1 A PROJECT REPORT ON ³CUSTOMER SATISFACTION TOWARDS INSURANCE INDUSTRY ´ . Submitted to CENTRAL UNIVERSITY OF HIMACHAL PRADESH (In partial fulfilment of requirement of the prescribed course) Masters of Business Administration (2010-2012) Supervised By: Submitted by: Mr. Shabab Ahmed PUNEET SHARMA Roll No. CUHP10MBA18
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.
The liberalization of the Indian insurance sector has been the subject of much heated debate for some years.
The policy makers where in the catch 22 situation wherein for one they wanted competition, development
and growth of this insurance sector which is extremely essential for channelling the investments in to the
infrastructure sector. At the other end the policy makers had the fears that the insurance preemie, which are
substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign
participation in the sector.
As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the
light thanks to the maturing polity emerging consensus among factions of different political parties. Though
some changes and some restrictive clauses as regards to the foreign participation were included the IRDA
has opened the doors for the private entry into insurance.
Whether the insurer is old or new, private or public, expanding the market will present multitude of
challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance
sector will have still remains under the realms of the possibilities and speculation. What is the likely impact
of opening up India¶s insurance sector?
The large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized
insurers. Therefore, potential private entrants expect to score in the areas of customer service, speed and
flexibility. They point out that their entry will mean better products and choice for the consumer. The critics
counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as
foreign banks did until recently. This seems to be a logical strategy. Start-up costs-such as those of settingup a conventional distribution network-are large and high-end niches offer better returns. However, the
middle-market segment too has great potential. Since insurance is a volumes game. Therefore, private
insurers would be best served by a middle-market approach, targeting customer segments that are currently
In today¶s corporate and competitive world, I find that insurance sector has the maximum growth and
potential as compared to the other sectors. Insurance has the maximum growth rate of 70- 80% while as
FMCG sector has maximum 12-15% of growth rate. This growth potential attracts me to enter in this sector
and get experience in highly competitive and enhancing sector.
The success story of good market share of different market organizations depends upon the availability of
the product and services near to the customer, which can be distributed through a distribution channel. In
Insurance sector, distribution channel includes only agents or agency holders of the company. If a particular
insurance company has adequate agents in the market it can capture big market as compared to the other
companies. For long run stay in insurance sector company must be loyal for its customers and provide them
best services to compete with its competitors, otherwise it will lose its recognition from this corporate world.
Agents are the only way for a company of Insurance sector through which policies and benefits of thecompany can be explained to the customer. Thus every company wants that it have best agents with them
which serve its customer in best way than any other company can serve. It¶s directly related to feel the
1.2 THE NEED TO MEASURE CUSTOMER SATISFACTION.................. ..................................................7
1.3 SERVICE QUALITY AND CUSTOMER SATISFACTION................................................... .................8
1.4 EXPECTATIONS AND CUSTOMER SATISFACTION..........................................................................8
1.5 MARKETING OF INSURANCE IN INDIA............................................................. ...........................9
1.10 MAJOR COMPAINES IN INSURANCE INDUSTRY.......................................................... ................11
1.11 SWOT ANALYSIS OF INSURANCE INDUSTRY....................................................... .....................13
1.12 MAJOR STEPS TAKEN BY INSURANCE INDUSTRY FOR CUSTOMER SATISFACTION........15
2. LITERATURE REVIEW....................................................................................................... ......................17
3.1 NEED OF THE STUDY........................................................................................................ ....................20
3.2 TITLE JUSTIFICATION.......................................................................................................... .................20
3.3 OBJECTIVES OF THE STUDY......................................................................................... ......................21
3.4 SCOPE OF THE STUDY............................................................................................................. .............22
3.5 SIGNIFICANCE OF THE STUDY........................................................................................ ...................22
3.6 RESEARCH METHODOLOGY..................................................................................................... ..........23
4. DATA ANALYSIS.............................................................................................. ............................... .........24
There is a great deal of discussion and disagreement in the literature about the distinction between service
quality and satisfaction. The service quality school view satisfaction as an antecedent of service quality -
satisfaction with a number of individual transactions "decay" into an overall attitude towards service quality.
The satisfaction school holds the opposite view that assessments of service quality lead to an overall attitude
towards the service that they call satisfaction. There is obviously a strong link between customer satisfaction
and customer retention. Customer's perception of Service and Quality of product will determine the success
of the product or service in the market.
