SUMMER TRAINING REPORT SUBMITTED TOWARDS THE

PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

INTERNATIONAL BUSINESS

CUSTOMER RETENTION AND EXPANSION STRATEGY BY

UNDERSTANDING BEHAVIOR DYNAMICS, NEED STATES,
AND DEVELOPING VALUE-BASED OFFERINGS AND
SERVICES

SUBMITTED BY:
VIVEK GUPTA
MBA-IB (2006-2008)
Roll No. : A1802006A45

INDUSTRY GUIDE FACULTY GUIDE

AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA

AMITY UNIVERSITY – UTTAR PRADESH
Company Certificate

1
 (LETTER HEAD of the Company)

TO WHOM IT MAY CONCERN

This is to certify that Mr.Vivek Gupta, a student of Amity

International Business School, Noida, undertook a project on
“ CUSTOMER RETENTION AND EXPANSION STRATEGY BY
UNDERSTANDING BEHAVIOR DYNAMICS, NEED STATES, AND
DEVELOPING VALUE-BASED OFFERINGS AND SERVICES ” at

BHARATT AXA From 17/05/2007 to 17/07/2007 .

Mr.Vivek Gupta has successfully completed the project under the

guidance of Mr. Manish Rustogi. He is a sincere and hard-
working student with pleasant manners.

We wish all success in his future Endeavour’s .

Signature with date

(Name)
(Designation)
(Company Name)

CERTIFICATE OF ORIGIN

2
This is to certify that Mr.Vivek Gupta, a student of Post Graduate
Degree in International Business, of Amity International
Business School, Noida has worked in BHARTI AXA, under the
able guidance and supervision of Mr. Manish Rustogi, Manager
of agency of Bharti Axa Life Insurance. The period for which he
was on training was for eight weeks, starting from 17/05/2007 to
17/07/2007.

This Summer Internship report has the requisite standard for the
partial fulfillment the Post Graduate Degree in International
Business. To the best of our, knowledge no part of this report has
been reproduced from any other report and the contents are based
on original research.

Signature Signature
(Faculty Guide) (Student)

3
 ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr.

Manish Rustogi, Manager of agency of Bharti Axa for his able
guidance, continuous support and cooperation throughout my
project, without which the present work would not have been
possible.

I would also like to thank the entire team of Bharti Axa, for
the constant support and help in the successful completion of my
project.

Also, I am thankful to my faculty guide Prof Mr. Ravi

Prakash of my institute, for his continued guidance and
invaluable encouragement.

Signature
(Student)

4
 TABLE OF CONTENTS

Subject Page.no

EXECUTIVE SUMMARY--------------------------------6
RESEARCH OBJECTIVE---------------------------------8
HYPOTHESIS-----------------------------------------------9
RESEARCH DESIGN--------------------------------------11
SAMPLE DESIGN------------------------------------------11
DATA COLLECTION--------------------------------------12
SCOPE OF STUDY-----------------------------------------13
LIMITATION------------------------------------------------14
CRITICAL REVIEW OF LITERATURE ---------------15
INDUSTRY PROFILE -------------------------------------19
COMPANY PROFILE. ------------------------------------28
SWOT ANALYSIS-----------------------------------------33
FINDINGS & ANALYSIS--------------------------------35
RECOMMENDATIONS ----------------------------------43 -
BIBLIOGRAPHY-------------------------------------------46
ANNEXTURES---------------------------------------------47
CASE STUDY-----------------------------------------------51
SYNOPSIS---------------------------------------------------58

5
 EXECUTIVE SUMMARY

The contour of insurance business has been changing across the globe and
the rippling effects of the same can be observed in the domestic markets
also. The Insurance sector in India has gone through a number of phases
and changes, particularly in the recent years when the Govt. of India in
1999 opened up the insurance sector by allowing private companies to
solicit insurance and also allowing FDI up to 26%. By end March 2006,
there were fifteen life and fifteen non-life insurance companies. Bharti
Axa Life insurance company was granted Certificate of Registration in
July, 2006 and commenced its operations during the current financial year
2006-07.

Bharti AXA Life Insurance is a joint venture between Bharti, India's

leading private telecom company and AXA, world leader in financial
protection and wealth management.

This study is carried out to understand the behavioral dynamics of

consumers and the triggers for behavior and develop rapid stage
segmentation strategies for customer retention and expansion

An exploratory research was carried out through questionnaire for which a

stratified sampling technique was adopted and a sample size of 100
individuals was taken. A questionnaire was drafted to analyze the
dependence of type of insurance policy required, on the life cycle stage of
the individual. It will also clearly show the customers perception towards
insurance compared with the other investment options and financial
instruments, and as to how we can make it better.

6
Both qualitative and quantitative techniques were applied but this study
heavily relied on qualitative technique and it was proven that the life
cycle stage of an individual is an important determinant for deciding the
type insurance policy required by the individual.

After the completion of the study the recommendations are 1) Customer

crosses selling and bundling, 2) Implementation of Customer relationship
management, 3) Market of One strategy which has been more clearly
explained in the later stage of the report.

The implication of this research study for Bharti Axa can be developing
customer retention and expansion strategies by creating a bouquet of
offerings to meet and surpass expectations and add value in the business
system and recrafting the offerings at various points in the product life
cycle to provide a total brand value experience.

