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CHAPTER-3

RESEARCH DESIGN

3.1 Introduction:

Life Insurance is service industry and the product marketed is

intangible in nature. It is more of a promise that is redeemed at a

future date upon the happening of the event, i.e. maturity or early

death of the life assured during the currency of the policy. Unlike

the marketing of a tangible product, the marketing of life insurance

is complicated and involves ingenuity, tenacity and trust worthiness

on the part of the sales men. Further the lack of insurance

awareness in the rural hinter lands, the scattering of rural markets,

inaccessibility, regional diversities, language barriers etc make things

complicated for designing marketing tools and techniques. The

marketing of life insurance involve understanding these markets,

generating awareness of life insurance, creating demand for the

products, designing suitable products according to the specific

needs, positioning of the products for specific needs, sale of these

products through trustworthy agents, suitable pricing mechanism,

after sales service, repeat sales etc. It also includes innovative

distributive mechanism, innovative product design, suitable and

sensitive advertisement appealing to the rural folk. The companies,

while formulating the marketing policy, need to keep in mind the

social responsibility and the necessity to cover all those who are

insurable. At the same time the objectives - minimizing cost and

maximizing the profit - can not be ignored.

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3.2 Significance of the study:

Life Insurance in the rural areas is gaining lot of importance

and significance since this alone can ensure a risk free climate and

ensure the holistic development of rural areas. When the liabilities

are protected, the burden of liabilities does not pass on to the

members of the bereaved families and an element of trust and

security pervades among the rural population. The study of rural

insurance market and marketing management of life insurance

products is significant because of certain challenges in marketing

and deficiencies observed in marketing the products.

The following are the loopholes or lacunae, which lead to the need

for intensive study of the marketing aspect of life insurance

products.

 Inadequacy of exclusive rural marketing techniques.

 Low life insurance awareness.

 Inadequate need based products.

 Lack of proper reach.

 Low customer service.

 Lack of low priced, low commission oriented products with

suitable riders.

 Inadequacy in promoting pension products in rural areas.

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 Inability of private players in creating confidence and trust

among the rural customers.

 Lack of adequate training to agents with reference rural strata,

rural needs and necessities.

 Inadequate appreciation of social marketing by the private

players.

Among the limitations, as cited above, almost all of them are

controllable provided the companies take them up in right direction.

In other words, the marketing design addressing the above

limitations will certainly help in wide spread coverage of insurance

and the day is not far off when all the insurable people are insured

and stay secure, come what may be the risks associated with life.

Thus the objectives of study are summarized as follows:

3.3 Objectives of study:

Objective 1: To study the rural customer vis-à-vis the life insurance

under the following sub- objectives:

 1.1. To study the awareness levels of rural people with regard

to life insurance and their perceptions of private companies

with regard to safety aspects.

 1.2. To study the expectations of the rural customers with

regard to type of products and frequency of payment of

premiums.
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 1.3. To study the factors that influence customer satisfaction

in rural areas.

 1.4. To study whether the life insurance is equally sought after

by both genders in rural areas.

 1.5. To study the factors that influences the purchase

decisions of rural customers with reference to life insurance.

Objective2: To study the marketing techniques of life insurance

companies in rural areas under the following sub-objectives:

 2.1. To study the knowledge levels of the agents and the

motivational factors for the agents in selling rural policies.

 2.2. To study the effectiveness of advertisement and other

promotional activities of life insurance companies

 2.3. To study whether the life insurance companies really show

interest in rural areas.

 2.4. To study the pattern of life insurance canvassing in rural

areas.

 2.5. To study the utilization of IT initiatives of the life

insurance companies by the customers.

 2.6. To study the awareness of government subsidized

schemes of life insurance and their popularity in rural areas.

 2.7. To study the rural centric marketing techniques adopted

by the life insurance companies in rural areas.

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Objective 3: To suggest suitable rural centric marketing

management techniques to the life insurance companies for wider

rural coverage.

