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A SUMMER INTERNSHIP PROJECT REPORT ON “A STUDY OF THE ROLE OF THIRD PARTY AGENCY IN INFLUENCING CUSTOMERS FOR BUYING INSURANCE PRODUCTS” PREPARED FOR:

PREPARED BY: DEEPIKA KHATRI BM017092

Industry Guide: Mr. Anuj Chiller

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Faculty Guide: Dr. Vishal Shukla

DECLARATION

I, Deepika Khatri hereby declare that this project report is the record of authentic work carried out by me during the period from 2nd May, 2018 to 30th June, 2018, and has not been submitted to any other University or Institute for the award of any degree / diploma etc.

Signature: Name of the student: Deepika Khatri

Roll No.: BM-017092

Date:

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CERIFICATE

This is to certify that Deepika Khatri, a student of the Post-Graduate Diploma in Management-Finance & Marketing, has worked under my guidance and supervision. This Summer Project Report has the requisite standard and to the best of our knowledge, no part of it has been reproduced from any other summer project, monograph, report or book.

Signature: Faculty Guide: Dr. Vishal Shukla

Designation: Assistant Professor

Organization: IMS Ghaziabad

Date:

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PREFACE

As a student of PGDM, one of the most reputed professional course, I consider that it’s my privilege to thank all the person involved in the working of this project and their supervision and guidance I have been able to complete this project.

The attractive feature of the PGDM course is that along with theory we also get has the exposure of the practical environment. This is through the summer internship training that we have to undergo after the completion of first year. The entire journey from the very idea of this project report to reality would not have been possible without guidance and support of many people.

The project report is based on viability study of its customer in Gurgaon and Delhi. The data source was given to me by the company.

A special task was assigned to me to create an awareness of an affordable housing among the customers through a demonstration.

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ACKNOWLEDGEMENT

I would like to take this opportunity to express a deep sense of gratitude to my industry mentors Mr. Anuj Chillar, Rupee Makers (FINGAIN Consultants Pvt. Limited) for giving me proper directions from time to time and constant words of advice.

I would also like to express my gratitude to my Faculty mentor , Dr. Vishal Shukla for her encouragement during the different phases of the project. Also, I would express my gratefulness to Dr. Tapan Kumar Nayak, Programme Chairperson PGDM,IMS Ghaziabad, for sharing his thoughts with me regarding the betterment of the project.

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EXECUTIVE SUMMARY

A third party is an individual or entity that is involved in a transaction but is not one of the principals and has a lesser interest. An example of a third party would be the escrow company in a real estate transaction that acts as a neutral agent collecting the documents and money that the buyer and seller exchange when completing the transaction. As another example, if a debtor owes a creditor a sum of money and hasn't been making the scheduled payments, the creditor is likely to hire a third party, a collection agency, to ensure that the debtor honours his agreement. This project is focused on analyzing the role of third party agency in influencing customers for buying insurance products. It is mainly focused on how the purchase decision of customers of insurance products is affected by third party agency instead of purchasing directly from company’s office.

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CONTENT

Title

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

Introduction



Company Profile



Objective



Research Methodology



Data Interpretation and Analysis



Conclusion



Suggestions



Limitations



Bibliography



Appendix

INTRODUCTION

Life is full of risk and uncertainties. Since we are social human beings, we have certain responsibilities too. Indian consumers have big influence of emotions and rationality on their buying decisions. They believe in future rather than present and desire to have a better and secured future. In this direction life insurance services have its own value in terms of minimizing risk and uncertainties. Indian economy is developing and having huge middleclass societal status and salaried persons. Their money value for current needs and future desires generate the reasons behind holding a policy. An attempt has been made in this report to study the buying behaviour of consumers towards life insurance services.

Analyzing consumer behaviour is perceived as the cornerstone of a successful marketing strategy. Consumer behaviour is a mental and emotional process and the observable behaviour of consumers during searching, purchasing and post consumption of a product and service. Similarly consumer behaviour is action and decision process of people who purchase goods and services for personal consumption. Now if these defining criteria are closely observed, it is evident that analyzing consumers’ decision-making process is the foundation of the entire notion of consumer behaviour.