7
 RESEARCH OBJECTIVE

This paper describes the initiatives adapted to understanding behavior

dynamics, need states, creating rapid segmentation models and developing
value-based offerings and services to re design their own product life
cycles.

This is a holistic approach that defines the environment in the competitive

sphere and understands the messages and experience the consumer is
exposed to both from within the product/service category as well as across
categories.

Primary objective

• Developing customer retention and expansion strategies

Secondary objective

• Understanding the behavioral dynamics of consumers and the

triggers for behavior
• Developing rapid stage segmentation strategies for customer
retention and expansion
• Creating a bouquet of offerings at various inflection points in the
product life cycle to meet and surpass expectations and add value in
the business system

8
 HYPOTHESIS
Hypothesis 0 : the need for old age solution policy depends on the life
cycle stage of an individual.

Hypothesis 1: the need for old age solution policy does not depend on the
life cycle stage of the individual.
Correlations

agegroup oldageneed
agegroup Pearson Correlation 1 .990*
Sig. (2-tailed) . .010
N 4 4
oldageneed Pearson Correlation .990* 1
Sig. (2-tailed) .010 .
N 4 4
*. Correlation is significant at the 0.05 level (2-tailed).

So we fail to reject the null hypothesis

HYPOTHESIS 0: the need for policy for family depends on the life cycle
stage of an individual

HYPOTHESIS 1 : the need for policy for family does not depend on the
life cycle stage of an individual

Correlations

agegroup familyneed
agegroup Pearson Correlation 1 .737
Sig. (2-tailed) . .263
N 4 4
ffamilyneed Pearson Correlation .737 1
Sig. (2-tailed) .263 .
N 4 4

So we fail to reject the null hypothesis

9
HYPOTHESIS 0: The need for policy providing asset building solution
depends on the life cycle stage of an individual.

HYPOTHESIS 1 : The need for policy providing asset building solution

does not depend on the life cycle stage of an individual.

Correlations

assetbuil
agegroup dingneed
agegroup Pearson Correlation 1 .400
Sig. (2-tailed) . .600
N 4 4
assetbuildingneed Pearson Correlation .400 1
Sig. (2-tailed) .600 .
N 4 4

So we fail to reject the hypothesis

10
 RESEARCH DESIGN
Methodology:
An exploratory research was carried out to understand the behavior
dynamics and need states and also understands the messages and
experience the consumer is exposed to both from within the
product/service category as well as across categories. Both qualitative and
quantitative techniques are applicable although exploration relies more
heavily o qualitative techniques.

Sample size:
As the research is based on study to exhibit relation between life cycle
stage of an individual and the type of insurance policy required at
different stages, a stratified sampling technique was adopted and a sample
size of 100 individuals were taken , out of which 20 sampled did not have
a life insurance policy.
The survey has been conducted within the geographic area of Delhi &
Noida. The time period for which survey has been undertaken is may-June,
2006

Sampling techniques:
A stratified sampling technique was adopted because of the nature of the
study and for higher statistical efficiency requirement to come to an
analysis. The sample was carefully drafted. A lot of care was taken and 20
samples from each age group were taken. Knowledge of the sample about
different financial instruments was an important consideration. The age
groups discussed in the study are 20-30, 30-40, 40-50 and 50-60. The
sample was designed in the above stated manner to make the analysis
easier.

11
 DATA COLLECTION

Primary data:
A questionnaire was drafted which included sample rating scales like
simple category scale, multiple- choice single-response scale, multiple-
choice multiple- response scale , multiple- rating list scale, and constant
sum scale, and open ended questions.
The questionnaire contains 12 questions which helps us to analyze the
dependence of type of insurance policy required on the life cycle stage of
the individual. It will also clearly show the customers perception towards
insurance compared with the other investment options and financial
instruments, and as to how we can make it better.

Secondary data:
The secondary data was collected through the web sites of different
organizations, news papers and weekly journals of the Bharti Axa. The
secondary data is collected through the Websites related to insurance sectors,
Journals & Books on Research Methodology.

Techniques used in data analysis: Four hypothesis with both null and
alternate have been taken and correlation technique has been used to
accept or to reject the hypothesis. Correlation technique has been used so
as to show that the type of insurance policy demanded by an individual
depends on the life cycle stage of the same. Correlation analysis has been
done using the SPSS software.

12
 SCOPE OF STUDY

Understand the behavioral dynamics of consumers and the triggers for

behavior and develop rapid stage segmentation strategies. Understand
customer’s perception towards insurance compared with the other
investment options and financial instruments and creating a bouquet of
offerings to meet and surpass expectations and recrafting the offerings at
various points in the product life cycle to provide a total brand value
experience.

13
 LIMITATIONS

 Project was undertaken in the Delhi-Noida region only .So it might

not be a true Representation of the views of the insured of other
places.
 The project is based on survey of population related to Bharti Axa
only. For a better & magnified picture competitor’s similar study
should be undertaken .
 All the responses taken are personal opinions & perception of the
respondents that are subjective.

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 LITERATURE SURVEY
Marketing in India, with its economic and social contrasts, is often
likened to dealing with several markets at the same time. The population
of more than 1 billion differs enormously with 15 different languages,
social customs and lives under varying states of economic development
from the vastly affluent to the destitute.

The personal and general insurance market, hitherto dominated by

governmental monopolistic monoliths - Life Insurance Corporation,
General Insurance - had to make way for a slew of private players who
paired with local financial institutions to revolutionize the insurance
market in India.

