CHAPTER I

INTRODUCTION
SUMMARY OF THE PROJECT
The project entitled CONSUMER SATISFACTION WITH REFERENCE
TO TATA-AIG - A STUDY IN VISHAKAPATNAM. Insurance means protection
against financial loss which will happen in unexpected events such as fire,
accident, illness, or death. Insurance divided into two types:
1. Life Insurance

2. General Insurance

Business of Life Insurance in India started in the year 1818 with the
establishment of the Oriental Life Insurance Company in Calcutta. Insurance
sector is commenced with the enhancement of the Insurance Regulatory and
Development Authority Act 1999, which facilitated the entry of private insurance
companies into the Indian Insurance market. Tata-AIG Life Insurance Company
Private Limited entered the Private Life Insurance Industry in India in April 2001,
and in pass of 6 years has established itself as a distinctive Life Insurance brand
with an Innovate, attractive and customer friendly product portfolio and a
professional advisor force. It also distributes products in close operation with the
Tata network. Currently, it has over 10000, active advisors working from 46
branches in 30 cities across the country and over 1200 Employees. The company
with a customer base of over 1, 65,000. This topic contains what is insurance,
what is the position of Tata-AIG, in what way Tata-AIG is differ from other
private insurance players, what are the Tata-AIG products and what are its
features, customer awareness about Tata-AIG, what is the market share of TataAIG, with compare to other private insurance players, how much percentage of
customer have in Tata AIG in present situation. It also includes study of----1

 The products offered by the top private insurance companies with compare
to Tata-AIG.
The need of the customers [protection, pension, investment, savings, tax
effect, loan.]
Acceptance of privatization of insurance companies without feel any
insecurity.
All the above helps in differentiating the company through customers in
terms of return, asset, services and satisfaction. It will help to the know the
following:
Who is a close competitor, what products are they deal in, what features it
has and how many customers really know the Tata-AIG Life Insurance Company.
Primary data collection is with the help of survey through a questionnaire, by
interacting with all individuals who have Insurance policies in different
companies. Secondary data is collected through Web sites, News papers, Journals
and Magazines etc.
The limitations of the study are there is possibility of collecting biased
opinion from the customers and limited time period allocated for the survey is not
sufficient to allocate the satisfaction levels of customers. Due to irrelevant sample
and biased option the results derived may not be appropriate. The study done
through only half of the questionnaire so it is not the represent of total concept.

Strategy
To Recruit advisors collection of data regarding various fields like
chartered accountants Pharma distributors, postal agents goldmercahants, retailer

medical owners, cement and steel traders) those who are potential advisors of
TATA AIG life insurance company. Make telecalling and take appointment their
convenient time. Completions of telecalling go to their appointment places and
explain the concept of financial advisor recruitment with the help of company
flyers. Completion of concept explanation, give a company flyers with phone
number.
Synopsis :
After privatization of insurance companies, every insurance company
entered into global market implementing various strategies to gain good market
share. Every company is trying to outsmart others in fighting with changing
business environment. And adaptability is the main thing followed by every
insurance company. One insurance calibirize other competitor company it will put
more efforts. Company to withstand in the competition, followed the strategies
such as product differentiation, service quality, agent service satisfaction,
maintaining good relationship with customers. Company withstood in the global
market ready to anticipate challenges and immediately reacting to meet customers
changing needs by establishing goals keeping customers needs and preferences in
mind. .
Value Addition to Self
Through this project I had gained some exposure to real market conditions,
gained some experience regarding company products and understood corporate
culture. I am able to follow time management, stress management and developed
communication skills and interpersonal relationship skills.

Content and Scope of the Study

This project deals with a study of consumer begaviour in TATA-AIG LIFE
INSURANCE COPMANY VISHAKAPATNAM. Under the esteemed guidance
of C. JAGADISH, Branch Manager and Prof. G.SATYANARAYANA, Ph.D.,
Project Guide. The project started on Jan 17, 200, where our company guide
provided details regarding the company and its products.
A service is any act of performance that one party can offer to another that
is essentially intangible and does not result in the ownership of any thing .its
production may or may be tied to a physical production, may or may not be tied to
physical products.
The word insurance instills a sense of security in the minds of people
.insurance is a part of financial system that takes care of the financial consequence
of certain specific contingencies both incase of individuals and corporate bodies.
Such contingencies are called risk and they cause losses when they take place
.insurance neither prevents risk nor alters the probability of its occurrence. But
reduces the extant of financial loses by transferring risk from one individual to a
group.
Economic activity and growth are greatly facilated by the existence of a
financial system. Developing in terms of efficiency of the market in mobilizing the
savings and allocating them among competing user. Economy needs institutions
that impartially enforce property rights and contracts. Economic growth depends
on the existence of well functioning financial market. It is essential that the
financial infrastructure is developed sufficiently so that the market operation is
efficient

Need for the Study:

To know the Awareness levels of existing and new customers
To analyses the customer satisfaction levels of customers of TATA-AIG
LIFE INSURANCE COMPANY.
To know the whether the customers are satisfied with the company services
are not
Objectives of the study
To study customers awareness level regarding products of TATA-AIG.
To find out changing needs and preferences of the customers of TATA_AIG
To find out how the company is maintaining close relationship with the
customers
To study how the customers are benefiting out of the insurance products.
To find out insurance agent service levels
Methodology
TYPE AND SOURCES OF DATA.
Proposed method of approach towards this project to collect primary
data and secondary data on customer awareness and general
information about life insurance companies in India.
PRIMARY DATA:
Primary data is the original data collection by market survey and
Telecalling, through which data is collected from the questionnaires.
QUESTIONNAIRE:
The questionnaire was prepared on the basis of CUSTOMER
BEGAVIOR.the questionnaire we have chosen both the open and

close ended questions, which helps in collecting source information

such as customer satisfaction and customer relationship
management.
MARKET SURVEY
Conduct a market survey and telecalling the existing customer of the
Tata AIG and take an opinion of the customer based on that
questionnaire.
SECONDARY DATA:
For present project it has been collected data from journals and take
little bit of opinions with official of the Tata Aig office.
Sampling Technique;
The random sampling technique was used in collecting data from
200 customers
Limitations of the study
The respondent may not be aware of Tata Aig life insurance products .so
response may not be fair.
.
The sampling technique like random sampling and satrified sampling
adopted may not provide desire results.
This survey restricted with in Andhra Pradesh boundaries only.(Existing
customers of Tata AIG only.)
.
Some of the respondents are may hesitate to reveal the accurate
information required for survey

CHAPTER II
INDUSTRY PROFILE
INSURANCE INDUSTRY :
It is a plan in which individuals and organization who is concerned about
potential risks will pay premiums to an insurance company, who in return, will
reimburse them if there is loss. To generate profit, the insurer will invest the
premiums he receives. Examples of the different types of insurance available are
automobile, home, health and worker's compensation. Whereas in most cases the
insured is paid for their loss, with life insurance a beneficiary is paid when the
insured person passes away

policy: written contract or certificate of insurance; "you should have read

the small print on your policy"

indemnity: protection against future loss

The Buyer shall provide at its expense property damage insurance or all

risk builder's risk insurance covering all of its property on the basis of full
replacement cost value without depreciation which will name the Seller and any
manufacturer of the Product(s) as additional insured with a waiver of subrogation
against all insured parties there under
Insurance, in law and economics, is a form of risk management primarily
used to hedge against the risk of potential financial loss. Ideally, insurance is
defined as the equitable transfer of the risk of a potential loss, from one entity to
another, in exchange for a reasonable fee. ...

Liberalisation of Insurance in India

The eagerly awaited Insurance Regulatory and Development Authority
(IRDA) Bill to open the insurance sector in India to private and foreign players,
was passed by the Lok Sabha on December 2, 1999 and by the Rajya Sabha on
December 7, 1999. The Bill seeks to grant statutory status to the interim Insurance
Regulatory Authority and amend the 1938 Insurance Act, the 1956 Life Insurance
Corporation Act and the 1972General Insurance Business (Nationalization) Act to
end the public sector monopoly. The IRDA Bill incorporates the recommendations
made by the parliamentary Standing Committee on Finance.
India is the fifth largest economy in the world and the country is expected
to have 500million middle class consumers within next eight years. The demand
for consumer and industrial product and services has been expanding rapidly and
removal of some investment and trade barriers has given new momentum to this
A

Brief history of Insurance Sector

The business of life insurance in India in its existing form started in India in

the year1818 with the establishment of the Oriental Life Insurance Company in
Calcutta.
Some of the important milestones in the life insurance business in India are:
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 fund 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 core 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:
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. GIC
incorporated as a company.

