The Persistency In Life Insurance Industry At Meylife Srinagar By Ahmad Mustafa

MetLife India Insurance Co. Pvt. Ltd. 1 Factors Responsible For Lapsed Policies

LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

Report on Summer Training “The Persistency In Life Insurance Industry With Special Thrust On Lapses And Loopholes”

Submitted to MetLife India Insurance Co. Pvt. Ltd. And Lovely Professional University (LPU)

In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration (MBA)

Submitted by: Name: Ahmad Mustafa Reg. No. 10811688

DEPARTMENT OF MANAGEMENT (2009)

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MetLife India Insurance Co. Pvt. Ltd. 2 Factors Responsible For Lapsed Policies

ACKNOWLE DGEM ENT

I would like to express my sincere gratitude to Mr. Irfan Ali Zargar (Area Sales Manager) for providing me wonderful opportunity to do a project in an esteemed organization. I am also highly indebted to Mr. Ifthikar Bashir (Operations Manager) and Mr. Shabir Ahmad (Sales Manager Banca) of MetLife for providing me proper direction, for sparing the valuable time and rendering all possible guidance, when ever needed. Special thanks are owed; in particular to every member of MetLife (Sgr. Kashmir) those constitute Ms.Gousia, Ms. Misbah, Mr. Kulwant, and Ms. Gazala. Lastly I express my thanks to my family members particularly my ABBA and AMMI for extending their whole hearted cooperation and support and without whose help this project would have been incomplete. All the entries

are

done

on

market

survey

bases

and

the

suggestions

and

recommendations are the result of hard work over the entire one and a half months period.

AH MAD MUSTAFA

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MetLife India Insurance Co. Pvt. Ltd. 3 Factors Responsible For Lapsed Policies

Contents Executive Summary ................................................................................................................................. 4 Chapter 1................................................................................................................................................. 6 Introduction ............................................................................................................................................ 6 History of Insurance ............................................................................................................................ 7 History of insurance sector in India .................................................................................................. 11 Literature Review .............................................................................................................................. 14 Chapter 2............................................................................................................................................... 16 Introduction To MetLife India Insurance Pvt. Co. Ltd. ...................................................................... 16 Benefits of MIVRA ............................................................................................................................. 21 PRODUCTS OF MetLife ................................................................................................................. 22 BANC ASSURANCE ....................................................................................................................... 23 Financial Status of MetLife................................................................................................................ 28 Chapter 3............................................................................................................................................... 30 OBJECTIVES AND RESEARCH METHODOLOGY ...................................................................................... 30 Objectives Of Study ........................................................................................................................... 31 Research Methodology ..................................................................................................................... 31 Chapter 4. ............................................................................................................................................. 34 Data presentation and analysis......................................................................................................... 34 Chapter 5- ............................................................................................................................................. 53 Summary ........................................................................................................................................... 54 Conclusion ......................................................................................................................................... 55 Recomm endation s ....................................................................................................................... 56 Annexure ............................................................................................................................................... 57 GLOSSARY ........................................................................................................................................ 58 Bibliography .......................................................................................................................................... 64

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MetLife India Insurance Co. Pvt. Ltd. 4 Factors Responsible For Lapsed Policies

Executive Summary

MetLife India Insurance Co. Pvt. Ltd. Is one of the largest, strongest and most respected financial organizations in USA. It was incorporated in India on April 11, 2001 as a joint venture between MetLife International Holdings Inc., The Jammu & Kashmir Bank, M. Pallonji and Co. Pvt. Ltd. And other private industries. The mission of the company is to provide 5 million customers in India world class solutions for financial security and in the process add significant value to its shareholders, associates and society by 2010. Since while probing that whether the management is in dilemma or not, I came to know that issue of lapsation of policies was striking the minds of management. I took that issue as my problem and designed my research questions. Since the time period for my summer training was allowing me to go for an Exploratory Research, so did me. The s tudy was conducted in Kashmir valley as the MetLife office is at Srinagar Kashmir. Since my project was more based on s urvey rather than simply interviewing the MetLife customers, so I was given the task of visiting different branches of J&K Bank at Srinagar City and discussing the lapsed cases with the concerned Insurance Managers and C SO’s (C hannel Sales Officer). Getting the case details from the bank and then discussing with the Operations section of MetLife. My study also reflects the relationship of CSO’s with operations department. My target was to reinstate the lapsed policies. Lastly 50 MetLife customers were contacted at Head Office and there feedback towards company was recorded, analyzed and interpreted as well.

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MetLife India Insurance Co. Pvt. Ltd. 5 Factors Responsible For Lapsed Policies

The major findings of the study are:
MetLife has been successful in building confidence and hope for better future in the customers.
MetLife ought to provide proper guidance regarding policy matters to its customers as well as its CSO’s.
Better services in terms of timely delivery of renewal notices, premium receipts should be provided.
MetLife’s major causes for lapses of policies were B ank Employees, Delay in operations process and C SO’s as well as its customers up to certain extent.


Need for online system was recognized by most of the customers.


Operations department was not cooperative at all towards its CSO’s
Bank employees ought to make accountable and responsible.


The due date of premium ought to be maintained on 3 0 t h of /every/ month.

MetLife is exerting every effort to gain market share but due to huge no. of lapsed cases the retention part is still lacking. It is very much driven towards the acquisition of new customers as compare to retain the existing ones. Delivering quality product should be the first preference of an organization towards its customers as quality service is the basic element of today’s era which frames the firm’s quantitative advantage. Improvement in quality in terms of simplified procedures, personal follow up of customers, product effectiveness, its flexibility and simplicity should be provided. Relationship marketing

should

be

preferred

as

retention

of

customers

is

MUST.

Expectations of customers should be satisfied to the maximum level so that both the parties achieve their end. Thus I can say that by overcoming such loopholes there is very much space for MetLife to grow to its fullest.

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MetLife India Insurance Co. Pvt. Ltd. 6 Factors Responsible For Lapsed Policies

Chapter 1. Introduction

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History of Insurance Everyone knows what life insurance or property insurance is and usuall y knows something about how it works but not everyone knows the history and reasons for and behind insurance in general. In the most basic sense, insurance is the compensating of a person or business for a loss. There are many types of insurance to cover any situation including, auto insurance, health insurance, dental ins urance, home insurance, personal insurance and even pet insurance. A type of Property Insurance first became popular about 3000 BC in China. Chinese merchants, as well as their investors, wanted to ensure that they would see a profit from their goods that they shipped overseas. In the event that a ship was lost at sea or pirated, an insuring partner would reimburse the owners of the ship and goods. To pay for the loss the merchant would be sold into slavery to the insurer until the debt was repaid. This was a mutually beneficial arrangement since a merchant could not afford to pay for the lost goods or even to buy a ship unless someone invested. The merchant could become very rich and even own a fleet of ships if he was successful. Of course property insurance wasn't just available in China. In Babylon merchants and investors devised a system of contracts in which the supplier of money for a trade venture agreed to cancel the loan if the trader was robbed of his goods. The trader who borrowed the money paid an extra amount for this protection in addition to the usual interest. As for the lender, collecting these premiums from many traders made it possible for him to absorb the losses of the few. This arrangement proved to be more appealing and sensible than the earlier one. Later this series of contracts was extended to include provisions for a family's home and even covered murder, the start of life insurance. Of course news of a good idea spread fast. Soon the Phoenicians and to the Greeks, Hindus and Romans also had similar concepts in place. Each culture had its own interesting twist on the laws. For example the Roman's had a "jettison" law which stated that if a ship's crew had to lighten the ship by throwing things overboard then the loss would be split between the merchant and the insurer. In f act, this law still exists today as part of our own laws for

