General Management Project Report

On

“Perception of Indian Population about Insurance”

Submitted In Partial Fulfillment for the award of the degree of

Master of Management Studies(MMS)

(Under University of Mumbai)

Submitted By,

Jaiswal Saurabh Krishna

(Roll. No. 9052)

Under the guidance of

PROF. PAVAN BHADANG

2018-20

Swayam Siddhi College of Management and Research,Bhiwandi.

 DECLARATION

I, undersigned, am Mr./ Miss (Student’s Name) Jaiswal Saurabh, student of Swayam Siddhi
College of Management and Research, Bhiwandi hereby declare that the project entitled
“Perception of Indian Population about Insurance” is partial fulfilment for the requirement of
the degree of Master of Management Studies (MMS) is an authentic work and has not been
submitted to any other University/Institute for award of any degree/diploma.

Date: Name: Jaiswal Saurabh

Place: Bhiwandi Course: MMS-IV (2018-20)

Roll No: 9052

 ACKNOWLEDGEMENTS

No endeavor is complete without acknowledging those who have helped to make this report a
success. A sense of satisfaction can only be achieved after giving thanks to all people directly
and indirectly contribute to this project work. The project is a great source of learning and good
experience as it made me aware of professional culture and conducts that exists in an
organization. Inspiration and guidance are valuable in all aspects of life especially in an
academic field. It is my personal belief that no report is the result of only its author’s efforts.

I express my sincere thanks to my guider Prof. Pavan Bhadang without his supervision and
inspiration, I could not have completed my project. There guidance proved to be valuable in
solving many of my difficulties.

Last but not the least; I would like to express my sincere gratitude to my parents, teachers, and
friends for their support, co-operation and their prayers without which my project would not
have been completed.

Sincerely,

Jaiswal Saurabh

MMS (9052)
 CERTIFICATE

This is to certify that the Final Project Report entitled “Perception of Indian Population about
Insurance” submitted by MR. / MISS STUDENT’s NAME Jaiswal Saurabh k. (ROLL NO-
9052) as a partial fulfilment for the requirement of MMS course at Swayam Siddhi College of
Management and Research, Bhiwandi is carried out under my supervision and guidance. The
facts and figures are true to the best of my knowledge.

SIP Guide’s Name : Prof. Pavan Bhadang Prof. Dr Ginlianlal Buhril

Swayam Siddhi College of Management and Research, Director.
Bhiwandi.
Contents
CHAPTER 1:- INTRODUCTION......................................................................................................................6
Need for the Study..................................................................................................................................6
Importance Of study................................................................................................................................6
Scope of study.........................................................................................................................................7
Objective of Study...................................................................................................................................7
Limitation of Study..................................................................................................................................7
CHAPTER 2:- LITERATURE REVIEW...............................................................................................................8
CHAPTER 3:- RESEARCH METHODOLOGIES...............................................................................................15
CHAPTER 4:- INTRODUCTION TO INSURANCE...........................................................................................16
MEANING..............................................................................................................................................17
ADVANTAGES OF INSURANCE...............................................................................................................22
DISADVANTAGES OF INSURANCE..........................................................................................................25
TYPES OF INSURANCE............................................................................................................................27
FUNCTIONS OF INSURANCE...................................................................................................................32
CHAPTER 5:- CURRENT SCENARIO OF INSURANCE SECTOR.......................................................................35
CHAPTER 6 :- DATA ANALYSIS AND INTERPRETATION...............................................................................42
Findings.....................................................................................................................................................52
Suggestion.................................................................................................................................................53
Conclusion.................................................................................................................................................54
BIBLIOGRAPHY /WEBLIOGRAPHY..............................................................................................................55
CHAPTER 1:- INTRODUCTION

This project report on perspective of Indian population about insurance & its impact analysis & it
majorly covers primary as well as secondary information related to perception of Indian
population for insurance measurement & its effect on society & economy of the country. The
topics in the report includes: evolution, advantages-disadvantages of insurance, types, functions
swot analysis, current scenario & perception of population. The report was originally developed
to conduct a research & get practical exposure with general management to oblige the
requirement of Mumbai University. The core objective was to increase the capacity of learning
through practical observation, research etc.

Need for the Study

 Risk & uncertainties are invertible to human life. Insurance plays an extraordinary role to
reduce the risk that cannot be ignored as a whole. Thus it becomes necessary to know the
perception of the Indian population about the same.
 The research helps to enhance the knowledge about insurance & its types.
 Its shows the role of insurance in individual’s life & security.

Importance Of study

 There are various study conducted on insurance; but this study tries examine the
perception the Indian population about insurance & its role.
 The study can help the insurance companies to know the mindset of the target audience.
 It can aid to bring effectiveness in the service provided by meeting consumer
expectations
 The study help to gain customer satisfaction to insurance company.
Scope of study

 The research was conducted on the population from which majority were between the age
group18-35.
 The number of respondent was limited to 50.
 Majority of the respondents were from Maharashtra & Gujarat
 The research was done by deliberate sampling method.

Objective of Study
 To enhance the knowledge about insurance
 To learn about the different perception about insurance in India.
 To analyze the scope of insurance industry in India.
 To learn who can be the unexpected prospectus of insurance companies.
 Acknowledge the future trends in insurance sector.