PUBLIC AND PRIVATE PLAYERS IN INDIA

LIFE INSURERS

Websites

Public Sector
Life Insurance Corporation of India

www.licindia.com

Private Sector
Allianz Bajaj Life Insurance Company Limited

www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited

www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited

www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited

www.iciciprulife.com

ING Vysya Life Insurance Company Limited

www.ingvysayalife.com

Max New York Life Insurance Co. Limited

www.maxnewyorklife.com

MetLife Insurance Company Limited

www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd.

www.omkotakmahnidra.com

SBI Life Insurance Company Limited

www.sbilife.co.in

TATA AIG Life Insurance Company Limited

www.tata-aig.com

AMP Sanmar Assurance Company Limited

www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited

www.avivaindia.com

GENERAL INSURERS
Public Sector
National Insurance Company Limited

www.nationalinsuranceindia.co
m

New India Assurance Company Limited

www.niacl.com

Oriental Insurance Company Limited

www.orientalinsurance.nic.in

United India Insurance Company Limited

www.uiic.co.in

Private Sector
Bajaj Allianz General Insurance Co. Limited

www.bajajallianz.co.in

ICICI Lombard General Insurance Co. Ltd.

www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd.

www.itgi.co.in

Reliance General Insurance Co. Limited

www.ril.com

Royal Sundaram Alliance Insurance Co. Ltd.

www.royalsun.com

TATA AIG General Insurance Co. Limited

www.tata-aig.com

Cholamandalam General Insurance Co. Ltd.

www.cholainsurance.com

Export Credit Guarantee Corporation

www.ecgcindia.com

HDFC Chubb General Insurance Co. Ltd.

REINSURER
General Insurance Corporation of India

www.gicindia.com

10

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. A particular of the life insurance companies and general
insurance companies including their web address is given below:
MARKET SHARE OF THE INSURANCE COMPANIES
MARKET SHARE
(%)
71.44
7.34
3.01
7.56
1.80
3.20
3.09
0.90
0.79
0.51
0.37
0.26
0.21

NAME OF THE PLAYER

LIC
ICICI PRUDENTIAL
BIRLA SUN LIFE
BAJA ALLIANZ
SBI LIFE
HDFC STANDARD
TATA AIG
MAX NEW YORK
AVIVA
OM KOTAK MAHINDRA
ING VYASA
AMP SANMAR
METLIFE

Insurance is system by which the losses suffered by a few are spread over
many, exposed to similar risks. Insurance is a protection against financial loss
arising on the happening of an unexpected event. Insurance policy helps in not
only mitigating risks but also provides a financia ushion against adverse financial
burdens suffered. Insurance policies cover the risk of life as well as other assets

11

and valuables such as home, automobiles, jewelry et al. On the basis of the risk
they cover, insurance policies can be classified into two categories:
1. Life Insurance Policies
2 General Insurance
Before insurance sector was opened to the private sector Life Insurance
Corporation (LIC) was the only insurance company in India. After the opening up
of Insurance sector in India there has been a glut of insurance companies in India.
These companies have come up with innovative and flexible insurance policies to
cater to varying needs of the individual. Opening up of the Insurance sector has
also forced the Lic to tighten up its belt and deliver better service. All in all it has
been a bonanza for the consumer.
Major Life insurance Companies in India are:
Aviva Life Insurance
Bajaj Allianz
Birla Sun Life Insurance
HDFC Standard Life Insurance
ICICI Prudential
ING Vysya
Kotak Mahindra
LIC
Max New York Life Insurance
MetLife India Insurance
Reliance Life Insurance
SBI Life Insurance
Shriram Life Insurance

12

 Tata AIG Life Insurance

TYPES OF INSURANCE:
Life Insurance
Term Life Insurance: is life insurance for a set period of time. If the insured dies
during this period, the beneficiary receives a lump sum of tax-free money. Term
Insurance is ideal for young families with a limited budget where as much
insurance as possible is required to secure the family's well being, or in business
situations such as buy-sell agreements, for mortgage coverage, or to fulfill other
temporary needs.
Whole Life Insurance: provides permanent coverage with level premiums and a
guaranteed death benefit. It is perfect for people who think long term and whish to
have plan that is not subject to investment gains and losses. The policy also gains
cash value over time, allowing for flexible cancellation options. Furthermore,
though coverage is life-long, you do not have to pay premiums for life. You can
purchase the insurance in a predefined number of payments: the shorter the
payment period, the large the discount.
Universal Life Insurance: is permanent insurance with the added feature of
having a tax-sheltered investments portion built into the plan. Universal Life pays
off precisely at the moment when significant costs and tax implications are
triggered. This timing, along with the tax-sheltered savings feature, makes
Universal Life Insurance a powerful financial tool in estate preservation,
leveraging, buy-sell agreements, charitable giving, and pension maximization. The
tax-sheltered status of its investments component can also allow it to help pay for
itself.
Disability Insurance provides an alternate income in case of injury or illness that
leaves you unable to work for an extended period of time. It is ideal for anyone

13

who earns an income and does not have disability insurance through their
employer. Depending on your profession, it could provide income during times of
inability to perform your "own occupation," even though other sources of income
continue. More importantly, it can provide the family's income when you can't.
Insurance: pays a lump sum of tax-free money 30 days after the diagnosis of a
covered illness. It is like having your own private health care program: If you do
not wish to wait in line for health care, you can seek professional services
elsewhere. Insurance companies now cover up to 21 major illnesses, and you
decide how to use the money (to pay down the mortgage, take a vacation, or
provide family income).
Long Term Care Insurance provides a daily benefit for in home or nursing home
care. Ideal for those approaching retirement age, long term care insurance means
peace of mind knowing that you will never be a burden to your loved ones. Long
Term Care easily erodes one's life savings costing upwards of 40 to 60 thousand
dollars a year, making this form of insurance a must for retirees.
Health & Dental Insurance covers many common medical expenses that the
Government Health Insurance Plan does not, such as dental work, prescription
drugs, eyeglasses, private and semi-private hospital rooms. If you do not have an
employer group health plan and, therefore, are vulnerable to health care costs
not covered by your Government Health Insurance Plan supplemental health
care coverage is important.
Why to get a Life Insurance Policy?
Planning for our own death or the death of a loved one is not something that many
of us want to do. But having support in place when the unfortunate happens can
help those left behind take care of arrangements and recover from the loss easier.
A life insurance policy can be an important part of that support.

14

Life Insurance basics

A life insurance policy can help you:

Provide income to surviving family members so they can maintain their

lifestyle.

Pay off the mortgage if an income earner were to die so the house is free
and clear of debt.

Provide for a college education if there are dependent children in the

household.

Pay for final expenses of a funeral or estate settlement costs.

Provide an emergency fund to handle an unexpected financial crisis.

Provide for settlement of personal debts.

