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A PROJECT REPORT
On
Retailing in Insurance

2007-2008

Unit 4 A, Western Industrial Estate

Opp. SEEPZ, MIDC, Marol,
Andheri (E) 400 093
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Understanding Retailing in Insurance

Shopassurance
Name of the Student : Kaustubh Vasant Gholap

Rohit Sitasawad

Pooja Khandelwal

Name of the Guide: Prof. Shrinivasan

Date: 05/04/2008
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Declaration
Date: - 05/04/2008

We are very glad that Prof. Shrinivasan had given us the opportunity to do the
survey about the Retailing in Insurance according to Indian Insurance Industry. I
am also thankful to Mr. Y. B. Bhide, Associate Dean, Chennai Business School
and Miss. Pallavi Prabhu for their timely guidance for the completion of this
project. Without their encouragement and appreciation it will not be possible to
complete this project.

This Project is a new approach towards the changes in Insurance Distribution

channel in Indian Insurance Industry especially after the liberalization and in
context with the rapid increase in the GDP of India. I am fortunate that I am
learning in Mumbai where you can easily found a culture mix and various attitudes
and instant reply about the market Trends. This study revealed the intrinsic point
about the major changes in Distribution of Insurance Products with help of
booming retail sector in India.

The data collected here is truly original and it is only used for the analysis and
interpretation of this project.
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Index
Sr. no. Particulars Page number
1 Introduction To Life 5
Insurance Sector
2 ICICIPrudential 7

3 Executive Summery 10

4 The Study And Research 11

Methodology

5 12
Retail Industry India
6 13
Shopassurance
7 16
World View of Distribution
Channel
8 19
Shopassurance -India
9 28
Summery
10. 30
Recommendations
11. 31
Annexure
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ife Insurance in its modern form came to India from England in the year

L 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 Babu Muttylal 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
Assurance Society heralded the birth of first Indian life Insurance company in the
year 1870, and covered Indian lives at normal rates.
Insurance is an Rs 450 billion industry in India. The value of the market is
determined by gross premium incomes. 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 pervious 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. 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:
British-India Period:
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.
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Liberalization of Indian Insurance:

1994: Insurance sector invited private participation to induce a spirit of

competition amongst the various insurers and to provide a choice to the
consumers.
1997: Insurance regulator IRDA was set up as there felt the need:
To set up an independent regulatory body, that provides greater autonomy to
Insurance companies in order to improve their performance,
In the first year of Insurance market liberalization (2001) as much as 16 private
sector companies including joint ventures with leading foreign Insurance
companies have entered the Indian Insurance sector. Of this, 10 were under the
life Insurance category and six under general Insurance. Thus in all there are 25
players (12-life Insurance and 13-general Insurance) in the Indian Insurance
industry till date.

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.
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ICICI PUDENTIAL LIFE INSURANCE:-

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse and prudential plc, a leading international financial
services group headquartered in the United Kingdom.
ICICI Prudential is amongst the first private sector Insurance companies to begin
operations in December 2000 after receiving approval from Insurance Regulatory
Development Authority (IRDA).
ICICI Prudential's equity base stands at Rs. 11.85 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively.

Vision:-

To be the dominant Life, Health and Pensions player built on trust by world-class
people and service.

Values:-

Every member of the ICICI Prudential team is committed to 5 core values:

Integrity, Customer First, Boundary less, Ownership, and Passion. These values
shine forth in all we do, and have become the keystones of our success.
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Indian Retail: An Overview

