ICFAI BUSINESS SCHOOL, DEHRADUN

Market Potential Study

of Tata-AIG in Dehradun
MANIMOY MONDAL

2009

RAJAWALA ROAD,CENTRAL HOPE TOWN,SELAQUI,DEHRADUN-248197

 FINAL PROJECT REPORT

A REPORT
ON

MARKET POTENTIAL STUDY OF TATA AIG IN

DEHRADUN CITY
Submitted By
Manimoy Mondal
(08BSDDU00600)
(IBS DEHRADUN)

Company Guide: Faculty Guide:

Mr. Pushkar Saxena Dr. Pavnesh Kumar
Branch Manager ICFAI Business School
RIBL Dehradun
Date of Submission: 23rd May 2009

2
 TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. Manimoy Mondal student of MBA (2008-2010) ICFAI
Business School; Dehradun has done his live summer training project under my
guidance and supervision from 24th February 2009 to 23rd May 2009.
He has completed the project titled “Market Potential Study of TATA AIG in
Dehradun City” towards the partial fulfillment of MBA under my supervision.
During his project he was found to be very dedicated, sincere and attentive to small
details whatsoever told to him.
I wish him luck and success in future.

……………………………………………..
Mr. Pushkar Saxena
Branch Manager
Religare Insurance Broking Limited

3
 AUTHORISATION

The summer Internship program has been conducted for the partial fulfillment of

MBA program in ICFAI Business School-Dehradun. Summer internship program

also included a project work on “Market Potential Study of Tata AIG in Dehradun

City”.

Religare Insurance Broking Limited and ICFAI Business School hereby authorize

Mr. Manimoy Mondal to conduct his summer Internship Project under the

supervision of company guide Mr. Pushkar Saxena (Branch Manager) and the

faculty guide Dr. Pavnesh Kumar (Faculty of Finance). A final project report will

have to be submitted to Religare Insurance Broking Limited and ICFAI Business

School, Dehradun.

………………………. ... …………………………

Mr. Pushkar Saxena Dr. Pavnesh Kumar

Company Guide Faculty Guide

ABDM, RIBL IBS-Dehradu

4
 Acknowledgement
Sometimes words fall short to show gratitude, the same happened with me during this project.
The immense help and support received from Tata AIG Insurance Company overwhelmed me
during the project.
My sincere gratitude to Dr. Pavnesh Kumar (ICFAI Business School, Dehradun) and Mr.
Pushkar Saxena(Branch Manager, RIBL, Dehradun), for providing me with an opportunity to
work with TATA AIG Life Insurance company.

I am highly indebted to Mr. Ravi Prakash, (Asst. Sales Manager, Tata AIG, Dehradun) and
company project guide, who has provided me with the necessary information and his valuable
suggestion and comments on bringing out this report in the best possible way.

I also thank Mr. Sanjeev Malviya (Placement Officer, ICFAI Business School, Dehradun) and
all the faculty members of IBS-Dehradun who has sincerely supported me with the valuable
insights for this project.

I am grateful to all of the members of Tata AIG Insurance Company, Dehradun branch, who
have helped me to carry on the project.

Last but not the least; my heartfelt love for my parents, whose constant support and blessings has
helped me throughout this project.

Manimoy Mondal
08BSDDU0060
IBS- Dehradun

5
 TABLE OF CONTENT

Contents Pages
Preface 8
Executive Summary 10
Chapter 1 Introduction to Insurance 11-19
1.1 Introduction 12
1.2 Function of Insurance 13
1.3 Life Insurance 14
1.4 Role of Insurance 14
1.5 Important of insurance 15
1.6 Insurance Cycle 17
Chapter 2 Introduction to Indian Insurance Industry 20-31
2.1 Indian Insurance Industry 21
2.2 A brief history of insurance sector 21
2.3 Indian insurance market ( History) 23
2.4 How Big Insurance Market Is 24
2.5 Indian Scenario 25
2.6 Role of IRDA 28
2.7 Name of Different Insurance Companies 29
2.8 Market Share of Different Private Players 30
2.9 Growth of Private players 31
Chapter 3 Introduction to Tata AIG 32-38
3.1 Tata Group 33
3.2 Tata Group in Insurance 33
3.3 AIG 34
3.4 The Joint Venture 35
3.5 About Tata AIG 35
3.6 Organizational Structure of Tata AIG 36
3.7 Distribution Channel of Ttata AIG 37
Chapter 4 Introduction to the Research Study 39-42
4.1 Project Proposed 40
4.2 Objective of the Project 40
4.3 Methodology 40
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 4.4 Questionnaire Designing 41
4.5 Limitation of the Study 42
Chapter 5 Survey and Results 43-61
5.1 Findings From the Research Study 44
5.2 Reasons for Preferring Public and Private Sector 57
5.3 Market Potential Study of Tata AIG 60
Chapter 6 Recommendation and Benefits 62-64
6.1 Recommendation to the Company 63
6.2 Benefits to the Company and Us 64
Chapter 7 Conclusion and References 65-67
7.1 Conclusion 66
7.2 References 67
Annexure I Questionnaire 68-70

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 PREFACE

The liberalization of the Indian insurance sector has been the subject of much heated debate for

some years. The policy makers where in the catch 22 situation wherein for one they wanted

competition, development and growth of this insurance sector which is extremely essential for

channeling the investments in to the infrastructure sector. At the other end the policy makers had

the fears that the insurance premium, which are substantial, would seep out of the country; and

wanted to have a cautious approach of opening for foreign participation in the sector.

As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw

the day of the light thanks to the maturing polity emerging consensus among factions of different

political parties. Though some changes and some restrictive clauses as regards to the foreign

participation were included the IRDA has opened the doors for the private entry into insurance.

Whether the insurer is old or new, private or public, expanding the market will present multitude

of challenges and opportunities. But the key issues, possible trends, opportunities and challenges

that insurance sector will have still remains under the realms of the possibilities and speculation.

What is the likely impact of opening up India‟s insurance sector?

8
The large scale of operations, public sector bureaucracies and cumbersome procedures hampers

nationalized insurers. Therefore, potential private entrants expect to score in the areas of

customer service, speed and flexibility. They point out that their entry will mean better products

and choice for the consumer. The critics counter that the benefit will be slim, because new

players will concentrate on affluent, urban customers as foreign banks did until recently. This

seems to be a logical strategy. Start-up costs-such as those of setting up a conventional

distribution network-are large and high-end niches offer better returns. However, the middle-

market segment too has great potential. Since insurance is a volumes game. Therefore, private

insurers would be best served by a middle-market approach, targeting customer segments that are

currently untapped.

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 EXECUTIVE SUMMARY

This project has been a great learning experience for me; at the same time it gave me enough
scope to implement my analytical ability.
Tata Group is one of the India's largest and most respected business groups. Tata Group's name
is synonymous with India's industrialization. Tata AIG Insurance Solutions is one of the leading
insurance companies that provide both life insurance as well as general insurance. This pioneer
company is a joint collaboration between the American International Group, Inc. (AIG) and Tata
Group. They own the company in the ratio of 26:74. It is a leading financial institution that has
carved a niche for itself all over the world.

Tata AIG Insurance Company is having different insurance policies. At the end of the project
people will be knowledgeable about various insurance organizations and different products
taking into considerations hundred sample sizes in Dehradun city. Project is on the market
potential study of Tata AIG Insurance Company in Dehradun city. To get to know a
questionnaire has been prepared which contains open ended and close ended questions. Firstly
pilot study has been done through hundred questionnaires. For collecting the data field survey
method, personal interview technique has been used. Secondary data has been collected from the
company. The data collected are represented into suitable tabular forms for drawing inferences.
Quantitative techniques like averages, percentages, range, two-way tables, chi- square tests
analysis has been applied as per the requirement. The level of preference, perception of the
customers about the product and company were identified by means of a scoring scheme. For the
representation of data various charts and graphs are used as per requirement.
.