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MetLife India Insurance Co. Pvt. Ltd. 8 Factors Responsible For Lapsed Policies

protection against losses at sea and the very word " insurance" is derived from the Latin word for " security." Other forms of insurance terminology are also derived from ancient practices of Mediterranean commerce. The origin of the word "underwriter," for example, is Italian, from an old s ystem of signing contracts on marine insurance. Those businessmen who had agreed to share in the profit or loss on a certain venture signed their names underneath the contract, writing at the same time the amount of ris k assumed by each. It is possible that " policy" is also of Italian origin - derived from "promise" - although other sources have been claimed for this word. Things changed dramatically in the 17th century. In 1666 the Great Fire of London finally and forcibly demonstrated the need for fire insurance. The primitive fire-fighting methods of the day were virtually helpless against the hungry flames that roared unchecked through narrow streets reducing timbered dwellings to ashes. The Great Fire of London burned f or four days and nights. It razed 436 acres, devouring 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other public buildings. Only six people perished in the flames, but hundreds died from shock and exposure. Ins urance protection as we know it today can be traced to the aftermath of that tragedy and a man call Nicholas Barbon. Profoundly shaken by the Great Fire, Barbon promptly opened an office "to insure buildings. " This venture was apparently successful, because in 1680 he founded a partnership and established England's first fire insurance company, The Fire Office, to insure brick and frame houses. The first mutual fire insurance company was established in 1696 with the cumbers ome name of "Contributor ship for Insuring Houses, Chambers, or Rooms from Loss by Fire by Amicable Contributions" . This company was highly successful, eventually being absorbed by the Commercial Union Ass urance Company, Ltd., of London in 1905. In 1704 the Lombard House inaugurated fire insurance for household and business goods, and in 1762 the first mutual life insurance company was formed, The Equitable of London. The earliest authenticated insurance contract (i.e. That which displays the characteristics of insurance in the sense

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MetLife India Insurance Co. Pvt. Ltd. 9 Factors Responsible For Lapsed Policies

of a transfer of risk of loss due to a fortuitous uncertain event in lieu of payment of consideration / premium), is a marine insurance contract on a ship “The Santa Clara” dated 1347 in Genoa. The policy is in the Italian language and appears in the form a maritime loan to avoid the canon (church) prohibition against usury. The earliest insurance contracts did not appear in the form of a modern insurance contract, but rather was drafted in the form of either a fictional sale or loan, until the insurance contract proper was recognized and accepted. The earliest insurers were merchants underwriting risks for fellow merchants, on a part time basis. Until the 1800-1900’s premiums were not determined by statistics kept etc. as in the modern sense, but was often arrived at as a result of haggling. The contract of insurance was not created as a result of judicial or legislative innovation, but by the merchants themselves as a result of commercial expediency and need (Necessity being the mother of invention). It is evident from the implementation of the earliest legis lative measures enacted that there was a distinct divergence between the legal position and what occurred in practice. Very few reported cases exist, or legal principles were established by the judiciary on the Continent, until Lord Mansfield C.J. took office in the Highest Court in England. During his tenure in office a large number of cases and principles were established by the eminent judge, many of which today exist unaltered (examples of which would be that insurances contracts are contracts of good faith, the duty of disclosure, the effect of misrepresentation and non-disclosure on the insurance contract, the effect of fraud on the insurance contract, warranties, etc, to name a few). Due to the fact that insurers were in fact fellow merchants who underwrote risks on a part time basis, with no accurate data or statistics or experience to determine premiums , such “insurers” were clearly in an unequal or weaker bargaining position than the insured’s at the time. For this reason a large number of decisions handed down, and principles enunciated were to a large extent for the protection of the insurer. However despite the establishment of corporate ins urers and the advancements made in the determination of risk, statistics,

AHMAD’s

data

sharing

and

collection,

experience,

and

expertise

in

MetLife India Insurance Co. Pvt. Ltd. 10 Factors Responsible For Lapsed Policies

underwriting risks, many of the early principles have not been adapted to suit modern times or take into account insurer’s greater bargaining power. This is particularly evident in the instance of the duty of disclosure where Lord Mansfield CJ in the seminal case of Carter V Boehm explained the duty of disclosure on the part of the Insured as being a duty to disclose facts which were within the own peculiar knowledge of the Insured, and which could not have been reasonably discovered by the insurer by reasonable inquiry or facts which were common knowledge to both the parties to the insurance contract. Those policy wordings have to a large extent, remained unaltered and follow the example of the Lloyds policy wordings which had been created more than 200 years ago. This is particularly evident in the field of marine insurance. Personal

lines

insurance

policy

wordings

however have

been

greatly

improved and simplified in recent times. Despite insurance being a “contract”, the general principles in contract law are not applied, or followed in the insurance context. This is particularly evident when one has regard to the principles relating to misrepresentation, non-disclosure, breach of contract, and the remedies available to the parties. The clearest example of this would be that the remedies available to a party in the law of contract would extend to damages, whereas in the case of the insurance contract the parties would not have the remedy of damages available to them. Very often one finds that sight is lost of the above when dealing with the insurance contract, and more often than not, a large number of parties who are exposed/ involved in dealings/interpreting the insurance contract do not take account of the remarkable background of this contract.

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MetLife India Insurance Co. Pvt. Ltd. 11 Factors Responsible For Lapsed Policies

History of insurance sector in India The Indian Life Insurance Sector has been witnessing considerable prosperity in many fronts after its opening to private sector in 1999. Foreign investments of Rs.8.7 billion have poured into the Indian market and 21 private companies have been granted licenses. India has a favorable market, which is growing fast. There are currently 14 life including LIC and 14 nonlife insurers companies. The compound growth rate of new business of individual life insurance premium income rose to 18 percent during 200-05 as compared to average of 14.5 percent during pre privatization period from 1957-1999. The business in force of individual life insurance premium has grown at a compound annual growth rate of 22.6 as compared to 14.2 percent before privatization. During the same period number of policies issued also has grown to 10.07 percent from 6 percent. Management expenditure to premium has come down to 17.3 percent in 2004 from 23.24 percent in 1991.At the present compound growth rate, it is estimated that premium from individuals may go up to Rs.357000 crores by 2020 from Rs.47303 crores in 2006. During the same period the group insurance premium may rose up to Rs.160000

Crores

from

100000

Crores.

