Literature ReviewLect. D.ramkumar(2003), “Relationship Marketing – The new mantra for life insurance sector”. Department Of Management Studies, N.M.S.S. Vallaichamy Nadir College, Nagamalai, Madurai studied the role of relationship marketing in life insurance sector. In today’s impersonal marketplace, customer satisfaction, retention and loyalty are rapidly become the thing of the past. Relationship marketing brings them back to the forefront, providing easy-to-apply solutions and strategies for establishing meaningful bonds with customers and turning them into reliable, life-long partners. Relationship marketing can be defined as the process to “identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders at a profit so that the objective of all parties involved are met; and this is done by mutual exchange and fulfillment of promises”. The important objectives of relationship marketing are to acquire new customers, maintain and enhance existing relationships with existing customers, reactivation of ex-customers, and handling of customer terminations. The key objective of relationship marketing is to establish a one to one relationship with all the customers. This may sound like a daydream few years ago; but thanks to the technology breakthrough and technological solutions providers it is very much of reality. making inroads into the interiors of the economy and is being considered as one of the fast developing area in the Indian financial sector too. Ch. department of commerce & Business Management. It is also attempted to examine the growth of .insurance to support economic growth and also facilitating economic development. It has been mobilizing long term saving through life. both life insurance and non-life insurance are found playing a significant role in avoiding or facing the risk of life and business enterprises and also aiding to certain extents for their smooth sailing. “changing scenario of India insurance sector”. effective and a stable insurance business in India as well as a strong base to both the needs of the real economy and socio-economic objective of the country. Thus. insurance cover to a large segment of people. Andhra Pradesh revised that insurance sector has not only been playing a leading role within the financial system in India but also has significant socio-economical function. an attempt is made in this paper to highlight the developments of insurance sector in India in a phased manner and to examine the reasons for the entry of private and foreign insurance players into Indian insurance market and to present the changing scenario of insurance business in India.rajesham (2004). It has also been facilitating economic development with an objective to build an efficient.Dr. while the non-life insurance and reinsurance firms in India are main providers of risk financing for manmade disasters and natural catastrophes. Kakatiya University Khammam. University P G college. Therefore. and expanded the market. There has been a flurry of private players providing a wide range of innovation products. Emerging markets-such as China. services and customized solutions. and Russia. their life insurance sectors are also drawing more attention. the private accounts for nearly 20% of the market.Indian insurance sector during the period of pre and post liberalization and finally to suggest the strategies and challenges need to be adopted by Indian insurance sector in the light of global scenario so as to enhance its market share. Mexico. new delhi studied that economic growth in the emerging markets has time and again outpaced the developed and industrialized countries. Today. It’s been four years since the life insurance sector was opened up for private players in India. It was also felt that the rapid economic growth witnessed in the 90s couldn’t be sustained without a thriving insurance sector.Mehra (2005). India. While the public sector life insurance companies made enormous contribution in the spread of awareness about insurance. it was recognized that their reach was still limited. the financial express.are home to some 86% of the world’s . “innovations in life insurance industry”. The reasons that prompted the government to bring in reform in this sector are well known. The market share of the private players has to be seen in the context of this enlarged market. the range of product offered restricted to the services to the consumer inadequate. J. Alongside the rising importance of emerging economics. strong growth performance and favorable regulatory changes. they account for 23% of world economic output. India and China are the most populous countries and both have sustained impressive economic growth in the last decade. Joseph Calandro Jr.9% in china and 5. its level of completion is very high). Only 35% of the 250 million insurable population is insured. Exploiting the growth potential of emerging insurance market. (2008) "A practical approach for risk‐adjusting performance".e. even though it has the potential to develop unprofitably over time. insurance business is underdeveloped in these markets. Collectively.4 – 12 studied that many insurance companies vigorously pursue top-line growth. which means that profitable opportunities are both . annual real GDP growth averaged 8. Furthermore. pp.population. Scott Lane. 12 Iss: 4. both markets have gone through a similar period of nationalization of their insurance business.India and China are in the spotlight. India as a country is under-insured. the insurance market is both mature and efficient (i. Between 1993 and 2003. In fact. Measuring Business Excellence. Yet. Vol. Both the countries currently attract a lot of attention due to their size. The time lag(or tail) between when insurance is