Several demographic and psychographic mega trends augured well for the
growth of financial services in general and insurance in particular.

One was the fact that there was a substantial segment of the middle class
population that remained 'unbanked' (40%) and penetration of insurance
was only 13% of the total insurable population!

Besides this, economic growth at 6.5% and the 'demographic dividend' -

55% of the population in the productive age group of 15 - 60 years were
clear indications for exponential growth.

Success factors: Understanding consumer expectations and market

behavior dynamics

An initial comprehensive study of the usage and attitudes towards

insurance revealed interesting perceptions and attitude segments!

15
• To succeed, private players needed to ride piggyback on a strong
local bank (Banc assurance). The bank then provided the source of
credibility
• In terms of risk attitudes, distinct trends emerged.
• The defensive investors were the largest kind (60%). They preferred
safe long-term returns guaranteed by the government as well as
gold, especially the elders. These were also among the higher SEC
segments likeA1.
• There was a small segment of sophisticated investors (34%) who
actually took professional advice from portfolio managers and were
even predisposed to taking calculated risks - i.e., mutual funds,
equity markets. These were typically those who had accumulated a
fair share of wealth and were not insecure about making it work for
them!
• There was also a Young Cosmopolitan (Yo Co) segment (6%). The
YoCos were highly 'self opinionated’ and demanded a higher life
cover. They were keen to be educated on the financial aspects of
investing in local and foreign markets. They were largely neophytes
in the arena of investments.
• Across board consumers expected a reasonable return for their
investments and the time span for returns seemed to telescope
dramatically. Consumers wanted some returns to accrue within four
to five years of entering an insurance policy.
• For the private players the expectations were more stringent! They
were expected to start paying up from a reasonably short time frame
of four years for consumers to feel reassured about their long term
probity and safety of the capital!

16
Focusing on customer equity as a driver to brand equity through
rapid need state analysis, concept generation.

In order to understand consumer equity, a large segmentation and cluster

study based on life stages and market dynamics/behavior mapping was
conducted. This study innovatively meshed the socio-demo and
psychographics variables with the life stage need states of consumers.

Based on their financial investment portfolios and attitudes /expectations

from insurance, five distinct clusters emerged. The key clusters identified
for which distinct value offerings were to be offered were:

• High Net Worth Buyers (16%) - more predisposed to traditional

offerings and mutual funds;
• The Defensive Buyers (48%) - who keep their income in government
assured stocks, liquid forms of investments;
• The Sophisticates (18%) - predisposed towards mutual funds, stocks
through portfolio managers;
• The Pension Savers (12%) - older, more disposed towards safe
bonds, traditional offerings, providing income in later years;
• The Neophytes (6%) - those just starting out, willing to look at
nontraditional offerings with safety, unit linked plans.

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 ATTITUDE TO INSURANCE

5 point scale High net Defensive Sophisticat Pension Neophyte

(mean scores) worth buyers es Savers s
buyers
16% 48% 12%
18% 6%
Prefer to invest in 3.88 4.3 3.6 4.0 4.0
policies recommended
by the advisors
Prefer government 2.88 4.5 3.5 4.0 3.5
backed funds
Prefer other assets like 3.28 4.2 3.0 2.5 1.8
gold
Want company with 3.98 3.4 4.3 3.0 4.5
variety of flexible plans
Want returns on the 4.08 3.5 4.0 3.8 4.0
investment with life
cover
Want the company to 4.78 3.8 4.8 4.0 3.4
be proactive and offer
regular updates and
suggestions

****YVDV Pras ad , I NG Vys ya L i fe In s u ran ce

Vi vek B en gani , I NG Vys ya l i fe In s u ran ce

Nayan tara Ch ak ravarti mu l ti di men s i on res earch I n di a

INDUSTRY PROFILE

18
Indian Insurance Industry
With a large population and untapped market, insurance happens to be a
big opportunity in India. The insurance business (measured in the context
of first year premium) grew at 47.93 per cent in 2005-06, surpassing the
growth of 32.49 per cent achieved in 2004-05. However, insurance
penetration in the country continues to be low. Insurance penetration or
premium volume as a share of a country’s GDP, for the year 2005 stood at
2.53 per cent for life insurance and 0.62 per cent for non-life insurance.
The level of penetration tends to rise as income increases, particularly in
life insurance. India, with its huge middle class households, has exhibited
potential for the insurance industry. Saturation of markets in many
developed economies has made the Indian market even more attractive for
global insurance majors. The insurance market has witnessed dynamic
changes which includes presence of a fair number of insurers in both life
and non-life segment. Most of the private insurance companies are joint
ventures with recognized foreign players across the globe. Consumer
awareness has improved. Competition has brought more products and
better customer servicing. It has had a positive impact on the economy in
terms of income generation and employment growth.

The Insurance sector in India has gone through a number of phases and
changes, particularly in the recent years when the Govt. of India in 1999
opened up the insurance sector by allowing private companies to solicit
insurance and also allowing FDI up to 26%. Ever since, the Indian
insurance sector is considered as a booming market with every other
global insurance company wanting to have a lion's share. Currently, the
largest life insurance company in India is still owned by the government.