Emerging markets such as India and China are the final frontier for retail
taking the focus away from saturated Western markets. Since 2001, 49 global
retailers entered 90 new markets, but at the same time, 17 retailers left markets in
2005.
The Indian retail industry in valued at about $300 billion and is expected to
grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian
retail is organized. Retailers of multiple brands can operate through a franchise or a
cash-and-carry wholesale model.
Retail is India’s largest industry, accounting for over 10 percent of the
country’s GDP and around eight percent of employment. Retail in India is at the
crossroads. It has emerged as one of the most dynamic and fast paced industries
with several players entering the market. That said, the heavy initial investments
required make break even hard to achieve and many players have not tasted
success to date. However, the future is promising; the market is growing,
government policies are becoming more favourable and emerging technologies are
facilitating operations.
Retailing in India is gradually inching its way to becoming the next boom industry.
The whole concept of shopping has altered in terms of format and consumer
buying behavior, ushering in a revolution in shopping. Modern retail has entered
India as seen in sprawling shopping centres, multi-storeyed malls and huge
complexes offer shopping, entertainment and food all under one roof.
The Indian retailing sector is at an inflexion point where the growth of organized
retail and growth in the consumption by Indians is going to adopt a higher growth
trajectory. The Indian population is witnessing a significant change in its
demographics. A large young working population with median age of 24 years,
nuclear families in urban areas, along with increasing working-women population
and emerging opportunities in the services sector are going to be the key growth
drivers of the organized retail sector.
Initially, this was about Indian corporate houses rolling out malls and
supermarkets, but with Wal-Mart coming into the Indian market, the era of the
superstore is dawning. Unlike the kirana stores that served us for decades, this new
breed of retail chains is heavily dependent on IT.
Wal-Mart, the world’s largest retailer, and Bharti Enterprises have signed a
Memorandum of Understanding (MoU) to explore business opportunities in the
Indian retail industry. This joint venture will mark the entry of Wal-Mart into the
Indian retailing industry.
The biggest competitor for Bharti-Wal-Mart is likely to be Reliance Retail, the
retail wing of Reliance, which had planned to establish 10,000 stores by 2010. It
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had already opened 11 pilot stores under the “Reliance Fresh” format in
Hyderabad.
All these trends and developments present a great business opportunity for
software and hardware vendors from across the globe. Indian solution providers
are targeting this segment have reason to rejoice. For while organised retail
occupies a miniscule two to three percent of the overall Indian retailing industry,
that is poised to change.
In spite of the prospects being good things aren’t quite as rosy when it comes to
awareness of IT systems. In most cases, organised retailers in India have installed
solutions that help them automate transactional systems.
With the retail sector in India undergoing a transformation due to the entry of large
corporate houses, IT managers and CIOs are now looking forward to know how IT
can help them achieve the business goals of their organisations.
Standards-based architecture and software support all kinds of mission-critical IT
applications for enabling greater efficiency, significant cost savings, and new
business value. The critical activities that can be handled by IT are finance and
accounting, business intelligence, vendor development and management, supply
chain management, merchandising and inventory management, facilities
management, stores management, customer relationship management, branding,
marketing, sales promotion and HR.
Like any other vertical, retail also stands to benefit from elaborate IT set-ups.
However, this is subject to the scale and size of the organization, as well as an
objective assessment of its requirements. Key common challenges that can be
tackled through IT implementations include accurate merchandising, improved
planning, and increasing profitability, enhancing customer experience,
strengthening store operations, improved workforce management, and improving
the supply chain. This is in fact one of the key imperatives facing retailers in India,
to have a robust and scalable supply chain that will facilitate rapid growth.
Since a basic objective is to make data available to users and customers, proper IT
implementation and superior IT infrastructure ensure that in spite of getting
minimal details, the retailer captures the right information, which flows to
everyone from the back office staff to the head office managers. The entire
information flow must be seamless. A retail business works on a network
environment because the stores connect to one another as well as to supplier sites.
This is because in the retail business quick response is the key to success. Proper
IT implementation also ensures that investment in retail reduces substantially.
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Executive Summery:-

 Insurance Industry in India has a very huge potential to grow in coming

years. .
 Shopassurance simply means distributing Insurance or financial
products through the retail chains.
 This channel is prompt by number of factors viz. Psycho graphical,
Economical, Social, Politico legal and Demographical. The list is not
exhaustive but it is sufficient to have the deep understanding of the
factors influencing the need for developing a new channel.
 Psycho graphical Factors are those factors that include the behavioral
aspect of the individual viz. lifestyle, living standard. Here purchase
decision in influenced by those issues that affect the lifestyle of the
consumer or in the other that reflects the status. For e.g.: purchase
decision related to buying of car and that to Mercedes Benz
 Talking specifically to the Insurance sector, here customer will buy only
that policy that has got high premium or that type of policy which
company is promoting to limited high-income level group only. For e.g.
"Life Time Super" policy of ICICIPrudential life Insurance is meant for
only those individual who can pay at least Rs. 20000/- per annum.
 Economical factors affect the purchase decision by influencing the
issues pertaining to money and income level of the individual.
Consumer will buy only that product which will not have any negative
effect on his pocket. For e.g. decision to buy an Insurance policy is
influenced by the deepness in the pocket.
 Social factor affect the purchase decision by influencing the issues
pertaining to social beliefs and morals.
 Demographical factor is that factor which has got the maximum of its
effect in the purchase decision of the product and specially if that
product is life Insurance product.
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The Study and Research Methodology:-