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 CHAPTER 1

INTRODUCTION TO INSURANCE

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 1.1. INTRODUCTION
"Insurance is a contract between two parties whereby one party called insurer undertakes in
exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount
of money on the happening of a certain event."
Insurance may be described as a social device to reduce or eliminate risk of life and property.
Under the plan of insurance, a large number of people associate themselves by sharing risk,
attached to individual.
With the help of Insurance, large number of people exposed to a similar risk makes contributions
to a common fund out of which the losses suffered by the unfortunate few, due to accidental
events, are made good.
Insurance is a tool by which fatalities of a small number are compensated out of funds collected
from plenteous. Gradually as competition increased benefits given by industry to its customers
increased by leaps and bounds. Insurance is a basic form of risk management which provides
protection against possible loss to life or physical assets. Person who seeks protection against
such loss is termed as insured, and company that promises to honor claim, in case such loss is
actually incurred by insured, is termed as Insurer. In order to get insurance, insured is required to
pay to insurance company a certain amount called premium. Premium is collected by insurance
companies which acts as trustee to pool created through contributions made by persons seeking
to protect themselves from common risk. Any loss to the insured in case of happening of an
uncertain event is paid out of this pool.

Insurance business is divided into four classes:

Life Insurance
Fire
Marine
Miscellaneous Insurance.

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Insurance provides:
Protection to investor.
Accumulation of savings.
Channeling these savings into sectors needing huge long term investment.

1.2. FUNCTION OF INSURANCE:

Provide protection: The primary function of insurance is to provide protection against

future risk, accidents and uncertainty. Insurance cannot check the happening of the risk,
but can certainly provide for the losses of risk. Insurance is actually a protection against
economic loss, by sharing the risk with others.
Collective bearing of risk: Insurance is an instrument to share the financial loss of few
among many others. Insurance is a mean by which few losses are shared among larger
number of people. All the insured contribute the premiums towards a fund and out of
which the persons exposed to a particular risk is paid.
Assessment of risk: Insurance determines the probable volume of risk by evaluating
various factors that give rise to risk. Risk is the basis for determining the premium rate
also.
Provide certainty: Insurance is a device, which helps to change from uncertainty to
certainty. Insurance is device whereby the uncertain risks may be made more certain.
Small capital to cover larger risk: Insurance relieves the businessmen from security
investments, by paying small amount of premium against larger risks and uncertainty.
Contributes towards the development of industries: Insurance provides development
opportunity to those larger industries having more risks in their setting up. Even the
financial institutions may be prepared to give credit to sick industrial units which have
insured their assets including plant and machinery.

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 Means of savings and investment: Insurance serves as savings and investment,
insurance is a compulsory way of savings and it restricts the unnecessary expenses by the
insured's For the purpose of availing income-tax exemptions also, people invest in insurance.
Source of earning foreign exchange: Insurance is an international business. The
country can earn foreign exchange by way of issue of marine insurance policies and various
other ways.
Risk free trade: Insurance promotes exports insurance, which makes the foreign trade
risk free with the help of different types of policies under marine insurance cover.

1.3. LIFE INSURANCE:

Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a
premium paid undertakes to pay a fixed sum of money on The death of the insured or on the
expiry of a specified period of time Whichever is earlier. In case of life insurance, the payment
for life insurance policy is certain. The Event insured against is sure to happen only the time of
its happening is not known. So life insurance is known as „Life Assurance‟. The subject matter of
insurance is life of human being. Life insurance provides risk coverage to the life of a person. On
death of the person insurance offers protection against loss of income and compensate the
titleholders of the policy.

1.4. ROLES OF THE LIFE INSURANCE:

Life insurance as an investment: - Insurance products yield more than any other
investment instruments and it also provides added incentives or bonus offered by insurance
companies.
Life insurance as risk cover: - Insurance is all about risk cover and protection of life.
Insurance provides a unique sense of security that no other form of invest can provide.
Life insurance as tax planning: - Insurance serves as an excellent tax saving mechanism
too.

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1.5. IMPORTANCE OF THE LIFE INSURANCE:
Protection against untimely death: - Life insurance provides protection to the
dependents of the life insured and the family of the assured in case of his untimely death.
The dependents or family members get a fixed sum of money in case of death of the
assured.
Saving for old age: - After retirement the earning capacity of a person reduces. Life
insurance enables a person to enjoy peace of mind and a sense of security in his/her old
age.
Promotion of savings: - Life insurance encourages people to save money compulsorily.
When life policy is taken, the assured is to pay premiums regularly to keep the policy in
force and he cannot get back the premiums, only surrender value can be returned to him.
In case of surrender of policy, the policyholder gets the surrendered value only after the
expiry of duration of the policy.
Initiates investments: - Life Insurance Corporation encourages and mobilizes the public
savings and canalizes the same in various investments for the economic development of
the country. Life insurance is an important tool for the mobilization and investment of
small savings.
Credit worthiness: - Life insurance policy can be used as a security to raise loans. It
improves the credit worthiness of business.
Social Security: - Life insurance is important for the society as a whole also. Life
insurance enables a person to provide for education and marriage of children and for
construction of house. It helps a person to make financial base for future.
Tax Benefit: - Under the Income Tax Act, premium paid is allowed as a deduction from
the total income under section 80C.

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1.6. INSURANCE CYCLE:

Fig 1: Insurance cycle source: www.rma.usda.gov

Policy Renewal/Change Options/Application
The Insurance Cycle begins each year with the insurance offer. Actuarial documents are
published annually by the Risk Management Agency (RMA). The actuarial documents list the
plan of insurance, crop, type, variety, and practice that may be insured in a state and county, and
show the amounts of insurance, available insurance options, levels of coverage, price elections,
applicable premium rates, and subsidy amounts. The Special Provisions of Insurance list
program calendar dates, and general and special statements which may further define, limit, or
modify coverage.

Sales Closing/Cancellation/Termination Dates

Insurance applications must be completed and signed no later than the sales closing date
specified in the crop actuarial documents. Applications signed after the crop sales closing date
may be rejected by the insurance provider.

Insurance coverage is continuous and can be cancelled by either the insurance provider or the
policyholder for the following crop year by providing a written notice to the other party no later

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than the cancellation date specified in the crop policy. For a policyholder insured the previous
crop year, any changes he or she wishes to make to the policy coverage must be made on or
before the crop sales closing date. The policy will automatically renew for the subsequent crop
year unless the policyholder cancels the policy in writing on or before the crop cancellation date.

Insurance coverage may be terminated by the insurance provider for the following crop year for
nonpayment of outstanding debt by providing a written notice to the policyholder no later than
the termination date specified in the crop policy. The insurance provider may terminate coverage
on a crop if no premium is earned for three consecutive years.

Acceptance
Upon receipt of a properly completed and timely submitted insurance application, the insurance
provider will accept and process the application, unless the applicant is determined to be
ineligible under the contract or Federal statute or regulation. The insurance provider will issue a
summary of coverage and the appropriate policy documents to the applicant. After the
application is accepted, the policyholder may not cancel the policy for the initial crop year.
Insurance Attaches

For annual crops, insurance attaches annually when planting begins on the insurance unit. The
crop must be planted on or before the crop's published final planting date unless late or prevented
planting provisions apply. If prevented planting provisions apply, and the crop cannot be timely
planted due to the causes specified in the crop provisions, such acreage may be eligible for a
prevented planting payment.

Acreage Reports

The policyholder must annually report for each insured crop in the county the number of
insurable and uninsurable acres planted or prevented from being planted if prevented planting is
available for the crop, the date the acreage was planted, share in the crop, the acreage location,
farming practices used, and types or varieties planted to the insurance provider on or before the
applicable acreage reporting date specified in the crop actuarial documents. This report is used
by the insurance provider to establish the amount of coverage and premium for the crop.

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Insurance providers may deny coverage if the acreage report is filed after the applicable crop
acreage reporting date.

Summary of Coverage

The insurance provider will process a properly completed and timely filed acreage report, and
issue to the policyholder a summary of coverage that specifies the insured crop, the insured acres
and amount of insurance or guarantee for each insurance unit. The policyholder may make
changes to the filed acreage report, if permitted by the insurance provider.

