EXECUTIVE SUMMARY

The insurance sector has opened up after more than four

decades of nationalization. Now since privatization there are
already a large number of private life insurance companies that
have started their operations in India. So the potential life
insurance customers have a huge choice of various life insurance
companies and their products to choose from. In this context it
is important to note that the various life insurance companies
are also competing among themselves to differentiate their
products from that of competitors to fight for the biggest pie in
the Indian market.

So in this liberalized scenario, there are questions thrown up like

what do these Insurance companies offer t the Indian customers
that are different from the pre privatization era and also as to
whether the customers themselves are aware of the various
services being offered by the new and the old players. There are
also questions like what is the perception in the minds of the
customers about the new players and the various products that
they are offering. Also it is doubtful about the awareness in the
minds of the Indian customers about the changes that are taking
place and have taken place in the insurance sector since
liberalization. This study has tried to underline the customers’
perception about the various changes taking place in the
insurance sector. The study also attempts to help the various
life insurance companies in understanding the various facets of
customers’ perception and the areas they need to improve upon
and the strength that they can capitalize upon. Thus this study
has strived to give a comprehensive picture on the various
parameters governing the insurance market in India and the
customer acceptability of the same.
 Chapter – 1

INTRODUCTION

THEORITICAL FRAMEWORK

1.1 INSURANCE – THE CHARACTERSTICS OF BEING

SERVICE

Insurance services are intangible having the implications of

difficulty in judging the quality and value in advance. It is
relatively difficult to promote and is difficult to have patent or
copyright. Insurance services have the characteristics of being
inseparable from the firm providing the service. It requires the
apparent presence of performer/marketer. Moreover, insurance
services requires a throughout involvement of human element in
providing and rendering services as it is a people based service
and not the equipment based service. This makes
standardization of the quality a very difficult task to achieve.
Further, insurance services cannot be stored and have dominant
feature of perishablity. And lastly, consumer has the access t
the insurance services but cannot own the facility. Thus for
marketing the insurance services, the marketing managers must
understand the nature and characteristics of insurance as a
service and the manner they impinge on the marketing strategy.
1.2 PARAMETERS OF CUSTOMERS SERVICES TOWARDS
LIFE INSURANCE COMPANIES.

The following are the parameters on which customers judge

the quality of the services provided by the Insurance
companies-:

Product (service) - The very first and important parameter

is the service or the product itself. It includes the brand
name, the policy features, service quality etc. Apart from
this there has been some new service development and
innovations going on at regular intervals. Innovative covers
were launched earlier like umbrella cover for household and
shopkeepers in urban and semi-urban markets. Recent
innovation is the overseas mediclaim for even students and
executives going abroad on contract basis. Also there has
been innovations wherein the insurance companies are
offering products which offer returns linked to the one going
in the market. These are called “unit linked plans.”

Price is an important element of perception towards the

insurance companies. Here, the strategy is not cost based
pricing. The premium is however different for services
provided by different insurance companies. In insurance
companies the pricing strategy is based on a “product
version basis”.

Physical evidence – The physical evidence would refer to

the overall tangibles used by the organization to
communicate to the customers how effective they are in
delivering their customers service. This can be judged on
the basis of certain parameters like aesthetics, social
conditions, convenience, ambience, and privacy. Customers
do keep the perception about te physical evidence of the
service organizations so as to decide about whether to use
their service or not.

Place: Place would indicate the accessibility of the services

of the insurance companies. It would include the strength
of the distribution channel of the insurance companies, the
number of offices it has, the number of agents it has, the
number of tie – ups it has with the banks across the globe
etc. The stronger the distribution network the positive will
be the perception of the customer towards the insurance
organization and vice versa.

Distribution channels in case of the insurance

services.

Head offices

Regional Offices.

Insurance
agents Divisional Banks.
Or direct
offices.
selling agents.

Branch offices.

Customers Promotion –
Since the insurance services like any other services are
intangible, there is more stress on designing subjective
expression and impressions rather than objective evidence. The
methods used in the promotion of insurance services are
personal selling, publicity, and sales promotion. The insurance
services rely heavily on the ‘personal selling’ through
commission agents and development officers, as the services
cannot be separated from the performer. Moreover, the exact
standards of performing cannot be specified. One strategy of
personal selling is to make their presence felt as maximum as
possible and should maintain a high visibility. The insurance
organization should choose the media vehicle, which is credible,
and trustworthy otherwise it may be boomerang. Though there
are varied techniques for sales promotion the affective way of
sales promotion in case of life insurance services may be free
gifts like calendars etc. to its existing customers and discounts
in premium in case of brand loyalty. These can go a long way in
attracting potential customers as well.