Limitation of Study
 The research is based on limited respondent number to 50.
 The respondent resided in Maharashtra & Gujarat only thus the sample does not cover
entire India.
 It covers only basic heads about the insurance & does not include major titles of the
insurance.
 There is wide scope available for the further study.
CHAPTER 2:- LITERATURE REVIEW

1. Harold D. Skipper (2000) in his paper explains the terms liberalization and deregulation.
Liberalization means the process by which the government take actions to move towards
liberal markets. It denotes a reduction of government barriers to market access, especially
as relates to foreign insurers. A liberal insurance market is one which determines:-
 Who should be allowed to sell insurance?
 What products should be sold?
 How the products should be sold?
 At what price the products should be sold?

2. Titivate Boonyasai, Grace and Skipper (1999) in their study examined the effects of
liberalization and deregulation on the efficiency of life insurers in selected Asian life
insurance markets. The life insurance industries selected for examination are those of
Korea, Philippines, Taiwan and Thailand. Korea and Philippines undertook 16modest
liberalization and deregulation efforts during the decade of 1990’s, but Taiwan and
Thailand undertook no deregulation. The liberalization and deregulation of the Korean
and Philippine life insurance industries stimulated improvements in productivity and total
efficiency. The evidence suggests that liberalization and deregulation generated
impressive productivity growth for Philippine life insurers. Liberalization had little effect
on the productivity and efficiency of Taiwanese and Thai life insurance industries. The
life insurance industries in these countries regressed in terms of efficiency after
liberalization. Liberalization alone failed to stimulate productivity growth in Korea in
1989. But after partial deregulation in 1993, Korean life insurance industry witnessed
significant increase in productivity growth. They conclude that liberalization alone with a
restrictive regulatory regime is unlikely to yield the improvements. In a restrictive
regulatory environment, welfare gains will be minimal if deregulation does not closely
follow liberalization.
 3. Harold D. Skipper (2005) addresses the major issues and concerns relating to the
liberalization of the insurance markets from several perspectives. He sets out the role and
importance of government policy in insurance and points out that the government
intervention in the insurance market is essential but should be carefully targeted to
minimize undue interference. He also discusses the role of foreign insurers with
particular emphasis on the concerns that have historically been expressed about their
roles in national insurance markets of emerging economies and points out that such
insurers 17 should be expected to play an important role in market evolution and
development. He also presents a set of principles around which governments should craft
their regulation of insurance and suggests that for having a competitive and solvent
insurance market, insurance regulation should have the following traits namely,
 Adequacy
 Impartiality
 Minimal instructions
 Transparency
The lesson for the government is to craft laws and enforce regulations that promote more
transparent markets supported by fair competition. Competitive insurance market serves each
country’s interest. Governments that deny their citizens and business such markets lessen
consumer choice and hinder national economic development.

4. Mathur (2003) has the opinion that joint efforts need to be made by all insurance
operators to extend coverage to millions of insurable people who need insurance and
points out the need for promoting different distribution channels for expanding rural
insurance market. LIC has contributed immensely to the process of economic
development through its multi-dimensional activities and services over twelve core
policies which is a record for any life insurance company in the world.

5. Gupta and Chuganee (2001) in their article specify the major steps to be taken by the LIC
in order to compete with the new players. 18 The opening up of the insurance sector has
challenged the monopoly of the LIC and in order to withstand competition LIC has to
take steps in the areas of products, services and information technology. The excess
workforce in the LIC should be utilized in raising business volumes through skill
upgradation.
6. S.B Mathura (2002) mentions the challenges that LIC faces from new entrants having
sound background and high brand equity. He also expresses doubts about the ethics of
new players who may focus on those areas not covered by LIC. The development officers
of LIC must work carefully to ensure that the people are not weaned away from LIC.
7. Kundu (2003) in his article discusses the various issues in the insurance industry after the
entry of new players. India has a low insurance penetration of 1.95 percent. The saving
rate in India is 25 percent but only less than five percent is spent on insurance. The
market is witnessing a wide array of products from new players. The profile of the
consumer is also changing. People are looking for integrated financial solutions that can
offer stability of return along with total protection.

8. Kumar (2003) examines the various issues relating to insurance business in India like
liberalization, privatization, regulatory issues and Future possibilities. He points out the
importance of insurance in Promoting saving habits and providing safety to rural and
urban enterprises and generation of funds for infrastructure building. Foreign companies
are required in this vital sector. Even after liberalization, 19 nationalised players will
continue to hold strong market share positions but there will be enough business for new
entrants to be profitable.

9. P.S Palande, R.S. Shah and M.L. Lunawat (2003) identify the key transformations that
are going to exert a tremendous influence on the insurance industry. They point out that
non-life insurance is a barometer of industrial growth and life insurance is a barometer of
the saving habit of the people. At present there is a wide variety of products in both life
and non-life sectors. The LIC’s range includes around 60 products and general insurance
companies have a range of 150 products. They envisaged that the liberalization scene
would be marked by the following developments.

 The character of the industry will change in the wake of transition from a
controlled to a competition driven market.
 There will be new players. The foreign insurers will enter through the joint
venture route.
 The range of products and services offered will widen.
 The industry will be closely regulated.
 The public sector units will seriously have to set about preparing
themselves to face competition.

