A PROJECT REPORT ON

A STUDY OF CONSUMER BEHAVIOUR IN

RELATION TO INSURANCE PRODUCTS IN IDBI

A Summer Training Project Report Submitted in partial fulfilment of the requirements for the
award of Bachelor’s of Business Administration (BBA)

2015-2018

SUBMITTED BY: GUIDED BY:

JATIN GOYAL DR. SUPREET WAHEE

BHARATIVIDYAPEETH DEEMED UNIVERSITY INSTITUTE OF

MANAGEMENT& RESEARCH, NEW DELHI
Re-Accredited with Grade “A” by NAAC
Ranked in Top 50 B-schools in India & Top 5 in Delhi & NCR By Business India and
Hindustan Times
Recipient of B- School Leadership award from Star News
A-4, PaschimVihar, New Delhi, 011-5286442 Fax 011-25286442

1
 CERTIFICATE OF ORIGINALITY

This is to certify that the project report entitled, “A Study of Consumer Behavior in
Relation to Insurance Products in IDBI” submitted to BharatiVidyapeethUniversity,Pune
in partial fulfilment of the requirement for the award of the degree of Bachelor’s of Business
Administration is an original work carried out by JATIN GOYAL under the guidance of

DR. SUPREET WAHEE the matter embodied in this project is a genuine work done by
JATIN GOYAL to the best of my knowledge and belief and has been submitted neither to
this University nor to any other University for the fulfillment of the requirement of the course
of study.

(JATIN GOYAL)

2
 CERTIFICATE

This is to certify that the Project titled, “A Study of Consumer Behavior in Relation to
Insurance Products in IDBI” is an academic work done by “JATIN GOYAL” submitted in
the partial fulfilment of the requirement for the award of the Degree of “Bachelor’s of
Business Administration” from “Bharati Vidyapeeth University, Pune.” It has been
completed under the guidance of DR.SUPREET WAHEE. We are thankful to IDBI life
insurance for having allowed our student to undergo project work training. The authenticity
of the project work will be examined by the viva examiner which includes data verification,
checking duplicity of information etc. and it may be rejected due to non fulfilment of quality
standards set by the institute.

(JATIN GOYAL)

3
 ACKNOWLEDGEMENT

I would like to thank our respected college Bharati Vidyapeeth University, Institute Of
Management And Research, New Delhi for providing me a platform to foray my creative
and intellectual prodigy by giving me due permission and encouragement to take up the
project. I would also like to take up the opportunity to whole heartily thank the staff at “A
Study of Consumer Behavior in Relation to Insurance Products in IDBI” where I
pursued my internship for their immense cooperation, guidance and support throughout the
project. I would also like to thank DR.SUPREET WAHEE who extended his full support for
the completion of this project. Without their generous contribution this project would never
have come into existence.

(JATIN GOYAL)

4
 Table of Contents

Chapter No. Title Page No.

1 INTRODUCTION
1.1 EXECUTIVE SUMMARY
1.2 HISTORY OF INSURANCE
1.3 HISTORY OF THE ORGANIZATION
1.4 INDUSTRY BACKGROUND
1.5 BRIEF HISTORY OF INSURANCE SECTOR IN INDIA
1.6 COMPANY’s VISION AND VALUES
1.7 SWOT ANALYSIS OF IDBI BANK
2 LITERATURE REVIEW
2.1 DISCUSSION ABOUT THE WORK DONE BY
AUTHOR
2.2 ABOUT THE SPONSORS OF IDBI FEDERAL LIFE
INSURANCE
2.3 PRODUCTS OFFERED
3 RESEARCH METHODOLOGY
3.1 STATEMENT OF THE PROBLEM
3.2 OBJECTIVE AND SCOPE OF STUDY
3.3 MANAGERIAL USEFULNESS OF STUDY
3.4 TYPE OF RESEARCH & RESEARCH DESIGN
3.5 DATA COLLECTION METHOD
3.6 LIMITATION OF STUDY
4 RESEARCH , FINDING & ANALYSIS
4.1 FEEDBACK FROM RESPONDENTS
5 FINDING , CONCLUSIONS AND SUGGESTION
5.1 OBSERVATION AND LEARNING
5.2 CONCLUSION
5.3 RECOMMENDATIONS/SUGGESTIONS

5
5.4 BIBLIOGRAPHY
5.5 ANNEXURE

List of Tables

Table No. Title Page No.

3.2.12 SUGGESTIONS FOR BETTER PRODUCTS 43

3.2.13 SUGGESTIONS FOR BETTER FUNCTIONING 43

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 List of Charts

Chart No. Title Page No.

1.6.1 LIFE INSURANCE DENSITY 19

1.6.2 MARKET SHARE OF INSURANCE 20

COMPANIES

3.2.1 GENDER OF RESPONDENT 37

3.2.2 AGE OF RESPONDENT 38

3.2.3 OCCUPATION 38

3.2.4 SOURCE OF KNOWLEDGE 39

3.2.5 POSSESSION OF POLICY 39

3.2.6 REASON FOR NOT POSSESSING POLICY 40

3.2.7 COMPANY WHOSE PRODUCTS ARE 40

PURCHASED

3.2.8 MOTIVATION TO BUY FROM THAT 41

COMPANY

3.2.9 CUSTOMER OF IDBI FEDERAL 41

3.2.10 REASON FOR NOT BUYING IDBI FEDERAL’S 42

PRODUCTS

3.2.11 REASON FOR BUYING IDBI FEDERAL’S 42

PRODUCTS

7
 LETTER OF TRANSMITTAL

MR. Abhishek Gupta

IDBI Federal Life Insurance

Dear Sir,

As discussed in May 2017, I’m submitting the report titled “A study of Consumer Behaviour
in Relation to Insurance Products in IDBI”.

