Student Declaration

I here by declare that the project report entitled

To determine customer buying behavior with a focus on

market segmentation for Kotak Life Insurance.

Submitted in partial fulfillment of the requirement for the

degree of

Masters of business administration

To Sikkim – manipal university, India, is my original work

and not submitted for the award of any other degree, diploma,

fellowship, or any other similar title or prizes.

Place: AMIT SAHA

Date: (520545091)

Examiner’s certificate
1
 The project report of

AMIT SAHA

To determine customer buying behavior with a focus on

market segmentation for Kotak Life Insurance.

Is approved and is acceptable in quality and form.

Pradiptadas gupta
Internal examiner external examiner

2
 University study center certificate

This is to certify that the project report entitled

To determine customer buying behavior with a focus on

market segmentation for Kotak Life Insurance.

Submitted in partial fulfillment of the requirement for the

degree of
Masters of business administration of
Sikkim-manipal University of health, medical and
technological sciences.

AMIT SAHA
(520845091)
Has worked under my supervision and guidance and that no
part of this report has been submitted for the award of any
other degree, diploma , fellowship or other similar titles or
prizes and that the work has not been published in any journal
and magazine.

Certified by,

3
 Table of contents
Main head Sub head
Executive summary Introduction
Objective
Methodology
Analysis
Conclusion and
recommendations
Introduction to Introduction
Insurance
Function of Insurance
Types of Insurance
General & life Insurance
Role of life Insurance
Importance of life
Insurance
Global insurance Brief outline
industry
Indian insurance History
industry
Important milestones
Insurance regulatory Brief knowledge about
& development IRDA
Part 1 authority(chap5)
Role of IRDA
Changing perception of
consumer because of
IRDA
4
 Changing face of Indian
insurance sector
Company profile Brief discussion
Marketing dept Detailed study
Function of Insurer’s business model
Insurance
industry(chap6)
Investment management
Distribution of Different distribution
Part 1 insurance channel such as Agent,
product(contd.) Bank, Broker, Corporate
Agent, Internet
Effective marketing Brief analysis
strategy for
Insurance
product(contd.)
Four success factor
Major player of LIC
insurance(chap 7)
BAJAJ ALLIANZ
TATA AIG
MAX NEW YORK
LIFE
ICICI PRUDENTIAL
Project introduction Brief discussion
Project objective discussion
Research Detailed discussion
methodology
Questionnaire Survey for consumer
Part 2 preference
Survey for life advisor
Data analysis for Analysis based on annual
consumer preference income of the people
5
 Analysis based on where
people want to invest
surplus money
Analysis based on what
benefit people want
Analysis based on what
people want more
Analysis based on which
product people like more
Analysis based on
consumer’s awareness
Analysis based on
occupation group
Analysis based on who is
interested to invest at
KLI
Analysis based on
medium of selecting KLI
Data analysis for the Analysis based on how
life advisor much free time you get
out of daily routine
Analysis based on who
many people you know
Analysis based on do you
like to meet new people
Analysis based on the
offer to become sales
manager from advisor
Analysis based on
whether he/she wants to
work for KLI
Analysis based on
interested people with
6
 occupation
Analysis based on
interested people with
education
Swot analysis discussion
Recommendation
Part 3 Achievement
Conclusion
Reference

7
 Chapter 1:
Executive summary

8
INTRODUCTION:

In today’s corporate and competitive world, I find that insurance

sector has the maximum growth and potential as compared to the
other sectors. Insurance has the maximum growth rate of 70-80%
while as FMCG sector has maximum 12-15% of growth rate. This
growth potential attracts me to enter in this sector and KOTAK LIFE
INSURANCE has given me the opportunity to work and get
experience in highly competitive and enhancing sector.

Companies now are tapping a lot of ways to capture the market and
hence adopting different ways to hold the large portion of the market.

My summer training learning helped me a lot to complete my project

in order to learn a lot of things of the corporate. As a project trainee
the first task given to me was to understand the basic behaviour of the
consumer in order to manipulate the market according to our target
competition.

For this I developed a questionnaire and I did my survey in kolkata.

9
This job training also helped me a lot in understanding the process of
building effective marketing channels for life insurance products by
establishing network of life insurance advisors.

The success story of good market share of different market

organizations depends upon the availability of the product and
services near to the customer, which can be distributed through a
distribution channel.

In Insurance sector, distribution channel includes only agents/advisors

or agency holders of the company. If a company like KOTAK LIFE
INSURANCE, ICICI PRUDENTIAL, RELIANCE LIFE
INSURANCE, TATA AIG, MAX etc has adequate agents in the
market, they can capture big market as compared to the other
companies.

OBJECTIVES:
The objectives of the present study are as following:
• Proper understanding and analysis of life insurance industry.

• To know about brand awareness of Kotak Life Insurance and

customer’s preference about Kotak Life Insurance.

• Conduct market survey on a sample selected from the entire

population and derive opinion on that research.

10
 • To help company in establishing a network of Life Insurance
Advisors and to promote the benefits those are provided by
Kotak Life Insurance to its Life Insurance Advisors.

• To offer suggestions based upon findings.

RESEARCH METHODOLOGY:

All the findings and conclusions are based on the survey done in the
working area within time limit. I tried to select a sample
representative of the whole group during my job training. I have
collected data from 200 respondents for studying Customer Buying
Behaviour and Market Segmentation, selected randomly from
different areas in kolkata such as:

• Public places like shopping centers, malls, restaurants etc.

• Employees of Government Departments

• Employees of Private Firms

• Business / Self Employed

11
For recruitment of Life insurance Advisors, I have collected data from
150 respondents from following groups:
 Chartered Accountants

 Tax Consultants

 Businessmen

 Share Brokers

 Lawyers

 Working Professionals

 House Wives

 Retired Persons

ANALYSIS:
Insurance market has grown really well in the last couple of years.
People now started to think beyond LIC and SBI LIFE. But there is
also lots of private big companies like HDFC, ICICI, and MAX NEW
YORK and so on. So it is very difficult for KLI to capture the market.
I also found that people are also not aware of KLI and their product,
so I suggest management to start a huge campaign at the sub urban
areas of Kolkata especially from kakurgachi onward to bongaon. If
management don’t spend to much attention on this matter I should say
it will be difficult for them to capture a huge untapped market.

12
CONCLUSIONS:

During the data collected, it has been found that people have great
awareness about various companies but a lot more has to be done,
especially by smaller companies like Kotak Life Insurance to
establish their market presence.
People are beginning to look beyond LIC for their insurance needs
and are willing to trust private players with their hard earned money.
People in general have been influenced by the marketing activities of
insurance companies. A high penetration of print, radio and TV ad
campaigns over the years is beginning to have its impact now.
Another important trend was in terms of people viewing insurance as
a tax saving and investment instrument as much as protective one.
The general satisfaction levels among public with regards to policy
and agents still requires improvement. Here lies the opportunity for a
relatively new comer like Kotak Life Insurance. LIC has never been
known for prompt service or customer oriented methods but Kotak
Life Insurance can build its reputation based on these factors

13
RECOMMENDATIONS:

• Kotak life insurance has only 4 branches at Kolkata. The nearest

branch is at kakurgachi. After kakurgachi, there is a huge
untapped market available for Kotak Life.

• Marketing in terms of the media via advertisements on

Television to small commercials on FM, hoardings and signage
etc. has to be made because there were respondents who haven’t
even heard about Kotak Life Insurance.

• Awareness camp for sub-urban area should be focused.

• State and Central Government employees should be targeted

because of reasons like:

 They don’t have Life Insurance cover other than that

provided by their respective employers and LIC.

 Most of them are underinsured.

 They have a stable source of income and social security.

14
 Chapter 2:
Overview of the
organization

15
 INTRODUCTION

The story of insurance is probably as old as the story of mankind.

Tendency of a human being to secure themselves against loss and
disaster has been from the starting of world. They sought to avert the
evil consequences of fire and flood and loss of life and were willing to
make some sort of sacrifice in order to achieve security. Though the
concept of insurance is largely a development of the recent past,
particularly after the industrial era – past few centuries – yet its
beginnings date back almost 6000 years as per records.

Functions 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 risk, but can certainly
provide for the losses of risk. Insurance is actually a protection
against economic loss, by sharing the risk with others.