10. Sen (2006) analysed the Indian life insurance industry after the privatization of the
insurance market. The entry of private firms will raise both price competition and service
competition. The study concludes that there is a hint of movement towards a more
competitive regime but 20 there is a good level of competition among the private
companies to capture market share.
11. S. Krishnamurthy (2005) points out that the life insurance industry has shown extremely
satisfactory results in terms of premium income and new policies sold but a huge
potential still remains unexploited. Experience suggests that consumers still favor
insurance as a saving tool. There is a need to change the perception of Indian consumers
towards insurance and it is the responsibility of the distribution channel to advise and
educate consumers.

12. Geetanjali Mehlwal (2006) in her article describes the insurance market as it exists today,
its growth potential and the incentive to private insurers from world over. The study
suggests that after liberalization of the insurance industry in March 2000, there has been
consistent growth and the current potential premium income of the country is estimated at
$80 billion. India is seen as the sixth largest market in the world. In India 80 percent of
the population remains without life insurance and only 2.5 percent of the country’s
insurable population is currently insured. Though LIC has been in the country for a long
time, it did not tap much of the rural market. It mainly concentrated on endowment and
money back policies. The private insurance has made good progress despite the existence
of public sector players. As a result there is a decline in the new premium business of
LIC. Between April 2004 and February 2005, LIC’s first year premium dropped by 9.3
percent i.e. 77.87 percent from a market share of 87.22 percent in the preceding year. The
study points out that the insurance business is growing at the rate of 15-20 21 percent
annually. Insurance penetration has increased from 2.32 percent in 2000 to 2.88 percent
in 2003. Likewise insurance density has increased from Rs. 435.897 in 2000 to
Rs.722.092 in 2003. There has been an increase of 83 percent in the premium collection
during the three years following the enactment of the IRDA Act. The premium collected
by insurers, both life and non-life is estimated to be about Rs.25, 343 billion in the year
2004-2005. The average size of life insurance cover before privatization which was
around Rs.50, 000/- has now been risen to Rs.80, 000/-. Geetanjali Mehlwal also
mentions about insurance distribution and intermediaries. Insurance companies are
making new investments in information technology. Today there are alternate channels
like ban assurance, brokers, corporate agents and direct marketing through internet.
13. Aggarwal (2005) in his article deals with the insurance status of the poor in India.
Insurance is more concentrated in relatively financially stable urban areas but the
requirement for a cushion to absorb risk is greater among rural and urban poor.
Compared to developed countries23 the penetration of insurance is very poor in India.
Even after liberalization the poor and the needy find insurance a risky proposition with
their uncertain and irregular income. The male literacy rate in India in the year 2000 was
68.4 percent and the female literacy rate was only 45.4 percent. Thus, access is not
sufficient in rural areas. Health insurance is extremely limited in India. There is no
significant change in the availability of new health insurance products or in the volume of
business although a number of private insurance companies haveentered the field.
Agriculture is the mainstay of the rural people andtherefore products and reforms must be
designed after considering this segment of the population.

14. Shobhit and Sanjay Shukla (2005) conducted a study in Lucknow city and its adjoining
rural areas to expose the reasons for the failure of insurance players of private sector in
attaining a significant share in the rural market. The study revealed that there is a major
difference in the objectives and expectations between rural and urban policyholders.
Rural population showed high bias towards low premium and maximum risk coverage. In
rural areas private players have not achieved much success. The private players have not
been able to provide policies preferred by rural people. In urban areas, for the
conservative consumers insurance is a tax saving device. In urban areas consumers
belonging to the middle income group prefer policies of public sector players and only
high income group preferred private sector players. The study also revealed that in urban
areas the efficient customer service helped the 24 market penetration by private players.
The major reasons cited for the failure in the rural sector can be summarized as follows.
 Lack of popular appeal in marketing strategy
 High variation between services provided and consumers’ expectations
 High premiums
 Product differentiation and innovation are not in conformity with the rural
population
 Professional style of working has failed to generate confidence and goodwill as
rural population prefers personalized approach and that too in accordance with
the regional culture The above findings reveal that there should be a change in
the Products, marketing and service strategy of private players of
insurancesector.

15. A. Srujan (2005) in his article explores the current situation in theinsurance industry,
particularly in rural India. An attempt is made to examine the opportunities and threats in
rural insurance markets.
Opportunities
1. Gigantic population. India has a higher population growth rate.The rural population amounts
to seventy two percent and majority of them are left uncovered. This can be a major avenue for
the players in the insurance market.
2. Agriculture insurance. Agriculture is the major source of income for rural India. This segment
has vast potential which cannot be over looked.
3. Growth in the income level of the rural population. The rural market contributes upto fifty five
percent of the national GDP.
4. High saving habit. Rural people have high savings habits.
Insurance could be an alternate investment opportunity.
Threats
1. Uneven distribution of population. The Indian population isunevenly distributed. Agents may
not find it worthwhile to procure business when customers are scattered.
2. Low literacy levels
3. Rural employment condition
4. Low earnings
5. Traditional saving habits
It is the opportunities and not compulsions which would drive the old and new players to rural
India.
CHAPTER 3:- RESEARCH METHODOLOGIES

The research was carried by studding secondary data & primary data.
The primary data was collected by preparing questionnaire on goggle forms & having discussion
with the different people from insurance sector.