This report focuses on bringing into light the attitude of current as well as future consumers
of IDBI Federal life insurance towards the insurance products offered by the company.

I hope you find this report satisfactory.

Yours sincerely,

Jatin Goyal

Bharti Vidyapeeth Institute of Management and Research

New Delhi

8
 CHAPTER-1
INTRODUCTION

9
Life is full of risk and uncertainties. Since we are social human beings, we have certain
responsibilities too. Indian consumers have big influence of emotions and rationality on their
buying decisions. They believe in future rather than present and desire to have a better and
secured future. In this direction life insurance services have its own value in terms
of minimizing risk and uncertainties. Indian economy is developing and having huge middle
class societal status and salaried persons. Their money value for current needs and future
desires generate the reasons behind holding a policy. An attempt has been made in this report
to study the buying behaviour of consumers towards life insurance services.

Analyzing consumer behaviour is perceived as cornerstone of a successful marketing

strategy.
Consumer behaviour is a mental and emotional process and the observable behaviour of
consumers during searching, purchasing and post consumption of a product and service.
Similarly consumer behaviour is action and decision process of people who purchase goods
and services for personal consumption. Now if these defining criteria are closely observed, it
is evident that analyzing consumers’ decision making process is the foundation of entire
notion of consumer behaviour.

1.1 EXECUTIVE SUMMARY

A Study of Consumer Behaviour in Relation to Insurance Products in IDBI

Influencing the ways that people act in their daily consumption lives is a concern for
researchers in a number of disciplinary areas, including consumer behaviour psychology,
sociology and marketing.

This project is focused on analyzing the Internal and the External factors which aim at
determining the customers buying behaviour towards insurance products of IDBI Federal. It
is mainly focused in trying to understand the various factors responsible for the buying
decision. Understanding these factors is a critical task. The purchase decision in general is
prompt by number of factors viz. Psycho graphical, Economical, Socio Political, Legal and
Demographical. There are certain other factors which need to be understood while keeping in
mind the investment decisions made by customers, such as, Customer Buying Behaviour,
Customer Preferences and Perception, Brand Loyalty etc.

10
1.2 HISTORY OF INSURANCE

In some sense we can say that insurance appeared simultaneously with appearance of human
society. In earlier economies, we can see insurance in the form of people helping each other.
For example, if a house is burnt, the members of the community help build a new one. Should
the same thing happen to one’s neighbour, the other neighbours must come to help.
Otherwise, neighbours will not receive help in the future. Insurance in the modern sense,
started as a methods of transferring or distributing risk, were practiced by Chinese and
Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese
merchants travelling treacherous river rapids would redistribute their cargo across many
vessels to limit the loss due to any single vessel’s capsizing. The Babylonians developed a
system which was recorded in the famous Code of Hammurabi, c.1750 BC, and practiced by
early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he
would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the
loan should the shipment be stolen.

Greek monarchs were the first to insure their people and made it official by registering the
insuring process in governmental notary offices. They invented the concept of

the general average. Merchants whose goods were being shipped together would pay a
proportionally divided premium which would be used to reimburse any merchant whose
goods were jettisoned during storm or sinking of the vessel in the sea. The Greeks and
Romans introduced the origins of health and life insurance c. 600 AD when

they organized guilds called ―benevolent societies which cared for the families and paid
funeral expenses of members upon death. Guilds in the middle Ages served a similar
purpose.

Before insurance was established in the late 17th century, friendly societies existed in
England, in which people donated amounts of money to a general sum that could be used for
emergencies. Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Greeks rulers in the 14th century, as were
insurance pools backed by pledges of landed estates. These new insurance contracts allowed
insurance to be separated from investment, a separation of roles that first proved useful in
marine insurance. Insurance became far more sophisticated in post-RenaissanceEurope,
andspecializedvarieties developed. Insurance as we know it today can be traced to the Great

11
Fire of London, which in 1666 A.D devoured 13,200 houses. In the aftermath of this
disaster,NicholasBarbonopened an office to insure buildings. In 1680, he established
England‘s first fire insurance company, The Fire Office to insure brick and frame homes.

The first insurance company in theUnitedStatesunderwrote fire insurance and was formedin
Charles Town (modern-day Charleston), South Carolina, in 1732.

1.3 HISTORY OF THE ORGANIZATION

2006:-

-IDBI signs MoU with Fortis

-IDBI - Tripartite MOU with Federal Bank & Forties Insurance
International
-IDBI, Federal Bank and Fortis Sign Joint Venture Agreement To
Establish A New Life Insurance Company In India

2009:-

- IDBI Federal Life launches new plan for senior citizens.

- IDBI Fortis redefines endowment & money back with Incomesurance™
- IDBI Fortis launches Termsurance™ Protection Plan
- IDBI Fortis bags bronze Dragon at 'PMAA 2009'
- IDBI Fortis Life Insurance uses an interactive application to help users easily calculate their
taxes
- IDBI Fortis launches Incomesurance™ Immediate Annuity
- IDBI Fortis launches Retiresurance™ Pension Plan
- 'IDBI Fortis' Boss-Ka-Boss bags PRCI Award
- IDBI Fortis announces Rs 250cr capital infusion

2010:-

- IDBI Federal launches brand new campaigns!

