CHAPTER 1

INTRODUCTION
In 1972 with the passing of the General Insurance Business (Nationalization) Act, general insurance
business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and
grouped into four companies, namely National Insurance Company Ltd., the New India Assurance
Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd.
The General Insurance Corporation of India was incorporated as a company in 1971 and it
commence business on January 1st 1973.

Insurance other than Life Insurance falls under the category of General Insurance. General
Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as
Accident and Health Insurance, and liability insurance which covers legal liabilities. There are also
other covers such as Errors and Omissions insurance for professionals, credit insurance etc

General insurance or non-life insurance policies, including automobile and homeowners policies,
provide payments depending on the loss from a particular financial event. General insurance
typically comprises any insurance that is not determined to be life insurance. It is called property
and casualty insurance in theU.S.and Canada and Non-Life Insurance in Continental Europe.

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In the UK, insurance is broadly divided into three areas: personal lines, commercial lines and
London market.

The London market insures large commercial risks such as supermarkets, football players and other
very specific risks. It consists of a number of insurers, reinsurers, P&I Clubs, brokers and other
companies that are typically physically located in the City of London. The Lloyd's of London is a
big participant in this market. The London Market also participates in personal lines and
commercial lines, domestic and foreign, through reinsurance.

Commercial lines products are usually designed for relatively small legal entities. These would
include workers' comp (employers liability), public liability, product liability, commercial fleet and
other general insurance products sold in a relatively standard fashion to many organisations. There
are many companies that supply comprehensive commercial insurance packages for a wide range of
different industries, including shops, restaurants and hotels.

Personal lines products are designed to be sold in large quantities. This would include autos (private
car), homeowners (household), pet insurance, creditor insurance and others.

ACORD which is the insurance industry global standards organisation. ACORD has standards for
personal and commercial lines and has been working with the Australian General Insurers to
develop those XML standards, standard applications for insurance, and certificates of currency.

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General insurance or non-life insurance policies, including automobile and homeowners policies,
provide payments depending on the loss from a particular financial event. General insurance
typically comprises any insurance that is not determined to be life insurance. It is called property
and casualty insurance in the U.S. and Canada and Non-Life Insurance in Continental Europe.

In the UK, insurance is broadly divided into three areas: personal lines, commercial lines and
London market.

The London market insures large commercial risks such as supermarkets, football players and other
very specific risks. It consists of a number of insurers, reinsurers, P&I Clubs, brokers and other
companies that are typically physically located in the City of London. The Lloyd's of London is a
big participant in this market. The London Market also participates in personal lines and
commercial lines, domestic and foreign, through reinsurance.

Commercial lines products are usually designed for relatively small legal entities. These would
include workers' comp (employers liability), public liability, product liability, commercial fleet and
other general insurance products sold in a relatively standard fashion to many organisations. There
are many companies that supply comprehensive commercial insurance packages for a wide range of
different industries, including shops, restaurants and hotels.

Personal lines products are designed to be sold in large quantities. This would include autos (private
car), homeowners (household), pet insurance, creditor insurance and others.

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ACORD which is the insurance industry global standards organisation. ACORD has standards for
personal and commercial lines and has been working with the Australian General Insurers to
develop those XML standards, standard applications for insurance, and certificates of currency.

Insurance other than Life Insurance falls under the category of General Insurance. General
Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as
Accident and Health Insurance, and liability insurance which covers legal liabilities. There are also
other covers such as Errors and Omissions insurance for professionals, credit insurance etc.

Non-life insurance companies have products that cover property against Fire and allied perils, flood
storm and inundation, earthquake and so on. There are products that cover property against burglary,
theft etc. The non-life companies also offer policies covering machinery against breakdown,there
are policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit
including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms
a major chunk of non-life insurance business.

In respect of insurance of property, it is important that the cover is taken for the actual value of the
property to avoid being imposed a penalty should there be a claim. Where a property is undervalued
for the purposes of insurance, the insured will have to bear a rateable proportion of the loss. For
instance if the value of a property is Rs.100 and it is insured for Rs.50/-, in the event of a loss to the
extent of say Rs.50/-, the maximum claim amount payable would be Rs.25/- ( 50% of the loss being
borne by the insured for underinsuring the property by 50% ). This concept is quite often not
understood by most insureds.

Personal insurance covers include policies for Accident, Health etc. Products offering Personal
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Accident cover are benefit policies. Health insurance covers offered by non-life insurers are mainly
hospitalization covers either on reimbursement or cashless basis. The cashless service is offered
through Third Party Administrators who have arrangements with various service providers, i.e.,
hospitals. The Third Party Administrators also provide service for reimbursement claims.
Sometimes the insurers themselves process reimbursement claims.

Accident and health insurance policies are available for individuals as well as groups. A group could
be a group of employees of an organization or holders of credit cards or deposit holders in a bank
etc. Normally when a group is covered, insurers offer group discounts.

Liability insurance covers such as Motor Third Party Liability Insurance, Workmens Compensation
Policy etc offer cover against legal liabilities that may arise under the respective statutes Motor
Vehicles Act, The Workmens Compensation Act etc. Some of the covers such as the foregoing
(Motor Third Party and Workmens Compensation policy ) are compulsory by statute. Liability
Insurance not compulsory by statute is also gaining popularity these days. Many industries insure
against Public liability. There are liability covers available for Products as well.

There are general insurance products that are in the nature of package policies offering a
combination of the covers mentioned above. For instance, there are package policies available for
householders, shop keepers and also for professionals such as doctors, chartered accountants etc.
Apart from offering standard covers, insurers also offer customized or tailor-made ones.