Life Insurance in India

Life is very fragile and death is a certainty. We cannot control the
uncertainties of life. But, we can cover the risks surrounding us. Life insurance,
simply put, is the cover for the risks that we run during our lives. It protects us
from the contingencies that could affect us.
Life insurance is not for the person who passes away, it for those who survive.
It is the responsibility of every bread earner to guard against the events that
could affect the family in the unfortunate circumstance of his / her demise.
Thus, having a life insurance policy is very vital. Before going for a life
insurance policy it is imperative that you know about various types of life
insurance policies. Major among them are:
Endowment Policy
15

 Whole Life Policy

Term Life Policy
Money-back Policy
Joint Life Policy
Group Insurance Policy
Loan Cover Term Assurance Policy
Pension Plan or Annuities
Unit Linked Insurance Plan

Life insurance sector grew by 41 per cent in 2005-06 due to better

performance of country's largest life insurer, LIC, and private players like Bajaj
Allianz and ICICI Prudential.
The 15 life insurance companies together collected Rs 35,898 crore in the
fiscal ended March this year, compared to Rs 25,343 crore in the previous fiscal,
according to data compiled by regulator IRDA. Life Insurance Corporation's
premium income rose more than 28 per cent to Rs 25,645 crore after it sold 3.16
crore policies as against Rs 19,972 crore collected a year ago.
However, LIC's market share dipped by 6.63 per cent to 71.44 per cent
from 78.07 per cent in the year ago period due to stiff competition and aggressive
marketing of private life insurers.
The 14 private players were able to steadily increase their market share from 21.93
per cent to 28.56 per cent in a year's time by collecting Rs 10,252 crore during the
period under review.
16

With an annual growth rate of 15-20% and the largest number of life
insurance policies in force, the potential of the Indian insurance industry is huge.
Total value of the Indian insurance market (2004-05) is estimated at Rs. 450
billion (US$10 billion). According to government sources, the insurance and
banking services contribution to the country's gross domestic product (GDP) is
7% out of which the gross premium collection forms a significant part. The funds
available with the state-owned Life Insurance Corporation (LIC) for investments
are 8% of GDP.

Till date, only 20% of the total insurable population of India is covered
under various life insurance schemes, the penetration rates of health and other
non-life insurances in India is also well below the international level. These facts
indicate the of immense growth potential of the insurance sector.
The year 1999 saw a revolution in the Indian insurance sector, as major
structural changes took place with the ending of government monopoly and the
passage of the Insurance Regulatory and Development Authority (IRDA) Bill,
lifting all entry restrictions for private players and allowing foreign players to
enter the market with some limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity
in an insurance company, a proposal to increase this limit to 49% is pending with
the government. Since opening up of the insurance sector in 1999, foreign
investments of Rs. 8.7 billion have poured into the Indian market and 21 private
companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled
fledgling private insurance companies to sign up Indian customers faster than
anyone expected. Indians, who had always seen life insurance as a tax saving
17

device, are now suddenly turning to the private sector and snapping up the new
innovative products on offer.
The life insurance industry in India grew by an impressive 36%, with
premium income from new business at Rs. 253.43 billion during the fiscal year
2004-2005, braving stiff competition from private insurers. RNCOSs report,
Indian Insurance Industry: New Avenues for Growth 2012, finds that the
market share of the state behemoth, LIC, has clocked 21.87% growth in business
at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was
still not enough to arrest the fall in its market share, as private players grew by
129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year
(2004-2005) compared to the previous one, its market share came down from
87.04 to 78.07%. The 14 private insurers increased their market share from about
13% to about 22% in a year's time. The figures for the first two months of the
fiscal year 2005-06 also speak of the growing share of the private insurers. The
share of LIC for this period has further come down to 75 percent, while the
private players have grabbed over 24 percent.
There are presently 12 general insurance companies with four public sector
companies and eight private insurers. According to estimates, private insurance
companies collectively have a 10% share of the non-life insurance market.
Though the focus of this market research report is on the potential growth
on the Indian Insurance Sector, it also talks about the market size, market
segmentation, and key developments in the market after 1999. The report gives
an instant overview of the Indian non-life insurance market, and covers fire,
marine, and other non-life insurance. The data is supplied in both graphical and
18

tabular format for ease of interpretation and analysis. This report also provides
company profiles of the major private insurance companies.
GENERAL INSURANCE
General Insurance provides much-needed protection against unforeseen
events such as accidents, illness, fire, burglary et al. Unlike Life Insurance,
General Insurance is not meant to offer returns but is a protection against
contingencies. Almost everything that has a financial value in life and has a
probability of getting lost, stolen or damaged can be covered through General
Insurance policy.
Property (both movable and immovable), vehicle, cash, household goods,
health, dishonesty and also one's liability towards others can be covered under
general insurance policy. Under certain Acts of Parliament, some types of
insurance like Motor Insurance and Public Liability Insurance have been made
compulsory.
Major insurance policies that are covered under General Insurance are:
HOMEINSURANCE
HEALTH INSURANCE
MOTOR INSURANCE
TRAVEL INSURANCE

Today the Indian general insurance market is valued at Rs 14,000 crore. It

is growing at a rate of 20 per cent and is expected to reach Rs 45,000 crore in
about 10 years. Private players have already gained a 10 per cent share in three
years. No mean achievement when compared to the growth rates of countries like
South Korea and Thailand, where the private sector took 15 years to gain a 15 per

19

cent share of the market. India has 14 private players in life insurance and 12
players in the general insurance sector.
CURRENT SCENARIO OF THE INDUSTRY
Composition of Household Financial Savings
Currency
Deposits
Of which Deposits with non banking companies
Shares and debentures
Small savings (central govt .schemes)
Life insurance
Provident and pension funds

1991
10.6%
33.3%
2.2%
14.3%
13.2%
9.5%
16.9%

1996-97
8.6%
48.2%
16.4%
6.6%
7%
10.1%
19.1%

2005-06
8.5%
41.5%
1.6%
2.7%
14.3%
15.5%
14.3%

INSURANCE MARKET IN INDIA

India with about 200 million middle class household shows a huge
untapped potential for players in the insurance industry. Saturation of markets in
many developed economies has made the Indian market even more attractive for
global insurance majors. The insurance sector in India has come to a position of
very high potential and competitiveness in the market.
Innovative products and aggressive distribution have become the say of the
day. Indians, have always seen life insurance as a tax saving device, are now
suddenly turning to the private sector that are providing them new products and
variety for their choice. Life insurance industry is waiting for a big growth as
many Indian and foreign companies are waiting in the line for the green signal to
start their operations. The Indian consumer should be ready now because the
market is going to give them an array of products, different in price, features and
benefits. How the customer is going to make his choice will determine the future
of the industry.

20

CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After
the entry of the foreign players the industry is seeing a lot of competition and thus
improvement of the customer service in the industry. Computerization of
operations and updating of technology has become imperative in the current
scenario. Foreign players are bringing in international best practices in service
through use of latest technologies. The one time monopoly of the LIC and its
agents are now going through a through revision and training programmes to catch
up with the other private players. Though lot is being done for the increased
customer service and adding technology to it but there is a long way to go and
various customer surveys indicate that the standards are still below customer
expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which
insurance products are sold. The concept is very well established in the country
like India but still the increasing use of other sources is imperative. It therefore
makes sense to look at well balanced, alternative channels of distribution. LIC has
already well established and have an extensive distribution channel and presence.
New players may find it expensive and time consuming to bring up a distribution
network to such standards. Therefore they are looking to the diverse areas of
distribution channel to have an advantage. At present the distribution channels that
are available in the market are:
DIRECT SELLING
Corporate Agents

Group Selling
Brokers and Cooperative Societies
Bancassurance

21

To make all these channels a success the companies have to be very alert and
skillful to Know how to use these channels in a proper way. Banc assurance is on
of the most upcoming channels of distribution and therefore is being discussed in
details.
BANCASSURANCE
India has an extensive bank network established over the years. What
Insurance companies have to do is to just take advantage of the customers' longstanding trust and relationships with banks. This is a mutually beneficial situation
as banks can also expand their range of products on offer to customers, while the
insurance company will also earn profits from the exposure. Another advantage is
that banks, with their network in rural areas, help to fulfill rural and social
obligations stipulated by the Insurance Regulatory and Development Authority
(IRDA) recently. Insurance companies should see banc assurance as a tool for
increasing their market penetration in India. It is also good for the one who sees
banc assurance in terms of reduced price, high quality product and delivery at
doorsteps. Everybody is a winner here. The creation of banc assurance operations
has made an important impact on the financial services industry at large. This is
though a new concept but it has gained a lot of importance in the industry at
present and has a great future.
PRODUCT INNOVATION
There has been a plethora of new and innovative products offered by the
new players. Customers have tremendous choice from a large variety of products
from pure term (risk) Insurance to unit-linked investment products. Customers are
offered unbundled products
with a variety of benefits as riders from which they can choose. More customers
are buying products and services based on their true needs and not just traditional
22

