http://www.projectscollege.blogspot.com A COMPARATIVE STUDY ON THE PERFORMANCE OF [COMPANY NAME] ALLIANCE INSURANCE COMPANY WITH ITS INDUSTRIAL COMPETITORS By [STUDENT NAME] (Reg. no. ) Of[COLLEGE NAME] A PROJECT REPORT Submitted to the FACULTY OF MANAGEMENT STUDIES In partial fulfillmen t of the requ irement s for the awa rd of the de gree OfMASTER OF BUSINESS ADMINISTRATION [UNIVERSITY NAME] [PLACE] [YEAR]
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
This project titled as “ A Comparative Study on the Performance of [COMPANY
NAME] Alliance Insurance Company with its Industrial Competitors” focuses on some
of the key issues like competitive position that [COMPANY NAME] holds, the strengths
and weaknesses of the company’s insurance schemes, consumer’s awareness, customer’s
perception etc.
The sample size for this study is 120. The research design carried out for this study is
descriptive research. Primary data are collected from the clients of various insurance
companies through a structured undisguised questionnaire. Secondary data are gathered
from the websites of [COMPANY NAME] and other companies for the purpose of making a comparative analysis. Statistical tools like graphs, interval estimation, chi-
square test, H-test, and correlation have been used for the purpose of analysis.
The findings of the study were arrived at based on the analysis conducted. Some of the
major findings of the study relate to increased necessity of having a general insurance
cover, higher reputation enjoyed by [COMPANY NAME] and priority to have auto/car
and health insurance cover by majority of the respondents. Some of the suggestions of the
study are to make amendments in the premium rates, to maintain the promptness in the
claim settlement procedure, to introduce additional insurance covers and create more
awareness about the products.
The study is been concluded that the performance of [COMPANY NAME] is excellent in
comparison with its industrial competitors and that the company has high growth
The outlook for the general insurance industry in India is stable as per the financial
forecast that has been made. Over the medium and long term, India’s insurance market
will continue to experience major changes as its operating environment increasingly
deregulates. On the one hand, a mix of new products, new delivery system and a greater
awareness of risk will generate growth. On the other hand, the competition is expected to
remain intense as private sector insurers and those about to enter India seek to win market
share from the more established public sector entities.
In 2006-07, India’s general insurance market witnessed a variety of changes as
deregulation continued at a hectic pace. With the removal of pricing controls on fire and
engineering lies in 2007, insurers have since discounted their rates by 50% or more in
their quest to retain or win market share. Furthermore, the number of private insurers is
expected to grow as various foreign companies have announced intentions to establish
joint ventures.
History of Insurance industry
In some sense we can say that insurance appeared simultaneously with appearance of human society. In earlier economies, we can see insurance in the form of people helping
each other. For example, if a house is burnt, the members of the community help build a
new one. Should the same thing happen to one’s neighbour, the other neighbors must
come to help? Otherwise, neighbors will not receive help in the future.
Insurance in the modern sense, started as a methods of transferring or distributing risk
were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd
millennia BC, respectively. Chinese merchants traveling treacherous river rapids wouldredistribute their cargo across many vessels to limit the loss due to any single vessel’s
capsizing. The Babylonians developed a system which was recorded in the famous Code
of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a
merchant received a loan to fund his shipment, he would pay the lender an additional sum
in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen.
2000-01 Insurance Industry had 16 new entrants, 10 in Life and 6 in General Insurance2001-03 Insurance Industry had 5 new entrants, 2 in Life and 3 in General
2003-04 Insurance Industry had 1new entrant, Sahara India Insurance Company Ltd. In
Life Insurance category2004-05 Insurance Industry had 1new entrant, Shri Ram Insurance company Ltd. In
Life Insurance category2005-06 Bharti Axa Life insurance company was granted Certification of Registration
in July2006 Bharti Axa Life insurance company commenced its operations the newest
player in the insurance sector.