Secondary data was collected from various published & non published sources based on
insurance & related websites
CHAPTER 4:- INTRODUCTION TO INSURANCE
Human beings are exposed to different types of risks such as loss of property by fire, theft,
accident, untimely death of the earning persons, professional or business failure etc. Such risks
may cause a large scale financial losses. It is not possible to eliminate such risks but can be
reduced and or recovered. It is insurance which bears the risks and assures the recovery of the
financial losses so caused.

The concept of insurance may be illustrated with the help of the following example. Suppose
that, in a village there are 100 houses with the monetary value within the range of $400 to $60.
As the experience of the past, there is a probability of falling average 2 houses into fire each year

Every house is exposed to this risk and thus every family is likely to suffer from a loss of around
$50 each year. Therefore, all the houses may raise a common fund by collecting a certain amount
say $20 per annum per house/family so that the two householders who fall under fire can be
financially compensated.

Insurance is a means of compensating the probable losses caused by any uncertain events in
consideration to the payment of a certain fees called premium.
MEANING
Risk-transfer mechanism that ensures full or partial financial compensation for the loss or
damage caused by event(s) beyond the control of the insured party. Under an insurance contract,
a party (the insurer) indemnifies the other party (the insured) against a specified amount of loss,
occurring from specified eventualities within a specified period, provided a fee called premium is
paid. In general insurance, compensation is normally proportionate to the loss incurred, whereas
in life insurance usually a fixed sum is paid. Some types of insurance (such as product liability
insurance) are an essential component of risk management, and are mandatory in several
countries.

Insurance, however, provides protection only against tangible losses. It cannot ensure continuity
of business, market share, or customer confidence, and cannot provide knowledge, skills, or
resources to resume the operations after a disaster.

Insurance is an arrangement in which you pay money to a company, and they pay money to you
if something unpleasant happens to you, for example if your property is stolen or damaged, or if
you get a serious illness.

the act, system, or business of providing financial protection for property, life, health, etc, against
specified contingencies, such as death, loss, or damage, and involving payment of regular
premiums in return for a policy guaranteeing such protection
EVOLUTION OF INSURANCE IN INDIA

1818 saw the advent of life insurance business in India with the establishment of the Oriental
Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the
Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870
saw the enactment of the British Insurance Act and in the last three decades of the nineteenth
century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in
the Bombay Residency. This era, however, was dominated by foreign insurance offices which
did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and
London Globe Insurance and the Indian offices were up for hard competition from the foreign
companies.

In 1914, the Government of India started publishing returns of Insurance Companies in India.
The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life
business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to
collect statistical information about both life and non-life business transacted in India by Indian
and foreign insurers including provident insurance societies. In 1938, with a view to protecting
the interest of the Insurance public, the earlier legislation was consolidated and amended by the
Insurance Act, 1938 with comprehensive provisions for effective control over the activities of
insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a
large number of insurance companies and the level of competition was high. There were also
allegations of unfair trade practices. The Government of India, therefore, decided to nationalize
insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life
Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16
non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The
LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a
legacy of British occupation. General Insurance in India has its roots in the establishment of
Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian
Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of
general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of
India. The General Insurance Council framed a code of conduct for ensuring fair conduct and
sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also set up then.

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

This millennium has seen insurance come a full circle in a journey extending to nearly 200 years.
The process of re-opening of the sector had begun in the early 1990s and the last decade and
more has seen it been opened up substantially. In 1993, the Government set up a committee
under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations
for reforms in the insurance sector.The objective was to complement the reforms initiated in the
financial sector. The committee submitted its report in 1994 wherein , among other things, it
recommended that the private sector be permitted to enter the insurance industry. They stated
that foreign companies be allowed to enter by floating Indian companies, preferably a joint
venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in
April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance
customer satisfaction through increased consumer choice and lower premiums, while ensuring
the financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000
onwards framed various regulations ranging from registration of companies for carrying on
insurance business to protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

Today there are 31 general insurance companies including the ECGC and Agriculture Insurance
Corporation of India and 24 life insurance companies operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with
banking services, insurance services add about 7% to the country’s GDP. A well-developed and
evolved insurance sector is a boon for economic development as it provides long- term funds for
infrastructure development at the same time strengthening the risk taking ability of the country.
ADVANTAGES OF INSURANCE
1. Provides economic protections

Insurance provides economic and finanicial protection to the insured against the unexpected
losses in consideration of nominal amount called premium. It provides financial protection to the
nominee in case of the pre-matured death of insured. It also covers the loss of properties due to
theft, fire, accident and other natural calamities.

2. Shares risks

People are exposed to various kinds of risks and uncertainties which may cause large losses. It is
impossible to eliminate risks and uncertainties altogether but it can be reduced or shared.
Insurance is a co-operative device, which helps to share the risks among the insured. Thus, the
insurance company redeuces the risk of the insured in exchange for small premium.

3. Maintains standard of living

Insurance provides financial protection against an unexpected risk of losses due to which people
can maintain their living standard. The insurance company provides a safeguard in terms of
money to avoid the unfortunate financial crisis.