money back policies, which is not considered very appropriate for long-term
protection and savings. There is lots of saving and investment plans in the market.
However, there are still some key new products yet to be introduced - e.g. health
products.
RURAL MARKETING
Rural India seems to have an appetite for mobile phones, computers, and
cars and to add to it we have insurance. In India with the private players having
entered into the insurance industry, the expected explosion in job opportunities
may not actually happen but for them the catchments area is the opportunities in
the rural India. In India the insurance business can be said to be "a marathon, not a
sprint". This is because of the nature of the business being long term. With merely
two years of the industry being opened, not surprisingly, the new comers are
making losses. The public sector companies, notably the LIC, have gained in
strength, thanks to the deepening of the market consequent to the awareness
created by the new companies. However this does not deterred the private sector,
which knows know that the race is a marathon, not a sprint. However it seems that
they if not anything, are only increasing their spending, though only out of the
capital. Today, there are 18 insurance companies in India excluding the PSUs,
with 12 in the life insurance business and the rest in non-life .As insurance
companies go more and more rural in search of business, there will be
opportunities in the rural sector. Those who understand rural India better will be in
demand. Already United India
The rural consumer is now exhibiting an increasing propensity for
insurance products. A research conducted exhibited that the rural consumers are
willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year.
In the insurance the awareness level for life insurance is the highest in rural India,
23

but the consumers are also aware about motor, accidents and cattle insurance. In a
study conducted by MART the results showed that nearly one third said that they
had purchased some kind of insurance with the maximum penetration skewed in
favor of life insurance. The study also pointed out the private companies have
huge task to play in creating awareness and credibility among the rural populace.
The perceived benefits of buying a life policy range from security of income bulk
return in future, daughter's marriage, children's education and good return on
savings, in that order, the study adds.
Regulatory and Development Authority (IRDA) have set stiff rural targets
for insurance Companies. For the life sector, in the first year, 5 per cent of the total
policies written Should come from the rural sector. This will go up to 15 per cent
in five years. Similarly, for the non-life sector, two per cent of the total gross
premium income should come from the rural sector going up to 5 per cent in five
years, according to the regulation. All these Moves will make the investment the
rural area a big start.
IRDA ruling on `special discounts' Insurance brokers, an unhappy lot
IRDAs latest ruling on the "special discount" given to insurance customers has
been termed "Tughlaqian" by one broker. The allusion is to the flip-flop on the
issue by IRDA, like Mohammad-bin-Tuglaq changed his Capital frequently.
Four months ago, within a month of having issued licenses, the IRDA
came up with a notification saying that insurance companies could give either a
`special discount' (of 5 per cent of the premium) to the customer, or (the 12.5 per
cent) commission to the broker, but not both.
This move sparked outrage among brokers. They argued that their business
would be affected, as no customer would want to forgo the 5 per cent discount.
Arguing that the ground rules of the game could not be changed within such a
24

short time of issuing the licenses, they managed to prevail upon the then IRDA
Chairman, Mr. N. Rangachary, and got the order cancelled on May 30.
Now, the new Chairman, Mr. C.S. Rao, with a notification on July 16, has
effectively cancelled the May 30 order and the brokers are back to square one. The
Secretary of the Insurance Brokers Association deplored the decision and said it
was a "death blow to fledgling insurance brokers business." He hoped that IRDA
would reconsider the matter as over 80 brokers had obtained licenses at
considerable cost and effort. Frequent changes in the law regulating the
commissions would plunge the market into confusion and result in loss of
confidence, he said. Some international brokers who had obtained licenses are also
said to be reconsidering their decision to set up shop in India.
Brokers point out that when the first ruling (saying `either a discount to the
customer or a brokerage, but not both') was brought in, the IRDA argued that the
idea was to force the brokers to provide value-added service, not just sell policies.
The objective was that customers should find it worthwhile forgoing the discount
and make use of the brokers. For example, if a broker with some deft risk
management is able to help slash a company's premium expenditure from say, Rs
10 crores per year to Rs 8 crores, then the company would happily forgo the 5 per
cent or Rs 50 lakhs discount, because by using the broker, it saves Rs 2 crores!
Sound logic, but the ground realities are different, say brokers. There have
been instances when the corporate customer took all the advice from the broker,
then dumped him and went directly to the insurance company. Secondly, while the
broker may be able to provide such an excellent, value-adding advice in the first
year, it may be difficult for him to do that year after year.
Mr. R. Thyagarajan, Chairman of the Shriram group, which owns of the
broking firm Armour Consultants points out, that it is unrealistic to expect the
nascent broking industry to provide such value-added services in the first few

25

years of the industry's birth. The broking industry is a baby of 4-months and the
community should allow some time for it to develop expertise. And till such time,
it should be ensured that the brokers first survive.
"We feel like orphans," says Mr. N. Raveendran, Director, Alegion
Insurance Services Ltd, a Chennai-based broking firm. "The law is not helpful, the
regulator is not helpful, the insurance companies do not want us, and the
customers do not want us."
Above all, brokers complain of the "air of uncertainty," given that the
policies are frequently changed.
.
Indian Insurance Industry Forecast (2007-2009)
The market research report Indian Insurance Industry Forecast (20072009) gives an in-depth analysis of the present and future of the Indian Insurance
Industry. The market research report looks in to the details as well as gives an
overview of the Indian insurance market with focus on the performance of the key
players. With the initiation of the deregulation in the Indian insurance market, the
monopoly of big public sector companies in life insurance as well as general
(non-life insurance) market has been broken. New private players have entered
the market and with their innovative approaches and better use of distribution
channels and technology, they are eating in to the shares of established public
sector companies in Indian Insurance Market. Since the deregulations have been
put in to place, the market share of LIC has come down to 71.4% in life insurance
market while the private players have captured around 17% market in the general
insurance segment. Having said that, public sector insurance companies such as
LIC and New India Assurance are registered impressive double-digit growths,
which reflects on the overall health of the Indian insurance sector.

26

This report includes the key private players in the insurance market such as ICICI
Prudential, Bajaj Allianz, Birla Sun life, ICICI Lombard and TATA AIG. It also
includes the leading competitors in the life insurance and general insurance
segments along with their market shares.
Wage and salary employment in the insurance industry is projected to grow
about 10 percent between 2004 and 2014, compared to the 14 percent growth
projected for wage and salary employment in all industries combined. While
demand for insurance is expected to rise, corporate downsizing, productivity
increases due to new technology, and increasing use of direct mail, telephone, and
Internet sales will limit job growth. However, some job growth will result from the
industrys expansion into the broader financial services field, and employment in
the medical service and health insurance areas is anticipated to grow. Also,
thousands of openings are expected to arise in this large industry to replace
workers who leave the industry, retire, or stop working for other reasons.
Medical service and health insurance is the fastest growing sector of the
insurance industry. In recent years, increasing health insurance premiums and
relatively high unemployment have left some unable to afford health insurance,
but over the long term, significant growth is expected. As the share of the elderly
population rises, more people are expected to buy health insurance and long-termcare insurance, as well as annuities and other types of pension products sold by
insurance sales agents. If legislation is passed to make health insurance affordable
to more people, demand should increase further for this type of insurance.
Population growth will stimulate demand for auto insurance and homeowners
insurance. Population growth also will create demand for businesses to service the
needs of more people, and these businesses will need insurance as well. Moreover,
large liability awards are motivating growing numbers of individuals and
businesses to purchase liability policies to protect against lawsuits brought by
people claiming injury or damage from a product.
27

Many successful insurance companies will recognize the Internets

potential as a powerful marketing tool. Not only might this reduce costs for
insurance companies, but it also could enable many clients to turn to the Internet
first to get information on their policies, obtain quotes, or submit claims. As
insurance companies begin to offer more information and services on the Internet,
employment in some occupations, such as insurance sales agent, could be
adversely affected.
Sales agents working in the property and casualty market, particularly in
auto insurance, will be most affected by increasing reliance on the Internet. Auto
policies are relatively straightforward and can be issued more easily without the
involvement of a live agent. Also, auto premiums tend to cost more per year than
do other types of policies, so people are more likely to shop around for the best
price. The Internet makes it easier to compare rates among companies.
Insurance companies will continue to face increased competition from
banks and securities firms entering the insurance markets. As more of these firms
begin to sell insurance policies, increasing numbers of insurance sales agents will
be employed in them, rather than in insurance companies. In order to stay
competitive, insurance companies have begun to expand their financial service
offerings or to establish partnerships with banks or brokerage firms.
Productivity gains caused by the greater use of computer software will
continue to limit the growth of certain jobs within the insurance industry. For
example, the use of underwriting software that automatically analyzes and rates
insurance applications will limit the employment growth of underwriters. Also,
computers linked directly to the databases of insurance carriers and other
organizations have made communications easier among sales agents, adjusters,
and insurance carriers, so that all have become much more productive.
Furthermore, efforts to contain costs have led to an increasing reliance on

28

customer service representatives to deal with the day-to-day processing of policies

and claims. In addition, the Internet has made insurance investigators more
productive by drastically reducing the amount of time it takes to perform
background checks and by allowing investigators to handle an increasing number
of cases, thus limiting their employment growth.
Sales agents and adjusters still are needed to meet face-to-face with clients,
many of whom prefer to talk directly with an agent, especially regarding
complicated policies. Opportunities will be best for sales agents who sell more
than one type of insurance or financial service. Adjusters will still be needed to
inspect damage and interview witnesses, and although the number of available
jobs for actuaries will be limited due to the small size of the occupation,
employment opportunities should be good as stringent qualifying requirements
resulting from the examination system limit the number of new entrants.