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Suitable general Insurance covers are necessary for every family. It is important to protect ones
property, which one might have acquired from ones hard earned income. A loss or damage to ones
property can leave one shattered. Losses created by catastrophes such as the tsunami, earthquakes,
cyclones etc have left many homeless and penniless. Such losses can be devastating but insurance
could help mitigate them. Property can be covered, so also the people against Personal Accident. A
Health Insurance policy can provide financial relief to a person undergoing medical treatment
whether due to a disease or an injury.
Industries also need to protect themselves by obtaining insurance covers to protect their building,
machinery, stocks etc. They need to cover their liabilities as well. Financiers insist on insurance. So,
most industries or businesses that are financed by banks and other institutions do obtain covers. But
are they obtaining the right covers? And are they insuring adequately are questions that need to be
given some thought. Also organizations or industries that are self-financed should ensure that they
are protected by insurance.

Most general insurance covers are annual contracts. However, there are few products that are longterm.

It is important for proposers to read and understand the terms and conditions of a policy before they
enter into an insurance contract. The proposal form needs to be filled in completely and correctly by
a proposer to ensure that the cover is adequate and the right one.

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1.1 Major Players of General Insurance Companies in the Market:

Oriental Insurance Co. Ltd.

United India Insurance Co. Ltd.

New India Assurance Co. Ltd.

National Insurance Co. Ltd.

Bharti AXA General Insurance

Future Generali India Insurance

HDFC ERGO General Insurance

Liberty Videocon General Insurance Co Ltd

L & T General Insurance

Magma HDI General Insurance Co Ltd

Royal Sundaram

SBI General Insurance

Shriram General Insurance

Cholamandalam MS General Insurance Company Limited

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 Bajaj Allianz General Insurance Co. Ltd.

ICICI Lombard General Insurance Co. Ltd.

IFFCO-Tokio General Insurance Co. Ltd.

Reliance General Insurance Co. Ltd.

Royal Sundaram Alliance Insurance Co. Ltd

TATA AIG General Insurance Co. Ltd.

Cholamandalam General Insurance Co. Ltd.

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1.2 Types of General Insurance:

1)

Motor Insurance: Vehicle insurance (also known as auto insurance, GAP insurance, car
insurance, or motor insurance) is insurance purchased for cars, trucks, motorcycles, and other
road vehicles. Its primary use is to provide financial protection against physical damage
and/or bodily injury resulting from traffic collisions and against liability that could also arise
therefrom. The specific terms of vehicle insurance vary with legal regulations in each region.
To a lesser degree vehicle insurance may additionally offer financial protection against theft
of the vehicle and possibly damage to the vehicle, sustained from things other than traffic
collisions.
Its primary objective is to provide protection against physical damage resulting from traffic
collisions and against liability that could also arise there-from.

Motor insurance in India covers for the loss or damage caused to the automobile or its parts
due to natural and man-made calamities. It provides accident cover for individual owners of
the vehicle while driving and also for passengers and third party legal liability.

Need of Motor Insurance:

Motor Insurance(Third Party) is compulsory on purchase of new vehicles whether
acquired for commercial or private usage as per Motor Vehicle Act in India. One can
be penalised for driving without a valid cover.

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 An accident can happen to anyone even if the driver of the car is not at fault. This may
result into a lot of damages caused in person as well as to the car. Motor Insurance
turns to be very beneficial under such circumstances.

If the driver is liable for an accident which results in bodily injuries to a third party,
then the expenses have to be borne by the owner of the car. In such a case third party
motor insurance saves from a devastating financial blow.

Cars are an expensive investment for an individual. An accident can turn this
investment into a huge loss as well. Hence it is important to have motor insurance.

It also helps to cover for damages caused other than an accident like fire, theft,etc.

2)

House Insurance: Home insurance, also commonly called hazard insurance or

homeowner's insurance (often abbreviated in the US real estate industry as HOI), is a type of
property insurance that covers a private residence. It is an insurance policy that combines
various personal insurance protections, which can include losses occurring to one's home, its
contents, loss of use (additional living expenses), or loss of other personal possessions of the
homeowner, as well as liability insurance for accidents that may happen at the home or at the
hands of the homeowner within the policy territory.
Homeowner's policy is referred to as a multiple-line insurance policy, meaning that it includes
both property insurance and liability coverage, with an indivisible premium meaning that a
single premium is paid for all risks. In the US standard forms divide coverage into several
categories, and the coverage provided is typically a percentage of Coverage A, which is

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coverage for the main dwelling.

The cost of homeowner's insurance often depends on what it would cost to replace the house
and which additional endorsements or riders are attached to the policy.The insurance policy
is a legal contract between the insurance carrier (insurance company) and the named
insured(s). It is a contract of indemnity and will put the insured back to the state he/she was
in prior to the loss. Typically, claims due to floods or war (whose definition typically includes
a nuclear explosion from any source) are excluded from coverage, amongst other standard
exclusions (like termites). Special insurance can be purchased forthese possibilities,
including flood insurance. Insurance is adjusted to reflect replacement cost, usually upon
application of an inflation factor or a cost index.

The home insurance policy is usually a term contract, i.e. a contract that is in effect for a
fixed period of time. The payment the insured makes to the insurer is called the premium.
The insured must pay the insurer the premium each term. Most insurers charge a lower
premium if it appears less likely the home will be damaged or destroyed: for example, if the
house is situated next to a fire station or is equipped with fire sprinklers and fire alarms; if
the house exhibits wind mitigation measures, such as hurricane shutters; or if the house has a
security system and has insurer-approved locks installed. Perpetual insurance, a type of home
insurance without a fixed term, can also be obtained in certain areas.