Premium Billing

The annual premium is earned and payable at the time insurance coverage begins. The insurance
provider shall issue a premium billing based upon the information contained in the acreage report
no earlier than the premium billing date specified in the crop actuarial documents. The premium
billing will specify the amount of premium and any administrative fees that may be due. If the
premium or administrative fees are not paid by the date specified in the actuarial documents or
policy, the insurance provider may assess interest on the outstanding premium balance.

Notice of Damage or Loss

A written notice of damage or loss for each unit is to be filed by the policyholder within 72 hours
of the policyholder's initial discovery of damage or loss but not later than 15 days after the
calendar date for the end of the insurance period unless otherwise stated in the individual crop
policy. The policyholder should refer to the individual crop provisions for additional
requirements in the event of damage or loss. These notifications provide the opportunity for the
insurance provider to inspect the crop and determine the extent of damage or potential
production before the crop is harvested or otherwise disposed of.

Inspection
After the insurance provider receives the written notice of damage or loss, it will be processed
and, if necessary, a loss adjuster will be sent to inspect the damaged crop and gather pertinent
information concerning the damage. If the policyholder wishes to destroy or not harvest the crop,
18
the loss adjuster will gather the appropriate information, conduct an appraisal to establish the
crop's remaining value and complete any forms needed. If the crop has been harvested or will not
be harvested by the end of the insurance period, and the policyholder wishes to file a claim for
indemnity, the loss adjuster will gather the appropriate information and assist the policyholder in
filing the claim for indemnity. It is the policyholder's responsibility to establish the time,
location, cause, and amount of any loss.
Indemnity Claim

After the claim for indemnity is processed by the insurance provider, an indemnity check and a
summary of indemnity payment will be issued showing any deductions to the amount of
indemnity for outstanding premium, interest, or administrative fees.

Contract Change Date

Changes to the insurance program may be made by RMA from one year to the next. The
insurance provider will notify the policyholder in writing of any changes to the policy, actuarial
documents, or the Special Provisions of Insurance prior to the calendar date for contract changes
specified in the crop policy. The policyholder will have the opportunity to review the changes
and, if he/she desires, continue the insurance coverage for the following crop year, change the
policy coverage, or cancel the insurance coverage. Any changes to the policy coverage that the
policyholder makes must be made no later than the crop sales closing date. If the policyholder
wishes to cancel the policy, a written notice must be submitted to the insurance provider on or
before the crop cancellation date.

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 CHAPTER 2

INTRODUCTION TO INDIAN INSURANCE

INDUSTRY

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 2.1. INDIAN INSURANCE INDUSTRY

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation
Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and
Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population
and the untapped market area of this population Insurance happens to be a very big opportunity
in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together
with banking services, it adds about 7 per cent to the country‟s GDP .In spite of all this growth
the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian
populations are without Life insurance cover and the Health insurance. This is an indicator that
growth potential for the insurance sector is immense in India. It was due to this immense growth
that the regulations were introduced in the insurance sector and in continuation “Malhotra
Committee” was constituted by the government in 1993 to examine the various aspects of the
industry. The key element of the reform process was Participation of overseas insurance
companies with 26% capital. Creating a more efficient and competitive financial system suitable
for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition LIC
started facing from these companies were threatening to the existence of LIC .since the
liberalization of the industry the insurance industry has never looked back and today stand as the
one of the most competitive and exploring industry in India. The entry of the private players and
the increased use of the new distribution are in the limelight today. The use of new distribution
techniques and the IT tools has increased the scope of the industry in the longer run.

2.2. A BRIEF HISTORY OF THE INSURANCE SECTOR:

The business of life insurance in India in its existing form started in India in the year 1818 with
the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important
milestones in the life insurance business in India are given in the following table.

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

Year Milestones in the life insurance business in India

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 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 crore from the Government of
India.

Table 1

The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British. Some of the important milestones in the general insurance business in
India are given in the following table.

Year Milestones in the general insurance business in India

1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business
1957 General Insurance Council, a wing of the Insurance Association of India, frames
a code of conduct for ensuring fair conduct and sound business practices
1968 The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.
1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd. and the United India Insurance Company Ltd. GIC
incorporated as a company.

Table 2

1993 Setting up of Malhotra Committee

1994 Recommendations of Malhotra Committee
1995 Setting up of Mukherjee Committee

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1996 Setting up of (interim) Insurance Regulatory Authority (IRA) Recommendations of the
IRA.
1997 Mukherjee Committee Report submitted but not made public
1997 The Government gives greater autonomy to LIC, GIC and its subsidiaries with regard to the
restructuring of boards and flexibility in investment norms aimed at channeling funds to the
infrastructure sector.
1998 The cabinet decides to allow 40% foreign equity in private insurance companies-26% to
foreign companies and 14% to NRI‟s, OCB‟s and FII‟s.
1999 The Standing Committee headed by Murali Deora decides that foreign equity in private
insurance should be limited to 26%. The IRA bill is renamed the Insurance Regulatory and
Development Authority (IRDA) Bill.
1999 Cabinet clears IRDA Bill.
2000 President gives Assent to the IRDA Bill.

2.3. INDIAN INSURANCE MARKET (HISTORY):

Insurance has a long history in India. Life Insurance in its current form was introduced in 1818
when Oriental Life Insurance Company began its operations in India. General Insurance was
however a comparatively late entrant in 1850 when Triton Insurance company set up its base in
Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre
Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to be
nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the
operations of various insurance companies. General Insurance followed suit and was nationalized
in 1973. General Insurance Corporation of India was set up as the controlling body with New
India, United India, National and Oriental as its subsidiaries. The process of opening up the
insurance sector was initiated against the background of Economic Reform process which
commenced from 1991. For this purpose Malhotra Committee was formed during this year who
submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in

23
1999. Resultantly Indian Insurance was opened for private companies and Private Insurance
Company effectively started operations from 2001.

2.4. HOW BIG IS THE INSURANCE MARKET?

The insurance sector was opened up for private participation four years ago. For years now, the
private players are active in the liberalized environment. The insurance market have witnessed
dynamic changes which includes presence of a fairly large number of insurers both life and non-
life segment. Most of the private insurance companies have formed joint venture partnering well
recognized foreign players across the globe.

There are now 29 insurance companies operating in the Indian market – 14 private life insurers,
nine private non-life insurers and six public sector companies. With many more joint ventures in
the offing, the insurance industry in India today stands at a crossroads as competition intensifies
and companies prepare survival strategies in a detariffed scenario.

There is pressure from both within the country and outside on the Government to increase the
foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV
partners to bring in funds for expansion.

There are opportunities in the pensions sector where regulations are being framed. Less than 10
% of Indians above the age of 60 receive pensions. The IRDA has issued the first license for a
standalone health company in the country as many more players wait to enter. The health
insurance sector has tremendous growth potential, and as it matures and new players enter,
product innovation and enhancement will increase. The deepening of the health database over
time will also allow players to develop and price products for larger segments of society.

Insurance is a Rs.400 billion business in India, and together with banking services adds about 7%
to India's Gap. Gross premium collection is about 2% of Gap and has been growing by 15-20%
per annum. India also has the highest number of life insurance policies in force in the world, and
total investible funds with the LIC are almost 8% of GDP. Yet more than three-fourths of India's

24
insurable population has no life insurance or pension cover. Health insurance of any kind is
negligible and other forms of non-life insurance are much below international standards.

2.5. INDIAN SCENARIO:

Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in
terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising
foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is
on the hinge of an ever increasing growth curve. Indians have a tendency to invest in properties
and gold followed by bank deposits. They selectively invest in shares also but the percentage is
very small--4-5%. This in itself is an indicator that growth potential for the insurance sector is
immense. It‟s a business growing at the rate of 15-20% per annum and presently is of the order
of $47.9 billion.

India is a vast market for life insurance that is directly proportional to the growth in premiums
and an increase in life density. With the entry of private sector players backed by foreign
expertise, Indian insurance market has become more vibrant. Competition in this market is
increasing with company‟s continuous effort to lure the customers with new product offerings.
However, the market share of private insurance companies remains very low -- in the 10-15%
range. Even to this day, Life Insurance Corporation (LIC) of India dominates Indian insurance
sector. The heavy hand of government still dominates the market, with price controls, limits on
ownership, and other restraints.