IMPACT OF BUDGET IN INSURANCE

The 2005-06 Budget has dampened the spirit of insurance companies.
Hardly any changes have been made in the general insurance sector. The change in
the tax structure may have some impact on the life insurers. With the removal of
the Section 88 relief there is not much for the insurance players to cheer for.
FDI hike in Insurance Sector:
The Finance Minister commended on the growth in the insurance sector,
there was no mention of the steps being taken for increasing FDI in insurance
sector. There is a dire need to attract more foreign capital in the sector. However it
seems that the Union Finance Ministry is looking at proposals to decline the FDI
limit from the Insurance Act, when it is amended. This move would empower any

29

future government to increase the FDI limit through an executive order without
taking the issue to the Parliament. Removal of Sec 88 tax relief: With the removal
of the Section 88 tax relief on life insurance products there would be a sever blow
on the life insurance companies. Removal of tax relief will have an adverse impact
on the flow of investments into life Continuation of Sec 10(10) (d): The
continuations of this section create sever blow for the insurance players. Here by
the life insurance companies for availing the optimum benefit under this section
need to change their strategy. Till now, life insurers were selling life insurance
products mostly on tax-benefit grounds. However, now they will have to sell
products with an investment pitch.
The investment limit in pension plans is unaltered at Rs 10,000 so these
plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowed for
investments/expenditures that could be claimed as a deduction from income. This
is likely to have an adverse impact on the overall growth of the sector. Pension
plans are the only Investment Avenue
where specific limits continue to apply.
BPO Industry in India- IT WILL HELP INSURANCE SECTOR BY WAY OF
1. Insurance Processing
Our insurance processing services provide specialized solutions to the
insurance sector and support critical business processes applicable to the
industry right from new business acquisition to policy maintenance to
claims processing.

30

INSURANCE SECTOR BY 2012

With an annual growth rate of 15-20% and the largest number of life
insurance policies in force, the potential of the Indian insurance industry is huge.
Total value of the Indian insurance market (2005-06) is estimated at Rs. 450
billion (US$10 billion). According to government sources, the insurance and
banking services' contribution to the country's gross domestic product (GDP) is
7.5% out of which the gross premium collection forms a significant part. The
funds available with the state-owned Life Insurance Corporation (LIC) for
investments are 8% of GDP. Till date, only 20% of the total insurable population
of India is covered under various life insurance schemes, the penetration rates of
health and other non-life insurances in India is also well below the international
level. These facts indicate the of immense growth potential of the insurance sector.
The year 1999 saw a revolution in the Indian insurance sector, as major structural
changes took place with the ending of government monopoly and the passage of
the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry
restrictions for private players and allowing foreign players to enter the market
with some limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in
an insurance company, a proposal to increase this limit to 49% is pending with the
government. Since opening up of the insurance sector in 1999, foreign investments
of Rs. 8.7 billion have poured into the Indian market and 21 private companies
have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have
enabled fledgling private insurance companies to sign up Indian customers faster
than anyone expected. Indians, who had always seen life insurance as a tax saving
31

device, are now suddenly turning to the private sector and snapping up the new
innovative products on offer.
The life insurance industry in India grew by an impressive 36%, with
premium income from new business at Rs. 253.43 billion during the fiscal year
2004-2005, braving stiff competition from private insurers. This report "Indian
Insurance Industry: New Avenues for Growth 2012", finds that the market share of
the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86
billion by selling 2.4 billion new policies in 2004-05. But this was still not enough
to arrest the fall in its market share, as private players grew by 129% to mop up
Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year
(2004-2005) compared to the previous one, its market share came down from
87.04 to 78.07%. The 14 private insurers increased their market share from about
13% to about 22% in a year's time. The figures for the first two months of the
fiscal year 2005-06 also speak of the growing share of the private insurers. The
share of LIC for this period has further come down to 75 percent, while the private
players have grabbed over 24 percent. There are presently 12 general insurance
companies with four public sector companies and eight private insurers. According
to estimates, private insurance companies collectively have a 10% share of the
non-life insurance market.
Though the focus of this market research report is on the potential growth
on the Indian Insurance Sector, it also talks about the market size, market
segmentation, and key developments in the market after 1999. The report gives an
instant overview of the Indian non-life insurance market, and covers fire, marine,
and other non-life insurance. The data is supplied in both graphical and tabular

32

format for ease of interpretation and analysis. This report also provides company
profiles of the major private insurance companies.
Now with real competition coming in with most of the global insurance
players setting footprints here, it is felt that the time for merger has come and to
enjoy the benefits if the size. It is to be sated that size does matter in insurance
business. All over the worlds mergers and acquisitions in the risk-underwriting
sector is common. The benefits if the four insurance companies merge will be
enormous. The merged entity will enjoy higher underwriting and risk retention
capacity; increase in reinsurance premium, reduction in reinsurance outflow,
healthy solvency margins, setting right the asset liability mismatch and reduction
in cost. The insurance market thus becomes a gambling place. Had the public
sector companies made into a single entity, perhaps the total premium of the four
public sector companies in the year 2003-04 would have gone up but 25 percent.
But the public sector alone is forced to underwrite the loss making motor third
party liability (TPL) insurance. The public insurance companies insured a loss of
Rs 1943 crore on this portfolio on just one year (03-04). The cumulative loss under
this portfolio is astronomical. The loss of profitable business in view of
undeserved competition among the public sector companies is hampering the
subsidization of social insurance including the motor TPL.
It is thus clear that it is good for the public sector companies to merge
immediately when they are still strong, lest a merger becomes inevitable later after
the independent public sector companies fail one after another. This does not bid
well for the public sector, nor fort he insuring public and not for the economic
development either. For a progress me require merger of strong public sector
companies. Else it would render public sector companies weak and destroy them.

33

CHAPTER III
COMPANY PROFILE
Tata AIG Life Insurance Company Limited is a joint venture between Tata
Group and American International Group, Inc. (AIG). Tata Group is one of the
oldest and leading business groups of India. Tata Group has had a long association
with India's insurance sector having been the largest insurance company in India
prior to the nationalization of insurance. The Late Sir Dorab Tata was the founder
Chairman of New India Assurance Co. Ltd., a group company incorporated way
back in 1919.
American International Group, Inc is the leading U.S. based international
insurance and financial services organization and the largest underwriter of
commercial and industrial insurance in the United States. AIG has one of the most
extensive life insurance networks in the world.
Tata-AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad
array of life insurance products to individuals, associations and businesses of all
sizes, with a wide variety of additional coverage to ensure our customers can
findinsuranceproducttomeettheirneeds.
Tata AIG is a joint venture of the Tata Group and American International
Group, Inc. (AIG).
THE TATA GROUP
The Tata Group is one of India's best-known industrial groups with an
estimated turnover of around US $14.25 billion (approximately 2.6% of India's