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Personal Accident Insurance: Personal accident insurance covers your expenses

3)

from an accident with a lump sum payment, a daily or monthly amount or a payment for loss
of life from an accident. Several types of policies supplement an insurance program. Often,
accidental death and dismemberment is an inexpensive form of personal accident insurance.
Other forms are similar to disability income, but they pay a cash sum when you have an
injury due to an accident. There are several ways to buy personal accident insurance. Some
policies only pay for specific types of accident.
A personal accident insurance is insurance that covers all your expenses

incurred from an

accident. Payment could either be a lump sum payment, a daily or monthly amount, or a
payment for loss of life from an accident. Some personal accident insurance policies only pay
for specific types of accidents.
4)

Medical & Health Insurance: Health insurance is insurance against the risk of
incurring medical expenses among individuals. By estimating the overall risk of health care
and health system expenses, among a targeted group, an insurer can develop a routine finance
structure, such as a monthly premium or payroll tax, to ensure that money is available to pay
for the health care benefits specified in the insurance agreement. The benefit is administered
by a central organization such as a government agency, private business, or not-for-profit
entity. According to the Health Insurance Association of America, health insurance is defined
as "coverage that provides for the payments of benefits as a result of sickness or injury.
Includes insurance for losses from accident, medical expense, disability, or accidental death
and dismemberment"
A health insurance policy is:

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a) A contract between an insurance provider (e.g. an insurance company or a government)

and an individual or his/her sponsor (e.g. an employer or a community organization). The
contract can be renewable (e.g. annually, monthly) or lifelong in the case of private
insurance, or be mandatory for all citizens in the case of national plans. The type and amount
of health care costs that will be covered by the health insurance provider are specified in
writing, in a member contract or "Evidence of Coverage" booklet for private insurance, or in
a national health policy for public insurance.
b) Provided by an employer-sponsored self-funded ERISA plan. The company generally
advertises that they have one of the big insurance companies. However, in an ERISA case,
that insurance company "doesn't engage in the act of insurance", they just administer it.
Therefore ERISA plans are not subject to state laws. ERISA plans are governed by federal
law under the jurisdiction of the US Department of Labor (USDOL). The specific benefits or
coverage details are found in the Summary Plan Description (SPD). An appeal must go
through the insurance company, then to the Employer's Plan Fiduciary. If still required, the
Fiduciarys decision can be brought to the USDOL to review for ERISA compliance, and
then file a lawsuit in federal court.

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1.3 OBJECTIVES AND SCOPE

Objectives of the study:
The research objectives for the project undertaken can be defined as follows:
1) To study the types of General Insurance services offered by different companies.

2) A study & analysis of customers perception & acceptability towards General Insurance
services.

3) Analysis of dependency of customers perception towards General Insurance services on

demographic parameters.

Scope of the study:

This project aims to study the perception of General Insurance of the customer. The project will
analyse the impact of Insurance in the eye of the customers on the customer satisfaction levels. It
includes the detailed study of customers focusing on the various parameters that lead to identifying
and understand the perception of the customer in buying the General Insurance. The scope is limited
to the Insurance owners of Bareilly city only.

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CHAPTER 2
LITERATURE REVIEW
1. According to the recent report of Lloyd - The Indian insurance market is likely to
change in the next few years significantly largely due to regulatory changes. In addition, premium
growth is being driven by other factors such as the growing consumer class, increased foreign direct
investment, infrastructure development, and an increased awareness of catastrophe exposure.

Despite significant positive changes, the insurance market must still face the challenge of poor
customer perceptions and the danger that the pace of reform will slow. Several significant structural
changes are expected in the insurance market that will influence the countrys development in the
medium to long term.

2. Ajit ranade and Rajeev Ahuja - They discuss about penetration of insurance premium
in various countries. They find that opening up of the insurance sector is an integral part of the
liberazation process being pursued by many developing countries. Since 1987, when the Korean and
Taiwanese insurance sectors were liberalized, the Korean market has grown three times faster than
its GDP and in Taiwan the rate of growth has been almost four times that of its GDP. The
Philippiness opened up its insurance sector in 1992, the major insurance markets in South and East
Asia are to varying degrees open. These range from the comparatively free markets of Hong Kong
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and Singapore to the increasingly more liberal markets of South Korea and Taiwan and more
densely regulated insurance sectors of Thailand and Malaysia.

3. Dr. P. S. Palande, R. S. Shaw, M. L. Lunawat - They their book discuss about

insurance sector at the international level and then about insurance in India. This book provides a
comprehensive and up-to-date picture of the insurance industry. They analyse recent development,
the transformation that has taken place after reforms, and provide a macro perspective on this
industry. According to them, in the new economic reality, that is, globalization, insurance companies
face a dynamic global business environment. Dramatic changes are taking place owing to the
internationalization of activities, the appearance of new risks, new types of covers to match with
new risk situations and unconventional and innovative ideas on customer service.
They further, state that numerous governments in developed and developing countries redefined the
role of the state and privatization in the insurance and reinsurance sectors has been part of policies
pursued by them. Thus, since 199o, Japan has been liberalizing its insurance sector and China too is
in the course of the last 10 years, has cautiously started the process of liberalization.

