Beruflich Dokumente
Kultur Dokumente
PROJECT REPORT
ON
MARKETING OF INSURANCE
PRODUCT
SUBMITTED BY
Ms.ARCHANA SALUNKHE
IN PARTIAL FULFILMENT FOR THE COURCE OF
BACHELOR OF COMMERCE (BANKING &
INSURANCE)
UNIVERSITY OF MUMBAI
RAYAT SHIKSHAN SANTHAS
KARMAVEER BHAURAO PATIL COLLEGE
VASHI, NAVI MUMBAI
CERTIFICATE
This is to certify that Bhaskar.B.Shinde of B.B.I semester
VIth has completed the project on Personal Services with
special reference Bank of Baroda and has submitted a
satisfactory report under the guidance of Professor
ArchanaSalunkhe in the partial fulfillment of B.B.I course of
University of Mumbai in the academic year 2014-2015.
Project Guide
Co-ordinator
Principal
University Examiner
ACKNOWLEDGEMENT
--------------------------------------
Bhaskar.B.Shinde.
DECLARATION
Bhaskar.B.Shinde
of
KarmaveerBhauraoPatil
College,
etc. The
Date:
Place:
Signature
Index
Chp
Topic
Pg no
No
INSURANCE
Insurance
1.
2
1.
3
1.
4
1.
5
History of Insurance
Concept of Insurance
Overview of Insurance
Principles of Insurance
Marketing of
Insurance
2.1 Marketing of Insurance
2.2 Insurance Marketing
1-22
Marketing of Insurance
Products
strat
egie
s
2
2.3
Me
a
n
i
n
rketing
2.4 Ind
ian
Insur
ance
Mark
eting
g
&
D
e
f
i
2.5 Prob
lems
face by
insuran
ce
compa
nies
t
i
o
2.6 Chal
lenges
faced
by
insuran
m
a
ce
compa
nies
2
Marketing Mix of
Insurance
3.1
3.2
Marketing of Insurance
Products
Case study
46-54
Life Insurance
Corporation
ltd
55
Objectives
RESEARCHMETHODOLOGY
METHODOFDATACOLLECTION
Primary Data: - The primary data are those, which are collected afresh and for
The first time and thus happen to be original in character. The primary data
were
Collected through well-designed and structured questionnaires based on the
Objectives.
Secondary Data: The secondary data are those, which have already been
collected by
Someone else and passed through statistical process. The secondary data
required Of the research was collected through various newspapers, and
Internet etc.
Scope
The project begins with a brief mention of what "MARKETING" is and its
need and importance in Insurance Companies. It further goes on to show
the challenges faced by the Insurance Companies
Limitations
Executive summary
Insurance is a financial service for collecting the savings of the public and
providing them with the risk coverage. The main function of insurance is to
provide against the possible chance of generating losses. It eliminates worries
and miseries of losses by destruction of property and death. It also provides
capital to the society as the funds accumulated are invested in the productive
heads.
Insurance comes under the service sector and while marketing this service, due
care is to be taken in quality product and customer satisfaction. While marketing
the services, it is also pertinent that they think about the innovative promotional
measures. It is not sufficient that you perform well but it is also important that
you let other know about the quality of your positive contribution.
The creativity in the promotional measures is the need of the hour. The
advertisement, public relations, word of mouth communication needs due care
and personal selling requires intensive care.
Chapter 1
INSURANCE
12
1.1
Definition
13
This instrument is used for managing the possible risks of the future. Insurance
is bought in order to hedge the possible risks of the future which may or may
not take place. This is a mode of financially insuring that if such a incident
happens then the loss does not affect the present well-being of the person or
the property insured. Thus, through insurance, a person buys security and
protection.
A simple example will make the meaning of insurance easy to understand. A
biker is always subjected to the risk of head injury. But it is not certain that the
accident causing him the head injury would definitely occur. Still, people riding
bikes cover their heads with helmets. This helmet in such cases acts as
insurance by protecting him/her from any possible danger. The price paid was
the possible inconvenience or act of wearing the helmet; this i.e. equivalent to
the insurance premiums paid.
Though loss of life or injuries incurred cannot be measured in financial terms,
insurance attempts to quantify such losses financially. Insurance can be defined
as the process of reimbursing or protecting a person from contingent risk of
losses through financial means, in return for relatively small, regular payments
to the insuring body or insurance company.