34

GDP). With more than 220,000 employees across 91 major companies, it is also
India's largest employer in the private sector. The Tata Group pioneered several
firsts in Indian industry firsts, including: India's first private sector steel mill, first
private sector power utility, first luxury hotel chain and first international airline,
amongst others. Recently, the Tata Group's pioneering spirit has been showcased
by companies such as Tata Consultancy Services (TCS), Asia's largest software
and services company, and Tata Motors, the first car maker in a developing
country to design and produce a car from the ground up.
The Tata Group stable of brands also includes many national and some
internationally renowned product and service brands, including Tata Indica, Tata
Indigo, Indigo Marina, Tata Safari, Tata Indicom, the Taj Group of Hotels (Luxury,
Business and Leisure), indiOne, Tata Tea, Tetley, Tata Salt, Tata Steelium, Tata
Shaktee, Tata Tiscon,

By combining ethical values with business acumen,

globalization with national interests and core businesses with emerging ones, the
Tata Group aims to be the largest and most respected global brand from India
whilst fulfilling its long-standing commitment to improving the quality of life of
its stakeholders
AIG :
American International Group, Inc. is the world's leading international
insurance and financial services organization, with operations in more than 130
countries and jurisdictions. AIG member companies serve commercial,
institutional and individual customers through the most extensive worldwide
property-casualty and life insurance networks of any insurer. In the United States,
AIG companies are the largest underwriters of commercial and industrial
insurance and AIG American General is a top-ranked insurer. AIG's global
businesses also include retirement services, financial services, and asset in asset
35

management for the individual and institutional markets, with specialized

investment management capabilities in equities, fixed income, alternative
investments and real estate. AIG's common stock is listed in the New York Stock
Exchange and ArcaEx, as well as the stock exchanges in London, Paris,
Switzerland and Tokyo.
Management
Trevor Bull Managing Director TATA AIG LIFE INSURANCE COMPANY
Mr. Dalip Verma, Managing Director, Tata AIG General Insurance
company. Mr. Trevor Bull joined Tata AIG Life as Managing Director in January
2006. Prior to this, Trevor was Senior Vice President and General Manager at
American International Assurance in Korea. Trevor has over 28 years of
experience in the life insurance industry and has spent considerable time working
in Japan and Britain. His experience covers an array of skills at various authority
levels including Director, Regional Executive, Senior Line Management and
Project Management. Additionally, Trevor has acquired keen insights into Unit
Linked, conventional life and health insurance/ reinsurance and all major products
& distribution channels.
Tata AIG Life Insurance Company adopts a new brand identity Anticipation,
innovation and infinity reflects "A new look at life"
Tata AIG Life's new brand identity
The new baseline represents 'A new look at life'

Anticipation of present and future requirements of the insured

Innovative and path breaking products that fulfils the anticipated

needs of the insured
36

Opening the upper and lower boundaries of the Tata AIG logo represents

Infinite space for product innovation

Product development will not be confined to definite boundaries

Launches a multimedia brand campaign to communicate the new identity.

India's premier private life insurance company, Tata AIG Life Insurance Company
Limited today announced the launch of its new brand logo and corporate baseline
-- A new look at life - simultaneously with a new multimedia brand campaign. The
act of opening the upper and lower borders of its logo aptly reinforces Tata AIG
Life's corporate ethos and philosophy of being an innovator. The company will
leverage its unique capability of anticipating the present and future needs of the
insurable population of India and will look beyond the regular realm while
designing its product offerings.

Announcing the new brand identity of Tata AIG Life Insurance Company
Limited, its managing director, Ian J. Watts said, "It gives me great pleasure in
announcing the new brand identity of Tata AIG Life Insurance Company - A new
look at life. We stand committed to our customers and also the Indian population
that even as Tata AIG Life is taking 'A new look at life', it will remain 'With you
always' and our product suite will be designed taking into consideration our
consumers present and future insurable and savings needs."
"The opening-up of the upper and lower boundaries of our logo endorses
our commitment that we will go beyond the usual boundaries to find solutions that
meet the present and future insurance and savings needs of the Indian customers
and will design products which are not hitherto available in India. Going forward,

37

'Anticipation' and 'Innovation' will be integral parts of our corporate philosophy

and ethos."
Tata AIG Life Insurance Company combines the strength and integrity of
the Tata Group with the international expertise and financial strength of the
member companies of AIG Inc- the leading U.S. based international insurance and
financial services organization.
On the backing of this strong foundation and keeping in mind the long-term
aspect of the insurance industry, Tata AIG Life commenced operations in India in
April 1, 2001, with its base line of 'With you always' signifying Tata AIG Life
would always be there to take care of the insurance and financial needsoftheir
customers.
Having established the same, the new corporate identity - A new look at life
- is the next logical step forward to the endorsement of the fact that it is walking
the talk of its commitment and will continue to offer path-breaking products to its
customers.
To support its new identity the company is launching a multimedia brand
campaign across television, press, outdoor, cinema and the Internet.
Over the past three years since the company commenced its operations in
India, Tata AIG Life Insurance Company has designed its insurance, pension and
superannuation products by anticipating the present and more importantly the
future savings and insurance requirements of the insurable population of this
country. Tata AIG Life has carved out a differentiated position in the Indian
insurance market and is a leader in the insurance sector for introducing innovative
insurance and pension products. These unique products have not been just the
building blocks for the company but have redefined the way insurance, savings
and pension needs are understood, keeping both the present and future needs of the
insured in mind.
38

In the past Tata AIG Life has introduced several innovative products in
India. Mahalife Gold - synonymous with the whole life market, and where it owns
over half the market. Heath First - where Tata AIG Life was the first off the block
with a unique health product, in fact the first from any life company. And Nirvana
- which continues to be the only guaranteed pension product in the market today.
The company has also launched unique juvenile endowment products and was the
first life insurance company to introduce simplified products including Special
Life.
Recently, Tata AIG Life also launched its ULIP - Invest Assure - which is a
unique unit linked insurance plan, which has the option to invest in five funds plus
the security of a life cover.
TATA-AIG products:
Tata AIG has a range of flexible insurance products to help you secure your
childrens financial future. Our products include:
AssurecreerBuilder
This money-back policy provides financial assistance at key stages of your
childs life, from education to their first steps into a new career.
Assure Educare
This first of its kind juvenile endowment policy is geared toward funding
your childs education. You can choose between Educare 18 and Educare 21,
depending on your childs needs.
Assure Money Saver
This savings plan provides you with cash payments in the form of survival
benefits at regular intervals to fund your childs needs at critical milestones or

39

support your financial obligations. You get the dual benefits of life insurance
coverage plus the flexibility of periodic payments.
Tata AIG Life Insurance Company Limited is a joint venture between Tata
Group and American International Group, This exceptional policy ensures that you
have a steady income and insurance coverage for life! Premiums are payable only
for the first 12 years. You can even use this to create a steady stream of post
retirement income. To learn more,
MahaLifeGold
This unique policy ensures that your child will have a steady income and
insurance coverage for life! Premiums are payable only for the first 15 years.
NirbhayLife
Tata AIG Life has a whole new participating plan which will surprise you
continually with its remarkable benefits. Premiums are payable only for the first 9
years, after which you will receive all your money and much more!
STARKID
An exceptional endowment policy that ensures you can afford to give your child
the very best for his career & marriage.
ADULTS:
Assure Lifeline
You get the luxury of high coverage but at an affordable cost. You also get
automatic renewals and the flexibility to choose the term of cover

40

Assure Money Saver

This plan offers you cash payments at the end of every 3 years during the
term of the policy. You also get the dual benefits of life insurance coverage plus
the flexibility of periodic payments.
Assure Security & Growth
This amazing endowment policy enables you keep your money safe and
have it grow. In the unfortunate event you die while under this cover, your
dependants will get the sum assured. However, if you outlive the term, you still get
the sum assured along with a whole range of bonuses
Assure Golden Years
This endowment policy gives you safety AND returns. In case of death,
your dependants get the sum assured otherwise your savings grow. If you live past
the term you still get that sum assured along with a whole host of bonuses.
Health Protector
The average cost for a major surgery or treatment in hospital is between
three to five lakh. Health Protector is the first product of its kind in India that
offers you protection in case ANYONE in your family has an accident or falls ill.
Life plus
This plan lets you win no matter what happens. Get your premiums back if
you outlive the term. Get sum assured in case of death by natural causes. Get
DOUBLE the sum assured in case of death by accidental causes.
41

MahaLife
This exceptional policy ensures that you have a steady income and
insurance coverage for life! Premiums are payable only for the first 12 years. You
can even use this to create a steady stream of post retirement income.
MahaLifeGold
This is the ideal planning vehicle for your retirement. It provides you a
steady income and insurance coverage for life! Premiums are payable only for the
first 15 years. You can even use this to cover future expenses of your children.
NirbhayLife
Tata AIG Life has a whole new participating plan which will surprise you
continually with its remarkable benefits. Premiums are payable only for the first 9
years, after which you will receive all your money and much more! To
ShubhLife
This plan provides you 100% life insurance protection and high returns on
your investment but the premiums you pay are among the lowest of any similar
endowment policy
Health First
Quality healthcare is incredibly expensive. You need a policy that covers all
contingencies including prolonged hospitalization, major surgery, critical illness,
post hospitalization fees and even the unfortunate event of your death.

