A REPORT ON

Customer satisfaction and retention of IDBI Federal Life

Insurance Company LTD


By

AKSHIT DUBE, ID- 13A3HP011

A report submitted in partial fulfillment of the requirements
of MBA program of IMT HYDERABAD

(IDBI Federal Life Insurance Co Ltd.)


Faculty Guide Company Guide
DR.Sridhar vaithianathan MRS.C.Shanthi
Associate Professor Asst. Branch manager
IMT, Hyderabad IDBI Federal Life
Insurance Ltd


Customer satisfaction and retention of IDBI
Federal Life Insurance Company LTD


AKSHIT DUBE

Company Guide Faculty Guide
Mrs.C.Shanthi Dr.Sridhar Vaithianathan
Asst. Branch manager Associate Professor
IDBI Federal Life Insurance Co Ltd. IMT, Hyderabad
Coimbatore




IMT Hyderabad

ACKNOWLEDGMENT
I sincerely thank Mrs.C.Shanthi (Asst. Branch head), Jay Mala and Mr.
sankeerth(Coordinator) for providing me this wonderful opportunity of working
on this particular project. I have been provided help and got the chance to
learning a lot throughout this project.
I am also thankful to my faculty guide MR.Sridhar vaithianathan for guiding and
encouraging me throughout the internship.


TABLE OF CONTENTS
INTRODUCTION OF THE PROJECT 5
PROBLEM STATEMENT 6
RESEARCH OBJECTIVE 6
SCOPE OF THE PROJECT 6
PERIOD OF STUDY 6
SAMPLE DESIGN 6
LIMITATION 6
THE INSURANCE INDUSTRY 7
COMPANY PROFILE 8
CUSTOMER RETENTION 9
ADVANTAGES OF CUSTOMER RETENTION 11
TYPE OF CUSTOMER RETENTION RATE 12
REFERENCES 13

Introduction of the project

Customer retention and satisfaction are 2 of the most important factors regarding
long term success of the company. These factors are known to be huge
influencing factors in the economic growth of a company.
Customer retention is of the main factor of profit growth.
Following are some of the benefits of customer retention
1. New customers cost more than keeping existing ones.
2. Companies already know how to do business with the existing customers.
3. Long term customers initiate free promotion through word of mouth and
referrals.
My research aims to study the current customer satisfaction and retention
scenario of IDBI federal life insurance and suggest ways to improve it.

Problem statement
IDBI Federal Life Insurance Co Ltd. Is a joint venture company among three
financial companies IDBI Bank, Federal Bank, European insurance company
AGEAS. It has grown remarkably in the last 6 years but it still has a long way to go
and customer satisfaction and retention are 2 factors which will help the company
in the long run.
Research objective
1. To identify the current scenario of IDBI Federal Life Insurance Ltd.
2. To identify ways to improve the customer satisfaction and retention levels.
Scope of the project
Successful companies are continuous working in the field of customer satisfaction
and retention. It is not possible to be successful without keeping the customers
happy and retaining them for future business. This study will help IDBI Federal Life
Insurance in knowing the relinquishment level and how to retain the customers.
PERIOD OF STUDY
The period of the report project is 14 weeks.
Sample design
The research will be carried out among the customers of IDBI Federal Life
Insurance. The sample would be around 100.

Limitation
1. Survey has the sample size of 100 respondents so it may not be entirely correct.
2. The survey is very objective and entirely based on the views of the respondent.

The insurance industry

The insurance sector has gone through a number of phases and changes.
Insurance in India used to be tightly regulated and monopolized by state-run
insurers. Following the move towards economic reform in the early 1990s, various
plans to revamp the sector finally resulted in the passage of the Insurance
Regulatory and Development Authority (IRDA) Act of 1999.Significantly, the
insurance business was opened on two fronts. Firstly, domestic private-sector
companies were permitted to enter both life and non-life insurance business.
Secondly, foreign companies were allowed to participate, albeit with a cap on
shareholding at 26%. With the introduction of the 1999 IRDA Act, the insurance
sector joined a set of other economic sectors on the growth march. During the
2003 financial year, life insurance premiums increased by an estimated 12.3%in
real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums
rose 12.2%to INR 178 billion (USD 3.8 billion). Growth in insurance premiums has
been averaging at 11.3% in real terms over the last decade. There are strong
arguments in favor of sustained rapid insurance business growth in the coming
years, including Indias robust economic growth prospects and the nations high
savings rates.

Company profile

IDBI Federal Life Insurance Co Ltd. is a joint-venture of IDBI Bank, India's premier
development and commercial bank, Federal Bank, one of India's leading private
sector banks and Ageas, a multinational insurance giant based out of Europe. In
this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26%
equity each. Having started in March 2008, in just five months of inception, IDBI
Federal became one of the fastest growing new insurance companies by
garnering Rs.100 Cr in premiums. Through a continuous process of innovation in
product and service delivery IDBI Federal aims to deliver world-class wealth
management, protection and retirement solutions that provide value and
convenience to the Indian customer. The company offers its services through a
vast nationwide network 2,308 partner bank branches of IDBI Bank and Federal
Bank in addition to a sizeable network of advisors and partners. As on 31st
December 2013, the company has issued nearly 5.5 lakh policies with a sum
assured of over Rs. 32,110.48 crores
Currently it is offering 7 products in the market lifesurance, childsurance,
incomesurance, termsurance, microsurance, loansurance, wealthsurance.