The upward growth trend started from 2000 was mainly due to economic policies adopted by the
then Indian government. This year saw initiation of an era of economic liberalization and
globalization in the Indian economy followed by several reforms and long-term policies that
created a perfect roadmap for the success of Indian financial markets. On the basis of several

25
macroeconomic factors like increase in literacy rate & per capita income, decrease in death rate
and unemployment, better tax rebates, growing GDP etc., we estimate that the Indian insurance
sector will grow by $28.65 billion and reach $76.54 billion by 2011 with a CAGR of 12.44% and
a growth of 59.82%.

The Indian life insurance market generated total revenues of $41.36 billion in 2007, thus
representing a compound annual growth rate (CAGR) of 11.84% for the period spanning 2000-
2007. Life insurance market had a growth of $22.46 billion within a period of 7 years with a
growth rate of 118.24%. Estimated life premiums rose from INR1, 470,800 million ($36.77
billion) in 2006 to INR1, 301,540 million ($32.54billion) in 2005. We envisage that life
premiums in 2011 will be $65.96 billion, a growth larger than they were in 2007. The
performance of the market is forecast to accelerate, with an anticipated CAGR of 9.78% for the
four-year period 2007-2011 expected to drive the market to a value of $65.96 billion by the end
of 2011. There would be a growth of $24.6 billion i.e. 59.48% in the next 4 years.

Non-life premiums in India were $6.53 billion in 2007. Gross written premium (GWP) in the
Indian non-life insurance market reached a value of $5.75 billion in 2006, this representing an
annual growth of 13.55% for the period spanning 2006-2007. Estimated non-life premiums rose
from INR230 billion ($5.75 billion) in 2006 to INR261 billion ($6.53 billion) in 2007. We
anticipate that non-life premiums will grow by a CAGR of 9.40% between 2007-2011. We are
looking for non-life premiums to rise by $405 million over the five years to the end of 2011 with
a growth rate of 62.02%.

26
 Fig 2 Source: www.indiaprwire.com

The general insurance industry grew by 16% in 2006-07 as private insurers continued their
robust performance, while public sector players like New India Assurance and Oriental
Insurance improved their show. Despite continuous fall in business of government-owned
National Insurance, the 12 non-life insurers collected Rs 20,378 crore in first year premium in
the last fiscal compared to Rs 17,531 crore collected in 2005-06, according to data compiled by
regulator IRDA.

New India Assurance collected Rs 4,762 crore in premium and continued to lead the non-life
sector by cornering 23.36% of the market. National Insurance was at the second spot by
collecting Rs 3,524 crore in premium, a decline of 7%, but had a market pie of 17.29%. Oriental
Insurance mopped up Rs 3,518 crore in premium income after logging 16.6% growth in business
to corner a market share of 17.26%. Another PSU insurer United India grew by a modest 6.8% to
collect Rs 3,147 crore in premium and had 15.44% of the market. The eight private players
expanded their business by 52% to collect Rs 5,427 crore in premium income and increased their
combined market share to 26.6% from 20.2% a year ago.
27
ICICI Lombard led the private players by logging 80% growth in premium at Rs 1,592 crore,
followed by Bajaj Allianz, which grew by 50% to collect Rs 1,287 crore in premium. ICICI
Lombard had a market share of 7.81% and Bajaj Allianz had 6.31% of the market.

2.6. ROLE OF INSURANCE REGULATORY AND DEVLOPMENT

AUTHORITY (IRDA) ACT, 1999

An act to provide for the establishment of an authority to protect the interests of policyholders, to
regulate, to promote and ensure orderly growth of the insurance industry and for matters
connected therewith for incidental thereto and further to amend, the Life Insurance Corporation
Act, 1956 and the insurance Act, 1938 and General Insurance Business Act 1972.
Spread Life Insurance much more widely and in particular to the rural areas and to the socially
and economically backward classes with a view to reaching all insurable persons in .the country
and providing them adequate financial cover against death at a reasonable Cost.
Maximize mobilization of people's savings by making insurance linked savings adequately
attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the; community as a whole;
the funds to be deployed to the best advantage of the investors as well as the community as a
whole, keeping in view national priorities and obligations of attractive return. Conduct business
with utmost economy and with the full realization that the moneys belong to: the policyholders.
Act as trustees of the insured public in their individual and collective capacities. Meet the various
life insurance needs of the community that would arise in the changing social and economic
environment. Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with courtesy.
Promote amongst all agents and employees of the Corporation a sense of participation, pride and
job satisfaction through discharge of their duties with ded1cat1on towards achievement of
Corporate Objective.

28
2.7. NAME OF MAJOR INSURANCE COMPANIES IN
DEHRADUN CITY
NAME OF INSURANCE LOGO NATURE OF
COMPANIES HOLDING
Life Insurance Corporation Public

Tata AIG Insurance Private

ICICI Prudential Private

Max New York Life Insurance Private

HDFC Standard Insurance Private

Reliance Life Insurance Private

Kotak Life Insurance Private

Aviva Life Insurance Private

SBI Life Insurance Private

Bajaj Allianz Private

Table 3

29
Above all the company they are having various types of insurance plans. All the plans are giving
a good rate of return after a certain period of time. But all the plans don‟t get success in the
market. Many of the companies they are having almost same type of plan but sometimes it
happens one of them is successful and another is not. Always it doesn‟t depend on the plan of the
insurance sometimes it depends on the marketing strategies, promotion of the product, reputation
of the company, employees of the company etc.

2.8. MARKET SHARE OF DIFFERENT PRIVATE PLAYERS:

Fig 3 source: www freepress.in

If we see market share of different private players in the financial year 2009 then from the above
chart we can understand ICICI Prudential is holding the maximum market share i.e. 21.6%. After
that SBI Life and Bajaj Allianz is holding 14.8% and 13.2% respectively. Reliance Life Birla
Sun life and HDFC Standard they are also holding a good market share all over the India. Tata
AIG is holding 3.3% of market share all over the India.

30
2.9. GROWTH OF PRIVATE PLAYERS:

Fig 4 Source: www.blonnet.com

If we see the growth rate of private players in Indian economy then it will be seen that fastest
growing insurance companies are Reliance Life and Birla Sun Life, growing rate is 335% and
152% respectively. Next fastest growing companies are SBI Life, Met Life, Kotak Old, ICICI
Prudential, Bajaj Allianz and TATA AIG. Their growing rate is 138%, 125%, 121%, 116%,
105%, 100% respectively. Less growing companies are HDFC Standard, ING Vysya, Aviva and
Max New York Life respectively.

31
 CHAPTER 3

Introduction to tata-aig

32
 Tata AIG Insurance Company

Tata Enterprises with 82 companies, spread over seven sectors and with an annual turnover
exceeding US $ 8.8 billion, employs more than 262,000 people. Tata Group has shown over
years that it is a value driven company and has pioneering contributions in various fields
including insurance, aviation, iron and steel. In terms of capital market performance as many as
40 listed Tata companies account for nearly 5% of the total market capitalization of all listed
companies. The Group has had a long association with India's insurance sector having been the
largest insurance company in India prior to the nationalization of insurance.

3.2. TATA GROUP IN INSURANCE:

Tata AIG General Insurance Company Ltd, and Tata AIG Life Insurance Company Ltd.,
(collectively "Tata AIG") are joint venture companies between the Tata group India's most
trusted industrial house and American International Group, Inc. (AIG), the leading U. S. based
international insurance and financial services organization.
The Late Sir Dorab Tata, was the founder Chairman of New India Assurance Co. Ltd., a group
company incorporated way back in 1919. Government of India took over the management of this
company as a part of nationalization of general insurance companies in 1972. Not deterred by the
move, Tata group have ventured into risk management services having tied up with AIG group,
back in 1977, with the incorporation of Tata AIG Risk Management Services Pvt. Ltd.

The Tata Group is one of India's largest and most respected business conglomerates, with
revenues in 2006-07 of $28.8 billion (Rs129,994 crore), the equivalent of about 3.2 per cent of
the country's GDP, and a market capitalization of $72.2 billion as on December 6, 2007. Tata
companies together employ some 289,500 people. The Tata Group has operations in more than
85 countries across six continents, and its companies export products and services to 80
countries.