Insurance

Regulatory

and

Development Authority (IRDA) has cleared 386 new insurance products between 2001 and 2005. The contribution of life fund at market price has gone up from 10.58 percent of GDP in 2002-03 to 13.8 percent in 200405.The Life insurance penetration was doubled from 1. 41 in 1999 to 2.67.However it stands lowest when compared to world average of 4.53, Asian average of 5.18, South African average of 14.38 and North American average of 4.12. Similarly though the density of Life Insurance went up from 11.7 to 15.7 during the same period, it stood lowest when compared to world average of 291.5,As ian average , North American average of 1617.2, South African average of 545.5 . Thus there is a lot of potential for insurance consumption in India when compared the world average. Among many other factors which are coming in the way of consumption of life insurance policies discontinuation of policies (here after called as lapsation) in the first year of their sale is considered as virus for the growth of the sector. Perhaps the most disturbing feature of Indian life insurance business is the high

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MetLife India Insurance Co. Pvt. Ltd. 12 Factors Responsible For Lapsed Policies

proportion of lapses. If we take into consideration all lapses including paidups and surrenders as wastages, the proportion will be substantially higher. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360degree turn witnessed over a period of almost 190 years. The busines s of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 

1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.



1928 - The Indian Ins urance Companies Act enacted to enable the government to collect statistical information about both life and nonlife insurance businesses.



1938 - Earlier legislation consolidated and amended to by the Ins urance Act with the objective of protecting the interests of the insuring public.



1956 - 245 Indian and foreign insurers and provident societies 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 crore from the Government of India.



The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

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MetLife India Insurance Co. Pvt. Ltd. 13 Factors Responsible For Lapsed Policies

Some of the important milestones in the general insurance business in India are: 

1907 - The Indian Mercantile Insurance Ltd. set up, the firs t company to transact all classes of general insurance business.



1957 - General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.



1968 - The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.



1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973.



107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Ins urance Company Ltd. GIC incorporated as a company.

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MetLife India Insurance Co. Pvt. Ltd. 14 Factors Responsible For Lapsed Policies

Literature Review 1. M. ShriNivas Osmania University Hyderabad, 2008 This study was a modest attempt to analyze the causes for lapsation after privatization on the basis of the experiences of the functionaries like branch managers, development officers, Agency managers and insurance agents (CSO’s) who are the core marketing staff for MetLife India Ins. Co. Pvt. Ltd. After privatization significant progress has taken place in Indian insurance sector especially in life insurance business. However still lot of potential for life insurance consumption is available in India as the India's Life Insurance penetration and density is low when compared to Asian average or world average. In spite of rapid progress the sector is suffering with high rate of lapsation of policies. This study reveals that forced selling of policies without caring for matching of MetLife products with requirements of the policy holders plays a vital role in lapsation of policies in the first year of policy life. This is happening due to the fact that beneficiaries are unaware about the insurance products and their comparative merits and limitations. In addition the services after sale of policies are not as per the requirements of the policy holders. Hence there is a need to organize special training camps to agents and awareness camps to beneficiaries periodically. Attention has to be paid on not to yield for forced selling, target oriented last movement selling without caring for matching of insurance products with that of the requirements of policy holder. 2. Misbah Showkat, Student of K.U., J&K, 2008 In her study Misbah has clarified that For the purpose of identifying prime causes for lapsation, the perceptions of the core functionaries in the marketing network of MetLife are ascertained by canvassing questionnaire. They

include

Branch

managers,

Development Officers and Agents.

Area

Managers,

Sales

Managers,

For the purpose stratified random

sampling is applied in selecting sample of Branch managers (B Ms), Development Officers (Dos) and Banca Agents. The study is confined to the city of Srinagar. The findings include

awareness levels of the customer

(about personal risks, insurance and insurance product knowledge), product AHMAD’s

MetLife India Insurance Co. Pvt. Ltd. 15 Factors Responsible For Lapsed Policies

mismatch (lack of need based selling/ forced selling/ wrong selling), incompetent

services

(by

agent

and

MetLife),

financial

problems

of

customers (due to insufficient income, inflation, lack of financial planning), Competition (with other financial institutions and other investments with higher returns ). 3. Irfan Ali Zargar, student of Kashmir University, J&K, 2007 In his study Irfan Ali has listed that purchase of insurance more than affordability, purchase of wrong type policies, purchase of expensive policies etc are some of the causes for lapsation. He has included the Srinagar city as epicenter, since Srinagar is the best site of Kashmir valley for successful busines s. Presently he is the Area manager of Sales Department; this is the result of his sincere efforts towards the mission of organization. The conclusion and recommendations were very helpful to the management. He has reinstated almost 100 (one hundred) lapsed policies. 4. IRDA journal Aug., 2008: The focus of this issue of journal is on “LAPSATION OF LIFE INSUR ANCE BUSINESS”. It starts with an article discussing inter alia the vulnerabilities that insurers are exposed to account of early lapsation. In the next article, a team of life insurance domain consultants project ‘persistency’ of business as the fifth ‘p’, which is as important as the other four ‘p’s of Marketing. Another article draws light about the important role that the distributor [Agency personnel or CSO] plays in ensuring that life insurance contracts don’t die an immature death. One significant adverse feature of high lapsation in life insurance is the financial crisis that it brings about, both for the insurer as well as the insured. This journal also focuses on the remedial measures adopted by life insurers. Although in an insurance contract, the insurer promises to pay the assured sum on the happening of the event, sometimes the claims are not paid on account of various reasons, this gives birth to the problem of “REPUDATION OF CLAIM S”.

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MetLife India Insurance Co. Pvt. Ltd. 16 Factors Responsible For Lapsed Policies

Chapter 2. Introduction to MetLife India Insurance Pvt. Co. Ltd.

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MetLife India Insurance Co. Pvt. Ltd. 17 Factors Responsible For Lapsed Policies

The spirit of MetLife’s commitment………..