CUSTOMER RETENTION

In todays challenging economy and competitive business world, retaining their
customer base is critical to organization success. If the company doesnt give their
customer some good reason to stay, organizations competitors will give the
customer a reason to leave. Customer retention and customer satisfaction drive
profits. Its far less expensive to cultivate organization existing customer base and
sell more service to the customer than to seek new, single-transaction customers.
Most surveys across industries shows that keeping one existing customer is five to
seven times more profitable than attracting one new customer. A customer-
focused approach among its employees is still not present. In this era of intense
competition .it is very important for any service company to understand that
merely acquiring customer is not sufficient because there is a direct link between
customer retention over time and profitability & growth.
Customer retention to a great extent depends on service quality and customer
satisfaction. Complaints are natural part of any service activity as mistakes are an
unavoidable feature of all human endeavor and thus also of service recovery.
Service recovery is the process of putting things right after something goes wrong
in the service delivery. Customer retention is the maintenance of continuous
trading relationships with customers over the long term. Customer retention is
the mirror image of customer defection or chum.
High retention is equivalent to low defection. In an industry where there are a
multiple purchases over the years, organizations entire team should be very
focused on retaining those customers. Following are some of the ways -
1. Delivering service thats consistent with your value proposition and brand.
2. Cross-selling, up-selling and asking for referrals from existing customers
3. Developing programs to increase customer loyalty and decrease turnover
4. Prioritizing retention as a major focus in your annual marketing plan.
Customer retention occurs when a customer is loyal to a company, brand, or to a
specific product or service, expressing long-term commitment and refusing to
purchase from competitors. Of critical importance to such strategies are the wider
concepts of customer service, customer relations, and relationship marketing.
Companies can build loyalty and retention through the use of a number of
techniques, including database marketing, the issue of loyalty cards, redeemable
against a variety of goods or service, preferential discounts, free gifts, special
promotions, newsletters or magazines, members clubs or customized products in
limited editions

1. The cost of acquisition occurs only at the beginning of the relationship, so
the longer the relationship, the lower the amortized cost.
2. Long-term customers tend to be less inclined to switch.
3. Long-term customer may initiate free word of mouth promotions and
referrals.
4. Long-term customers are more likely to purchase ancillary products and
high margin supplemental products.
5. Customer that stay with company tend to be satisfied with the relationship
and are less likely to switch to competitors, making it difficult for competitors to
enter the market or gain market share.





ADVANTAGES OF CUSTOMER RETENTION

1. POSSIBILITY OF REPEAT BUSINESS
This is probably the most obvious advantage of customer retention. Effective
services that lead to customer satisfaction will make customer coming back to
again, thus giving repeat business. Repeat business is a win-win proposition for
the business or service and the customer. The business reduces the cost of
customer acquisition, while the customer reduces the cost of finding a reliable
vendor and thus also saves on costs associated with switching vendors.
2. REDUCED COSTS FOR CUSTOMER ACQUISITION
Acquiring a customer has certain associated costs. These include the costs
associated with advertising, following up, sales demos, travel and meeting cost
etc. having a repeat customer means that the customer means that the customer
is already aware of your processes and can predict certain quality of output, thus
minimizing the cost involved in new customer acquisition. Having a repeat
customer also has the potential to open up another channel to advertise your
business word of mouth. Word of mouth advertising / recommendations are
perhaps the most important outcome of having a satisfied customer.
3. FOSTERING GREATER INTERACTION BETWEEN BUSINESSAND CUSTOMER
Todays markets are increasingly moving away from mass produced standard
products and service, towards a more customized market, where products and
service are tailored to meet customers specific requirements. Having a repeat
customer is an opportunity for you to build a more focused relationship based on
your customers specific needs and requirements. Being ensured of having a
customer who comes back, you have more confidence to suggest improvements,
provide an insight to better understand their needs and consequently design
products and services that are relevant. Having a repeat business also provides an
opportunity for the buyer and the seller to co-create products and services.
TYPE OF CUSTOMER RETENTION RATE

RAW CUSTOMER RETENTION RATE
This is the number of customer doing business with a firm at the end of a trading
period, expressed as percentage of those who were active customer at the
beginning of the period.
SALES-ADJUSTED RETENTION RATE:
This is the value of sales achieved from the retained customers, expressed as a
percentage of the sales achieved from all customers who were active at the
beginning of the period.
PROFIT-ADJUSTED RETENTION RATE:
This is the profit earned from the retained customers, expressed as a percentage
of the profit earned from all customers who were active at the beginning of the
period.

REFERENCES

1. http://www.idbifederal.com/
2. http://www.ibef.org/industry/insurance-sector-india.aspx
3. http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page
=PageNo4&mid=2
4. http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-
Maximizing-Customer-Retention.pdf
5. http://www.customer-retention.co.uk/advantages-of-customer-
retention.html
6. The Antecedents of Customer Loyalty:
An Empirical Investigation in Life Insurance Context
Alok Kumar Rai, Srivastava Medha
7. http://www.thefreelibrary.com/A+study+of+customer+satisfaction+with
+life+insurance+in+Chandigarh...-a0297309481