Marketing in Insurance

Marketing in Insurance
CHAPTER 1
INTRODUCTION
Insurance is a means of protection from financial loss. It is a form of risk management primarily used
to hedge against the risk of a contingent, uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person
or entity who buys insurance is known as an insured or policyholder. The insurance transaction involves the
insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in
exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or
may not be financial, but it must be reducible to financial terms, and must involve something in which the
insured has an insurable interest established by ownership, possession, or pre-existing relationship.
The insured receives a contract, called the insurance policy, which details the conditions and circumstances
under which the insured will be financially compensated. The amount of money charged by the insurer to the
insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a
loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for
processing by a claim adjuster.
Insurance occupies an important place in the complex modern world since risk, which can be insured, has
increased enormously in every walk of life. This has led to growth in the insurance business and evolution of
various types of insurance covers. The insurance sector acts as a mobiliser of savings and a financial
intermediary and is also a promoter of investment activities. It can play a significant role in the economic
development of country, while economic development itself can facilitate the growth of the insurance sector.
This chapter provides an overview of the insurance sector in India its origin and growth. It begins by defining
insurance as a concept, followed by a discussion on the importance of insurance for individuals, households,
and the economy. The penetration of the insurance business and insurance density in India are compared with
those in other countries. The need to create and enhance the level of awareness about different aspects of
insurance is also discussed.
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1.1CONCEPT OF INSURANCE
Insurance is a form of risk management which is used primarily to hedge against the risk of a contingent,
uncertain loss. Insurance is defined as the equitable transfer of the risk of loss, from one entity to another,
in exchange for payment. Insurance is essentially an arrangement where the losses experienced by a few
are extended among many who are exposed to similar risks. It is a protection against financial loss that
may occur due to an Unexpected event. The transaction involves the insured assuming a guaranteed and
known, relatively small, loss in the form of payment to the insurer in exchange for the insurer's promise to
compensate or indemnify the insured in the case of a large, possibly devastating, loss. The insured receives
a contract called an insurance policy which details the conditions and circumstances under which the
insured will be compensated. Insurance can be classified broadly into:
(a) life insurance, and
(b) general or non-life insurance.
(a)Life insurance or life assurance is a contract between the policy owner and the insurer, where the
insurer agrees to pay the designated beneficiary a sum of money upon the occurrence of the insured
individual’s death or other event, such as terminal or critical illness. In return, the policy owner agrees to
pay a stipulated amount at regular intervals or in lump sums. Life-based contracts tend to fall into two
major categories:
• Protection policies: designed to provide a benefit in case of a specified event, typically against lump
sum payment. A common form of this policy is term insurance. • Investment policies: the main objective
is to facilitate the growth of capital by single or regular premiums. The common forms in this category
include whole life, universal life and variable life policies.
(b) General insurance or non-life insurance policies, including automobile and homeowners’ policies,
provide payments depending on the loss from a particular financial event. General insurance typically
comprises any insurance cover that is not deemed to be life insurance. Some categories of general
insurance policies are: vehicle, home, health, property, accident, sickness and unemployment, casualty,
liability, and credit. The terms of insurance generally depend on the company providing the cover.
1.3ORIGIN OF INSURANCE
Maritime insurance is the oldest form of insurance and is followed by life insurance and fire insurance.
Insurance was prevalent in ancient Greece and among the maritime peoples with whom the Greeks traded.
It developed first as a means of spreading the huge risks involved in early maritime enterprises, evolving
much later during the fourteenth century in the commercial cities of Italy. This practice of marine
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insurance gradually spread to London during the sixteenth century. The history of marine insurance is
closely associated with the origin and rise of Lloyd’s group of ship-owners. Today, Lloyd’s is considered
the largest underwriter in the world. In the USA, the first insurance company was established by Benjamin
Franklin in 1752. Since the mid nineteenth century, insurance has developed significantly to cover other
kinds of risks.
1.4ORIGIN AND DEVEPLOPMENT OF INSURANCE IN INDIA
In India, the history of life insurance can be tracedto1818 when Anita Bhavsar started the Oriental Life
Insurance Company in Kolkata. This organisation was basically founded to serve European clients and hence
Indians who opted for an insurance cover were charged a much higher premium. The reason given was that
Indians had a lower life expectancy on account of their lifestyle, while in fact this was a planned effort to keep
Indians out of any kind of progress. The company failed in1834.Then, in 1870 the British Insurance Act was
passed and the last three decades of nineteenth century saw the emergence of the Bombay Mutual Life
Assurance Society (1871), which became the first organisation to charge the same premium from all residents
of India irrespective of their origin or nationality. The Oriental (1874) and Empire of India (1897) insurance
companies began their activities in the Bombay Residency in the late nineteenth century. This period,
however, was dominated by foreign insurance offices such as Albert Life Assurance, Royal Insurance, and
Liverpool and London Globe Insurance, which did good business in India. The history of general insurance
can be traced to the Industrial Revolution in the West and the consequent growth of sea-faring trade and
commerce. A legacy of British rule, General Insurance in India has its roots in the establishment of Triton
Insurance Company Ltd in 1850 in Calcutta. Its first Indian counterpart, the Indian Mercantile Insurance Ltd,
which launched its operation in Bombay in 1907, was the first company of its type to transact all general
insurance business.
1.2IMPORTANCE OF INSURANCE
Life insurance is generally considered a means of protecting one’s family against the unforeseeable
circumstance of the death of an earning member. However, there are a number of other benefits that are
not apparent. Some benefits accrue to the individuals and their families, while others assist economic
development. For instance, an insurance company takes the risk of large and uncertain losses in exchange
for small premiums. This gives a sense of confidence and security to the insured individual through the
protection of insurance in the event of an unfortunate incident. In large sized commercial and industrial
organizations, it facilitates operations as many of the risks are transferred to the insurer.
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Insurance, particularly life insurance, is one of the ways of providing for the future. A life insurance
policy which gives an annuity is a combination of protection and investment. It increases the
creditworthiness of the assured person because it can provide funds for repayment in the event of death. It
also reduces losses owing to theft, robbery, fire accidents, etc. In addition, it serves as a solution to social
problems. For instance, while compensation is available to victims of industrial injuries and road
accidents, financial difficulties on account of old age, disability or death is minimised.
Investment of accumulated resources by the insurer facilitates the overall development of the country.
Capital is usually risk averse, but if insurers provide protection against risks, then several investors would
come forward to invest their funds.
In many developed countries, citizens are to a certain extent protected by social security schemes
provided by the government. These schemes offer financial aid to citizens who are eligible on grounds of
unemployment, old age, sickness, disability, etc. The social security scenario in India is quite different,
having traditionally been the responsibility of the family or community. However, with industrialization,
urbanization, breakup of the joint family system and weakening of family bondage, it has become
necessary to provide social security arrangements that are institutionalized and regulated by the state
rather than the society.
Issues relating to social security are listed in the directive principles of state policy. While social security
and insurance, employment and unemploymentformItem23oftheconcurrent list, the welfare of labour
including conditions of work, provident fund, employee’s liability, workmen’s compensation, invalidity
and old age pension and maternity benefits form Item 24,alsooftheconcurrentlist.Duringtheinitial years of
development planning, it was believed that with the process of development, a greater number of workers
would join the organised sector and eventually get covered by formal social security arrangements.
However, the actual experience has proved otherwise. There is now almost a stagnation of employment in
the organised sector with increase in the inflow of workers into the informal sector. The unorganised
workforce is characterised by scattered and fragmented areas of employment, seasonality, lack of job
security and low legislative protection. Currently, out of an estimatedworkforceofnearly400million, only
lessthan10percenthavethebenefitsofformal social security protection. Although the government has a few
centrally funded social assistance programmes like National Old Age Schemes and National Family
Benefit Schemes, the number of people covered as well as the benefits is very meagre. Furthermore, in a
country like India, where there is no provision for unemployment benefits, the concept of insurance
becomes extremely important.
1.5IMPORTANT DEVEPLOMENT IN THE HISTORY OF INDIA INSURANCE

BUSINESS
Before deregulation in 1999, the insurance industry in India consisted of only two state insurers, namely
Life Insurance Corporation of India (LIC) for life insurance, and General Insurance Corporation of India
(GIC) with its four subsidiaries for general insurance. According to the Insurance Regulatory and
Development Authority (IRDA), the insurance industryinIndiaatpresentconsistsof24general insurance
companies including specialised insurers such as Export Credit Guarantee Corporation of India and the
Agricultural Insurance Corporation of India, and 23 life insurance companies. Of the 22 insurers who set
up operations in life insurance after the industry wasopenedupfortheprivatesector,20arejoint ventures with
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foreign companies. Similarly, of the 17 non-life insurers, including health

insurersoperatingintheprivatesector,16arein collaboration with foreign partners. Thus, 36 insurance
companies in the private sector are operating in collaboration with well-established foreign companies.
Prior to the opening up of insurance for the private sector, non-life products were limited and were
classified on the basis of their being regulated by tariffs or otherwise. Those such as fire insurance, motor
vehicle insurance, engineering insurance and worker’s compensation came under tariff regulation while
others such as burglary insurance, Mediclaim, and personal accident insurance did not. In addition, most
specialised insurance products, such as race horse insurance, did not fall under tariff regulation. After the
opening up of the sector to private players, new products were introduced and these included products’
liability, corporate cover, professional indemnity policies, weather insurance, credit insurance and travel
insurance.
Table 1.1 shows important developments in the history of the Indian insurance industry.
YEAR DESCRIPTION OF NEW DEVELOPMENTS AND IMPORTANT EVENTS

1912 The Life Insurance Companies Act was passed, making it mandatory for companies to get
their premium rate tables certified by an actuary.
1938 The Insurance Act of 1938 became the first legislation governing all forms of insurance to
provide strict state control over insurance business.
1956 Life insurance in India was completely nationalised on January 19 by means of the Life
Insurance Corporation Act. All 245existing companies operating in the country were merged
into one entity, namely the Life Insurance Corporation of India (LIC)
1957 The General Insurance Council, a wing of the Insurance Association of India, was formed and
framed a code of conduct for ensuring fair conduct and sound business practices.
1968 The Insurance Act of 1938 was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also setup.
1972 The General Insurance Business (Nationalisation) Act was passed. With effect from January 1,
1973 107 companies were amalgamated and grouped into four companies, namely National
Insurance Company Ltd., Oriental Insurance Company Ltd., New India Assurance Company
Ltd and United India Insurance Company Ltd.
1993 The Government of India set up a committee under the chairmanship of RN Malhotra, then
Governor of the Reserve Bank of India, to proposer
commendationsforreformsintheinsurancesectorthatwouldcomplementthereforms in the
financial sector.
1994 The Amphora Committee submitted its report, recommending that entry of the private sector
be permitted in the
insurancesectorandthatforeigncompaniesbeallowedentrybyfloatingIndiancompanies, preferably
as joint ventures with Indian partners.
1996 Following their commendation of the Malhotra Committee, an interim Insurance Regulatory
Authority was set up.
1999 The Insurance Regulatory and Development Authority (IRDA) was constituted as an
autonomous body to regulate and develop the insurance industry. The IRDA was in corporate
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as a statutory body in April, 2000.ThekeyobjectiveofIRDA includes promotion of competition

in order to improve customer satisfaction through increased customer choice and lower
premiums, while ensuring the financial security of the insurance market. The IRDA
deregulated the insurance sector and permitted the entry of private companies. Foreign
investment was also allowed and capped at 26 per cent holding in the Indian insurance
companies.
2006 The Actuaries Actwaspassedtogivetheprofessionstatutorystatusonparwithchartered
accountants, notaries, cost and works accountants, advocates, architects and company
secretaries.
1.6 PRINCIPLES OF INSURANCE
Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses
that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being
dependent upon the frequency and severity of the event occurring. In order to be an insurable risk, the risk
insured against must meet certain characteristics. Insurance as a financial intermediary is a commercial
enterprise and a major part of the financial services industry, but individual entities can also self-
insure through saving money for possible future losses.
 Insurability
Risk which can be insured by private companies typically shares seven common characteristics:
1. Large number of similar exposure unit
2. Definite loss
3. Accidental loss
4. Large loss
5. Affordable premium
6. Calculable loss
7. Limited risk of catastrophically large losses
 Legal
When a company insures an individual entity, there are basic legal requirements and regulations.
Several commonly cited legal principles of insurance include:
1. Indemnity
2. Benefit insurance
3. Utmost good faith
4. Insurable interest
5. contribution
 Indemnification
To "indemnify" means to make whole again, or to be reinstated to the position that one was in, to
the extent possible, prior to the happening of a specified event or peril. Accordingly, life
insurance is generally not considered to be indemnity insurance, but rather "contingent" insurance.
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CHAPTER 2
TYPES OF INSURANCE
INSURANCE
INDUSTRY IN
INDIA
GENERAL
LIFE INSURANCE INSURANCE /NON-
LIFE INSURANCE
MOTOR MARINE HEALTH