Insurance can range from life to medical to general (residential, commercial
property, natural incidents, burglary, etc)
14
Life Insurance:
It insures the life of the person buying the Life Insurance Certificate. Once a
Life Insurance is sold by a company then the company remains legally entitled
to make payment to the beneficiary after the death of the policy holder.
Medical Insurance :
This is also known as mediclaim. Here, the policy holder is entitled to receive
the amount spent for his health purposes from the insurance company.
General Insurance:
This insurance type involves insuring the risks associated with the general life
such as automobiles, business related, natural incidents, commercial and
residential properties, etc.
15
1.2
History of insurance
Refers to the development of a modern laws and market in insurance against
risks. In some sense we can say that insurance appears simultaneously with
the appearance of human society. We know of two types of economies in human
societies: money economies (with markets, money, financial instruments and so
on) and non-money or natural economies (without money, markets, financial
instruments and so on). The second type has been used much longer than the
first. In such an economy and community, we can see insurance in the form of
people helping each other. For example, if a house burns down, the members of
the community help build a new one. Should the same thing happen to one's
neighbor, the other neighbors must help. Otherwise, neighbors will not receive
help in the future. Turning to insurance in the modern sense (i.e., insurance in a
modern money economy, in which insurance is part of the financial sphere), early
methods of transferringor
distributing
risk
Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.
Chinese merchants travelling treacherous river rapids would redistribute their wares
across many vessels to limit the loss due to any single vessel's capsizing. The
Babylonians developed a system which was recorded in the famous Code of
16
Exchange for the lender's guarantee to cancel the loan should the shipment
be stolen.
Achaemenian monarchs were the first to insure their people and made it official
by registering the insuring process in governmental notary offices. The
insurance tradition was performed each year in Nowruz (beginning of the
Iranian New Year); the heads of different ethnic groups as well as others willing
to take part, presented gifts to the monarch. The most important gift was
presented during a special ceremony. When a gift was worth more than 10,000
Derrik (Achaemenian gold coin) the issue was registered in a special office.
This was advantageous to those who presented such special gifts. For others,
the presents were fairly assessed by the confidants of the court. Then the
assessment was registered in special offices.
The purpose of registering was that whenever the person who presented the
gift registered by the court was in trouble, the monarch and the court would help
him. Jahez, a historian and writer, writes in one of his books on ancient Iran:
"whenever the owner of the present is in trouble or wants to construct a
building, set up a feast, have his children married, etc. the one in charge of this
in the court would check the registration. If the registered amount exceeded
10,000 Derrik, he or she would receive an amount of twice as much."
A thousand years later, the inhabitants of Rhodes created the 'general average',
which allowed groups of merchants to pay to insure their goods being shipped
together. The collected premiums would be used to reimburse any merchant
whose goods were jettisoned during transport, whether to storm or sink age.
The ancient Athenian "maritime loan" advanced money for voyages with
repayment being cancelled if the ship was lost. In the 4th century BC, rates for
the loans differed according to safe or dangerous times of year, implying an
intuitive pricing of risk with an effect similar to insurance.
17
The Greeks and Romans introduced the origins of health and life insurance c. 600
BCE when they created guilds called "benevolent societies" which cared for the
families of deceased members, as well as paying funeral expenses of Members.
Guilds in the Ages served a similar purpose. The Talmud deals with several
aspects of insuring goods. Before insurance was established in the late 17th
century, "friendly societies" existed in England, in which people donated amounts
of money to a general sum that could be used for emergencies.
underwrite such ventures. Today, Lloyd's of London remains the leading market
(note that it is not an insurance company) for
modern disability insurance. This payment model continued until the start of
the 20th century in some jurisdictions (like California), where all laws regulating
health insurance actually referred to disability insurance.
The first insurance company in the United States underwrote fire insurance
and was formed in Charles Town (modern-day Charleston), South Carolina in
1732, but it provided only fire insurance.
Industrial revolution
Benjamin Franklin helped to popularize and make standard the practice of
insurance, particularly against fire in the form of perpetual insurance. In 1752, he
founded the Philadelphia Contribution ship for the Insurance of Houses from Loss
by Fire. Franklin's company was the first to make contributions toward fire
prevention. Not only did his company warn against certain fire hazards, it
19
refused to insure certain buildings where the risk of fire was too great, such as
all wooden houses.
