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1 | Page A PROJECT REPORT On Retailing in Insurance 2007-2008 Unit 4 A, Western Industrial Estate Opp. SEEPZ, MIDC, Marol, Andheri (E) 400 093

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Page 1: Retail + Insurance = Shopassurance

1 | P a g e

A PROJECT REPORT

On

Retailing in Insurance

2007-2008

Unit 4 A, Western Industrial Estate

Opp. SEEPZ, MIDC, Marol,

Andheri (E) 400 093

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Understanding Retailing in Insurance

Shopassurance

Name of the Student : Kaustubh Vasant Gholap

Rohit Sitasawad

Pooja Khandelwal

Name of the Guide: Prof. Shrinivasan

Date: 05/04/2008

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Declaration

Date: - 05/04/2008

We are very glad that Prof. Shrinivasan had given us the opportunity to do the

survey about the Retailing in Insurance according to Indian Insurance Industry. I

am also thankful to Mr. Y. B. Bhide, Associate Dean, Chennai Business School

and Miss. Pallavi Prabhu for their timely guidance for the completion of this

project. Without their encouragement and appreciation it will not be possible to

complete this project.

This Project is a new approach towards the changes in Insurance Distribution

channel in Indian Insurance Industry especially after the liberalization and in

context with the rapid increase in the GDP of India. I am fortunate that I am

learning in Mumbai where you can easily found a culture mix and various attitudes

and instant reply about the market Trends. This study revealed the intrinsic point

about the major changes in Distribution of Insurance Products with help of

booming retail sector in India.

The data collected here is truly original and it is only used for the analysis and

interpretation of this project.

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Index

Sr. no. Particulars Page number 1 Introduction To Life

Insurance Sector

5

2 ICICIPrudential 7

3 Executive Summery 10

4 The Study And Research Methodology

11

5

Retail Industry India

12

6

Shopassurance

13

7

World View of Distribution

Channel

16

8

Shopassurance -India

19

9

Summery

28

10.

Recommendations

30

11.

Annexure

31

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ife Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life Insurance company on Indian Soil. All the Insurance companies established during that period were brought up with the

purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life Insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life Insurance company in the year 1870, and covered Indian lives at normal rates. Insurance is an Rs 450 billion industry in India. The value of the market is determined by gross premium incomes. The life Insurance segment writes about 80% of the overall market value. Indian Insurance market was at its all time high in 2003 with a growth of about 17.4% over the pervious year. Since 2001 Insurance is growing at the rate of 15-20 % annually. The growth in the Insurance industry is affected by volatility in real estate rates, GDP rates and long term interest rates. Fluctuations in exchange rates also affect the growth in this sector. The gross premium as a percentage of the GDP has gone up from 2.3 in the year 2000 to 4.8 in 2006. Together with banking services, it adds about 7% to the country’s GDP. Some of the important milestones in the life Insurance business in India are: British-India Period: 1818: Oriental Life Insurance Company, the first life Insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life Insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life Insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life Insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crores from the Government of India.

L

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Liberalization of Indian Insurance: 1994: Insurance sector invited private participation to induce a spirit of competition amongst the various insurers and to provide a choice to the consumers. 1997: Insurance regulator IRDA was set up as there felt the need:

To set up an independent regulatory body, that provides greater autonomy to Insurance companies in order to improve their performance, In the first year of Insurance market liberalization (2001) as much as 16 private sector companies including joint ventures with leading foreign Insurance companies have entered the Indian Insurance sector. Of this, 10 were under the life Insurance category and six under general Insurance. Thus in all there are 25 players (12-life Insurance and 13-general Insurance) in the Indian Insurance industry till date.

Indian Insurance in 21st Century:

2000: IRDA starts giving licenses to private insurers: ICICI prudential and HDFC Standard Life Insurance first private insurers to sell a policy 2002: Banks allowed selling Insurance plans. As TPAs enter the scene, insurers start setting non-life claims in the cashless mode 2007: First Online Insurance portal, www.Insurancemall.in set up by an Indian Insurance Broker, Bonsai Insurance Broking Pvt Ltd.

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ICICI PUDENTIAL LIFE INSURANCE:-

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 is amongst the first private sector Insurance companies to begin

operations in December 2000 after receiving approval from Insurance Regulatory

Development Authority (IRDA).

ICICI Prudential's equity base stands at Rs. 11.85 billion with ICICI Bank and

Prudential plc holding 74% and 26% stake respectively.

Vision:-

To be the dominant Life, Health and Pensions player built on trust by world-class

people and service.

Values:-

Every member of the ICICI Prudential team is committed to 5 core values:

Integrity, Customer First, Boundary less, Ownership, and Passion. These values

shine forth in all we do, and have become the keystones of our success.