3.4 Sources of data and sampling procedure:

The population of the study consists of the customers of two

rural districts of Karnataka. A cluster sampling technique is used to

select areas. Further a simple random technique is used to select

250 respondents each from Kolar rural and Bangalore rural villages

out of these clusters. Thus a total of 500 customers are contacted

through personal meeting and obtained the questionnaires. Since the

insurance branch offices of Kolar rural and Bangalore (rural) register

life insurance proposals brought across the country and even from

NRIs (Non Resident Indians) by the agents, it is difficult to obtain the

business statistics by way of secondary data exclusively for the

districts of Kolar and Bangalore rural from the life insurance branch

offices of Bangalore and Kolar. The secondary data is also not

available in terms of village wise rural penetration. We can not also

get data as to which household of which village has life insurance

coverage since the insurance companies do not possesses village

wise statistics. The modus operandi in the offices is to notify 1 or 2

for rural and urban proposals at the time of inwarding and

registering the proposals. Even the annual IRDA reports do not

throw any light as to the number of rural agents for each company

and the village wise statistics of the individual insurance company.

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IRDA simply stipulates certain percentage of business to be done by

the companies every year which is shown in Section 1.24 of

chapter-1. Further no insurer is willing to part with business

statistics for strategic reasons. The only link to ascertain the

individual village wise household insurance is the agent.

Owing to these limitations, the scope is confined to primary

data of the policy holders provided by all the agents who are

operating in the rural areas of Bangalore rural and Kolar rural. A

macro analysis of secondary data for the country as a whole is taken

to ascertain the gap in insurance coverage and study the current

marketing techniques vis-à-vis expectations for the research study.

The population of the study also includes the agents of LIC of

India and the insurance consultants of 4 private players of the

referred two districts of Karnataka. A total of 158 LIC rural agents

and 42 agents of 4 private players are contacted for obtaining the

responses to the questionnaires. Since the research design is one of

exploratory or formulative and intended to aim at discovery of ideas

and insights, the questionnaire from experienced persons in the

industry, viz, agents is felt necessary to study the rural life insurance

market. The scope is limited to the agents of LIC of India and four

private players since the market share of these five companies is

more than 95% as seen from the secondary data (table 4.13). Further

this is due the fact that other insurers have no agents in these two

rural districts.

3.5 Rationale of the study:

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As rural security is vital for the growth of the economy, the

most serious problem confronting the rural security is inadequate life

insurance coverage and inadequate coverage of all their liabilities.

Inclusive growth demands inclusive insurance coverage for a tension

free life. Creating assets without the provision of an insurance

umbrella prove to be a futile exercise in the long run. Lack of market

research with regard to specific life insurance needs and lack of

societal marketing have inhibited the growth of life insurance

penetration in the rural areas.

The present study aims at studying the rural life insurance

market in all angles – rural aspirations and expectations, the

insurance awareness, present marketing techniques, the deficiencies

in the light of low levels of rural penetration and offering some

suggestions for improvement in profitability of the companies

coupled with wider rural coverage.

3.6 Limitations of the study:

 The results obtained are based on the information provided by

the customers and agents of life insurance products at the

time of survey.

 The area covered is representative and not exhaustive due to

time and financial constraints.

 As it is not possible to cover the entire population of

customers, a cluster sampling method of population is adopted

to select the clusters and questionnaires are distributed and

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responses are collected from 250 Bangalore rural district and

250 Kolar rural district customers. They are selected by simple

random sampling to represent the whole population of these

two rural districts. The procedure is given in detail at the

subsequent section.

 The secondary data related to the rural areas of these 2

districts is not exhaustive since no insurance company is

willing to part with strategic business data and further the

business figures of these 2 district branch offices include the

business brought by the agents from all over India and even

from abroad from the NRIs.

 No insurance company has at present district specific

marketing policy and hence the research is confined to

secondary data at macro level and the primary data collected

from customers and agents from the two districts.

3.7 Methodology:

Materials and methods which are used in conducting the study

are presented under the following headings:

 Research location.

 Research design.

 Sampling design.

 Collection of data.

 Analysis of data.
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3.8 Research location:

Life Insurance marketing in rural areas is spread through out

the country extending more than the six lakh villages. The social

security and life insurance needs are felt in all these villages. All

these villages fall under the category of either ‗pure rural‘ or ‗semi

urban‘. Two such districts of Karnataka, namely, Kolar (pure rural)

and Bangalore rural district (rural and semi urban characteristics)

are selected for the study.

The survey for doing this research was conducted in these 2

districts of Karnataka viz, Kolar rural and Bangalore rural districts.

The offices of all private insurance companies are located in

Bangalore and hence Bangalore rural district is selected. For

selecting the other district, the following criteria are considered:

 Net Domestic product of the district.

 Exposure to all private players.

 Contribution of primary sector,

The rationale for selecting Kolar and Bangalore (rural) being

their proximity to the metro city, Bangalore where the branches of all

private life insurance companies are present and the customers are

exposed to all private players in one way or other.