This study, which was conducted in the suburbs of Mumbai city, Dombivali and
Nasik. The duration of the study was 1 month. The method which we used to
collect the information was through telephone and personal interview.
The data collection method was through random method and the sample size is
moderate. I met around 40 people among them actual eligible were 28. These are
the people who are having at least one or more than one Insurance policies.
The collection of primary and secondary data was then restructured and
reevaluated according to the need and the objective of the study. The data thus
collected undergone the various round of editing, coding and decoding as the
various interconnected links was their in the study.
The study covered 28 individuals, of whom 80 % were found were happy about
their Insurer and rest 20 %, were ignorant about the Insurer. It was 78 % of the
male who was there in the total insured and rest 22% were female. Occupation
wise 50 % of the total insured were into service and 25 % into business. There was
an immense rise in market awareness and the benefits from the competitor among
the Individuals.
The target group for the study was the age group between 25-40 yrs. I have
started searching for the potential consumers in the nearby area of my college and
the around my residence. Then I got references through my friends and then the
study spread across the city and some towns of Maharashtra.
Main Aim to conduct this study was to get the closer view of the consumers
about life Insurance which was a little difficult as it’s a intangible product and
consumers are not so willing to reveal their identity because of various reasons for
that I made a declaration on the letterhead of college to convince them about the
privacy of this report and their importance in contributing in this study.
Filling up questionnaire from the people was a great experience as they ask
all the information about the Insurance terminology and it was a satisfying survey
also as more and more customers are aware about the presence of private life
Insurance players.
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R etail and Insurance industry have changed rapidly in the changing and
challenging economic environment throughout the world. In the
competitive and liberalized environment everyone is trying to do better
than others and consequently survival of the fittest has come into effect. Insurance
companies are also to be competitive by cutting cost and serving in a better way to
the customers. Now the time has come to choose and adopt appropriate distribution
channel through which the Insurance companies Can get the maximum benefit and
serve Customers in manifold ways. The intermediaries in the Insurance business
and the distribution channels used by carriers will perhaps be the strongest drivers
of Growth in this sector. Multi channel distribution and marketing of Insurance
products will be the smart Strategy of continue to play an important role in
distribution, alternative channels like corporate agents brokers and Shopassurance
will play a greater role in distribution. The time has come for the industry
To gradually move from traditional individual agents towards new distribution
channels with a paradigm Shift in creating awareness and not just selling products.
The game is old but the rules are new and still developing. Ensconced in a
monopoly run from the nationalized days beginning in 1956, the Insurance
Industry has indeed awakened to a deregulated environment in which several
private players have Partnered with multinational Insurance giants. However
despite of its teaming one billion populations, India still has a low Insurance
penetration of 1.95 percent, 51st in the world. Despite the fact that India boosts a
saving rate around 25 percent, less than 5% is spent on Insurance. To streamline
the saving into Insurance, Shopassurance is the best channel to tackle four
challenges facing the industry: - product innovation, distribution, customer service
and investments. The objective of this study is to show the present status of
Shopassurance and how it is gaining world wide acceptance. In the age of stiff
competition no one is ready to loose its own possession. In this case merger among
the retailers and
Insurance sector is necessary to take the challenges of liberalization. In this article
there are six phases. In the

 First phase we would like to define Shopassurance.

 Second phase – benefits of Shopassurance from the view point of retailers,
insurer and customer,
 Third phase- SWOT analysis of it in India,
 Fourth phase: status in the world,
 Fifth phase comment and conclusion.
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Definition:
Shopassurance, known as and most popular in Europe is the simplest way of
distribution of Insurance products through a retail outlet. It is basically selling
Insurance products and services by leveraging the vast customer base of retailers
and fulfills the retailers and Insurance needs of the customers at the same time.
It takes the various forms depending upon the demography, economic and
legislative climate of the country, while demographic climate will determine the
kinds of Insurance products, economic climate will determine the trends in terms
of turnover, market shares etc, legislative climate will decide the periphery within
which shopassurance has to operate. The motives behind the shopassurance also
differ for retailers it just acts as a means of product diversification and additional
fee income; for Insurance company it acts as a tool for increasing their market
penetration and premium turnover and for customer it acts as a bonanza in terms of
reduced price, high quality products and delivery to doorsteps so every body is a
winner here.
Benefits:-
Shopassurance as an important tool in the hands of retailers, insurers and
customers to maximize their benefits at a time. As everybody is a winner in this
system, their respective benefits are given below:-
From The Viewpoint Of Retailers:-
Retailers have power; existing structure to relate to the customers needs why
retailers will enter in this area.
The reasons behind it are given below:
I) in a situation of constant asset base the retailers can increases return on assets
(ROA) by increasing their income, by selling Insurance products through their own
channel. It can cover operating expenses and make operating expenses profitable
by leveraging their distribution and processing capabilities.
II) the retailrs have a branch network to make face to face contact with the
customers and a great deal of trust over the customers. By leveraging the facilities,
the retailrs can guess the attitude and diverse needs of the customers and could
change the face of Insurance distribution to personal line Insurance.
III) retailrss enjoy significant brand awareness within their geographical region
providing for a lower per lead cost when advertising through print, radio and
television. The advantage of a retailers over traditional distributors is the lower
cost per sales lead made possible by their sizeable loyal customer base.
Iv) retailrss have extensive experience in marketing to both existing customers and
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non-customers. They also use technology access multiple communication channels