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Indian Retail: An Overview

Emerging markets such as India and China are the final frontier for retail

taking the focus away from saturated Western markets. Since 2001, 49 global

retailers entered 90 new markets, but at the same time, 17 retailers left markets in

2005.

The Indian retail industry in valued at about $300 billion and is expected to

grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian

retail is organized. Retailers of multiple brands can operate through a franchise or a

cash-and-carry wholesale model.

Retail is India’s largest industry, accounting for over 10 percent of the

country’s GDP and around eight percent of employment. Retail in India is at the

crossroads. It has emerged as one of the most dynamic and fast paced industries

with several players entering the market. That said, the heavy initial investments

required make break even hard to achieve and many players have not tasted

success to date. However, the future is promising; the market is growing,

government policies are becoming more favourable and emerging technologies are

facilitating operations.

Retailing in India is gradually inching its way to becoming the next boom industry.

The whole concept of shopping has altered in terms of format and consumer

buying behavior, ushering in a revolution in shopping. Modern retail has entered

India as seen in sprawling shopping centres, multi-storeyed malls and huge

complexes offer shopping, entertainment and food all under one roof.

The Indian retailing sector is at an inflexion point where the growth of organized

retail and growth in the consumption by Indians is going to adopt a higher growth

trajectory. The Indian population is witnessing a significant change in its

demographics. A large young working population with median age of 24 years,

nuclear families in urban areas, along with increasing working-women population

and emerging opportunities in the services sector are going to be the key growth

drivers of the organized retail sector.

Initially, this was about Indian corporate houses rolling out malls and

supermarkets, but with Wal-Mart coming into the Indian market, the era of the

superstore is dawning. Unlike the kirana stores that served us for decades, this new

breed of retail chains is heavily dependent on IT.

Wal-Mart, the world’s largest retailer, and Bharti Enterprises have signed a

Memorandum of Understanding (MoU) to explore business opportunities in the

Indian retail industry. This joint venture will mark the entry of Wal-Mart into the

Indian retailing industry.

The biggest competitor for Bharti-Wal-Mart is likely to be Reliance Retail, the

retail wing of Reliance, which had planned to establish 10,000 stores by 2010. It

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had already opened 11 pilot stores under the “Reliance Fresh” format in

Hyderabad.

All these trends and developments present a great business opportunity for

software and hardware vendors from across the globe. Indian solution providers

are targeting this segment have reason to rejoice. For while organised retail

occupies a miniscule two to three percent of the overall Indian retailing industry,

that is poised to change.

In spite of the prospects being good things aren’t quite as rosy when it comes to

awareness of IT systems. In most cases, organised retailers in India have installed

solutions that help them automate transactional systems.

With the retail sector in India undergoing a transformation due to the entry of large

corporate houses, IT managers and CIOs are now looking forward to know how IT

can help them achieve the business goals of their organisations.

Standards-based architecture and software support all kinds of mission-critical IT

applications for enabling greater efficiency, significant cost savings, and new

business value. The critical activities that can be handled by IT are finance and

accounting, business intelligence, vendor development and management, supply

chain management, merchandising and inventory management, facilities

management, stores management, customer relationship management, branding,

marketing, sales promotion and HR.

Like any other vertical, retail also stands to benefit from elaborate IT set-ups.

However, this is subject to the scale and size of the organization, as well as an

objective assessment of its requirements. Key common challenges that can be

tackled through IT implementations include accurate merchandising, improved

planning, and increasing profitability, enhancing customer experience,

strengthening store operations, improved workforce management, and improving

the supply chain. This is in fact one of the key imperatives facing retailers in India,

to have a robust and scalable supply chain that will facilitate rapid growth.

Since a basic objective is to make data available to users and customers, proper IT

implementation and superior IT infrastructure ensure that in spite of getting

minimal details, the retailer captures the right information, which flows to

everyone from the back office staff to the head office managers. The entire

information flow must be seamless. A retail business works on a network

environment because the stores connect to one another as well as to supplier sites.

This is because in the retail business quick response is the key to success. Proper

IT implementation also ensures that investment in retail reduces substantially.

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Executive Summery:-

Insurance Industry in India has a very huge potential to grow in coming

years. .

Shopassurance simply means distributing Insurance or financial

products through the retail chains.

This channel is prompt by number of factors viz. Psycho graphical,

Economical, Social, Politico legal and Demographical. The list is not

exhaustive but it is sufficient to have the deep understanding of the

factors influencing the need for developing a new channel.

Psycho graphical Factors are those factors that include the behavioral

aspect of the individual viz. lifestyle, living standard. Here purchase

decision in influenced by those issues that affect the lifestyle of the

consumer or in the other that reflects the status. For e.g.: purchase

decision related to buying of car and that to Mercedes Benz

Talking specifically to the Insurance sector, here customer will buy only

that policy that has got high premium or that type of policy which

company is promoting to limited high-income level group only. For e.g.