FIRE INSURANCE
INSURANCE INSURANCE INSURANCE
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims
are known as perils. An insurance policy will set out in detail which perils are covered by the policy and
which are not. Below are non-exhaustive lists of the many different types of insurance that exist. A single
policy that may cover risks in one or more of the categories set out below. For example, vehicle
insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk
(legal claims arising from an accident). A home insurance policy in the United States typically includes
coverage for damage to the home and the owner's belongings, certain legal claims against the owner, and even
a small amount of coverage for medical expenses of guests who are injured on the owner's property.
Business insurance can take a number of different forms, such as the various kinds of professional liability
insurance, also called professional indemnity (PI), which are discussed below under that name; and
the business owner's policy (BOP), which packages into one policy many of the kinds of coverage that a
business owner needs, in a way analogous to how homeowners' insurance packages the coverages that a
homeowner needs.
2.1 LIFE INSURANCE

Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may
specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life
insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum
cash payment or an annuity. In most states, a person cannot purchase a policy on another person without their
knowledge.
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Annuities provide a stream of payments and are generally classified as insurance because they are issued by
insurance companies, are regulated as insurance, and require the same kinds of actuarial and investment
management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are
sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources.
In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror
image of life insurance.
Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is
surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are
financial instruments to accumulate or liquidate wealth when it is needed.
In many countries, such as the United States and the UK, the tax law provides that the interest on this cash
value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-
efficient method of saving as well as protection in the event of early death.
In the United States, the tax on interest income on life insurance policies and annuities is generally deferred.
However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends
upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover,
other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value
accumulation.
2.2 GENERAL INSURANCE / NON-LIFE INSURANCE
MOTOR INSURANCE
Auto insurance protects the policyholder against financial loss in the event
of an incident involving a vehicle they own, such as in a traffic collision.
Coverage typically includes:
 Property coverage, for damage to or theft of the car

 Liability coverage, for the legal responsibility to others for bodily injury or property damage
 Medical coverage, for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral
expenses
HEALTH INSURANCE
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Health insurance policies cover the cost of medical treatments. Dental insurance, like medical insurance,
protects policyholders for dental costs. In most developed countries, all citizens receive some health coverage
from their governments, paid for by taxation. In most countries, health insurance is often part of an employer's
benefits.
Health insurance is insurance that covers the whole or a part of the risk of a person incurring medical
expenses, spreading the risk over a large number of persons. By estimating the overall risk of health
care and health system expenses over the risk pool, an insurer can develop a routine finance structure, such as
a monthly premium or payroll tax, to provide the money to pay for the health care benefits specified in the
insurance agreement.
FIRE INSUANCE
Fire insurance is property insurance covering damage and losses caused by fire. The purchase of fire insurance
in addition to homeowner’s or property insurance helps to cover the cost of replacement, repair, or
reconstruction of property, above the limit set by the property insurance policy. Fire insurance policies
typically contain general exclusions, such as war, nuclear risks, and similar perils.
Fire insurance policies include payment for loss of use, or additional living expenses due to uninhabitable
conditions as well as damage to personal property, and nearby structures. Homeowners should document the
property and its contents to simplify the assessment of items damaged or lost during a fire.
A fire insurance policy includes additional coverage against smoke or water damage due to a fire and is
usually effective for one year. On expiration, the policyholder may renew the policy according to the
conditions of the policy.
MARINE INSURANCE
Marine insurance covers the loss or damage of ships, cargo, terminals, and

any transport or cargo by which the property is transferred, acquired, or held
between the points of origin and the final destination. Cargo insurance is the
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sub-branch of marine insurance, though Marine insurance also includes Onshore and Offshore exposed
property, (container terminals, ports, oil platforms, pipelines), Hull, Marine Casualty, and Marine Liability.
When goods are transported by mail or courier, shipping insurance is used instead.
CHAPTER 3
CONCEPT OF MARKETING
There are many definitions of marketing. The better definitions are focused upon customer orientation
and satisfaction of customer needs: -
According to Philip Kotler - Marketing is the social process by which individuals and groups obtain what
they need and want through creating and exchanging products and value with others.1
According to P.F Drucker - Marketing is not only much broader than selling, it is not a specialized activity
at all It encompasses the entire business. It is the whole business seen from the point of view of the final
result, that is, from the customer's point of view. Concern and responsibility for marketing must therefore
permeate all areas of the enterprise.
3.1 The Production Concept of Marketing

The production concept prevailed from the time of the industrial revolution until the early 1920's. The
production concept was the idea that a firm should focus on those products that it could produce most
efficiently and that the creation of a supply of low-cost products would in and of itself creates the demand for
the products. The key questions that a firm would ask before producing a product were.
At the time, the production concept worked fairly well because the goods that were produced were
largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually
everything that could be produced was sold easily by a sales team whose job it was simply to execute
transactions at a price determined by the cost of production. The production concept prevailed into the late
1920's.
3.2 The Sales Concept of Marketing

By the early 1930’s however, mass production had become commonplace, competition had increased,
and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling
concept), under which companies not only would produce the products, but also would try to convince
customers to buy them through advertising and personal selling. Before producing a product, the key
questions were.
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The sales concept paid little attention to whether the product actually was needed; the goal simply was
to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that
was performed after the product was developed and produced, and many people came to associate marketing
with hard selling. Even today, many people use the word “marketing” when they really mean sales.
3.3 Modern Concept of Marketing

Old concept
PRODUCT / PROFIT MAXIMIZATION

SALES
SERVICES THROUGH SALES
New concept
Profit
Indentify
Product / maximization customer
customer's Sales
Services customer welfare
needs
satisfaction
3.4 4 P’s of marketing
PRODUCT
PLANNING
PHYSICAL PRICING
CUSTOMER
DISTRIBUTION POLICIES
PROMOTION
POLICIES
1. PRODUCT PLANNING
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2. PRICING POLICIES
3. PROMOTION POLICIES
4. PHYSICAL DISTRIBUTION
3.4 MARKETING MIX FOR INSURANCE COMPANIES
The marketing mix is the combination of marketing activities that an organization engages in so as to
best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due
weight age in the formation of marketing mix for the Insurance business is needed. The marketing mix
includes sub-mixes of the 7 P ‘s of marketing i.e. the product, its price, place, promotion, people, process &
physical attraction. The above mentioned 7 P ‘s can be used for marketing of Insurance products, in the
following manner:
PRODUCT
A product means what we produce. If we produce goods, it means tangible product and when we
produce or generate services, it means intangible service product. A product is both what a seller has to sell
and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. In
India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the two
leading companies offering insurance services to the users. Apart from offering life insurance policies, they
also offer underwriting and consulting services. When a person or an organization buys an Insurance policy
from the insurance company, he not only buys a policy, but along with it the assistance and advice of the
agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that
the users expect a reasonable return for their investment and the insurance companies want to maximize their
profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes
should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is
required to be expanded and the new schemes and policies for the villagers or the rural population are to be
included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural
savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been
found instrumental in inducing the rural prospects but the process is at infant stage and requires more
professional excellence. The policy makers are required to activate the efforts. It would be prudent that the
LIC is allowed to pursue a policy of direct investment for rural development. Investment in Government
securities should be stopped and the investment should be channelized in private sector for maximizing
profits. In short, the formulation of product-mix should be in the face of innovative product strategy. While
initiating the innovative process it is necessary to take into consideration the strategies adopted by private and
foreign insurance companies.
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PRICING
In the insurance business the pricing decisions are concerned with:
 The premium charged against the policies,
 Interest charged for defaulting the payment of premium and credit facility, and
 Commission charged for underwriting and consultancy activities.
With a view of influencing the target market or prospects the formulation of pricing strategy becomes
significant. In a developing country like India where the disposable income in the hands of prospects is low,
the pricing decision also governs the transformation of potential policyholders into actual policyholders. The
strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders.
The pricing in insurance is in the form of premium rates. The three main factors used for determining the
premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if
there are any significant changes in any of these factors.
• Mortality (deaths in a particular area):
When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a
country like South Africa the threat to life is very important as it is played by host of diseases.
• Expenses:
The cost of processing, commission to agents, reinsurance companies as well as registration are all
incorporated into the cost of instalments and premium sum and forms the integral part of the pricing strategy.
• Interest:
The rate of interest is one of the major factors which determines people ‘s willingness to invest in insurance.
People would not be willing to put their funds to invest in insurance business if the interest rates provided by
the banks or other financial instruments are much greater than the perceived returns from the insurance
premiums.
PROMOTION
The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy
is very high and the rural economy has dominance in the national economy. It is essential to have both
personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career
agents play an important role. Due attention should be given in selecting the promotional tools for agents and
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rural career agents and even for the branch managers and front-line staff. They also have to be given proper
training in order to create impulse buying.
Advertising and Publicity, organization of conferences and seminars, incentive to policyholders are
impersonal communication. Arranging Kittens, exhibitions, participation in fairs and festivals, rural wall
paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse
buying and the rural prospects would be easily transformed into actual policyholders
PHYSICAL DISTRIBUTION
Distribution is a key determinant of success for all insurance companies. Today, the nationalized
insurers have a large reach and presence in India. Building a distribution network is very expensive and time
consuming. If the insurers are willing to take advantage of India ‘s large population and reach a profitable
mass of customers, then new distribution avenues and alliances will be necessary. Initially insurance was
looked upon as a complex product with a high advice and service component. Buyers prefer a face-to-face
interaction and they place a high premium on brand names and reliability. As the awareness increases, the
product becomes simpler and they become off-the-shelf commodity products. Today, various intermediaries,
not necessarily insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer
sells insurance products. The financial services industries have successfully used remote distribution channels
such as telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads and
increase profitability. A good example is UK insurer Direct Line. It relied on telephone sales and low pricing.
Today, it is one of the largest motor insurance operators.
Technology will not replace a distribution network though it will offer advantages like better customer
service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India.
In Netherlands, financial services firms provide an entire range of products including bank accounts, motor,
home and life insurance and pensions. In France, half of the life insurance sales are made through banks. In
India also, banks hope to maximize expensive existing networks by selling a range of products. It is
anticipated that rather than formal ownership arrangements, a loose network of alliance between insurers and
banks will emerge, popularly known as banc assurance. Another innovative distribution channel that could be
used are the non-financial organizations. For an example, insurance for consumer items like fridge and TV
can be offered at the point of sale. This increases the likelihood of insurance sales. Alliances with
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manufacturers or retailers of consumer goods will be possible and insurance can be one of the various
incentives offered.
3.5 7 P’S OF SERVICES MARKETING IN INSURANCE SERVICES
INTRODUCTION
Wherever there is uncertainty there is risk. We do not have any control over uncertainties which involves
financial losses. The risks may be certain events like death, pension, retirement or uncertain events like theft,
fire, accident, etc. Insurance is a financial service for collecting the savings of the public and providing them
with risk coverage. The main function of Insurance is to provide protection against the possible chances 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 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 others
know about the quality of your positive contributions. Insurance marketing the term Insurance Marketing
refers to the marketing of Insurance services with the aim 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 organisation survives and thrives in the right perspective. Marketing --Mix for
Insurance Companies The two best meet the needs of its targeted market. The Insurance business deals in
selling services and therefore due weight-age in the formation of marketing mix for the Insurance business is
needed. The marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price, place,
promotion, people, process & physical attraction.
The above mentioned 7 P's can be used for marketing of Insurance products and banking services, in the
following manner:
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1. PRODUCT A product means what we produce. If we produce goods, it means tangible product and when
we produce or generate services, it means intangible service product. A product is both what a seller has to
sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product.
In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the
two leading companies offering insurance services to the users. Apart from offering l 2 | Journal of
Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed) •Interest: The rate of
interest is one of the major factors which determines people's willingness to invest in insurance. People would
not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or
other financial instruments are much greater than the perceived returns from the insurance premiums.
2.PRICING In the insurance business the pricing decisions are concerned with:
The premium charged against the policies,
Interest charged for defaulting the payment of premium and credit facility, and
Commission charged for underwriting and consultancy activities.
With a view of influencing the target market or prospects the formulation of pricing strategy becomes
significant. In a developing country like India where the disposable income in the hands of prospects is low,
the pricing decision also governs the transformation of potential policyholders into actual policyholders. The
strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders.
The pricing in insurance is in the form of premium rates.
3.PLACE This component of the marketing mix is related to two important facets i) Managing the insurance
personnel, and ii) Locating a branch. The management of agents and insurance personnel is found significant
with the viewpoint of maintaining the norms for offering the services. This is also to process the services to
the end user in such a way that a gap between the services- promised and services -- offered is bridged over.
In a majority of the service generating organizations, such a gap is found existent which has been instrumental
in making worse the image problem. The transformation of potential policyholders to the actual policyholders
is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural
career agents acting as a link, lack professionalism.
4. PROMOTION: The insurance services depend on effective promotional measures. In a country like India,
the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential
to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and
the rural career agents play an important role. Due attention should be given in selecting the promotional tools
for agents and rural career agents and even for the branch managers and front-line staff. They also have to be
given proper training in order to create impulse buying. Advertising and Publicity, organisation of conferences
and seminars, incentive to policyholders are impersonal communication. Arranging Kirtans, exhibitions,
participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van
units would be effective in creating the impulse buying and the rural prospects would be easily transformed
into actual policyholders.
16
5. PEOPLE Understanding the customer better allows to design appropriate products. Being a service
industry, which involves a high level of people interaction, it is very important to use this resource efficiently
to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to
be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level,
is one of the important areas to look into. Human resources can be developed through education, training and
by psychological tests. Even incentives can inject efficiency and can motivate people for productive and
qualitative work.
6. PROCESS: The process should be customer friendly in insurance industry. The speed and accuracy of
payment is of great importance. The processing method should be easy and convenient to the customers.
Instalment schemes should be streamlined to cater to the ever-growing demands of the customers. IT & Data
Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and
bring down overheads. Technology can either complement or supplement the channels of distribution cost
effectively. It can also help to improve customer service levels. The use of data warehousing management and
mining will help to find out the profitability and potential of various customers product segments. 3 | Journal
of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)
A. Flow of activities: all the major activities of banks follow RBI guidelines. There has to be adherence to
certain rules and principles in the banking operations. The activities have been segregated into various
departments accordingly.
B. Standardization: banks have got standardized procedures got typical transactions. In fact, not only all the
branches of a single-bank, but all the banks have some standardization in them. This is because of the rules
they are subject to. Besides this, each of the banks has its standard forms, documentations etc. Standardization
saves a lot of time behind individual transaction.
C. Customization: There are specialty counters at each branch to deal with customers of a particular scheme.
Besides this the customers can select their deposit period among the available alternatives.
D. Number of stores: numbers of steps are usually specified and a specific pattern is followed to minimize
time taken.
E. Simplicity: in banks various functions are segregated. Separate counters exist with clear indication. Thus, a
customer wanting to deposit money goes to ‗deposits ‘counter and does not mingle elsewhere. This makes
procedures not only simple but consume less time. Besides instruction boards in national boards in national
and regional language help the customers further.
7. PHYSICAL DISTRIBUTION: Distribution is a key determinant of success for all insurance companies.
Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is
very expensive and time consuming. Technology will not replace a distribution network though it will offer
advantages like better customer service. Finance companies and banks can emerge as an attractive distribution
channel for insurance in India. In Netherlands, financial services firms provide an entire range of products
including bank accounts, motor, home and life insurance and pensions.
In France, half of the life insurance sales are made through banks. In India also, banks hope to maximize
expensive existing networks by selling a range of products. The physical evidences include signage, reports,
punch lines, other tangibles, employee ‘s dress code etc.
17
A. Tangibles: banks give pens, writing pads to the internal customers. Even the passbooks, chequebooks, etc
reduce the inherent intangibility of services.
B. Punch lines: punch lines or the corporate statement depict the philosophy and attitude of the bank. Banks
have influential punch lines to attract the customers. Banking marketing consists of identifying the most
profitable markets now and in future, assessing the present and future needs of customers, setting business
development goals, making plans-all in the context of changing environment.
CHAPTER 4
ROLE OF IRDA IN INSURANCE SECTOR
Concept of IRDA:
IRDA is Insurance Regulatory Development Authority, that has been set up to protect the interests of
the policy holders, to regulate, promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental there to.
Insurance Regulatory and Development Authority To protect the interests of the policyholders Insurance
Regulatory & Development Authority is regulatory and development authority under Government of India in
order to protect the interests of the policyholders and to regulate, promote and ensure orderly growth of the
insurance industry. It is basically a ten members' team comprising of a Chairman, five full time members and
four part-time members, all appointed by Government of India. This organization came into being in 1999
after the bill of IRDA was passed in the Indian parliament.
Role of IRDA in insurance sector