4. G. N. Bajpai. former Chairman of SEBI (Securities Exchange Board of

India) and L.I.C. (Life Insurance Corporation) They states that the insurance
industry is a progeny of the economic order and growth and sustain ability of the economy has a
direct and proportionate bearing on the levels of its evolution and expansion, augmentation and
advancement , preservation and progression. There is also very significant relationship between the
financial sector and insurance. In fact, the three macro economic environment, financial sector and
insurance industry are inextricably interwoven.
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5. Dr. Tapen Sinha - The University of Nottingham, Centre for Risk and Insurance Studies
found that in India 312 million middle class consumers have enough financial resources to purchase
insurance products like pension, health care, accident benefit, life, property and auto insurance. But
only 2.5 of this insurable population however, have insurance coverage in any form. The potential
premium income is estimated around U.S. $ 80 billion. This will place India as the 6th largest
market in the world (after the U.S., Japan, Germany. U.K. and France).
He also mentions the main differences in the way which China and India handled deregulation.
They are as follows:
a) Both have followed the path of deregulation and privatization China started it in 1979 and
India in 1991.
b) The Insurance business in India has a premium volume of $ 8.3 billion in 1999 whereas in China
the premium volume is $ 16.8 billion in 1999.
c) In China, the peoples insurance company of China (PICC) had a monopoly between 1949 and
1959. In 1959, insurance business was deemed capitalistic and all forms of insurance were
suspended. The insurance business reopened in 1979, the P1CC reassumed its old role as the
monopoly.
d) In China, the China Insurance Regulatory Conunission (CIRC) was set up in November 1998,
well after the first Insurance law was promulgated in 1995. In India, the Insurance Regulatory
Development Authority (IRDA) was launched first with the authority to issue licenses.

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6. In the paper Capacity build up and growth through regional reinsu rance cooperation, Albert. J. Nduna, Group Chief Executive Zim Re Holdings Limited They
show in this report that the insurance environment in the different parts of the world today is full of
challenges of different sizes and complexities including different types of expectations. His study
reveals that insurance can be used as an empowerment tool for local people directly as individuals
and governments. They could play developmental role by addressing the issues of poverty
alleviation, the needs of the rural sector and the formal and informal sectors of the economy. The
insurance companies of the developing countries were expected and are still expected to be
responsive to the needs of the societies in which they operate. He also says that the world average
for insurance penetration for non-life was 4.9% whereas insurance penetration in developing
countries was about 1%. This signifies the gap between developed and developing countries in the
level of isnsurance development and at the same time the potential which is still to be unlocked in
the latter.

7. N. Rangachary, former chairman of IRDA - They discuss about the reasons for
opening up of the insurance industry. According to him, one of the predominant reasons for
liberalizing the insurance industry is to create a more contestable market in the insurance that will
foster the development of an efficient and forward looking industry. And the deregulation of
insurance will lead to a greater range of innovative and customer oriented products. Another
advantage of opening up of the insurance sector, he mentions, is that the foreign participation in
locally owned direct insurers will enable local players to form alliances with foreign partners and
benefit from transfer of technical know-how and increased financial strength.

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8. V.Jagnnathari - Imperatives of competition reports that a major change in the last couple
of years has been the dismantling of the monopolistic status of the state run insurers. The field is no
longer confined to them and has been thrown open to private players also. He also feels that the
opening up of the insurance sector has given a nw dimension to the competitive market while in the
previous era competition was among four organizations which were similar in almost all respects,
now the fight is among companies with different cultures, capabilities and value systems.

9. Jagendra Kumar - In the paper changing scenario of insurance industry, reports that
private insurance companies can give good competition to the public sector undertakings (PSUs) in
terms of customer orientation and quick settlements. There is a big scope for financiers to look a
good fee based income by becoming corporate agents. Before the industry was opened up, the four
public sector insurance companies were underwriting Rs. 14000/- crores premia a year. So far, the
eight private insurers had taken away only 14% of the business. He further states that, insurance
companies are today looking at different segments where there is business potential and are trying to
customize policies to suit the specific needs of their clients.

10. The Economic and Political Weekly, under the title Privatisation of
insurance industry - They reported that, the nationalised Life insurance Corporation of
India and General Insurance Corporation of India have contributed not only for social security of the
insured public but for the sustenance of Indias planned development of its economy catering to
social needs. The Mathotra committee recommendations, if accepted, will destroy these important
sources of mobilisation of peoples savings for the economic growth of the country.
The governments move will bring into play all the ills that afflicted this industry before
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nationlisation when peoples money was grossly abused for the private gain of the monopolists.The
concept of competition, which is being talked about, would only lead to a rate war and maipractices
endangering, in the process, policy monies. The LIC and GIC in the public sector have, by
conserving premiums and building up enormous resources, successfully protected policy monies.
The urunatched claim settlement record of LIC and GIC would bear this out.

11. M Siva Narayana. Deputy Manager, The Oriental Insurance Co. Ltd.. in
his article Forgotten monies of the non-life insurers - They explore the alternate
ways and means to improve the non premium revenue of non-life insurers in order to reduce their
Under writing losses and to augment their net worth. He discussed about the most important but
least bothered or most neglected concept - the RECOVERIES which arise mostly from the claims
payments made by the insurers where they have legal rights to recover the same from the third
parties! claimants/carriers etc. And he also explains the important source of recoveries for the nonlife insurers, where the insurers neglect / put in cold storage after payment of claims. lhey are
Motor Accident Claims Tribunal (MACT), Marine Claims, Fire Claims. Motor Claims, and
Miscellaneous Claims etc. He concluded by proposing to establish a RECOVERY CELL at DO/RO
level by the insurers to recover their forgotten money.

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12. Dr. M. Vidysagar Reddy A Decade of Liberalisation of Insurance Sector

in india - They reported that the global financial meltdown has left India largely unaffected.
There is universal acknowledgement that this is due to the strong presence of public sector in the
Indian banking and insurance industries. The world realized at great peril that finance capital is
fundamentally in search of quick profits and hence speculative in character ratir than having any
enduring links with the industry. Therefore, efforts are being made to tame the finance capital and as
a result many of the financial institutions including insurance companies have been taken over by
the governments in the developed countries. Therefore, India must remain cautious. The plans to
further liberalise the insurance industry must be given up. Today, there is a conflict between the
IRDA and SEBI over ULIPs and between RBI and SEBI over interest futures.
The government must take steps to settle these conflicts and strengthen the regulatory mechanism
for the orderly growth of the financial sector, insurance included.