- IDBI Federal introduces a cover for loans, Loansurance®
- IDBI Federal launches Wealthsurance Milestone Plan
- IDBI Fortis Life Insurance is now IDBI Federal Life Insurance
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2011:-

- IDBI Federal heralds the New Year with Childsurance

- IDBI Federal unveils 3-in-1 Lifesurance Savings Plan
- IDBI Federal launches insured wealth plan
- IDBI Federal pioneers Medical Test-free Term Plan for Seniors
- IDBI Federal launches unit linked Pension Plan
- IDBI Federal targets HNIs with Wealthsurance Premier
- IDBI Federal launches Retiresurance Guaranteed Pension Plan
- IDBI Federal-Samhita financial literacy drive a big hit in MP

2012:-

- IDBI Federal launches a plan with double life cover and no medicals
- IDBI Federal makes its online debut
- IDBI Federal Bondsurance™ plan offers attractive guaranteed Tax-Free Returns,
Life Cover
- IDBI Federal and IDBI Bank reaches out to Surly through
TermsuranceGrameenSuraksha

2013:-

-IDBI Federal breaks-even in Five years; posts maiden profit of Rs 9.24 crore
- IDBI Federal in association with Phoenix Foundation organises a trek for the physically
challenged

2014:-

- IDBI Federal launches 7 new plans

- IDBI Federal backs home grown talent; elevates VighneshShahane as CEO

13
1.4 INDUSTRY BACKGROUND

The insurance industry of India consists of 51 insurance companies of which 24 are in life
insurance business and 27 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-
lifeInsurers, there are six public sector insurers. In addition to these, there is sole national
reinsurer, namely, General Insurance Corporation of India. Other stakeholders in Indian
Insurance market include Agents (Individual and Corporate), Brokers, Surveyors and Third
Party Administrators servicing Health Insurance claims.
Out of 27 non-life insurance companies, 4 private sector insurers are registered to underwrite
policies exclusively in Health, Personal Accident and Travel insurance segments.They are
Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company
Ltd, Max Bupa Health Insurance Company Ltd and Religare Health Insurance Company Ltd.
There are two more specialized insurers belonging to public sector, namely, Export Credit
Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd
for Crop Insurance.
Insurance penetration of India i.e. Premium collected by Indian insurers is 4.10% of GDP in
FY 2011-12. Per capita premium underwritten i.e. insurance density in India during FY 2011-
12 is US$ 59.0.The insurance sector in India has come to a full circle from being an open
competitive market to nationalization and back to a liberalized market again. Tracing the
developments in theIndian insurance sector reviles the 360-degre turn witnessed over a period
of almost two centuries.

1.5 A BRIEF HISTORY OF INSURANCE SECTOR IN INDIA

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life
Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian
Soil. All the insurance companies established during that period were brought up with the purpose
of looking after the needs of European community and Indian natives were not being insured by
these companies. However, later with the efforts of eminent people like BabuMuttylal Seal, the
foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as
sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life

14
Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and
covered Indian lives at normal rates.

Insurance is anRs 450 billion industry in India. The life insurance segment writes about 80% of the
overall market value. Indian Insurance market was at its all time high in 2003 with a growth of about
17.4% over the previous year. Since 2001 Insurance is growing at the rate of 15-20 % annually. The
growth in the insurance industry is affected by volatility in real estate rates, GDP rates and long term
interest rates. Fluctuations in exchange rates also affect the growth in this sector. The gross
premium as a percentage of the GDP has gone up from 2.3 in the year 2000 to 4.8 in 2006. The
premium as percentage of the country’s gross domestic product (GDP) has increased from 4.8
percent in 2006 to 5.2 percent in 2011. Together with banking services, it adds about 7% to the
country’s GDP.

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil
started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started
its business
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective
of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with
a capital contribution of Rs. 5 crores from the Government of India.
Indian Insurance in 21st Century:
2000: IRDA starts giving licenses to private insurers: ICICI prudential and HDFC Standard
Life insurance first private insurers to sell a policy
2002: Banks allowed selling insurance plans. As TPAs enter the scene, insurers start setting
non-life claims in the cashless mode
2007: First Online Insurance portal, www.insurancemall.in set up by an Indian Insurance
Broker, Bonsai Insurance Broking Pvt Ltd.

15
INSURANCE SECTOR REFORMS

Cap on ULIP charges and increase in lock in period:

 Restriction on high distribution partner payouts
 Reduction in overall contribution of ULIPs to new business premium
 Insurers showing profits due to release of lapse reserves will not be able to sustain the
same in the future unless long term operational efficiencies are developed
Registration of Referral Agents:
 There have been a slew of regulations around turnover criteria to be a referral partner
and cap on referral fee income as well as share of income through referral business
 Training and tele-callers has been made mandatory
 Cost of compliance expected to increase and some referral partners who may have to
apply for Broking licence which could delay insurance distribution operations
Compulsory purchase of annuity in pension plans:
 Even in case the policy is surrendered, 2/3rd of accumulated funds will be used to
purchase annuity
 Exit option being constrained may have significant negative implications for the
product segment
Guidelines around agents:
 Persistency norms- the regulation stipulates a min level of persistency to be achieved
by each licensed agent. This is expected to reduce the agency force in the industry
 License renewal- IRDA has mandated a min business requirement norm for licensing
agent. This is expected to reduce part-time agents thus improving customer service

16
1.6 COMPANY’S VISION, MISSION AND VALUES

VISION

To be the leading provider of wealth management, protection and retirement solutions that
meets the needs of our customers and adds value to their lives.

MISSION

To continually strive to enhance customer experience through innovative product offerings,

dedicated relationship management and superior service delivery while striving to interact
with our customers in the most convenient and cost effective manner.

To be transparent in the way we deal with our customers and to act with integrity.

To invest in and build quality human capital in order to achieve our mission.