Background of insurance industry

Insurance in India has its history dating back till 1818, when Oriental Life
Insurance Company started was started by Europeans in Kolkata to cater to

19
the needs of European community. Pre-independent era in India saw
discrimination among the life of foreigners and Indians with higher
premiums being charged for the latter. It was only in the year 1870,
Bombay Mutual Life Assurance Society, the first Indian insurance
company covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started

mushrooming up. In the year 1912, the Life Insurance Companies
Act, and the Provident Fund Act were passed to regulate the
insurance business. The Life Insurance Companies Act, 1912 made
it necessary that the premium rate tables and periodical valuations
of companies should be certified by an actuary. However, the
disparage still existed as discrimination between Indian and foreign
companies.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19th
of January, 1956, that life insurance in India was completely nationalized,
through the Life Insurance Corporation Act, 1956. There were 245
insurance companies of both Indian and foreign origin in 1956.
Nationalization was accomplished by the govt. acquisition of the
management of the companies. The Life Insurance Corporation of India
was created on 1st September, 1956, as a result and has grown to be the
largest insurance company in India as of 2006.

General Insurance Business (Nationalization) Act, 1972

The General Insurance Business (Nationalization) Act, 1972 was enacted

to nationalize the 100 odd general insurance companies and subsequently
merging them into four companies. All the companies were amalgamated
into National Insurance, New India Assurance, Oriental Insurance, and

20
United India Insurance which were headquartered in each of the four
metropolitan cities.

Insurance Regulatory and Development Authority (IRDA) Act,

1999

Till 1999, there were not any private insurance companies in Indian
insurance sector. The Govt. of India then introduced the Insurance
Regulatory and Development Authority Act in 1999, thereby de-regulating
the insurance sector and allowing private companies into the insurance.
Further, foreign investment was also allowed and capped at 26% holding
in the Indian insurance companies.

Major Players in Indian Insurance

Life Insurance

• Public
o Life Insurance Corporation of India
• Private
o HDFC Standard Life Insurance
o Max New York Life Insurance
o ICICI Prudential Life Insurance
o Om Kotak Mahindra Life Insurance
o Birla Sun-Life Insurance
o TATA AIG Life Insurance
o SBI Life Insurance
o ING Vysya Life Insurance
o Bajaj Allianz Life Insurance
o MetLife Insurance
o Reliance Life Insurance Company Limited
o Bharti AXA

21
 o Aviva Life Insurance
o Sahara India Insurance
o Shriram Life Insurance

By end March 2006, there were fifteen life and fifteen non-life insurance
companies. Bharti Axa Life insurance company was granted Certificate of
Registration in July, 2006 and commenced its operations during the
current financial year 2006-07. The total number life insurer as of now
becomes sixteen

NUMBER OF REGISTERED INSURERS IN INDIA

Type of business Public Sector Private Sector
Total
Life Insurance 1 15*
16
General Insurance 6 9
15
Re-insurance 1 0
1
Total 8 24
32

• One has commenced operations in 2006-07

APPRAISAL OF INSURANCE MARKET

The contours of insurance business have been changing across the globe
and the rippling effects of the same can be observed in the domestic
markets also. Insurers are increasingly introducing innovative products to
meet the specific needs of the prospective policyholders. An evolving
insurance sector is of vital importance for economic growth. While
encouraging savings habit it also provides a safety net to both enterprises
and individuals. With an average annual growth of 37 per cent in the first
year premium in the life segment and 15.72 per cent growth in the non life
segment, together with the largest number of life insurance policies in

22
force, the potential of the Indian insurance industry is still large. Life
insurance penetration in India was less than 1 per cent till 1990-91.
During the 1990s, it was between 1 and 2 per cent and from 2001 it was
over 2 per cent. In 2005 it had increased to 2.53 per cent. The impetus for
growth has come from both the public and private insurers. In addition,
the insurance companies in general and private insurance companies in
particular, are reaching out to untapped semi-urban and rural areas
through advertisement campaigns and by offering products suitable to
meet the specific needs of the people in these segments. Innovative
products, imaginative marketing, and aggressive distribution have enabled
fledgling private insurance companies to sign up Indian customers faster
than anyone expected. While at the time of opening up of the sector, life
insurance was viewed as a tax saving device, policyholders’ perspective is
slowly changing and they are taking insurance cover irrespective of tax
incentives. The insurable populace is looking for avenues which are
offering products which suit their specific requirements, and plenty of
choices are available in the market today.

The changes perceived in consumer attitude towards insurance over

the past Two years

Traditionally the sale of insurance had been driven by the imperative to

save tax. The changes in tax deductibility norms in the budget before the
last one have helped reinforce the idea that investing in insurance for tax
saving is great, but buying insurance to fulfill a financial need is even
better.

A shift in the mix of products bought by consumers

23
There has been a move away from the predominance of money back and
endowment policies. Using Financial Health Check, planners have been
able to get a better understanding of people’s needs.

The building blocks of a financial portfolio should ideally be as follows:

protect your family first through term or whole life. Next protect your
wealth by buying critical illness cover, health cover, hospital cash benefit,
etc. Then save for children’s education through an endowment plan. And
finally save for your retirement needs by investing in a pension plan.

Pension product has sold very well in the last financial year. There is also
selling more of term and whole life products. The single-premium market,
of course, is dead as a stone after the government decided to take away the
tax benefits. In all major markets around the world, 70-90 business comes
from single premium products. It’s a consumer-friendly product: he has to
make a one-time commitment, the charges and commissions are lower
compared to a regular premium product, etc. But in one stroke we have set
ourselves back with this decision.