"Life Time Super" policy of ICICIPrudential life Insurance is meant for

only those individual who can pay at least Rs. 20000/- per annum.

Economical factors affect the purchase decision by influencing the

issues pertaining to money and income level of the individual.

Consumer will buy only that product which will not have any negative

effect on his pocket. For e.g. decision to buy an Insurance policy is

influenced by the deepness in the pocket.

Social factor affect the purchase decision by influencing the issues

pertaining to social beliefs and morals.

Demographical factor is that factor which has got the maximum of its

effect in the purchase decision of the product and specially if that

product is life Insurance product.

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The Study and Research Methodology:-

This study, which was conducted in the suburbs of Mumbai city, Dombivali and

Nasik. The duration of the study was 1 month. The method which we used to

collect the information was through telephone and personal interview.

The data collection method was through random method and the sample size is

moderate. I met around 40 people among them actual eligible were 28. These are

the people who are having at least one or more than one Insurance policies.

The collection of primary and secondary data was then restructured and

reevaluated according to the need and the objective of the study. The data thus

collected undergone the various round of editing, coding and decoding as the

various interconnected links was their in the study.

The study covered 28 individuals, of whom 80 % were found were happy about

their Insurer and rest 20 %, were ignorant about the Insurer. It was 78 % of the

male who was there in the total insured and rest 22% were female. Occupation

wise 50 % of the total insured were into service and 25 % into business. There was

an immense rise in market awareness and the benefits from the competitor among

the Individuals.

The target group for the study was the age group between 25-40 yrs. I have

started searching for the potential consumers in the nearby area of my college and

the around my residence. Then I got references through my friends and then the

study spread across the city and some towns of Maharashtra.

Main Aim to conduct this study was to get the closer view of the consumers

about life Insurance which was a little difficult as it’s a intangible product and

consumers are not so willing to reveal their identity because of various reasons for

that I made a declaration on the letterhead of college to convince them about the

privacy of this report and their importance in contributing in this study.

Filling up questionnaire from the people was a great experience as they ask

all the information about the Insurance terminology and it was a satisfying survey

also as more and more customers are aware about the presence of private life

Insurance players.

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etail and Insurance industry have changed rapidly in the changing and

challenging economic environment throughout the world. In the

competitive and liberalized environment everyone is trying to do better

than others and consequently survival of the fittest has come into effect. Insurance

companies are also to be competitive by cutting cost and serving in a better way to

the customers. Now the time has come to choose and adopt appropriate distribution

channel through which the Insurance companies Can get the maximum benefit and

serve Customers in manifold ways. The intermediaries in the Insurance business

and the distribution channels used by carriers will perhaps be the strongest drivers

of Growth in this sector. Multi channel distribution and marketing of Insurance

products will be the smart Strategy of continue to play an important role in

distribution, alternative channels like corporate agents brokers and Shopassurance

will play a greater role in distribution. The time has come for the industry

To gradually move from traditional individual agents towards new distribution

channels with a paradigm Shift in creating awareness and not just selling products.

The game is old but the rules are new and still developing. Ensconced in a

monopoly run from the nationalized days beginning in 1956, the Insurance

Industry has indeed awakened to a deregulated environment in which several

private players have Partnered with multinational Insurance giants. However

despite of its teaming one billion populations, India still has a low Insurance

penetration of 1.95 percent, 51st in the world. Despite the fact that India boosts a

saving rate around 25 percent, less than 5% is spent on Insurance. To streamline

the saving into Insurance, Shopassurance is the best channel to tackle four

challenges facing the industry: - product innovation, distribution, customer service

and investments. The objective of this study is to show the present status of

Shopassurance and how it is gaining world wide acceptance. In the age of stiff

competition no one is ready to loose its own possession. In this case merger among

the retailers and

Insurance sector is necessary to take the challenges of liberalization. In this article

there are six phases. In the

First phase we would like to define Shopassurance.

Second phase – benefits of Shopassurance from the view point of retailers,

insurer and customer,

Third phase- SWOT analysis of it in India,

Fourth phase: status in the world,

Fifth phase comment and conclusion.

R

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Definition:

Shopassurance, known as and most popular in Europe is the simplest way of

distribution of Insurance products through a retail outlet. It is basically selling

Insurance products and services by leveraging the vast customer base of retailers

and fulfills the retailers and Insurance needs of the customers at the same time.

It takes the various forms depending upon the demography, economic and

legislative climate of the country, while demographic climate will determine the

kinds of Insurance products, economic climate will determine the trends in terms

of turnover, market shares etc, legislative climate will decide the periphery within

which shopassurance has to operate. The motives behind the shopassurance also

differ for retailers it just acts as a means of product diversification and additional

fee income; for Insurance company it acts as a tool for increasing their market

penetration and premium turnover and for customer it acts as a bonanza in terms of

reduced price, high quality products and delivery to doorsteps so every body is a

winner here.