Regularizing the activities of the insurance companies, which were permitted to establish their
business in India; besides more number of our citizens be brought into the
net of life insurance cover. Then to create healthy competition among insurance companies of both general
and life, besides regulating them.
Duties, Power & Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA
1. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall
have the duty to regulate, promote and ensure orderly growth of the insurance business and re-
insurance business.
18
2. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and
functions of the Authority shall include,
 issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such
registration;
 protection of the interests of the policy holders in matters concerning assigning of policy, nomination
by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other
terms and conditions of contracts of insurance;
 specifying requisite qualifications, code of conduct and practical training for intermediary or insurance
intermediaries and agents;
 specifying the code of conduct for surveyors and loss assessors;
 promoting efficiency in the conduct of insurance business;
 promoting and regulating professional organizations connected with the insurance and re-insurance
business;
 levying fees and other charges for carrying out the purposes of this Act;
 calling for information from, undertaking inspection of, conducting enquiries and investigations
including audit of the insurers, intermediaries, insurance intermediaries and other organizations
connected with the insurance business;
 control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in
respect of general insurance business not so controlled and regulated by the Tariff Advisory
Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
 specifying the form and manner in which books of account shall be maintained and statement of
accounts shall be rendered by insurers and other insurance intermediaries;
 regulating investment of funds by insurance companies;
 regulating maintenance of margin of solvency;
19
 adjudication of disputes between insurers and intermediaries or insurance intermediaries;
 supervising the functioning of the Tariff Advisory Committee;
 specifying the percentage of premium income of the insurer to finance schemes for promoting and
regulating professional organizations referred to in clause (f);
 specifying the percentage of life insurance business and general insurance business to be undertaken
by the insurer in the rural or social sector; and
 exercising such other powers as may be prescribed
4.1 Impact of IRDA On Indian Insurance Sector
The creation of IRDA has brought revolutionary changes in the Insurance sector. In last 10 years of its
establishment the insurance sector has seen tremendous growth. When IRDA came into being; only players in
the insurance industry were Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC), however in last decade 23 new players have emerged in the field of insurance. The IRDA also
successfully deals with any discrepancy in the insurance sector.
Regulators
Insurance is a federal subject in India. The primary legislation that deals with insurance business in
India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.Insurance
Industry has ombudsmen in 12 cities. Each ombudsman is empowered to redress customer grievances in
respect of insurance contracts on personal lines where the insured amount is less than Rs. 20 lakes, in
accordance with the Ombudsmen Scheme.
4.2 Insurance Regulatory & Development Authority (IRDA)

IRDA was constituted by an act of parliament. The Authority is a ten-member team consisting of:
(a) a Chairman
(b) five whole-time members
(c) four part-time members
20
(1) Subject to the provisions of Section 14 of IRDA Act, 1999 and any other law for the time being in
force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and
functions of the Authority shall include, -
(a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such
registration;
(b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination
by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other
terms and conditions of contracts of insurance;
(c) Specifying requisite qualifications, code of conduct and practical training for intermediary or
insurance intermediaries and agents;
(d) Specifying the code of conduct for surveyors and loss assessors;
(e) Promoting efficiency in the conduct of insurance business;
(f) Promoting and regulating professional organizations connected with the insurance and re-insurance
business;
(g) Levying fees and other charges for carrying out the purposes of this Act;
(h) calling for information from, undertaking inspection of, conducting enquiries and investigations
including audit of the insurers, intermediaries, insurance intermediaries and other organizations
connected with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in
respect of general insurance business not so controlled and regulated by the Tariff Advisory
Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
4.3 INSURANCE CONTRACT
The insurance contract is a legal document that spells out the coverage, features, conditions and
limitations of an insurance policy. It is critical that you read the contract and ask questions if you don't
21
understand the coverage. You don't want to pay for the insurance and then find out that what you thought was
covered isn't included. Insurance terminology you should know:
Bound
Once the insurance has been accepted and is in place, it is called "bound". The process of being bound
is called the binding process.
Insurer
A person or company that accepts the risk of loss and compensates the insured in the event of loss in
exchange for a premium or payment. This is usually an insurance company.
Insured
The person or company transferring the risk of loss to a third party through a contractual agreement
(insurance policy). This is the person or entity who will be compensated for loss by an insurer under the terms
of the insurance contract.
Insurance Rider/ Endorsement

An attachment to an insurance policy that alters the policy's coverage or terms
Insurance Umbrella Policy
When insurance coverage is insufficient, an umbrella policy may be purchased to cover losses above
the limit of an underlying policy or policies, such as homeowners and auto insurance. While it applies to
losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those
of underlying policies.
Insurable Interest
In order to insure something or someone, the insured must provide proof that the loss will have a
genuine economic impact in the event the loss occurs. Without an insurable interest, insurers will not cover
the loss. It is worth noting that for property insurance policies, an insurable interest must exist during the
underwriting process and at the time of loss. However, unlike with property insurance, with life insurance, an
insurable interest must exist at the time of purchase only.
Nature of life insurance contract
 Unilateral
 An – Aleatory
 Conditional
22
 Contract of adhesion
 Contract of certain amount
 Essential general contract" 5
General Nature of a contract
 Offer & Acceptance
 Consideration
 Competence of parties
 Legality of object
 Free consent of the parties
4.4 THE INSURANCE ACT, 1938
THE INSURANCE ACT, 1938 ACT NO. 4 OF 1938

[26th February, 1938.]
An Act to consolidate and amend the law relating to the business of insurance.
WHEREAS it is expedient to consolidate and amend the law relating to the
business of insurance; it is hereby enacted as follows: --
PART I
PRELIMINARY
Short title, extent and commencement.
1. (1) This Act may be called the Insurance Act, 1938.
[(2) It extends to the whole of India 2***.]
23
(3) It shall come into force on such date 3* as the Central Government may, by notification in the Official
Gazette, appoint in this behalf.
2. Definitions. In this Act, unless there is anything repugnant in the subject or context, --
(1) "actuary" means an actuary possessing such qualifications as may be prescribed;
3*[(2) "policy-holder" includes a person to whom the whole of the interest of the policy-holder in the policy is
assigned once and for all, but does not include an assignee thereof whose interest in the policy is defensible or
is for the time being subject to any condition;]
4*[(3) "approved securities" means—
(i) Government securities and other securities charged on the revenues of the Central Government or of the
Government of a 6*** State or guaranteed fully as regards principal and interest by the Central Government,
or the Government of any 6* State;
Extended to Goa, Daman and Diu with modifications, by Reg. 12 of 1962, s. 3 & Sch.
The Act comes into force in Pondicherry on 1.10.1963 vide Reg. 7 of 1963, s. 3 and Sch. I.
Extended to and brought into force in Dadra and Nagar Haveli (w.e.f.1.7.65) by Reg. 6 of 1963, s. 2 & Sch. I.
Extended to Laccadive, Minicoy and Amindivi Islands (w.e.f.1.10.1967): vide Reg. 8 of 1965, s. 3 & Sch.
Extended to and brought into force in the State of Sikkim (w.e.f.1.7.1975) vide Notify. No. S.O. 274(E), dated
24.6.1975.
[See footnote 1 for this section]
(ii) debentures or other securities for money issued under the authority of any Central Act or Act of a State
Legislature by or on behalf of a port trust or municipal corporation or city improvement trust in any
presidency-town;
(iii) shares of a corporation established by law and guaranteed fully by the Central Government or the
Government of a 1* State as to the repayment of the principal and the payment of dividend;
(iv) securities issued or guaranteed fully as regards principal and interest by the Government of any Part B
State and specified as approved securities for the purposes of this Act by the Central Government by
notification in the Official Gazette ; and (v) subject to the limitations contained in the proviso hereto,
securities guaranteed fully as regards principal and interest by a Provincial Government in Pakistan or charged
on the revenues of any part of that Dominion, and debentures or other securities for money issued by or on
behalf of the trustees of the port of Karachi :
24
Provided that securities or debentures specified in item (v) shall be recognized as approved securities only for
such purposes and for such period and subject to such conditions as may be prescribed;]
2*[Explanation. -- In sub-clauses (i) and (iii), "Government of a State" in relation to any period before the 1st
November, 1956, means the Government of a Part A State.]
3*[(4) "auditor" means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949), to act as
an auditor of companies;]
4*[(4A) "banking company" and "company" shall have the meanings respectively assigned to them in clauses
(c) and (d) of sub-section (1) of section 5 of the Banking Companies Act, 1949 (10 of 1949)5*;]
(5) "Certified" in relation to any copy or translation of a document required to be furnished by or on behalf of
[See footnote 2 for this section]
1*[an insurer or a provident society as defined in Part III] means certified by a principal officer of 2*[such
insurer or provident society] to be a true copy or a correct translation, as the case may be;
3*[(5A) "chief agent" means a person who, not being a salaried employee of an insurer, in consideration of
any commission--
(i) Performs any administrative and organizing functions for the insurer, and (ii) procures life insurance
business for the insurer by employing or causing to be employed insurance agents on behalf of the insurer;
(5B) "Controller of Insurance" or "Controller" means the officer appointed by the Central Government to
perform the duties of the Controller of Insurance under this Act;]
(6) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court
in exercise of its ordinary original civil jurisdiction;
3*[(6A) "fire insurance business" means the business of effecting, otherwise than incidentally to some other
class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence
customarily included among
4.5 THE LIFE INSURANCE CORPORATION ACT, 1956
25
THE LIFE INSURANCE CORPORATION ACT, 1956 ACT NO. 31 OF 1956