33
3.3. AIG:

American International Group, Inc. (AIG), is a major American insurance corporation based at
the American International Building in New York City. The British headquarters are located on
Fenchurch Street in London, continental Europe operations are based in La Défense, Paris, and
its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the
18th-largest company in the world.

Company Background: AIG's history dates back to 1919, when Cornelius Vander • Starr
established an insurance agency in Shanghai, China. Starr was the first Westerner in Shanghai to
sell insurance to the Chinese. • In 1962, Starr gave management of the company's less than
successful U.S. holdings to Maurice R. \"Hank\" Greenberg, who shifted the company's U.S.
focus from personal insurance to high-margin corporate coverage. • The company went public in
1969.

American International Group, Inc is the leading U.S. based international insurance and financial
services organization and the largest underwriter of commercial and industrial insurance in the
United States. Its member companies write a wide range of commercial and personal insurance
products through a variety of distribution channels in over 130 countries and jurisdictions
throughout the world. AIG's Life Insurance operations comprise of the most extensive worldwide
network of any life insurer. AIG's global businesses also include financial services and asset
management, including aircraft leasing, financial products, trading and market making, consumer
finance, institutional, retail and direct investment fund asset management, real estate investment
management, and retirement savings products.

34
3.4. THE JOINT VENTURE:

Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent has been
brought in by Tata Sons and the American partner brings in the balance 26 per cent. Mr. George
Oommen has been named managing director of Tata AIG Life. Tata-AIG plans to provide broad
array of life insurance plans to cover to both individuals and groups. The company headquartered
in Mumbai, with branch operations in Delhi, Chennai, Hyderabad, Bangalore Calcutta, Pune and
Chandigarh.

3.5. ABOUT TATA-AIG:

Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life
insurance as well as general insurance. This pioneer company is a joint collaboration between the
American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of
26:74. It is a leading financial institution that has carved a niche for itself all over the world.

Tata AIG Insurance provides facilities to both corporate and individuals. Starting its operations
on April 1, 2001, it seeks to serve different categories of people. It acquired its license for
carrying out operations in India on February 12, 2001.

Tata AIG Insurance Solutions is one of the most prestigious organizations in the business world.
It employs thousands of employees and offers various opportunities to people to build a
prospective career. As a leading name in the financial world, it identifies the potential and
experience of the individual.

This insurance company identifies the clients‟ needs and works accordingly. It stresses on
innovative aspect and opening of new markets. It believes in new economy and latest Internet
technology.
Tata AIG Insurance offers a number of products for the General Insurance holders. General
insurance products include:

35
 Individual insurance

Small business insurance

Corporate insurance

Tata AIG Insurance offers flexible life insurance to the individuals, business organization and
other association. For the corporate, there are various insurance products like group pensions,
employee benefits, work place solutions and credit life.
For the individuals, Tata AIG Insurance offers various products for adults, children and for
retirement planning.

3.6. ORGANIZATIONAL STRUCTURE OF TATA-AIG:

Fig 5 source: CGAP working group o Micro insurance good and bad practices

36
3.7. DISTRIBUTION CHANNELS OF TATA AIG:

The winds of liberalization initiated vast changes in the functioning of the industry today.
Increasing number of multinational partnership with private insurers have paved the way for a
radical shift in insurance selling- through a number of new distribution channels besides bringing
about more awareness on the need for insurance and also stressing on the important role
technology can play.

In the developed markets, many insurers have a preferred mode of distribution. In India, many
players are hedging their bets because the need for scale outweighs considerations of focus and
because non-agency distribution, which is presently operational for the last two years, forms a
basis for study.

Tata AIG has a corporate agency channel, which handles its corporate agents and has tie-ups
with 38 corporate houses. Insurers want to lower distribution costs by finding more efficient
channels. The new private players are developing multiple channel models; many insurers use or
plan to use several banks as distributors. Because most banks have strong regional bias, in this
regards Tata AIG has agreement with HSBC (corporate agency distribution) through that it is
doing both life insurance and general insurance business..
Because most banks have a strong regional bias, Insurers can use several banks without creating
large overlap. Many larger banks are sourcing products from several insurers acting as
manufacturers.
An important distribution challenge facing insurers is the need to meet the rural and social sector
legislative requirements stipulated in terms of market opening. For Tata AIG, it takes rural
insurance as an opportunity and not an obligation. For achieving objective in rural area it has
also tie with NGOs (Bridge stone for Karnataka and Kerala).
In this project mainly focus is distribution channel of Life Insurance of Tata AIG and little bit of
distribution of General Insurance of Tata AIG also. So as the whole topic of distribution can be
known for the both company of Tata AIG (Life and General insurance). Gradually channels are
incorporating day by day for the growth of business.
37
In the span of two to three years Tata AIG achieve much more business growth what it expected
at the time of entrance in Indian market. It happened because it has quality people, innovative
management, be able to employ technology effectively besides having right products with
effective and modern distribution channel.

3.8. List of products offered by Tata AIG

The life insurance plans are generally divided into two types: (a) Traditional plans
(b) Unit linked insurance plans (ULIP). Traditional plans are basically insurance plus savings
whereas ULIPs are insurance plus investment. Further they are classified into pure protection,
savings, investments, pension and living benefits. The classifications are shown in the table
below.

Traditional Plan
Pure Protection Savings Investment Pension Living Benefits
Raksha 1.Maha - 1.Nirvana Plus 1.Health
Life Gold 2.Easy retire protector
3.Riders 2.Riders
Table 4

Unit linked insurance plans (ULIPs)

Pure protection Savings Investments Pension Living benefits
- 1.Invest 1.Invest 1.Invest assure 1.Health investor
Assure Gold assure plus future
2.Invest 2.Invest
Assure II assure flexi
Table 5

38
 Chapter 4

INTRODUCTION OF THE RESEARCH

STUDY

39
 4.1. Project proposed
“Market Potential Study of TATA AIG life Insurance in Dehradun City”

4.2. OBJECTIVE OF THE PROJECT: - Main objective of the project is to

find out the market potentialility of Tata AIG in Dehradun city. Project is about to find out
the competitors Tata AIG Life Insurance company. Nowadays all the insurance companies in
India are trying to establish themselves in the competitive market. They are introducing
innovative marketing strategies to survive in the market. Many other private companies are
looking to enter in the Indian insurance market.

To find out the market potentiality of Tata AIG in Dehradun city.

Main competitors of Tata AIG.
Which type of policies is preferable?
Most preferable plans in Dehradun city.
Which sector is most preferable public or private
Targeting the right and potential customers
Differentiating from other companies

4.3. METHODOLOGY:
Research is totally based on primary data. Secondary data can be used only for the reference.
Research has been done by primary data collection, and primary data has been collected by
meeting with the people in Dehradun. Data collection has been done through by giving
structured questioner. This study will be based on sampling. This is an exploratory type of
research.

The study was aimed at measuring the customer‟s preference for life insurance companies and
the comparison of various insurance policies of the various companies on basis of various
parameters based on customer‟s responcse in Dehradun region only. The survey was done on
hundred general residents of the selected region.

40
Methods adopted for surveys
1. Field survey method
2. Personal interview technique
3. Secondary sources viz company database

The data collected are represented into suitable tabular forms for drawing inferences.
Quantitative techniques like averages, percentages, range, two-way tables, chi- square tests
analysis are applied as per the requirement. The level of preference, perception of the customers
about the product and company were identified by means of a scoring scheme. For the
representation of data various charts and graphs are used as per requirement.