16
• 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.

• 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

17
 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.

Insurance is divided into two basic zones:

• General Insurance

• Life insurance

GENERAL INSURANCE

Insurance of the non life assets are called general insurance, this
includes loss of asset against water, fire, earthquake etc. With the
opening up of the Indian Market in Insurance sector for private
players, in General Insurance the monopoly of the general Insurance
public sector’s companies has been broken. With the entrance of the
new private player market innovative technique has been introduced

18
to capture the market. In general Insurance around 17% of the market
has been captured by the private players.
General Insurance is a sector which alone has many type of insurance
coverage in it like Fire Insurance, Marine Insurance, motor Insurance,
Liability Insurance, Engineering Insurance etc.

The Non Life Insurers:

• National Insurance Co. Ltd

• New Indian Assurance Co. Ltd

• Oriental Insurance Co. Ltd

• United India Insurance Co. Ltd

• Tata AIG General Insurance Co. Ltd

• Bajaj Allianz General Insurance Co. Ltd

• IFFCO Tokio General Insurance Co. Ltd

• ICICI Lombard General Insurance Co. Ltd

• Reliance General Insurance Co. Ltd

• Royal Sundaram Alliance Insurance Co. Ltd

• Bharti Axa General Insurance

• HDFC Chub

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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.

Roles of 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.

20
 • Life insurance as tax planning: Insurance serves as an
excellent tax saving mechanism too.

Importance of 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 channelizes 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.

21
• 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.

22
 Global & Indian Insurance Industry

GLOBAL INSURANCE INDUSTRY

Globally, insurers increasingly are pressured by the demands of their
clients. The development of global insurance industry over the past
few years was influenced by booming stock markets which enabled
considerable capital gains to be made in non life business. Increase in
insurers equity capital increased underwriting capacity, while demand
did not develop at the same pace, resulting in decrease in insurance
policies prices. The stock market boom of the past few years led to
demand for unit linked insurance products.
The global insurance industry is growing at rapid pace. Most of
the markets are undergoing globalization. Lot of mergers and
acquisition are taking place in the insurance world. The rapidity in the
industry, technological improvement has resulted in pressures on a
few economic parameters. The world insurance industry is at peak of
its globalization process.
Global insurance market is increasing by an average of six
percent per year since 1990. Insurance companies have collected
$2443.7 billion premium worldwide according to the global
development of premium volume in 144 countries in 2005. $1521.3
has been generated as life insurance premium and $922.7 as non life
insurance premium. The US accounted for 35% of global life and non

23
life premium, Japan had global share of 21%, and UK was having
10% of global share.

Influence on Indian Insurance Industry:

In this era of globalization, insurance companies face a dynamic

global environment. Dramatic changes are taking place owing to the
internationalization of activities, appearance of new risk, new types of
covers to match with new risk situations, and unconventional and
innovative ideas on customer services. Low growth rates in developed
markets, changing customers needs, and the uncertain economic
conditions in the developing world are exerting pressure on insurer’s
resources and testing their ability to survive. Now the existing
insurers are facing difficulties from non-traditional competitors those
are entering the retail market with new approaches and through new
channels.
India has a rapidly growing middle class and this section can
afford to buy insurance products. This shows the attraction that the
Indian market holds for foreign insurers who have been putting
pressure on developing countries as well as on India to open up its
market.

24
 Life Insurance Penetration as a % of GDP
United Kingdom 8.9
Japan 8.3
Korea 7.3
United States 4.1
Malaysia 3.6
India 3.0
China 1.8
Brazil 1.3

INDIAN INSURANCE INDUSTRY

HISTORY:

Life insurance came to India from England in 1818 when oriental life
insurance company started in Calcutta by Europeans. After this many
insurance companies had been started in India. But these companies
were looking after only the needs of European community established
in India. Indian people were not being insured by these companies.
First Indian life insurance company came as Bombay mutual life
insurance assurance. Second company was Bharat insurance company
came in 1896. After this the united India in Madras, national Indian
and national insurance in Calcutta and the co-operative assurance in
Lahore were established in 1906.

To regulate Indian insurance business first insurance act came in 1912

as life insurance company act and provident fund act. These acts
consist of premium rates tables and periodical valuations of

25
companies. In the first two decade of 20th century many life
insurance companies were started. So the insurance act came in 1938
to governing life and non life insurance companies and to provide
strict state control. In 1956 the life insurance business in India was
nationalized. In 1956 life insurance corporation of India (LIC) was
created to spreading life insurance much more widely particularly in
rural areas. In that year LIC had 5 zonal offices, 33 divisional offices
and 212 branch offices. In 1957 the business of LIC of sum assured of
200crores, 1000crores in 1970, and 7000crores in 1986.

Some of the important milestones in the life insurance business in

India are:-

• 1850 - Non life insurance debuts with triton insurance company.

1870 Bombay mutual life assurance society is the first Indian owned
life insurer
• 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
26
 formed by an Act of Parliament, viz. LIC Act, 1956, with a capital
contribution of Rs. 5 Crore from the Government of India.

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:

• 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.

27
Insurance Sector Reforms:-

In 1993, Malhotra Committee, headed by former Finance Secretary

and RBI Governor R. N. Malhotra, was formed to evaluate the Indian
insurance industry and recommend its future direction.
The Malhotra committee was set up with the objective of
complementing the reforms initiated in the financial sector. The
reforms were aimed at “creating a more efficient and competitive
financial system suitable for the requirements of the economy keeping
in mind the structural changes currently underway and recognizing
that insurance is an important part of the overall financial system
where it was necessary to address the need for similar reforms” In
1994, the committee submitted the report and some of the key
recommendations included.
• 1997 - Insurance regulator IRDA set up
• 2000 - IRDA starts giving licenses to private insurers: Kotak Life
Insurance, ICICI prudential and HDFC Standard Life insurance
first private insurers to sell a policy
• 2001 - Royal Sundaram Alliance first non life insurer to sell a
policy 2002 Banks allowed selling insurance plans.

INSURANCE AND ECONOMY

28
• Indian economy is growing in reference to global market.
Business of insurance with its unique features has a special
place in Indian economy.

• It is a highly specialized technical business and customer is the

most concern people in this business, therefore this business is
able to spur the growth of infrastructure and act as a catalyst in
the overall development of Indian economy.

• The high volumes in the insurance business help spread risk

wider, allowing a lowering of the rates of the premium to be
charged and in turn, raising profits. When there is a bigger base,
the probabilities become more predictable, and with system
wide risks balanced out, profits improve. This explains the
current scenario of mergers, acquisitions, and globalization of
insurance.

• Insurance is a type of savings. Insurance is not only important

for tax benefits, but also for savings and for providing security.
It can be serving as an essential service which a welfare state
must make available to its people.

• Insurance play a crucial role in the commercial lives of nations

and act as the lubricants of economic activities. Insurance firms
help to spread the potentially financial consequences of risk
among the large number of entities, to mobilize and distribute

29
 savings for productive use, facilitate investment, support and
encourage external trade, and protect economic entities against
external risk.

Insurance and economic growth mutually influences each other. As

the economy grows, the living standards of people increase. As a
consequence, the demand for life insurance increases. As the assets of
people and of business enterprises increase in the growth process, the
demand for general insurance also increases. In fact, as the economy
widens the demand for new types of insurance products emerges.
Insurance is no longer confined to product markets; they also cover
service industries. It is equally true that growth itself is facilitated by
insurance. A well-developed insurance sector promotes economic
growth by encouraging risk-taking. Risk is inherent in all economic
activities. Without some kind of cover against risk, some of these
activities will not be carried out at all. Also insurance and more
particularly life insurance is a mobilizer of long term savings and life
insurance companies are thus able to support infrastructure projects
which require long term funds. There is thus a mutually beneficial
interaction between insurance and economic growth. The low income
levels of the vast majority of population have been one of the factors
inhibiting a faster growth of insurance in India. To some extent this is
also compounded by certain attitudes to life. The economy has moved
on to a higher growth path. The average rate of growth of the

30
economy in the last three years was 8.1 per cent. This strong growth
will bring about significant changes in the insurance industry.
At this point, it is important to note that not all activities can be
insured. If that were possible, it would completely negate
entrepreneurship. Professor Frank Knight in his celebrated book “Risk
Uncertainty and Profit” emphasized that profit is a consequence of
uncertainty. He made a distinction between quantifiable risk and non-
quantifiable risk. According to him, it is non-quantifiable risk that
leads to profit. He wrote “It is a world of change in which we live,
and a world of uncertainty. We live only by knowing something about
the future; while the problems of life or of conduct at least, arise from
the fact that we know so little. This is as true of business as of other
spheres of activity”. The real management challenges are uninsurable
risks. In the case of insurable risks, risk is avoided at a cost.