[18th June, 1956.]
An Act to provide for the nationalization of life insurance business in India by transferring all such business to
a Corporation established for the purpose and to provide for the regulation and control of the business of the
Corporation and for matters connected therewith or incidental there to.
BE it enacted by Parliament in the Seventh Year of the Republic of India as follows: --
CHAPTER I
PRELIMINARY
1. Short title and commencement. (1) This Act may be called the Life Insurance Corporation Act, 1956.
(2) It shall come into force on such date 1* as the Central Government may, by notification in the Official
Gazette, appoint.
2. Definitions. In this Act, unless the context otherwise requires, --

(1) "Appointed day" means the date on which the Corporation is established under section 3;
(2) "Composite insurer" means an insurer carrying on in addition to controlled business any other kind of
insurance business;
(3) "Controlled business" means--
(i) in the case of any insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 of the
Insurance Act and carrying on life insurance business--
(a) All his business, if he carries on no other class of insurance business;
(b) All the business appertaining to his life insurance business, if he carries on any other class of insurance
business also;
Extended to and brought into force in Dadra and Nagar Haveli (w.e.f. 1.7.65) by Reg. 6 of 1963, s. 2 & Sch. I.
Extended to Goa, Daman and Dui by Reg. 11 of 1963, s. 3 & sch. (with modifications)
Extended to the Union territory of Pondicherry by Act 26 of 1968, s. 3 and Schedule.
1. 1st July, 1956, see Gazette of India, 1956, Extraordinary, Pt. II, Sec. 3. p.
1531.246
26
(c) all his business, if his certificate of registration under the Insurance Act in
respect of general insurance business stands wholly cancelled for a period of
more than six months on the 19th day of January, 1956;
(ii) In the case of any other insurer specified in clause (9) of section 2 of the Insurance Act and carrying on
life insurance business--
(a) All his business in India, if he carries on no other class of insurance business in India;
(b) All the business appertaining to his life insurance business in India, if he carries on any other class of
insurance business also in India;
(c) all his business in India, if his certificate of registration under the Insurance Act in respect of general
insurance business in India stands wholly cancelled for a period of more than six months on the 19th day of
January, 1956;
Explanation. -An insurer is said to carry on no class of insurance business other than life insurance business,
if, in addition to life insurance business, he carries on only capital redemption business or annuity certain
business or both; and the expression "business appertaining to his life insurance business" in sub-Clauses (i)
and (ii) shall be construed accordingly;
(iii) in the case of a provident society, as defined in section 65 of the Insurance Act, all its business;
(iv) in the case of the Central Government or a State Government, all life insurance business carried on by it,
subject to the exceptions specified in section 44;
(4) "Corporation" means the Life Insurance Corporation of India established under section 3;
(5) "Insurance Act" means the Insurance Act, 1938 (4 of 1938);
(6) "Insurer" means an insurer as defined in the Insurance Act who carries on life insurance business in India
and includes the Government and a provident society as defined in section 65 of the Insurance Act;
(7) "Member" means a member of the Corporation;
(8) "Prescribed" means prescribed by rules made under this Act; 247
(9) "Tribunal" means a Tribunal constituted under section 17 and having jurisdiction in respect of any matter
under the rules made under this Act;
(10) All other words and expressions used herein
4.6 MARKET SHARE OF INDIAN INSURANCE INDUSTRY
27
The introduction of private players in the industry has added value to the industry. The initiatives taken
by the private players are very competitive and have given immense competition to the on-time monopoly of
the market LIC. Since the advent of the private players in the market the industry has seen new and innovative
steps taken by the players in this sector. The new players have improved the service quality of the insurance.
As a result, LIC down the years have seen the declining phase in its career. The market share was distributed
among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures
of these private players are enough to give more competition to LIC in the near future. LIC market share has
decreased from 95% (2002-03) to 81 %( 2004-05). The following companies has the rest of the market share
of the insurance industry. Table 3 shows the mane of the player in the market.
TABLE SHOW THE INSURANCE COMPANY AND THE SHARE HOLDING

PATTEN
Sr,
Name of The Insurance Company Shareholding
no
1 Agricultural Insurance Co Bank and Public ins Co
2 Bajaj Allianz General Insurance Co. Ltd. Privately Held
3 Cholmondeley MS General Insurance Co. Ltd Privately Held
4 Export Credit Guarantee Company Public Sector
5 HDFC Chubb General Insurance Co. Ltd. Privately Held
6 ICICI Lombard General Insurance Co. Ltd. Privately Held
7 IFFCO-Tokyo General Insurance Co. Ltd. Privately Held
8 National Insurance Co. Ltd. Public Sector
9 New India Assurance Co. Ltd. Public Sector
10 Oriental Insurance Co. Ltd. Public Sector
11 Reliance General Insurance Co. Ltd. Privately Held
12 Tata AIG General Insurance Co. Ltd. Privately Held
13 United India Insurance Co. Ltd. Public Sector
*There is a total of 14 Insurance companies operating in India, of which 6 is a Public-Sector Undertaking and
the balance 8 are Private Sector Enterprises.
TABLE SHOW THE NAME OF THE LIFE INSURANCE COMPANY AND THE
SHARE HOLDING PATTEN
Sr. no Name of The Company Nature of Holding

1 Allianz Bajaj Life Insurance Co Private
28
2 Aviva Life Insurance Private

3 Birla Sun Life Insurance Co Private
4 HDFC Standard Life Insurance Co Private
5 ICICI Prudential Life Insurance Co Private
6 ING Vysya Life Insurance Co. Private
7 Life Insurance Corporation of India Public
8 Max New York Life Insurance Co. Private
9 MetLife Insurance Co. Private
10 Om Kotak Mahindra Life Insurance Private
11 Reliance insurance Private
12 SBI Life Insurance Co Private
13 TATA- AIG Life Insurance Company Private
There is a total of 13 life insurance companies operating in India, of which one is a Public-Sector Undertaking
and the balance 12 are Private Sector Enterprises.
LIFE INSURANCE BUSINESS AT PRESENT

Name of the player market share (%)
Market
Sr.no Name of The Player
Share
1 Life Insurance Corporation of India 76.07 %
2 ICICI Prudential Life Insurance Co 6.91
3 Allianz Bajaj Life Insurance Co 4.75%
4 SBI Life Insurance Co 2.98%
5 Birla Sun Life Insurance Co 1.72 %
6 HDFC Standard Life Insurance Co 1.66 %
7 TATA- AIG Life Insurance Company 1.46 %
8 Max New York Life Insurance Co. 1.28 %
9 Aviva Life Insurance 1.08 %
10 Om Kotak Mahindra Life Insurance 0.71 %
11 ING Vysya Life Insurance Co. 0.54 %
12 MetLife Insurance Co. 0.37 %
13 AMP SANMAR 0.46%
14 SAHARA LIFE 0.03%
PRIVATE TOTAL - 23.93%

29
PUBLIC TOTAL - 76.07%

GRAND TOTAL - 100.00%
CHAPTER 5
MARKETING STRATEGY-A BRIEF
Marketing strategy is most effective when it is an integral component of corporate strategy, defining
how the organization will successfully engage customers, prospects, and competitors in the market arena. It is
partially derived from broader corporate strategies, corporate missions, and corporate goals. As the customer
constitutes the source of a company's revenue, marketing strategy is closely linked with sales. A key
component of marketing strategy is often to keep marketing in line with a company's overarching mission
statement.
Marketing strategy consists of the analysis, strategy development, and implementation activities in:
―Developing a vision about the market(s) of interest to the organization, selecting market target strategies,
setting objectives, and developing, implementing, and managing the marketing program positioning strategies
designed to meet the value requirements of the customers in each market target‖ 26
Strategic marketing is a market-driven process of strategy development, taking into account a

constantly changing business environment and the need to deliver superior customer value. The focus of
strategic marketing is on organizational performance rather than a primary concern about increasing sales.
Marketing strategy seeks to deliver superior customer value by combining the customer-influencing strategies
of the business into a coordinated set of market-driven actions. Strategic marketing links the organization with
30
the environment and views marketing as a responsibility of the entire business rather than a specialized
function.
Because of marketing ‘s boundary orientation between the organization and its customers, channel
members, and competition, marketing processes are central to the business strategy planning process.
Strategic marketing provides the expertise for environmental monitoring, for deciding what customer groups
to serve, for guiding product specifications, and for choosing which competitors to position against.
Successfully integrating cross-functional strategies is critical to providing superior customer value. Customer
value requirements must be transformed into product design and production guidelines. Success in achieving
high-quality goods and services require finding out which attributes of goods and service quality drive
customer value.
5.1 MARKETING STRATEGY IN LIFE INSURANCE BUSINESS – A

PROCESS
The marketing strategy analysis, planning, implementation and management process is described below. The
strategic situation analysis considers market and competitor analysis, market segmentation, and continuous
learning about markets. Designing marketing strategy examines customer targeting and positioning strategies,
marketing relationship strategies and planning for new products. Marketing program development consists of
product, distribution, price, and promotion strategies designed and implemented to meet the value
requirements of targeted buyers. Strategy implementation and management consider organizational design and
marketing strategy implementation and control
Stra egan icstu

aly ati
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o
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esi eti
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gn g Im p lem en
a ti
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stra eg y m arketi n g stra egy
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Process of Marketing Strategy