VALUES

 Transparency: Crystal Clear communication to our partners and stakeholders

 Value to Customers: A product and service offering in which customers perceive
value
 Rock Solid and Delivery on Promise: This translates into being financially strong,
operationally robust and having clarity in claims
 Customer-friendly: Advice and support in working with customers and partners
 Profit to Stakeholders: Balance the interests of customers, partners, employees,
shareholders and the community at large

17
EXCELLENCE
"In every aspect of work ranging from the in-house training institute to the detailed Personal
Insurance Plan. IDBI Federal is focused on achieving the highest standards of quality in
every aspect of their business".

HONESTY
"Is the heart of the Life Insurance business? IDBI Federal believes that above all, Life
Insurance is based on trust. Transparency, Dependability and Integrity will form the
cornerstones of the IDBI Federal experience."

KNOWLEDGE
"Is what makes experts. IDBI Federal is focused on the Life Insurance business. Perfectly
combining global expertise with local knowledge, IDBI Federal is the Indian Life Insurance
specialist."

CARING
"For the customer IDBI Federal is redefining the Life Insurance paradigm to focus on the
needs of the customers. The IDBI Federal service process is responsive, personalized,
humane and empathetic."

CULTURE
Our "in house culture recipe" has some of the finest ingredients going into its making. Some
of the more prominent aspects of our culture are stated below:
i. Customer comes first

ii. Do it right the first time

iii. Bias for result oriented action

iv. Financial strength and discipline

v. Clarity of purpose

vi. International quality standards

18
vii. Inclusive Meritocracy

viii. Learning opportunities

ix. Fun at work

x. Commitment to published value system

TECHNOLOGY

To monitor and manage its network equipment across 34 sites, IDBI Federal uses Tulip
Proactive Managed CE solution. The solution includes device management, proactive
troubleshooting and notification support. With the implementation of the solution, IDBI has
reported improvement of network performance and availability, with a faster, more effective
change and configuration management.

19
Chart 1.6.1

Chart 1.6.2- Market Share of Insurance Companies

20
1.7 SWOT Analysis of IDBI Bank

Strengths in the SWOT analysis of IDBI bank

 The banks major strength is it involves latest cutting edge technologies to

support its core banking operations

 The bank has network of 943 branches and 1529 ATMs

 The total turnover of the bank is 3,37,584 crores in the last FY 2010-11,
and earned a net profit of Rs.1650 cr.

 The bank has grown at a rate of 60% compared to previous year

 IDBI has the first mover advantage in opening ‘G-sec portal’. This is a
platform for the retail investors to invest in government securities

 IDBI is one of the largest commercial banks in India which focuses on

industrial infrastructure and development

 IDBI’s product portfolio includes 14 broad classifications, and there are

some sub categories in each. The bank has customized solution faculties
for its industrial clients

 The location of its head quarters in Mumbai fosters the growth of the
bank

 IDBI’s subsidiaries are into capital market services, IT services, asset

management and life insurance

 SWOT analysis of IDBI bank

21
Weaknesses in the SWOT analysis of IDBI bank

 IDBI has less penetration into the rural market

 IDBI has very less number of branches and ATM network compared to
other major players

 It concentrates mainly on commercial banking services whereas the

individual banking services is where the main revenue lies.

 The customer help desk is not performing efficiently and there are many
unresolved issues of customers

 The bank has lots of consumer complaints with respect to servicing

charges

 The bank lacks in promotional activities

Opportunities in the SWOT analysis of IDBI bank

 Scope for bagging government schemes are high as IDBI belongs to

public sector

 Global opportunities for IDBI are the rise as the management is keenly
focusing on global expansion in next few years

 They have a good number of financial expertise to face the emerging

industrial and economic growth in India

 It is the only bank in public sector which has enabled social media plug-
in in its website. This has increased the brand awareness and better reach
to its customers

22
  The bank has good opportunities in semi-urban and Tire II cities areas as
the industrial growth is taking very rapidly

Threats in the SWOT analysis of IDBI bank

 IDBI faces tough competition in terms of new market development due to

competition from both government and private banks

 FDI in Indian banking has been opened up to 74% by the RBI

 In private banking HDFC, ICICI and in public sector SBI, Punjab National
Bank, Andhra bank and Allahabad bank are the major competitors

 The bank has to focus on improving the customer satisfaction in order to

sustain the loyal customers

CHAPTER-2

LITERATURE REVIEW

23
2.1 LITERATURE REVIEW

.The Indian economy has weathered the turbulent global economy and emerged as a strong
and disciplined economy. It is on the brink of a major transformation with several policy
initiatives being announced regularly. Enhanced spending on infrastructure and continued
economic reforms has fuelled the growth of the economy suggesting that India’s banking
sector is also poised for robust growth as the rapidly growing business would turn to banks
for their credit needs. The Indian banking system consists of 27 public sector banks and 25
private sector banks. Public sector banks control nearly 80 percent of the market, thereby
leaving comparatively much smaller share of the market to the private players. The core
activities of commercial banks are lending funds and accepting deposits to provide payment,
liquidity, and credit intermediation services. The foundation of the financial infrastructure is
important for the overall health of an economy and its growth. Studies show that both
financial intermediaries and markets are important for economic growth, important forms of
urban financial investment are bank deposits, shares and securities (Narayana, 1976). Banks
are the intermediaries to channelize the savings into investment; they form the backbone of
any economy, they take in savings typically as deposits and provide funding primarily in the