4. Encourages saving

An insured person pays the amount of premium in time as stated in the agreement which
encourages for developing a saving habit of persons. Hence, insurance is a means of encouraging
regular saving as it helps to reduce unnecessary expenses.

5. Eliminates dependency
Due to death or destruction of properties, the family suffers from unbearable and non-
compensational table losses. The insurance protects against those unbearable losses. The life
insurance policy gives full financial support to the dependent in case the death of the insured
which helps to eliminate the dependency of people.

6. Grants loan

An insured can get the facility of a loan from an insurance company or can take loan from other
financial institutions through the security of insurance policy. Thus, this provision of loan helps a
person can also meet the need of fund. Bank and financial institutions prefer the insured assets as
collateral for providing a loan.

7. Creates employment opportunities

As insurance has become business in the modern day business world, hundreds of entrepreneurs
and thousands of employees have been engaging in this line. Hence, by establishing and
developing insurance companies, it has provided employment opportunities to thousands of
people as per their qualification and calibre.

8. Promotes foreign trade

The growth of the international trade of the country has been greatly helped by shifting of risk to
insurance company. A ship sailing in the sea faces some miss-fortune. A fire breaks out and
burns to ashes all the merchandise of a business man. But insurance is one of the devices by
which these risks may be reduced or eliminated. So industrialists and exporter may devote their
full attention toward the promotion of business which may increase the export activities

9. Helps to operate business smoothly

A business gets financial compensation in case of loss or damage to the properties of the
business through insurance. An insurance policy taken for the employees increases their
motivation at work. Therefore, insurance plays a vital role to let the business run smoothly even
in the situation of unfavorable events.

10. Help to reduce inflation

The inflation means increase in price of goods or service. Inflation gives painful experienced to
the citizen so it should be control. To control inflation, the volume of money need to be reduce.
An insurance company takes the money from the people in the form of premium, which reduces
the volume of money in the market. Hence, it helps to control the inflation in the country.

11. Help to develop economy

Insurance companies collect premium through life or non life policies which are invested in
various development areas like trade and industry. Such investment helps to promote trade and
industry in the country. Ultimately, it helps for the economic development of the country.
DISADVANTAGES OF INSURANCE
Besides a number of benefits, insurance has also some limitations.

 Insurance leads to negligence as the insured feels that he/she can be compensated for any
loss or damage.
 Insurance companies do not make the compensation promptly on maturity of the policy
or for the financial losses as the expectation of the insured.
 It may lead to the crimes in the society as the beneficiaries of the policy may be tempted
to commit crimes to receive the insured amount.
 Although insurance encourages savings, it does not provide the facilities that are
provided by bank.

 It does not compensate all types of losses which caused baisness to insured by insurance
company.
 It takes more time to provide financial compensation because lengthy legal formalities.
 Although insurance encourages savings, it does not provide the facilities that are
provided by bank.
 It intentionally tries to compensate as less as possible to the sufferer with the aim of
maximizing profit rather than maximizing well-being of the insured.
 It may lead to the crimes in the society as the beneficiaries of the policy may be tempted
to commit crimes to receive the insured amount.
 Sometimes, the total amount of premium might be higher than the policy amount
receivable on maturity.
In order to understand the concept of insurance we should be familiar to the following
terms.

 Insured

The person or party who seeks protection against a particular risk and pays a certain amount in
consideration to the recovery of the financial loss is known as insured.

 Insurer

The party (i.e insurance company) which undertakes to protect the insured from the specified
risks and the loss so caused in consideration to a certain premium received from the insured is
known as insurer.

 Premium

It is the fees paid by the insured to the insurer as the consideration of the insurance contract for
the assurance of the recovery of financial loss so caused.

 Insured amount

It is the agreed financial value of the future loss caused by certain events. Insurance is made for
the recovery of this value.

 Insurance policy

It is the contract between the insured and the insurer containing the details of the terms and
conditions of a certain insurance.
TYPES OF INSURANCE
There are various types of insurance as the difference in the financial risks. Today we will
discuss common types of insurance.

1. What is Marine Insurance

Marine insurance is an agreement between the insurer and the insured by which the former
undertakes to indemnify the latter, in the manner they have agreed, the financial loss caused by a
certain sea perils in consideration to a certain premium paid periodically or in lump sum. It is
believed that it was the first developed form of insurance. In the ancient times, international trade
used to be done mainly through sea routes and the sea routes were subject to various risks like
collision of a ship with rocks or other ships, attack by sea pirates etc. Such risks were attached
both to the ship and cargo. Hence, the marine insurance was felt necessary to be secured from the
loss of ship, cargo etc. In course of time other types of insurance were also developed gradually.

 There are mainly three components (types) of marine insurance viz, cargo insurance, hull
insurance and freight insurance.
 Cargo insurance is the insurance of the goods loaded into the ship for delivery tot he
party authorized.
 Hull insurance refers to the insurance of the full body of the ship against the probable loss
caused by any specified sea perils during a particular journey or for a certain period of
time.
 Freight insurance refers to the insurance of the probable loss of freight charges for the
non delivery of goods by means of any specified sea perils.