such as statement inserts, direct mail, a tms, telemarketing etc for the improvement
in transaction processing and customer service. European retailrss have more than
doubled the conversion rates of Insurance leads into sales and have increased
Sales productivity to a ratio which is more than enough to make shopassurance a
highly profitable
Proposition.
• From The View Point Of Insurer:-
I) the insurer can increase their volume of business through retailrsing distribution
channel and gain better.
Ii) if can solve the difficulties arising out of price competition which has driven
down the margins
And increased the compensation demand of successful agents.
Iii) through agents the insurer can only sell fewer and larger policies to a more up
scale client. Mainly middleclass income holders who comprise the bulk of retailrs
customers get very little attention. By using retailrs channel the insurer can capture
much of its under served market.
Iv) by cutting cost insurers can serve better to the customer in terms lower
premium rate and
Better risk coverage through product diversification.
From The Customers' View Point :-
Product innovation and distribution activities are directed towards the satisfaction
of the needs of the customer. Shopassurance model assists customers in terms of
reduced price, diversified products quality products, in time and doorstep service,
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SWOT analysis in the context of India:

Strengths:-
In a country like India of one billion people where sky is the limit there is vast
untapped potentials waiting for life Insurance products. There are more than 900
million lives waiting for life cover, 200 million house hold waiting for household
Insurance policy. Millions of people travelling in and out of India are waiting for
overseas mediclaim and travel Insurance policies whole world is eyeing on the
second largest middle class segment after china to tap. Other than this there is a
huge pull of skilled
Professionals to relocate the shopassurance venture to provide new product
through R & D last of all, LIC & GIC have large branch net work facility to
implement shopassurance model very effectively.
Weaknesses:-
In the case of rapid growth of information technology Retailers and Insurance
companies are still lacking its implementation. Though it is awakening but it is too
late and too little. In the age of wide area network (WAN) and vast area network
(VAN), simple LAN has not yet been introduced even in the head-quarters.
As discussed earlier about the untapped middle class segments, they are over
burdened with the inflationary pressure and tax exemption for all Insurance
products will inspire the customers (though it is done partially) to be insured.
Another one is inflexibility of the products, i.e. they are not tailor-made to the
requirements of the customer.
Opportunities:-
Though not at the same level, retailers data base in India is enormous and has to be
dissected variously and various homogeneous groups are chummed out in order to
position shopassurance products. With a good it structure they can really do
wonders. Appropriate atmosphere and political conscientious have to be built up
for liberalization and if it is done then RBI or IRDA should have no hesitation in
allowing the marriage of Retail and Insurance sectors to take place. Merger and
acquisition or setting up of joint venture is necessary in this direction.
Threats:-
Success of shopassurance venture requires change in approach, thinking and work
culture on the part of everybody involved. In India there is always a tendency to
restrict any change whether its impact becomes favorable or not. So there should
be a clear vehemence. Sometimes nonresponsive from the target customers
becomes possible threat as it was found in USA in 1980's and failed. Us retailers
have turned their attention (since late 1990's) towards life Insurance. Again the
investors in the capital may turn their face in case the rate of return on capital falls
short of the existing return on capital. So the Return from shopassurance must at
least match those returns.
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World view of Insurance Distribution Channel:-