4.4. Questionnaire Designing:

The project is on “Market Potential Study of Tata AIG in Dehradun city”. To know the market
potentiality of Tata AIG a questionnaire has been prepared. The questionnaire is having both
open ended and close ended questions. It is also having ranking, multiple choice and check list
type of questions.
First part of the questionnaire is the demographic part. Questionnaire has been prepared in such a
way that we can understand insurance policies are dependable on the occupation of a person or
income level of a person. Which type of investment do they prefer? For it cluster analysis will be
used.
Nowadays private players are giving a good rate of return rather than the public player. So in
which sector (private or public) do they like to invest and what is the reason behind that? To get
to know the reason Likert scale has been used.
To get to know how much Tata AIG is preferable in Dehradun city a ranking scale has been used
where name of different major Insurance Companies have been given and according to the
ranking given by citizen we can get to know the potentiality of Tata AIG in Dehradun city. There
is different type of insurance policies in the market. Which type of policies do they prefer can

41
understand from the questionnaire. Which life insurance policies of Tata AIG are most preferable
we can get from it. To know all of these cluster analysis will be used.

Sample questionnaire has been attached with annexure I.

4.5.LIMITATION OF THE STUDY:

Time limitation
Research has been done only in Dehradun.
Companies did not disclose their secrets data and strategies.
Possibility of Error in data collection.
Possibility of Error in analysis of data due to small sample size.
Respondents error
Limited resources

42
 Chapter 5

Survey and results

43
 5.1 Findings from the research Study
A study has been conducted till date. From the study through hundred questionnaires we got
different data according to the questionnaire. The pilot study has been conducted in the
Dehradun city by meeting the people personally. From the study we have got as below-
Occupation of respondents:
Occupation Numbers of respondents
Service 60
Business 20
Professional 18
Others 2
Table: 6

Proportion of Different Occupation

Service Business professional others

2%

18%

20% 60%

Fig 6: Number of respondents according to the occupation

Number of respondents according to the income level:

Income/annum Number of person

50000-100000 29
100000-300000 40
300000-500000 26
500000-1000000 5
>1000000 0
Table: 7

44
 Income Level
50000-100000 100000-300000 300000-500000
500000-1000000 <1000000
5% 0%

29%
26%

40%

Fig 7: Proportion of respondent according to the income level

Number of family members of the respondents:
Number of family members Number of Respondents
a) 1-4 72
b) 4-8 16
c) 8-12 2
d) 12-16 0
e) >16 0
Table: 8

Number of family memebers

2% 0% 0%

18% a
b
c
d
80% e

Fig 8: Number of family members according to the respondents

45
Number of dependent family members of the respondents:
Number of dependant family members Number of respondents
a) None 23
b) 1-2 54
c) 2-4 19
d) 4-6 3
e) 6-8 1
Table: 9

none

c
Series1
b

0 20 40 60

Fig 9: Number of dependent family members of the respondents

Different Sectors people like to invest their money:

Name of different sector Numbers of respondents
Fixed deposit 55
Post office deposit 18
Mutual Fund 25
Share buying 10
Insurance 63
Table: 10

46
 Investment in different sector
fixed deposit post office mutual fund share Insurance

37% 32%

10%
15%

6%

Fig10: Different sector people like Invest their money

Ratio of Insured and Uninsured person In Dehradun city:

Number of insured person 93
Number of Uninsured person 7

insured person uninsured person

7%

93%

Fig 11: Ratio of Insured and Uninsured person in Dehradun city

Preferred sector in Dedradun city:

Name of sector Preferred Number
Public Sector 63
Private Sector 37
Table: 11

47
 Preferred Sector

private sector
37%
public sector
63%

Fig 12: Preferred Sector in Dehradun city

Investment in different Insurance Company in Dehradun City:
Name of the companies Number of respondents
LIC 80
Tata AIG 15
Birla Sun Life 5
ICICI Prudential 18
Max New York Life 8
Others 10
Table: 12

Investment in different Insurance

Company
lic tata aig birla icici max new york others

7%
6%

13%

11% 59%
4%

Fig 13: Investment in different insurance company in Dehradun city

48
Preferred Insurance Plan in Dehradun city
Name of Insurance Plan Number of respondents
Life Insurance 68
Vehicle Insurance 13
Pension Plan 28
Medi Claim 18
Others 10
Table: 13

Preferred Insurance Plan

Others
Mediclaim 7%
13%

Life Insurance
50%
pension plan
20%
Vehicle
Insurance
10%

Fig 14: Preferred Insurance Plan in Dehradun city

Comparison between number of dependent family members and Insured person
Number of Respondents Insured Uninsured Total
dependents
a) None 23 21 2 46
b) 1-2 54 51 3 108
c) 2-4 19 17 2 38
d) 4-6 3 3 0 6
e) 6-8 1 1 0 2
Total 100 93 7 200
Table: 14

49
Ho:µ=There is no significant relationship between number of dependent members and insured
persons
H1:µ= There is a significant relationship between number of dependent members and insured
persons.
Dependent (fo) (fe) (fo-fe)2 (fo-fe)2/fe
None
No of 23 23 0 0
Respondents
Insured 21 21.39 0.1521 0.007
Uninsured 2 1.61 0.1521 0.094
Dependent 1-2 No of 54 54 0 0
Respondents
Insured 51 50.22 0.6084 0.012
Uninsured 3 3.78 0.6084 0.16
Dependent 2-4 No of 19 19 0 0
Respondents
Insured 17 17.67 0.4489 0.025
Uninsured 2 1.33 0.4489 0.337
Dependent 4-6 No of 3 3 0 0
Respondents
Insured 3 2.79 0.441 0.158
Uninsured 0 - - -
Dependent 6-8 No of 1 1 0 0
Respondents
Insured 1 .93 0.0049 0.005
Uninsured 0 - - -
Table: 15
2
The value of CHI-SQUARE is ∑(fo-fe) /fe= 0.798
Degree of freedom is (no of row-1)*(no of column-1) = (5-1)*(3-1) = 8
At the significance level 0.01 and the df is 8 the value of CHI-SQUARE is 1.646.
Null hypothesis is accepted.

50
 Fig: 15 0.798 1.646

100%
90%
80%
70%
60%
UnInsured
50%
Insured
40%
No of dependant
30%
20%
10%
0%
none a b c d

Fig 16: Comparison between number of dependent family members and Insured person

Comparison between occupation, insured person and preferred sector:

51
Occupation No of Insured Uninsured Public private
Respondent
Service 60 58 2 43 17
Business 20 16 4 12 8
Professional 18 17 1 8 10
Others 2 2 0 0 2
Table: 16
100% 2 0 0 2
90% 1 8
17
80% 12 10
70% 16
60% 4 8
50%
40%
58 43
30%
20% 17
2
10%
0%
insured uninsured public private

service business professional others

Fig 17: Comparison between number of dependent family members and Insured person
Comparison between occupation and preferred sector:
Occupation No of Vote for Public Vote for Private Total
Respondents Sector Sector
Service 60 43 17 120
Business 20 12 8 40
Professional 18 8 10 36
Others 2 0 2 4
Total 100 63 37 200
Table: 17
Ho: µ= There is no significant relationship between occupation and preferred sector.
H1:µ= There is significant relationship between occupation and preferred sector.

52
 Occupation (fo) (fe) (fo-fe)2 (fo-fe)2/fe
Service No of 60 60 0 0
respondents
Public 43 37.8 27.04 0.718
Private 17 22.2 27.04 1.218
Business No of 20 20 0 0
respondents
Public 12 12.6 0.36 0.03
Private 8 7.4 0.36 0.048
Professional No of 18 18 0 0
respondents
Public 8 11.34 11.15 0.983
Private 10 6.66 11.15 1.674
Others No of 2 2 0 0
respondents
Public 0 - - -
Private 2 0.74 1.58 2.13
Table: 18
The value of CHI-SQUARE is ∑ (fo-fe)2/fe= 6.801
Degree of freedom is (no of row-1)*(no of column-1) = (4-1)*(3-1) = 6
At the significance level 0.01 and the df is 6 then from the CHI-SQUARE distribution table we
can get the value 0.872.
Null hypothesis is rejected and alternative hypothesis is accepted.
There is a significant relationship between occupation and preferred sector.