2. What is Life Insurance

Life insurance came into existence after the development of the marine insurance. The first life
insurers were the marine insurers who started issuing life insurance policies on the life of the
merchants, ship captains and the crew of the ship sailing along with the goods.
Every human beings wants the financial security of his/her life on one hand and the financial
security of his dependent after his death on the other. So it is a contract to recover the financial
uncertainty of the human life in some extent from business valuation method. It is not a contract
of indemnity like other insurance. Hence, life insurance may be defined as the insurance by
which the insurer undertakes to pay the fixed sum of money on the happening of some events
against the receipt of the premium. Thus life insurance contains the elements of security as well
as investment.

There are commonly four types of life insurance, I have briefly introduced below.

 Whole life policy

It refers to the insurance policy made for the whole life of the insured. In this policy, the insured
has to pay the premium throughout his life or up to certain years usually up to the retirement age
and the insurer compensates the specified amount to the nominee or dependent after the death of
the insured.

 Endowment policy

It is the policy which is made for a fixed period of time say, 15, 20 and 25 years etc. In this
policy, the insured has to pay a certain premium up to the specified period and sum insured is
receivable to the insured on the maturity date or to his nominee or dependent on his death
whichever is earlier. It is done for the financial security of the insured at the old age or to his
dependent after his death.

 Term policy

It is such a policy, which is made for a dependent only on the death of the policy holder. If
he/she remains survived till the specified period the insurer will not be liable to pay the sum. It is
neither saving nor investment.

 Multipurpose policy

It is the one, which covers several benefits through a single policy such as, old age benefit,
retirement age benefit, income assurance benefit, dependent protection benefit etc. against the
payment of a certain premium.
 3. What is Fire Insurance

Fire insurance is a measure, which provides security against the risk of fire. It was initiated from
England when London city was caught by fire devastation in 1666 A.D. Fire insurance is a
contract between the insurer and insured by which, the former undertakes to indemnify the latter
the financial loss caused by fire in consideration to a certain premium paid periodically or in
lump sum. In this policy, the insured must prove that the loss is caused by fire and that must be
unintentional accident case. It is generally made by the owners of cinema house, business
premises, residential house etc.

4. What are the Miscellaneous Insurance

There are many other types of insurance policies for different financial risks.

 Motor insurance

The insurance which is made to compensate the loss of the vehicles by means of the pre decided
events which may be caused by accident or other causes is known as motor insurance.

 Burglary/theft insurance

The insurance which is made for getting the compensation of the losses of property caused by
dacoit, burglary or theft that must not be by negligence of the insured is called burglary
insurance.

 Credit insurance

It is the insurance in which a person or business firm is assured by the insurer to compensate the
loss incurred due to the insolvency of the debtor in consideration to the payment of a certain
premium.

 Personal accident insurance

It is the insurance, which provides safety to the insured against the risk of disability due to
accident against the payment of a certain premium.
  Health insurance

It is the insurance under which the insured is paid with a sum of money to cover his/her
hospitalization and medical expenses in case of health loss against the payment of a certain
premium.

 Aviation insurance

The insurance, which is made to compensate the financial loss caused by aviation risks and
accidents is known as aviation insurance.
FUNCTIONS OF INSURANCE
The function of insurance may vary with its nature and types. It means the functions of fire or
marine insurance may differ from that of life insurance etc. Today I am going to discuss some
common function of the insurance.

1. Providing financial losses

Insurance provides assurance for the compensation of pre-decided and accidental financial losses
against the premium paid by the insured.

2. Reducing financial losses

Human beings are exposed to different kinds of risks in their personal as well as business life.
Such risks may cause great financial loss. Insurance acts as a mechanism to reduce or eliminate
the financial loss due to various risks by forecasting the chances of such happenings and
suggesting for their controlling measures.

3. Mobilization of capital

Insurance accumulates fund in terms of insurance premium from the parties willing to get
secured from the financial losses. Compensation is made to the insured who are actually suffered
and productive sectors. Hence, insurance accumulates fun and mobilized into different areas.

4. Maintaining Financial stability

Risks and uncertainties create instability in the financial sector. Insurance companies help to
maintain financial stability by assuring for the compensation of the losses caused by various risks
and thus, promotes the performance efficiency, which leads to financial stability.
SWOT ANALYSIS OF INSURANCE INDUSTRY IN INDIA

STRENGTHS:

 Premium rates are increasing and so are commissions.

 The variety of products is increasing.
 Prospects expect more services from their brokers.
 Growing economy with strong market dynamics
 Vast population as prospective consumers
 Democratic government with regulatory
 Framework familiar to western corporations
 Less risk of slowdown of economy compared to
 Other emerging markets

WEAKNESS:

 Insurance companies are often slow to respond to changing needs.

 There is an increasing trend of financial weakness among the companies.
 There are more competitors for agencies to compete with banks and Internet players.
 Less supportive political and bureaucratic regulatory environment
 Dominance of state-owned insurers in market
 Low non-life penetration rate and low life density compared to world

OPPORTUNITIES

 The ability to cross sell financial services is barely being tapped.