The sale of life insurance in the U.S. began in the late 1760s.
The Presbyterian Synods in Philadelphia and New York founded the Corporation
for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers
in 1759; Episcopalian priests created a comparable relief fund in 1769. Between
1787 and 1837 more than two dozen life insurance companies were started, but
fewer than half a dozen survived.
Prior to the American Civil War, many insurance companies in the United
States insured the lives of slaves for their owners. In response to bills passed
in California in 2001 and in Illinois in 2003, the companies have been required
to search their records for such policies. New York Life for example reported
that Nautilus sold 485 slaveholder life insurance policies during a two-year
period in the 1840s; they added that their trustees voted to end the sale of
such policies 15 years before the Emancipation Proclamation.
Insurance is essentially a hedge against misfortune, in modern usage. In the
20th century insurance was also used as a form or extortion, most
notably used by organized crime as a means of generating tax free income
and to control businesses, populations, and politics, usually on a local level.
In the USA, until the passage of the Social Security Act, the federal government
had never mandated any form of insurance upon the nation as a whole, but this
program expanded the concept and acceptance of insurance as a means to
achieve individual financial security that might not otherwise be available. That
expansion experienced its first boom market immediately after the Second World
War with the original VA Home Loan programs that greatly expanded the idea that
affordable housing for veterans was a benefit of having served. The mortgages
that were underwritten by the federal government during this
20
is known as the fee-for-service business model. During the middle to late 20th
century, traditional disability insurance evolved into modern health insurance
programs. Today, most comprehensive private health insurance programs cover
the cost of routine, preventive, and emergency health care procedures, and also
most prescription drugs, but this was not always the case.
During the 1920s, individual hospitals began offering services to individuals on a
pre-paid basis. The first group pre-payment plan was created at the Baylor
University Hospital in Dallas, Texas. This concept became popular among hospitals
during the Depression, when they were facing declining revenues. The Baylor plan
was a forerunner of later Blue Cross plans. Physician associations began offering
pre-paid surgical/medical benefits in the late 1930s Blue Shield plans. Blue Cross
and Blue Shield plans were non-profit organizations sponsored by local hospitals
(Blue Cross) or physician groups (Blue Shield). As originally structured, Blue Cross
and Blue Shield plans provided benefits in the form of services rendered by
participating hospitals and physicians ("service benefits") rather than
reimbursements or payments to the policyholder.
Hospital and medical expense policies were introduced during the first half of the
20th century. During the 1920s, individual hospitals began offering services to
individuals on a pre-paid basis, eventually leading to the development of Blue
Cross organizations. The Ross-Loos Clinic, founded in Los Angeles in 1929, is
generally considered to have been the first health maintenance organization
(HMO). Henry J. Kaiser organized hospitals and clinics to provide pre-paid health
benefits to his shipyard workers during World War II. This became the basis for
Kaiser Permanente HMO. Most early HMOs were nonprofit organizations. The development of HMOs was encouraged by the passage of
the Health Maintenance Organization Act of 1973. The first employer-sponsored
hospitalization plan was created by teachers in Dallas, Texas in 1929.
22
Because the plan only covered members' expenses at a single hospital, it is also
the forerunner of today's health maintenance organizations (HMOs). Employersponsored health insurance plans dramatically expanded as a result of wage
controls during World War II. The labor market was tight because of the
increased demand for goods and decreased supply of workers during the war.
Federally imposed wage and price controls prohibited manufacturers and other
employers raising wages high enough to attract sufficient workers. When
the War Labor Board declared that fringe benefits, such as sick leave and health
insurance, did not count as wages for the purpose of wage controls, employers
responded with significantly increased benefits.
Employer-sponsored health insurance was considered taxable income until
1954.
In the United States, regulation of the insurance industry is highly Balkanized,
with primary responsibility assumed by individual state insurance departments.
Whereas insurance markets have become centralized nationally and
internationally, state insurance commissioners operate individually, though at
times in concert through a national insurance commissioners' organization. In
recent years, some have called for a dual state and federal regulatory system
for insurance similar to that which oversees state banks and national banks.