Life Insurance businesses continue to expand in Asia’s emerging markets,

particularly China and India. Companies are extending their reach into more cities
as well as securing new distribution partner tie ups.
True “alternative” distribution channels are also under increasing focus as insurers
seek to take advantage of wide retail networks, high customer foot traffic and
strong affinity branding:
In Indonesia, “Shopassurance” appears to be another new developing channel
with an innovative campaign promoting personal accident plans to store
cardholders.
In a similar vein, “Postassurance” sees its debut with life Insurance soon to be
available through the postal networks of more than 3,000 offices in Vietnam and
36,000 in China. In the highly competitive arena of bancassurance, Insurance
companies are proving to be as active (or effective) as the foreign players in
developing this channel. Recent South Korean statistics show that the
bancassurance market share of foreign companies has fallen significantly.
The above are excerpts of some of the news you can find in the following pages.
We hope you will enjoy reading the publication and find the news useful. As usual,
we welcome your feedback so please feel free to write to us for any comments or
suggestions that you may have.
China:
Statistics from the China Insurance Regulatory Commission (“CIRC”) indicate that
there were 40 foreign Insurance companies, including both life and non-life,
operating in China at the end of December 2005. They also show that there were
1,800 Insurance intermediary agencies at the end of 2005, including 1,313
Insurance agencies, 268 brokers and 219 loss assessors.
According to a survey conducted by CIRC, only 58.8%, of the 1,575 Insurance
intermediaries surveyed have been certified. In some Insurance companies, the
percentage of certified agents was less than 50%, the minimum level required by
CIRC.
Taiwan
Statistics released by the Life Insurance Association of the Republic of China show
that 37.5% of unweighted new premium income was written through the
bancassurance channel and 58.5% was sold through other channels of the life
insurers in Taiwan in 2005. This amounted to NT$203.1 billion (US$6.34 billion)
and NT$316.3 billion (US$9.88 billion) respectively. The broker channel
represented the balance 4% which brought in NT$21.5 billion (US$671.87
million).Unfortunately, the statistics do not differentiate between single and regular
premium business in Taiwan.
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South Korea

Source: Korea Life Insurance Association

Unweighted new premium income of KRW2,775.3 billion (US$2.89 billion) and
unweighted total premium income of KRW35,586 billion (US$37.11 billion) was
collected in the period April to December 2005. The new premium collected by the
top ten insurers, split by distribution channel is shown in the graph on the left.
Smaller insurers increased their share of sales through the bancassurance channel
to 42%, up from 32% the previous year, while foreign players saw their share fall
by 10% for the same period, to 21%. The combined share of the bancassurance
channel of the three major Korean insurers, Samsung Life, Korea Life and Kyobo
Life remained unchanged at 37%.
The number of individual agents as at the end of December 2005, stood at 124,494,
a fall of 3.5% since October 2005. The number of individual agents has declined
steadily in recent years, representing a change in the composition of insurers’
agency forces. In the past, most agents were women working part-time with little
professional training, whereas there is now a growing emphasis on full time
professionally trained agents. However, as at December 2005, 84% of individual
agents were still female “solicitors”.
Singapore
Total unweighted premium income of S$11,388.0 million (US$7.12 billion) and
unweighted new premium income of S$6,142.5 million (US$3.84 billion) was
collected in 2005. The unweighted new premium collected, split by insurer and
distribution channel is shown below.
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Source: Life Insurance Association of Singapore

The market share of the bancassurance channel was reported to have declined
significantly from 32% in 2004 to just 21% in 2005. However, this apparent
contraction is largely due to the distortion from the passing of significant
premiums to the “non-intermediary” channels of Great Eastern and NTUC Income,
following the privatization of the Dependants' Protection Scheme ("DPS") on 16
September 2005. DPS is a government Insurance plan formerly made available
through the Central Provident Fund Board.
India:

Source: IRDA Annual Report 2004-05

The state insurer LIC relies heavily on its agency force which accounts for 98.8%
of their total life Insurance sales in the year 2004-05. Private insurers on the other
hand sold 59.3% of their policies through individual agents, with 23.2% through
banks and other corporate agents. About 10% of private player sales were “direct”
(where no intermediaries were involved), while 6.25% came through “referrals”
(when a third party database is used for a fixed fee). As LIC dominates the market,
the overall distribution split in India is skewed towards individual agents.
Market developments
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Shopassurance Road Ahead in India:

 This concept, Shopassurance was pioneered in the UK, where retailers
Tesco and Marks & Spencer and pharmacist Boots have been selling
Insurance for years.
 In South Africa too, retail chain Pick ‘n’ Pay has been selling Insurance. This
trend is now catching on in Asia. In Philippines SM Malls is turning out to be
significant distributor of Insurance products.
 According to a report on Insurance distribution by consultancy firm Watson
Wyatt, in Indonesia, shopassurance is a new developing channel.
 According to the report, US insurer Cigna is targeting a 50% increase in
premium in Indonesia following its tie-up with French retailer Carrefour of
France. The retailer’s outlets in 21 locations will be used to sell life
Insurance to customers holding Carrefour credit cards.

The idea of vending Insurance with retail products dubbed "Shopassurance", was pioneered in
the UK where retailers such as Tesco, Marks & Spencer and the pharmacist Boots have been
offering Insurance to their customers.