24
form of loans. Mudra-SAMIR’S (1992) finds that the working women in urban India save 20
percent of their earnings as savings. The access to low cost deposits enables them to lend the
corporate at competitive rates (Pathak, 2005). The banks work closely with their customers
and collect the necessary information from the clients during the process of providing funds
to the clients who approach them, lay down the covenants that work in favour of both the
bank and the customer, unlike the capital markets, where the investments are based on the
investor’s knowledge thus are risky for the customer. Research shows that the savings are
parked in the banks when compared to other medium of investment. Kumar, Banu and
Nayagam (2008) found in their study that investors in Tiruchirapalli prefer post office
savings, bank deposits, gold, real estate, equity investments and mutual funds in the ranking
order. In an economy where a large percentage of the gross domestic savings are invested in
the banks, a strong banking system is essentially the order of the day. Indian banks are
increasingly focusing on adopting integrated approach to risk management complying with
Basel II accord. Stake holders measure the financial performance, forecast the firm’s future
earnings and evaluate the financial structure, capital structure along with other components of
the statements of the company from the financial statements published by the firm. Financial
structure refers to the balance between all of the company's liabilities and its equities. Capital
structure, by contrast, refers to the balance between equities and long term liabilities.
Financial structure is more sensitive for comparing the firm's debt to its equities. It reflects
the status of working capital and cash flow. Capital structure refers to the combination of
equities and long term debt. Each business has a different mix depending on its necessities.
To assess the financial structure of the companies the analysts perform a static and dynamic
analysis of financial statements. IDBI Bank is among the young public sector banks,
incorporated as a commercial bank in the year 2004. The IDBI Bank offers personalized
banking and financial solutions to its clients. The IDBI Bank had an aggregate Balance sheet
size of Rs.3,74,372 crore and total business of Rs.4,81,613 crore as on March 31, 2016. The
Government of India has a dominant shareholding to the tune of 73.98 percent shares
followed by Life Insurance Corporation of India, which holds approx. 14.37 percent of the
shares. This paper examines the performance of IDBI Bank, the young public sector bank in
the face of competition in the banking sector. This paper consists of four sections. The first
section presents the introduction and discusses the background of the financial intermediaries.
The second discusses the literature on the financial structure and its impact on the firms. The
third section discusses the objectives, methodology and the background. The concluding
section summarises the main results.
25
Yusuf and Hakan, (2011) described the short term creditors of a company like suppliers of
goods of credit and commercial banks providing short-term loans are primarily interested in
knowing the company’s ability to meet its current or short-term obligation as and when these
become due. Ross et al., (2007) implied that the most researchers divide the financial ratios
into four groups i.e. profitability, solvency, liquidity and activity ratios for detailed analysis.
Eugene F Brigham and Michael C Ehrhardt (2010) stated that financial ratios are designed to
help in evaluating financial statements and used as a planning and control tool. Nadia Zedek
(2016) investigated the controlling shareholders affects product diversification performance
of 710 European commercial banks, it was found that when banks have no controlling
shareholder or have only family and state shareholders diversification yields diseconomies,
while the involvement of banking institutions, institutional investors, industrial companies or
any other combination of these shareholder categories, produce diversification economies:
they display higher profitability, lower earnings volatility and lower default risk. Abe De
Jong, et al (2008) analysed the importance of firm-specific and country-specific factors in
theleverage choice of firms around the world. Data suggested that firm-specific determinants
of leverage differ across countries, and that there is an indirect impact of country-specific
factors on the roles of firm-specific determinants of leverage. Dimitios Louzius (2012) In his
study of Banking sector in Greece found that for all loan categories, NPLs in the Greek
banking system could be explained mainly by macroeconomic variables (GDP,
unemployment, interest rates, public debt) and management quality. Muhammad Saifuddin
Khan, et al (2016) in his research paper examines the relationship between funding liquidity
and bank risk taking in the U.S. bank holding companies from 1986 to 2014, results showed
that bank size and capital buffers usually limit banks from taking more risk when they have
lower funding liquidity risk. Malcom and Jeffrey Wurgler (2002) found that effects on capital
structure are very persistent. Results suggest that capital structure is the cumulative outcome
of past attempts to time the equity market. Zeitun (2007) investigated the effect which capital
structure has had on corporate performance using a panel data sample representing of 167
Jordanian companies during 1989-2003. Results showed that a firm’s capital structure had a
significantly negative impact on the firm’s performance measures, in both the accounting and
market’s measures.

The present study is based on secondary data collected from the annual reports of IDBI Bank,
State Bank of India (SBI) and Bank of Baroda (BOB) for the period 2011-12 to 2015-16. The
large public sector banks i.e. State bank of India and Bank of Baroda, which are listed on the

26
Nifty 50 are considered as proxy for industry averages for the purpose of comparing the
performance of IDBI Bank. Ratio Analysis was applied to analyze and compare the trends in
banking business and financial performance. Compound Average Growth Rate (CAGR) and
ratios have also been deployed to analyze the trends in banking business profitability

The IDBI Bank’s performance in the last year is in contrast to the largest public sector bank
in India (SBI), which exhibited a strong performance consistently. The trend of the
shareholders’ funds and its comparison with the bellwether indicates that the IDBI Bank has
to improve its operational functioning.

2.2 NEW DEVELOPMENT OF IDBI BANK

IDBI Bank Ltd. continues to be, since its inception, India's premier industrial development
bank. It came into being as on July 01, 1964 to support India's industrial backbone. Today, it
is amongst India's foremost commercial banks, with a wide range of innovative products and
services, serving retail and corporate customers in all corners of the country from 1201
branches and 2156 ATMs. The Bank offers its customers an extensive range of diversified
services including project finance, term lending, working capital facilities, lease finance,
venture capital, loan syndication, corporate advisory services and legal and technical advisory
services to its corporate clients as well as mortgages and personal loans to its retail clients. As
part of its development activities, IDBI Bank has been instrumental in sponsoring the
development of key institutions involved in India's financial sector - National Stock
Exchange of India Limited (NSE) and National Securities Depository Ltd, SHCIL (Stock
Holding Corporation of India Ltd), CARE (Credit Analysis and Research Ltd).