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HISTORY OF INSURANCE WORLDWIDE In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: natural or nonmonetary economies (without money, markets, financial instruments and so on) and more modern monetary economies (with markets, currency, financial instruments and so on). The former is more primitive and the insurance in such economies entails agreements of mutual aid. If one family's house is destroyed the neighbors are committed to help rebuild. Granaries housed another primitive form of insurance to indemnify against famines. Often informal or formally intrinsic to local religious customs, this type of insurance has survived to the present day in some countries where a modern money economy with its financial instruments isn not widespread. Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.1 Chinese merchants travelling treacherous river rapids would redistribute their wares 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 or lost at sea. Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "Whenever the owner of the present is in 9

trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."

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INSURANCE INDUSTRY IN INDIA Introduction The insurance industry of India consists of 57 insurance companies of which 24 are in life insurance business and 33 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the non-life insurers there are six public sector insurers. In addition to these, there is sole national reinsurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and third party administrators servicing health insurance claims. Out of 33 non-life insurance companies, five private sector insurers are registered to underwrite policies exclusively in health, personal accident and travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more specialised insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for crop insurance. Market Size Government's policy of insuring the uninsured has gradually pushed insurance penetration in the country and proliferation of insurance schemes. The domestic life insurance industry registered 10.99 per cent y-o-y growth for new business premium in 2017-18, generating a revenue of Rs 1.94 trillion (US$ 30.1 billion). Gross direct premiums for non-life insurance industry increased by 17.54 per cent y-o-y in FY18. Investments The following are some of the major investments and developments in the Indian insurance sector. 

Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7 billion) through public issues in 2017.



In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals worth US$ 903 million.

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

India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture with Ebix Inc to build a robust insurance distribution network in the country through a new distribution exchange platform.

Government Initiatives The Government of India has taken a number of initiatives to boost the insurance industry. Some of them are as follows: 

National Health Protection Scheme will be launched under Ayushman Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families.



Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18.



The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue redesigned initial public offering (IPO) guidelines for insurance companies in India, which are to looking to divest equity through the IPO route.



IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that are issued by banks to augment their tier 1 capital, in order to expand the pool of eligible investors for the banks.

Road Ahead The future looks promising for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. The overall insurance industry is expected to reach US$ 280 billion by 2020. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will support the growth of Indian life insurance.

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TYPES OF INSURANCE General Insurance 1. Personal Insurance 2. Rural Insurance 3. Industrial Insurance 4. Commercial Insurance

Life Insurance 1. Whole Life Plan 2. Endowment 3. Money Back 4. Term plan 5. ULIP plan

Others 6. Home insurance 7. Travel insurance

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FUTURE GENRALI ASSURED EDUCATION PLAN

Minimum age for entry

Parent:21 years Child-0 years

Maximum age for entry

Parent: 50 years Child: 10 years

Minimum age at maturity

35 years

Maximum age at maturity

67 years

Minimum premium payable

Rs. 20, 000 per annum/ Rs. 2,000 per month

Maximum premium payable

Maximum limit has not been set

Minimum policy term

7 years

Maximum policy term

17 years for a newborn

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Eligibility Criteria

Benefits of Future Generali Assured Education Plan This policy helps parents to save funds for the purpose of their children’s education.



Money can be saved until the child turns 17 years old and then it can be used to fund their college fees. 

This plan offers the flexibility to choose from three payout frequencies. These assured payouts can be claimed according to the education requirements of the child.



The Future Generali Assured Education Plan also offers various riders which can extend the cover offered by the base policy.



Tax Benefits as specified under the Income Tax Act is applicable on this life insurance policy.

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FUTURE GENRALI NEW ASSURE PLUS 

Entry Age 3 years - 55 years



Maturity Age 18 years - 70 years



Policy Term 10 to 30 years



Premium Payment Term 5 years - 30 years



Sum Assured Minimum -



1,00,000 Maximum - No Limit

Premium Payment Frequency Yearly, Half Yearly, Quarterly & Monthly



Premium amount Minimum Annualized Premium-

10,000 subject to Minimum SA of

1,00,000

Maximum Premium- No Limit

BENEFITS Maturity Benefit: Once your policy matures at the end of the Policy Term and if you have paid all your due premiums, you will receive Maturity Benefit as per the chosen optionOption 1 Guaranteed Maturity Sum Assured equal to Sum Assured plus Vested Compound Reversionary Bonuses, if any, plus Terminal Bonus, if any, shall be paid Option 2: Guaranteed Maturity Sum Assured equal to Sum Assured plus Vested Compound Reversionary Bonuses, if any, plus Terminal Bonus, if any, shall be paid Even in case of death of the Life Assured, the Maturity Benefit will be payable if all Installment premiums due till date of death of the Life Assured have been received in full. Death Benefit during the Policy Term