 In the US, Bajaj Allianz Life Insurance had made an attempt to sell life
Insurance at retail outlets through a tie up with Shoppers’ Stop.
 Bharti AXA Life Insurance is negotiating a tie-up with Bharti Retail (a joint
venture with Wal-Mart) and Sunil Mittal's FieldFresh Foods Ltd for this.
 FieldFresh is the partnership venture between Bharti Enterprises and ELRo
Holdings India Ltd, an investment company of the Rothschild family.
FieldFresh provides fresh produce to markets worldwide.
 These chains, which were not considered as separate sectors a decade ago,
have now become the biggest and most powerful business tools in the
country. Pantaloons, WestSide, Big Baazar, FoodWorld, Reliance Fresh,
Shoppers Stop, Spencers and Subhiksha have built strong reputations on
the shopassurance front.
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 Kishore Biyani's Future group, which owns Pantaloons and Big Baazar, is a
stakeholder in Future Generali India Life Insurance Company and Future
Generali India Insurance Company.
 Ambani's Reliance Fresh is into life and non-life Insurance.
 ITC has an Insurance brokering venture called ITC Choupal.
 Pantaloons, has sold over 3.5 lakh credit cards to its customers at Big
Bazaar and Food Bazaar outlets.
 The group is expecting around 200 million customers to walk into these
outlets, out of which at least a substantial section could be prospective
customers for financial products.
 These markets and chains have a special appeal as they deal with different
categories of customers on the basis of mutual relationships. This will make
the insurer's job easier as Insurance is also sold mostly on a relationship
platform, according to industry experts.
 After the Insurance industry was opened to the private sector in 2002, both
public and private sector companies have tried every possible channel,
including direct agents, brokers, NGOs and SHGs, to sell their products. The
latest channel was bancassurance. Now, shopassurance is set to become
the brave new channel for Insurance sellers.
 According to industry experts, shopassurance has been successfully tested
abroad. Leading retail giant Wal-Mart has been selling life and mortgage
Insurance in addition to motor, travel and home Insurance, through its
stores worldwide.
 Bajaj Allianz has tied up with Godrej Agrovet to sell its Insurance policies
through Godrej Aadhaar, an agri services-cum-retail shop.
 MetLife Insurance has tied up with Mumbai's Apna Bazar co-operative
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Changing customer trends:-

As Insurance sector is becoming more and more competitive the consumers are
changing the trends according to the situation. The survey reveals the main
challenging trends in the consumer buying behavior.
The profile of the typical Insurance customer is taking a new and definite
shape and one thing is clear: the customer is increasingly aware about internet,
comparative pricing and increased bargaining power. In short customers have
become more self sufficient, price sensitive, and less loyal.
Let’s take a look about the changing trends in consumers:-

Priority relationship 24

Less Formalities 15

Relationship with Agent and Transperency 18

Want Inproved ease of purchase and Interaction 20

Knows Information About Insurance Products 16

Incresed Use of Tecnology 10

Most Price Sensitive 13

0 5 10 15 20 25 30

Changing Customer Trands

1. Priority Relationship:-
Consumers want that insurers should give them a priority in every aspect.
As insurers are already giving them priority they are more inclined towards
increased attentiveness and less patient.
They don’t like to wait for the solution of their problem. So this will
became a trend setting pattern in Insurance industry and ICICIPrudential
already have InstaInsure for the satisfaction of these less patient
consumers.
85% consumers give preference to Priority relationship.
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2. Less Formality:-
Consumers prefer those insurers who are having a quick processing of
documents and less formalities and practice approach.
72% give priority to fewer formalities.

3. Agent relationship and Transparency:-

Insurance is an intangible product and it is sold on sole trust on the agent
(Advisor) of the company
Also the total transparency in the transactions the trust of the customer and
help in increasing the business.
Among 75% surveyed said that that they have purchased this product
because they believe in their advisor and they like the performance of the
company and they feel safe with this company.
4. Want improved ease of purchase and interaction:-
Easy availability and more convenient interactions help in increasing the
business.
75% of total surveyed give priority for this.
5. Knows information about Insurance products:-
With consumers becoming more and more interactive in using the technology
they are well versed with the knowledge of completion in Insurance industry.
57% were regularly evaluating their Insurance with other products.
6. Price sensitive:-
Quote of Insurance premium is gaining a more importance in Insurance
industry as people are more inclined towards more coverage at fewer
premiums
As it is in initial stage about 46% were aware about this.
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Primary Factors Influencing Purchase Decisions:-

Consumers of Insurance products are mainly influence by various social,
psychological and demographical factors but here are some primary factors about
the Insurance purchasing decisions.