PRODUCTS

IDBI Fortis launched its first set of products across India in March 2008, after receiving the
requisite approvals from the Insurance Regulatory and Development Authority (IRDA). IDBI
Federal offers services through a nationwide network across the branches of IDBI Bank and
Federal Bank in addition to a network of advisors and partners. IDBI Federal has 60 branches
across the country.

2.3PRODUCTS OFFERED

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2.3.1 IDBI Federal Childsurance Savings Protection Plan is a non-linked participating
endowment plan that ensures a child’s future. Childsurance Savings is designed to give the
customers, guaranteed annual payouts and also aid the important milestones in their child’s
life. In the unfortunate event of the parent not being around, the policy will continue exactly
as they had planned it, without any further premiums being paid. .In other words, this plan
ensures that their child gets to live his/her dream exactly as they have planned, whether or not
their parents are around.

2.3.2IDBI Federal Incomesurance Guaranteed Money Back Insurance Plan is a non-

linked non-participating money back plan which gives guaranteed returns on an investment,
so that the customer stops worrying about the future. With Incomesurance, they can
guarantee a secure future for their families even when they are not around.

2.3.3IDBI Federal Lifesurance Savings Insurance Plan is a fixed term non-linked

participating plan that provides twin benefits of long-term savings and life cover. With
Lifesurance Savings, customers’ small savings will help them realise their big dreams that
they have for their selves and their family. This plan also offers the benefit of life cover that
will provide financial security to their family in their absence.

28
 CHAPTER-3

RESEARCH
METHODOLOGY

29
3.1 Statement Of The Problem

A Study of Consumer Behaviour in Relation to Insurance Products in IDBI

DEFINING CONSUMER BEHAVIOUR:

Consumer Behaviour may be defined as “the interplay of forces that takes place during a
consumption process, within a consumers’ self and his environment.
- this interaction takes place between three elements viz. knowledge, affect and behaviour;
- it continues through pre-purchase activity to the post purchase experience;
- it includes the stages of evaluating, acquiring, using and disposing of goods and services”.

The “consumer” includes both personal consumers and business/industrial/organizational

consumers.

Consumer behaviour explains the reasons and logic that underlie purchasing decisions and
consumption patterns; it explains the processes through which buyers make decisions.
The study includes within its purview, the interplay between cognition, affect and behaviour
that goes on within a consumer during the consumption process: selecting, using and
disposing of goods and services.

30
Cognition: This includes within its ambit the “knowledge, information processing and
thinking” part; It includes the mental processes involved in processing of information,
thinking and interpretation of stimuli (people, objects, things, places and events). In our case,
stimuli would be product or service offering.

Affect: This is the “feelings” part. It includes the favourable or unfavourable feelings and
corresponding emotions towards a stimuli (e.g. towards a product or service offering or a
brand). These vary in direction, intensity and persistence.

Behaviour: This is the “visible” part. In our case, this could be the purchase activity: to buy
or not a buy (again specific to a product or service offering, a brand or even related to any of
the 4 Ps).

The interaction is reciprocal between each of the three towards each other and with the
environment.
Studying consumer behaviour is important because it enables us to better focus our efforts
where we can get the results we want. By understanding consumer behaviour; our business
will provide the consumer with better goods and services. Better goods and services results in
more sales and therefore more profit. Not only is it important to improve goods and services;
it is necessary to know what type of products and what type of service to offer.

Consumer behaviour is strongly tied to their phase in the life cycle. Patterns of spending are
dictated by what is happening at a given time. Younger couples with no children have
different needs than those who have started a family. While teenagers and elderly people
have more discretionary income and can spend more freely.
Knowing this will help us decide who our core customer is. By using this information to
influence buying decisions; we can increase sales.

It is also important to plan marketing strategies that are focused on this group. These
strategies should target our market and focus on niche marketing. Resources should not be
spent marketing to consumers outside of our target.
We will begin to understand our market when we have satisfied certain questions about our
customers. Why do they choose one product over the next? What impact does the role of
31
culture, education and advertising has on the decision to choose a product? How and why is
the consumer planning to use the product? Why are they loyal to a specific brand? What are
the risks involved in using or switching to our brand?
Having the answer to these questions will help us gain consumer confidence. We may have
the best product, but the consumer does not know this. We will speak to them through our
status in the community, our good-will, our price points and the way our product relates to
them. These factors will help to determine who will become our customers and who won't.
Consumers have needs and wants, and our objective is to identify the need and create the
want. Our ultimate goal is to influence consumer behaviour and convert this into profits for
our company. Businesses that can predict consumer behaviour have the edge over their
competitors. To predict consumer behaviour requires knowledge of the consumers’ values,
goals and lifestyle. Companies with this asset use it to develop better strategies, and are better
able to win over consumers. Hence, this study is very important.

3.2 OBJECTIVE AND SCOPE OF STUDY

SCOPE OF STUDY:

The scope of a subject refers to everything that is studied as part of that subject. When we set
out to explain the scope of consumer behaviour we need to refer to all that which forms part
of consumer behaviour.

Consumer behaviour includes not only the actual buyer and his act of buying but also the
various roles played by different individuals and the influence they exert on the final
purchase decision.

To define the scope of a subject it is important to set parameters or a framework within which
it shall be studied.. This framework is made up of three main sections-the decision process as
represented by the inner-most circle, the individual determinants on the middle Circle and the
external environment which is represented by the outer circle. The study of all these three
sections constitutes the scope of consumer behaviour. Here, we shall dwell on these
constituents of the framework only briefly as they are explained in detail in the following
units.