23
1.3
Concept of Insurance
The functions of Insurance will give you an idea on how to go ahead with the
approach of insurance and what type of insurance to choose. In a layman's
words, insurance means, a guard against pecuniary loss arising on the
happening of an unforeseen event. In developing economies, the insurance
sector still holds a lot of potential which can be tapped. Majority of the people in
the developing countries remains unaware of the functions and benefits of
insurance and it is for this reason that the insurance sector is still to grow.
becoming
non
functional
by
any
24
disaster
or
an
accident.
Providing protection
The elementary purpose of insurance is to allow security against
future risk, accidents and uncertainty. Insurance cannot arrest the risk
from taking place, but can for sure allow for the losses arising with the
risk. Insurance is in reality a protective cover against economic loss,
by apportioning the risk with others.
Provide Certainty
Insurance is a device, which assists in changing uncertainty to certainty.
Preventing losses
Insurance warns individuals and businessmen to embrace appropriate
device to prevent unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm systems, etc.
Covering larger risks with small capital Insurance assuages the businessmen
from security investments. This isdone by payingsmall amount of premium
against larger risks and dubiety.
y Helps in the development of larger industries Insurance provides an
opportunity to develop to those larger industries which have more risks in their
setting up.
y
27
1.4
OVERVIEW of INSURANCE :
The economic reforms undertaken in the last 15 years have brought about a
considerable improvement in the health of banks and financial institutions in
India. The banking sector is a very important sector of the Indian economy.
The sector has made a marked improvement in the liberalization period. There
has been extraordinary progress in the financial health of the commercial
banks with respect to capital adequacy, profitability, and asset quality and risk
management. Deregulation has opened new doors for banks to increase
revenues by entering into investment banking, insurance, credit cards,
depository services, mortgage, securitization, etc.
The limit for foreign direct investment in private banks has been increased
from 49% to 74%. In addition, the limit for foreign institutional investment in
private banks is 49%. Liberalization and globalization have created a more
challenging environment in the banking sector as well as in the other segments
of the financial sector such as mutual funds, Non Banking Finance Companies,
post offices, capital markets, venture capitalists, etc. Now the challenges faced
by the sector would be gaining profitability, reinforcing technology, maintaining
global standards, corporate governance, sharpening skills, risk management
and, the most important of all, to establish 'Customer Intimacy'.
28
The insurance business is one of the most rapidly growing areas in the
financial sector. As an economy grows over the years, insurance sector
intensifies and broadens its reach. Every practical and futuristic individual
would want himself, his family and his assets to be insured. Insurance deals
mainly with life and general insurance. India has a large insurance market
commensurate with its population. The IRDA Act 1999 (Insurance Regulatory
and Development Authority of India Act) has given new opportunities to
private players to enter into the market on the fulfillment of certain
prerequisites. The IRDA is the licensing authority in the sector; the current
FDI cap/Equity in the sector stands at 26 percent. There is no doubt the
challenges ahead will become tougher with more companies competing both
in general and life Insurance. Also mortgage insurance will soon be coming
into the industry. New players have contributed to the launch of innovative
products, services and value-added benefits.
Major foreign players have entered the country and announced joint
ventures in both life and non-life areas. These include New York Life, Aviva,
Tokio Marine, Allianz, Standard Life, Lombard General, AIG, AMP and Sun
Life among others.
Commercial banks are coming up with more and more vacancies, and the
banking sector now has more new jobs than any other sector. Right from the
branch level to the highest level, there is tremendous range of opportunities
available in the sector. Jobs in this sector can be both rewarding and
29
30
1.5
Insurance Principles
Main principles of Insurance:
y
Indemnity
Subrogation
Contribution
Insurable Interest
Proximate Cause
2. Indemnity
On the happening of an event insured against, the Insured will be
placed in the same monetary position that he/she occupied immediately
before the event taking place. In the event of a claim the insured must:
y
31
Transfer any rights which he/she may have for recovery from
The right of an insurer which has paid a claim under a policy to step into
the shoes of the insured so as to exercise in his name all rights he
might have with regard to the recovery of the loss which was the subject
of the relevant claim paid under the policy up to the amount of that paid
claim. The insurers subrogation rights may be qualified in the policy.
In the context of insurance subrogation is a feature of the principle of
indemnity and therefore only applies to contracts of indemnity so that it
does not apply to life assurance or personal accident policies. It is
intended to prevent an insured recovering more than the indemnity he
receives under his insurance (where that represents the full amount of his
loss) and enables his insurer to recover or reduce its loss.