Brand

Life Stage

Service

advice

Product

price

1. Brand: -
The consumers give most preference to the popular brand who has
achieved the highest safety in the Insurance market.
Consumers feel trust about the popular brands and more inclined towards
them.
Among the surveyed mostly people are brand aware and the most recalled
brand was LIC after that ICICIPrudential, Birla Sun life, Bajajallianz were the
few one.
2. Life Stage: -
Life Stage plays an important part in the purchasing decision of the
customer as youngsters are more inclined towards short term policies while
middle age people are inclined towards family safety.
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3. Service:-
General image about the Service of the Insurance companies plays an
important part in the decision making.
Companies with higher customer satisfaction and hassle free claims get
maximum market share.
4. Advice:-
Mostly consumers don’t believe in the advisors but believe in their close
friends and wife.
In fact wife plays an important part in decision making.
5. Product:-
After evaluating all these criteria people evaluate product feature.
The product having most customer needs satisfying features sells the more.
6. Price :-
Price plays an important role in purchasing behavior of consumers.
Insurer with competitive price and more coverage with fewer premiums
take the maximum market share.
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Response to Channel:-
With the evolution of Insurance industry there is a greater need for the perfect
channel for the distribution of the Insurance.
Here is graphical representation of the consumer’s response to the channel

Respone to Channel
Financial Advisors 15

Alternative Channel 5

Advisers 30
Respone to Channel
Tied Agency 20

Bancassurance 30

0 10 20 30 40

 Among the surveyed consumers the most preferable channels for the
buying Insurance was Bancassuraance and the second is Agent.
 Bancassurance is the innovative channel in Insurance distribution
channel as it includes the perfect blend of trust in bank and
additional service.
 Agent who builds trust along the time period with the customer is
the most important person in terms of Insurance buying.
 Most of the people buy only because of the agent.
 Financial advisors have a limited role in our developing market.
 Alternative channel such as Shopassurance in which Insurance is
made available through retail outlets have a limited scope and is in
nascent stage in India. E. g. Future Gererali Life Insurance, Bharati
AXA etc.
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Most Important customer influencing factors:-

Here are the most influencing factors of the Insurance buying behavior:-

Customer Satisfying Criteria

Closer Branches 22

Adviser Relationship 20

Simplicity of Information 25

Quick Responcive 20
Customer Satisfying Criteria
Right Specifications 18

Any time availability 24

Quality of advice 20

0 5 10 15 20 25 30

Closer Braches:-
Customers are wiling to purchase Insurance from the insurer who is nearer
to their house as a part for the convenience for future interactions.
So having the maximum network of the branches favors the sells.
Advisor Relationship:-
Good trained and groomed advisor is the most influencing factor in buying
behavior
Most importantly the advisor speaking in the local language having a more
touch towards purchasing decision
Also having a female advisor have a significant impact in Insurance selling.
Simplicity of Information:-
Information about the product in the simple language and in the local
language impact more in consumers as Met life come up with regional
information broacher abut Insurance in Punjab .
Right Specifications:-
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Right mixture of customer needs with the affordable price makes a great
combination about the Insurance
Quick responsive:-
Customers can’t wait especially when market is competitive and no. of
competitor is more.
Hence a quick resolving in customer query helps in customer satisfaction
and word of mouth advertising also.
Any time availability:-
Trust of being heard at any time in the day gives the more inclination and
loyalty to the Insurance.
Quality of advice:-
Getting a professional advice from an insurer feels a lot to the consumer as
ICICIPrudential have made the Life Planner activity to act as a financial
consultant.
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Summery:-

Price Focused / Service inclined :-

Price focused customers are likely to relinquish advice for a cheaper price.
In fact, they will actively pursue a better price, even though they recognize
that product specifics might suffer. Beyond price they are more inclined to
focus on service than product, i.e. they would rather improve their after
sales service than attain precise product specifications.

Relationship focused/service Inclined:-

For those customers advice from a trusted advisor is paramount, and they
will use an advisor when purchasing any product, including very basic ones.
Beyond the advisory relationship, these customers most appreciate for
sales service, which they are likely to receive through their advisors.

Non-committals:-
In this group, there is no overriding focus on price or relationship. Each
Customer makes each decision based on market circumstances. However,
they all value after-sales service more than product specifics.

Product Focused/Relationship Inclined.

Customers in this group focus on product firsthand foremost. Depending on
the complexity of the product, they may use an advisor or conduct research
themselves before buying.