31
 Insurance Regulatory and Development
Authority
Insurance regulatory and development authority :

In 1999, the Insurance Regulatory and Development Authority

(IRDA) was constituted as an autonomous body to regulate and
develop the insurance industry. The IRDA was incorporated as a
statutory body in April, 2000. The key objectives of the IRDA include
promotion of competition so as to enhance customer satisfaction
through increased consumer choice and lower premiums, while
ensuring the financial security of the insurance market. The IRDA
opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed
ownership of up to 26%. The Authority has the power to frame
regulations under Section 114A of the Insurance Act, 1938 and has
from 2000 onwards framed various regulations ranging from
registration of companies for carrying on insurance business to
protection of policyholders’ interests.

32
Role of IRDA:

• Protecting the interests of policyholders.

• Establishing guidelines for the operations of insurers and

brokers.

• Specifying the code of conduct, qualifications and training for

insurance intermediaries and agents.

• Promoting efficiency in the conduct of insurance business.

• Regulating the investment of funds by insurance companies.

• Specifying the percentage of business to be written by insurers

in rural sectors.

• Handling disputes between insurers and insurance

intermediaries.

33
Changing perception of Indian customers:

Indian Insurance consumers are like Indian Voters, they are soft but
when time is right and ripe, they demand and seek necessary changes.
De-tariff of many Insurance Products are the reflection of changing
aspirations and growing demand of Indian consumers.
For historical years, Indian consumers were at receiving end.
Insurance Product was underwritten and was practically forced onto
consumers on a “Take-it-As-it-basis”. All that got changed with
passage of IRDA act in 1999. New insurance companies have come
into existence leading to open competition and hence better products
for customers.
Indian customers have become very sensitive to Coverage / Premium
as well as the Products (read Risk Solution), that is given to them.
There are not ready to accept any product, no matter even if that is
coming from the market leader, should that product is not serving the
purpose. A case in point is ULIP Product / Group Life and Credit Life
in Life Insurance segment and Travel / Family Floater Health and
Liability Insurance in the Non-life segment are new age Avatar. The
new products are constantly being demanded by Indian consumers,
which is putting huge pressures on Insurance companies (Read Risk
Under-writers) and Brokers to respond.
Customers are looking at Insurance for covering Pure Risk now which
I have covered in my next section. Another good reason why we are
seeing quick changes in the buying behavior of Insurance from mere

34
Investment to risk mitigation is the cost of Replacement of Goods
(ROG) or Cost of Services (COS).
Now Indian customers are aware of insurance industry and insurance
products provided by companies. They have become more sensitive.
They would not accept any type of insurance product unless it fulfills
their requirements and needs. In historic day’s customers looking at
insurance products as a life cover which can provide security against
any unacceptable events, but now customers look at insurance
products as an investment as well as life cover. So today’s customers
wants good return from the insurance companies. The Indian
customer’s forms the pivot of each company’s strategy.

35
Changing face of Indian insurance industry:

After the Insurance Regulatory and Development Authority Act have

been passed there has been establishment of many private insurance
companies in India. Previously there was a monopoly business for
Life Insurance Corporation of India (L.I.C.) who was the only life-
insurance company for the people till 2000. L.I.C. still holds 71.4% of
the market share in 2006. But after the introduction of private life
insurance companies there is a great competition in Indian market
now. Everyone is trying to capture the fresh market here and penetrate
it with aggressive marketing strategies. Today life-insurance is not
only limited up to just life risk cover and maturity period bonuses but
changed to greater return from the investments. With the introduction
of the unit linked insurance policies these companies are investing the
money in different investment instruments like shares, bonds,
debentures, government and other securities. People are demanding
for higher returns with the life risk cover and private companies are
giving 30-40% average growth per annum. These life-insurance
companies have every kind of policies suiting every need right from
financial needs of, marriage, giving birth and rearing up a child, his
education, meeting daily financial needs of life, pension solutions
after retirement. These companies have every aspects and needs of
our life covered along with the death-benefit.
In India only 25% of the population has life insurance. So Indian
life-insurance market is the target market of all the companies who

36
either want to extend or diversify their business. To tap the Indian
market there has been tie-ups between the major Indian companies
with other International insurance companies to start up their
business. The government of India has set up rules that no foreign
insurance company can set up their business individually here and
they have to tie up with an Indian company and this foreign insurance
company can have an investment of only 24% of the total start-up
investment.

Indian insurance industry can be featured by:

• Low market penetration.

• Ever growing middle class component in population.

• Growth of customer’s interest with an increasing demand for

better insurance products.

• Application of information technology for business.

• Rebate from government in the form of tax incentives to be

insured.

Today, the Indian life insurance industry has more than a dozen
private players, each of which are making strides in raising awareness
levels, introducing innovative products and increasing the penetration
of life insurance in the vastly underinsured country. Several of private
insurers have introduced attractive products to meet the needs of their
target customers and in line with their business objectives. The

37
success of their effort is that they have captured over 28% of premium
income in five years.
The biggest beneficiary of the competition among life insurers
has been the customer. A wide range of products, customer focused
service and professional advice has become the mainstay of the
industry, and the Indian customer’s forms the pivot of each
company’s strategy. Penetration of life insurance is beginning to cut
across socio-economic classes and attract people who have never
purchased insurance before.
Life insurance is also now being regarded as a versatile financial
planning tool. Apart from the traditional term and saving insurance
policies, industry has seen the entry and growth of unit linked
products. This provides market linked returns and is among the most
flexible policies available today for investment. Now products are
priced, flexible, and realistic and sustain so people in better position
to understand the risk and benefits of the product and they are
accepting these innovative products.
So it is clear that the face of life insurance in India is changing,
but with the changes come a host of challenges and it is only the
credible players with a long term vision and a robust business strategy
that will survive. Whatever the developments, the future and the
opportunities in this industry will surely be exciting.

38
The number of companies in Insurance particularly in Life Insurance
has changed drastically now the number is in 17. List of them are
mentioned as below:-

1. Bajaj Allianz Life Insurance

2. ICICI Prudential Life Insurance
3. TATA AIG Life Insurance
4. Max New York Life Insurance
5. AVIVA Life Insurance
6. Bharti AXA Life Insurance
7. Kotak Mahindra Life Insurance
8. Reliance Life Insurance
9. SBI Life Insurance
10.HDFC Standard Life Insurance
11.Birla Sun Life Insurance
12.Sahara Life Insurance
13.ING Vysya Life Insurance
14. MAX bupa life insurance

And so on…

Increasing growth since liberalization:

YEAR LIC (in billion Rs.) PRIVATE PLAYER

FY 03 110 10
FY 04 120 20
FY 05 130 40
FY 06 140 60
FY 07 240 160
FY 08 270 180
FY 09 320 224

39
Possibilities for insurance companies in India:

• Further deregulation of the market.

• Greater concern for the customers.

• Newer products and services.

• Competition and quality consciousness.

• Cost effective operations.

• Restructuring of the public sector.

• Consolidation of domestic insurance markets.

• Technology driven shift in product design.

• Actual operations and distribution.

• Convergence of financial services.