VISION Build financial freedom for all through leadership in providing professional financial advice and building long term relationships through innovative protection,

accumulation

and

retirement

products,

robust

underwriting

processes and creating a world-class customer service experience for our customers. OUR MISSION By 2010, provide 5 million customers in India world-class solutions for financial

security

and

in

the

proces s

add

significant

value

to

our

shareholders, associates and society. OUR CORE VALUES
We lead through innovation to offer world class and competitive products to our customers.
We build long term relationships with our customers by creating a world class service experience through operational excellence and the innovative use of technology.
We create a customer centered and result focused division that inspires and has the buy in of all our associates and has their buy-in.
We are committed to creating a high performance organization by creating an environment that allows each one of our associates to perform at their peak. As a result we will also be recognized as an employer of choice. We are committed to partnering with our internal and external customers for mutual success.
We work with integrity, fairness and financial prudence in all our dealings keeping the interest of our shareholders, customers and employees paramount. ………….Partnering for excellence

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MetLife India Insurance Co. Pvt. Ltd. 18 Factors Responsible For Lapsed Policies

MetLife proudly inherits its parent company's over- 136 year-o l d r e p u t a t i o n of helping build financial freedom for everyone. Ranked 43 on the Fortune 500 list (Dec. 31, 2007). MetLife insurances (MetLife) is one of the largest, strongest and most respected financial organizations. MetLife through its' affiliates is the number one life insurer in the U.S with approx. @3.4trillion of life insurance in force (as of Dec. 2007) and has been delivering reliable, high quality service to its customers since 1868. MetLife is a leader in group benefits that serve over 90 of the top 100 FORTUNE 500® companies, and providing benefits to 70 million employees and family members through its spons ors in the U.S. The MetLife companies are also ranked #1 in group life and #1 in commercial dental in the U.S. Headquartered in New York. MetLife through its affiliates, subsidiaries and representative offices, operates in 15 countries throughout the America, Europe and

Asia. MetLife's institutional clients

have

approx.

39,800

employees in the USA, and more than 55,300 employees worldwide. MetLife has assets under management worth $521.3 billion (third quarter 2008).

(FORTUNE 500® is a registered trademark of FOURT UNE® Magazine, a division of Time, Inc)

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MetLife India Insurance Co. Pvt. Ltd. 19 Factors Responsible For Lapsed Policies

MetLife insurance Company private L imited was incorporated in India on April 11, 2001 as a joint venture between MetLife international Holdings Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and other private investors. MetLife has-developed and distributes a range of life insurance in India. MetLife is headquartered in Bangalore with officers and presence in major Indian cities, and an additional 1000 outreach points through its channel partners. Through our highly professional agency system, we are dedicated to helping Indian consumers plan for their financial security through customized solutions. MetLife is driven by the principles of uncompromising integrity and the highest level of professionalism. Its mission is to work with utmost integrity, fairness and financial prudence in all its dealings. MetLife benefits from its parent company's global presence in the field of insurance, track record of establishing successful insurance operations in emerging markets and the unique strengths of its other Indian promoters. Drawing from these experiences, MetLife will be able to address the needs of the Indian customer. MetLife aspires to build on MetLife history of meeting policy holder and contract obligations and the, ability to withstand the impact of adverse economic factors. The MetLife brand, known for empowering people to feel protected, guided and hopeful about their lives, will do the same for its Indian customers. In the past two years, MetLife has made significant contributions to the growth of MetLife international. Since selling its firs t policy in January 2002, MetLife has experienced strong growth from its agency force, which increased 45% during 2003 alone. The company presently has more than 240, 00 policies in place and has recently entered the institutional market with a group life product. While group insurance in India is not currently a large market, the segment is forecasted to grow rapidly in the next two-to-three years. By focusing on this untapped market, MetLife can meet the needs of large corporations, helping them establish benefit programs that help them attract and retain top talent. However, it is pertinent

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MetLife India Insurance Co. Pvt. Ltd. 20 Factors Responsible For Lapsed Policies

to mention here that India's Banc assurance and Corporate Agency has also played a significant role in contributing to this success. The goal is for MetLife to contribute significantly to the MetLife mis sion of reaching 100 million customers by 2010. To help reach that goal, MetLife plan on launching innovative products in the near future, this will act as a major differentiator among competitors. In additions, with the launch of the new MetLife television commercials, which is a first for our India operation, this will add greatly to MetLife's global brand recognition. The combination of this brand and the continued outs tanding efforts will provide the fuel to drive MetLife further up the road of success. MetLife delivers value and world-class service to customers through its financial advisors and corporate sales representatives. The mission of MetLife Insurance is to build financial freedom for all. What is financial freedom? It is all about securing one's future. It is about approaching life’s major milestones without any worries. True financial freedom arises from identif ying your financial capabilities, setting realistic goals based on your dreams and aspirations and achieving them through a comprehensive plan. Most importantly, while you set out to draw up financial plans for your lifeyou need to unders tand that it isn't a one-time plan. The planning that goes into attaining your financial freedom should be dynamic, since life itself is dynamic. What's good for you today might not be next year. During the course of your life you need to achieve your aspirations (life owning of house), meet certain financial obligations (life educating your children orgetting them married), ride over unforeseen contingencies and plan a financially independent retirement phase. The Met Advice Financial Planning could be the first step in your planning exercise. It attempts to give you on overview of the various investment options available in the market today.  In India MetLife has presence in 192 branch offices and 440 agency units as of December 2008.  Also its presence is in over 680 locations with access to 1892 branches of banc assurance partners.

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MetLife India Insurance Co. Pvt. Ltd. 21 Factors Responsible For Lapsed Policies

 AFYP of 1153.6 crore for period January 2008 to Dec. 2008[a growth of 80% over 2007].  It has sold 2, 94,400 individual policies during Jan. 2008 to Dec. 2008 [a growth of 155% of the policies last year].  A Banc Assurance and business partnership {BAB P} has done a busines s of Rs 641.2 Crores for the period of Jan. 2008 to Dec. 2008. [it is 195% of the business done for last year same period]. Since MetLife was founded in 2001with its headquarters in Bangalore India but its operations started in financial year 2001-02.

Mr. Rajesh Relan is

Managing Director of MetLife and the no. of Employees is 7688 (up to 6 t h March 2009). The total no. of advisors was 56,072 and the 5 members of Bancassurance Tie-ups are J&K BANK, AXIS BANK, DHANALAKSHMI BANK, KARNATAKA BANK AND BARCLAYS. There are almost twenty products of life policies of MetLife in the market.

Recent happenings: July 09, 2008 MetLife Ties-up with Siemens Enterprise Communications to launch MIVR A'MetLife Integrated Voice Response Application’ an Advanced Telephony System that combines the cutting edge attributes of technology with the human resources. With this, MetLife will have a 24/7 perspective on the customer requirements.

Benefits of MIVRA Check the renewal premium due along with the due date  Request for a premium paid certificate through e-mail or courier  Request an account statement (For unit linked policy owners)  Fix up appointments for medical examinations  Check application status online

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MetLife India Insurance Co. Pvt. Ltd. 22 Factors Responsible For Lapsed Policies

PRODUCTS OF MetLife

 Met Growth, ULIP [Non Par]: A unit linked plan to grow wealth for your retirement years.  Met Suraksha [Non Par]: a pure risk cover plan at low cost.  Met 100 [Par & Non Par]  Met Suvidha [Par & Non Par]: flexible endowment plan that combine savings and security.  Met sukh [Non Par]: Guaranteed Money-Back  Met Bhavishya [Non Par]: Guaranteed Money-Back plan to secure child’s future.  Met Riders [Non Par]  Met Easy, ULIPS [Non Par]: A simple tick and take unit linked plan.  Met Smart Gold ULIP [Non Par]: A unit linked endowment plan for accelerated wealth creation and protection.  Met advantage plus ULIP [Non Par]: A unit linked pension plan to meet your retirement needs.  Met Smart Plus & Met Smart Premier ULIP [Non Par]: Whole life unit linked life insurance plan.  Met Mortgage Protector: Reducing term plan to protect loans.  Met Sukh: Guaranteed money back plan.