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Death Benefit in this plan secures your family in case of your unfortunate demise during the Policy Term. You have the option to choose between two Death Benefit Payout options Option 1 – Lumpsum Death Benefit Payout: Under this option, Death Benefit payable to your nominee shall be higher of: 105% of all the premiums paid (excluding taxes, rider premiums and extra premiums, if any) as on date of death; and Death Sum Assured plus vested Compound Reversionary Bonuses, if any plus Terminal Bonus, if any. The Policy will terminate on payment of Death Benefit under Option 1 Option 2 – Lumpsum Death Benefit with Maturity Payout Under this option, two payouts will be made to your nominee. Lumpsum Death Payout: The first payout which is the Lumpsum Death Payout will be paid at the time of death. Death Benefit payable to your nominee shall be higher of: 105% of all the premiums paid (excluding taxes, rider premiums and extra premiums, if any) as on date of death; and Death Sum Assured Maturity payout: The second payout equal to Guaranteed Maturity Sum Assured plus Reversionary Bonus (if any) plus Terminal Bonus (if any) will be paid at the time of Maturity of the Policy i.e. at the end of the Policy Term. The payout at the time of maturity is made, because the policy continues after the death of the insured person. No further premiums are payable under the policy after the death of the Life Assured. The policy continues to participate in profits even after the death of the Life Assured.Nominee shall not have any right to avail loan, assignment and surrender as available to Policyholder under the Policy.

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What is a ‘Third Party’

A third party is an individual or entity that is involved in a transaction but is not one of the principals and has a lesser interest. An example of a third party would be the escrow company in a real estate transaction that acts as a neutral agent collecting the documents and money that the buyer and seller exchange when completing the transaction. As another example, if a debtor owes a creditor a sum of money and hasn't been making the scheduled payments, the creditor is likely to hire a third party, a collection agency, to ensure that the debtor honors his agreement.

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COMPANY PROFILE

Rupee Makers is a leader in wealth and asset management services rendering investment consultancy to its valuable and esteemed customers. With our strong research capabilities and a robust team of experts, we help you make investments that will stand the test of time. We at Rupee Makers, through our in-depth analysis and extensive research, throw up incisive views that help our customers foresee & reduce risks, maximize returns and make informed investment decisions. Rupee Makers is promoted by a team of professionals having a combined experience of more than 50 years in investment and real estate consultancy. Rupee Makers is committed to wealth creation for all its clients, associates, and shareholders.

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COMPETITORS OF RUPEE MAKERS

1. PolicyGenius 2. Sureify 3. BankBazaar.com 4. ICICI Bank 5. PolicyBazaar 6. Coverfox 7. Easypolicy 8. PolicyBoss 9. Policyadvisor

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OBJECTIVES OF THE STUDY



To study the role of third party agency in influencing customers for buying insurance products.



To study whether the customers prefer to purchase the insurance products directly from the company’s office or from third party agency.

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LITERATURE REVIEW

Contractual Provisions, Organizational Structure, and Conflict Control in Insurance Markets We provide a foundation for a positive theory of insurance contracting with examples of its testable predictions. We argue that incentive conflicts arise when discretionary action is authorized and that contractual provisions and organizational structures control sources of conflict within the insurance market. Our emphasis differs from much of the previous insurance analysis. We focus on the implications of cost differences across insurance lines in the contracting/control technology. Our analysis yields testable implications about the distribution and contractual provisions (such as upper limits, deductibles, and coinsurance) and organizational structures (such as Lloyd's Associations, mutuals, and stocks) across lines of insurance.

The role of the insurance industry in covering nuclear third party liability risks

German insurers were quick to respond to the challenge inherent in the coverage of nuclear risks. By international co-operation, the German nuclear pool has been able to meet increasing demands to the present day and will continue to make its contribution in the future. One condition must still be satisfied on this subject: the stabilisation of the tried and tested liability and financial coverage system. (NEA)

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RESEARCH METHODOLOGY

The study is based on both primary data and secondary data. Primary Data: The primary data was collected using a questionnaire. The data was collected from the respondents through personal meeting and by using online survey tools. The respondents were asked to evaluate certain parameters quintessential for service quality. Secondary Data: The secondary information was collected from the internet, government agencies, publications, journals, articles etc.

Sample size: 57 respondents to the pre-designed questionnaire. Period of study: 8 weeks Location of study: Gurugram and Delhi NCR

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DATA ANALYSIS AND INTERPRETATION

Interpretation

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

The customer database included young generation.