Stage 1: Strategic Situation Analysis
31
Marketing management uses the information provided by the situation analysis to guide the design of
a new strategy or change an existing strategy. The situation analysis is conducted on a regular basis
after the strategy is under way to evaluate strategy performance and identify needed strategy changes.
Market Vision, Structure, and Analysis markets need to be defined so that buyers and competition
can be analysed. For a market to exist, there must be (1) people with particular needs and wants and
one or more products that can satisfy buyers ‘needs, and (2) buyers willing and able to purchase a
product that satisfies their needs and wants. A product-market consists of a specific product (or line of
related products) that can satisfy a set of needs and wants for the people (or organizations) willing and
able to purchase it. The term products used to indicate either a physical good or an intangible service.
Analysing product-markets and forecasting how they will change in the future are vital to business and
marketing planning. Decisions to enter new product-markets, how to serve existing product-markets,
and when to exist in unattractive product-markets are critical strategic choices. The objective is to
identify and describe the buyers, understand their preferences for products, estimate the size and rate
of growth of the market, and find out what companies and products are competing in the market.
Evaluation of competitors ‘strategies, strengths, limitations and plans are also a key aspect of the
situation analysis. It is important to identify both existing and potential competitors. Competitor
analysis includes evaluating each key competitor. The analyses highlight the competition ‘s important
strengths and weaknesses. A key issue is trying to figure out what each competitor is likely to do in
future.
Segmenting Markets market segmentation looks at the nature and extent of diversity of buyers ‘needs
and wants in a market. It offers an opportunity for an organization to focus in business capabilities on
the requirements of one or more groups of buyers. The objective of segmentation is to examine
differences in needs and wants and to identify the segments (sub-groups) within the product-market of
interest. Each segment contains buyers with similar needs and wants for the product category of
interest to management. The segments are described using the various characteristics of people, the
reasons that they buy or use certain products, and their preferences for certain brands of products.
Likewise, segments of industrial product-markets may be formed according to the type of industry, the
uses for the product, frequency of product purchase, and various other factors.
Each segment may vary quite a bit from the average characteristics of the entire product-market. The
similarities of buyers ‘needs within a segment enable better targeting of the organization ‘s capabilities
to buyers with corresponding value requirements.
32
Continuous Learning about Markets one of the major realities of achieving business success today
is the necessity of understanding markets and competition. Sensing what is happening and is likely to
occur in the future is complicated by competitive threats that may exist beyond traditional industry
boundaries. For example, CD-ROMs compete with books.
Stage 2: Designing Market-Driven Strategies
The strategic situation analysis phase of the marketing strategy process identifies market opportunities,
defines market segments, evaluates competition, and assesses the organization ‘s strengths and
weaknesses. Market sensing information plays a key role in designing marketing strategy, which
includes market targeting and positioning strategies, building marketing relationships, and developing
and introducing new products.
Market Targeting and Strategic Positioning marketing advantage is influenced by several

situational factors including industry characteristics, type of firm (e.g., size), extent of differentiation
in buyers ‘needs, and the specific competitive advantage(s) of the company designing the marketing
strategy. The core issue is deciding how, when, and where to compete, given a firm ‘s market and
competitive environment.
The purpose of the marketing targeting strategy is to select the people (or organizations) that
management wishes to serve in the product-market. When buyers ‘needs and wants vary, the market
target is usually one or more segments of the product-market. Once the segments are identified and
their relative importance to the firm determined, the targeting strategy is selected. The objective is to
find the best match between the value requirements of each segment and the organization ‘s distinctive
capabilities. The targeting decision is the focal point of marketing strategy since targeting guides the
setting of objectives and developing a positioning strategy. The options range from targeting most of
the segments to targeting one or few segments in a product-market. The targeting strategy may be
influenced by the market ‘s maturity, the diversity of buyers ‘needs and preferences, the firm ‘s size
compared to competition, corporate resources and priorities, and the volume of sales required to
achieve favourable financial results. Deciding the objectives for each market target spells out the
results expected by management. Examples of market target objectives are desired levels of sales,
market share, customer retention, profit contribution, and customer satisfaction. Marketing objectives
may also be set for the entire business unit and for specific marketing activities such as advertising.
The marketing program positioning strategy is the combination of product, value-chain, price, and
promotion strategies a firm uses to position itself against its key competitors in meeting the needs and
wants of the market target, the strategies and tactics used to gain a favourable position are called the
marketing mix or the marketing program.
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Marketing Relationship Strategies marketing relationship partners may include end user customers,
marketing channel members, suppliers, competitor alliances, and internal teams. The driving force
underlying these relationships is that a company may enhance its ability to satisfy customers and cope
with a rapidly changing business environment through collaboration of the parties involved.
Relationship strategies gained new importance in the last decade as customers became more
demanding and competition became more intense. Building long-term relationships with customers
and value-chain partners offers companies a way to provide superior customer value. Although
building collaborative relationships may not always be the best course of action, this avenue for
gaining a competitive edge is increasing in popularity.
Strategic partnering has become an important strategic initiative for many well-known companies and
brands. Many firms outsource the manufacturing of their products. Examples include Motorola cell
phones, Calvin Klein jeans, Pepsi beverages, and Nike footwear. Strong relationships with outsourcing
partners are vital to the success of these powerful brands. The trend of the 21 st century is partnering
rather than vertical integration.
Planning for New Plans new products are needed to replace old products because of declining sales
and profits. Strategies for developing and positioning new market entries involve all functions of the
business. Closely coordinated new-product planning is essential to satisfy customer requirements and
produce products with high quality at competitive prices. New-product decisions include finding and
evaluating ideas, selecting the most promising for development, designing the products, developing
marketing programs, use and market testing the products, and introducing them to the market.
The new-product planning process starts by identifying gaps in customer satisfaction. The differences
between existing product attributes and those desired by customers offer opportunities for new and
improved products.
Stage 3: Market-Driven Program Development
Market targeting and positioning strategies for new and existing products guide the choice of strategies
for the marketing program components. Product, distribution, price, and promotion strategies are
combined to form the positioning
strategy selected for each market
target
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Markets – Driven Program Development.
The marketing program (mix) strategies implement the positioning strategy. The objective is to
achieve favourable positioning while allocating financial, human, and production resources to markets,
customers, and products as effectively and efficiently as possible.
Strategic Brand Management products (goods and services) often are the focal point of positioning
strategy, particularly when companies or business adopt organizational approaches emphasizing
product or brand management. Product strategy includes: (1) developing plans for new products, (2)
managing programs for successful products, and (3) deciding what to do about problem products (e.g.,
reduce costs or improve the product). Strategic brand management consists of building brand value
(equity) and managing the organization ‘s portfolio for overall performance.
Value-Chain, Price, and Promotion Strategies one of the major issues in managing program is
deciding how to integrate the components of the mix. Product, distribution, price, and promotion
strategies are shaped into a coordinated plan of action. Each component helps to influence buyers in
their positioning of products. If the activities of these mix components are not coordinated, the actions
may conflict and resources may be wasted. For example, if the advertising messages for a company’s
brand stress quality and performance, but salesperson emphasize low price, buyers will be confused
and brand damage may occur.
Market target buyers may be contacted on a direct basis using the firm ‘s sales force or by direct
marketing contact (e.g., Internet), or instead, through a value-added chain (distribution channel) of
marketing intermediaries (e.g., wholesalers, retailers, or dealers). Distribution channels are often used
in linking procedures with end user household and business markets. Decisions that need to be made
include the type of channel organization to use, the extent of channel management performed by the
firm, and the intensity of distribution appropriate for the product or service. The choice of distribution
channels influences buyers ‘positioning of the brand.
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Price also plays an important role in positioning a product or service. Customer reaction to alternative
prices, the cost of the product, the prices of the competition and various legal and ethical factors
establish the extent of flexibility management has in setting prices. Price strategy involves choosing
the role of price in the positioning strategy, including the desired positioning of the product or brand as
well as the margins necessary to satisfy and motivate distribution channel participants. Price may be
used as an active (visible) component of marketing strategy, or, instead, marketing emphasis may be
on other marketing mix components (e.g., product quality).
Advertising, sales promotion, the sales force, direct marketing, and public relations help the
organization to communicate with its customers, value-chain partners, the public, and other target
audiences. These activities make up the promotion strategy, which performs an essential role in
communicating the positioning strategy to buyers and other relevant influences. Promotion informs,
reminds, and persuades buyers and others who influence the purchasing process.
Stage 4: Implementing and Managing Market-Driven Strategy
Selecting customers to target and the positioning strategy for each target moves marketing strategy
development to the action stage. This stage considers designing the marketing organization and
implementing and managing the strategy.
Designing Effective Market-Driven Organizations an effective organization design matches people

and work responsibilities in a way that is best for accomplishing the firm ‘s marketing strategy.
Deciding how to assemble people into organizational units and assign responsibility to the various mix
components that make up the marketing strategy are important influences on performance.
Organizational structures and processes must be matched to the business and marketing strategies that
are developed and implemented. Organizational design needs to be evaluated on a regular basis to
assess its adequacy and to identify necessary changes.
Strategy Implementation and Control marketing strategy implementation and control consist of:
(1) preparing the marketing plan and budget; (2) implementing the plan; and (3) using the plan in
managing and controlling the strategy on an ongoing basis. The marketing plan includes details
concerning targeting, positioning, and marketing mix activities. The plan spells out what is going to
happen over the planning period, who is responsible, how much it will cost, and the expected results
(e.g., sales forecasts).
The marketing plan includes action guidelines for the activities to be implemented, who does what, the
dates and location of implementation, and how implementation will be accomplished. Several factors
contribute to implementation effectiveness including the skills and commitment of the people
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involved, organizational design, incentives, and the effectiveness of communication within the
organization and externally.
Marketing strategy is an ongoing process of making decisions, implementing them, and tracking their
effectiveness over time. In terms of its time requirements, strategic evaluation is far more demanding
than planning. Evaluation and control are concerned with tracking performance and, when necessary,
altering plans to keep performance on track. Evaluation also includes looking for new opportunities
and potential threats in the future. It is the concerning link in the strategic marketing planning process.
By serving as both the last stage and the first stage (evaluation before taking action) in the planning
process, strategic evaluation assures that strategy is an ongoing activity.
5.2 TYPES OF MARKETING STRATEGIES
Every marketing strategy is unique, but can be reduced into a generic marketing strategy. There are a
number of ways of categorizing these generic strategies. A brief description of the most common categorizing
schemes is presented below: -
Strategies Based on Market Dominance - In this scheme, firms are classified based on their market Share
or dominance of an industry. Typically, there are three types of market dominance strategies:
 Leader
 Challenger
 Follower
Porter Generic Strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic
scope refers to the market penetration while strategic strength refers to the firm ‘s sustainable competitive
advantage
 Cost leadership
 Product differentiation
 Market segmentation
Innovation Strategies - This deals with the firm's rate of the new product development and business model
innovation. It asks whether the company is on the cutting edge of technology and business innovation. There
are three types:
 Pioneers
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 Close followers
 Late followers" 31
Growth Strategies - In this scheme we ask the question, ―How should the firm grow? ‖. There are a number
of different ways of answering that question, but the most common gives four answers:
 Horizontal integration
 Vertical integration
 Diversification
 Intensification
5.3 ROLE OF MARKETING STRATEGIES IN LIFE INSURANCE BUSINESS

As we ‘ve seen the key objective of an organization ‘s marketing efforts is to develop satisfying
relationships with customers that benefit both the customer and the organization. These efforts lead marketing
to serve an important role within most organizations and within society.
At the organizational level, marketing is a vital business function that is necessary in nearly all industries
whether the organization operates as a for-profit or as a not-for-profit. For the for-profit organization,
marketing is responsible for most tasks that bring revenue and, hopefully, profits to an organization. For the
not-for-profit organization, marketing is responsible for attracting customers needed to support the not-for-
profit ‘s mission, such as raising donations or supporting a cause. For both types of organizations, it is
unlikely they can survive without a strong marketing effort.
Marketing is also the organizational business area that interacts most frequently with the public and,
consequently, what the public knows about an organization is determined by their interactions with marketers.
For example, customers may believe a company is dynamic and creative based on its advertising message.
At a broader level marketing offers significant benefits to society. These benefits include:
 Developing products that satisfy needs, including products that enhance society ‘s quality of life
 Creating a competitive environment that helps lower product prices