Benefits:-

Shopassurance as an important tool in the hands of retailers, insurers and

customers to maximize their benefits at a time. As everybody is a winner in this

system, their respective benefits are given below:-

From The Viewpoint Of Retailers:-

Retailers have power; existing structure to relate to the customers needs why

retailers will enter in this area.

The reasons behind it are given below:

I) in a situation of constant asset base the retailers can increases return on assets

(ROA) by increasing their income, by selling Insurance products through their own

channel. It can cover operating expenses and make operating expenses profitable

by leveraging their distribution and processing capabilities.

II) the retailrs have a branch network to make face to face contact with the

customers and a great deal of trust over the customers. By leveraging the facilities,

the retailrs can guess the attitude and diverse needs of the customers and could

change the face of Insurance distribution to personal line Insurance.

III) retailrss enjoy significant brand awareness within their geographical region

providing for a lower per lead cost when advertising through print, radio and

television. The advantage of a retailers over traditional distributors is the lower

cost per sales lead made possible by their sizeable loyal customer base.

Iv) retailrss have extensive experience in marketing to both existing customers and

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non-customers. They also use technology access multiple communication channels

such as statement inserts, direct mail, a tms, telemarketing etc for the improvement

in transaction processing and customer service. European retailrss have more than

doubled the conversion rates of Insurance leads into sales and have increased

Sales productivity to a ratio which is more than enough to make shopassurance a

highly profitable

Proposition.

• From The View Point Of Insurer:-

I) the insurer can increase their volume of business through retailrsing distribution

channel and gain better.

Ii) if can solve the difficulties arising out of price competition which has driven

down the margins

And increased the compensation demand of successful agents.

Iii) through agents the insurer can only sell fewer and larger policies to a more up

scale client. Mainly middleclass income holders who comprise the bulk of retailrs

customers get very little attention. By using retailrs channel the insurer can capture

much of its under served market.

Iv) by cutting cost insurers can serve better to the customer in terms lower

premium rate and

Better risk coverage through product diversification.

From The Customers' View Point :-

Product innovation and distribution activities are directed towards the satisfaction

of the needs of the customer. Shopassurance model assists customers in terms of

reduced price, diversified products quality products, in time and doorstep service,

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SWOT analysis in the context of India:

Strengths:-

In a country like India of one billion people where sky is the limit there is vast

untapped potentials waiting for life Insurance products. There are more than 900

million lives waiting for life cover, 200 million house hold waiting for household

Insurance policy. Millions of people travelling in and out of India are waiting for

overseas mediclaim and travel Insurance policies whole world is eyeing on the

second largest middle class segment after china to tap. Other than this there is a

huge pull of skilled

Professionals to relocate the shopassurance venture to provide new product

through R & D last of all, LIC & GIC have large branch net work facility to

implement shopassurance model very effectively.

Weaknesses:-

In the case of rapid growth of information technology Retailers and Insurance

companies are still lacking its implementation. Though it is awakening but it is too

late and too little. In the age of wide area network (WAN) and vast area network

(VAN), simple LAN has not yet been introduced even in the head-quarters.

As discussed earlier about the untapped middle class segments, they are over

burdened with the inflationary pressure and tax exemption for all Insurance

products will inspire the customers (though it is done partially) to be insured.

Another one is inflexibility of the products, i.e. they are not tailor-made to the

requirements of the customer.

Opportunities:-

Though not at the same level, retailers data base in India is enormous and has to be

dissected variously and various homogeneous groups are chummed out in order to

position shopassurance products. With a good it structure they can really do

wonders. Appropriate atmosphere and political conscientious have to be built up

for liberalization and if it is done then RBI or IRDA should have no hesitation in

allowing the marriage of Retail and Insurance sectors to take place. Merger and

acquisition or setting up of joint venture is necessary in this direction.

Threats:-

Success of shopassurance venture requires change in approach, thinking and work

culture on the part of everybody involved. In India there is always a tendency to

restrict any change whether its impact becomes favorable or not. So there should

be a clear vehemence. Sometimes nonresponsive from the target customers

becomes possible threat as it was found in USA in 1980's and failed. Us retailers

have turned their attention (since late 1990's) towards life Insurance. Again the

investors in the capital may turn their face in case the rate of return on capital falls

short of the existing return on capital. So the Return from shopassurance must at

least match those returns.

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World view of Insurance Distribution Channel:-

Life Insurance businesses continue to expand in Asia’s emerging markets,

particularly China and India. Companies are extending their reach into more cities

as well as securing new distribution partner tie ups.