There are 2 other districts viz, Mysore and Tumkur which are

also of same distance to the Bangalore Metro. These 2 districts

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however are not selected as they have more urban characteristics.

While the villages in Kolar are 2828, the villages under Tumkur and

Mysore are 2452 and 1593 only as per census, 2001. While the

population of Kolar town as per 2001 census is 1,13,211, the

populations of TumkurTown and MysoreTown are 2,48,592 and

7,42,261 respectively. Hence it is concluded that Kolar has more

rural features than the other proximate districts to Metro, viz,

Tumkur and Mysore. Since the research is aimed at studying the

aspirations of the rural people vis-à-vis the marketing techniques,

Kolar is preferred in place of Tumkur and Mysore.

Due to the presence of large number of players with in the

radius of around 200 kms, it gives an excellent opportunity for data

collection from rural perspective for the Kolar district. The data

related to Kolar, Mysore and Tumkur can be found from the following

table 3.1.

Table-3.1: Table showing the basic data related to the districts

proximate to Bangalore.
Population of Contribution of
Per capita
the district primary sector to
Net
head Net Domestic
District name Domestic
quarters as product of the
Product (In
per 2001 district ( in lakhs
rupees)
census of rupees)
Kolar 1,13,211 138961 16992
Tumkur 2,48,592 124190 17038
Mysore 7,42,261 121380 24383
Bangalore (rural) 132716 27188
Source: 2001 Census data and Directorate of Economics& Statistics, Bangalore.
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Analysis of table 3.1:

The percentage contribution of primary sector to NDP for the districts

of Kolar, Tumkur, Mysore and Bangalore rural districts are 26.86,

24.08, 23.46 and 25.65 respectively. Obviously Kolar rural district is

selected for survey.

The map of Karnataka is shown (figure 3.1) to have an idea of the

districts proximate to Bangalore city where all private life insurers

have offices.
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3.9 Specific research design:

The present research is intended to study the rural life

insurance market and the rural centric marketing techniques and

the expectations of the rural customers which are specified in

objectives (1.25). The research design selected is, therefore,

‗exploratory‘ or ‗formulative‘ research and the major emphasis is on

the discovery of ideas and insights. A critical pre requisite to this

study is to know the marketing strategies which is the domain of the

top management and may not be revealed officially. Since the

researcher himself is a person from the life insurance industry for

nearly 3 decades and having worked in 2 major life insurers and

having seen the techniques from inside the offices, the personal

observation over the years at work situation is brought in for the

study. The reliance on the observation is only to the extent of

ensuring the objectivity of the data gathered and is not central to the

study. The known details are explained and deficiencies are identified

to suggest suitable suggestions at the end of the thesis. Still, since

the marketing techniques are dynamic and ever changing and are

the domain of the top management, the research design is aimed at

to see what is there than to predict, to interpret what is distinct and

visible rather than to visualize and finally suggest viable marketing

techniques for wider rural coverage.

The objectives of the study are made use of to formulate

hypothesis and primary data is utilized to check the hypotheses. The

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works of other writers on insurance also provided insights for

formulating hypotheses.

3.10 Hypotheses for study:

Based on the objectives of the study and the points emerged

from the survey of literature, the following hypotheses are made for

testing:

For studying the awareness levels of rural people with

regard to life insurance and their perception of private

companies with regard to safety aspects:

 Majority of the customers believe that SBI Life Insurance

Company is a government company.

 The rural policy holders perceive that investment in private life

insurance companies is safe.

 ‗IRDA is considered as a guaranteeing authority of investments

in the minds of rural people‘.

For studying the expectations of the rural customers with

regard to type of products and frequency of payment of

premiums:

 Direct sale strategy with cheaper premiums is preferred in

rural areas.

 People in rural areas prefer insurance coverage on liabilities.

 People in rural areas prefer pension plans.

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 ‗The daily pygmy collection of premium is inversely

proportional to yearly income‘.

For studying the rural centric marketing management

techniques adopted by the life insurance companies and also the

deficiencies vis-à-vis expectations of the customers.

 The existing rural policies of different companies are need

based.

 ‗Life insurance agents are influenced by extra rewards for

promoting rural policies‘.

 Life Insurance companies are really interested in rural

business‘.

 ‗Satisfaction of customer influences repeat business‘.

 ‗Group insurance is preferred than the individual business by

the agents for rural people‘.

 ‗Life insurance awareness has an effect on the business

volumes of companies‘.