40
 COMPANY PROFILE
(About Kotak Mahindra Old Mutual Life Insurance)

Kotak Mahindra is in business since 1985 as a partnership between

Uday Kotak and Mr. Mahindra, and insurance part of their business
came into existence in the year 2001.
Evolution of Insurance business in Kotak Mahindra business is like
this:-
YEAR SIGNIFICANT BUSINESS
CHANGES DEVELOPMENT
1985 Trade Finance
1986 Corporate Finance
1990 Car Finance
1991 Investment Banking
1992 Goldman Sachs Brokerage and Distribution
1995 Ford Credit Commercial Vehicle
1997 Consumer Finance
1998 Mutual Fund
2001 Old Mutual Plc Life Insurance
2003 Bank

41
KMOM- The Partnership and Lineage
A 26% - 74% Joint Venture Between

As stated above Kotak Mahindra Life Insurance has Joint venture

with Old Mutual plc.
Old Mutual Plc is the 12th largest Insurance Company in the world. It
has its base of over 4 million life assurance policyholders. It has one
of the best “Payouts” among insurers in the world. It has one of the
best “Solvency Ratios” among insurers in the world. A FTSE 100
financial services group and ranks as a Fortune Global 500
company.The Old Mutual group manages in excess of 239 billion
pounds in funds (Dec’06). The company is 160 years old and has
prominent presence in the United States and the United Kingdom.
Now the question arises that why for the business in India of life
insurance Kotak Mahindra chose Old Mutual plc and vice versa.
Features of Kotak Mahindra and Old Mutual plc at a glance:
KOTAK MAHINDRA OLD MUTUAL plc
Brand Equity Domain Knowledge
Branch Network Technology
Entrepreneur Employees Product Innovation
Knowledge of Indian Market Training Expertise
Access to customer base Global Perspectives
Distribution Associates System and Process
Multi Channel Working System

PRODUCTS
Term Plans
• Kotak Term Assurance Plan

42
 • Kotak Preferred Term Plan
Endowment Plans
• Kotak Endowment Plan

• Kotak Money Back Plan

• Kotak Child Advantage Plan

• Kotak Capital Multiplier Plan

• Kotak Retirement Income Plan

• Kotak Premium Return Plan

Unit Linked Plans
• Kotak Retirement Income Plan (Unit Linked)

• Kotak Safe Investment Plan II

• Kotak Flexi Plan

• Kotak Easy Growth Plan

• Kotak Privilege Assurance Plan

Group
• Employee Benefits

• Kotak Term Group Plan

• Kotak Credit-Term Group Plan

• Kotak Complete Cover Group Plan

• Kotak Gratuity Group Plan

• Kotak Superannuation Group Plan

Rural
• Kotak Gramin Bima Yojna

43
If we look at the status of Kotak Life Insurance’s market share in
comparison of other private company in comparison of premium
earned:-
No. INSURER Market Share
(%)
1 Bajaj Allianz 7.56
2 ICICI Prudential 7.35
3 HDFC Standard Life 2.87
4 SBI Life 2.31
5 Birla Sun Life 1.89
6 Tata AIG 1.29
7 Max New York 1.23
8 Aviva 1.14
9 Kotak Mahindra Old Mutual 1.11
10 ING Vysya 0.79
11 Reliance Life 0.54
12 Met Life 0.40
13 Sahara Life 0.06
14 Shriram Life 0.03

If we talk the growth of Insurance industry’s private players in

recent years, the data will reflect:-

44
Structure of Kotak Life Insurance
• Managing Director: GAURANG SHAH

• CFO: G.MURALIDHAR
• Vice President (Training and Management Development):
ARUN PATIL
• Vice President (HR): SUGATTA DUTTA
• Vice President (Distribution Development and Planning) :
KAMLESH VORA
• Appointed Actuary : JOHN BRYCE

45
Its hierarchy in Kotak Life Insurance is like this:

MANAGIN
G
DIRECTO
R

CFO

MARKETI APPOINTE
SALES HR & TRAINING
NG D CIO
HEAD ADMIN. HEAD
HEAD ACTUARY

46
 HIERARCHY OF KMOM LIFE INSURANCE LIMITED
(Kolkata branch)

REGIONAL MANAGER

BRANCH OPERATIONS
AREA MANAGER
INCHARGE

SALES MANAGER OPERATION EXECUTIVE

ASST. SALES MANAGER OPERATIONS

LIFE ADVISOR

Study of marketing department:

47
Marketing practice tends to be seen as a creative industry, which
includes advertising, distribution and selling. It is also concerned with
anticipating the customers' future needs and wants, which are often
discovered through market research. Seen from a systems point of
view, sales process engineering views marketing as a set of processes
that are interconnected and interdependent with other functions,
whose methods can be improved using a variety of relatively new
approaches

Promoters:

Kotak Mahindra Private Ltd.

Kotak Mahindra Prime Limited (KMPL) is a 100%

subsidiary of Kotak Mahindra Group (Kotak Group) formed to
finance all passenger vehicles. The company is dedicated to financing
and supporting automotive and automotive related manufacturers,
dealers and retail customers. The Company offers car financing in the
form of loans for the entire range of passenger cars and multi utility
vehicles. The Company also offers Inventory funding to car dealers
and has entered into strategic arrangement with various car
manufacturers in India for being their preferred financier.

As on March 31, 2005, KMP has a retail distribution

network comprising of 54 branches (including representative offices)
covering about 100 locations in 17 states in the country and has a
48
wide network of Direct Marketing Associates, brokers and agencies
supporting the distribution network and servicing around 113,000
customers.

Kotak Mahindra Bank Ltd.

Kotak Mahindra Bank Limited (KMBL) is the holding

company and the flagship of the Kotak Mahindra Group. It was
actually incorporated as Kotak Capital Management Finance Limited
on November 2, 1985 and obtained its ‘Certificate of Commencement
of Business on February 11, 1986.

It commenced operations with Bill Discounting and

soon started other fund-based activities like corporate leasing & hire
purchase, automobile finance and money market operations.
Subsequently, it also entered the funds syndication and the Investment
banking business.

Old Mutual Plc

It has been developed into an International financial
services group whose activities are focused on asset gathering and
asset management. The Old Mutual Group offers a diverse range of
financial services in three principal geographies: South Africa, the
United States and the United Kingdom. The company is listed on the
London Stock Exchange with a market capitalization of
approximately $6 billion and is a member of the elite FTSE 100
index. In the 2003 rankings of the World's 500 largest corporations by

49
Fortune magazine, Old Mutual climbed 87 places to position number
366 and was also listed as the 14th largest insurance company in the
world.
Old Mutual is the largest financial services business in
South Africa, through its life insurance, asset management, banking
and general insurance operations. The company serves 4 million life
insurance policyholders and employs over 13 000 South Africans in
its local operations.
In the USA, Old Mutual is one of the top ten fixed annuity
businesses offering an array of specialist asset management skills
through its 23 asset management businesses. The company’s US Life
business recorded sales of $4 billion at the end of 2002.
Operations in the United Kingdom are focused on wealth
management, through Gerrard as one of the leading private client
stock broking businesses in the UK.

Distribution:

50
Kotak life has one of the largest distribution networks amongst
private life insurers in India. It has a strong presence across India with
over 2000 branches (including 1,095 micro-offices) and an advisor
base of over 261,000 (as on August 31, 2008).

SALES DISTRIBUTION:

Tied Agency:

Tied Agency is the largest distribution channel of Kotak Life,

comprising a large advisor force that targets various customer
segments. The strength of tied agency lies in an aggressive strategy of
expanding and procuring quality business. With focus on sales &
people development, tied agency has emerged as a robust, predictable
and sustainable business model.

Bank assurance and Alliances:

Kotak life was a pioneer in offering life insurance solutions through

banks and alliances. Within a short span of two years, and with nearly
a large number of partners, B & A has emerged as a vital component
of the company’s sales and distribution strategy, contributing to
approximately one third of company’s total business. The business
philosophy at B&A is to leverage distribution synergies with our
partners and add value to its customers as well as the partners.
Flexibility, adaptation and experimenting with new ideas are the
hallmarks of this channel.

51
SALES STRETAGY

Kotak life insurance has a great strategy for sales department.

Company has a three type of strategy for sales and that are as follow:

COMPANY STRETEGY:

Now company applies the project “Turning Point” and in this project
to decide the selection criteria for LIFE ADVISOR and life advisor
is the basic requirement for sale the policy. The selection criteria for
advisor are:

Like:-

Agent age > 30 for male LA, and >25 for female

Agent income 5 lakhs

Agent stay in city belong > 5 years

Family back ground strong.

Minimum graduate

Either 2 years experience or post graduate refresher

EXTERNAL STRETEGY:

52
Kotak life insurance external strategy is “To make limited branches
but, to perform productive” so that company to reduce the cost.