If experience of the service greatly exceeds the expectations clients had of the service then satisfaction will
be high, and vice versa. In the service quality literature, perceptions of service delivery are measured
separately from customer expectations, and the gap between the two provides a measure of service quality.
1.4 EXPECTATIONS AND CUSTOMER SATISFACTION
Expectations have a central role in influencing satisfaction with services, and these in turn are determined by
a very wide range of factors lower expectations will result in higher satisfaction ratings for any given level
of service quality. This would seem sensible; for example, poor previous experience with the service or
other similar services is likely to result in it being easier to pleasantly surprise customers. However, there are
clearly circumstances where negative preconceptions of a service provider will lead to lower expectations,
but will also make it harder to achieve high satisfaction ratings - and where positive preconceptions and highexpectations make positive ratings more likely and seem to be an oversimplification.
Major overall satisfaction measure, consisting of four subscales: general satisfaction (e.g. You feel happy
recommending the bank to a friend); Trust (e.g. You trust the staff at your branch to do what is best for you);
Reliability (e.g. Requests are carried out right first time); and professionalism (e.g. Staff have the knowledge
Insurance is in a manner of speaking the last frontier in the financial sector to open. It is also a sector, which
leads to benefits across the full spectrum, from the individual who now have wider choices, to the economy,
which see increased savings, to the infrastructure sector, which can look forward to long term funding being
available. In an under-insured economy, newer channels of distribution have to be utilized to intensify thereach of insurance both in urban and rural markets. This will create huge employment opportunities not only
within insurance companies but also as agents and consultants of insurance companies.
Marketing Mix Policies
Different companies can choose to position themselves differently and hence the Marketing Mix is different.
However, there are certain common characteristics that one can cull out from the possible strategies that
companies adopt.
Product:
The development of flexible products to suit individual requirements is what will differentiate the winners
from the also-rans. The key to success is in providing insurance solutions, not standardized insurance
products. The concept of riders/optional benefits has already been a huge innovation brought about by the
new players, which has led to customization of products for individual needs. However, companies may
differentiate themselves on the basis of product segments that they choose to focus on and excel in.
Place:
Different companies may however choose different channels and different geographies to focus on. The
channel options are - tied agency force, corporate agents and brokers and this is an area where different
companies will make different choices. Many companies like HDFC Standard Life are focusing on all
channels whereas companies like Max New York Life are focusing on the tied agency force only. Customer
interface will be a key challenge for life insurance companies and includes every that interaction that the
customer has with the company, such as sales, new business underwriting, policy servicing, premium
payments, claim processing and so on. Technology can play a crucial role in delivering the highest standards
of service set by the company and it will be imperative for any serious player to excel in all of these.
Price:
Price is a relevant differentiator only in two segments - pure term insurance and in pure annuities. Here too,
service delivery and financial strength will need to be present at a minimum acceptable level for price to be
a relevant differentiator. In case of savings oriented products, long-term returns generated are more relevant
than just the price of the product. A focus on generating good investment performance and keeping a tight
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial
powerhouse and prudential plc, a leading international financial services group headquartered in the United
Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in
December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Thecompany has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-
ups.
4. Om Kotak Mahindra Life Insurance Co. Ltd.
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd.
(KMBL), and Old Mutual plc.
5. Birla Sun Life Insurance Company Ltd.
Birla Sun Life Insurance Company is a joint venture between Aditya Birla Group and Sun Life financial
1. Large numbers of competitor¶s especially major threat from the India¶s biggest insurance company i.e.
LIC.
2. Entrance of many more companies in insurance sector with better plans and schemes which attracts most
of customer.
3. Switching of customers from one to other insurance company because of better schemes provided by
other companies.
4. Because of fraud done by fake companies many of customers does not trust easily on private companies.
INSURANCE INDUSTRY: KEYS STRENGHS
FINANCIAL EXPERTISE
As a joint venture of leading financial services groups , companies have the financial expert iserequired to manage your long-term investments safely and efficiently.
RANGE OF SOLUTIONS
We have a range of individual and group solutions , which can be easily, customised to specific needs
o u r group solutions have been designed to offer you complete flexibility combined with a low
The customer's requirements must be translated and quantified into measurable targets. This provides an
easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction. We can recognize where we need to make changes to create improvements
and determine if these changes, after implemented, have led to increased customer satisfaction.