Evolution of Non-Life insurance in India:
The boycott of British goods and British institutions, which occurred because of the
nationalist movement, encouraged formation of Indian-owned commercial and business
houses. By 1907, the Indian mercantile the first of the long lasting general insurance
companies to be established with Indian capital, had started functioning five offices, the
New India, Vulcan, Jupiter, British India General and the Universal, were established in
1919 almost simultaneously for transacting general insurance business.
In 1928, prominent insurance men of Bombay met and formed the Indian insurancecompanies association to protect the interest of Indian insurers. Leaders of the insurance
industry began to organize conferences, educate public on the benefit of insurance, focus
attention on the annual remove of national wealth through invisible export’s, and arise
public interest in favour of Indian insurance.
In 1950, the planning commission was set up to formulate plans for successive five years.
This five year plan brought about large scale economic development and increased
insurance consciousness among the people. As insurance business increased the number
of claims for compensation against losses also naturally increased. Settlement of too
many large claims meant a severe demand on the funds of insurance companies. So to
prevent this situation the practice of ‘Reinsurance’ was adopted according to which
insurers themselves reinsured portions of the insurances they had undertaken. So Indian
insurance companies with their expanding business wanted to reinsure for which they had
to seek foreign reinsurance markets.
Since the need for conserving foreign exchange was felt in India all the insurers in India
as well as foreigners operating in India formed the India Reinsurance Corporation in
1956. This corporation provided reinsurance facilities. It was compulsory for insurers in
India to reinsure a fixed percentage of their insurances with the corporation.
The Insurance Amendment Act 1950 imposed certain limitations on expenses of
management. The general insurance council constituted what was called the tariff
committee to control and regulate terms and conditions of business.
In 1972, the General Insurance Business (Nationalization) Act 1972 was passed under the provisions of this act. The general insurance corporation of India was established for the
purpose of directing, controlling and caring on the general insurance business and all the
106 insurers were merged and grouped into four subsidiaries of the general insurance
corporation of India namely:
National Insurance Company Ltd., with its head office at Calcutta.
The New India Assurance Company Ltd., with its head office at Bombay.
The Oriental Insurance company Ltd., with its head office at Delhi. The United India Insurance Company Ltd., with its head office at Madras.
Three Phases of De-Tariffing
India’s general insurance industry has undergone de-tariffing in three phases:
1994 -- marine cargo, personal accident, health, banker liability and aviation
2005-06 -- marine hull segment
2007 -- Fire, engineering and motor own damage (OD). However, the de-tariffing
did not immediately allow for free pricing. Instead, insurers were required to follow
the “file and use” method, whereby they were expected to file a charter of proposed
rates, which was then approved by IRDA.
The only segment that remains under a tariff regime is the third party motor business,
although there has been a large upward revision in this area’s premium rates by regulators
to offer co-branded credit cards, first to introduce industry-specific proposition. Their
product range is designed to provide extra cover to a varied range of customers starting
from the common man to corporate conglomerates. The company is now in the eighth
year of operation. The shareholders of [COMPANY NAME] are as follows:
[COMPANY NAME] and Associates 74%
[COMPANY NAME] London 26%
Working from a corporate office in Chennai, [COMPANY NAME] has been carrying out
its business in over 150 cities with four fully operational Regional Centers in Chennai,
Mumbai, Guargon and Kolkata supported by a network of 35 Branch Offices. Each of
these Regional Offices is staffed by a team of insurance professionals responsible for
Customer Servicing, Business Development, Underwriting, Operations and Claims
Management.
Royal [RESPECTIVE COMPANY NAME] brings the golden heritage and reliability
of [COMPANY NAME] (AAA), one of the most respected non-banking financial
institution in India, and RSA, one of the oldest and the second largest general insurer in
the UK.
The coming together of these two financial giants allows them to offer its customers the best global practices in insurance industry, innovation in terms of products and services,
According to the recent report of Lloyd, the Indian insurance market is likely to change in
the next few years significantly largely due to regulatory changes. In addition, premium
growth is being driven by other factors such as the growing consumer class, increased
foreign direct investment, infrastructure development, and an increased awareness of
catastrophe exposure.