 Technology is improving to the point that paperless transactions are available.
 The client’s increasing need for an “insurance consultant” can open new ways to service
the client and generate income.
 One billion populations can bring enormous opportunities as it has long-term potential as
it will increase insurance users.
  Rising 'middle class', and an elite group of extremely wealthy Indians are also seems as
business opportunities.
 Several economic forces may change the mind of government to handover the ownership
of major dominant insurers. Increase in FDI limit to 49%

THREATS

 The increasing cost and need for insurance might hit a point where a backlash will occur.
 Government regulations on issues like health care, mold and terrorism can quickly
change the direction of insurance. Increasing expenses and lower profit margins will hit
hard on the smaller agencies and insurance companies.
 Increasing expenses and lower profit margins will hit hard on the smaller agencies and
insurance companies.
 The political environment is not conducive to constructive change or sound economic
management.
 The dominance of entrenched players makes it possible that the industry will stagnate.
 The legal framework, bureaucracy and financial infrastructure worsen the insurance
business environment.
CHAPTER 5:- CURRENT SCENARIO OF INSURANCE SECTOR

Global integration of financial markets resulted from de-regulating measures, technological

information explosion and financial innovations. Liberalization and Globalization have allowed
the entry of foreign players in the Insurance sector. With the entry of private and foreign players
in the Insurance business, people have got a lot of options to choose from. Radical changes are
taking place in customer profile due to the changing life style and social perception, resulting in
erosion of brand loyalty. To survive, the focus of the modern insurers shifted to a customer-
centric relationship. The paper focuses the current position of insurance industry.

Liberalization and Privatization

India's economic development made it a most lucrative Insurance market in the world. Before the
year 1999, there was monopoly state run LIC transacting life business and the General Insurance
Corporation of India with its four Subsidiaries transacting the rest. In the wake of reform process
and passing Insurance Regulatory and Development Authority (IRDA) Act through Indian
parliament in 1999, Indian Insurance was opened for private companies.

Liberalization on the Insurance sectors has allowed the foreign players to enter the market with
their Indian partners. Most of the foreign Insurers have joined within the local market. India
offers immense possibilities to foreign Insurers since it is the world's most populous country
having over a billion people.

Insurance industry had ten and six entrants in life and non-life sector respectively in the year
2000-2001. The industry again saw two and three entrants in the life and non-life business
respectively in the year 2001-2002. One additional entrant was made both in the life and in non-
life business in 2004 and 2005 respectively. At present there are fourteen companies each in Life
and General Insurance. The Funds earlier generated by the state owned insurers have been
diversified with other new insurers. We should wait and see how the new players are going to
boost up our economy.

Competition

Private and Foreign entrants in the Insurance Industry made others difficult to retain their
market. Higher customer aspirations lead to new expectations and compel him to move towards
the insurer who provides him the best service in time. It becomes less viable for them even to
maintain the functional networks or competitive standards and services. To survive in the
Industry they analyse, the emerging requirements of the policyholders / insurers and they are in
the forefront in providing essential services and introducing novel products. Thereby they
become niche specialists, who provide the right service to the right person in right time.

Information Technology

Insurers are the earlier adopters of technology. Because of the Information revolution, customers
are free to choose from a wide range of new and innovative products. The Insurance companies
are utilizing the Information technology applications for better customer service, cost reduction,
new product design and development and many more.

New technology gives the policyholders / insured better, wider and faster access to products and
services. The impact of Information Technology in Insurance business is being felt at an
accelerating pace. In the initial years IT was used more to execute back office functions like
maintenance of accounts, reconciling broker accounts, client processing etc. With the advent of
"database concepts", these functions are better integrated in an administrative efficiency.

The real evolution is however emerged out of Internet boom. The Internet has provided brand
new distribution channels to the Insurers. The technology has enabled the Insurer to innovate
new products, provide better customer service and deeper and wider insurance coverage to them.
At present, Insurance companies are giving customers a distinct claim id to track claims on-line,
entertaining on-line enrollment, eligibility review, financial reporting, and billing and electronic
fund transfer to its benefit clan customers.

Product Innovations

Insurers are continuously innovating new products based on forward-looking models. They have
developed new products addressing the new challenges in society and products to address the
hazards from new environmental issues. Companies will need to constantly innovate in terms of
product development to meet ever-changing consumer needs. Understanding the customer better
will enable Insurance companies to design appropriate products, determine price correctly and to
increase profitability. Since a single policy cannot meet all the Insurance objectives, one should
have a portfolio of policies covering all the needs. Product development is made possible by
integrating actuarial, rating, claims and illustration systems. At present, the Life Insurers are
concentrating on the pension schemes and the Non-Life Insurers on many innovative schemes of
various realms and thereby enriching their market share. Moreover, with increased
commoditization of insurance products, brand building is going to play a vital role.
Distribution Network

While companies have been successful in product innovation, most of them are still grapping
with right mix of Distribution Channels for capturing maximum market share to build brand
equity, building strong and effective customer relationships and cost effective customer service.
While the traditional channel of tied up advisors or agents would be the chief distribution
channel, insurer should innovate and find new methods of delivering the products to customers.
Corporate agency, brokerage, Banc assurance, e-insurance, cooperative societies and panchayats
are some of the channels, which can be tapped by the insurers to reach the appropriate market
segments. Now days, the urban masses are tapped with the new techniques provided by
Information Technology through Internet. Rural masses are attracted by the consultative
approach adopted by the Insurers. Moreover, they attract the customers through telephone and
mobile also.

Customer Education and Services

Insurance is a unique service industry. The key industry drivers are related to life style issues in
terms of perceiving insurance as a savings instrument rather than for risk cover, need based
selling, quality of service and customers awareness.