13. H. Ansari - His article Insurance Reform s repoted that nationalization of insurance
helped in deployment of massive financial resources. It also helped in spread of insurance with LIC
becoming a household name in the country. However, as was then the prevailing culture in public
sector, with the passage of time, the responsibility arl accountability parameters deteriorated
resulting in consumer detriment. Though insurance business in the country grew by leaps and
bounds - both in the life and nonlife sectors - and a unique low-cost model of insurance was
developed for the first time in the world by public sector companies, the servicing parameters in the
insurance sector came down and the chalta hai (laidback) attitude prevailed. According to him
Insurance is people-centric in character. Insurers deal with people who are their policyholders,
beneficiaries, claimants, intermediaries and even employees. The government since inception
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perhaps has exercised more control over the business of insurance than any other business activity.
Even when this business was in the hands of private players prior to 1956 (for life insurance) and
1973 (pertaining to general insurance), regulatory control was exercised exclusively at the state
level.

14. Dr. S.C. Das - His paper Cost Management Practices in Non-Life Insurance Companies: A
Comparative Study, presented that the performance of the general insurance industry in the first
three decades after nationalization has been impressive in terms of growth. But while premiums
have shown strong growth, claims and operating expenses, both in absolute terms and relative to
premiums, have grown faster. Claims as a proportion of premiums, have increased from 51 per cent
in 1972-73 to 69 per cent in 1990-91 to 73 per cent in 1992-93, largely due to the motor insurance
business. But since the opening up of Indian insurance market, over the years with the eflctive cost
control measures, the claims cost has been reduced to 54. 11 per cent in 2004-05 (% of claims
expenses to gross direct prenuum). Operating expenses in 1972-73 (when the sector was
nationalized), which were 30 per cent of gross premium, reduced sustantially due to merger
efficiencies to 24 per cent in 1990-91 and further to 22 per cent in 2004-05. The steep increase in
motor claims over the years has resulted in an underwriting profit of 8 per cent in 1972-73 being
converted into a loss of 4 per cent and 20 per cent in 1990-9 1 and 2004-05. respectively. Investment
income has shown strong growth over the years largely driven by increasing yield due to higher
interest rates. Overall, despite underwriting losses, net profits have grown from 6.3 per cent in 19721973 to 12 per cent and 13 per cent in 1990-91 and 2004-05, respectively due to increasing
investment income. Internationally, many insurers lose money on products and make up with
investment income.

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15. ICRA Moodys Global Insurance, Indian General Insurance Outlook

Major Changes Expected as Deregulation Continues - They reported that with the
Indian economy forecast to grow at 7.5% in 2008 and given rising income levels and higher risk
awareness among insurers, the countrys insurers are optimistic about demand for their products.
However, intense competition from new entrants, deregulation and a moderation in returns from the
equities market will pressure pricing and ultimately short- term profitability. At the same time,
despite rising inflation and a severe correction in the stock market, the prevailing view in Asia is
that while China and India are not insulated from the credit crisis afflicting the US and EU,
domestic demand is strong enough to support GDP growth. Being less export dependent, India is
also less vulnerable than some of its neighbours. Rising income levels, low penetration for most
consumer products, availability of financing and changes in lifestyles/ aspirations are likely to
sustain consumer demand over the next few years. in the short term, the focus on infrastructure
development will keep the economy going, even if the tightening in credit leads to a slowdown in
consUmer spending.

16. According to S V Mony - His article New initiatives in the insurance sector:
opportunities and challenges, reports that the insurance sector in India is nearly 150 years old. It is
now in the third phase of its existence. The first phase was the long-growth phase before the two
nationalizations in 1956 and 1971 of life and general insurance respectively. At that point of time,
there were more than 200 life insunince companies and 108 general insurance companies. They
were all private sector insurers with the exception of one state-owned general insurer Several
overseas insureis were operating in India through branches. In the second phase, the entire sector
became a state monopoly. In the third phase, we now have several new private sector players
competing with the large public sector insurers. Based on the current trends, it seems that, in ten
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years. the market will have about 35 to 40 players, equally distributed between life and general
insurance sectors. Several large global insurers operate in India through joint ventures. In the short
time since the market was opened up, a comprehensive set of legislative instruments has been
introduced.

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CHAPTER 3
RESEARCH METHODOLOGY
Research Methodology
Research is a common language refers to a search of knowledge. Research is scientific & systematic
search for pertinent information on a specific topic, in fact research is an art of scientific
investigation. Research Methodology is a scientific way to solve research problem. It may be
understood as a science of studying how research is doing scientifically. In it we study various steps
that are generally adopted by researchers in studying their research problem. It is necessary for
researchers to know not only know research method techniques but also technology.

The research problem consists of series of closely related activities. At times, the first step
determines the native of the last step to be undertaken. Why a research has been defined, what data
has been collected and what a particular methods have been adopted and a host of similar other
questions are usually answered when we talk of research methodology concerning a research
problem or study.

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3.1 Research Design

A research design is defined as the specific methods and procedures for acquiring the information
needed. It is a plant or organizing framework for doing the study and collecting the data. Designing
a research plan requires decisions all the data sources, research approaches, research instruments,
sampling plan and contact methods.
Research design is mainly of following types:
1. Exploratory research
2. Descriptive research
3. Casual research

1. Exploratory Research
The major purposes of exploratory studies are the identification of problems, the more precise
formulation of problems and the formulations of new alternative courses of action. The design of
exploratory studies is characterized by a great amount of flexibility and ad-hoc veracity.