All the customers were between the age of 20 to 50.



Insurance is generally sold to young customers.

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Options

Frequency

Percentage

20-30

29

53.7

30-40

18

33.3

40-50

7

13

50 and above

-

-

Interpretation 

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Mostly customers were male. Options

Frequency

Percentage

Male

32

59.3

Female

22

40.7

Transgender

-

-

Interpretation 

The income of mostly customers was between 3 lakhs to 7 lakhs.



Few had income of above 7 lakhs per annum.



The income level of customers decides the amount of premium they would like to pay.

Options

Frequency

Percentage

3-5 lakhs

21

41.2

5-7 lakhs

20

39.2

7-10 lakhs

9

19.6

10 lakhs and above

-

-

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Interpretation 

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Customers were from different professional backgrounds.

Interpretation

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

Mostly customers preferred long term investment.



Few were interested in short term investment and few in both. Options

Frequency

Percentage

1

17

30.9

2

26

47.3

3

12

21.8

Interpretation 

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Majority of people preferred life insurance as a method of investment.

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Options

Frequency

Percentage

1

21

38.2

2

13

23.6

3

15

27.3

4

5

9.1

5

-

-

Interpretation 

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Majority of people preferred company’s office to purchase insurance products. Options

Frequency

Percentage

1

36

65.5

2

19

34.5

Interpretation 

More than 90% people preferred to give premium amount between 10k to 30k to a third party agency working offline.

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33

Options

Frequency

Percentage

10k-20k

26

48.1

20k-30k

23

42.6

30k-40k

-

-

40k and above

-

-

Interpretation 

Mostly people preferred to give premium amount between 10k to 40k to a third party agency working online.

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Options

Frequency

Percentage

10k-20k

26

33.3

20k-30k

18

48.1

30k-40k

8

14.8

40k and above

-

-

Interpretation 

Mostly people considered third party agency as trustworthy.



But some also considered it as not trustworthy.

Options

Frequency

Percentage

1

34

30.9

2

17

61.8

3

4

7.3

35

Interpretation

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

Most of the people buy insurance products for tax saving purpose.



Only few buy it for investment and covering risk of life. Options

Frequency

Percentage

1

28

31.5

2

17

51.9

3

9

16.7

Interpretation 

For different reasons people prefer to buy insurance products from company’s office like trust issues, better quality etc.

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Interpretation 

Most of the people think that company’s office provides better services rather than a third party agency

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Options

Frequency

Percentage1

1

34

61.8

2

21

38.2

CONCLUSION

The age of the customer database was from 20 years to 50 years as most of the insurance products are sold to this age of people only. The people were from different professional background so there is a variation in the thinking of the people. Most of them were service people so they are required to do investment for tax saving purpose. When the survey was done then we came to know that people are well aware of insurance products but they do not trust third party agencies much. They purchase insurance products but directly from the company’s office. Even today most of the people prefer LIC for buying insurance products that too directly from their office instead of third party agency. Although the services provided by the third party agencies is much better. Still people do not consider them trustworthy.

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SUGGESTIONS

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

Customer database could be increased.



More customers from professional background could be approached.



The services provided by the third party agency could be improved.

LIMITATIONS



These responses are not very reliable because the customer database was not very vast



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Many of the customers were students so their responses cannot be considered.

BIBLIOGRAPHY

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

http://generali.futuregenerali.in



http://www.irda.gov.in



http://rupeemakers.com

APPENDIX 1.Age 

20-30



30-40



40-50



50 above



Male



Female



Transgender

2.Gender

3.Occupation 

Annual Income 

3-5 lakhs



5-7 lakhs



7-10 lakhs



Above 10 lakhs

5.Which one would you prefer? 

Short term investment



Long term investment



Both

6.Which method of investment would you prefer? 

Life insurance



Equity



Mutual funds



Fixed deposits



Bonds

7.Which one would you prefer for buying a life insurance product? 

Company’s office



Third party agencies

8.Premium amount that you would like to give to an online third party agency? 

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10k-20k



20k-30k



30k-40k



40k and above

9.Premium amount that you would like to give to a third party agency working offline? 

10k-20k



20k-30k



30k-40k



40k and above

10.How much trustworthy do you think a third party agency is? 

Not trustworthy



Trustworthy



Very trustworthy

11.You buy insurance products for: 

Covering risk of life



Tax saving



Investment

12.Why would you prefer company’s office over third party agency? 13.Which one do you think provides better services?

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

Company’s office



Third party agency