 ‗The caste/ religion of the agent has effect on sale of insurance

policies.‘

3.11 Sampling design:

For collecting the responses from the customers, ‗cluster

Sampling‘ technique followed by simple random sampling is adopted

to ensure the representation of the data for the whole population.

‗Cluster sampling means random selection of sampling units

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consisting of population elements. Then from each selecting unit, a

sample of population elements is drawn by either simple random

selection or stratified random selection‘ (Methodology of Research in

Social Sciences by O.R.Krishnaswami and M.Ranganatham, page no

130).

The district of Kolar has 5 taluks and Bangalore rural has 4

taluks. The total rural population of each taluk happens to be the

first cluster. A set of villages having a population of 20000 together is

presumed as second cluster. The contiguity of villages from North

West point to South East point happens to be the criterion as was

done by the Census, 2001. Thus in Bangalore we have 31 sub

clusters - 6, 9, 7 and 9 respectively in four taluks of Bangalore (rural)

namely, Nelamangala, Doddaballapur, Devanahalli and Hosakote. In

Kolar rural we have 48 sub clusters - 8, 11, 11, 9 and 9 respectively

in five taluks of Kolar, namely, Srinivasapur, Kolar, Bangarpet,

Mulabagal and Malur.

After identifying the number of sub clusters in each taluk, a

methodical approach is adopted to collect the questionnaires. As the

research is intended to collect data from the populations who have

insurance policies, the researcher collected the data of the agents

available in each sub cluster for ensuring and identifying the people

who have insurance policies. Since the agent is the only source of

information for giving the details of policy holders, the researcher

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took the details of agents of these sub clusters from the local offices

of the selected 5 life insurance companies.

The researcher with prior appointment of the identified agents,

visited the cluster head quarters (of a total population of around

20,000 each) to know the details of the customers who have policies

from the records of the agents. The urban business of the agent is

excluded and the rural insurance details are taken in the following

manner.

 Name and village of the policy holder.

 The category to which he belongs –

1. Landless agricultural laborers.

2. Farmers who own lands.

3. Salaried professionals such as teachers, doctors, nurses,

anganwadi workers and such other people.

4. Artisans, petty shop owners, hoteliers, cobblers, potters,

bidi workers, weavers etc.

5. People engaged in service sector like agents (post and

insurance), pigmy collectors, vegetable dealers, suppliers

and distributors of products.

Thus the total number of policy holders from a cluster of

20,000 populations is listed out in the second phase. In the third

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phase a set of 500 policy holders is identified as a sub cluster. Each

policy is serial numbered and one out of 500 policy holders is

selected by way of lottery from a list of consecutive 500 policy

holders with the help of computer to ensure that all policyholders in

the population have an equal chance of being selected. The typical

method followed for sub clusters under different taluks of Bangalore

rural is as per table 3.2, table 3.3, table 3.4 and table 3.5.

Table-3.2: Method of selection of respondents from Nelamangala

taluk, Bangalore rural.

Number of rural
Total number of

questionnaires
administered.
policies sold
households
Number of

Number of

Number of

Number of
Insurance

insurance
persons
villages

Name of the Agents

cluster centre

Heggunda 36 4253 19801 14 4247 8

Honnenahalli 25 4124 20017 20 6200 12
Manne 40 4202 20094 8 2020 4
Isuvanahalli 38 4220 20864 6 4200 8
Bardi 27 4100 19602 8 2730 5
Basavanahalli 23 4939 20763 18 4800 9
Goravanahalli 28 5520 28452 16 5600 11
Total 217 31358 149593 90 27997 57

Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.

Table-3.3: Method of selection of respondents from

Doddaballapur taluk, Bangalore rural.
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Total number of

rural insurance

questionnaires
administered.
policies sold
households
Number of

Number of

Number of

Number of

Number of
insurance
persons
villages

agents
Name of the
cluster centre

Gundumgere 37 4548 20355 20 4400 8

S.Nagenahalli 41 3990 20089 6 1500 3
Melekote 28 4318 21420 22 5200 10
Vaddarahalli 25 4335 21479 22 6100 12
Neralaghatta 22 4090 19516 18 3600 7
Basettihalli 19 4264 20004 18 5450 11
Sakkaragollahalli 38 4236 20192 12 2400 5
Hulikunte 25 4333 20705 18 4730 9
Dodda Tumkur 38 4151 26794 12 3720 7
Total 273 39459 190554 74 37100 72
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.