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MetLife India Insurance Co. Pvt. Ltd. 23 Factors Responsible For Lapsed Policies

BANC ASSURANCE

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MetLife India Insurance Co. Pvt. Ltd. 24 Factors Responsible For Lapsed Policies

Banc assurance

in its simplest form is the distribution of insurance

products through a bank's distribution channels. In concrete terms banc assurance, which is also known as Allfinanz - describes a package of financial services that can fulfill both banking and insurance needs at the same time. It takes various forms in various countries depending upon the demography

and

economic

and

legislative

climate

of

that

country.

Demographic profile of the country decides the kind of products banc assurance shall be dealing in with, economic situation will determine the trend in terms of turnover, market share, etc., whereas legislative climate will decide the periphery within which the bane assurance has to operate. The motives behind banc assurance als o vary. For banks it is a means of product diversification and a source of additional fee income. Insurance companies see banc assurance as a tool for increasing their market penetration and premium turnover. The customer sees banc assurance as a bonanza in terms of reduced price, high quality product and delivery at doorsteps. Actually, everybody is a winner here.

Benefits to bank Using bank as a distribution channel benefits both the insurance company and the bank. Benefits of using bank as a distribution channel are: 1)

Banks provide a readymade infrastructure and, therefore, reduces the time and cost in establishing distribution network by the insurance company.

2)

Bank can supplement fee income without utilizing large amounts of capital.

3)

Leverage its strength in distribution of banking.-products.

4)

Customer retention by offering convenient window for banking and insurance products.

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MetLife India Insurance Co. Pvt. Ltd. 25 Factors Responsible For Lapsed Policies

Benefits to the insurance companies Benefits that would accrue to the insurance companies: 1

Banks have the potential to avoid expensive agency system and facilitate prospecting of smaller term life insurance policies which are not covered by the existing agency sys tem.

2

Banks' customer focused information system in the banks facilities automating the process of prospecting customers for specific products.

3

Banks provide an effective channel for direct marketing by periodic mailing and also online access.

4

Access to readymade customer base for selling insurance products.

5

Avoiding

wasteful

expenditure

on

data

procurement,

data

warehousing and data mining.

Critical success factor Bank Assurance has been successf ul f or selling ins uranc e pro ducts du e to:  Eas y ac cess ibi lit y  Custom er trust on ba nk  Freque nt int eraction with th e custom er  Qu ick servic e  Im proved sales  High convers ion rate s of the custom er

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Chart showing Market Share of ULIPS in Kashmir region

Market Share Of Major Players

MetLife 40%

Bajaj Allianz 27%

ICICI Prud 33%

Inference and analysis: The Graph shows that 31.39 Cr is the market share of Kashmir region regarding ULIPS(Unit Unit Linked Insurance Policies), Policies ), 27 C Crr is that of ICICI IC IC I prudential and 22.5 Cr that of Bajaj Allianz. Inference: It implies that major portion of ULIPS market is that of MetLife India Ins urance Ltd. But there is a tough completion among the three that is Bajaj Insurance Allianz, ICICI ICIC I Prudential and MetLife. So, MetLife have an edge over others and should ould continue the same in the market.

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Why choose MetLife? It takes great pride in the financial solutions that it offers. But that’s not all. The customer requirements and comfort are always at its priority. That is why its interactions are distinguished by its expertise, compassion and sensitivity. The MetLife companies are one of the world’s largest and most respected financial services organizations. For over 140 years, it has been helping people build financial freedom. For some, this means protection for their families. For others, it means wealth optimization or preservation. Combined with its innovation, it makes the MetLife companies truly formidable players in the Life Insurance industry. Why life insurance? Just think!!!!

Your son’s education, your daughter’s marriage, your home loan, your retirement planning is your responsibility.

But if you are not there then!!!!!!! Your son’s education, your daughter’s marriage, your home loan, your retirem ent planning is your responsibility. So life insurance!!!!

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An umbrella to cover all your need.

MetLife India Insurance Co. Pvt. Ltd. 28 Factors Responsible For Lapsed Policies

Financial Status of MetLife

{See annexure for fin. report}

From balance sheet The figure of total assets has increased from $ 356,808.0 (2004) to $ 559,149.0(2007) during past four years but it showed drastic

decline in the financial year 2008, [ $ 501,678.0]. This might be the result of huge economic meltdown which effected all over the world. There is increase in cash amount but the long term investments have declined due to high risk in the slowing down economic scenario. Also the good will of company has increased to satisfactory level. Similarly the liabilities figure has increased from 2004 ( $ 333,984.0) to 2007 ( $ 523,970.0) but declined in 2008 financial year up to $ 477,944.0. The highest figure ( $ 408,961.0) is of policy liabilities

i.e. the amount which the company owes to its policy holders in case of their claim/ accident. The amount of long term debt has shown an increasing trend from past five years ( $ 7,412.0 to $ 13,425.0). There is a huge amount of retained earnings ( $ 6,608.o

to $ 22,403.0) which depicts that the company is not distributing its all net profit after tax in its shareholders. So the figure of total liability & shareholders’ equity is $ 501,678.0 in financial year 2008.

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MetLife India Insurance Co. Pvt. Ltd. 29 Factors Responsible For Lapsed Policies

From income statement Total revenue figure shows increasing trend i.e. $38,701 to $50,989 where the total premium earned increases from $25,067 to $31,295. Gross profit shows small inclination from 2004 to 2007 but slows down in 2008 ($24,189 to $23,155). The company is doing increased expenses year after year, in 2005 it was $7,553 but in 2008 it was $7,907.0. Net income after tax figure shows incline from 2004 ($2,572.0) to 2007 ($4,102.0), but in 2008 the net income after tax amount is US $3,510. The EPS has increased in last 4 years but in 2008 it remains low at 4.72. From past ten years income statement predicts similar increase in coming financial year but there might the effect of economic slowdown. Figure moves from EBIT $1,175 to US $5,762 [In millions] (up to 2007), and in 2008 it declines to US $5,090 [In millions] Also ES (earning per share) varies from 0.83 to 5.2 (4.54 in 2008). From past 10 years balance sheet similar trend is viewed i.e. Current Assets varies from $225,232.0 (in millions) to $501,678, up to 2008. Also current liabilities vary from $211,542 to $477,944. In addition long term debt increases from $2,514.0 to $13,425.0. All above figures are forecasting better future of MetLife but C.A. should be utilized properly and lowering the liabilities. It is better to retain earnings than long term debt by discussing the same issue with share holders.

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Chapter 3. OBJECTIVES AND RESEARCH METHODOLOGY

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Objectives of Study

The objectives of my research included the following important functions:

i. ii. iii.