sold and when claims are paid generates risks unique to insurance companies. although China revoked state monopoly earlier than India.9% in India. Ranganna Dasari . To begin with. Interestingly. thus hampering strategies decision making. UWR can further aid insurance executive in strategic analysis by helping to quantify in which segments to compete. and Vijayalakshmi.rare and untenable unless protected by competitive advantage. hold. Keerthi. and which ones to abandon. and their research into applying value-based management to that industry. In general. P. are utilized today. R. The purpose of this paper is to introduce a practical measure developed by the authors called Underwriting Return (UWR) which aims at helping to alleviate this situation. “A Study on the Expectations and Perceptions of the Services in Private . The paper finds that UWR is a practical measure that property and casualty executives can use at the business unit level to help quantify market segments to grow. the application of such tools is hampered by an imprecision of measurement but each can add a level of insight to executive’ resource allocation options. impairing executives’ ability to assess segment opportunities (and hazards). such as the popular Boston Consulting Group matrix. The paper demonstrates the utility of the measure in an example based on an actual analysis. harvest and abandon.. The paper introduces UWR which was developed during the course and scope of the authors’ work in the insurance industry. There currently no practical measure available ( of which the authors are aware ) at the business unit level to evaluate insurance premium growth in the face of the industry’s risk. A variety of strategies analysis tools. There is no right and wrong in this. K. 2009 .. by focusing on important dimensions first. 5. (2009)90 “A Study on the Expectations and Perceptions of the Services in Private Life Insurance Companies” reveals that the policyholders’ expectations are well met in the case of certain factors reacting to service quality. tangibles and technology dimensions. there exists a significant gap which means that policyholders have experienced low levels of service as against their expectations. personalized financial planning. Thanjavur Division. they can win the hearts of customers and anticipate their increased market share.V. Here. Ramanathan. awareness level. P. R. competence. A study conducted by Keerthi. SMART Journals. Bharathidasan University. A Project on “A Study on Policyholders Satisfaction with Special Reference to Life Insurance Corporation of India. This would help the service managers to efficiently allocate resources. and satisfaction level of customers towards life insurance industry. The success of marketing insurance depends on understanding the social and cultural needs . But in the case of other variables. If all the players in the Life insurance industry focus on the effective delivery of services. research has resulted in the development of a reliable and valid instrument for assessing customer perceived service quality.Life Insurance Companies. Vol. service quality needs to be measured using a six dimensional hierarchal structure consisting of assurance. corporate image. and Vijayalakshmi. 2011. Arora64 (2008) in his thesis entitled. No significant difference was found in the demands of customers of both agents and bank employees. The research indicated that the five dimensional structure of service quality was not only industry specific but also country specific. R. Arora. R. Thesis Submitted to Guru Nanak Dev University.“Marketing of Services: A Study of LIC in Jalandhar Division”. and matching the market segment with the suitable intermediary segment.D. whereas the bank employees stressed more on providing objective information.S. The results regarding the intermediaries showed that the agents attached 56 more weight to all aspects as compared to bank employees. The results also showed that out of the seven factors used to define service quality. Amritsar. The agents gave more importance to good customer service and regular updating of knowledge.S. responsiveness had the strongest correlation and was the best predictor of the overall quality. “Marketing of Services: A Study of LIC in Jalandhar Division” has explained that service quality to be a multidimensional construct. 2008.of the target population. Ph. . The data analysis revealed that agents had better success rate as compared to the bank employees in selling products and that agent’s perceived lower competitive pressure than bank employees. Product convenience was found to have the greatest influence on customer satisfaction followed by assurance and tangibility. Patiala. Kumar. “Impact of Service Quality on Customer Loyalty: A Study of Hotel Industry in Punjab and Chandigarh” has modified the SERVQUAL scale to include six dimensions. “Impact of Service Quality on Customer Loyalty: A Study of Hotel Industry in Punjab and Chandigarh”.D. Patiala. Kumar65 (2010) in his thesis entitled. V. Thesis Submitted to Punjabi University. Ph. Singla 66 (2010) in her thesis entitled. Ph. “Performance Evaluation of General Insurance Companies: A Study of Post-Reform Period” has explained that the public sector exhibited higher underwriting losses in the post-reform period than the pre-reform period.D.R. The results showed that private sector companies provide significantly higher service quality than the public sector general insurance companies. R. 2010 . “Performance Evaluation of General Insurance Companies: A Study of Post-Reform Period”. Thesis Submitted to Punjabi University. The higher investment return of the public sector general insurance companies compensated their underwriting losses. The study suggested methods to improve the performance of these companies. Singla. The gap scores were significant for a number of . 