True “alternative” distribution channels are also under increasing focus as insurers

seek to take advantage of wide retail networks, high customer foot traffic and

strong affinity branding:

In Indonesia, “Shopassurance” appears to be another new developing channel

with an innovative campaign promoting personal accident plans to store

cardholders.

In a similar vein, “Postassurance” sees its debut with life Insurance soon to be

available through the postal networks of more than 3,000 offices in Vietnam and

36,000 in China. In the highly competitive arena of bancassurance, Insurance

companies are proving to be as active (or effective) as the foreign players in

developing this channel. Recent South Korean statistics show that the

bancassurance market share of foreign companies has fallen significantly.

The above are excerpts of some of the news you can find in the following pages.

We hope you will enjoy reading the publication and find the news useful. As usual,

we welcome your feedback so please feel free to write to us for any comments or

suggestions that you may have.

China:

Statistics from the China Insurance Regulatory Commission (“CIRC”) indicate that

there were 40 foreign Insurance companies, including both life and non-life,

operating in China at the end of December 2005. They also show that there were

1,800 Insurance intermediary agencies at the end of 2005, including 1,313

Insurance agencies, 268 brokers and 219 loss assessors.

According to a survey conducted by CIRC, only 58.8%, of the 1,575 Insurance

intermediaries surveyed have been certified. In some Insurance companies, the

percentage of certified agents was less than 50%, the minimum level required by

CIRC.

Taiwan

Statistics released by the Life Insurance Association of the Republic of China show

that 37.5% of unweighted new premium income was written through the

bancassurance channel and 58.5% was sold through other channels of the life

insurers in Taiwan in 2005. This amounted to NT$203.1 billion (US$6.34 billion)

and NT$316.3 billion (US$9.88 billion) respectively. The broker channel

represented the balance 4% which brought in NT$21.5 billion (US$671.87

million).Unfortunately, the statistics do not differentiate between single and regular

premium business in Taiwan.

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South Korea

Source: Korea Life Insurance Association

Unweighted new premium income of KRW2,775.3 billion (US$2.89 billion) and

unweighted total premium income of KRW35,586 billion (US$37.11 billion) was

collected in the period April to December 2005. The new premium collected by the

top ten insurers, split by distribution channel is shown in the graph on the left.

Smaller insurers increased their share of sales through the bancassurance channel

to 42%, up from 32% the previous year, while foreign players saw their share fall

by 10% for the same period, to 21%. The combined share of the bancassurance

channel of the three major Korean insurers, Samsung Life, Korea Life and Kyobo

Life remained unchanged at 37%.

The number of individual agents as at the end of December 2005, stood at 124,494,

a fall of 3.5% since October 2005. The number of individual agents has declined

steadily in recent years, representing a change in the composition of insurers’

agency forces. In the past, most agents were women working part-time with little

professional training, whereas there is now a growing emphasis on full time

professionally trained agents. However, as at December 2005, 84% of individual

agents were still female “solicitors”.

Singapore

Total unweighted premium income of S$11,388.0 million (US$7.12 billion) and

unweighted new premium income of S$6,142.5 million (US$3.84 billion) was

collected in 2005. The unweighted new premium collected, split by insurer and

distribution channel is shown below.

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Source: Life Insurance Association of Singapore

The market share of the bancassurance channel was reported to have declined

significantly from 32% in 2004 to just 21% in 2005. However, this apparent

contraction is largely due to the distortion from the passing of significant

premiums to the “non-intermediary” channels of Great Eastern and NTUC Income,

following the privatization of the Dependants' Protection Scheme ("DPS") on 16

September 2005. DPS is a government Insurance plan formerly made available

through the Central Provident Fund Board.

India:

Source: IRDA Annual Report 2004-05

The state insurer LIC relies heavily on its agency force which accounts for 98.8%

of their total life Insurance sales in the year 2004-05. Private insurers on the other

hand sold 59.3% of their policies through individual agents, with 23.2% through

banks and other corporate agents. About 10% of private player sales were “direct”

(where no intermediaries were involved), while 6.25% came through “referrals”

(when a third party database is used for a fixed fee). As LIC dominates the market,

the overall distribution split in India is skewed towards individual agents.

Market developments

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Shopassurance Road Ahead in India:

This concept, Shopassurance was pioneered in the UK, where retailers

Tesco and Marks & Spencer and pharmacist Boots have been selling

Insurance for years.

In South Africa too, retail chain Pick ‘n’ Pay has been selling Insurance. This

trend is now catching on in Asia. In Philippines SM Malls is turning out to be

significant distributor of Insurance products.

According to a report on Insurance distribution by consultancy firm Watson

Wyatt, in Indonesia, shopassurance is a new developing channel.

