Life Insurance Industry in India

Kamalanathan, V S Kannan.

False promises top the list with 93.94% followed by poor returns (89.10%) and lack of professionalism
(64.71%). For LIC the major problem is poor service (50%) followed by poor claim settlement (43.85%)
and lack of professionalism (35.29%). This shows that majority of the customers of private insurance
companies are disappointed with their services.

Decreasing Satisfaction Level of the Life Insurance Policyholders

People may buy a product from a particular company first time by accident and if they are
satisfied with the quality of the product and services offered they will continue to buy from that
particular company. Continuous purchase is a good indication of satisfaction. To find out the
satisfaction level of respondents on the overall services of the life insurance companies from
which they have purchased the policies, the respondents were asked to indicate their satisfaction
levels in 4 categories, very good, good, average and poor.

The response of the policyholders were tabulated and shown as table 4.13. Of the total 296
responses only 58 (19.59) % is very good and 95 (32.09)% were good put together 51.68%. The
remaining 48.32% indicates that the services are average (33.45) % and 16.22%says it is poor.
Overall LIC is having a good satisfaction level; while the HDFC is having good satisfaction level
while Reliance is having the least.( figure 4.12)

In Insurance sector the rural market constitutes 70% of the insurable population. Recent studies have
established that disposable income of farmers has risen. The NCAER study "Very Rich White book: a
study of Super -Affluent Indian Consumers" shows that around 15% of mega rich are in rural India.Since
agents are still the primary intermediaries in the Indian insurance scenario, emphasis should be laid on
their training, explaining their role to them, enabling them to enhance their capabilities in dealing with
rural customers.

The distinguishing feature of life insurance plans which are offered online vs those which are available
offline is in terms of cost. For almost all insurers, the premium of an online term plan is lower by 25 per
cent or more than its offline version. Yashish says, "Since online purchase does not involve agents/ sales
person, insurance plans bought online cost less vis-a-vis their offline counterparts. In fact, insurance
companies usually pass on the benefits of reduced offline  ..
As per the final regulations of IRDA which have been finalised on 10th January, 2016, the insurance web
aggregator can be remunerated by charging a fee of Rs. 50,000 from the insurer for each insurance
policy or product of this insurer that it displays on its web page. Apart from this fee, it may also charge
premium or commission of sorts, of not more than 30%, for any conversions into a sale and may also
charge a pre-decided fee for certain other activities such as premium collection carried out by it.

To Do for the report

1. Document all of the envisioned (or existing) company procedures (preferably using a workflow
diagram or flowchart) before attempting to implement and commission a technology tool. You’ll
be amazed how quickly you’ll identify inefficiencies or duplications merely by charting the
processes. (You’ll also be amazed how little you’d previously thought about your company
processes holistically). Be careful to design all processes to be “customer facing.” In many
instances, rules and processes are designed by financial wizards to control costs. Cost control
processes are often not customer friendly and hinder your ability to provide efficient service.
Strive to achieve a balance.
2. Start with knowing who the real customer is. Research the needs of the customers. Then
develop ongoing solutions or support that is highly valued by customers. This is the start of
becoming “customer-centric”.
3. Finding lapse triggers - Affordability? Lack of need? Product suitability? Other?
4. liberty holdings, a South African financial services provider whose life insurance
business is widely acknowledged as having established a best-practice retention
program, recognised the importance of building a retention culture early on in its
program. Its retention problems surfaced in 2008 and early 2009, yet the 2009
annual report already disclosed efforts towards shifting the sales culture towards
retention Read about liberty holding

Commission paid to agents

What Is a Surrender Charge?

A surrender charge is a fee levied on a life insurance policyholder upon cancellation of their life
insurance policy. The fee is used to cover the costs of keeping the insurance policy on the
insurance provider's books. A surrender charge is also known as a "surrender fee."

For annuities and life insurance, the surrender fee often starts at 10 percent if you cash in your
investment in year one. It goes down to 1 percent if you cash it in during year nine and no
surrender fees in year 10 or longer.