Despite significant positive changes, the insurance market must still face the challenge of
poor customer perceptions and the danger that the pace of reform will slow. Several
significant structural changes are expected in the insurance market that will influence the
country’s development in the medium to long term
So far, the entry of a large number of Indian and foreign private companies has led to
greater choice in terms of products and services for Indian consumers. A growing
realisation of the benefits and importance of sophisticated insurance and reinsurance tools
has broadened the pool of potential buyers of insurance. Given this backdrop, the Indian
insurance market has experienced considerable growth since its liberalisation in 2000.
Over the next three years, the Indian insurance market is likely to see its process of
maturation accelerate. Regulatory changes in the four areas– products, market players,distribution and reinsurance – will drive change in the Indian insurance market in the
medium term.
• Price competition has already begun to increase and is likely to continue to do so for the
next 18 to 24months.
• The practice of cross-subsidisation is likely to be phased out as risk-based pricing is
used increasingly for all products.
• As Indian insurers build a profitable portfolio, they are likely to have increased access
• Finally, rising demand for insurance is likely to be met by increased capacity as foreign
insurers look to access this growing market.
As per the recent research by Moody’s – ICRA Global Insurance, the following facts
relating to the performance of both private and public sector general insurance companieswere made.
Private Sector’s Growing Influence
The private sector has been steadily growing market share despite the fact that public
sector companies have been around for a lot longer. The private insurers enjoy
considerable operational flexibility, whereas the public sector companies have been
constrained by their traditions and inability to innovate.
Market Share – Redistribution
Due to the effectiveness of private marketing strategies, the market share of public
insurers has consistently declined. Given a faster growth rate, the market share of the
private sector is catching that of the public sector and the two will likely converge over
the medium term.
The private sector share of third party motor business was much lower in the past thanthat for public firms as the former did not pursue this market because of its negative
underwriting margins. However, with the formation of the common third party motor
pool, the situation has changed. The losses related to this segment now get shared among
all the players, leaving little incentive to avoid this segment.
Fire and engineering now broadly contribute a similar proportion of overall business for
the private and public sectors. In terms of overall business, the focus has shifted towards
the retail segments of motor and health, where good growth is expected.
Operational Flexibility
The public entities lack the operational flexibility enjoyed by the private players. Their
limited capacity to innovate has impacted their ability to tailor and aggressively price
The combination of superior technology and selective underwriting has allowed the
private sector to set high standards for policyholder services, thereby differentiating
themselves from public sector insurers. The claim settlement performance of the private
sector has also been superior because of the limited amount of third party motor business
that they have underwritten. Such claims normally take a longer time to settle.
Distribution – Rise of Bancassurance
The Indian general insurance industry has historically been dominated by the agency
channel, through which 75% of total premium income is sourced. But in recent periods
other channels – for example, bancassurance, brokers, corporate agents, direct marketing
and direct sales channels -- are gaining importance. Most insurers now have tie-ups withthe banks, which act as corporate agents and are remunerated on a commission basis. For
example, ICICI Lombard sources a major portion of its business from a tie-up with ICICI
Bank. Similarly, Bajaj Allianz General Insurance Company Limited (BAIL, second
largest private player) has tie-ups with large number of banks, which contribute a big
share of its total premium income.
As of December 31 2007, 267 brokers were registered with IRDA, including 228 direct
brokers, 33 composite brokers and 6 reinsurance brokers. In a deregulated environment,
the broking community will have plenty of opportunity to become an integral part of the
insurance and risk financing process. At this time, low cost channels like tele-sales and
the internet are still not developed in India, mainly due to relatively poor knowledge
about insurance products and low internet penetration.
One conclusion is certain– the Indian non-life market is set to grow dramatically over the
next few years. The simplest forecasts suggest that premium income could double in the
next few years to reach USD11.6bn in 2010. When the structural changes above are takeninto consideration, this growth becomes exponential, with relatively slow growth in 2007
Open ended question are the type of question used to get suggestion from the respondent
in order to give feed back to the organization.