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 Developing product distribution systems that offer access to products to a large number of customers
and many geographic regions
 Building demand for products that require organizations to expand their labour force
 Offering techniques that have the ability to convey messages that change societal behaviour in a positive
way (e.g., anti-smoking advertising)
 A very common way to promote a Life insurance company through Life Insurance Marketing is to make
the name of the company familiar to others by means of television commercials, handling out
pamphlets, hanging banners in populated areas and by providing exciting offers.
 Telephone marketing is another way of Life Insurance Marketing. One can see the telephone companies
send messages about various offers and they even make phone calls. Web Insurance Marketing is
another good strategy to promote insurance policies. The pop ups that one sees while using Internet are
actually a very effective way of sending messages across the potential insurance customers.
 One should listen to the existing Life Insurance Policy Holders as well as the potential Life insurance
policy holders and listen to what people who actually matters have to say. One common problem that the
insured persons face is that the insurance companies do not inform its clients about the hike in the
premium rates. These things should be kept in mind. Not only that, a client should be informed about
everything related to his policy and the Life insurance company should keep the transparency as much as
possible.
 Community Life Insurance Marketing is another different way to get promotion and a high recognition
for the Life Insurance Company. Eminent workers join local community institutions, such as Chamber
of Commerce, and by signing up there one can help out various projects that take place. These kinds of
activities and social works on behalf of the Life insurance company helps the company to get free
publicity as their names are published in newspaper and in media also. Doing charity works also helps
the Life insurance companies to come across various people who act as volunteers and can act as their
potential Life insurance clients. People also like to deal with likeminded people and companies and this
is how many deals are made.
 A Life Insurance Company should not charge different Life insurance client different charges
for the same policy. This kind of policy gives the Life insurance policy holders the feeling that they are
being treated unfairly and promote insurance policies. The pop ups that one sees while using Internet are
actually a very effective way of sending messages across the potential insurance customers.
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 One should listen to the existing Life Insurance Policy Holders as well as the potential Life insurance
policy holders and listen to what people who actually matters have to say. One common problem that the
insured persons face is that the insurance companies do not inform its clients about the hike in the
premium rates. These things should be kept in mind. Not only that, a client should be informed about
everything related to his policy and the Life insurance company should keep the transparency as much as
possible.
 Community Life Insurance Marketing is another different way to get promotion and a high recognition
for the Life Insurance Company. Eminent workers join local community institutions, such as Chamber
of Commerce, and by signing up there one can help out various projects that take place. These kinds of
activities and social works on behalf of the Life insurance company helps the company to get free
publicity as their names are published in newspaper and in media also. Doing charity works also helps
the Life insurance companies to come across various people who act as volunteers and can act as their
potential Life insurance clients. People also like to deal with likeminded people and companies and this
is how many deals are made.
 A Life Insurance Company should not charge different Life insurance client different charges
for the same policy. This kind of policy gives the Life insurance policy holders the feeling that they are
being treated unfairly and also that the Life insurance companies are only looking for profits and not the
betterment of customer welfare.
 When a Life insurance claim is filed, especially for a very big hefty amount, the Life insurance
Company should help out the policy holder in processing out the paperwork. One should not let
bureaucracy enter and make it so difficult for the one making the claim so that he gives his claim. This
has always been a common tactic on the insurance company's part to avoid paying claims claimed by the
policy holder. This though makes a short-term profit for the company but it hurts in the long run as the
reputation of the company is hampered severely.
 People in this Life insurance industry should always try to keep in constant contact with the existing
customers as well. The competition in the insurance market is so fierce today that no company wants to
lose out on a customer to another company. Clients who are not contacted for a longer period of time
normally fail to remain loyal to the insurance company and look for a different Life insurance company.
The company can keep the records of the client's birthday and days like anniversary and sent him or her
small tokens of love or loyalty at a regular basis. If the company can afford a little more it can send
dinner coupons to the Life insurance policy holder. These things play a major role and can be considered
as an effective Life Insurance Marketing strategy.
May be the most crucial thing in insurance marketing is to always speak about unity and honesty while
dealing with a business. A Life Insurance Holder can find so many frauds in various life insurance
companies today, that life insurance customers are going for products and services which are
trustworthy to them. Feeling safe is about insurances and other things are most important as far as the
insurance holder is concerned. So, if a company remains loyal to its customers it will itself do Life
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Insurance Marketing for itself. So, only by remaining loyal to its customers the company can do a world
of good to its reputation and this would in itself bring more potential Life Insurance Holders to the
company, because the customers prefer safety more than anything else these days.
CHAPTER 6
ISSUES IN MARKETING OF INSURANCE
LEGAL & ETHICAL ISSUES OF SELLING INSURANCE SELLING INSURANCE

The selling of insurance is a balancing of many disciplines. First and foremost
is the determination of client needs and your conduct in choosing safe,
appropriate product. Throughout this course, you will find many suggestions
and ways to analyse your sales or market conduct performance as well as how to
assess appropriate client risk analysis. Next, comes your legal responsibilities
before and after the sale. Do you know what they are? Do you know when you
exceed your role as an agent and assume additional exposure? If conflicts
occur, are you able to settle them reasonably and do you have procedures in
place to help avoid them in the future? What about consumer protection issues?
Finally, are you someone who learns from the mistakes of others. As you will
soon discover, it is a great training ground.
6.1 SALES CONDUCT & CLIENT NEEDS

In the section that follows, you will learn why agent legal conduct is a broad area of agent responsibility you
are duty-bound to know. Sales conduct, on the other hand, is responsibility you choose to uphold to do a
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better job for your clients. It involves making reasonable decisions for your clients after analysing their needs.
If you need more reasons why you should practice proper sales conduct here’s a short list:
• It might keep you from being sued by a client or your insurer.
• The cleaner your record, the less involved underwriters will be in the sales process, i.e., you have more
control over the sales process and less compliance.
• Sales conduct violations drive up the cost of doing business which could affect your commissions, or,
completely replace the current system of incentive pay with a salary or other form of measured
compensation, i.e., violations can mean less money.
• Sales conduct problems erode the public trust and that can cut into your sales.
• Sales conduct lawsuits are now part of how companies are rated. More suits mean a lower rating and a
harder sale for you.
If you went a step further and combined legal conduct and sales conduct you might run your business by the
following credo:
• I will know everything possible about my client’s financial and insurance needs.
• I will have a complete understanding of all products I sell and present them fairly.
• I will find the most suitable product for my client and make sure I place him with financially capable
companies without “bashing” the competition.
• I will document any lack of knowledge with a full disclosure agreement.
• I will request each client to sign a binding arbitration agreement for any potential misunderstanding or
dispute.
6.2 NEW TREND IN LIFE INSURANCE BUSINESS

"Today ‘s market is rapidly-changing world; the term life insurance market is on the move. Learn
about what kinds of new and innovative products life insurance companies are offering today. Like other
industries, the term life insurance industry is constantly finding new ways to meet consumers ‘needs. While
there are still the basic sorts of term life insurance offerings out there on the market, many life insurance
companies are becoming more and more innovative as they struggle to create exactly what customers want to
see
This has led to many new and interesting trends in the life insurance marketplace, many of which may appeal
to you. From new options for pay-outs to things like combined insurance, life insurance companies have
plenty of interesting choices for you to consider. Take, for example, pay-out options. As you know, one of the
sources of revenue for a life insurance company is the interest that they make on accumulated funds. The
longer the life insurance company holds onto its premiums, the more money it makes. If the life insurance
company can hold onto a portion of those funds for a longer period, it will not only increase the company ‘s
profits but it may be able to increase your policy ‘s benefits.
Instead of paying out your life insurance policy as a single lump sum, for example, it may offer death
benefits as an annuity. This annuity will pay out the death benefit over time. In the long run, your
beneficiaries will receive a larger payment than if they were to take it all at once. of course, traditional one-
time lump sum payments are still an option. Many customers still want their policy to pay the full benefit on
their death. They don‘t see their life insurance policy as an investment for their beneficiaries, but rather as a
safety net should anything happen to them. Another rising trend in the term life insurance industry is that
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more and more companies are finding ways to offer products to older customers. As life expectancy increases,
the older population becomes more and more of a potential market. It also becomes much more feasible to
offer term life insurance products to older customers. While it may not have made much financial sense for a
term life insurance company to offer products to someone over the age of 60 just a few decades ago, today it
is much more likely that the individual will live into their 80s and beyond.
"Many term life insurance companies are now bundling their products with other insurance products,
too. For example, some companies offer private medical insurance, long-term care insurance as well as term
life insurance. By combining products in this way, the company can create a synergy that increases their
bottom line but also the customer ‘s security and well-being
There is much discussion these days, in both the public and private sectors, about not letting our current
financial crisis go to waste. For life insurance agents, this "seize the day" attitude is more than just a dose of
positive thinking to treat a case of sales paralysis.
It is a strategy that has proven effective over our industry's long, often dramatic history.
Following are three trends that come to mind and suggestions for how to use them to open doors to
new life cases –
The New Fiscal Conservatism
"It may seem counterintuitive, but economist‘s project that cash-strapped Americans are expected to
save a larger percentage of their income over the next few years. When stocks and real estate were riding high,
many Americans didn't feel a need to save money. The brisk collapse of the stock and real estate markets has
changed the country's collective feelings on saving, however, and increased the preference for guarantees and
conservative financial strategies. Far less attractive these days are promises of higher returns from riskier asset
classes
This trend puts life insurers in the sweet spot. Guaranteed protection and accumulation-based life
insurance products can offer renewed value for clients now recognizing the need to manage downside risks
and balance their portfolios with more conservative financial options. To satisfy this trend, new products are
hitting the market, such as universal life products with more flexible guarantees that put less drag on cash
accumulation and make pricing more accessible. These products can also appeal to business owners
struggling to protect and retain key employees and provide for their financial futures at competitive rates.
Rising Employment Insecurity
"As people save more and spend less, many companies are being forced to cut expenses. Thousands
of jobs and their corresponding benefits--including group life insurance coverage--have been cut, and more
are in danger of being eliminated. It's especially difficult for somebody to lose work coverage if they don't
have a separate policy in place. The risk of unemployment today is a very real concern for many Americans.
For agents, these same Americans can be viewed as prospects for affordable, individual life coverage. In an
uncertain job market, having a separate policy in place, in addition to employer coverage, can more
adequately protect a family's future
Even if you have clients who are confident their jobs are secure, would the free or low-cost coverage
provided by their employer be enough to replace their income and support a family? Many Americans,
including high-net-worth individuals, have a misguided reliance on their group life insurance benefits, since
the term coverage provided is usually just a small portion of their annual salary. Will it be enough to pay for
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future college tuition? Help pay a mortgage and keep a family in their home? Would a separate term life
policy fill the gap, fit the budget, and provide peace of mind?
A Sense of Panic Among the Affluent
Another trend appears to be that no one--not even affluent consumers--is immune from the effects of this
crisis. Results from an April 2009 AXA Equitable survey indicate that consumers' behaviours and attitudes
today vary significantly by the degree of affluence, as well as the age of the affluent person polled. Six in 10
affluent people surveyed said that they are worried that they may not be able to pay their mortgage if they
were to lose their job, compared with slightly more than half (54 percent) of the non-affluent. Less than half
(48 percent) of the younger affluent consumers polled believe their personal financial situation has declined in
the past year, while 66 percent of the older affluent feel they are worse off today" 37
Market losses among many older affluent Americans have some consumers rethinking their wealth
transfer planning. Now maybe a good time to discuss with them how, when used in the right circumstances, a
life insurance death benefit offers an income tax-free mechanism to provide a guaranteed inheritance to
beneficiaries, regardless of the performance of their non-life insurance investment portfolio. Life insurance
can offer a strategy to protect inheritances simply using the death benefit paid to beneficiaries. Particularly
relevant today, the death benefit can have a stabilizing effect in the face of a potentially widely fluctuating
portfolio. Premium payments and policy design can enhance the effect to a client and their beneficiaries.
Today, people of all incomes need financial guidance. Life agents are uniquely positioned to help
people impacted by market volatility and insecurity, because we represent the only industry that can protect
families, retirement incomes, and legacies with guaranteed financial products.
CHAPTER 7
INSURANCE ON THE INTERNET
When the topic of the Internet arises, the question that many insurance agents ask is. . . should I participate?
A better question would be . . . how can I participate? Like it or not, the Internet is here, and its use is about to
explode. Need proof? A recent survey, by International Data Corp, asked small business owners if the
Internet is key to doing business. Almost 40% responded YES! This is double the response of the previous
survey. And, by 2000, the World Wide Web is expected to be a significant channel representing $95 billion in
product and service activity. Users of the Internet numbered 16 million in 1995, jumping to 34 million in
1996 and anticipated to skyrocket to 163 million by the year 2000.
WILL THE INTERNET REPLACE INSURANCE AGENTS?
Experts don’t believe this will happen since most insurance is Experts don’t believe this will
happen since most insurance is purchased when an agent uncovers a need and encourages the
purchased when an agent uncovers a need and encourages the consumer to act. Further, only a
small portion of the consumer to act. Further, only a small portion of the population is thought to
be self-directed enough to log on and population is thought to be self-directed enough to log on
and buy insurance without help. For future generations, however, buy insurance without help.
For future generations, however, their lifelong association with the computer may stimulate
more their lifelong association with the computer may stimulate more of them to make remote
purchases of goods and services like of them to make remote purchases of goods and services
like insurance
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In the insurance industry, growth of the Internet is still in its infancy. A recent Booz-Allen & Hamilton
survey of 144 insurance companies found that most had websites, but only a few had a strategic plan for use
of the Internet. Sixty-six percent used the Internet for name recognition, whereas only eight percent used it
for lead generation and one percent for direct sales. Clearly, there is more potential to be tapped with over 60
million adults using the Internet with desirable demographics: Users have an average annual income of
$60,000 and an average age of 35.
If we accept a growing consumer enthusiasm for the Internet, the next question is will people use it to buy
complicated financial products, like insurance, and will direct access to insurance company websites soon
eliminate the need for agents altogether? Both issues are hotly debated.
A recent Nielsen Media Research study indicated that there is strong growth in the US and Canada among
people who have made purchases on the Web – usage jumped 50 percent in a recent six-month period. These
sales, however, may not have been made in complicated areas such as insurance or business, but rather in
consumer products. So, what is the potential for insurance? Experts believe that someday a rather exclusive
group of consumers will dial up insurer sites, research policies and fill out an electronic application. Several
carriers are already in place to make this happen. The best estimates are, however, that only a small segment
of the population will be willing to do this. More likely, most people will find the task of Internet searches
and the analysis of lengthy and complicated insurance policies too intimidating on their own. So, if insurance
companies do not offer deep discounting as an incentive to “buy direct” over the Internet there is no reason for
consumers not to take advantage of professional guidance from a licensed agent.
If the Internet is not an immediate vehicle for widespread direct purchasing of insurance policies what good is
it to agents and the industry alike?
Currently, there at least a dozen or more great ways that the insurance industry can benefit from using the
Internet.
• Clients and agents can check the status of policies or cash values
• Clients and agents can check the status of pending applications
• Premiums can be paid by credit card or electronic transfer
• Quotes and illustrations can be instantly retrieved
• Clients can stay in touch directly with their agent using E-mail
• Agents can be connected to carrier news on new products or learn of commission problems
• Insurance loss claims can be reported
• Clients can use an agent website to review benefits of their policy
• Agents can provide clients with a 24-hour information source using an electronic newsletter
• Clients will be able to buy insurance using electronic signature technology
• Agents can inexpensively market their services with their own website or as a member of an “insurance
mall”.
• Agents can download forms and order underwriting requirements
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• Agents can learn of new regulations and licensing requirements or complete their continuing education
• Discussion groups (chat rooms) can provide valuable interaction with other professionals about policy
benefits and insurance news
• Independent and employee agents alike can have access to powerful prospecting databases, professional tax
and planning reference materials and rating services
• Agents in the field could log on for sales presentation / quote information
• Regulators can post “consumer-beware” bulletins and comb the web for violations and less than ethical
insurance dealings.
• Insurers and agents alike can use the Internet as an inexpensive recruiting tool
Just one of these possible uses should be a reason for the professional agent to get involved and work through
the Internet.
Experts predict that no major insurer will be without Internet presence in the next
couple of years. Given their vast resources and ability to tap into new technology it is
likely that the insurance industry will soon maintain a high profile that will not go
unnoticed by the many information search services such as Yahoo, Excite, Alta Vista,
AOL and Info seek. As a result, it won’t be long before consumers will be offered a
stockpile of user-friendly insurance sites and links from related sites in banking,
financial
Experts predict that no majorplanning, tax and
insurer will retirement
be without planning.
Internet presence in the next couple of years. Given their
vast resources and ability to tap into new technology it is likely that the insurance industry will soon maintain
a high profile that will not go unnoticed by the many information search services such as Yahoo, Excite, Alta
Vista, AOL and Info seek. As a result, it won’t be long before consumers will be offered a stockpile of user-
friendly insurance sites and links from related sites in banking, financial planning, tax and retirement
planning. All above are reasons that agents should now begin investigating the potential use and application of
the Internet. To aid in this research you will need to know some background on the Internet and some of the
legal and regulatory obstacles to selling insurance on line.
7.1 The Marketing of Insurance Over the Internet