Performance in the first half of 2006-07

The life insurers underwrote a premium of Rs. 29664.64 crore during the
six months in the current financial year as against Rs. 11323.13 crore in
the comparable period of last year recording a growth of 161.98 per cent.
Of the total premium underwritten, LIC accounted for Rs. 23435.08 crore
and the private insurers for Rs. 6229.56 crore. The premium underwritten
by the LIC and the new insurers grew by 178.69 per cent and 113.78 per
cent respectively, over the corresponding period in the previous year. The
number of policies written at the industry level increased by12.63 per
cent. As against this increase, the number of policies written by LIC
increased by 2.14 per cent whereas in the case of private insurers the
increase was 91.92 per cent. Of the total premium underwritten, individual
premium accounted for Rs. 25637.42 crore (growth of 160.29 per cent) and

24
the remaining Rs. 4027.22 crore from the group business (growth of
173.27 per cent). In respect of LIC, the growth in individual and group
business was 177.86 per cent and 183.71 per cent respectively. In the case
of private insurers, the individual and group business increased by 111.94
per cent and 130.44 per cent respectively. The market share of LIC was 79
per cent in premium collection and 80.09 per cent in number of polices
underwritten. In the corresponding period of last year these shares were
74.26 per cent and 88.32 per cent respectively. The number of lives
covered by life insurers under the group scheme was 87.34 lakhs recording
a growth of 108.62 per cent over the previous period. Of the total lives
covered under the group scheme, LIC accounted for 63.97 lakhs and
private insurers 4.03 lakhs. The life insurers covered 38.97 lakh lives in
the social sector with a premium of Rs.69.75 crore. In the rural sector the
insurers underwrote 21.92 lakhs policies with a premium of Rs. 2271.31
crore.
.

The growth in first year premium was fuelled by sales of unit linked
products for the second consecutive year. In a reversal from the
experience of the previous year, LIC reported a growth of 47.89 per cent
in the number of policies underwritten as against a decline of 11 per cent
in the previous year; the reversal has been witnessed on the strength of the
increase in the unit linked business. The size of life insurance market
increased on the strength of growth in the economy and concomitant
increase in per capita income

MARKET SHARE OF LIFE INSURERS

(Per cent)

25
Insurer 2004-05 2005-06
First year premium
LIC 73.41
64.52
Private Sector 26.59 35.48
Total 100.00
100.00
Single premium
LIC 87.02
84.45
Private Sector 12.98 15.55
Total 100.00
100.00
Renewal premium
LIC 96.18
92.82
Private Sector 3.82 7.18
Total 100.00
100.00
Total premium
LIC 90.67 85.75
Private Sector 9.33 14.25
Total 100.00
100.00

SWOT ANALYSIS

26
STRENGTHS
• Strong new business growth exceeding 40% yoy
• Market increased in agency force, private players 300k
• Successful banc assurance, contributing 25% of private market
• Strong growth of unit linked market at the mass affluent/affluent
end
• Healthy regulatory environment
WEAKNESS
• Life insurance penetration at 3% still largely uninsured or under
insured population
• Private players have limited focus on mass market and lower income
sections and on tier III, semi urban and rural markets
• Market growth largely investment driven protection market still
underdeveloped
• High cost operating models unable to yield profitability in low
ticket, high volume business.

OPPURTUNITY
• Expand beyond proprietary branch outlets through a large number of
partner points of presence
• Establish extensive distribution spreading to tier III , semi urban
and rural locations, with access to the large mass and low income
population
• Develop the pure protection market through large volumes, lower
ticket products
• Sustainable business supported through low cost operations and
service model

COMPANY PROFILE

27
Bharti AXA Life Insurance is a joint venture between Bharti, India's
leading private telecom company and AXA, world leader in financial
protection and wealth management. Their philosophy is to build around
the promise of making people "Life Confident"...

The AXA Group

AXA, ranked No 13 in the Fortune 500 list of global companies managed a

total AUM of Euro 1,091 billion as of June 30, 2006 The AXA group has
over 50 million customers and employs over 112,000 people with a
presence in over 50 countries. For over 2 decades, AXA has been focused
on providing financial protection to millions of families the world over, to
help them lead their lives confidently.

AXA Asia Pacific Holdings (AXA APH) is listed on the Australian and
New Zealand stock exchanges and is 51% owned by AXA Group. AXA
APH is responsible for AXA Group’s life insurance and wealth
management businesses in the Asia-Pacific region. It has operations in
Australia, New Zealand, Hong Kong SAR, China, Indonesia, the
Philippines, Thailand and Singapore. AXA APH had AUD 28.8 billion in
total assets as at 30 June 2005, and reported profit after tax before non-
recurring items of AUD 246 million, for six months ended 30 June 2005.

.The Bharti Group

28
Bharti Enterprises is India’s leading business conglomerate with interests
in telecom, agro business and infrastructure projects. Established in 1976,
Bharti has been a pioneering force in the telecom sector with many firsts
and innovations to its credit over the last decade, the Bharti Group,
through its flagship brand Airtel has endeavored to simplify lives by
dissolving boundaries of communication. The driving force at the Bharti
Group stems from the passion to consistently deliver superior services,
and above all, a delightful experience to millions of customers across the
country. Bharti Airtel is India's leading private telecom service provider
with over 24 million subscribers and has been voted Asia's best managed
company.