Close ended question
Close ended question are the type of questions with a clear declined set of alternatives
that confine the respondents to choose one of them.
Multiple choice question
It consists of multiple choices in which the respondents can choose more than one
Likert scale
It uses 5 point or 7 point scale to elicit respondent’s favour or unfavour towards an
object.
Dichotomous question
It consists of two choices of answers in which the respondent has to choose one of them.
Ranking
In ranking, questions will have the ranking skill, which the respondents are free to rank
them according to their preference.
SAMPLING
Convenience sampling is been used in the study. This type of sampling is basically usedwhen you simply stop anybody in the street who is prepared to stop, or when you wander
round a business, a shop, a restaurant, a theatre or whatever, asking people you meet
whether they will answer your questions. In other words, the sample comprises subjects
who are simply available in a convenient way to the researcher. There is no randomness
χ² = ∑ [(Oi – Ei) 2] with n-1 degrees of freedomi =1 Ei
2. WEIGHTED AVERAGE METHOD
This method is widely used in finding the weightage given to different attributed byrespondents. The respondents assign different weightage to the different ranking and
weighted average percentage is found and graphs are plotted.
Net score = (weight for column * no. of respondents)Total weight
Net score in %age = net score in row
Total net score*100
3. INTERVAL ESTIMATION METHOD
An estimation of a population parameter given by 2 numbers between when the
parameter
may be considered to lie is called interval estimation of the parameter.
( p - z √pq ; p + z √pq )
n n p = sample proportion of success
q = sample proportion of failure
z = standard variance of the confidence level
n = no. of sample size
3. KARL PEARSON’S COEFFICIENT OF CORRELATION
Correlation analysis helps us in determining the degree of relationship between 2 or more
variables. The value of the coefficient of correlation as obtained by the below formula
shall always lie between +1 and -1. When r = +1, it means there is perfect positive
correlation between the variables. When r = -1, there is perfect negative correlation
between the variables and when r = 0, there is no relationship between the two variables.
S.No Age No. Of Respondents Percentage (%)1 Less than 25 yrs 43 35.832 25-35 32 26.673 35-45 20 16.674 45-55 12 10
5 Above 55 yrs 13 10.83Total 120 100
Findings: The above table shows that 35.83% of the respondents belong to the age group
of less than 25 years, 26.67% fall under the category of 25-35 years, 16.67% belong to
the age group of 35-45 years, 10% belong to the age group of 45-55 years and the rest
10.83% above 55 years
Inference: It is inferred that there is a higher percentage (i.e. 35.83%) of respondents inthe age group of less than 25 years and comparatively very lower percentage (i.e. 10%) of
respondents in the age group of 45-55 years
3.2.1 CHART SHOWING AGE OF RESPONDENTS
Less
than 25
yrs
25-35 35-45 45-55 Above
55 yrs
35.83
26.67
10.8310
16.67
0
5
10
15
20
25
30
35
40
No. of
respondents
Age in years
3.2.2 TABLE SHOWING GENDER OF RESPONDENTS
S.No Gender No. Of Respondents Percentage (%)1 Male 81 67.5
S.No Awareness No. Of Respondents Percentage (%)1 Yes 45 752 No 15 25
Total 60 100
Findings: The above table shows that 75% of respondents, who are policy holders with[COMPANY NAME], have stated that they are aware of various insurance schemes
offered by [COMPANY NAME] and the rest 25% of respondents who are policy holders
with [COMPANY NAME] have stated that they are not aware of all the insurance
schemes offered by the company
Inference: It is inferred that higher percentage (75%) of respondents, who are policy
holders with [COMPANY NAME] are aware of various insurance schemes offered by
Findings: The above table shows that 38.33% of respondents have indicated the serviceof [COMPANY NAME] as excellent, and 50% of them have stated it as very good and
11.67% of them have indicated it as moderate.
Inference: It is inferred that a higher percentage (50%) of respondents have indicated
that the service rendered by [COMPANY NAME] as very good.