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OBJECTIVE OF STUDY:

The main objective of this project is to study the consumer behaviour and various reactions of
customers with reference to IDBI Federal Life Insurance Co. Ltd. And suggest ways to
improve its marketing efforts.

1. To study the trends in life insurance market

2. To study the profile of IDBI Federal’s customers.
3. To study the investors’ behaviour with respect to IDBI Federal Life Insurnace.
4. To analyse the investors’ perception about IDBI Federal.

3.3 MANAGERIAL USEFULNESS OF STUDY

Sample Size: 80 respondents responded to the pre-designed questionnaire.

Period of Study: 50 days (10th May- 30th June, 2017)

Location of Study: PASCHIM VIHAR, JANAKPUR, NEW DELHI…

Methodology:

Obtaining first hand information by pitching to customers and getting the

survey filled from them about the insurance products of IDBI and acquiring
their views and beliefs about overall insurance products and hence picking up
the areas where we are good and also the areas where our way of working can
be improved in order to enhance customer satisfaction and increase the
business.

3.4TYPE OF RESEARCH & RESEARCH DESIGN

Type of Research: - Descriptive research

33
Descriptive research includes Surveys and fact-finding enquiries of different kinds. The main
characteristic of this method is that the researcher has no control over the variables; he can
only report what has happened or what is happening.

SAMPLE DESIGN

A sample design is a definite plan for obtaining a sample from a sample from a given
population. There are many sample designs from which a researcher can choose. Researchers
must prepare/select a sample design which should be reliable and appropriate for his research
only. It is very different to interview all the employees.

3.5 DATA COLLECTION METHOD

PRIMARY SOURCES:-

The data required for the study has been collected from-

 Personal interviews with the company representatives regarding training and

development.
 Interviews with trainers, to obtain information about employee’s interest and feedback.

SECONDARY SOURCES:-

The secondary data has been collected from

 websites
 blogs
 business magazines
 books

QUESTIONARE TECHNIQUE

The questions were consisted of

34
 Open Ended questions – To bring out ideas and pertinent thinking of the respondents.
 Multiple choice questions - Questions made answering procedure more convenient for
respondent.

TOOLS APPLIED

 Use of percentage and bar graph for analysis.

 Sizable sample of Pearson employees.

3.6 Limitations of Study:

 The study was conducted only in the PaschimVihar, and Janakpur; hence the
results can be biased and hence not exactly accurate.
 The survey includes more number of responses of people within the age group of
18-30. Hence, the study may be biased, as, at that age, income is less and people
take life insurance lightly.
 Most of the contents collected were difficult to understand because it was new for me
to work in this field.

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 CHAPTER-4

RESEARCH

FINDING & ANALYSIS

36
 FEEDBACK FROM RESPONDENTS:

i. Gender of Respondent

37
 Gender

40 40

Chart 4.1.1 Gender of Respondent

INTERPETATION: From the above chart, 40% of the respondent are males and reaming 40
are females

ii. Age of Respondent

38
 Age
5
6

5
18-30
31-46
47-53
54-55

64

Chart 4.1.2 Gender of respondent

INTERPETATION: From the above chart, maximum age group of the respondent is between
18 to 46 years of age.

iii. Occupation

39
 Occupation
4

16
Students
Professional(Engg./Doc./Lawyer)
36 Home-maker
Govt./Pvt. Sector
Self Employed
4

20

Chart 4.1.3 Occupation

INTERPETATION: From the above pie chart, maximum numbers of respondent are students
followed by Professionals; Home maker; Goverment/pvt.sector; Self Employed.

iv. How did you come to know about Insurance products?

40
 Source
12

4 Friends/family
Television
36
8 Internet
Newspapers/magazines
Radio
Agents/field sales represen-
tatives
12

24

Chart4.1.4 Source of knowledge

INTERPETATION: From the above chart, maximum number of respondents got to know
about insurance product from friends and family and reaming via Television; Internet; Newspapers;
Radio etc.

v. Do you currently have an Insurance Policy?

41
 Possession of Policy

16

YES
NO

64

Chart4.1.5 Possession of Policy

INTERPETATION: From the above chart, maximum number of respondent have an insurance
policy.

vi. If NO, why not?

42
 Chart 4.1.6 Reason for not possessing policy

INTERPETATION: From the above chart, 50% of the respondents feel that the policy do not
have lucrative returns

vii. If YES, which company’s?

43
 Company
8

4
LIC
4 TATA AIG
SBI LIFE
4 BAJAJ ALLIANZ
ICICI Prudential
MAX New York
44
Kotak Mahindra
8 IDBI Federal

Chart 4.1.7 Company, whose Insurance products are purchased

INTERPETATION: From the above chart, we can conclude that maximum number of
respondent have LIC policy.

viii. What prompted you to buy policy from that company?

44
 Chart 4.1.8 Motivation to buy from that company

INTERPETATION: From the above chart, maximum numbers of respondents buy policy
because of the company Brand Image.

ix. Are you a customer of IDBI Federal Life Insurance?

45
 Customer of IDBI Federal
8

YES
NO

56

Chart 4.1.9 Customer of IDBI Federal

INTERPETATION: From the above pie chart, only few respondents are the customer of IDBI
Bank.

x. If NO, why not?

46
 Reason
4

I get better returns in other

policies
I already have 1 or more policies
and I am satisfied with them
32
I am not in the financial con-
dition to invest right now
32

Chart 4.1.10 Reason for not buying IDBI Federal’s products

INTERPETATION: From the above chart, reason for few customers in IDBI Bank is that they
are not in the financial condition to invest right now.

xi. If YES, what do you like about our policies

47
 Chart 4.1.11 Reason for buying IDBI Federal’s products

INTERPETATION: From the above chart, respondent like the policies because they feel
Tax benefit given by the Bank are good.

xii. What suggestions would you give us to make our products better?