In response to the increased use of electronic commerce and the unique regulatory concerns surrounding
electronic commerce, the NAIC charged the Market Conduct and Consumer Affairs (EX3) Subcommittee to
study and issue a white paper, including recommendations, regarding the sale, marketing and regulation of
insurance through the Internet; including, but not limited to, analysis of technology issues such as digital and
electronic signatures, electronic fund transfers, electronic applications, privacy and confidentiality issues,
contracted policy forms, and agent, broker, producer and company licensing issues. The following section is
the White Paper published by the NAIC.
Permission for reprinting here is granted by the
National Association of Insurance Commissioners.
Internet Commerce Internet Commerce.
46
Electronic commerce is the buying and selling of goods via an electronic medium. This is a very broad
definition that encompasses the sale of goods from telemarketers to the sale of goods over the Internet. From a
consumer's viewpoint, electronic commerce may provide access to more information, faster and economically,
and may result in lower product and service acquisition costs with ease and greater cost savings. Electronic
commerce can also help organizations meet their goals of enhanced customer service, and the economical
dissemination of consumer information and increased sales.
Over the last several years, the proliferation of the Internet usage has increased importance of electronic
commerce. With the Internet, companies are able to make world wide contact with potential consumers 24
hours a day, 365 days a year. Companies can also maintain this open line of communication with suppliers,
independent contractors and any other entity which plays an integral role in the production and distribution of
its product.
7.2 Sales and Service of Insurance Over the Internet

To date, current electronic commerce typically involves the sale of goods as opposed to services, such as
insurance. This disparity can be tied to a variety of issues, including technology acceptance by consumers,
security and regulatory concerns surrounding insurance sales on the Internet. Unlike the sale of a book or
article of clothing, the sale of an insurance policy involves complicated contractual language, the transmission
of sometimes confidential information and a relationship of good faith on behalf of the buyer and the seller.
Current methods by which insurance sales can occur over the Internet are either single source or via insurance
malls.
Single Source Sale Sites
Single source sale sites are comprised of a single insurance company marketing its products over the Internet
through the establishment of a home page. When developing a home page for a single source sale site,
insurance companies can use their home pages as a promotional tool, to direct consumers to their existing
agents or as another distribution channel. A survey conducted by the LIMRA International, Inc. revealed that
two thirds of the companies use their home pages for name recognition. Eight percent of the companies
indicated they use their home pages for lead generation for their agents while only one company indicated
direct sales was the main purpose of its home page. A single source sale site is a method of marketing
insurance over the Internet which enables the consumer to select and purchase his/her insurance directly from
an insurance company. This type of insurance marketing over the Internet will presumably provide the
consumer with all the steps necessary to purchase insurance; from filling out an application on-line to
payment of the premium and receipt of the policy on-line.
47
Insurers' and producers' home pages can offer marketing and/or educational information about a company and
its products. For instance, a home page may explain the benefits of life insurance or explain different auto
coverages.
Insurance Malls
Insurance malls are sale sites that offer the products of more than one seller. Vertical insurance malls offer
the products of multiple sellers from the same industry, while horizontal malls offer the products of multiple
sellers from multiple industries. Because of the diversity of products offered at both types of malls, these
malls attract a wide diversity of consumers and have the potential to become true electronic markets. One of
the key features of insurance malls is their ability to provide consumers with access to a wide variety of
products and comparisons of these products. These Insurance malls are designed to provide consumers with
one or more purchase alternatives by matching consumer profiles against company underwriting criteria and
present a list of alternative companies from which the consumer may selects. The consumer can then review
policy information, pricing, and other aspects of various offerings from companies participating in the mall.
Apart from being wholly geared to focusing on cost comparison and sales, many sites are educational.
Insurance malls also present information about the different types of insurance available, insurance
companies, and ratings of these companies. Such malls may also provide a brief description of insurance
terms and information on state insurance laws.
Service of Insurance Over the Internet Over the Internet
The more transactions a consumer has with a company via a certain medium, the more bound the consumer
becomes to the company and the medium of communication. Unlike consumers in other industries,
consumers who use the Internet may have increased interaction with their insurance companies -- with noted
benefits. A typical insurance consumer, without Internet service, only interacts with his/her insurance carrier
on four occasions:
1) when he/she purchases the insurance policy,
2) when he/she pays the insurance premium,
3) when he/she makes a claim on the policy, and
4) when he/she changes coverage or other contract provisions such as a beneficiary.
Consumers may, therefore, be more likely to use this medium to make their initial purchase of insurance if
all facets of the insurance transaction are available over the Internet.
Many websites are already increasing the interaction insurance companies have with consumers by offering
educational information. It has been stated that these types of interactions not only increase the general
public's understanding of insurance but also create a familiarity and level of comfort in terms of a company's
on-line services.
Company/Agent Communications
The Internet also is a tool which could enhance company and agent communication. With the use of the
Internet, agents can have a continuous line of communication to their insurance companies. This could
enhance the educational level of agents and thus enhance the information agents pass on to consumers during
48
the sales process. In addition, the Internet has the potential to permit the electronic transmission of policy
forms; thus cutting down on the cost of the application and policy issuance process.
7.3 Elements of Insurance Transactions

The insurance contract - i.e., the promise by the insurer to perform at a future date, coupled with the
policyholder's promise to pay premiums - is a fundamental principle of to the business of insurance. To better
understand this principle, it is essential to understand the elements of a contract. We can then examine the
elements of an insurance transaction. Elements of an Insurance Contract Elements of an Insurance Contract
Insurance policies generally contain the above elements. However, the process of achieving a fully executed
insurance policy may vary based on a number of factors, including among others things, the type of insurance
(e.g., personal lines property and casualty vs. life vs. health vs. commercial/business, etc); the type of
policyholder (e.g., group, individual, corporate); and, as we are seeing, the method for memorializing the
agreement (written vs electronic signature and/or other methods).
Even though differences may exist among the various types of insurance, the following steps typically
represent the general means for achieving a binding insurance policy:
• Offer - the act of a person applying for coverage.
• Acceptance - an insurance carrier applying its underwriting standards and issuing the policy is commonly
considered the act of acceptance. In those instances where a risk is not acceptable to the underwriter, but
coverage could be provided at a higher premium, the issuance of a policy at the higher rates or for different
coverages would be considered a counteroffer which could be rejected or "accepted" by the consumer.
• Consideration - in an insurance policy, consideration is obtained by the policyholder paying premiums in
exchange for the insurer agreeing to pay benefits at some future date (if certain conditions are met).
• Legal Purpose - pursuant to the regulatory power of the respective state, insurers cannot enter into insurance
contracts for products or services which are unlawful. (For example, business interruption coverage for a drug
dealer would be illegal.)
• Legal Competency of the Parties - the above basic rules as to legal competency generally apply in the
context of the insurance contract.
7.4 Advantages and Disadvantages of Insurance Sales and Service over the Internet
Consumer Advantages
Consumers already have the ability to search the Internet for life and auto insurance quotes on the Internet via
numerous home pages and other Worldwide Web Sites provided by or on behalf of insurers and agents. Some
Internet sites are interactive and permit the consumer to provide certain information and allow the agent or
insurer to determine eligibility for coverages.
In addition to obtaining quotes, consumers currently have the ability, from at least one auto insurer, to
complete the entire transaction on-line. Another auto insurer provides consumers the opportunity to complete
the application on-line and then forwards the application to an agent located near the consumer to complete
the transaction.
49
Consumers may also browse the Internet to locate agents and insurers in their area. This provides consumers
the ability to narrow their search for a particular agent, insurance company or specific type of insurance
coverage. In many cases, agents advertise the names of insurers they represent and the types of coverage they
most commonly provide. A particular advantage to consumers appears to be accessibility. Often times,
consumers may not have the time nor the opportunity to shop for insurance during normal work hours. The
Internet increases the opportunities for these consumers to shop after hours and in most cases, a quote can be
received within minutes or the next day. The quote arrives electronically, which eliminates the need to
personally interact with an agent, which some consumers prefer.
Consumers using the Internet for the purchase of insurance have the ability to contact their agent or insurer 24
hours a day. Depending on the Internet site's capabilities and response time, this is likely to substantially
enhance consumer service by eliminating the delays in obtaining policy information and service. While some
insurers already provide 24-hour service via telephone, the Internet has the potential to increase this practice.
Consumers already have the ability from at least one company to review their account status to determine
when and how much they need to pay for their existing policy. After checking how much is due, they can
make a payment to the company online. This service eliminates the two step process of calling the company
to find out how much is owed and then mailing a payment. Online payment could potentially prevent
cancellations as this can be done at any hour of the day without the delay of the postal service.
Many major insurers have indicated they will be able to deliver insurance products and services via the
Internet in a more cost-effective environment. This may result in lower a overall lower cost of premiums to
all consumers if a substantial number who are willing to purchase coverage and interact with an agent or
insurer electronically.
Consumer Disadvantages
The most significant disadvantage to some consumers may be the lack of personal interaction with an agent.
Agents are generally trained to assist consumers in determining the type and amount of coverage that should
be purchased to adequately insure their needs. Some consumers may focus on how much coverage they want
to purchase, rather than how much coverage they actually need. Since many consumers may not be well
versed in the purchase of insurance, they may end up "ordering" insurance, rather than purchasing insurance
that fits. Unfortunately, "ordering" insurance is not a practice that would be unique to Internet sales.
Many consumers are not acquainted with insurance laws and regulations. This includes, but may not be
limited to familiarity with the requirements for insurer and producer/agent licensing, producer appointment,
policy form filing and approval for products sold in the admitted market, and qualifications for sales in the
surplus lines and reinsurance markets. Because the location and actual identity of the producer and/or agent is
not always obvious, consumers may not in all Internet transactions be able to determine whether they are
doing business with regulated producers and insurers, or are purchasing insurance products that have been
approved by state regulators. Or worse, could learn they purchased a fictitious policy. This could result in a
variety of consumer issues where the desired level of regulatory protection may not be available to consumers.
Some consumers lack the financial ability to purchase computer hardware or software, and access the Internet.
Even in today's environment where accessing the Internet is becoming increasingly more affordable, the
lowest cost access can be unaffordable for some consumers. If insurers offer lower premiums to Internet
access users, certain consumers will not benefit from those savings unless they have Internet access from
50
another source such as a Public Library. Inadequacies in the telecommunications infrastructure also limits
some consumers access to the Internet, especially in the rural areas of the country.
Even though Internet marketing of insurance products and services is growing at a rapid rate, there are only a
limited number of insurers presently offering electronic quotes. At least for now, this may limit the number of
comparisons or quotations a consumer may obtain electronically.
CHAPTER 8
LITRATURE REVIEW
 Carrow Kenneth A. and Heron R. ―Capital market reactions to the passage of the Financial
Services Modernization Act of 1999‖. The Quarterly Review of Economics and Finance 42 (2002)
The authors investigate how the passage of the Financial Services Modernization Act of 1999 (FMA)
affected stock prices of banks, thrifts, finance companies and insurance companies. The study looks at
stock excess returns across sectors and company size. The idea is that the passage of the FMA opens
doors for potential mergers and consolidations across banking, financial and insurance sectors,
translating into abnormal positive returns for businesses that are the likely candidate for mergers and
consolidation. The results of the study suggest that the largest returns to the FMA passage were
realized by large investment banks and insurance companies. The stock prices of banks, both small
and large, seemed to be unaffected by the new legislation while thrifts, finance companies and foreign
banks lost value.
 Hogan, John D (2001). ―Financial Services Reform: The Gramm-Leach-Bliley