According to the report, US insurer Cigna is targeting a 50% increase in

premium in Indonesia following its tie-up with French retailer Carrefour of

France. The retailer’s outlets in 21 locations will be used to sell life

Insurance to customers holding Carrefour credit cards.

The idea of vending Insurance with retail products dubbed "Shopassurance", was pioneered in

the UK where retailers such as Tesco, Marks & Spencer and the pharmacist Boots have been

offering Insurance to their customers.

In the US, Bajaj Allianz Life Insurance had made an attempt to sell life

Insurance at retail outlets through a tie up with Shoppers’ Stop.

Bharti AXA Life Insurance is negotiating a tie-up with Bharti Retail (a joint

venture with Wal-Mart) and Sunil Mittal's FieldFresh Foods Ltd for this.

FieldFresh is the partnership venture between Bharti Enterprises and ELRo

Holdings India Ltd, an investment company of the Rothschild family.

FieldFresh provides fresh produce to markets worldwide.

These chains, which were not considered as separate sectors a decade ago,

have now become the biggest and most powerful business tools in the

country. Pantaloons, WestSide, Big Baazar, FoodWorld, Reliance Fresh,

Shoppers Stop, Spencers and Subhiksha have built strong reputations on

the shopassurance front.

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Kishore Biyani's Future group, which owns Pantaloons and Big Baazar, is a

stakeholder in Future Generali India Life Insurance Company and Future

Generali India Insurance Company.

Ambani's Reliance Fresh is into life and non-life Insurance.

ITC has an Insurance brokering venture called ITC Choupal.

Pantaloons, has sold over 3.5 lakh credit cards to its customers at Big

Bazaar and Food Bazaar outlets.

The group is expecting around 200 million customers to walk into these

outlets, out of which at least a substantial section could be prospective

customers for financial products.

These markets and chains have a special appeal as they deal with different

categories of customers on the basis of mutual relationships. This will make

the insurer's job easier as Insurance is also sold mostly on a relationship

platform, according to industry experts.

After the Insurance industry was opened to the private sector in 2002, both

public and private sector companies have tried every possible channel,

including direct agents, brokers, NGOs and SHGs, to sell their products. The

latest channel was bancassurance. Now, shopassurance is set to become

the brave new channel for Insurance sellers.

According to industry experts, shopassurance has been successfully tested

abroad. Leading retail giant Wal-Mart has been selling life and mortgage

Insurance in addition to motor, travel and home Insurance, through its

stores worldwide.

Bajaj Allianz has tied up with Godrej Agrovet to sell its Insurance policies

through Godrej Aadhaar, an agri services-cum-retail shop.

MetLife Insurance has tied up with Mumbai's Apna Bazar co-operative

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Changing customer trends:-

As Insurance sector is becoming more and more competitive the consumers are

changing the trends according to the situation. The survey reveals the main

challenging trends in the consumer buying behavior.

The profile of the typical Insurance customer is taking a new and definite

shape and one thing is clear: the customer is increasingly aware about internet,

comparative pricing and increased bargaining power. In short customers have

become more self sufficient, price sensitive, and less loyal.

Let’s take a look about the changing trends in consumers:-

1. Priority Relationship:-

Consumers want that insurers should give them a priority in every aspect.

As insurers are already giving them priority they are more inclined towards

increased attentiveness and less patient.

They don’t like to wait for the solution of their problem. So this will

became a trend setting pattern in Insurance industry and ICICIPrudential

already have InstaInsure for the satisfaction of these less patient

consumers.

85% consumers give preference to Priority relationship.

13

10

16

20

18

15

24

0 5 10 15 20 25 30

Most Price Sensitive

Incresed Use of Tecnology

Knows Information About Insurance Products

Want Inproved ease of purchase and Interaction

Relationship with Agent and Transperency

Less Formalities

Priority relationship

Changing Customer Trands

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2. Less Formality:-

Consumers prefer those insurers who are having a quick processing of

documents and less formalities and practice approach.

72% give priority to fewer formalities.

3. Agent relationship and Transparency:-

Insurance is an intangible product and it is sold on sole trust on the agent

(Advisor) of the company

Also the total transparency in the transactions the trust of the customer and

help in increasing the business.

Among 75% surveyed said that that they have purchased this product

because they believe in their advisor and they like the performance of the

company and they feel safe with this company.

4. Want improved ease of purchase and interaction:-

Easy availability and more convenient interactions help in increasing the

business.

75% of total surveyed give priority for this.

5. Knows information about Insurance products:-

With consumers becoming more and more interactive in using the technology

they are well versed with the knowledge of completion in Insurance industry.

57% were regularly evaluating their Insurance with other products.

6. Price sensitive:-

Quote of Insurance premium is gaining a more importance in Insurance

industry as people are more inclined towards more coverage at fewer

premiums

As it is in initial stage about 46% were aware about this.