In the present competitive scenario, a key differentiator is the professional customer service in
terms of quality of advice on product choice along with policy servicing. Servicing focus is on
enhancing the customer's experience and maximizing his convenience. This calls the effective
CRM system, which eventually creates sustainable competitive advantage and enables to build
long lasting relationship.
MODERN MARKETING APPROACH

Marketing strategies for insurance in the emerging scenario could be understood in terms of the
following steps:

Having done market research and finalizing on segmentation, targeting and positioning the
strategy would focus on the marketing mix namely, Product, Price, Place and Promotion. While
determining the implementation methodology, the four characteristics viz. Intangibility,
Inseparability, Perish ability and Variability gives rise to certain unique requirements that
deserve careful attention while formulating the marketing strategy for insurance. After
implementation, the insurers should concentrate on the effective control that would enhance their
business.

In India Insurance is sold and not bought. The agents / Advisors by using various strategies sell
the product by convincing the customers. Moreover, they push Policies with the highest premium
to pocket a higher commission. The consultative approach to selling is the modern approach,
which helps customers and prospects to buy. A consultant makes calls and sells just like any
other sales person. The difference is in their attitude, their approach and their commitment. Here,
the customer is seen as a person to be served and not a person to be sold. It helps the purchaser to
make an intelligent decision. The four-step process includes:

 Need discovery
 Selection of the product
 Need satisfaction presentation, and
 Serving the sale
This approach to selling their products requires understanding of concepts and principles
borrowed from the fields of psychology, communications, and sociology and needs a lot of
personal commitments and self – discipline from the seller.

The commitments referred are:

 Finding and understanding the needs of the customers.

 Partnering with the customers.
 Helping the customers to achieve his business and other objectives by the purchase of the
product or service.
 Believing that your products / services are a great fit with your customer's needs, and
 Believing in yourself and your ability to help the customers in solving their problems.
CHAPTER 6 :- DATA ANALYSIS AND INTERPRETATION

Gender

Interpretation: The responses shows that majority of the respondents were female.
 1. Please tick your occupation from following?

Interpretation: the survey has a majority of the respondent who are having job as a occy=upation
followed by student. While 24% were self-employed & few of them were others.
 2. What are your perception for insurance from the following?

Interpretation: the survey show that the respondents finds insurance beneficial. While there are
still some who feel that insurance does not have much importance. Thus, it could be interpreted
that the job seekers & self-employed find insurance beneficial while student are the one who
don’t feel it important.
 3. What attract you to purchase insurance policies?

Interpretation: majority of the respondent are attracted towards insurance because of the security
provided by the insurance company. While some ate attracted due to extra benefits derived from
it.
 4. Why you feel insurance is rational?

Interpretation: the survey shows that insurance is rational because it covers the risk. While there
are some prefer insurance for covering the risk against family or to protect family.at the same
time there were few respondent who preferred insurance for the tax benefit.
 5. According to you which of the following are more likely periodicity of policy?

Interpretation: the survey shows that the periodicity of – are more preferred in India. While there
are many who finds the periodicity of years & 15-25 years beneficial.
 6. Policies & plans offered by insurance company in India are relevant & attractive?

Interpretation: majority of the respondent found that the polices & plans of insurance are not
always attractive & relevant & many a times they are to attractive.
 7. Kindly tick your veiw from the following about the statement "premium paid are low as
compared to benifits derived

Interpretation: 56% of the respondent disagreed to the statement that premium are less than
benefit derived. At the same time there were few who agreed to the statement.
 8. Are you satisfied with the overall services provided by insurance companies in India?

Interpretation: the surveys shows that Indian people are satisfied with the services provided by
the insurance companies.
 9. Rate service provided by insurance companies in india.

Interpretation: majority of the respondent rated services of insurance as 3 & 4.while many of
them rated it 2.
Findings

 Insurance is generally preferred by the people having their income. While student do not find
insurance useful.
 Respondent found insurance services are beneficial.
 Benefits & security are the tool to attract the people towards insurance services.
 People purchase insurance policies to cover risk & protect family from uncertainties. While
there are some who purchase insurance to get tax benefits.
 The periodicity of 5-15 are more preferred for insurance in India.
 Majority of the respondent were confused with the relevancy & attractive of the insurance
policies provided by the insurance companies.
 The survey showed that people of India do not fell that premium are less than the benefit
derived.
 Overall review is that the insurance services are satisfactory
Suggestion

 Insurance sector should to make some new policies relevant to students. So as to attract
them to purchase insurance.
 The need of modification in premium & benefits need to done.
 The policies provided can be more relevant & attractive.
 Insurance sector is satisfactory in India but still has a scope of improvement.
Conclusion

The following conclusion can be drawn from the following

 The insurance sector had a divesting growth since evolution.

 There is a need to review the policies as respondent found it less relevant & attractive.
 The overall survey showed that the respondent are satisfied but still there is scope for
improvement.
BIBLIOGRAPHY /WEBLIOGRAPHY
www.nios.ac.in/media/documents/VocInsServices/m2--f2.
www.businessdictionary.com/definition/insurance.html
https://dictionary.cambridge.org/dictionary/english/insurance
https://en.oxforddictionaries.com/definition/insurance