3.2.13 CHART SHOWING THE RESPONDENT’S COMMENT ON THE
SERVICE OF [COMPANY NAME]
38.33
50
11.67
0 00
10
20
30
40
50
60
Excellent Very good Moderate Poor Very poor
N o .
o f r e s p o n d e n t s
3.2.14 TABLE SHOWING SOURCES BY WHICH THE RESPONDENTS
BECAME FAMILIAR OF [COMPANY NAME]
S.No Source of information No. Of Respondents Percentage (%)1 Ads (print, radio, TV) 21 352 Insurance agents 14 23.333 Friends & Relatives 25 41.674 Others - -
Findings: The above table shows that 35% of respondents have indicated advertisement,
23.33% of them have stated insurance agents and 41.67% of them have indicated friends
& relatives as means by which they came to know about [COMPANY NAME].
Inference: It is inferred that a higher percentage (41.67%) of respondents has indicatedfriends and relatives as means by which they came to know about [COMPANY NAME].
3.2.14 CHART SHOWING SOURCES BY WHICH THE RESPONDENTS
BECAME FAMILIAR OF [COMPANY NAME]
Others
0% Ads (print,
radio, TV)
35%
Insurance
agents
23%
Friends &
Relatives
42%
3.2.15 TABLE SHOWING THE PERIOD OF INSURANCE COVER HELD BY
RESPONDENTS.
S.No Period of insurance cover No. Of Respondents Percentage (%)1 Annual policy 61 50.832 1-5 year 35 29.173 5-10 year 11 9.174 10-15 year 13 10.835 Greater than 15 years - -
It is inferred that a higher percentage of respondents (79.63%) are policy holders
in at least 2 companies, while18.52% of respondents are policy holders in 2-5
companies and the rest 1.85% of respondents are policy holders in more than 5
companies.
It is inferred that higher reputation amidst customers is enjoyed by [COMPANY
NAME] with 39.17% of respondents stating it.
Majority of respondents (i.e., 75%), who are policy holders with [COMPANY
NAME] have stated that they are aware of various insurance schemes offered by
the company.
It is found that the percentage of respondents aware of various insurance schemes
offered by [COMPANY NAME] lies between 64.02% and 85.98%
Majority of respondents (i.e., 80%), who are policy holders with [COMPANY
NAME] have agreed that [COMPANY NAME] is well known for offering
customer centric products.
It is inferred that a higher percentage (50%) of respondents have indicated that the
service rendered by [COMPANY NAME] as very good, while 38.33% of
respondents have indicated the service of [COMPANY NAME] as excellent, and
the rest 11.67% of them have indicated it as moderate.
The study implies that a higher percentage (41.67%) of respondents has indicated
friends and relatives, while 35% of respondents have indicated advertisement andthe rest 23.33% of them have stated insurance agents as means by which they
came to know about [COMPANY NAME]
Among the respondents, who has taken general insurance cover it is inferred that a
higher percentage (50.83%) of respondents holds annual policy.
The present scenario demands almost all the customers to have a general insurance
cover in order to protect from future uncertainty. The company always has an
opportunity to grow and expand its operations in the non-life insurance segment.
Hence, the company can seize this opportunity and pay attention to introduce more
insurance covers to cater to the needs of various classes of people.
Majority of the respondents, who are policy holders with [COMPANY NAME] have
felt that the premium being paid is comparatively higher with the premium rates of
other insurance companies. Hence, amendments can be made in this regard by
offering insurance cover at reasonable premium rates to the customers.
The promptness of claim settlement procedure can be maintained as it is one of the
important aspects which would enhance the reputation of the company, as well as
build trust in the minds of the customers. Also, it helps to retain existing customers
and attract new customers.
The company has to focus more on the auto/car insurance segment and health
insurance segment. Majority of the respondents have preference towards auto/car
insurance as it is a must to have insurance for their vehicles by law. Therefore, thecompany has got enough opportunities to earn huge profits from both these
segments.
The company can create more awareness about its products among potential
customers by means of advertisements and efficient insurance agents, which in turn