Table-3.4:Method of selection of respondents from Devanahalli

taluk, Bangalore rural.
Number of rural
Total number of

questionnaires
administered.
policies sold
households
Number of

Number of

Number of

Number of
insurance

insurance
persons
villages

agents

Name of the
cluster centre

Koira 34 4101 20375 12 4200 8

Alurdoddanahalli 28 3803 20113 8 2180 4
Venkatagirikota 37 4457 20135 14 5490 11
Dandiganahalli 27 3611 20358 6 1700 3
Avathi 31 4101 20275 16 6670 13
Sadahalli 36 4203 20355 6 2650 5
Channahalli 33 925 10769 2 1240 2
Total 217 31358 149593 90 24130 49
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.
Table-3.5 Method of selection of respondents from Hosakote
taluk, Bangalore rural.
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Total number of

rural insurance

questionnaires
administered.
policies sold
households
Number of

Number of

Number of

Number of

Number of
insurance
persons
villages

agents
Name of the
cluster centre

Gullahalli 38 3986 19843 8 3700 7

Begur 36 3801 20580 10 4610 9

Nandagudi 22 4137 20600 14 5930 12

Yelachahalli 35 4255 20859 12 2100 4

Nidagatta 33 3930 20475 8 3490 7

Kattigenahalli 36 3715 20530 12 6690 13

Kumbalahalli 33 4012 20376 5 2450 5

Mallasandra 27 4090 20759 4 2900 6

Medimallasandra 34 3030 22085 14 4400 9

Total 273 39459 190554 74 36270 72

Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.
The same procedure of clustering villages with a near or equal

population 20,000 with one sub cluster is followed for Kolar rural

also and the typical method followed for different taluks of Kolar are

under table 3.6, table 3.7, table 3.8, table 3.9 and 3.10.
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Table-3.6: Method of selection of respondents from Kolar taluk,

Kolar rural district.

rural insurance

questionnaires
administered.
Total number

policies sold
households
Number of

Number of

Number of

Number of

Number of
of persons

insurance
villages

agents
Name of the
cluster centre

Channasandra 32 3941 20686 9 2220 4

Madivala 24 4115 21174 14 4270 8
Narasapura 25 3902 20398 9 3240 6
Arabikothnur 39 3929 20731 11 3700 7
Vokkaleri 22 3063 20203 8 3200 6
Thoti 26 3827 20873 12 4740 9
Muduvadi 33 3802 20089 6 1740 3
Seepura 35 3701 20362 7 2240 4
Kodikannur 29 3627 20050 4 1200 2
Dimbachamanahalli 31 3842 20961 4 2150 4
Abbani 31 5018 23159 3 2100 4
Total 327 42767 228686 87 30800 57
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.

Table-3.7: Method of selection of respondents from Bangarpet

taluk, Kolar rural district.
rural insurance

questionnaires
administered.
Total number

policies sold
households
Number of

Number of

Number of

Number of

Number of
of persons

insurance
villages

agents

Name of the
cluster centre

Sulikunte 28 3930 20310 12 2730 5

Hulibele 30 4600 21716 14 4150 8
Yelesandra 23 3928 20452 12 3200 6
Kamasamudra 42 3890 20766 8 3730 7
Hunukunda 25 3673 20180 8 3170 6
Badamakanahalli 24 3823 20090 16 4690 9
Sundrapalya 30 3807 20350 8 1740 3
Mahadevapura 31 3720 20470 12 1700 3
Kyasamballi 32 3615 20236 14 730 1
Kempapura 28 3840 20312 12 2100 4
Sanganahalli 30 4455 20768 10 2675 5
Total 323 43281 225650 126 30615 57
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.
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Table-3.8: Method of selection of respondents from Malur taluk,

Kolar rural district.

questionnaires
administered.
Total number

policies sold
households
Number of

Number of

Number of

Number of

Number of
of persons

insurance

insurance
villages

agents

rural
Name of the
cluster centre

Shivarapatna 30 3769 20267 10 2110 4

Doddakadathur 36 4003 20492 10 4240 8
Mylandanahalli 40 4041 20969 5 3230 6
Lakkur 22 3977 20078 16 3670 7
Chalahanahalli 27 4196 20313 5 2800 6
Rajenahalli 49 3688 20294 3 4730 9
Dinnahalli 44 3804 20212 3 1730 3
Tekal 38 3869 20380 9 1520 3
Banahalli 19 2747 16189 3 720 1
Total 305 34094 179194 64 24750 47
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.