Competitiveness :-
To remain dominant I Business like Insurance in which the product is
mostly intangible more aggressive strategy is to be applied according
to customer and more emphasis should be given to the customer
relationship and loyalty building.
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In a Nutshell we can Say:-

The Insurance customer has changed over the last five years,
becoming more empowered and less loyal.
Customers’ primary Insurance purchasing criteria–price, product
specifications, and advice–vary based on region and Insurance
product type.
Increased complexity of customer channel usage necessitates multi-
channel integration.
Customer satisfaction does not equal customer loyalty.
Delivering a consistent, high-quality customer experience is essential
to future success.
30 | P a g e

Recommendations
 In a situation of constant asset base the retailers can increases return on
assets (ROA) by increasing their income, by selling insurance products
through their own channel. It can cover operating expenses and make
operating expenses profitable by leveraging their distribution and
processing capabilities.
 The retailers have a branch network to make face to face contact with the
customers and a great deal of trust over the customers. By leveraging the
facilities, the retailers can guess the attitude and diverse needs of the
customers and could change the face of insurance distribution to personal
line insurance.
 Retailers enjoy significant brand awareness within their geographical
region providing for a lower per lead cost when advertising through print,
radio and television. The advantage of retailers over traditional
distributors is the lower cost per sales lead made possible by their sizeable
loyal customer base.
 Retailers have extensive experience in marketing to both existing
customers and non-customers. They also use technology access multiple
communication channels such as statement inserts, direct mail,
telemarketing etc for the improvement in transaction processing and
customer service. European retailers have more than doubled the
conversion rates of insurance leads into sales and have increased sales
productivity to a ratio which is more than enough to make shopassurance
a highly profitable proposition.
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Annexure I
Sample Questionnaire:-

Personal Details-
1. Name-
Age-
Sex-
Income group (annual income in laky)-A) 0-1 B) 1-2 C) 2-3 D) 3-
5 E) above
Profession-
Mob. No-
E-mail-

2. Do you have any life Insurance policy?

Yes/no ______________, if yes, name of

company________________________________
3. Which type of policy?

A.ULIP B. ENDOWN MENT D. TERM. E .Health F . . . Do not know

3. Which are the Insurance Companies you are aware about?
a)
b)
C)
4. What parameters you consider while you go for Insurance?
A. Brand Name Rank-
B. Returns Rank-
C. Tax benefits Rank-
D .Risk covers Rank-
E. Services Rank-

5. from where you purchase policy?

A. Agent B. Bank C. Direct marketing D. With house loan
 32 | P a g e

6. Which service of your insurer you like most?

7. Are you satisfied with current Company services?
Yes/no if no, why?
8. Have you purchase Insurance from any other insurer than your regular Insurer?
Why?
9. Whose advice you find most important in Purchasing Insurance?
______________________________________________________
10. Do you any suggestions/ recommendations?
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Annexure II
Postal Address Contact
Name Nos.

Nasik 9960707012
Amit Jain
Pune 9960565731
Amit Potphode
Anupam Beedkar 9960171539
Pune
Kharghar,Navi Mumabi 9820495869
Shahid Sayyad
Pune 9975474772
Bhramhadev Mane
Mumbai 9890914841
Chaitanya Katekar
Nasik 9850840770
Punam Gangurde
Mumbai 9867521201
Bapu Sonavane
Mumbai 986721209
Vikas Turakane
Kalewadi, Pune 9970800846
Pravin Jain
Pune 9881240677
Suyog Jain
Cidco Nasik 9271652764
Satish K.
Kalamboli Navi Mumbai 9833066417
Sachin Hatge
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Mira Road, Mumbai 9920960912

Rupali Umrotkar
Ambernath, Mumbai 9766614560
Sanjiv Singh
Powai 9920071575
Nandini Gurav
Powai 9867521212
Ratna Gurav
Mulund 9820021600
Hareh Mehta
Mulund 9322934902
Dr. Sameer
Thane 9867472160
Satish Tiwtane
Thane 9867019048
Santosh Dalvi
Mulund 9820397849
Gopal Gupta
Dombivali 9960617371
Ashish Bidve
Dombivali 9326796495
Chakradhar Phasle
Dadar 9890716263
Jayashri Pachange
Mulund 9323607046
Bhavana Pote
Srvoday nagar Mulund 9819022930
Brinda
Venkatramani
Kandiwali 9870039737
Ravikiran R
Powai 9940282212
Manjusha Devediga
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Mumbai 1-600-44-6969
Future Generali Sanjeev Pujari 022-40976666

Andheri 1-866-765-4296
Reliance Insurance Purnima Gupta 30479600/30479784

Mumbai 1800-425-1350
Bharti-AXA
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Bibliography:-
http://www.telegraphIndia.com/1030616/asp/opinion/story_2065311.asp
https://www.Insurancemall.in/blog/category/Insurance-News-India.aspx
http://digital.dnaIndia.com/epapermain.aspx?queryed=9&eddate=3/27/2008
http://google.com