2. Descriptive Research
Descriptive research in contrast to exploratory research is marked by the prior formulation of
specific research questions. The investigator already knows a substantial amount about the research
problem. Perhaps as a result of an exploratory study, before the project is initiated. Descriptive
research is also characterized by a preplanned and structured design.
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3. Casual or Experimental Research

A casual design investigates the cause and effect relationships between two or more variables. The

hypothesis is tested and the experiment is done. There are following types of casual designs:

1. After only design

2. Before after design

3. Before after with control group design

4. Four groups, six studies design

5. After only with control group design

6. Consumer panel design

7. Exposit factor design

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3.2 Method of the Sampling

Probability Sampling
It is also known as random sampling. Here, every item of the universe has an equal chance or

probability of being chosen for sample. Probability sampling may be taken inform of:

1.

Simple Random Sampling

A simple random sample gives each member of the population an equal chance of being chosen. It

is not a haphazard sample as some people think. One way of achieving a simple random sample is

to number each element in the sampling frame (e.g. give everyone on the Electoral register a
number) and then use random numbers to select the required sample.

Random numbers can be obtained using your calculator, a spreadsheet, and printed tables of random
numbers, or by the more traditional methods of drawing slips of paper from a hat, tossing coins or
rolling dice.

2.

Systematic Random Sampling

This is random sampling with a system from the sampling frame, a starting point is chosen at
random, and thereafter at regular intervals.

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3.

Stratified Random Sampling

With stratified random sampling, the population is first divided into a number of parts or 'strata'
according to some characteristic, chosen to be related to the major variables being studied. For
this survey, the variable of interest is the citizen's attitude to the redevelopment scheme, and the
stratification factor will be the values of the respondents' homes. This factor was chosen because it
seems reasonable to suppose that it will be related to people's attitudes.

4.

Cluster and Area Sampling

Cluster sampling is a sampling technique used when "natural" groupings are evident in a statistical
population. It is often used in marketing research. In this technique, the total population is divided
into these groups (or clusters) and a sample of the groups is selected.
Then the required information is collected from the elements within each selected group. This
may be done for every element in these groups or a subsample of elements may be selected within
each of these groups.

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Non Probability Sampling

It is also known as deliberate or purposive or judgemental sampling. In this type of sampling, every
item in the universe does not have an equal, chance of being included in a sample. It is of following
type:

11 Convenience Sampling
A convenience sample chooses the individuals on the basis of easiness to reach or convenience.
Convenience sampling does not represent the entire population so it is considered bias.

11 Quota Sampling
In quota sampling the selection of the sample is made by the interviewer, who has been given
quotas to fill form from specified sub-groups of the population.

11 Judgment Sampling
The sampling technique used here in probability > Random Sampling.

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3.3 DATA COLLECTION

The main source of information for this study is based on the data collection. Data collected are both
primary and secondary in nature.

Primary Data

Primary data have been directly collected from the clients of [COMPANY NAME] as well from the
clients of other insurance companies by survey method through undisguised structured
questionnaire.
Questions like open ended, close ended, multiple choice, dichotomous and ranking type have been
used for the purpose of data collection.

Secondary Data

Secondary data have been collected from official website of [COMPANY NAME] and also from
other official websites related to general insurance industry.

4.3 Sampling Design:i.

Population:- Infinite population. ( only policy holders )

ii.

Sampling Size:- 60

iii.

Sampling Techniques:- For my research work I will use convenience sampling technique
because I am going to perform my research work in different areas of Bareilly City.

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CHAPTER 4
DATA ANALYSIS & INTERPRETATION
Q1. Which type of General Insurance you have? (You can tick more than one)
Table No 4.1
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

MOTOR INSURANCE

38

24.84

HOUSE INSURANCE

18

11.76

PERSONAL ACCIDENT INSURANCE

41

26.79

MEDICAL& HEALTH INSURANCE

23

15.04

TRAVEL INSURANCE

24

15.69

FIRE INSURANCE

09

05.88

TOTAL

153

100

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Figure No 4.1

INTERPRETATAION:
It is quite evident from the above graph that personal and household insurance are the most popular
insurances. They account for more than half ( 58.33%) of the insurance market. Motor insurance is
also one of the common insurances@ 13.33%. the popularity of Health and fire insurance is at par
@ nearly 12%. In a country like india, travel insurance is not too popular.

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Q2. What is your Purchase tenure period?

Table No 4.2
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Less than 1 year

22

36.66

1 year

10

16.67

2 years

12

20.00

2 to 5 years

10

16.67

More than 5 years

06

10.00

TOTAL

60

100

Figure No 4.2
INTERPRETATION:
It is quite evident from the above graph that most of the persons take the insurance for less than 1
year and for 1 year i.e. more than a half(53.33%) and 20% for 2 years, 16.67% for 2 to 5 years and
only 10% respondents take the insurance for more than 5 years.

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Q3. How do you want to pay your premium?

Table No 4.3
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Cash

14

23.33

Cheque & Credit Card

25

41.67

Demand Draft

11

18.33

Online

10

16.67

TOTAL

60

100

Figure No 4.3
INTERPRETATION:
It is quite evident from the above graph that 41.67% of the customers prefer to pay their premiums
by cheques and credit card, 23.33% customers pay by cash, 18.33% pay by Demand Draft and only
16.67 % customers prefer to pay their premiums by online.

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Q4. In what interval you want to give your premium?