Table-3.9: Method of selection of respondents from

Srinivasapura taluk, Kolar rural district.
Total number of

rural insurance

questionnaires
administered.
policies sold
households
Number of

Number of

Number of

Number of

Number of
insurance
persons
villages

agents

Name of the
cluster centre

Mudimadugu 38 4311 20028 10 3990 8

Addagal 41 5281 20839 4 1700 3
Lakshmipura 50 4257 20567 4 2200 4
Thadigol 46 3542 20080 4 3100 6
J.Thimmasandra 31 3924 20094 12 3230 6
Chaldiganahalli 37 3779 20431 10 4150 8
Muthakapalli 35 3739 19793 10 2160 4
Lakshmisagara. 16 3126 19930 6 1600 3
Total 294 31959 161762 60 22130 42
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.
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Table-3.10: Method of selection of respondents from Mulabagal

taluk, Kolar rural district.

rural insurance

questionnaires
administered.
Total number

policies sold
households
Number of

Number of

Number of

Number of

Number of
of persons

insurance
villages

agents
Name of the
cluster Centre

Amblical 28 3801 20738 8 2200 4

V.Guttahalli 39 4157 20956 14 4120 8
Kannasandra 42 4058 21437 10 3100 6
Byadarahalli 25 4175 20764 15 3590 7
Gudipalli 30 3986 20731 13 3240 6
Mustoor 52 3199 20647 16 4600 9
Gummakal 45 4121 20533 7 1600 3
Thimmaravatha
nahalli 34 4185 20646 6 1700 3
Thayalur 19 3806 20817 3 650 1
Total 314 35488 187269 92 24800 47
Source: Village population figures totaled up after taking the figures from the
District Population Booklet, Series 30 (Directorate of Census
Operations, Karnataka, 2001) and agents‘ statistics from the local
insurance branches.
Having selected and identified the respondents, the researcher

contacted the customers and got the responses to the questionnaires

filled in.

This process started in Jan, 08 and ended by June, 09. The

responses for both Kolar and Bangalore are collected following the

method as stated above.

Responses from agents:

The responses from the agents were collected administering

questionnaire to 158 agents of LIC of India and 42 agents from 4 big

private players viz., ICICI Life Insurance Company, Bajaj Allianz Life
 109

Insurance Company, SBI Life Insurance Company and Reliance Life

Insurance Company from their respective offices.

For the purpose of collecting the responses from the agents,

the researcher visited the offices of the 5 private companies operating

in the selected districts and took stock of the number of agents

operating from these rural districts and the number of policies. The

total number of agents from Bangalore rural are 328 (259 from LIC

+69 from others) and similarly for Kolar rural the agents are 429(328

from LIC + 101 from others). Since the researcher is interested to

collect responses to the questionnaires from 100 agents each from

the 2 districts, roughly 30% of Bangalore rural and 24% Kolar rural

are randomly selected by simple random sampling from each life

insurance stream. The details for Bangalore and Kolar are found in

Table 3.11 and 3.12 as follows:

Table-3.11: Showing market share of different companies in

terms of individual policies as at 31.03.09(Bangalore rural).
Number of Number of
Name of the Number of agents agents selected
company policies operating for for survey from
the company. the 5 insurers.
LIC of India 100397 259 80
ICICI Life 7530 20 6
Bajaj Alliannz Life 7488 17 5
SBI Life 3300 11 3
Reliance Life 6782 21 6
Total 125497 328 100
Source: Secondary data.
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Table-3.12: Showing market share of different companies in

terms of individual policies as at 31.03.09( Kolar rural)
Number of
Number of
agents
Name of the Number of agents
selected for
company policies operating for
survey from
the company.
the 5 insurers.
LIC of India 99800 328 78
ICICI Life 10640 36 8
Bajaj Allianz Life 9310 27 6
SBI Life 5320 14 3
Reliance Life 8025 24 5
Total 133095 429 100
Source: Secondary data.

Even though the market share of LIC is around 65 % and that

of private players 35% in terms of business volumes based on
premium income, the market shares as per individual policies for
LIC and other private players are in the ratio of 81:19 as at March,09
as per secondary data at macro level. (Source: Statistics- Life
Insurance, IRDA Journal, May, 09). The relevant details as per
secondary data for these five companies can be found in table 3.13.