People – In any service industry the role of its people is

substantial and significant too. Main interaction and maximum
contact of customers is with employees at the front counter of
the company providing the services. These contracts and
interactions actually lead the company’s performance to a
certain directions. These employees must be well informed
about the service and more importantly well behaved so as to
win the customer’s perception about the company/company’s
policies which would be formed on the basis of the contract with
the personnel of the company.

Like personnel of the company, the customers also are important

as there is ‘two step communication.’ A customer influences
other customers and hence as image of the company is formed.
The moral of the discussion is the customer satisfaction. This is
very relevant and significant in insurance industry. If any
customer doesn’t get a fair deal from a company in the claim
settlement or in claim delivery, he definitely influences other
customers in their selection of the company. And in the process
company loses some customers.

Process – Process refers to the logical sequence of activity

of delivery of service of performer to the ultimate customer.
The process to be efficient requires a judicious blend of men
and machine. In the insurance services, customers’ general
view is that the process involves a lot of paper work, is time
consuming, and has bureaucratization. In the event of an
accident, the customer has to run so many times to get a
claim and get the unnecessary administrative stings
removed put by either the surveyor or the agent or
sometimes with the connivance of all three. This process
has to be streamlined and automation should be introduced
wherever possible. Thus, the process has a direct impact
on the customer satisfaction. Moreover, some companies’
boast of high rate of claim settlements but if we drive deep
into this we would find that most of the claims may be
forged one and the real deserving customers are not given
their claims.

1.2.1 PARAMETERS FOR JUDGING CUSTOMER

PERCEPTION TOWARDS INSURANCE COMPANIES.

Service (product). Advertising.

* Service Line *Ad Budget.

*Policy (Brand) name. *Media.

*Policy Features. *Message.

*Logo, Trade Mark. *Appeal

*Ad effectiveness.

Target Market
Promotion

People. *Personal

Selling.

*Personnel. *Publicity.

*Customer. *Sales
Promotion.

Process Price

*delivery. *Premium.

*Automation. Placement
*Streamlining. *Offices.

*branches.

*development offices.

*Agents.

*banks tie – ups.

OBJECTIVES -:

The following are the objectives of the project study:

• To find out the awareness among customers about

various life insurance products available in India
particularly after privatization of the insurance sector.

• To find out customer perception about life insurance

companies – private sector vis-à-vis public sector.

• To understand customer perception towards the service

environment of the two organization overall.
RESEARCH METHODOLOGY

1) Project title –“Customers’ perception towards Insurance

companies “A comparative study of LIC and ICICI PRUDENTIA.”

2) Objective –

• To find out customer perception about life insurance companies –

private sector vis-à- vis public sector.

• To understand customer perception towards the overall service

environment of the two organization.

• To find out the awareness among customers about various life

insurance products available in India particularly after
privatization of the insurance sector.

Research design

The project involved the study of customers’ perception towards

the insurance companies with respect to certain parameters like:

1) Product (service)
2) Price
3) Place or distribution
4) Promotion
5) People
6) Process
7) Physical evidence.
NATURE OF STUDY-EXPLORATORY
Data collection method- Data was collected both from primary
and secondary sources. Secondary data was collected from books,
magazines, newspapers etc. for collecting primary data survey
method was used wherein customers of both the organization were
surveyed.
Data collection instrument – For collecting primary data
structured questionnaire were used. Separate questionnaire were
made for conducting survey among customers of LIC and ICICI
Prudential.

SAMPLE TECHNIQUE - Quota sampling

SAMPLE SIZE – 50 for LIC and 50 for ICICI PRUDENTIAL.

DATA COLLECTION METHOD – Survey method.

DATA COLLECTION INSTRUEMENT–Structured questionnaire

LIMITATIONS

Though every effort was put in to make this report authentic in

every respect, there were few uncontrollable factors that might
have had their influence on the final report. The various limiting
factors are-:

• While making this report few typing and compilation result may
have crept in which have not been able to get rectified. Also the
major part of the data collect is primary in nature and hence the
data may be subject to some human errors.

• Since the basic objective of the project is to find out the

customers’ perception and compare it with that of the private
insurer, it involved collection of the information that is
confidential from the point of view of interviewee. Thus some
individuals were tentative in giving such kind of information.
This has rendered minor impact on the conclusion of the report.

• Also, not many people have actually applied for claim settlement
ever in their life insurance company. As a result of this
conclusion with regards to the claim settlement has not bee able
to serve its purpose.
• The study was mainly conducted in the national capital region of
Delhi. It has not have included relevant respondents in other
areas in the sample size.