INTERNAL STRETEGY:

Kotak Life Insurance Company has internal strategy like,

Rewards & Recognisation:

SLAB NO OF POLICIES REWARDS

LEVEL 1 2 Reebok Travel Bag Combo
LEVEL 2 4 Cordless Phone
LEVEL 3 6 Vacuum Cleaner
LEVEL 4 10 Oven Toaster Grill
LEVEL 5 15 Nokia Xpress Music Mobile
Phone
LEVEL 6 20 Philips Home Theatre With
DVD Player

FUNCTIONING OF INSURANCE INDUSTRY

Insurer’s Business Model:
Profit = Earned Premium + Investment Income – Incurred Loss –
Underwriting expenses

53
Insurers make money in two ways:
1. Through Underwriting, the processes by which insurers select
the risks to insure and decide how much in premiums to charge
for accepting those risks, and

2. By investing the premiums they collect from insured.

The most difficult aspect of the insurance business is the underwriting

of policies. Using a wide assortment of data, insurers predict the
likelihood that a claim will be made against their policies and price
products accordingly. To this end, insurers use actuarial science to
quantify the risks they are willing to assume and the premium they
will charge to assume them. Data is analyzed to fairly accurately
project the rate of future claims based on a given risk. Actuarial
science uses statistics and probability to analyze the risks associated
with the range of perils covered, and these scientific principles are
used to determine an insurer's overall exposure. Upon termination of a
given policy, the amount of premium collected and the investment
gains thereon minus the amount paid out in claims is the insurer's
underwriting profit on that policy.

An insurer's underwriting performance is measured in its combined

ratio. The loss ratio (incurred losses and loss-adjustment expenses
divided by net earned premium) is added to the expense ratio
(underwriting expenses divided by net premium written) to determine
the company's combined ratio. The combined ratio is a reflection of

54
the company's overall underwriting profitability. A combined ratio of
less than 100 percent indicates underwriting profitability, while
anything over 100 indicates an underwriting loss.

Insurance companies also earn investment profits on “float”. “Float”

or available reserve is the amount of money, at hand at any given
moment that an insurer has collected in insurance premiums but has
not been paid out in claims. Insurers start investing insurance
premiums as soon as they are collected and continue to earn interest
on them until claims are paid out.

Naturally, the “float” method is difficult to carry out in an

economically depressed period. Bear markets do cause insurers to
shift away from investments and to toughen up their underwriting
standards. So a poor economy generally means high insurance
premiums. This tendency to swing between profitable and
unprofitable periods over time is commonly known as the
"underwriting" or insurance cycle.

Finally, claims and loss handling is the materialized utility of

insurance. In managing the claims-handling function, insurers seek to
balance the elements of customer satisfaction, administrative handling
expenses, and claims overpayment leakages.

Investment Management:

55
Investment operations are often considered incidental to the business
of insurance, and have traditionally viewed as secondary to
underwriting. In the past risk management was the most important
part of business, whereas today the focus has shifted to fund
management. Investment income is a large component of insurance
revenues, skilful and careful management of funds. Insurance is a
business of large numbers and generates huge amount of funds over
time. These funds arise out of policyholder funds in the case of life
insurance, and technical and free reserves in the non-life segments.
Time lag between the procurement of premium and the payment of
claim provides an interval during which the funds can be deployed to
generate income. Insurance companies are among the largest
institutional investors in the world. Assets managed by insurance
companies are estimated to account for over 40% of the world’s top
ten asset managers.
Returns on investments influence the premium rates and
bonuses and hence investment income will continue to be an
important component of insurance company profits. In life insurance,
benefits from insurance profits accrue directly to policy holders when
it is passed on to him in the form of a bonus. In non life insurance the
benefits are indirect and mostly by the creation of an investment
portfolio. Investment income has to compensate for underwriting
results which are increasingly under pressure. In the case of

56
insurance, the difference between revenue and the expenses is known
as operating surplus.
• Revenue = Premium

• Expenses = (Sum of Claims + Commission payable on

procurement of business + Operating expenses)

• Operating Surplus = (Revenue – Expenses)

Net investment income includes income from trading in and holding

stock market securities including government securities, special
deposits with the central government, loans to several public utilities
and service providers in state government.
Insurance premium collected is converted in a pool of fund then
divided in to four expenses.
• To pay the expenses of the management

• To pay agency commission

• To pay for the claims

• Surplus money will be invested in govt. securities

Requirements of an insurance risk

Insurance normally insure only pure risks .However, not all pure risk
is insurable .certain requirements usually must be fulfilled before a

57
pure risk can be privately insured .From the view point of the insurer,
there are ideally six requirement of an insurable risk:
• There must be a large number of exposure units

• The loss must be accidental and unintentional

• The loss must be determinable and measurable

• The loss should not be catastrophic

• The chance of loss must be calculable

• The premium must be economically feasible

DISTRIBUTION OF INSURANCE PRODUCTS

58
Insurance has to be sold the world over. The Touch point with the
ultimate customer is the distributor or the producer and the role
played by them in insurance markets is critical. It is the distributor
who makes the difference in terms of the quality of advice for choice
of product, servicing of policy post sale and settlement of claims. In
the Indian market, with their distinct cultural and social ethics, these
conditions will play a major role in shaping the distribution channels
and their effectiveness. In today's scenario, insurance companies must
move from selling insurance to marketing an essential financial
product. The distributors have to become trusted financial advisors for
the clients and trusted business associates for the insurance
Companies.
Challenges for insurance companies and intermediaries in India-
• Building faith about company in the mind of clients.

• Building personal credibility with the clients.

Different distribution channels in India

59
A multi-channel strategy is better suited for the Indian market. Indian
insurance market is a combination of multiple markets. Each of the
markets requires a different approach. Apart from geographical spread
the socio-cultural and economic segmentation of the market is very
wide, exhibiting different traits and needs. Different multi-distribution
channels in India are as follows:

• Agents: Agents are the primary channel for distribution of

insurance. The public and private sector insurance companies
have their branches in almost all parts of the country and have
attracted local people to become their agents. Today's insurance
agent has to know which product will appeal to the customer,
and also know his competitor's products to be an effective
salesman who can sell his company, the product, and himself to
the customer. To the average customer, every new company is
the same. Perceptions about the public sector companies are also
cemented in his mind. So an insurance agent can play an
important role to create a good image of company.

• Banks: Banks in India are all pervasive, especially the public

sector banks. Many insurance companies are selling their
60
 products through banks. Companies which are bank owned, they
are selling their products through their parent bank. The public
sector banks, with their vast branch networks, are helpful to
insurance companies. This channel of selling insurance is
known as Bank assurance

INSURANCE COMPANY ASSOCIATE BANKS

ICICI Prudential ICICI Bank, Bank of India,
Citibank, Allahabad Bank,
Federal Bank, South Indian Bank,
Punjab and Maharashtra
Cooperative Bank
SBI Life State Bank of India
Birla Sun Life Deutsche Bank, Citibank, Bank of
Rajasthan, Andhra Bank
ING Vysya Bank Vysya Bank
Aviva Life Insurance ABN Amro Bank, Canara Bank
HDFC Standard Life HDFC Bank, Union Bank, Indian
Bank
Met Life Karnataka Bank, J&K Bank

• Brokers: Now a day’s different financial institution are selling

insurance. These financial institutions are known as brokers.

61
 They are taking some underwriting charges from the insurance
companies to sell their insurance products.

• Corporate agents: Corporate agency is a cross selling type of

channel. Insurance companies’ tie-up with business houses in
other industries to sell insurance either to their employees or
their customers. Insurance industry, during the past 2 years has
witnessed a number of such strategic tie-ups and alliances.
Corporate agents have become a major force to reckon with in
distributing insurance products. Such as- Bajaj Allianz tied up
with Maruti Udyog and Ford for auto insurance and Tata AIG
life has tied up with Tata tea, and now SBI with maruti to life
car loan facilities, Khaitan’s Williamson major and bridge
foundation for selling rural policies.

• Internet: In this technological world internet is also a channel

of selling insurance. This can be as direct marketing.