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Primary Factors Influencing Purchase Decisions:-

Consumers of Insurance products are mainly influence by various social,

psychological and demographical factors but here are some primary factors about

the Insurance purchasing decisions.

1. Brand: -

The consumers give most preference to the popular brand who has

achieved the highest safety in the Insurance market.

Consumers feel trust about the popular brands and more inclined towards

them.

Among the surveyed mostly people are brand aware and the most recalled

brand was LIC after that ICICIPrudential, Birla Sun life, Bajajallianz were the

few one.

2. Life Stage: -

Life Stage plays an important part in the purchasing decision of the

customer as youngsters are more inclined towards short term policies while

middle age people are inclined towards family safety.

Brand

Life Stage

Service

advice

Product

price

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3. Service:-

General image about the Service of the Insurance companies plays an

important part in the decision making.

Companies with higher customer satisfaction and hassle free claims get

maximum market share.

4. Advice:-

Mostly consumers don’t believe in the advisors but believe in their close

friends and wife.

In fact wife plays an important part in decision making.

5. Product:-

After evaluating all these criteria people evaluate product feature.

The product having most customer needs satisfying features sells the more.

6. Price :-

Price plays an important role in purchasing behavior of consumers.

Insurer with competitive price and more coverage with fewer premiums

take the maximum market share.

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Response to Channel:-

With the evolution of Insurance industry there is a greater need for the perfect

channel for the distribution of the Insurance.

Here is graphical representation of the consumer’s response to the channel

Among the surveyed consumers the most preferable channels for the

buying Insurance was Bancassuraance and the second is Agent.

Bancassurance is the innovative channel in Insurance distribution

channel as it includes the perfect blend of trust in bank and

additional service.

Agent who builds trust along the time period with the customer is

the most important person in terms of Insurance buying.

Most of the people buy only because of the agent.

Financial advisors have a limited role in our developing market.

Alternative channel such as Shopassurance in which Insurance is

made available through retail outlets have a limited scope and is in

nascent stage in India. E. g. Future Gererali Life Insurance, Bharati

AXA etc.

30

20

30

5

15

0 10 20 30 40

Bancassurance

Tied Agency

Advisers

Alternative Channel

Financial Advisors

Respone to Channel

Respone to Channel

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Most Important customer influencing factors:-

Here are the most influencing factors of the Insurance buying behavior:-

Closer Braches:-

Customers are wiling to purchase Insurance from the insurer who is nearer

to their house as a part for the convenience for future interactions.

So having the maximum network of the branches favors the sells.

Advisor Relationship:-

Good trained and groomed advisor is the most influencing factor in buying

behavior

Most importantly the advisor speaking in the local language having a more

touch towards purchasing decision

Also having a female advisor have a significant impact in Insurance selling.

Simplicity of Information:-

Information about the product in the simple language and in the local

language impact more in consumers as Met life come up with regional

information broacher abut Insurance in Punjab .

Right Specifications:-

20

24

18

20

25

20

22

0 5 10 15 20 25 30

Quality of advice

Any time availability

Right Specifications

Quick Responcive

Simplicity of Information

Adviser Relationship

Closer Branches

Customer Satisfying Criteria

Customer Satisfying Criteria

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Right mixture of customer needs with the affordable price makes a great

combination about the Insurance

Quick responsive:-

Customers can’t wait especially when market is competitive and no. of

competitor is more.

Hence a quick resolving in customer query helps in customer satisfaction

and word of mouth advertising also.

Any time availability:-

Trust of being heard at any time in the day gives the more inclination and

loyalty to the Insurance.

Quality of advice:-

Getting a professional advice from an insurer feels a lot to the consumer as

ICICIPrudential have made the Life Planner activity to act as a financial

consultant.

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Summery:-

Price Focused / Service inclined :-

Price focused customers are likely to relinquish advice for a cheaper price.

In fact, they will actively pursue a better price, even though they recognize

that product specifics might suffer. Beyond price they are more inclined to

focus on service than product, i.e. they would rather improve their after

sales service than attain precise product specifications.

Relationship focused/service Inclined:-

For those customers advice from a trusted advisor is paramount, and they

will use an advisor when purchasing any product, including very basic ones.

Beyond the advisory relationship, these customers most appreciate for

sales service, which they are likely to receive through their advisors.

Non-committals:-

In this group, there is no overriding focus on price or relationship. Each

Customer makes each decision based on market circumstances. However,

they all value after-sales service more than product specifics.

Product Focused/Relationship Inclined.

Customers in this group focus on product firsthand foremost. Depending on

the complexity of the product, they may use an advisor or conduct research

themselves before buying.

Competitiveness :-

To remain dominant I Business like Insurance in which the product is

mostly intangible more aggressive strategy is to be applied according

to customer and more emphasis should be given to the customer

relationship and loyalty building.