To know the factors responsible for the lapsed policies To provide feedback of customer to MetLife To explain the benef its of policy to the policy holder and motivate him to pay the pending premium.

iv.

Ultimately reinstate the lapsed policies.

Research Methodology

Research

design:-

it

constitutes

the

blueprint

for

the

collection,

measurement, and analysis of data. It helps the researcher in the allocation of limited resources by posing crucial choices in methodology. In this research some selected branches of J&K Bank were visited and the cases of lapsed policies were taken one by one and worked over for their

REINTATEMEN T . Also a customer survey was undertaken to know the factors responsible for lapsation of policies and working of MetLife. Since there was lack of clear idea about factors causing lapsation of policies, thus an exploratory research design was adopted to conduct the study in order to know the above mentioned objectives. The data collection method was

Random sampling.

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Sampling plan Population of Sample The population of interest were the policy holders of Kashmir Valley (Active as well as lapsed) Total of 50 MetLife customers were contacted. The customers were approached personally with the prior appointment at a convenient place of the client at a suitable time and day/ some of them were contacted when they visited the Head Office Srinagar, J&K. Sample size Monthly

20% of 50 = 10 respondents

Quarterly

10% of 50 = 5 respondents

Semi-annually

10% of 50 = 5 respondents

Annually

60% of 50 = 30 respondents

Data Collection Data Source Primary as well as secondary were used Primary data has been collected from the

survey conducted through

systematic gathering of data from structured sample of customers through questionnaire. Secondary data comprised mainly of management books like Business Research Methods, IRDA journals and various webs ites. The report mainly consists of primary data gathered through the schedule of questions asked to the respondents directly.

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Research instrument A structured interviewer administered questionnaire was used containing the relevant questions seeking information from the existing policy holders of MetLife (lapsed cases particularly). Statis tical tools Microsoft Excel is used for tabulation of data, charts are drawn in M. S.Word in continuation of Excel, percentages are drawn for generalizing the study and graphs are used for having better pictorial representation.

Limitations of technique The first and most crucial hurdle in this study was shortage of time, being one and a half months duration. Secondly no vast researches were done over the problems faced by MetLife at Kashmir valley; this forced us to start from zero. Since the research was exploratory based and no hypothesis testing was worked out. Also no tests like Z-test, T-test etc were applied. Some other points related to our research were: Although every effort was undertaken to conduct the study as rigorously as possible, there are certain limitations of the project as follows: Time limit is not sufficient enough to collect all the data to complete the project report. The sample size was limited to 50 respondents. Some confidential information was not allowed to be analyzed by the management which might have more relevance from the study angle. The study was limited to Srinagar city. Some of the respondents didn’t take research seriously and

didn’t

give enough time While filling the questionnaire. Due to continuous strikes in valley I faced lot of problems in data collecting.

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Chapter 4. Data presentation and analysis

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Q 1. Which among following influenced you to join MetLife? Other 20%

Hoardings/Bill Boards 0%

Friends 24% T.V. Advertisement 18%

J&K Bank 38%

Inference and analysis: 24% respondents came to know about MetLife through Friends 18% respondents came to know about MetLife through T.V. Advertisement 38% respondents came to know about MetLife through J & K Bank, 0% respondents came to know about MetLife through Hoardings/bill boards 20% respondents came to know MetLife through other means.

Most of the customers were introduced to MetLife through J&K Bank and lesser

number

of

customers

got

aware

of

it

through

hoardin hoardings

and

advertisement. Though most of its marketing is done by J&K bank but it needs to use other marketing tools to capture more and more market. Since the presence of MetLife has been made more visible through Co branding wherein both names appear ((J&K bank and MetLife).

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MetLife India Insurance Co. Pvt. Ltd. 36 Factors Responsible For Lapsed Policies

Q.2. You choose MetLife because of its: Better risk coverage 8%

tax benefit 14% varieties of policies 12%

affiliation with J&K Bank 48%

high returns 18%

Inference and analysis: 14% re sponde nts chose MetLif e bec ause of its Tax Benef its 12% re sponde nts chose MetLif e bec ause its variet y in po lic ie s 18% re sponde nts chose MetLif e bec ause of its High returns 48% re sponde nts chose MetLif e bec ause it is af f iliated with J&K Bank 8% res pondents c hose MetLif e beca use i t’s better risk cover age.

The Goodwill that J&K Bank has created in Kashmir valley is the major factor that influences customers mostly to go for MetLif e policy. Other reason being its high returns on policies, variety it provides and tax rebates.

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Q 3. MetLife makes your investment secure Can't Say 18%

Disagree Strongly Disagree 4% 4% Strongly Agree 36% Agree 38%

Inference and analysis: 36% % respo respondents ndents strong strongllyy agre agree e that the ir investm ent is secur e 38% % respo respondents ndents agree that their invest inv est ment m ent is secure 18% % respo respondents ndents m entioned ention ed Can’t Can ’ Sa y. 4% res pondents d is agree that their in vest ment is secure 4% res pondents strongl y D Disagree isagree that their investm ent is secure

More than 50 percent customers agree that their investment is secure and only few customers are not sure about their investments. So MetLife needs to build confidence in their customers. By publicizing the annual growth returns and the financial position of o f company, it will overcome the customers who mentioned their disagreement towards the above question.

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Q 4. Is MetLife Staff friendy to you? Disagree 4%

Strongly Disagree Strongly Agree 4% 8%

Agree 26%

Can't Say 58%

Inference and analysis: 8% res pon dents Stro ngl y agree that MetL if e staff is f riendly 26% respo ndents Ag ree that MetL if e staff is f riend ly 58% respo ndents m entioned C an’t Say 4% res pon dents Disagree that MetLif e staff is f riendl y 4% res pon dents Stro ngl y Disagr ee that MetLife staff is f riendly

Most of the respondents agree that the staff of MetLife is helpful and provides proper guidance regarding policy matters. Few respondents did not experience any such behavior; this response comes as most of the respondents were those whose policy has lapsed from last one year [approx.].

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MetLife India Insurance Co. Pvt. Ltd. 39 Factors Responsible For Lapsed Policies

Q.5. You pay your premium via:

automatically deducted 28% Other 36%

by cheque 18%

other mode 18%

cash 36%

Inference and analysis: 36%respondents pay their premium through cash 28% respondents pay their premium through their bank account 18% respondents pay their premium through cheque 18% res pondents pay through mixed/ other means.

Most of the customers pay their premium by cash, yet some of them pay their premium through their bank accounts. They find it easy as the amount automatically gets deducted from their respective accounts. Since this method is the easy one, I found that all customers have applied for SIM facility at their respective branches. Cheques are also given by some customers and few of the customers pay in mixed manner i.e. sometimes cash, sometimes cheque etc.