4. Contribution
5. Insurable Interest
If an insured wishes to enforce a contract of insurance before the Courts
he must have an insurable interest in the subject matter of the insurance,
which is to say that he stands to benefit from its preservation and will
suffer from its loss.
6. Proximate Cause
An insurer will only be liable to pay a claim under an insurance
contract if the loss that gives rise to the claim was proximately caused
by an insured peril. This means that the loss must be directly attributed
to an insured peril without any break in the chain of causation.
33
CHAPTER 2
MARKETING OF INSURANCE
AN INTRODUCTION
34
2.1
the know. You are an industry professional so you need to get yourbusiness in
one or more of these publications as well.
Television ads and print ads are excellent forms of insurance marketing.
However the downside is that both can be very expensive. You may go way
beyond your budget if you decide to use either one of these methods.
However if you can afford it then your best course of action is to either consult
with an external advertising agency or hire one to help you develop a
campaign that is conducive to what you need most. Your goal of course is to
gain exposure and to increase your sales.
If you decide that print ads would suit your style and your budget just fine then
colored ads are the most expensive to produce but can be very appealing to
the eye. You can also choose a reverse type for your advertisements. Think
back to what black and white television looked like. The ad would have white
lettering on a stark black background. The black background sets off the
lettering and gives it that catchy effect.
36
2.2
Marketing is
the
process
of
performing market
Marketing is used to identify the customer, to satisfy the customer, and to keep
the customer. With the customer as the focus of its activities, it can be
concluded that marketing management is one of the major components
of business management. Marketing evolved to meet the stasis in developing
new markets caused by mature markets and overcapacities in the last 2-3
centuries. The adoption of marketing strategies requires businesses to shift
their focus from production to the perceived needs and wants of their customers
as the means of staying profitable.
The term marketing concept holds that achieving organizational goals depends
on knowing the needs and wants of target markets and delivering the desired
satisfactions. It proposes that in order to satisfy its organizational objectives,
an organization should anticipate the needs and wants of consumers and
satisfy these more effectively than competitors.
37
Definition
The management process through
services move from concept to
customer. As a practice,
it consists
Identification, selection,
As
a
philosophy,
the
marketing
is
based on thinking
about
38
2.3
Indian Insurance Marketing
The Indian insurance market in spite of having a history covering almost two
centuries took a turn after the establishment of the Life insurance Corporation
in India in 1956. From being an open competitive market to being nationalized
and then back to a liberalized market again, the insurance sector has
witnessed all aspects of contest.
The Indian insurance market conventionally focused around life insurance until
recently, a various range of other insurance policies covering sectors like medical,
automobile, health and other classes falling under general insurance came up,
generally provided by the private companies. The life insurance of India added
4.1% to the GDP of the economy in 2009, an immense growth since 1999, when
the gates were opened for the private company in the market.
The Insurance Regulatory Development Act, 1999 (IRDA Act) allowed the entry
of private companies in the insurance sector, which was so far the sole
prerogative of the public sector insurance companies. The act was passed to
protect the concerns of holders of insurance policy and also to govern and
check the growth of the insurance sector. This new act allowed the private
insurance companies to function in India under the following circumstances:
The company should only the serve the purpose of life or general
insurance or reinsurance business
The minimum paid up equity capital for serving the purpose of
The FDI limit in the insurance sector has been capped at 26% for the
foreign marketers but the government is thinking to increase it to
49% and
40
In the coming three years Health insurance sector is all set to become the
second largest business after motor insurance.
During the period of 2008-09 to 2010-11 the non life insurance premium
is likely to have a growth of 25%.
41
HDFC Standard
Bajaj Allianz
ICICI Prudential
SBI Life
42
2.4
Types of insurance
What you should know about the various types of insurance policies
before getting insured. All policies are not the same. Some give coverage
for your lifetime and others cover you for a specific number of years. Here
is a snapshot of the types of policies and what they offer.
Term Insurance
Term insurance covers you for a term of one or more years. It pays a death
benefit only if the policy holder dies during the period the insurance is in
force. Term insurance generally offers the cheapest form of life insurance.
You can renew most term insurance policies for one or more terms even if
your health condition has changed.
However, each time you renew the policy for a new term, premiums may
climb higher, just like a rent agreement every time you renew the lease. This
policy is particularly useful to cover any outstanding debt in the form of a
mortgage, home loan, etc.