. Bharti Tele-Ventures Ltd. (BTVL), a group company, is one of India’s

leading private sector providers of telecommunication services with an
aggregate of 13.76 million customers as on July 31, 2005, consisting of
approximately 12.79 million mobile customers. The company is the only
operator to provide mobile services in all the 23 circles in India. BTVL
also provides telephone services and Internet access over DSL in 15
circles. This is complemented by its national and international long
distance services. BTVL has a market capitalization of Rs.57, 000 crores
(USD 13 billion) as on 23 August, 2005. Bharti Enterprises is also the
country’s largest manufacturer and exporter of telephone terminals. Bharti
also has a joint venture with ELRo Holdings India Ltd. – ‘Field Fresh
Foods Pvt. Ltd’, for the global distribution of fresh fruits and vegetables

BHARATI AXA

29
Bharti Enterprises and AXA Asia Pacific Holdings Limited (AXA) signed
an agreement to establish a joint venture named Bharti AXA Life
Insurance Company Limited to carry on life insurance business in India

August 26, 2005, New Delhi : Bharti Enterprises and AXA Asia Pacific
Holdings Limited (AXA) signed an agreement to establish a joint venture
named Bharti AXA Life Insurance Company Limited to carry on life
insurance business in India.

Under the agreement AXA has a 26% equity interest in the joint venture,
while Bharti holds the balance. AXA, a global leader in insurance
business, enabled the company to have access to AXA’s global life
insurance and asset management expertise. Bharti brought its strong local
market knowledge, reputation and India-wide retail presence.

“The insurance sector in India provides a mega opportunity for private

players like Bharti Axa Despite the strong growth witnessed by the sector
in the recent years, nearly 80% of the Indian population is without life
insurance coverage. As one of India’s leading business conglomerates
having an established brand and a significant presence in the retail space,
Bharti has inherent advantages in being a part of this growth story. In
AXA, Bharti has a global leader as its partner, one that is known for its
expertise and best practice across the world. More importantly, this new
venture also fits into our strategy of taking on projects that make a
difference to the society at large.

This joint venture is an opportunity for AXA to enter the Indian life
insurance market, one of the most attractive emerging insurance markets.
India is a fast growing economy and a huge market with more than 1.1
billion people. This coupled with a large middle class and increasing
income levels will drive growth in the insurance market. Bharti is a well-

30
established and financially strong group whose capabilities and network
will be of significant value to the joint venture.

The joint venture invested in the region of Rs. 500 crores (115 Million
USD) over the first three to four years of operations, reflecting both
partners’ commitment to quickly establish a strong foothold in the Indian
market.

The joint venture commenced business in the first half of 2006, subject to
IRDA, FIPB and other statutory approvals.

Vision

To be a leader and the preferred company for financial protection and

wealth management in India

Strategy

To achieve a top 5 market position in India through a multi-

distribution, multi-product platform. To adapt AXA's best practice
blueprints as a sound platform for profitable growth. To leverage
Bharti's local knowledge, infrastructure and customer base. To deliver
high levels of shareholder return. To build long term value with our
business partners by enhancing the proposition to their customers. To
be the employer of choice to attract and retain the best talent in India.
To be recognized as being close and qualified by our customers

Strategic differentiators

• Strong partner Bharti - provides access to customer base of more

than 20 million
• Multi channel execution capability

31
• Current Asia product range which is a strong match to products sold
to the mass and mass affluent
• Global scale providing cost effective and speedy re-use of systems,
products and business capability
• Strong AXA and Bharti brands which can be leveraged to attract and
retain a high quality management team

32
 SWOT ANALYSIS

Strengths
• Use of brand affinity of Airtel to promote insurance sales.
• Bharti brought its strong local market knowledge, reputation and
India.
• Associated with AXA world leader in financial protection and
wealth management, ranked No 13 in the Fortune 500 list of global
companies and has enabled the company to have access to AXA’s
global life insurance and asset management expertise.
• Strong partner Bharti - provides access to customer base of more
than 20 million

Weakness
• Late entrant in the insurance sector
• Thin distribution network all over the nation
• Very less number of product offering in comparison to its
competitors
• Lack of confidence among the customers as parent company does
not have a financial background.

Opportunities
• Strong growth of unit linked market at the mass affluent end.
• Lower income section, tier III semi-urban and rural market are still
untapped by private companies.
• Potentially with 20% insurance cross sale only to new telecom
customers, this network can yield 48 lac policies per year with sum
assured of nearly Rs 58000 crores.

33
Threats
• Many more companies are lining up to enter into Indian Insurance
Industry.
• Consumer’s preference is still more towards public sector insurance
companies.

34
 FINDINGS AND ANALYSIS

On age group 20-30

After analyzing the findings derived from the questionnaire we come

across to some interesting facts.
• 60% of the respondents from the age group 20-30 do not hold any
life insurance policy at all and also none of them hold more than 5
policies. (Table-4)
• This age group is more attracted towards share market with 55% and
mutual funds with 35%. (Table-3)
• The various needs at this age group are very low. (Table-2)

This may be due to various reasons.

