. 14. REINSURANCE: (1) A contract of indemnity against liability by which the insurance company procures another insurance to insure against loss or liability by reason of the original insurance; (2)

Insurance by one insurance company of all or part of a risk accepted by it with another insurance company which agrees to reimburse the insurance company for the portion of the claim insured. 15. UNDER-INSURANCE: A condition in which not enough insurance is carried to cover the insurable value, and, especially, to satisfy a coinsurance clause.