42

Invest Assure
This highly flexible plan gives you full life cover AND high returns AND
the flexibility of deciding the Length of your life cover term, the amount of Cover
you receive & where the rest of your premium is invested
For Retirement:

Keep your capital safe and growing with Assure Golden Years.

Provide a stable, lifetime income for you and your family with MahaLife
Gold.

Give you the flexibility to choose when to retire and where to invest with
Nirvana.

Guarantee additions to your sum assured with Nirvana Plus.

Most popular products in TATA-AIG:

In 2004, the first year of its launch, Invest Assure accounted for 38 per cent of the
total premiums issued. Maha Life made up 30 per cent of the total number of
policies sold so far this year.
Health First and Health Protector were unique since these were the first healthrelated products introduced by a private life insurance company in India. These
two (products) take care of the entire gamut from hospitalization to surgery.
Nirvana Plus is a pension planning solution and MahaLife Gold has also been
received very well.
Tata AIG Life Insurance - winner of customer satisfaction
A recent survey conducted by the Voluntary Organization in Interest of
Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata
AIG Life) as the clear winner in terms of customer satisfaction in the life
43

insurance category. This is India's first-ever customer satisfaction study for the
insurance sector.
The survey also revealed that Tata AIG Life had a high recall as a reputed
brand name. The ability to provide innovative and customer-focused service such
as allowing the maximum grace period for premium payment has not only further
distinguished Tata AIG Life from other life insurance companies but also appealed
to consumers.
Commenting on the survey results, Trevor Bull, managing director, Tata
AIG Life Insurance Company, said, "The quest of the company has always been to
be the best at what we do rather than adopting a simplistic market share at all costs
approach. Achieving this VOICE recognition required huge effort from Tata AIG
Life team; however retaining the number one position will be tougher. Being
ranked the best in the life insurance category by an independent consumer group is
an encouraging and fitting manifestation of our successful completion of five years
of service in the insurance industry. We look forward to the challenges that lie
ahead and are confident of maintaining and improving further our current
standards of service and efficiency."
The survey, which was conducted across eight cities and covered around
1,250 life insurance customers, evaluated the different life insurance companies on
the parameters of tangibility, problem solving ability, reliability, responsiveness,
assurance and empathy. The objective of the survey was to understand and
measure overall customer satisfaction within the insurance sector.
The Voluntary Organization in Interest of Consumer Education (VOICE) is
a voluntary action group, whose objective is to protect and further the interests of
the consumer.

44

Tata AIG eyes 90% rise in premium income

(Business Standard June 6, 2006)
Tata AIG Life Insurance Company Ltd is expecting an 85-90 per cent growth in its
premium incoming 2006-07.
"We will be looking at an 85-90 per cent increase in total premium income.
Increase in the first year premium income (FPI) is expected to be around 70 per
cent this year," said Joydeep Roy, director, alternate channels/chief distribution
officer, Tata AIG

Life Insurance. The company had targeted 100 per cent

increase in premium income to more than Rs 800 crorein 2005-06.

During the first eight months of 2005-06, it recorded a 102 per cent year-on-year
growth in total premium income at Rs 678 crore whereas FPI grew by 79 per cent
at Rs351crores. The company was all set to launch around six products during the
current financial year.
"Two products are likely to be unit linked insurance product (ULIP), two
would be rural products and remaining two would be accident health product or
rider. We have already applied to the Insurance Regulatory and Development
Authority (IrDA)

fort heir approval. The company would shortly apply to the

IrDA for approval for another couple of products, he noted. Meanwhile, the
company is very comfortable with its exposure in capital market. "IRDA has
strong rules about investments in capital market. Currently, we are very
comfortable with our investments in the capital market. The company had firmed
up significant network expansion plans. The company would be opening 2025newofficesduring2006-07.

45

"Currently, we have 85 offices in cities. We will be adding 20-25 new

offices at strategic locations to cater to a large customer base. Among the states to
get new offices will be Madhya Pradesh, Rajasthan, TamilNadu. Tata AIG Life
will also be doubling its 'mobile vans' for reaching to Remote customers.

"The company has experienced tremendous response with its mobile vans
that are being used for selling products as well as collecting premiums. We are
planning to double the number of vans to eight vans during the year," added Roy.
Currently, 35-40 per cent of the company's business comes from banc assurance,
45 per cent form agencies and remaining from other channels including corporate
agents.
Tata-AIG simplifies claims processing

Tata AIG Life Insurance has simplified the claims processing system for
policyholders. The company's staff is visiting major hospitals and advising people
on how to expedite claims.
Tata AIG's customers can also call the 24-hour toll-free help line and get
immediate assistance and advice on the claims process. A special 24-hour help line
has also been set up.
Mr. Sunil Mehta, Country Head and Chief Executive, American
International Group (AIG), said Tata AIG had activated the Claims Catastrophe
Management Plan (CCMP) that was envisaged to meet claims under such
calamities.

46

Tata AIG Life Insurance appoints Vivek Sood as CFO

Tata group company, Tata AIG Life Insurance Company Limited (Tata AIG
Life), has announced the appointment of Vivek Sood as the Chief Financial
Officer (CFO) of the company.
Prior to this appointment, Sood was the Vice-President, Finance, at
Hutchison Essar for the southern region, a release issued here today stated.
Sood will provide guidance to the financial team at Tata AIG Life in managing and
taking financial decisions, as also responsible for formulating and managing the
financial strategy of the company.
Service tax effects on policy
TATA AIG life insurance start charging service tax from the policy holders
as renewal premium due paid or after June 5th 2006.
Service tax paid along with under section 80/80ccc and 80 current tax laws.
Service tax rate depend upon type of policy.
Segmentation of customers

Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad
array of life insurance products.

To suit individuals
Employees
Associations

Businesses of all sizes, with a wide variety of additional coverage to

ensure our customers can find an insurance product to meet their needs

Objectives
Goal finders
A unique that tool that helps us understand your goals and needs.
Helps you understand your current financial position

47

 Ensure recommendation that fits your needs and priorities.

Market share of TATA AIG
in the year of 2006 march the market share of the TATA AIG IS 3.09
COMPETITORS OF TATA-AIG

Main Competitors

Market share (%)

LIC

71.44

ICICI PRUDENTIAL

7.34

BIRLA SUN LIFE

3.01

BAJAJ ALLIANZ

7.56

HDFC STANDARD

2.86

48

CHAPTER IV
ANALYSIS OF THE STUDY
TABLE- 1
POLICY AND CATEGERY OF RESPONDENTS
TYPE
POLICY

OF
EMPLOYEES

BUSINESS
PEOPLE

OTHER
PEOPLE

HEALTH

21

29

CHIDRENS
EDUCATION

14

12

RETIREMENT
PLANNING

26

36

14

OTHER
POLICIES

11

15

12

TOTAL

72

92

49

36

CHART I
Inferences:
92 members of the business people preferred all the types of the policies.
So in the near future
most of the business people are potential
customers of the TATA AIG life insurance
company.
Second category of customers like employees (72) preferred both
retirement planning and
health policy because these type policies will
give tax benefits and life long returns to the
policy holder.
36 members of the respondents like rural people mostly preferred
retirement planning they want some monthly returns.