 The primary reason being maximum percentage of this age group are
not married and do not have children so do not have any kind of a
responsibility towards family.
 Secondly most of them are still parasites and dependent on their
parents for living. A small extent is working but do not have
sufficient fund to take a life insurance policy.
 They have high risk takers and want to earn quick money so are
more interested in the share market.
 They have a notion that they will live long and no unavoidable
circumstances can hamper their life.

35
 On age group 30-40

• Again moving towards the age group 30-40 we can observe that 40%
of the respondents hold 3-5 policies and 25% have 0-3 policies and
10% have more than 5 policies. (Table-4)
• From table-3 we can analyze that the number of people favoring
insurance over other investment instruments have increased from 2
to 7.
• Table-2 exhibits that the various needs have also increased to a
great extent. The major needs in this age group have been children
need and family need. Asset building need has also shown a
tremendous increase.
• There has been a growth of about 100% in each need in this age
group.

The reasons for these shifts may be:

 The mass populations in this age group are married and even have a
child or two. They now being the bread earners for their family have
a sense of responsibility towards them.
 People at this stage generally start earning a good living and can
afford to invest in policies
 Since they are earning well so they can invest in policies to save tax
to some extent.

On age group 40-50

• Now in age group 40-50, 45% have over 5 policies and 35% have 3-
5 policies. (Table-4)

36
 • Table-3 clearly shows that there has been a shift of interest from
other financial instrument to insurance. About 45% believe
investing in insurance.
• There has been a 140% increase in the old age policy need as
compared to age group 30-40.( table-2)
• About 50% fall in the children need policies can be observed.
(Table-2)

This may be for the following reason:

 The offspring’s are already grown up and investment for their

benefit has already been made in the previous stage.
 They start thinking about their old age and after retirement financial
solution.

On age group 50-60

• In the age group 50-60, 50% of them hold more than 5 policies.
(Table-4)
• The primary needs being old age and family need and critical
illness.
• Children need has fallen by 80%.(table-2)
• The asset building need has fallen by 50% from the previous age
group
• This age group least wants to invest into shares

37
The various reasons may be:

 He wants to secure his financial future when he retires from

his job or takes leave from his business so that he is self
dependent.
 Their children are already grown up and self dependent with
their own family.
 They want to secure themselves towards any kind of critical
illness.
 The risk taking ability decreases and want safe and secure
returns

Summary

 The age group 40-50 takes most of the insurance policies

 Requirement of Old age need policies increase in number with
the increasing age.
 The age groups 30-40 and 40-50 are most interested in asset
building needs and family needs
 The age group 30-40 is most interested in children need and
family need and maximum in covering future cash needs.
 The age groups 30-40 and 40-50 also take insurance to take
the benefit of tax relaxation.

38
  Comparing the amount of investment different age groups
would like to make in different financial instruments i.e.
mutual funds insurance policy and shares, given 100000/-.
The mean value of all the respondents in different age group

20-30 30-40 40-50 50-60

Insurance 10000 35000 45000 35000
Mutual funds 35000 30000 35000 50000
Shares 55000 35000 20000 15000
were taken

 47% of the respondents like to take decision on various financial

instruments by consulting a financial advisor.
 37%of the respondents feel personal reference most reliable source
to take an investment decision
 A very large proportion of the respondents perceive insurance to be
less flexible compared to mutual funds and shares.
 They also feel it gives the least scope to diversify.
 They are also not satisfied with the liquidity aspect of insurance.
 Insurance scores high on attributes like security and control over
financial future and scores average on attributes like requirement of
fund, rate of return and transparency.

39
Table-1

why would you take a life insurance policy

20

15

10

0
20-30 30-40 40-50 50-60
cover future cash needs 12 17 6 2
tax benefit 8 12 14 7
investment instrument 3 10 6 3
angel of mercy 10 15 15 7
as a hedge against old 2 5 14 17
age

Table-2

need at different stages while taking a policy

50
40
30
20
10
0
20-30 30-40 40-50 50-60
asset building nees 4 10 13 7
old age need 2 5 12 17
children need 8 15 7 3
familu need 7 16 15 15 40
Table-3

attitude towards investment instruments at different

life stages

15

10

0
20-30 30-40 40-50 50-60
insurance policy 2 7 9 7
mutual funds 7 6 7 10
shares 11 7 4 3

Table-4

number of policies held at different life stages

20-30 30-40 40-50 50-60

5 and above
10
0
2

3-5 policies
2

0-3 policies
6

0 policies
12

1
2

0 5 10 15 20 25

41
Table-5

which medium is suitable for gaining knowledge about financial

instruments

Personal reference Financial advisors

Telephonic cold calls Advertisement (T.V, newspaper)

13%
9% 31%

47%

Table-6

perception tow
in

100% 42

80%
 RECOMMENDATIONS

“Market of one”

• This plan should be introduced as a method of planning for time

based expenditure to be incurred on children. The maturity benefit
could be received as a single lump sum payment or in three to five
annual installments at specific stages of the child.
• The critical differentiator of this plan should be that it provides
money for the child’s future with risk coverage of the parent as well
opposed to the parent receiving the money in case of any
eventuality.