For example if you have taken a loan of Rs10 lakhs, you will have an option
of taking an insurance to protect the loan in case of passing away before
the debt is repaid.
43
Whole life insurance covers you for as long as you live if your premiums are
paid. You generally pay the same premium amount throughout your lifetime.
Some whole life policies let you pay premiums for a shorter period such as 15,
20 or 25 years. Premiums for these policies are higher since the premium
payments are made during a shorter period. There are options in the market
to have a return of premium option in a whole life policy. That means after a
certain age of paying premiums, the life insurance company will pay back the
premium to the life assured but the coverage will continue.
The money back plan not only covers your life, it also assures you the return
of a certain per cent of the sum assured as cash payment at regular intervals.
It is a savings plan with the added advantage of life cover and regular cash
inflow. This plan is ideal for planning special moments like a wedding, your
child's education or purchase of an asset, etc. Money back plan have
"participating" and "non participating" versions in the market.
Endowment Assurance
44
Universal Life
This is a flexible life insurance policy and is also market sensitive. You decide
on the several investment options on how your net premium are to be
invested. While the money invested has the potential for significant growth,
such funds are subject to market risks including the loss of the principal.
The major advantage market-linked plans offer is that they leave the asset
allocation decision in the hands of investors themselves. You are in control of
how you want to distribute your money among the broad class of instruments
and when you want to do it or pull out. Any of the products mentioned above
except term products could be unit-linked.
45
Riders
Riders are additional add-on benefits that you could opt to include in
your policy over and above what the policy may provide. However,
these additions come at an extra premium charge depending of the
rider you opt for. These riders cannot be bought separately and
independently. The extra premium, nature and characteristics of the
riders are based on the base policy that is offered.
46
2.5
What Problems Are Faced by Insurance Companies?
1. Factors in the economy, risk management, keeping costs low and
retaining business in a competitive market are issues insurance companies face
on a regular basis, according to Price Waterhouse Coopers. Uncertainty
regarding the economy along with changes in how people do business keep
this industry on its toes as it strives to meet the demands of consumers and
ensure long-term success.
Maintaining Funds in Hard Economic Times.
2. Price Waterhouse Coopers stated that instead of seeing collapsing assets, insurance
companies have to deal with problems relating to collapses in hedge funds,
structured securities and equities, according to the company's "Top Nine Insurance
Industry Issues in 2009" publication. As a result, credit markets seized, sales in life
insurance policies dropped, asset management fees lowered and bond and
mortgage insurers lost significant amounts of capital. In an effort to hold on to
whatever funds they have, insurance companies are doing what they can to deny
claims, pay less in settlements and defend their claim decisions in court, a battle
that can take several years, according to a 2007 CNN article.
47
3. Companies that offered whole and term life insurance began offering "marketsensitive" products in an effort to expand product portfolios, according to Price
Waterhouse Coopers. This gave policyholders competitive returns and gave
Insurance companies an edge in the financial service market. Consequently,
reserve calculations are subjective, more complex and the investment portfolios
require more attention in order to manage them so returns and cash flow align
with future liabilities. Market sensitive products that involve long- and short-term
investments for companies that sell life insurance are seeing low returns. As a
result, insurance companies need to look at other avenues to ensure solvency
and increase retention efforts.
48
2.6
Challenges faced by Insurance Sector
Every business has risks but insurance companies do get a bigger share of these
unwanted possibilities. Anyone who's had to be screened for a policy knows
that specific criteria are used in determining the chances of being approved or
the actual price of premiums to be paid. This is because the more an individual
is likely to use coverage, the higher the risk that the insurer incurs losses. And
since insurance companies are business entities that need to make money, they
will have a natural aversion to individuals who are likely put them at risk as a
way of ensuring their survival.
One of the ways insurance companies determine risk is by using mortality
tables. For Self-Insured Medical Plans, for example, an age group that has
higher mortality will be required a higher premium or denied altogether.
Meanwhile, individuals who belong to the bracket where mortality is low enjoy
low fees. Providers also use past experiences with policy holders in gauging
whether or not a person is insurable or not. A basic example is someone who
has had a number of operations performed on him. Most probably, this person is
going to have another operation and then another. An insurance company which
gives him coverage is, thus, very likely to incur losses while providing for his
medical needs which are very likely to surface again and again.