Table-3.13: Showing market share of different companies in

terms of individual policies and premium incomes as at 31.03.09
at macro level.
Market Premium Market
Number
share in underwritten share in
Name of the of
terms of in crores as terms of
company. individual
individual at premium
policies
policies. 31/03/2009 income
LIC of India 35891332 81.06 36690 65
ICICI Life 2637675 5.95 6812 12
Bajaj Allianz Life 2589943 5.85 4491 8
SBI Life 937493 2.12 5386 9
Reliance Life 2219273 5.02 3514 6
Total 44275716 100 56893 100
Source: Secondary data- IRDA Journal, May,2009.

While preparing the above table, data relating to other players

is ignored as their business is negligible. It is a coincidence that the

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percentage of agents selected for the study from both the districts

correspond to their company‘s market share very closely. The method

used for selection of agents is by assigning individual numbers to all

agents and selecting the required agents as per the last column of

table 3.11 and table 3.12 by way of lottery. The broad composition

was thus maintained as above. This simple random sampling

ensured each element an equal chance of being selected and hence

broadly represent the whole population.

Apart from the above companies, the other private players have

no agents in these two rural districts and hence their market share

from the agents operating from Bangalore Metro could not be

considered for the purpose of survey.

The responses were collected from the individual agents by

meeting them personally during the period June, 09 to September,

09.

Two questionnaires were prepared-- one meant for customers

and the other for insurance consultants/ agents. The questionnaire

for policy holders and agents are exhibited in Appendix 1 and 2

respectively.

3.12 Data collection-primary data:

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The primary data is collected through questionnaires. The

questionnaires contain both open ended and close ended questions

that are simple and easy to understand. The questionnaires

administered to customers have close ended questions which include

49 dichotomous (Yes or No answers) and multiple choice questions to

the tune of 5 (selecting from 5 given alternative answers). Open

ended questions are asked where diverse information is required

giving scope for the customers to air their views. 62 exclusive

questions were administered and they were asked to give their

response on a scale of 1 to 5. The questions are designed to elicit the

following information:

 Questions aimed at eliciting personal details like family income,

educational back ground, sex, family type ( unitary/joint), family

size etc.

 Questions aimed at eliciting life insurance awareness levels like

whether they know the existence of private players, whether

investing in private companies is safe as per their perception,

whether they recognize SBI Life Insurance Company as a

government owned company, knowledge of IRDA, what prompted

them to take policy ( agent pressure/ savings/ to meet future

expenses/ to meet contingencies) etc.

 Questions aimed at eliciting information with regard to

satisfaction/ dissatisfaction levels like whether they received

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policy bonds and premium notices on time, whether claims are

settled on time, whether they have gone for repeat sales etc.

 Questions aimed at eliciting the life insurance product knowledge

like – whether the group plans are cheaper than individual plans,

whether money back policies are costlier than endowment plans,

whether premium payment through Internet is known to them

etc.

 Questions aimed at eliciting information with regard to the needs

and expectations of the customers like -- whether they prefer

daily collection of premium, whether they require loan protected

policies for all liabilities, whether they prefer direct sale of policies

to avoid commission to agents, whether they prefer single family

policy for the entire family, whether they prefer sale of policies to

earn commission, whether they prefer to take policies from post

office and banks etc.

The primary data is also collected from the population

consisting of agents. This ‗Experience Survey‘ from the people

having experience with the problem under study is felt necessary

since the objective of the research is to obtain insight in to the new

ideas relating to the research problem.

The questions are both open ended (seven) and close ended

(fourteen). Questions are also asked with regard to their suggestions

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for spreading the message of life insurance in rural areas. The

questions are designed to elicit the following information:

 The questions aimed at eliciting information whether in their view

the different life insurance companies have plans to suit the

needs of rural people, whether there is a necessity to design cost

effective policies, whether the life insurance companies, in their

opinion, are really interested in social security etc.

 The questions aimed at eliciting information as to the real

difficulties in selling the rural policies, what type of policies they

suggest for rural folk, suggestions for popularizing insurance

plans in rural areas etc.

 The questions aimed at eliciting information whether the

customers, in their view, believe that the investment in private

companies are safe, whether the investment decisions are swayed

by caste and religious considerations, whether opinion makers

have any say in investment decisions etc.

 The questions aimed at eliciting information whether they expect

more incentives/ commissions for popularizing insurance in rural

areas.

3.13 Data collection- secondary data:

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The secondary data is collected through the annual reports of

LIC of India and other life insurance companies, the journals of

IRDA, the internal magazine of LIC, viz., Yogakshema, the

publications of Information & Broad Casting dept, viz, Yojana, India

Year Books, the web sites of LIC of India and other private

companies, the lead bank reports of the selected districts under

study etc. The brochures, pamphlets and advertisement material are

collected from across the branches of different life insurance

companies.