62
EFFECTIVE MARKETING STRATEGIES FOR INSURANCE
PRODUCTS

Now the Indian consumer is knowledgeable and sensitive. Consumers

are increasingly more aware and are actively managing their financial
affairs. People are increasingly looking not just at products, but at
integrated financial solutions that can offer stability of returns along
with total protection. In view of this, the insurance managers need to
understand more about the details that go into the introduction of
insurance products to make it attractive in this competitive market. So
now days an insurance manager requires leadership, commitment,
creativity, and flexibility. "Every family in every village in the
country should feel safe and secure". This vision alone will help to
bring the new ideas to the insurance manager.
Financial, marketing and human resource polices of the
corporations influence the unit mangers to make decisions.
Performance of insurance company depends on the effectiveness of
such policies. Insurance corporations formulate and revise these
policies from time to time to ensure that the performance of the
managers is best for the organization.
In the competitive market, insurance companies are being forced to
adopt a strictly professional approach in marketing. The insurance
companies face the challenge of changing the uninspiring public
image of the industry.
Some of the important marketing elements are-

63
 • Marketing mix.

• The importance of relationship.

• Positioning.

• Value addition.

• Segmentation.

• Branding.

• Insuring service quality.

• Effective pricing.

• Customer satisfaction research.

The growth of insurance sector is governed largely by factors external

to it. The following factors influence the market and demand of
product-
• Government policies.

• Growth in population.

• Changing age profile.

• Income wise distribution of the population.

• Level of insurance awareness.

• The pricing of the policies.

64
 • The economic climate of the country.

• The aversion to risk.

• Social and political features of the country.

• Growth scenario in the world.

Different companies adopt different approaches in their marketing

strategies. One approach is focus upon product quality which can give
confidence in the mind of customers that they are offered by best
featured products. And other approach is focusing on customer’s
needs, which involve a heavy investment in developing relationships
with policyholders. Under this approach customer can expect a range
of products and service offered to him. Third approach is market
segmentation under which the population can be divided into several
homogeneous products and groups, the effort should be tie clients to
the company by customized combination of coverage, easy payment
plans, risk management advice, and convenient and quick claim
handling.

An insurance product can be classified into three phases:

65
Core product: In insurance industry the core product is the policy
that provides protection to the customers.

Expected product: Because of competition customers start to expect

more from an insurance product. Then insurance companies provide
some tangible attributes in their product to differentiate from
competitors, such as-
• Brand
• Some additional features in existing product
• By providing instruction manual with the policy

Augmented product: An insurance company can provide different

types of services to differentiate their products-
• Post sales services.
• Branches in different places for customers.
• Customer complaint management.
• Payment option convenient to customers.

The entry of private players and their foreign partners has given
domestic players a tough time, because the opening up of the sector
has not brought in only foreign players, but also professional
techniques and technologies. The present scene in India is such that
everyone is trying to put in the best efforts. There are marketing
strategies more for survival than growth. But the most important gift

66
of privatization is the introduction of customer-oriented services.
Utmost care is being taken to maximize customer satisfaction.

Success of an insurance company depends on four important

functions:

• Identification of markets: Identification of markets means

need to understand the trends in culture and businesses
constantly, through conducting research and analysis. Insurance
companies can take this job on their own or assign it to an
external agency. Relying on an external agency can be risky due
to the questionable loyalty of the agents.

• Assessment of risks (of the insured and the insurance

corporation) and estimation of losses: Efficiency of actuaries
and assessors of the insurance policies in fixing premiums and
settling claims is foremost an important area for achieving
overall efficiency in operations. The quality of assessing the risk
and estimation of losses has the largest claim on the
performance of an insurance company. Well trained,
experienced and expert hands are needed for the operations.

• Penetration into and exploitation of markets: Market

penetration or exploitation of a company can be identified with
the growth in number of policies in each type of insurance,
growth rate in earnings or turnover, company’s market share,

67
 increase in number of branches and divisions etc. Efforts of the
company as a whole and that of the divisions and branches are
assessed to measure the effectiveness.

• Control over investment and operating costs: Control over

resources such as men, machines, and materials at each level of
the organization provides measures of efficiency of a unit as
well as the organization. Investment control and expense control
are dealt separately and the effectiveness of management’s’
decisions at various levels is to be assessed separately.

To find best prospects:

• Allocating marketing strategies against market potential.

• Estimating potential for specific products within local markets.

• Identifying high opportunity areas.

• Measuring agency performance relative to market potential.

• Optimizing your agency network against market potential.

Attributes to develop marketing strategies:

• Channel data: - Useful to know future buying preferences,
learning about products and purchase channels.

• Consumer attitudes.

68
 • Consumption data: - Useful to evaluate annual premiums,
number of annuities owned, value of annuities, and with which
company the current policy is held.

Effective Strategies for Insurance Agents:

• Learn how to construct a mental image for success.

• Learn how to find a proper perspective and how to turn off all
the signals that cause people not to buy from you.

• Learn how to get and set more appointments.

• Learn how to convert a new lead into sales.

• Learn how to act when you meet a client for the first time.

• Learn how the order in which you explain the types of policies
can double your income.

• Take Easy steps to avoid delays in issuing policies.

69
 MAJOR PLAYER OF INSURANCE IN INDIA

The Life Insurance Corporation of India (LIC) is

the largest 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 was founded in 1956.Headquartered
in Mumbai, which is considered the financial 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 one million and 200 thousand agents for soliciting
life insurance business from the public. Over its existence of around
50 years, Life Insurance Corporation of India, which commanded a
monopoly of soliciting and selling life insurance in India, created
huge surpluses, and contributed around 7 % of India's GDP in 2009.
The Corporation, which started its business with around 300 offices,
5.6 million policies and a corpus of INR 459 million, has grown to
25000 servicing around 180 million policies and a corpus of over INR
3.4 trillion.

70
 Bajaj Allianz General Insurance Company
Limited is a joint venture between Bajaj
Finserv Limited (recently demerged from Bajaj Auto Limited) and
Allianz AG. Both enjoy a reputation of expertise, stability and
strength.
Bajaj Allianz General Insurance received the Insurance Regulatory
and Development Authority (IRDA) certificate of Registration on 2nd
May, 2001 to conduct General Insurance business (including Health
Insurance business) in India. The Company has an authorized and
paid up capital of Rs 110 crores. Bajaj Finserv Limited holds 74% and
the remaining 26% is held by Allianz.

Tata AIG Life Insurance Company Limited (Tata

AIG Life) is a joint venture company, formed by the
Tata Group and American International Group, Inc.
(AIG). Tata AIG Life combines the Tata Group’s pre-
eminent leadership position in India and AIG’s global presence as one
of the world’s leading international insurance and financial services
organization. The Tata Group holds 74 per cent stake in the insurance
with AIG holding the balance 26 per cent. Tata AIG Life Insurance
Company was licensed by Insurance Regulatory and Development
Authority to operate in India on February 12, 2001 and started on
April 1, 2001.

71
 Max New York Life Insurance Company Ltd.
is a joint venture between New York Life; a
Fortune 100 company and Max India Limited; one of India's leading
multi-business corporations. The company has positioned itself on the
quality platform. In line with its vision to be the Most Admired Life
Insurance Company in India, it has developed a strong corporate
governance model based on the core values of excellence, honesty,
knowledge, caring, integrity and teamwork. The strategy is to
establish itself as a Trusted Life Insurance Specialist through a
quality approach to business. Incorporated in 2000, Max New York
Life started commercial operation in 2001. In line with its values of
financial responsibility, Max New York Life has adopted prudent
financial practices to ensure safety of policyholder's funds. The
Company's paid up is Rs. 1,782 crore.

ICICI Prudential is a joint venture

between ICICI Bank and Prudential plc
engaged in the business of life insurance
in India. ICICI Prudential is the largest private insurance company
and second largest insurance in India after LIC. ICICI Prudential Life
Insurance Company is a joint venture between ICICI Bank, a premier
financial powerhouse, and prudential plc, a leading international

72
financial services group headquartered in the United Kingdom. ICICI
Prudential was amongst the first private sector insurance companies to
begin operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA).ICICI
Prudential Life's capital stands at Rs. 37.72 billion (as on March,
2008) with ICICI Bank and Prudential plc holding 74% and 26%
stake respectively. For the year ended March 31, 2008, the company
garnered Retail New Business Weighted premium of Rs. 6,684 crores,
registering a growth of 68% over the last year and has underwritten
nearly 3 million retail policies during the period. The company has
assets held over Rs. 30,000 crore as on April 30, 2008.ICICI
Prudential Life is also the only private life insurer in India to receive a
National Insurer Financial Strength rating of AAA (Ind) from Fitch
ratings. The AAA (Ind) rating is the highest rating, and is a clear
assurance of ICICI Prudential's ability to meet its obligations to
customers at the time of maturity or claims.For the past seven years,
ICICI Prudential Life has retained its leadership position in the life
insurance industry with a wide range of flexible products that meet
the needs of the Indian customer at every step in life.