50

TABLE-2
AGE AND PREFERENCE OF POLICY
RETIREMEN OTHER
T PLANNING POLICIES

2O-30

CHILDREN
S
HEALTH
EDUCATIO
N
8
14

11

31-40

14

22

19

13

41-50

22

11

26

10

50
ABOVE

12

TOTAL

56

44

60

40

AGE

CHART - 2

51

Inferences:
o Above table shows that 56 members of the customers take health
policy, in that 56 included all ages of the customers .41-50 years of
age of the customers preferred health policy heavily .so these
customers are high net worth value customers of the TATA AIG
o 44 members of the customers preferred childrens education
policy .most of 31-40 years age of the customers preferred childrens
education policy.beacuse they are just entered in to the life and they
want to more investment and financial plans.
o 60 members of the respondents are preferred Retirement planning,
41-50 Middle Ages of the people preferred heavily, this type of
policy helpful in future needs and wants.
o 31-40 ages of the respondents are take other policies like invest
assure and Nirvana plus.

52

TABLE-3
MODE OF PREMIUM PAYMENT
MODE OF PREMIUM
PAYMENT
MONTHLY
QUATERLY
HALFYEARLY
YEARLY
TOTAL

NO
RESPONDENTS
43
63
42
52
200

OF

MODE OF PREMIUM PAYMENT

Inferences
43 respondents are satisfied with monthly mode of premium for the reason
that they felt that easy to pay premium.
63 of the respondents are satisfied with their quarterly yearly premium
payment
42 of the respondents are satisfied with their half yearly premium payment

53

 42 of the respondents are satisfied with their yearly premium payment

TABLE-4
OTHER COMPANY POLICIES OF THE TATA-AIG CUSTOMERS
DIFFERENT
HEALTH
COMPANIES

RETIREMENT CHILDRENS
PLANNING
EDUCATION

OTHERS

LIC

18

18

10

TATA AIG

21

22

14

15

12

12

12

66

46

27

BAJAJ
ALLIANZ
BIRLA
SUNLIFE
TOTAL

13

9
61

54

Inferences
61 members of the TATA AIG HEALTH policy customers taken other
company policies, most of the customers preferred LIC.
66 members of the TATA AIG RETIREMENT PLANNING customers
contain other company policies. They are also mostly invested in LIC
because they felt that it gives more security
compare other insurance
companies
46 members of the TATA AIG CHILDERNS EDUCATION
customers have other company policies.

policy

27 members of the TATA AIG policies different policy customers contain

other company

55

TABLE -5
REASONS FOR SELECTING TATA-AIG LIFE INSURANCE
REASONS

NO OF RESPONDENTS

Brand Name

98

Good
Relationship
Customers
More Returns

with 58
44

TOTAL

200

CHART- 5

56

Inferences
98 of the respondents are opting for TATA-AIG is to have good brand
name.
58 of the respondents are said to TATA-AIG maintain good relationship
with customer
44 of the respondents are said to be it gives good returns to their investment

57

TABLE-6
MODE OF RESPONSE ON PRODUCT DOUBTS RECEIVED
MODES OF RESPONSE
PHONE
PERSONAL INTERACTION
WEBSITES
TOTAL

NO OF RESPONDENTS
78
104
18
200

CHART - 6

Inferences
104 numbers of existing customers are clarifying their doubts regarding
policy and their mode of premium through personal interaction.
78 members of existing customers are clarify their doubts through phones
because they living in far away from the office.

58

 18 of the respondents are daily visit company websites and they will see
what are the happened in the company policies and clarify their doubts.
TABLE-7
COMPANY SERVICE LEVELS
DIFFERENT RANKS

NO OF RESPONDENTS

GOOD

102

AVERAGE

67

POOR

31

TOTAL

200

CHART - 7

Inferences
In this survey 102 numbers of respondents are said to be company service
levels are good like they provide on time training to newly joining of
advisors.

59

 In this survey 67 respondents are said to be company service levels are

average
In this survey 31 respondents are said to be company service levels are poor
TABLE -8
ADVISORS EXPLANATION REGARDING POLICY
NO OF RESPONDENTS
EXPLANATION
GOOD

69

SATISFIED

112

UN SATISFIED

21

TOTAL

200
CHART 8

Inferences
112 members of the of a TATA AIG existing customer are said to be they
are satisfied with advisor explanation. Advisors have enough knowledge
and skills regarding policy
69 members of TATA AIG of the existing customer are said Advisors
explanations are good.

60

 21 members of members of TATA AIG of the existing customer are said

Advisors explanations are poor. Because they are not provided exact
requirements of the customer
TABLE-9
TOTAL CUSTOMER SATISFACTION LEVELS
DIFFERENT RANKS
GOOD
AVERAGE
POOR
TOTAL

NO OF RESPONDENTS
103
69
28
200

CHART - 7

Inferences
In this survey 103 existing customers are satisfied regarding company
service levels advisors explanation and different policies offered by the
company.
69 members of the existing customers said to be company service levels
advisors explanation are Average
28 members of the existing customers said to be company service levels
advisors explanation are poor.
61

CHAPTER V
FINDINGS AND SUGGESTIONS

FINDINGS :
Most of the TATA AIG existing customers are aware of the all the products
offered by the company
With regard to occupation most of the respondents are business people
Most of the respondents preferred both retirement planning and health
protector policy because

health protector gives tax benefits .and

Retirement planning gives life long returns to the policy holders.

To protect their income after retirement most of the respondents preferred
to opt for the monthly income schemes.
most of the respondents aware of the insurance and its benefits
Most of the respondents felt that it is needed for the family.
with regarding to arrangement of cash for medical expenses, most of the
respondents prefer health protector
Most of the respondents are satisfied with company service levels advisors
explanation regarding policy

62

 As a whole total customer satisfaction is very in TATA AIG LIFE

INSURANC COMPANY.
SUGGESITONS :
Company should give more ads like hoardings , than only people should
aware of the company

Before a policy is sold all the details of the policy should be clearly
explained to the client so they should understand what the exact
requirement of the customers is, it will helps in avoiding misunderstanding
between customer and advisors.

Company should open online transaction facility so that the transaction

need not take so much of time

Company should train the advisors in the way of innovatively then all the
potential customers are converted in to policyholders

It is cleared from the data collected the majority of the people believe in
insurance therefore, the company may grab this opportunity in the near
future to sell their products.

63

BIBLILOGRAPHY
Website visited:
www .tata-aig.com
www.tata-aiglife.com
Www. the hindubusinessline
www.irdaindia.org
List of books and other supplementary material referred to:
Hindus market survey
On Life Insurance by M .Anderson, Buist M.Anderson]

64

ANNEXURE
QUESTIONNAIRE OF THE PROJECT
NAME:
SEX

MALE

FEMALE.

OCCUPATION
AGE
A) 20-30 years

b) 31-40 years

c) 41-50 years. d) 50 above.

1) Which type of policy did you take?

a) health insurance
b) children education
c) retirement planning
d) Any other product.
2)
TATA-

How much amount of policy did you take with respective to

AIG?
a) 50000.
b) 50000-100000
c) 100000 ABOVE.

3) How much amount of premium do you pay?

a) Below 10000
b) 10000 _15000
c 15000 above
4) Are you satisfied with the mode of premium payment?
a)
b)
c)
d)

Monthly
quarterly
half yearly
yearly

Why please specify .

5) Do you have any other life insurance policy apart from TATA-AIG?
If yes, with which insurance company.
a) icici prudential
b) Bajaj Allianz
c) Birla sun life insurance
d) Any other life insurance company.

65

e) no
6) Why did you opt for TATA- AIG Life Insurance Company?
a) brand name
b) Good relationship with customers
c) Get more returns.
d) Any other reasons
Please specify..
7) If you have any doubt regarding insurance service how do you receive the
response?
a) Phone
b) Personal interaction
c) Websites
d) Any other
8) How do you define the company service levels?
a) good
b) average
c) Poor.
9) Do you satisfy with the advisors explanation about our products?
a) Good
b) Satisfactory
c) Unsatisfactory
If no, please specify reasons for dissatisfaction. ..
d) no
10) Do you get any additional benefits from our company?
a) Incentives.
b) Gifts/ gift vouchers.
c) Conventions
d) Any other benefits
11) How do you define the rank of the customer satisfaction levels?
e) good
f) average
g) Poor.

66