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 Sr. Number Suggestion Number of respondents

1. Min. Premium amount 30

should be less

2. Monthly premium payment 50

option should be available

Table 4.1.12 Suggestions for better products

INTERPETATION: From the above chart, maximum numbers of respondents want the bank
to provide monthly premiums payment option to make the products better.

xiii. Suggestions for better functioning of IDBI.

49
Sr. Number Suggestion Number of Respondents

1. More marketing/promotions 35
should be done

2. Policies should have 25

something unusual, as people
already possess policies from
other companies, so they are
not attracted by yours.

3. Should open more branches 20

at remote locations.

Table 4.1.13 Suggestions for better functioning

INTERPETATION: From the above chart, maximum number respondents suggest that the
bank should market and promote their products for the better functioning of IDBI.

50
 CHAPTER-5

FINDING, CONCLUSION
AND SUGGESTIONS

51
5.1 OBSERVATION AND LEARNINGS

1. There is a good amount of people in the age group 18-30 who have not bothered to
buy a life insurance policy because they are very sure that nothing would happen to them as
they are fit and fine.
2. People prefer to buy a policy which has less years of premium payment term.
3. More than life insurance, people are interested in a savings scheme. The better
savings plan they get, the more is their tendency to buy the policy.
4. Very less people are interested in a pure life insurance policy.
5. Tax benefits are also a major factor why people like to buy a policy.
6. Customers are willing to pay through easy payment options such as ECS and online
payment so that their valuable time gets saved.
7. They are interested more in monthly premium payment options rather than annually
or half yearly.
8. Friends and family are major influencers on customers when it comes to the decision
of buying a life insurance policy.
9. LIC is still the market leader in life insurance sector.
10. Brand image and past record of performance are major stimuli in buying decision.
11. IDBI Federal has limited reach to prospective customers as compared to other
companies.
5.2 CONCLUSIONS

The Summer Internship project has helped me gain huge practical knowledge which can’t be gained
only through books. This experience gave me an opportunity to learn new things which provided me a
peek into the corporate culture. Being a fresher, I would never be exposed to a corporate environment
if it were not for this project. I thank IDBI Federal life insurance for giving me the chance to work
with them as a summer intern and showing me the path of knowledge and experience which will help
me succeed in my career and enter into a bright future.

52
CONCLUSIONS ON CONSUMER BEHAVIOUR

1. While the fresh air of competition in every sector of economy brings in major changes
in consumer expectations, the insurance industry has experienced a few unique aspects, such
as regulation-inspired efforts to educate insurance buyers and a vast change of skills and
capabilities of the intermediaries involved in the distribution.
2. With respect to life insurance, potential buyers are drivers of buying a policy for one
or more of these 3 major reasons: security of the money invested, saving for one or more
specific purposes and the availability of tax benefits.
3. The challenge for the insurance companies is to address the motivating factors of
customers and come up with genuine solutions.
4. The potential buyer primarily expects that the saving should be a painless process and
that the money saved should be absolutely safe. The challenge is to provide not only
convenient payment options, but also mechanisms that could offer some measure of
protection and relief to the customer if he is forced to disrupt the payment arrangement for
unforeseen reasons.
5. On the issue of customers’ perception of security of the money invested, there are 2
important aspects. One is, how the features of the insurance contract are put across the buyer
(whether it is unit linked policy or endowment oriented); and the second is, how to address
effectively, the question about dependability of the new generation companies that potential
new insurance buyers raise during sales calls. Both, the insurance companies and the
regulator need to address this behavioural challenge very actively.
6. Customers in major cities appreciate the need for higher level of insurance cover with
reference to their earning stage in working life.
7. Instances of customers requiring agents to arrange for loans against their policies, or
change nominations etc. are rare. Therefore companies need to gear themselves to provide
high service standards directly.
8. One aspect of customer service for new age companies that remains to be tested
widely is the claim payment record.
9. The entry of Pvt. players into insurance sector have expanded the product segment to
meetdifferentlevel of requirements of customers. It has brought greater choice to customers.
10. IRDA is also playing a very comprehensive role by regulating norms, mandatory to
private players, which increases confidence of customers in the private companies.

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5.3 RECOMMENDATIONS/ SUGGESTIONS

1. We need to tap the young crowd in the age group 18-30 and convince them that
buying a life insurance policy is necessary because life is very unpredictable.
2. More plans should be made that involve less period of premium payment.
3. As friends and family members are major influencers of customers, our
advertisements and promotions should be family and friend-centred.
4. Group insurance policies like ‘full family insurance’ schemes should be made.
5. Our reach needs to be increased through social media (Facebook, Twitter, YouTube
campaigns), television, radio, newspapers etc.
6. Our insurance policies should have a range of premiums to suit every pocket size.
7. In terms of distribution, we should increase the number of marketers- more channels
of distribution and more intermediaries.
8. Our advertisements should cover the benefits of our policies and what differentiates
our policies from those of other companies, in brief.
9. Our company should have more offices at smaller towns and uncovered segments in
the cities.
10. Mobile Commerce is the next big thing! We can have a mobile app where our
customers can get all the information related to our products as well as pay their premiums.

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 5.4 BIBLIOGRAPHY

www.idbifederal.com

www.idbifederal.com/Press/PressRelease

http://www.insidebusiness360.com/index.php/why-it-is-important-to-study-
consumer-behavior-8478/

http://www.moneycontrol.com/company-facts/idbibank/history/IDB05

Yogakshema- LIC Handbook

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5.5 ANNEXURE

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