Fig: 18 0.872 6.801

53
 100%
90%
80%
70%
Axis Title

60%
50%
40%
30%
20%
10%
0%
Uninsure
Number Insured Public Private
d
<1000000 0 0 0 0 0
500000-1000000 5 5 0 5 0
300000-500000 26 26 0 16 10
100000-300000 40 38 2 25 15
50000-100000 29 24 5 17 12

Fig 19: Comparison between income level, insured person and preferred sector

Comparison between level of Income and preferred sector:

Level of Income No of Vote for Public Vote for Private Total
Respondents Sector Sector
50000-100000 29 17 12 58
100000-300000 40 25 15 80
300000-500000 26 16 10 52
500000-1000000 5 5 0 10
Total 100 63 37 200
Table: 19
Ho:µ= There is no significant relationship between level of income and preferred sector
H1:µ= There is a significant relationship between level of income and preferred sector.

54
 Level of (fo) (fe) (fo-fe)2 (fo-fe)2/fe
Income
50000-100000 No of 29 29 0 0
respondents
Public 17 18.27 1.6129 0.09
Private 12 10.73 1.6129 0.15
100000- No of 40 40 0 0
300000 respondents
Public 25 25.2 0.04 0.001
Private 15 14.8 0.04 0.002
300000- No of 26 26 0 0
500000 respondents
Public 16 16.38 0.114 0.006
Private 10 9.62 0.114 0.012
500000- No of 5 5 0 0
1000000 respondents
Public 5 3.15 3.4225 1.08
Private 0 - - -
The value of CHI-SQUARE is ∑ (fo-fe)2/fe= 1.341 Table:20
Degree of freedom is (no of row-1)*(no of column-1) = (4-1)*(3-1) = 6
At the significance level 0.01 and the df is 6 then from the CHI-SQUARE distribution table we
can get the value 0.872.
Null hypothesis is rejected and alternative hypothesis is accepted.
There is a significant relationship between occupation and preferred sector.

Fig: 20 0.872 1.341

55
From the secondary data which has been got from the company we can understand how much
proportion of people is using Tata AIG insurance product and other insurance company‟s
products.

Number of Policy
Aegon Religare aviva birla
icici kotak Met Life
Reliance SBI Tata AIG
15% 5%
16%
9%
2% 1%
19% 31%

2%

Fig 21: Proportion of using insurance of different insurance companies

So in Dehradun city Tata AIG is having 15% market share among the private players.

using of different insurance plan

Tata Maha Life Gold Life Invest Assure Invest Assure Optima

37%

58%
5%

Fig 22: Using of different insurance product of Tata AIG

So most preferred plan of Tata AIG in Dehradun city is Tata Maha life gold and Invest Assure
Optima. Life Invest Assure is less preferred plan in Dehraun city.

56
5.2. REASONS FOR PREFERRING PUBLIC AND PRIVATE SECTOR:
To know the reasons why public sector or private sector is preferable we have given eight
reasons and used Likert scale. According to the preference respondents gave their ranking. To
find out the most preferable reason we have added all the values; they are given below.
Sector Guarantee Govt. Maximu Servic Age of Shar Loan Securit
d rate of Undertakin m rate of e the e facilitie y
return g return compan s
y

Public 365 381 283 288 322 293 277 409

Sector
Private 217 172 310 334 215 213 183 214
Sector
Table: 21

Prefarable reason for selecting public

setor
Gauranted rate
of return
Security 14%
Loan facilities Govt.
16%
11% Undertaking
14%
Share
11% Age of the
company Service
12% 11%
Maximum rate
of return
11%

Fig 23: Preferable reason for selecting public sector

Interpretation:
a) Firstly public sector is the most preferable because of security.
b) Next preferable reason is Government undertaking.
c) Another reason is guaranteed rate of return.

57
 d) Age of the company is also a preferable reason.
e) So most of the people in the Dehradun city they want security and Government
undertaking. People want the guaranteed rate of return means there is no hidden cost in
the policy. It should be transparent. Age of the company is also a great factor because if a
company survives for a long time in the then it‟s a faith to the people that the company
may not get out of the market suddenly. So invested money would be secured.
Reasons for preferring Private Sector:

Preferable reason for selecting private sector

Gauranted rate of
return
Loan facilities 12%
Security
10% Govt. Undertaking
11%
9%

Share Maximum rate of

11% return
17%
Age of the
company
12% Service
18%

Fig 24: Preferable reason for selecting private sector

Interpretation:

a) Private sector is preferable firstly for the service

b) The next reason for selection of private sector is maximum rate of return.

58
Comparison between public sector and private sector of different factors

Security
Loan facilities
Share
Axis Title

Age of the company

Service Private sector
Maximum rate of return Public sector
Govt. Undertaking
Gauranted rate of return

0 100 200 300 400 500

Axis Title

Fig 25: Comparison between public sector and private sector of different factors
Interpretation:
From the bar diagram it can be interpreted that Public sector is most preferable than the private
sector. From the bar diagram we can see that public sector gets more points than private sector in
every factors except service and maximum rate of return.
a) Most of the people preferred Public sector because of security which public sector
provide more than private sector.
b) A loan facility is not a vital for choosing public sector. Because it is seen from the graph
difference between private and public is not more.
c) Market share is not also playing the vital role for choosing the public sector.
d) Age of the company has a small impact for choosing the public sector.
e) According to the customer view service of the private sector is more preferable.
f) According to the customers view maximum rate of return is offered by private sector.
g) Government undertaking is a vital factor for choosing public sector. Most of the people
believe on Government. So public sector is preferable.
h) Guaranteed rate of return is also playing a vital role for choosing the public sector. Most
of the people believe that there is no hidden cost in public sector so they can get a
guaranteed rate of return.
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5.3. MARKET POTENTIAL STUDY OF TATA AIG:
100 sample sizes have been taken to know the market potentiality of Tata AIG. Out of 100
samples 15 sample sizes have been rejected due to insufficient information. So we have taken
sample size of 85. To find out the market potentiality of Tata AIG we have taken the ranking of
ten major insurance companies and sum of the ranking of those particular companies are
following below.
Name of LIC SBI ICICI Reliance Bajaj TATA HDFC Max Kotak ING
the Life AIG New Life Vysya
Companies York Insurance
Sum of the 95 313 348 395 484 490 579 609 676 686
ranking(r)
Final 1 2 3 4 5 6 7 8 9 10
Rank
Average 1.11 3.68 4.09 4.64 5.69 5.76 6.81 7.16 7.95 8.07
(r/sample
size)
Marks 9.89 7.32 6.91 6.36 5.31 5.24 4.19 3.84 3.05 2.93
Table: 22
Marks= Number of factor + 1- Average, i.e. Marks= 11- Average
In the ranking scale 1 is most preferred and 10 are least preferred. Out 4675 points LIC has got
95 points and SBI Life Insurance, ICICI Prudential, Reliance life Insurance, Bajaj Life
Insurance, ,Tata AIG, HDFC Life Insurance, Max New York Life Insurance, Kotak Life
Insurance, ING Vysya, got 313 pts, 348 pts, 395 pts, 484 pts, 490 pts, 579 pts, 609 pts, 676 pts,
and 586 pts respectively.
It has been found that potentiality of the private sector is 37% only whereas public sector holding
63% of market share in the Dehradun city. If only private sector has considered then these nine
major private companies holding the 37% of the insurance market in Dehradun city.

60
 Name of SBI ICICI Reliance Bajaj TATA HDFC Max Kotak ING
the Life AIG New Life Vysya
Companies York Insurance
Marks 7.32 6.91 6.36 5.31 5.24 4.19 3.84 3.05 2.93
Obtained
% of 16.2% 15.3% 14.0% 11.7% 11.6% 9.3% 8.5% 6.7% 6.5%
Marks
Out of 6 5.6 5.18 4.32 4.3 3.4 3.14 2.5 2.4
37%
marks
obtained
* Market potentiality of Tata-AIG in Dehradun city is 4.3% Table: 23

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 Chapter 6

RECOMMENDATIONS AND BENEFITS

62
6.1. RECOMMENDATIONS TO THE COMPANY:
Being the best product player in the private sector, but still survey TATA AIG needs to
improvement regarding its premium charges and advertisement to its target customers.
a) Premium charges
Owing to its high premium charges (Tata AIG Apex Plan, Premium RS. 90000/-) customers
perception about the company‟s product has become that its only for the upper middle class
people. Whereas TATA AIG do has some policy with low premium but the charges of allocation
are too high. So we would like to suggest slowing down its premium charges to some extend by
reducing administration charges and other charges.
b) Advertisement:
During survey we have found that due to lack of advertisements about the products and agents
selling the products in which they get high commissions customers are somewhere mislead and
they know about very few products though TATA AIG has wide range of variety of the products.
So we would recommend TATA AIG to invest more in advertisement in form of TV
commercials, pamphlets and hoardings.
c) Wrong perception:
AIG is on the edge of filing bankruptcy. So Tata AIG is also going to on the brink of filling
bankruptcy. But insurance in India is a highly regulated industry. Any company that wants to set
up an insurance business has to follow very stringent norms given by the Insurance Regulatory &
Development Authority (IRDA). So company should take positive measure to remove this wrong
perception from the people.
d) Sample size: For this research study only hundred sample size has been taken. The result
will be more appropriate if a large sample size is considered.