“Universal life plan”

• In order to ensure loyalty to the company, plans are afoot to 'catch

those young' and create customized plans at various stages and
catering to their need states. “The Universal Life Plan” should be on
the cards. This plan should be introduced as a method of planning
for time based expenditure to be incurred on children. A few of the
innovations should be based on specific needs at certain life stages.
Consumers are often migrated to these newer policies. The Critical
Illness Plan should be introduced as a response to a stated need of
consumers. The differentiator here is clearly different in the number
of illnesses it includes

43
Implementation of a proper customer relationship
management.

• Unlike other categories, customer retention in the insurance

business has not yet been under serious consideration. Insurance as
an industry till date has adopted a strategy of “one time customer”,
and is the same with Bharti Axa, but the concept should be revised
and “life time customer” or “Customer crosses selling and bundling
of policies” Strategy should be adopted for long term sustainability
and growth of the company. The company has to begin a huge
database monitoring exercise with annual statements / mailers to the
customers and updating their databases. This can also be used for
cross selling of different policies at different life stage of the
customer

Service Delivery Pathways: Innovations

• Tie-ups for reach and organic growth : To enable better

reach especially in the small towns, tie ups with banks have been
established. Co-operative societies, regional rural banks should be
tapped first.. In recent times, the business of post offices has
changed greatly. They already sell a range of products, like mutual
funds. They too could be used to sell insurance. Rural self-help
groups and NGOs have done significant work in the field of micro-
financing. They can become a significant channel. Panchayats too

44
 can be used for conveying the message. Together, these constitute a
formidable distribution network that can be tapped.

• Products and its prices will have to be tailored to suit

rural needs:

The success mantra would be

• Low cost protection product access

• Large distributions reach and network places
• Products Possibly with bundled benefit on purchase
• Product and process simplicity

Value 'makeover' of the advisors : A different class of advisors -

celebrity stockbrokers, chartered analysts/accountants; financial
consultants and the like have been enlisted as "evangelists". They bring to
the table a meshing of consumer apprehensions /FAQ's and financial
savvy. They are able to make meaningful contributions in the
customization of offerings

45
 BIBLIOGRAPHY

Times of India - 5 July 2007

Times of India- 30 June 2007
Business line- Saturday, september.21.2002
Business line- Sunday, December. 07. 2003
Business line- Friday, September. 24. 2004
Skees, J., Hazell, P., Miranda, M.. 1999. New Approaches to Crop Yield
Insurance in Developing Countries.
EPTD Discussion Paper No. 55.
Business Research Methods, Cooper & Schindler

REFERENCE:

http://www.irdaindia.org/
http://www.licindia.com/
http://www.bharti-axalife.com/
http://www.iciciprulife.com/public/default.htm
https://www.hdfcinsurance.com/index2.asp
http://www.lifeinscouncil.org/
http://www.rbi.org.in/home.aspx
http://www.tac.org.in/
www.ciionline.org
www.lifeinscouncil.org
www.abcinsurance.co.
www.economywatch.com
www.ficci.com
www.financialexpress.com

46
www.themanagementor.com
www.iinvestor.com

ANNEXTURE

47
 Amity International Business School
Dear sir/madam,
I am sincerely in need of your opinion on subject to identify and understand the
customer’s perspective towards life insurance and as to how we can make insurance
more beneficial to for you. This survey is conducted by Vivek Gupta student of ‘Amity
International Business School’ for the completion of summer internship project.
I assure the confidentiality of your sincere opinion.

Name: __________________________________occupation:____________________
Address: __________________________________
__________________________________
Age: 20-30 30-40 40-50 50-60
Gender: Male Female
Income: 1.5-3 3-5 5-10 10 above

1) Do you hold a life insurance policy?

• Yes
• No
2) If no, why have you not taken any life insurance policy?
• Not aware
• I don’t require it
• Have other investment options
• Lack of fund
• Planning in near future

3) Now being aware of life insurance why would you take a life insurance policy? (Can
give multiple choices)
• to cover Future cash needs

48
 • Tax benefit
• As an investment instrument
• As an angel of mercy
• As a hedge against old age

4) If yes how many life insurance policies do you hold at present?

___________

5) If yes what was your main concern for taking a life insurance policy?
• Investment
• Tax benefit
• Purely insurance

6) What were your needs when you had taken life insurance policies? (Can tick multiple
choices)
• Family need
• Children need
• Old age need
• Asset building need

Assuming that life insurance policy is purely an investment option please answer the
following questions
7) If you hold a policy please rate the benefits in insurance policy compared to investing
in shares market and mutual funds on scale of 1-5 (where 1 being the least and 5 being
the most?)

• Flexibility 1 2 3 4 5
• Diversification 1 2 3 4 5
• Security 1 2 3 4 5

49
 • Return on investment 1 2 3 4 5
• Requirement of funds 1 2 3 4 5
• transparency 1 2 3 4 5
• liquidity 1 2 3 4 5
• control over financial future 1 2 3 4 5

8) Given a certain amt of money where would you invest, assuming that insurance is
purely an investment option?
• Life insurance
• Mutual funds
• Share market

9) Suppose you have 100000/- of rupees in spare, how much would you invest in the
investment options state below?
• Life insurance __________
• Mutual funds __________
• Share market __________

10) What would be the reason for above decision? (30 Words Max)
________________________________________________________________________
________________________________________________________________________

11) Which medium do you find more suitable to gain knowledge about different financial
instruments?
Personal reference
Financial advisors
Telephonic
Advertisement (T.V, newspaper)

50
12) Please give a few suggestions as to how we can make life insurance a better
investment option compared to mutual funds and share market?
________________________________________________________________________
________________________________________________________________________

51