Table No 4.4
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Quarterly

31

51.67

Half Yearly

18

30.00

Annually

11

18.33

TOTAL

60

100

Figure 4.4
INTERPRETATION:
It is quite evident from the above graph that about 51.67% of the customers prefer to pay their
premiums at Quarterly basis, 30% customers prefer to pay their premium at Half Yearly basis and
18.33% customers prefer to pay their premium at annually basis.

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Q5. Which companies do you perceive to be better in providing general insurance services?
Table No 4.5
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Public

22

36.67

Private

38

63.33

TOTAL

60

100

Figure No 4.5
INTERPRETATION:
From the above graph, we can infer that the customer perception about the Private Insurance
companies is better than the Public companies. This is evident from their preference: more than 63%
customers prefer private companies and only 36% people like to invest in Public companies

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Q6. From which company you have Genaral Insurance?

Table No 4.6
OPTIONS
ICICI Lombard General Insurance
Apollo Munich Health Insurance
Bharti AXA General Insurance
Reliance General Insurance
HDFC ERGO General Insurance
SBI General Insurance
United India Comp. Ltd
Max Bupa Health Insurance
Tata AIG Health Insurance
Bajaj Allianz General Insurance
New India Comp. Ltd
If any other(please specify)________________
TOTAL

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NO OF RESPONDENTS
06
02
02
04
03
08
08
03
02
03
07
12
60

PERCENTAGE (%)
10.00
03.33
03.34
06.67
05.00
13.33
13.33
05.00
03.34
05.00
11.66
20.00
100

39

Figure No 4.6
INTERPRETATION:
The graph shows that the GIC Subsidiaries (only 2 out of 4 have been included in the research)
namely- The New India Assurance Company Ltd. And the United India Insurance Company,
together capture the highest market share- 25%. SBI is another major market player at 13.33%
market share. All other companies hold very small portions of the total General Insurance market,
ranging from ICICI Lombard at 10% to Tata AIG at 3.33%. This clearly indicates that even though
there are a huge number of Private players in the General insurance market, the public companies
have a very strong hold.

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Q7. How much money do you want to invest in General Insurance plan per year?
Table No 4.7
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Less than 5000

31

51.67

5001-10000

16

26.67

10001-15000

08

13.33

15001-20000

04

06.67

More than 20000

01

01.66

TOTAL

60

100

Figure No 4.7
INTERPRETATION:
Almost 80% of the customers are retail / small investors since their average policy premium for a
year is up to Rs. 10,000 only. Very few of the customers (about 7%) buy policies of more than
15,000 rupees per year for general insurance.

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Q8. While buying an insurance policy, your decision influenced by?

Table No 4.8
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Family

18

30.00

Friends

17

28.33

Professional Group

10

16.67

Advertisement

15

25.00

TOTAL

60

100

Figure No 4.8
INTERPRETATION:
This indicates that majority of decisions are influenced by friends, family and peer professionals.
The advertisements do not have a very high impact on people for buying general insurance policies.

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Q9. Rank the following factors

Rank 1- Most Important

Rank 2 Fairly important

Rank 3 Important

Rank 4 Slightly important

Rank 5 - Not important

1)

Premium Amount

2)

Premium Frequency

3)

Risk Cover

4)

Ease in claim settlement

5)

Tax implications

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For Premium Amount:

Table No 4.9
FACTORS

NO OF RESPONDENTS

PERCENTAGE (%)

Rating 1

10

16.67

Rating 2

15

25.00

Rating 3

16

26.67

Rating 4

10

16.67

Rating 5

09

15.00

TOTAL

60

100

Figure No 4.9
INTERPRETATION:
About 68% policy holders feel that premium amount is an important determinant for decision
making. Majority of policy holders have marked it as Important at 26.67%. For 16.67% policy
holders it is the most important deciding factor. About 15% policy holders feel that it is not at all
important.

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For Premium Frequency:

Table No 4.10
FACTORS

NO OF RESPONDENTS

PERCENTAGE (%)

Rating 1

12

20.00

Rating 2

08

13.33

Rating 3

15

25.00

Rating 4

13

21.67

Rating 5

12

20.00

TOTAL

60

100

Figure No 4.10

INTERPRETATION:
Approximately 58% policy holders feel it is an important factor in decision making but almost 42%
policy holders feel it is not of much significance as to how often we pay the premiums. For 20%
policy holders it is the most important factor in decision making.

For Risk Cover:

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Table No 4.11
FACTORS

NO OF RESPONDENTS

PERCENTAGE (%)

Rating 1

16

26.67

Rating 2

15

25.00

Rating 3

10

16.67

Rating 4

11

18.33

Rating 5

08

13.33

TOTAL

60

100

Figure No 4.11

INTERPRETATION:
Since more than 26% policy holders feel that general insurance is primarily taken for risk cover,
they have marked it as the most important influencer. Collectively, about 69% policy holders say
that risk cover is an important factor for taking general insurance.

For Ease in Claim Settlement:

Table No 4.12
FACTORS
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NO OF RESPONDENTS

PERCENTAGE (%)
46

Rating 1

13

21.66

Rating 2

16

26.67

Rating 3

09

15.00

Rating 4

16

26.67

Rating 5

06

10.00

TOTAL

60

100

Figure No 4.12

INTERPRETATION:
Almost 22% policy holders believe that it is the most significant factor in purchase decision.
However, equal number of policy holders says that it is very important and slightly important
(26.67%).