2010. The author had suggested that productivity of the private insurers was higher than the public insurers due to their hi-tech environment and modern technology features supported by them. The results also indicated that reliability.J. So. Brady and C. the study had suggested measures for improving customer loyalty. “Some New thoughts on Conceptualizing Perceived Service Quality. environment and outcome and customers based their evaluation of these primary factors on their assessment of three corresponding sub factors.attributes and these attributes were different for different categories of hotels. 2001.J. Lorraine (2002a). responsiveness and empathy are important for providing superior service quality. A Hierarchical Approach”. 65. The performance was found to be below the expectations of the customers. The study also showed that the managers over estimated and were also too self assured about the delivery of a particular service.K. Vol. "The New Producers. Journal of Marketing. Lastly. “Some New Thoughts on Conceptualizing Perceived Service Quality. A Hierarchical Approach” have concluded that evidence proved that customers form service quality perceptions on the basis of the three primary dimensions: interaction. Gorski. Joseph. Brady and C. pp. M.K. Joseph58 (2001) in their article titled. The combination of all these constitute the customers’ overall perception of the service quality." Best’s Review. May . M.34-47. they were 57 unable to deliver the service according to customers’ expectation. especially in the midlevel or mass market. 2002. Since most people already have a bank account. In addition these new institutions often have no brick and mortar establishment but rather rely on Internet applications and Internet interactions. Underwriting will stay with the insurers but selling may go both ways by insurance agents or bank employees. Insurance banks have an uphill battle to convince their customers to establish a bank account because it is hard to determine when and why an insurance customer needs a bank account. On the other hand. Establishing banks enable insurers to get into the trust business and offer a sophisticated retirement package and to be able to cross-sell insurance . customer as well as agents have to be motivated to deal with another financial institution or to switch. Furthermore. it is easier for a bank that provides a loan to sense when insurance is necessary. Banks could represent 3-4 different insurers therefore the insurance products need to be competitive (for the customer and the representative) and specific for bank employee selling. p. One hundred and thirty five applications were made between Jan. Insurers have founded banks to offer banking products.1. The article describes how insurers can use the banks' customer base to reach new customers. 2001. Banks have the trust of their customers and that would be a good distribution channel for life insurance.45-48. stable relationships are necessary and the product needs to be branded and well-advertised. 1997 and May 31. direct mailing. 2005. In urban areas. for the conservative consumers insurance is a tax saving device. Although this can be done through partnerships. Increasing brand awareness. ICFAI University Press.9-19. Rural population showed high bias towards low premium and maximum risk coverage. In rural areas private players have not achieved much success. Shobhit and Sanjay Shukla. Hyderabad. “Failure of Private Insurance Players in Rural Areas. Shobhit and Sanjay Shukla (2005) conducted a study in Lucknow city and its adjoining rural areas to expose the reasons for the failure of insurance players of private sector in attaining a significant share in the rural market. In urban . providing up-to-date interest rates should help to lure customers. some insurers want to do it alone and thus to avoid finding later on unpleasant surprises. pp. The study revealed that there is a major difference in the objectives and expectations between rural and urban policyholders. The private players have not been able to provide policies preferred by rural people. Most insurance firms have hired experienced bankers to create and manage these banks .An Analysis”. They count on their name recognitions and the availability of their agents (State Farm. Allstate). Insurance Industry- The Current Scenario.products to their customers and to earn fee income. 29 1. Regulation of conglomerates 2. Product differentiation and innovation are not in conformity with the rural population 5. Thus the major areas that require the attention of the regulators are:. K. 1.areas consumers belonging to the middle income group prefer policies of public sector players and only high income group preferred private sector players. The major reasons cited for the failure in the rural sector can be summarised as follows.12-15. “Changes in the Insurance Market Globally-Regulators’ Perspectives”. The study also revealed that in urban areas the efficient customer service helped the 24 market penetration by private players. marketing and service strategy of private players of insurance sector. IRDA Journal. Professional style of working has failed to generate confidence and goodwill as rural population prefers personalised approach and that too in accordance with the regional culture The above findings reveal that there should be a change in the products. Products . (2006) in his article attempts to identify the key areas of change that require the regulator’s urgent attention. The regulator has to be supportive of industry development.K. The regulator also has to play a positive role in enhancing international competitiveness of the players. pp. Srinivasan K. The regulator also has to monitor the rural and social obligations of the insurers. Lack of popular appeal in marketing strategy 2. High premiums 4. Srinivasan K. High variation between services provided and consumers’ expectations 3. October 2006. Dinesh Chandra. May 2004. The study reveals the various lapses of the Corporation in the settlement of claims. It is necessary to verify policy ledgers every month for omissions in the computer list so that delays can be reduced. E-commerce 4. There is an urgent need for keeping up the tempo of maturity claim settlement operations at the present level. 