When the losses are small, they are easily and automatically covered by all insured
individuals. However, when the losses are big, this is when insurance companies
become, to a degree, unstable. This is also the reason why they have to be extra
discerning in detecting risks. Providers partner with re-insurance
49
them is managed by the reinsurance firms to ensure the insurer's survival in the
case of huge claims.
There are a number of risks that insurance companies face but the largest and
most obvious of these are the risk for underwriting losses. When a policy holder
claims coverage that is worth more than the amount that he has been paid for the
policy, an underwriting loss occurs. When underwriting losses balloon, they could
actually cause the company to be unstable or worse, dissolved.
Although insurance companies may feel like heroes for saving people from
covered expenses, they are not to be taken in the wrong context. Before the
service aspect is still the fact that insurers are around for business reasons,
that is, to make money. Therefore, people should understand why laxity is jut
not possible when these providers categorize insurable and non-insurable
individuals. It must be understood that careless management of risks could well
cost an insurance company its survival.
If you're considering getting insurance and would like to inquire about the
possibilities, a Missouri insurance agent could tell you more about Self-Funded
Medical Plans, Group Life and Disability and other options you may explore.
50
Chapter 3
51
3.1
7Ps of Marketing Mix
Marketing professionals and specialist use many tactics to attract and retain
their customers. These activities comprise of different concepts, the most
important one being the marketing mix. There are two concepts for marketing
mix: 4P and 7P. It is essential to balance the 4Ps or the 7Ps of the marketing
mix. The concept of 4Ps has been long used for the product industry while
the latter has emerged as a successful proposition for the services industry.
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Price
Pricing must be competitive and must entail profit. The pricing
strategy can comprise discounts, offers and the like.
Place
It refers to the place where the customers can buy the product and
how the product reaches out to that place. This is done through
different channels, like Internet, wholesalers and retailers.
Promotion
It includes the various ways of communicating to the customers of what
the company has to offer. It is about communicating about the benefits of
using a particular product or service rather than just talking about its
features.
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People
People refer to the customers, employees, management and
everybody else involved in it. It is essential for everyone to realize that
the reputation of the brand that you are involved with is in the people's
hands.
Process
It refers to the methods and process of providing a service and is hence
essential to have a thorough knowledge on whether the services are
helpful to the customers, if they are provided in time, if the customers
are informed in hand about the services and many such things.
Physical (evidence)
It refers to the experience of using a product or service. When a service
goes out to the customer, it is essential that you help him see what he is
buying or not. For example- brochures, pamphlets etc serve this purpose.
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3.2
Tips of on successful Insurance Marketing
Anything can be marketed effectively, and the basic principles of marketing
remain the same, no matter what's being sold: You focus on what the benefit is
to the person who's buying the product; you emphasize the points of
differentiation between your product and the others in your market segment,
and then close with the pitch.
We're going to make an example out of insurance marketing here to illustrate
the point. The reason for insurance marketing is because everyone needs
insurance, and the market is saturated with a lot of products competing. Writing
insurance marketing tips for a saturated market is an example of how you, as
an internet entrepreneur, can make money by being a liaison to local
businesses in your area.
So, let's look at the big questions from up top - what's the big benefit for taking
insurance? It's buying a specific sort of peace of mind. It's providing coverage
in case there's a disaster. Let's focus that into marketing insurance: "Wouldn't
you like to know that your family will be taken care of, if something happens to
you?" is one way to state the benefit. Another one is "It's cheaper to buy
insurance for your car than to get into an accident without it. And while you
may be a good driver, can you be certain of everyone else?" Both of these are
fairly straightforward ways to insurance marketing and its benefits to the end
customer.
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Now, when I write insurance marketing tips, I'm constantly looking for the
edge, the out - the hook. What makes this product work for the reader
and prospective buyer?
To answer that question, I start with doing some research on Google, and look
for page ranks for specific permutations of insurance buying search terms, like
"cheap health insurance" or "cheap life insurance" or "auto insurance
Michigan" - anything that will help narrow down the search fields. Then I look at
what others are doing on those pages that pull up. It is extremely important to
understand what your competitors are doing. It helps you keep track of market
trends and makes sure you keep your edge.
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Chapter 4
Case study
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Case study
The Life Insurance Corporation of India (LIC) is the largest state-owned life
insurance company in India, and also the country's largest investor. It is fully
owned by the Government of India. It also funds close to 24.6% of the Indian
Government's expenses. It has assets estimated of 9.31 trillion (US$202.03
billion). It was founded in 1956 with the merger of more than 200 insurance
companies and provident societies.