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6.2. BENEFITS TO THE COMPANY AND US:

During the survey time sales have been done. It is a win-win Situation for both company and me.
The benefits of this summer internship program are discussed below.

1. Benefit to the company:

a) This survey has been done in Dehradun region on comparison of TATAAIG‟s product and its
competitor can give an idea of this position in the market. As TATA AIG leads in most of the
parameters so it should continue to serve in the same manner.
b) The survey also shows the customers perception about TATA AIG‟s life Insurance product
with which it can improve its impression better than now.
c) The recommendation has given in this report will help TATA AIG to position its product
properly to the target customers
d) Moreover the sales has been done during this internship have done a good business for the
company

2. Benefit to us:

a) Doing internship in TATA AIG have given me immense experience in the insurance industry
for these fourteen weeks.
b) Interaction with the customers for survey and sales has developed our marketing skills.
c) Working in the office premises has given exposure to corporate world and an experience in
working in corporate pressure.

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 Chapter 7

CONCLUSION AND REFERENCE

65
 7.1 CONCLUSION

Indian insurance sector is likely to register unprecedented growth of 200% and attain a size of
Rs. 2000 billion ($51.2 billion) by 2009-10, in which a private sector insurance business will
achieve a growth rate of 140% as a result of aggressive marketing technique being adopted by
them against 35-40% growth rate of state owned insurance companies. The rural market offers
tremendous growth opportunities for insurance companies and insurers should develop viable
and cost-effective distribution channels; build consumer awareness and confidence.
The state owned insurance companies such as LIC and GIC have limited number of policies to
offer to their subscribers while in case of private insurance companies, their policy numbers are
many more and the premium amount as well as the maturity period is much competitive as
against those of government insurance companies. The private sector insurance players have
started exploring the rural markets in which until recently, the state owned companies had the
monopoly.

Here it can be concluded that the summer internship program, done for partial fulfillment of the
MBA course in ICFAI University, in TATA AIG Life Insurance Co. Ltd. has been completed
successfully.
Following are the achievements done during the summer internship from 24 February 2009 to
th

23rd May 2009.

a) Survey done with interest of TATA AIG has been conducted successfully and results are
discussed above.
b) Sales done during the time have done great business to the company.
c) The experience gained during the internship has sharpen my skills and given a corporate
exposure.

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 7.2. RFERENCES

For the references different books, journals, and newspapers have been used and different
websites have been used.

Name of websites:

 www.tata-aig.com/life insurance, access on 8th April 2009

 www.tata-aiggeneral.com , access on 8th April 2009
 www.tata-aig-life.com, access on 8th April 2009
 www.mouthshut.com/product-reviews/Tata_AIG_General_Insurance access on 10th
April 2009
 www.irdaindia.org/duties/htm access on 15 April 2009
 www.mydigitalfc.com/tata-aig-eyes-10-growth-motor-insurance-556.htm, access on
16th April 2009
 www.economy watch.com/insurance-overview access on 12 May 2009
 www.managementparadise.com/29381-distribution-channels-tata-aig.html, access on 12
May 2009
 www.andhra.net/27-Tata-AIG-General-60949.asp.htm access on 14th May 2009
 www.marketresearch.com/product/disply.asp?productid=1475505 access on 15th May
2009
 www.allcoferences.com/Insurance Sector Reforms in India Challenges and
Opportunities.htm, access on 15th May 2009
 www.livemint.com/LIC-holds-its-groundLIC-holds-its-ground-private.html-private.html
access on 16th May 2009

Name of book and journal:

 Insurance Industry (ICFAI Publication)

 Business Research Method (ICFAI publication)
 Tata AIG Life Insurance Company Ltd, India, CGAP Working Group on Micro insurance
Good and Bad Practices, Case Study No 14, James Roth and Vijay Athreye- September
2005
 Privatization of the Insurance Market in India: From the British Raj to Monopoly Raj to
Swaraj, Tapen Sinha, CRIS Discussion Paper Series – 2002.X

Name of newspaper:

 Asia Economy Watch 21sr March 2008

 Business Line 20th September 20008
 The Hindu Editorial 23rd, 24th, 26th March 2009
 The Economic Times, 17th September 2008, 23rd March 2009
 Business Standard 17 march 2009, 18th April 2009
 The Financial Express 17th April, 14th May 2009

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 `
Annexure I
QUESTIONNAIRE
Market Potential study of Tata AIG in Dehradun City
Dear Sir/Madam,
We are conducting a survey on Market potential study of Tata AIG in Dehradun city by
Insurance organizations.
We hope for your kind coordination.
Name: ………………………………………………………………………………………………
Age: ………………………… Sex: Male [ ] Female [ ]
Name and address of the organization: …………………………………………………………….
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Contact Number: …………………………………………………………………………………...
E-mail address: ……………………………………………………………………………………..

1. Family Members: (Please tick)

a) 1-4 [ ] b) 4-8 [ ] c) 8-12 [ ]
d) 12-16 [ ] e) 16> [ ]

2. Number of dependent family members: (Please Tick)

a) 1-2 [ ] b) 2-4 [ ] c) 4-6 [ ]
d) 6-8 [ ] e) More: …………………………

3. Occupation: (Please Tick)

a) Service [ ] b) Business [ ] c) Professional [ ]
d) Any other: ………………………………………...

4. Annual Income: (Please Tick)

a) 50000-100000 [ ] b) 100000-300000 [ ] c) 300000-500000 [ ]
d) 500000-1000000 [ ] e) 1000000 [ ]

5. In which would you like to invest? (Please Tick)

a) Fixed deposit [ ] b) Post office [ ] c) Mutual fund [ ]
d) Share buying [ ] e) Insurance policy [ ]

6. Do you have any insurance policy? (Please Tick)

a) Yes [ ]
b) No [ ]

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7. Which sector do you prefer? (Please Tick)
a) Public Sector [ ]
b) Private Players [ ]

8. Why do you prefer public or private sector?

Reason Public Player Private Players

Rating Rating
Least...…………………Most Least…………………Most
1 2 3 4 5 1 2 3 4 5
Guaranteed Rate of
Return
Government undertaking
Maximum Rate of Return
within a time limit
Service
Age of the Company
Market Share
Loan Facilities
Security

9. Do you have any Insurance policy in the Following companies? (Please Tick)
a) LIC [ ] b) Tata AIG [ ] c) Birla Sun life [ ]
c) ICICI [ ] e) Max New York [ ] f) Any Other: ………….

10. Rank different company according to your opinion.

Most preferred rank is 1 and least preferred is 10 (Rank from 1 to 10)

LIC
ICICI Prudential
Tata AIG Life Insurance
Max new York Life
HDFC standard Life
Reliance Life Insurance
ING Vysya
Kotak Life Insurance
Bajaj Allianz
SBI life Insurance

69
 11. Which type of policy do you prefer? (Please Tick)

a) Life Insurance [ ] b) Vehicle Insurance [ ] c) Pension plan [ ]

d) Medi claim [ ] e) Any Other: ……………………

Any Comments: ……………………………………………………………………………

……………………………………….……………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………

Thank you, for your kind co-operation.

Signature: …………………………………..
Date: ………………………………………..

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