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In a Nutshell we can Say:-

The Insurance customer has changed over the last five years,

becoming more empowered and less loyal.

Customers’ primary Insurance purchasing criteria–price, product

specifications, and advice–vary based on region and Insurance

product type.

Increased complexity of customer channel usage necessitates multi-

channel integration.

Customer satisfaction does not equal customer loyalty.

Delivering a consistent, high-quality customer experience is essential

to future success.

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Recommendations In a situation of constant asset base the retailers can increases return on

assets (ROA) by increasing their income, by selling insurance products

through their own channel. It can cover operating expenses and make

operating expenses profitable by leveraging their distribution and

processing capabilities.

The retailers have a branch network to make face to face contact with the

customers and a great deal of trust over the customers. By leveraging the

facilities, the retailers can guess the attitude and diverse needs of the

customers and could change the face of insurance distribution to personal

line insurance.

Retailers enjoy significant brand awareness within their geographical

region providing for a lower per lead cost when advertising through print,

radio and television. The advantage of retailers over traditional

distributors is the lower cost per sales lead made possible by their sizeable

loyal customer base.

Retailers have extensive experience in marketing to both existing

customers and non-customers. They also use technology access multiple

communication channels such as statement inserts, direct mail,

telemarketing etc for the improvement in transaction processing and

customer service. European retailers have more than doubled the

conversion rates of insurance leads into sales and have increased sales

productivity to a ratio which is more than enough to make shopassurance

a highly profitable proposition.

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Annexure I

Sample Questionnaire:-

Personal Details-

1. Name-

Age-

Sex-

Income group (annual income in laky)-A) 0-1 B) 1-2 C) 2-3 D) 3-

5 E) above

Profession-

Mob. No-

E-mail-

2. Do you have any life Insurance policy?

Yes/no ______________, if yes, name of company________________________________

3. Which type of policy?

A.ULIP B. ENDOWN MENT D. TERM. E .Health F . . . Do not know 3. Which are the Insurance Companies you are aware about? a) b) C) 4. What parameters you consider while you go for Insurance? A. Brand Name Rank- B. Returns Rank- C. Tax benefits Rank- D .Risk covers Rank- E. Services Rank- 5. from where you purchase policy? A. Agent B. Bank C. Direct marketing D. With house loan

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6. Which service of your insurer you like most? 7. Are you satisfied with current Company services?

Yes/no if no, why?

8. Have you purchase Insurance from any other insurer than your regular Insurer?

Why?

9. Whose advice you find most important in Purchasing Insurance?

______________________________________________________ 10. Do you any suggestions/ recommendations?

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Annexure II

Name

Postal Address Contact

Nos.

Amit Jain

Nasik 9960707012

Amit Potphode

Pune 9960565731

Anupam Beedkar

Pune

9960171539

Shahid Sayyad

Kharghar,Navi Mumabi 9820495869

Bhramhadev Mane

Pune 9975474772

Chaitanya Katekar

Mumbai 9890914841

Punam Gangurde

Nasik 9850840770

Bapu Sonavane

Mumbai 9867521201

Vikas Turakane

Mumbai 986721209

Pravin Jain

Kalewadi, Pune 9970800846

Suyog Jain

Pune 9881240677

Satish K.

Cidco Nasik 9271652764

Sachin Hatge

Kalamboli Navi Mumbai 9833066417

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Rupali Umrotkar

Mira Road, Mumbai 9920960912

Sanjiv Singh

Ambernath, Mumbai 9766614560

Nandini Gurav

Powai 9920071575

Ratna Gurav

Powai 9867521212

Hareh Mehta

Mulund 9820021600

Dr. Sameer

Mulund 9322934902

Satish Tiwtane

Thane 9867472160

Santosh Dalvi

Thane 9867019048

Gopal Gupta

Mulund 9820397849

Ashish Bidve

Dombivali 9960617371

Chakradhar Phasle

Dombivali 9326796495

Jayashri Pachange

Dadar 9890716263

Bhavana Pote

Mulund 9323607046

Brinda

Venkatramani

Srvoday nagar Mulund 9819022930

Ravikiran R

Kandiwali 9870039737

Manjusha Devediga

Powai 9940282212

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Future Generali

Mumbai

Sanjeev Pujari

1-600-44-6969

022-40976666

Reliance Insurance

Andheri

Purnima Gupta

1-866-765-4296

30479600/30479784

Bharti-AXA

Mumbai 1800-425-1350

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Bibliography:-

http://www.telegraphIndia.com/1030616/asp/opinion/story_2065311.asp

https://www.Insurancemall.in/blog/category/Insurance-News-India.aspx

http://digital.dnaIndia.com/epapermain.aspx?queryed=9&eddate=3/27/2008

http://google.com