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MetLife India Insurance Co. Pvt. Ltd. 40 Factors Responsible For Lapsed Policies

Q. 6. you get renewal premium notice in time

never 34%

regularly 38%

seldomly 20%

usually 8%

Inference and analysis: 38% % res respondents pondents mention that they regularly receive Renewal premium notice in time. % respondents mention that they usually receive their Renewal premium 8% notice in time. % respondents mention that they seldom receive Renewal premium notice 20% in time 34% % respondents mention that they never receive Renewal premium notice in time. Though most of the customers receive re ceive their Renewal premium Notice in time but there are customers who receive Renewal notice but not in time. So MetLife needs to improve their services and should send such notice in time because this becomes the cause for Policy lapsation. 34% responden respondents were became prey of lapsation due to absence of reminder about their premium due date and most of them were monthly paying premium customers. Now they were advised to apply for facility of SIM i.e. automatic way of deducting the premium amount from the bank account.

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Q.7. You recieve reminder when you don't pay your premium on due date: never 20%

always 8%

usually 20%

sometimes 52%

Inference and analysis: 8% respondents say that they receive reminder always 20% respondents say that they receive reminder us ually 52% respondents say that they receive reminder sometimes 20% respondents say that they never receive reminder rem

As about 70% res respondents pondents never receive any reminder regarding their premium payment. There was found a delay in sending the reminder to customers, usually the mode of telecommunication is used to remind the customers their due date. But the problem is that the contact numbers are out dated. A need to update the contact numbers is the issue to be kept at highest highes t priority.

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MetLife India Insurance Co. Pvt. Ltd. 42 Factors Responsible For Lapsed Policies

Q. 8. After the payement of premium, Do you receive its reciept? 12%

always 32%

29%

usually sometimes

56%

never 3%

Inference and analysis: 56% respondents Always receive their Premium receipts. 12% respondents usually receive their premium receipts 29% respondents sometimes receive their premium receipts 3% respondents never receive their premium receipts

Most of the customers receive the receipt after paying their premium. But there are some who sometime receive or don’t receive at all. This again focuses on the service .MetLife should try their best to improve their services and should give proper receipts while accepting premium from customers. Premium receipt is an important document for customer as well for MetLife. If there had been on-line system then this issue might not have been so important, so on-line system is recommended in Kashmir Valley particularly.

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Q. 9. In case you don't receive the reciept, You do : other 3% contact Head Office 36%

contact CSO 42%

call MetLife 19%

Inference and analysis: 42%respondents %respondents contact their CSO C SO or insurance Managers in case they don’t receive their premium receipts. 19% % respondents call MetLife in case they don’t receive usually receive their premium receipts % respondents contact MetLife head office in case they don’t Head office 36% sometimes receive their premium receipts 3% % mentioned “other specify’ specif when asked. Most of the customers contact their CSO C SO or Insurance manager in case they don’t receive their premium receipts. Few of them either call MetLife office or contact them personally. There are many customers who have never faced such problem i.e.. they have always received their Premium Receipts and there are some who don’t bother about their receipts because of many reasons like busy bus y schedules. But as this Premium receipt is an important document both for insurer and insured so customers should keep k eep a track of all receipts and contact MetLife people in case they don’t issue it.

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MetLife India Insurance Co. Pvt. Ltd. 44 Factors Responsible For Lapsed Policies

Q.10. Your policy has lapsed, never 4% many times 20%

once 46%

twice 30%

Inference and analysis: 46% % respondents say that their policy has been lapsed once. 30% % respondents say that their policy has been lapsed twice. 20% respondents say that their policy has been lapsed many times. 4% % respondents say that their policy has never lapsed.

Though most of the customers policy has never been lapsed once but there are many whose policy cy has been lapsed either twice or many times. This lapsation creates tes a problem for both the customers cus and MetLife people as well. Customers need to re-activate re their policy, in such case, by paying the premium amount without interest rate as today is the special scheme for lapsed policy holders. And MetLife staff needs to do all cumbersome calculations involved in reinstating the lapsed cases for customers and give them details regarding their policy, if demanded/needed.

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MetLife India Insurance Co. Pvt. Ltd. 45 Factors Responsible For Lapsed Policies

Q.11. The policy got lapsed because, paid premium late

Got reminder late

paid on time but reconciled late

30%

other

26%

22% 22%

Inference and analysis: 36% customers mentioned “I “ paid premium late” as the reason of lapsation 22% % customers mentioned “I “ got Renewal premium notice late” as the reason of their policy lapsation 22% % customers mentioned “I “ paid on time but it was reconciled late” 26% % customers mentioned “Other “ specify” There were varied reasons ns for Policy lapsation. Majority of people admitted that the cause of their policy lapsation was that they paid the premium late which had its own reasons like having some financial problem, or the customer being out of station, or bus busyy schedules. Many customers cu stomers mentioned that though they paid in time but it was reconciled late the reason being CSO’s ignorance., system error, server problem causing workloads in MetLife staff and resulting in late reconciliations of premium which finally results in Policy lapsation. apsation. Also other gave the blame that bank employees {other option} entered there premium amount in wrong policy number, without any notice to the real owner. Thus an improved system should be provided with trained and responsible CSO’s which will minim minimize the lapsation case.

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MetLife India Insurance Co. Pvt. Ltd. 46 Factors Responsible For Lapsed Policies

Q. 12. Did you received any reciept regarding policy reinstatement Yes

No

20%

80%

Inference and analysis: 80% respondent mentioned that they received the receipt/ ticket No. raised. 20% respondent said that they did not received the receipt due to lack of time/ bus y schedule.

It is obvious that after the cumbersome work of reinstating the lapsed policy, all the customers will demand any receipt No. from the concerned authority, whether it is the customer itself or the CSO. A few cases are here who have not received the receipt no. due to exhaustion from the process. Management should try to put all the customers at motivated level s o that the goodwill of company would be sustained.

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MetLife India Insurance Co. Pvt. Ltd. 47 Factors Responsible For Lapsed Policies

Q. 13. Do you recommend any favorable mode of paying premium, 10

Yearly/Annually

4

half Yearly

Quartely

2

Monthly

35

Inference and analysis: 35 respondents recommend payment of premium as monthly. 2 respondents recommend payment pay of premium as Quarterly. 4 respondents recommend payment of premium as Half yearly 10 respondents recommend payment of premium as yearly

Majority of the respondents find monthly mode of premium payment more feasible than other modes of premium Payment despite they are paying through annual mode and many others pay quarterly, half yearly or yearly. The choice of mode depends on many factors like Regularity of income, occupation. some ome find it easy eas y to pay small amount every month while for others it’s more feasible to pay in one whole yearly installment. And also for some it’s feasible to pay half yearly and quarterly

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MetLife India Insurance Co. Pvt. Ltd. 48 Factors Responsible For Lapsed Policies

Q.14 Do you wish online-system online system to check the policy status?