73
 Chapter 3:
Project Overview

74
INTRODUCTION:

In today’s corporate and competitive world, I find that insurance

sector has the maximum growth and potential as compared to the
other sectors. Insurance has the maximum growth rate of 70-80%
while as FMCG sector has maximum 12-15% of growth rate. This
growth potential attracts me to enter in this sector and KOTAK LIFE
INSURANCE has given me the opportunity to work and get
experience in highly competitive and enhancing sector.

Companies now are tapping a lot of ways to capture the market and
hence adopting different ways to hold the large portion of the market.

My summer training learning helped me a lot to complete my project

in order to learn a lot of things of the corporate. As a project trainee
the first task given to me was to understand the basic behaviour of the
consumer in order to manipulate the market according to our target
competition.

For this I developed a questionnaire and I did my survey in kolkata.

75
This job training also helped me a lot in understanding the process of
building effective marketing channels for life insurance products by
establishing network of life insurance advisors.

The success story of good market share of different market

organizations depends upon the availability of the product and
services near to the customer, which can be distributed through a
distribution channel.

In Insurance sector, distribution channel includes only agents/advisors

or agency holders of the company. If a company like KOTAK LIFE
INSURANCE, ICICI PRUDENTIAL, RELIANCE LIFE
INSURANCE, TATA AIG, MAX etc has adequate agents in the
market, they can capture big market as compared to the other
companies.

OBJECTIVES:
The objectives of the present study are as following:
• Proper understanding and analysis of life insurance industry.

• To know about brand awareness of Kotak Life Insurance and

customer’s preference about Kotak Life Insurance.

• Conduct market survey on a sample selected from the entire

population and derive opinion on that research.

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To help company in establishing a network of Life Insurance
Advisors and to promote the benefits those are provided by Kotak
Life Insurance to its Life Insurance Advisors.

RESEARCH METHODOLOGY

All the findings and conclusions are based on the survey done in the
working area within time limit. I tried to select a sample
representative of the whole group during my job training. I have
collected data from 200 respondents for studying Customer Buying
Behaviour and Market Segmentation, selected randomly from
different areas in kolkata such as:

• Public places like shopping centers, malls, restaurants etc.

• Employees of Government Departments

• Employees of Private Firms

• Business / Self Employed

For recruitment of Life insurance Advisors, I have collected data from

150 respondents from following groups:
 Chartered Accountants

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  Tax Consultants

 Businessmen

 Share Brokers

 Lawyers

 Working Professionals

 House Wives

 Retired Persons

RESEARCH DESIGN

Research was initiated by examining the secondary data to gain

insight into the problem. The primary data is evaluated on the basis of
the analysis of the secondary data.

DEVELOPING THE RESEARCH PLAN

The data for this research project has been collected through self
administration. Due to time limitation and other constraints direct
personal interview method is used. A structured questionnaire was
framed as it is less time consuming, generates specific and to the point
information, easier to tabulate and interpret. Moreover respondents

78
prefer to give direct answers. In questionnaires open ended and closed
ended, both the types of questions has been used.

COLLECTION OF DATA

Secondary Data: It was collected from internal sources. The

secondary data was collected on the basis of organizational file,
official records, news papers, magazines, management books,
preserved information in the company’s database and website of the
company.

Primary data: Individual respondents, Chartered Accountants, Tax

Consultants, Insurance Agents, Auto loan providers were personally
visited and interviewed. They were the main source of Primary data.
The method of collection of primary data was direct personal
interview through a structured questionnaire.

SAMPLING PLAN
Since it is not possible to study whole population, it is necessary to
obtain representative samples from the population to understand its
characteristics.

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  Sampling Units: Individual respondents for studying Customer
Buying Behaviour and Market Segmentation, selected randomly
from different areas in kolkata, like various shopping malls and
markets, Government Offices. Chartered Accountants, Tax
Consultants, Lawyers, Business Men, Professionals and House
Wives of kolkata for recruitment of Life Insurance Advisors

 Sample Technique: Random Sampling

 Research Instrument: Structured Questionnaire

 Contact Method: Personal Interview

SAMPLE SIZE
 Study of Customer Buying Behaviour and Market
Segmentation: 200 respondents

 Recruitment of Life Insurance Advisors for Kotak Life

Insurance: 150 respondents

DATA COLLECTION INSTRUMENT DEVELOPMENT

The mode of collection of data is based on Survey Method and Field

Activity. Primary data collection is based on personal interview. I
have prepared the questionnaire according to the necessity of the data
to be collected.

80
RESEARCH LIMITATIONS
• The research is confined to certain parts of kolkata and does not
necessarily show a pattern applicable to all of country.

• Some respondents were reluctant to divulge personal

information which can affect the validity of all responses.

• In a rapidly changing industry, analysis on one day or in one

segment can change very quickly. The environmental changes
are vital to be considered in order to assimilate the findings.

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 Questionnaire for market survey and life advisor

Questionnaire for the market survey for the insurance

product:

MARKET SURVEY FOR INSURANCE PRODUCT

Dear Sir/Madam,

I am a student of institute of business management and research, conducting a marketing

survey. I request you to fill this questionnaire & I assure that this data will be used only for
study purpose & it will be kept confidential.

1. Name -

2. Phone number -

3. Age
a. Less than 25 c. 35-45
b. 25 – 35 d. 45 and above

4. Qualification
a. Graduate c. Diploma
b. Postgraduate d. Other discipline

5. Occupation
a. govt. employee c. private Job
b. business d. Other

6. What is your average annual income?

a. Up to 2 lakh
b. 2 lakh to 4 lakhs
c. 4 lakhs to 4.99 lakhs
d. 5 lakhs and more

7. Your family size

a. Below 5 members
b. 5 – 10 members

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 c. Above 10 members

8. Where you want to invest your surplus amount?

a. fixed deposit
b. mutual fund
c. real estate
d. stocks
e. All the above

9. What a benefit you are looking at your policy?

a. savings
b. high return
c. tax benefit
d. sum assured

10. Have you taken any life insurance product of kotak life insurnace?
YES NO

If yes , which one -------------------

If no, would you like to invest ? -----------------------

11. do u have any more expectation from kli?

Yes No

If yes what are they?

1. high return
2. more security
3. more liquidity
4. low premium

12.. In which of the following would you like to invest?

1. term cover
2. endowment
3. child advantage
4. pension plan
5. unit linked plan

13. how you rate this insurance company and their financial products?

a. lic b. icici c. tata aig d. birla e. kotak f.sbi life g. bajaj

14. how you come to know about KLI ?

1. insurance agent
2. relative
3. advertisement

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 4. other source

15. Any suggestion for KOTAK LIFE INSURANCE

______________________________________________________
______________________________________________________

Questionnaire for the life advisor:

MARKET SURVEY FOR LIFE ADVISOR

Dear Sir/Madam,

I am a student of institute of business management and research, conducting a marketing

survey. I request you to fill this questionnaire & I assure that this data will be used only for
study purpose & it will be kept confidential.