Adam Faulkner, 2006
Increasingly the companies that are winning - the smarter organisations - are the ones that understand how
contact centre business processes and their supporting technologies can be combined to allow for a more
holistic customer experience. Currently many of the different technology and process components - WFM,
IVR, quality monitoring, eLearning, CRM integration and analytical tools - that can support the goal of a
more integrated customer experience are only available as standalone systems, with just basic links between
the different components. To enable effective customer lifecycle management - like that being achieved by
companies such as Churchill and BA - requires deep expertise in the integration and interoperability of all
these different solutions - it's difficult, but it's not impossible - and it's worth getting right.
Jeanne Bliss October 23rd
, 2007
At some point, your business will suffer a failure that disappoints customers. The measure of a company is
taken at such moments. Customers see your true colours at these times more than at any other. How you
explain, react, remove the pain, and take accountability for your actions, clearly signal your sentiment
toward customers and reveals the collective "heart" of your organization.
Elaine Fogel, 2007
Glitches happen and setbacks occur when we deal with customers -- they're as inevitable as death and taxes.
The key to retaining these customers when an error occurs is handling them right from the start. Whether
your company or organization delivers products, services, or promises... its credibility and reputation is on
the line when you don't deliver what you say you will, and when. There's no magic pill to averting these
situations, but you can be proactive in redeeming yourself and retaining customers when things go wrong.
Customer satisfaction, business term, is a measure of how products and services supplied by a company
meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of
the four of a Balanced Scorecard.
In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key
differentiator and increasingly has become a key element of business strategy. However, the importance of
customer satisfaction diminishes when a firm has increased bargaining power .
Paul & Nick Hague
Developing a customer satisfaction programme is not just about carrying out a survey. Surveys provide the
reading that shows where attention is required but in many respects, this is the easy part. Very often, major
long lasting improvements need a fundamental transformation in the company, probably involving training
of the staff, possibly involving cultural change. The result should be financially beneficial with less
customer churn, higher market shares, premium prices, stronger brands and reputation, and happier staff.
However, there is a price to pay for these improvements. Costs will be incurred in the market research
survey. Time will be spent working out an action plan. Training may well be required to improve the
customer service. The implications of customer satisfaction surveys go far beyond the survey itself and will
only be successful if fully supported by the echelons of senior management.
Marcus Fidel, 2007
Customer satisfaction differs depending on the situation and the product or service. A customer may be
satisfied with a product or service, an experience, a purchase decision, a salesperson, store, service provider,
or an attribute or any of these. Some researchers completely avoid ³satisfaction´ as a measurement objective
because it is ³too fuzzy an idea to serve as a meaningful benchmark.´4 Instead, they focus on the customer¶s
entire experience with an organization or service contact and the detailed assessment of that experience.
A group of researchers of the Centre for the Study of Social Policy (2007) conceptualize that satisfaction is
based on the customer¶s experience of both contact with the organization (the moment of truth) and personaloutcomes. According to these researchers, satisfaction can be experienced in a variety of situations and
connected to both goods and services. To another extent, these researchers defined satisfactions as a ³highly
personal assessment´ that is greatly influenced by ³individual expectations´. This definition views
³individual´ element as powerful force to create satisfaction. Likewise, many researchers (Oliver, 1981;
Brady and Robertson, 2001) conceptualize customer satisfaction as an individual¶s feeling of pleasure or
A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have
entered the market and are trying to gain market share in this rapidly improving market. The study then goes
on to evaluate and analyse the findings so as to present a clear picture of trends in the Insurance sector
related to satisfaction of customer. This project will help to understand the current market scenario andmarketing in stiff competition. Being a student of management I can draw the relevant conclusion from the
market survey and give the appropriate suggestion to the companies.
3.5 SIGNIFICANCE OF THE STUDY
SIGNIFICANCE TO THE INDUSTRY
This is a limited study which takes into consideration the responses of 100 people. This data can be
explorated to take in the trends across the industry. The significance for the industry lies in studying these
trends that emerge from the study. It is a rapidly changing and evolving sector. People are only beginning to
wake up to its vast possibilities. A study like this can attempt to guide the future of the industry based on
current trends.
SIGNIFICANE FOR THE RESEARCHER
To facilitate and provide all the useful information to the companies.
Most of the customers have invested in market link planinstead of traditional. Market link plan are relatedto mutual fund investment. This shows that most of them are ready to bear little bit market r isk with assur ing