Headquartered in Mumbai, financial and commercial capital of India, the Life
Insurance Corporation of India currently has 8 zonal Offices and 101 divisional
offices located in different parts of India, at least 2048 branches located in
different cities and towns of India along with satellite Offices attached to about
some 50 Branches, and has a network of around 1.2 million agents for soliciting
life insurance business from the public.
History
The Oriental Life Insurance Company, the first corporate entity in India offering
life insurance coverage, was established in Calcutta in 1818 by Bipin Bernard
Dasgupta and others. Europeans in India were its primary target market, and it
charged Indians heftier premiums. The Bombay Mutual Life Assurance Society,
formed in 1870, was the first native insurance provider. Other insurance
companies established in the pre-independence era included,
The first 150 years were marked mostly by turbulent economic conditions. It
witnessed, India's First War of Independence, adverse effects of the World War I
and World War II on the economy of India, and in between them the period of
world wide economic crises triggered by the Great depression. The first half of the
20th century also saw a heightened struggle for India's independence. The
aggregate effect of these events led to a high rate of bankruptcies and liquidation
of life insurance companies in India. This had adversely affected the faith of the
general public in the utility of obtaining life cover.
The Life Insurance Act and the Provident Fund Act were passed in 1912,
providing the first regulatory mechanisms in the Life Insurance industry. The
Indian Insurance Companies Act of 1928 authorized the government to obtain
statistical information from companies operating in both life and non-life
insurance areas. The subsequent Insurance Act of 1938 brought stricter state
control over an industry that had seen several financially unsound ventures
fail. A bill was also introduced in the Legislative Assembly in 1944 to
nationalize the insurance industry.
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Nationalization
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by
owners of private insurance companies. In the ensuing investigations, one of
India's wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of
India newspaper, was sent to prison for two years. Eventually, the Parliament of
India passed the Life Insurance of India Act on 1956-06-19, and the Life
Insurance Corporation of India was created on 1956-09-01, by consolidating
the life insurance business of 245 private life insurers and other entities offering
life insurance services. Nationalization of the life insurance business in India
was a result of the Industrial Policy Resolution of 1956, which had created a
policy framework for extending state control over at least seventeen sectors of
the economy, including the life insurance.
Current status
The Corporation, which started its business with around 300 offices, 5.6
million policies and a corpus of INR 459 million (US$ 92 million as per the
1959 exchange rate of roughly Rs. 5 for a US $ , has grown to 25000 servicing
around 180 million policies and a corpus of over 8 trillion (US$173.6 billion).
The recent Economic Times Brand Equity Survey rated LIC as the No. 1
Service Brand of the Country. The slogan of LIC is "Zindagi ke saath bhi,
Zindagi ke baad bhi"in Hindi. In English it means "with life also, after life
also.
According to The Brand Trust Report 2011, LIC is the 8th most trusted brand of
India.
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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.
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Objectives of LIC
y
Spread Life Insurance 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
Conduct business with utmost economy and with the full realization that
the moneys belong to the policyholders.
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.
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Mission
"Explore and enhance the quality of life of people through financial security by
providing products and services of aspired attributes with competitive returns,
and
by
rendering
resources
for
economic
development."
Vision
"A trans-nationally competitive financial conglomerate of significance to
societies and Pride of India."
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Chapter 5
66
There are many aids of marketing of products but the challenges are also
there. The external environment of insurance market changes time to time, the
customer expectations are increased, they need good technology services at
quick.
The aim of marketing of insurance product is to create customer and
generate profit through customer satisfaction. The insurance marketing
focuses on the formulation of an ideal mix for insurance business so that the
insurance organization survives and thrives in the right perspective.
The government policy changes and low productivity and high cost of agency
organization, Illiteracy of people many challenges, by giving high technology
services to the customer, giving special training to the agents so that they can
convince the customers in rural areas.
The marketing of insurance really helps the companies and customers to
know what type of insurance are in the market.
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Marketing of Insurance Products
BIBLIOGRAPHY
M.N. Mishra
WEBLIOGRAPHY
WWW.GOOGLE.COM
WWW.WIKIPEDIA.COM
WWW.licindia.in
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