2.and the regulator 3. Warangal. Socio. service of agents and officers and personal attention in the settlement of claims. No.based strategies may be formulated to suit the requirements of all segments. conducted a study to assess the level of customer satisfaction regarding the services of LIC. especially the rural household sector. The overall conclusions that emerged from the above study are: 1. Integrating technology Life Insurance Corporation could streamline their marketing programmes on the basis of the valuable recommendations of this research study so that need . Corporate governance 6. The planning wing of LIC Divisional office. Khansill (2004) examines the innovation in product design and pricing by LIC.economic and developmental challenges 8. Innovation in life insurance market is attributed to the 37 initiatives taken by new private companies. The private life insurance companies have joint venture partners from countries . IRDA Journal. Vol. pp. Regulator and consumer confidence 5. 6.11. Channel proliferation 7. “A New Way of Thinking- Innovation in Product and Pricing by the LIC”. Khansili.25-26 . .. namely. 2. Canada and Australia. endowment assurance plans account for a major share (92 percent) followed by children’s plans (5 percent) and whole life insurance plans and pension plans (3 percent). Reddy. He has examined the problem on the basis of evaluation of the perception of different customers’ segments in respect of different components of marketing mix that are essential to meet the 39 challenges posed by intangibility in service-provider- customerinteraction and customer involvement in service consumption and production. 1. Appi V. Jabalpur. Segmentwise analysis of preference of policies also suggest that majority of customers in all segments prefer policies with profit plans. This reflects a change in the product pricing concepts of LIC.operating in US. Marketing of Life Insurance Services. Germany. The results of the study suggest that policies with profit plans account for about ninety percent of the total policies sold and policies without profit plans account for about ten percent of the same. The practices of the life insurance market of these countries are reflected in the products made available in our country by private life insurance companies. Printwell Publishers. Among the various types of plans. Jeevan Bharti and Jeevan Saral. These products are very unique. UK. The LIC has introduced two novel products. 1998 Reddy (1994) in his study makes a comprehensive analysis of marketing programmes of LIC of India to market its products to different segments of customers. 3. Savings motive. systematic and elaborate efforts are not infused to generate new product ideas or to examine them thoroughly from various angles. income tax relief. Some of the insurance plans were hastily introduced without proper planning and research. 5. 6. While designing new insurance plans by LIC to satisfy the requirements of different segments. Self employed and regular income groups consider old age protection as the second important motive and children’s marriage and education as the third important motive. 4. 7. They are not fully conscious of the benefit of risk coverage associated with life insurance plans even though it is their primary motive.Segmentwise analysis also clearly indicates that endowment plans are more popular than other types of insurance plans. c. LIC did not make any serious attempt to design policies to suit the requirements of rural population and the lower income group. The professional and managerial group regard income tax relief as the second important motive followed by savings motive. Segmentwise analysis of motives reveal the following:. Analysis of motives for buying insurance policies indicates that risk coverage is the most important motive in the selection of life insurance policies.a. old age protections are perceived to be the other important motives in their order of preference. marriage and education of children. Rural and illiterate segments consider savings as the second important motive. Consequently LIC incurred heavy loss on account of such short lived plans. 40 b. 8. Seventy eight percent of the policyholders felt that the services of agents are inevitable for promoting LIC . 41 The study is a valuable contribution in the area of marketing of products by financial institutions. The study identified many lapses in the marketing of life insurance services. 9. rate of interest. 10. service and selling expenses are the important factors taken as the basis for determining premium rates. especially for marketing insurance products. Performance rating of the pre purchase service of agents is very high and in the post purchase period service performance rate is very poor.business. Mortality. . some of the observations of the study point out the fact that product designing. In fact. premium fixation and service attributes deserve serious attention of the policyholders and the management in view of increased competition and socio- economic transformation.