Act and its implications for insurance‖, Journal of Financial Service Professionals, January 2001.
In this paper, the author contends that the impact of the GLB Act on the insurance industry is unclear.
It had been widely assumed that the banking industry would quickly expand into non-banking
51
activities, as synergies could be expected from the large bank customer information base and frequent
contacts with customers.
However, this quick response has not taken place, partly because of perception of risk in the insurance
business.
The author also cites a research study by The Federal Reserve Bank of Atlanta that suggests that bank
holding companies will add insurance products to their lines of business for sound reasons such as:
1) small increment costs involved,
2) the presence of existing customer relationships,
3) revenue diversification,
4) absence of interest rate risk in insurance compared with loans and
5) banks‘ web-based marketing capability.
 McDaniel, David (1995): ―Agents‘ worst nightmare: Banks are gaining the edge to sell insurance in
a big way‖. Best’s Review [Property/Casualty],
The article explains that insurance agents are afraid of banks cutting into their business as they have in
Europe where banks are far more efficient than agents. The article lays out how to make the proposed
legislation ineffective, by warning of unsubstantiated tie-ins and bank coercion, proposing 10-day
waiting periods, state legislation, and tough fire walls
 [email protected] ABSTRACT This paper describes Nigerians attitudes towards the

insurance institution.
The attitudes, most often negative, are mirrored through low patronage of insurance services. It
discusses such social-cultural factors that account for these attitudes and what role marketing
strategies can play to change such negative tide. Drawing from theoretical foundation, an empirical
survey was conducted among 392 members of the public—insuring and non-insuring—to gauge their
awareness level and general attitudes towards insurance companies and their operations. The findings
present different demographical factors and their attitudes towards insurance companies and their
services. It is expected that findings from such survey would constitute vital input for insurers in
designing marketing strategies that would further stimulate and boost patronage and perception of
insurance services. Key words: insurance, attitude, Nigeria, demography, marketing, strategies
African Journal of Accounting, Economics, Finance and Banking Research Tajudeen Olalekan Yusuf,
Ayantunji Gbadamosi, & Dallah Hamadu
 The demand for life insurance in a country may be affected by the unique culture of the country to the
extent that it affects the population‗s risk aversion (Douglas and Wildavski, 1982). Henderson and
52
Milhouse (1987) argue that an individual‗s religion can provide an insight into the individual‗s
behaviour; and understanding religion is an important component of understanding a nation‗s unique
culture.
Also, Zelizer (1979) notes that religion historically has provided a strong source of cultural opposition
to life insurance as many religious people believe that a reliance on life insurance results from a
distrust of God‗s protecting care. Until the nineteenth century, European nations condemned and
banned life insurance on religious grounds. Zelizer also states that religious antagonism to life
insurance still remains in several Islamic countries. In similar vein, Wasaw and Hill (1986) tested the
effect of Islam on life insurance consumption using an international data set. The results of their study
indicate that, ceteris paribus, consumers in Islamic nations purchase less life insurance than those in
non-Islamic nations. This becomes more evident in the fact that there is comparatively very low ratio
of Muslims in developed countries with the majority residing in medium to low human development
countries. From the thirty-five low human development countries as defined by the Human
Development Report (2004), seventeen have a majority Muslim population and a further five have a
Muslim population of over 20 percent. Muslims around the world are commonly faced with low-
income levels, and African Journal of Accounting, Economics, Finance and Banking Research
Tajudeen Olalekan Yusuf, Ayantunji Gbadamosi, & Dallah Hamadu
 Berman, Peter. "Rethinking Health Care Systems: Private Health Care Provision in India." Harvard
School of Public Health Working Paper, November 1996.
 Business Today. "The Monitory Group Study on Insurance I and II." March 22 and April 7, 2000.
 Mitra, Sumit and Nayak, Shilpa. "Coming to Life." India Today, May 7, 2001.
 Asian Economies, Vol. 27(2), June 1997, 5-31. U.S. Department of State FY 2001 Country
Commercial Guide: India. Commercial Guide for India was prepared by U.S. Embassy New Delhi and
released by the Bureau of Economic and Business in July 2000 for Fiscal Year 2001
8.1PRESENT SCENARIO OF INSURANCE INDUSTRY

India with about 200 million middle class household shows a huge untapped potential for players in the
insurance industry. Saturation of markets in many developed economies has made the Indian market even
more attractive for global insurance majors. The insurance sector in India has come to a position of very high
potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device,
are now suddenly turning to the private sector that are providing them new products and variety for their
choice. Consumers remain the most important centre of the insurance sector. After the entry of the foreign
players the industry is seeing a lot of competition and thus improvement of the customer service in the
industry. Computerization of operations and updating of technology has become imperative in the current
scenario. Foreign players are bringing in international best practices in service through use of latest
technologies. The insurance agents remain the main source through which insurance products are sold. The
53
concept is very well established in the country like India but still the increasing use of other sources is
imperative. At present the distribution channels that are available in the market are listed below.
 Direct selling
 Corporate agents
 Group selling
 Brokers and cooperative societies
 Banc assurance
Customers have tremendous choice from a large variety of products from pure term (risk) insurance to
unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders
from which they can choose. More customers are buying products and services based on their true needs and
not just traditional money back policies, which is not considered very appropriate for long-term protection and
savings. There is lots of saving and investment plans in the market. However, there are still some key new
products yet to be introduced - e.g. health products.
CONCLUSION
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.
54
Many marketing and management consults are self-employed, working as contractors with different clients.
This allows you certain benefits, such as a flexible schedule, the ability to pick and choose the types of
projects you want to tackle, and a relatively low business risk profile.
However, that doesn't mean your consulting business should do without insurance. Consultants face many of
the same risks as other types of businesses. In particular, consultants should be sure to choose a solid Errors &
Omissions policy to ward of the cost of professional liabilities. You can also mitigate your risks with safety
and security strategies, good communication, and detailed client contracts.
So in today’s world “MARKETING” is the life of Insurance companies
REFERENCE
WEBSITES
 www.googleco.in Concept of Sales

 www.irdaorg
 Ibid
 https://economictimes.indiatimes.com/
 Irda
 https://en.wikipedia.org/wiki/Insurance
NEWSPAPERS
 Economic times
55
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1.4ORIGIN AND DEVEPLOPMENT OF INSURANCE IN INDIA

1.5IMPORTANT DEVEPLOMENT IN THE HISTORY OF INDIA INSURANCE

foreign companies. Similarly, of the 17 non-life insurers, including health

YEAR DESCRIPTION OF NEW DEVELOPMENTS AND IMPORTANT EVENTS

as a statutory body in April, 2000.ThekeyobjectiveofIRDA includes promotion of competition

1.6 PRINCIPLES OF INSURANCE

MOTOR MARINE HEALTH

2.1 LIFE INSURANCE

2.2 GENERAL INSURANCE / NON-LIFE INSURANCE

 Property coverage, for damage to or theft of the car

Marine insurance covers the loss or damage of ships, cargo, terminals, and

3.1 The Production Concept of Marketing

3.2 The Sales Concept of Marketing

3.3 Modern Concept of Marketing

PRODUCT / PROFIT MAXIMIZATION

3.4 4 P’s of marketing

3.4 MARKETING MIX FOR INSURANCE COMPANIES

 Commission charged for underwriting and consultancy activities.

3.5 7 P’S OF SERVICES MARKETING IN INSURANCE SERVICES

Role of IRDA in insurance sector

Duties, Power & Functions of IRDA

 specifying the code of conduct for surveyors and loss assessors;

 promoting efficiency in the conduct of insurance business;

 regulating investment of funds by insurance companies;

 regulating maintenance of margin of solvency;

 adjudication of disputes between insurers and intermediaries or insurance intermediaries;

 supervising the functioning of the Tariff Advisory Committee;

 exercising such other powers as may be prescribed

4.1 Impact of IRDA On Indian Insurance Sector

4.2 Insurance Regulatory & Development Authority (IRDA)

(b) five whole-time members

(c) four part-time members

(e) Promoting efficiency in the conduct of insurance business;

4.3 INSURANCE CONTRACT

Insurance Rider/ Endorsement

 Contract of certain amount

 Essential general contract" 5

General Nature of a contract

 Offer & Acceptance

 Free consent of the parties

4.4 THE INSURANCE ACT, 1938

THE INSURANCE ACT, 1938 ACT NO. 4 OF 1938

[(2) It extends to the whole of India 2***.]

4.5 THE LIFE INSURANCE CORPORATION ACT, 1956

THE LIFE INSURANCE CORPORATION ACT, 1956 ACT NO. 31 OF 1956

2. Definitions. In this Act, unless the context otherwise requires, --

(3) "Controlled business" means--

(a) All his business, if he carries on no other class of insurance business;

(5) "Insurance Act" means the Insurance Act, 1938 (4 of 1938);

(7) "Member" means a member of the Corporation;

4.6 MARKET SHARE OF INDIAN INSURANCE INDUSTRY

TABLE SHOW THE INSURANCE COMPANY AND THE SHARE HOLDING

Sr. no Name of The Company Nature of Holding

2 Aviva Life Insurance Private

LIFE INSURANCE BUSINESS AT PRESENT

PRIVATE TOTAL - 23.93%

PUBLIC TOTAL - 76.07%

MARKETING STRATEGY-A BRIEF

Strategic marketing is a market-driven process of strategy development, taking into account a