3. Name -

4. Phone number -

3. Age
c. Less than 25 c. 35-45
d. 25 – 35 d. 45 and above

4. Qualification
c. Graduate c. Diploma
d. Postgraduate d. Other discipline

6. Occupation
a. Business c. Job holder
b. Professional d. Other

6. What is your average annual income?

a. Up to 1 lakh
b. 1 lakh to 3 lakhs
c. 3 lakhs to 5 lakhs
d. 5 lakhs and more

7. how many hours of free time you get out of your daily routine?
d. More than 3 hours
e. 2- 3 hours
f. 1-2 hours
g. Less than 1 hours

84
8. how many individual you know in this city who are directly associate with you?
a. less than 30
b. 30 - 50
c. 50 - 70
d. 70 - 100
e. more than 100

9. do you like to socializing and meeting with new people?

a. yes
b. no
c. depending upon situation
d. can’t say

10. would you like to work for kotak life insurance ?

a. yes b. no

11. Do you believe that KOTAK life insurance given you a very good opportunity to start
your carrier?

a. yes b. no

12 “RS 7,20,000 business for 6month and you will be the sales manager of the company”
how you will rate this opportunity?

a. very good b. good c. average d. bad e. very bad

13. Any suggestion for KOTAK LIFE INSURANCE

______________________________________________________
______________________________________________________

Thank you for sparing your valuable time

85
 Data analysis of consumer behavior

Data Analysis and Interpretation:-

In it through the help of questionnaires we conducted the research and

these are as below:-

Statement 1 :- Annual Income of the people

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
<2 lakhs 2-4 lakhs 4-5 lakhs >5 lakhs

86
Statement 2 :- People want to Invest their surplus Money.

60%

50%

40%

30%

20%

10%

0%
fixed deposit mutual fund stocks real estate

87
Statement 3 :- Benefits required by the people regarding their
Investments

40%
35%
30%
25%
20%
15%
10%
5%
0%
savings high tax risk cover
return rebates

Statement 4:- Expectations from the Life Insurance Companies.

88
 60%

50%
40%

30%

20%
10%

0%
high liquidity security lower
return premium

Statement 5:- Preference among various Insurance Plans

89
 25%
endowment
ulip
child plan
20%
term cover
pension plan
15%

10%

5%

0%

Statement 6:- Customer’s awareness about the Product

90
 100%
90%
80% LIC
70% ICICI
60% TATA AIG
50% BIRLA
40% OMKM
30% SBI life
20%
Bajaj Allianz
10%
0%

Statement 7:- Occupation Group

91
 60%

50%

40%

30%

20%

10%

0%
govt job pvt job business other

Statement 8:- People’s interest of investing in KLI

92
 60%

50%

40%

30%

20%

10%

0%
interested semi- not intsd
intsd

Statement 9:- Medium to select KLI.

93
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

er
t

t
s

en
en

h
iv
ag

sm

ot
t
la

rti
re

ve
ad

Data analysis for the life advisor

94
Statement 1: how many hours of free time you get in your daily routine?

35%

30%

25%

20%

15%

10%

5%

0%
>3 hrs 2 - 3 hrs 1 - 2 hrs < 1hr

Statement 2: how many individual you know in this city who are
directly associate with you?

95
 40%
35%
30%
25%
20%
15%
10%
5%
0%
< 30 30 - 50 50 - 70 70 - 100 100 >

Statement 3: do you like to socializing and meeting with new

people?

96
 40%
35%
30%
25%
20%
15%
10%
5%
0%
yes no depends can't say

RS 7,20,000 business for 6month and you will be the

Statement 4:
sales manager of the company” how you will rate this
opportunity?

97
 40%
35%
30%
25%
20%
15%
10%
5%
0%
very good good avg bad very bad

Statement 5: would you like to work for kotak life

insurance ?

98
 90%

80%

70%

60%
50%

40%

30%

20%

10%

0%
yes no

Statement 6: analysis of interested candidates with the reference

of occupation ?

99
 35%
30%
25%
20%
15%
10%
5%
0%
b

er
s

r
na

he
es

jo

sh
io

ot
n

e
es
si

fr
bu

of
pr

Statement 7: analysis of interested candidates with the

reference of education
100
 0%
10%
20%
30%
40%
50%
60%
70%
gr
ad
ua
po te
st
g ra
d ua
t e

di
pl
o m

101
a
<
gr
ad
ua
te

ot
he
r
 SWOT ANALYSIS

Albert Humphrey advocated the six categories which are the deciding
factor of a company’s future, those things are:

1. Product (what are we selling?)

2. Process (how are we selling it?)
3. Customer (to whom are we selling it?)
4. Distribution (how does it reach them?)
5. Finance (what are the prices, costs and investments?)
6. Administration (and how do we manage all this?)

provide a framework by which SWOT issues can be developed into

actions and managed using teams.

Depending on pretext and situation, a SWOT analysis can produce

issues which very readily translate into (one of the six) category
actions, or a SWOT analysis can produce issues which overlay a
number of categories. Or a mixture. Whatever, SWOT essentially tells
you what is good and bad about a business or a particular proposition.
If it's a business, and the aim is to improve it, then work on
translating:

102
Strengths (maintain, build and leverage)

Opportunities (prioritise and optimise)

Weaknesses (remedy or exit)

Threats (counter)

into actions (each within one of the six categories) that can be agreed
and owned by a team or number of teams.

The swot analysis of the KOTAK LIFE INSURANCE IS :

STRENGTHS

• End-user sales control and direction.

• Right products, quality and reliability.

• Superior product performance vs competitors.

• Better product life and durability.

WEAKNESSES

• Customer lists not tested.

• Some gaps in range for certain sectors.

• We would be a small player.

103
• We cannot supply end-users abroad.

OPPORTUNITIES

• Could develop new products.

• Local competitors have poor products.

• Profit margins will be good.

• End-users respond to new ideas.

• Could extend to overseas.

• Huge untapped market

THREATS

• Legislation could impact.

• Environmental effects would favour larger competitors.

• Existing core business distribution risk.

• Market demand very seasonal.

• Retention of key staff critical.

104
 Chapter 4:
Conclusion part

RECOMMENDATIONS

105
• Kotak life insurance has only 4 branches at Kolkata. The nearest
branch is at kakurgachi. After kakurgachi, there is a huge
untapped market available for Kotak Life.

• Marketing in terms of the media via advertisements on

Television to small commercials on FM, hoardings and signage
etc. has to be made because there were respondents who haven’t
even heard about Kotak Life Insurance.

• Awareness camp for sub-urban area should be focused.

• State and Central Government employees should be targeted

because of reasons like:

 They don’t have Life Insurance cover other than that

provided by their respective employers and LIC.

 Most of them are underinsured.

 They have a stable source of income and social security.

• Kotak Life Insurance recruits its advisors mainly through

personal reference, through advertisement and through walk-in
interviews. They must also recruit them though placement
agencies on trial basis and my personal experience says that
appointing tax consultant and the people who are directly related
to direct tax should be focus more than the other individual.

106
• In order to match with the other private insurance companies,
Kotak should plan their product according to the other
company’s product.

• More flexibility in term of training schedule as working people

cant go for training at working weekdays.

• “Rs7, 20,000 in 6month “it sounds huge for a fresher who is

new to this insurance sector. So it is my suggestion to the
management to make it bit flexible in intention to encourage the
fresher.

• Kotak Life Insurance must build its reputation by focusing on

service quality. Better service quality. Better service quality may
be in the form:

 Issuing policy in time.

 Providing claims in time.

 Making customers aware about their status of policy.

107
 Achievement

In my training period, I worked as a management trainee for the

company named KOTAK LIFE INSURANCE and I am successfully
recruit 4 life advisor and make a survey of 350 people.

108
 CONCLUSIONS

During the data collected, it has been found that people have great
awareness about various companies but a lot more has to be done,
especially by smaller companies like Kotak Life Insurance to
establish their market presence.
People are beginning to look beyond LIC for their insurance needs
and are willing to trust private players with their hard earned money.
People in general have been influenced by the marketing activities of
insurance companies. A high penetration of print, radio and TV ad
campaigns over the years is beginning to have its impact now.
Another important trend was in terms of people viewing insurance as
a tax saving and investment instrument as much as protective one.
The general satisfaction levels among public with regards to policy
and agents still requires improvement. Here lies the opportunity for a
relatively new comer like Kotak Life Insurance. LIC has never been

109
known for prompt service or customer oriented methods but Kotak
Life Insurance can build its reputation based on these factors.

REFERENCES

BOOKS
• Insurance Distribution (ICFAI publications)

• Insurance Industry (ICFAI publications)

• Study Guide- Principles and Practices of Life/ General

Insurance by AIMA

• Money Outlook, January 2009 edition.

• IRDA Annual Report, 2007-2008.

WEBSITES
• www.kotaklife.com

• www.google.co.in

• www.insurance.ind.com

• www.irda.org

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• www.insuranceworld.com
• www.findarticles.com
• www.indianinsuranceresearch.com

• www.wikipedia.org

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