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For Tax Implications:

Table No 4.13
FACTORS

NO OF RESPONDENTS

PERCENTAGE (%)

Rating 1

15

25.00

Rating 2

14

23.33

Rating 3

09

15.00

Rating 4

12

20.00

Rating 5

10

16.67

TOTAL

60

100

Figure No 4.13

INTERPRETATION:
For about 25% of the policy holders (highest), tax implications is the most important factor in their
decision making process. However, 16% policy holders feel, it is not such an important factor.

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Q10. What is the primary purpose of taking a general Insurance policy?

Table No 4.14
OPTIONS

NO OF RESPONDENTS

PERCENTAGE (%)

Risk Cover

20

33.33

Tax Benefit

24

40.00

Legal Compliance
TOTAL

16
60

26.67
100

Figure No 4.14

INTERPRETATION:
It is quite evident from the above graph that 40% customers take the insurance for taking the Tax
Benefit, 33.33% customers take for risk coverage and only 26.67% customer take the insurance for
legal compliance. This is also evident from Q9 analysis also, since most of the policy holders said
that tax implication is the most important factor in deciding which general insurance policy to buy.

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FINDINGS
Personal and household insurance are the most popular insurances. They account for more
than half ( 58.33%) of the insurance market. Motor insurance is also one of the common
insurances@ 13.33%. the popularity of Health and fire insurance is at par @ nearly 12%. In a
country like india, travel insurance is not too popular.
most of the persons take the insurance for less than 1 year and for 1 year i.e. more than a
half(53.33%) and 20% for 2 years, 16.67% for 2 to 5 years and only 10% respondents take
the insurance for more than 5 years.
about 51.67% of the customers prefer to pay their premiums at Quarterly basis, 30%
customers prefer to pay their premium at Half Yearly basis and 18.33% customers prefer to
pay their premium at annually basis.
the GIC Subsidiaries (only 2 out of 4 have been included in the research) namely- The New
India Assurance Company Ltd. And the United India Insurance Company, together capture
the highest market share- 25%. SBI is another major market player at 13.33% market share.
All other companies hold very small portions of the total General Insurance market, ranging
from ICICI Lombard at 10% to Tata AIG at 3.33%. This clearly indicates that even though
there are a huge number of Private players in the General insurance market, the public
companies have a very strong hold.
Almost 80% of the customers are retail / small investors since their average policy premium
for a year is up to Rs. 10,000 only. Very few of the customers (about 7%) buy policies of
more than 15,000 rupees per year for general insurance.

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 Majority of decisions are influenced by friends, family and peer professionals. The
advertisements do not have a very high impact on people for buying general insurance
policies.
More than 26% policy holders feel that general insurance is primarily taken for risk cover,
they have marked it as the most important influencer. Collectively, about 69% policy holders
say that risk cover is an important factor for taking general insurance.
Almost 22% policy holders believe that it is the most significant factor in purchase decision.
However, equal number of policy holders says that it is very important and slightly
important (26.67%).
About 40% customers take the insurance for taking the Tax Benefit, 33.33% customers take
for risk coverage and only 26.67% customer take the insurance for legal compliance. Most of
the policy holders said that tax implication is the most important factor in deciding which
general insurance policy to buy.

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CONCLUSION
Even though the policy holders have bought General insurance policies from the Public
Limited companies, the Policy holders are shifting their loyalties from these public limited
companies to the private firms. This implies that the policy holders perception is that the
Private companies provide better services than the Public Ltd. Companies.

Most of the policy holders said that tax implication is the most important factor in deciding
which general insurance policy to buy.

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SUGGESTION

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BIBLIOGRAPHY
Websites:
www.google.com
http://www.mgutheses.in/page/?q=T%202236&search=&page=&rad=#37

Books:
C. R. Kothari

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ANNEXURE
QUESTIONNAIRE
Q1. Which type of General Insurance you have? (You can tick more than one)

1) Motor Insurance

2) Householders/Houseowners Insurance

3) Personal Accident Insurance

4) Medical & Health Insurance

5) Travel Insurance

6) Fire Insurance

1) 1 year

2) 2 years

3) 2 years to 5 years

4) More than 5 years

1) Cash

2) Cheque & Credit Card

3) Demand Draft

4) Online

1) Quarterly

2) Half Yearly

3) Annualy

Q2. What is your Purchase tenure period?

Q3. How do you want to pay your premium?

Q4. In what interval you want to give your premium?

Q5. Which companies do you perceive to be better in providing general insurance services:1. Public Sector Insurance companies
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2. Private Sector Insurance companies

2. Apollo Munich Health Insurance

3. Bharti AXA General Insurance

5. HDFC ERGO Genaral Insurance

6. SBI General Insurance

10. Bajaj Allianz General Insurance

11. New India Assurance Comp. Ltd

Q6. From which company you have Genaral Insurance?

1. ICICI Lombard General Insurance

4. Reliance General Insurance

7. United India Insurance Comp. Ltd

8. Max Bupa Health Insurance

9. Tata AIG General Insurance

12. If any other(Please specify)____________________________________

Q7. How much money do you want to invest in General Insurance plan per year?
1) Less than 5000

2) Rs. 5001 to Rs. 10000

3) Rs. 10001 to Rs. 15000

4) Rs. 15001 to Rs. 20000

5) Above Rs. 20001

Q8. While buying an insurance policy, your decision influenced by?

1) Family

2) Friends

3) Professional Group
4) Advertisement

(
(

Q.9 Rank the following factors

Rank 1- Most Important
Rank 5 -Least important
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Factors
Premium Amount
Premium Frequency
Risk Cover
Ease in Claim settlement
Tax implications

Rank

Q.10 What is the primary purpose of taking a general Insurance policy:1)

Risk Cover

2)

Tax benefit

3) Legal Compliance

Q11. What extra facilities or improvements in the policies do you want from Company?
Ans_________________________________________________________________

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