3.14 Tools of analysis of data:

To test the reliability of the questionnaire meant for the

customers, the questionnaire was initially administered to 30 policy

holders each for Bangalore and Kolar respondents as a pilot study.

On analyzing the answers of the customers, suitable changes are

effected to the main questionnaire and administered to 250

respondents each of Bangalore and Kolar rural areas.After collecting

the 250 responses for the questionnaires, the reliability of the

instrument is tested using Cronbach's Alpha test.Cronbach's Alpha

determines the internal consistency or average correlation of items in

a survey instrument to gauge its reliability. This test was found

necessary to know whether the same set of items would elicit the

same responses if the same questions are recast and re-administered

to the same respondents. Since the value of Alpha is reasonably high

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and at around 0.70, it can be assumed that the reliability aspect is

taken care off.

Similarly the questionnaire meant for agents is administered to

20 LIC and 10 private players in each district as a pilot study and

the questionnaire is suitably revised on hearing the responses of the

agents. After revising the questionnaire, it was made use of for

getting the responses from 200 agents from both districts.

The primary data was analyzed by applying various statistical

tools and the statistical software. SPSS (Statistical Package for Social

Sciences) was applied for better analysis of data. The questions

relating to awareness levels vis-à-vis the educational background,

the questions relating to investment vis-à-vis family income, the

questions relating to customer satisfaction vis-à-vis repeat sales, the

questions relating to income vis-à-vis the option of premium payment

modes, the perception of customers with regard to private companies

and a host of other things are cross tabulated to analyze the

awareness levels, expectations, customer satisfaction etc.

The satisfaction levels and repeat sales, the income variations

and investment decisions, the awareness levels and investment

decisions etc are analyzed through Chi Square Test.

A factor analysis is done to identify the major factors and their

relative significance of rural life insurance market.

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3.15 Secondary data analysis:

The secondary data collected is analyzed by tabulation,

histograms, pie charts, line diagrams and graphs.

3.16 Scheme of chapters:

Chapter 1 is an introduction to the topic of study. A brief

history of life insurance with reference to world perspective, the

origin and growth of the industry, the Indian life insurance industry

growth story, the entry of private players, the extent of rural

penetration, the IRDA regulations, the importance of insurance to

the customers & the society, the key terms of life insurance, the

object of the thesis, the research location and rational etc are

covered.

In Chapter 2, a review of literature is presented. An overall

view of the existing literature on the subject based on relevant

articles and materials from various sources of references is made and

the objectives for the present study established.

The third chapter is on ‗Research Design‘. The scope of study,

the specific research design, and the methods of collecting the

primary and secondary data, the limitations of study and the

statistical tools used to study the data are presented. The rational of

the questions designed in the questionnaire for agents and

customers, the basis of analysis of the answers with reference to the

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object of study, the statistical tools used for the study are presented

in this chapter.

In chapter 4, the secondary data from various sources is

presented to analyze the nature of rural life insurance market, the

strengths and weaknesses of channels of distribution, the gap

between the potential available and the potential tapped with regard

to life insurance rural penetration. The chapter also analyzed the

following:

 The current rural centric marketing techniques adopted by the

life insurance players.

 The lacunae/deficiencies in the existing marketing techniques.

In Chapter 5, the results obtained by way of statistical analysis

are presented. In this chapter an attempt is made to test the

hypotheses with the help primary data collected from the

respondents. Various bar diagrams, line charts, pie diagrams and

histograms are presented to analyze the data. The results are also

made use of to test the hypotheses with Chi Square tests either to

reject or accept the null hypotheses. A factor analysis is also

conducted to find out the major factors of influence in rural

insurance market.

In this chapter, the analysis and their results on the following

aspects are brought out:

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 The awareness levels of the rural people with regard to life

insurance and their perceptions about the private companies.

 The expectations of the rural customers.

 The knowledge levels of field force as perceived by the

customers.

 The deficiencies in marketing techniques vis-à-vis the

expectations of the rural people.

Chapter 6 deals with a discussion of the results presented. The

chapter also deals with suggestions and recommendations to

insurance companies for the objective of wider rural coverage.

The thesis comes to an end with bibliography with related

literature like books and journals and appendices containing the

questionnaires and the articles published during the period of the

research.