22% Yes 54%

No Can't Say

24%

Inference and analysis: 54% % respondents mentioned’ YES’ 24%respondents ondents mentioned ‘NO’ 22% % respondents mentioned ‘CAN’T SAY’. Most of the respondents agreed that there should be an online system through which customers can keep a track of their policy and could easily check their Policy details and other necessary info information rmation concerning their policies. There were few who were indifferent. indifferent Two main reasons were found found, one being that they had no knowledge about such systems. systems . And other being their bus y schedules where they couldn’t find to check all such details online. busy Andd there were very less number of respondents who were not in favors of such ssystems ystems Major reason for this being that they were less educated and had no knowledge about computers. Thus As 54% % customers find the need of such online system, so MetLife should develop such a system which will help customer to check their details anywhere at any time and get all necessary information regarding their policies and also regarding MetLife.

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Q. 15.Does MetLife Inform you about its new Products?

No

Yes

0

10

20

30

40

50

Inference and analysis:

90% respondents say that they are informed by MetLife about new products. 10% respondents nts say that they are never informed by MetLife about new products.

Majority of the res respondents pondents say that they are informed by MetLife regarding their new products.

To maintain this facility they ought to send such

information notices to customers and also their C SO’s ’s should provide such information to cus customers tomers who visit them or who are in touch with the them. This will create a feeling among customers that they are being cared and will keep customers satisfied ed which will finally result in the increase in sales/ goal of organization.

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Q. 16. Now, Would U like to rcommend MetLife to others? 30 28 25 20 18 15 10 5

4

0 Yes

No

Some times

Inference and analysis: 28 respondents said that they would like to recommend MetLife to others 18 respondents said that they would not like to recommend MetLife to others 4 respondents mentioned ‘CANT SAY’. This question is directly related to the customer satisfaction. Though many customers were satisfied to the extent that they wanted to recommend MetLife to other People they know. But there were also many other customers who either did not want to recommend it to others or were not sure whether they

will

recommend

or

not.

Such

a

response

from

customers

side

questions/doubts the satisfaction level in customers by MetLife .The main reason for this being bitter experience of customers with MetLife Thus MetLife should try its best to satisf y its customers and make customer their first priority. MetLife should also appoint well trained CSO”s that’ll develop confidence in their customers. MetLife should also focus on proper selling of policies. The customer should not feel that he/she has been cheated.

Thus

wrong

selling

should

be

avoided.

Proper

information should be provided to customers regarding policy. AHMAD’s

and

correct

MetLife India Insurance Co. Pvt. Ltd. 51 Factors Responsible For Lapsed Policies

Q. No. 17. Any Suggestion? ONLINE SYSTEM NEEDED 14%

RESPONSIBLE/ ACCOUNTABLE STAFF

20%

TIME MGT. IN PROCESSING PREMIUM RENEWAL

14%

6%

24%

WORK ON CUSTOMER SATISFACTION TECH. INCREASE MOTIVATIONAL POWER/GOOD WILL OF COMPANY

22%

DON'T FOCUS ON HIGH TARGET, PROVIDE BEST QUALIT

Inference and analysis: 20% respondents recommend online system 24% respondents recommend responsible staff 22% respondents ondents recommend better time Mgt. Mgt . In process of operations dept. 6% respondents recommend better techniques of customer satisfaction 14% respondents recommend increment in motivational approach 14% respondents recommend not to focus on high targets but try to retain the existing policy holders, since this tech. is low in cost basis and takes the goodwill of firm up to the sky. From this open question, as no option was given to them, was a new experience to me? I got confronted with the inner opinion of respondents res pondents towards the MetLife. Thus I can infer from the above result, that if fortune favours MetLife will me the market leader in Kashmir valley in no time, until it focuses on customer attraction.

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Special term applicable to all policy holders If payment of premiums is discontinued: a) Discontinuance within three years of commencement – If all the premiums have not been paid for at least three consecutive years from inception, the insurance cover shall cease immediately. Insurers may give an opportunity for revival within the period allowed; if the policy is not revived within that period, surrender value shall be paid at the end of third policy anniversary or at the end of the period allowed for revival, whichever is later. b) Discontinuance after three years of commencement -- At the end of the period allowed for revival, the contract shall be terminated by paying the surrender value. The ins urer may offer to continue the insurance cover, if so opted for by the policy holder, levying appropriate charges until the fund value is not less than one full year’s premium. When the fund value reaches an amount equivalent to one full year’s premium, the contract shall be terminated by paying the fund value.

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Chapter 5-

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Summary The project work stared with a fruitful discussion with the management of MetLife at Srinagar, J&K. then a problem was assigned to me that is to work on the lapsed policies. I with another trainee [Mr. sayeem] worked all together towards our assigned task and by the grace of Almighty ALL AH we did our best to accomplish the task. Particularly J&K branch SKIMS SOURA and karanagar Sgr. were analyzed. The response from the concerned Insurance Manager and CSO [Channel sales Officer] was satisfactory. Cases were taken on regular basis and necessary action was taken to reinstate/ make them active policies. Almost 10 policies were reinstated and 20 other were near to be made active. The concerned policy holders were visited personally and the case was informed them and they too participated at most. Operations department of MetLife Sgr. Was profoundly ready to help at every step. All these steps and our sincere efforts were appraised by management as well. Lastly the company gave me best regards and blessings to succeed in future period and assure me that you will get placement in a reputed corporate due to my smart work plus hard work also.

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Conclusion MetLife is exerting every efforts to gain market share but the retention part is still lacking it is very much driven towards the acquisition of customers as compare to retaining the existing ones. Customers are dissatisfied by the nature (quality and value) of service they are getting. Customers usually complain about the various errors that are being created by the organization by not providing the policy documents and renewal receipts on time. Delivering quality product should be the first preference of an organization towards its customers as quality service is the basic element which frames firms quantitative advantage. Improvement in quality in terms of simplified procedures, personal follow up of

customers,

products

effectiveness,

its

flexibility

and

simplicity.

Relationship marketing should be preferred as retention of customers is must. Expectations of customers should be satisfied to the maximum level so that both the parties achieve their end. As observed there is lack of staff, MetLife should recruit personal to lessen the burden and perform various activities effectively. Thus we can say that by overcoming the loopholes there is very much space for MetLife to grow to the fullest.

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Recommendations

 Though most of the Marketing is done by J&K Bank but MetLife should not solely depend on it and should adopt other marketing tools to capture more and more market.

 Wrong selling should be avoided.  MetLife should equally concentrate in the retention of existing customers as well as capturing new ones, as retention of customers requires low cost.

 MetLife should provide user friendly online system which will help customers to check their policy details anywhere and at any time and get all necessary information about their policies and also about MetLife.

 MetLife should update their customers about their new products and their CSO’s should also provide such information to customers.

 MetLife should have a proper training Mechanism to train and Develop CSO.

 MetLife should send periodic Policy details to customers so that they have a track on their policy.

 MetLife

should

update

its

customer

information

database

like

customer address, phone number etc.

 MetLife should try to minimize its policy requirements so that policy taking becomes easy and less time consuming.

 MetLife should try to personalize its s ervices to some extend like giving reminders through phone calls, sms’s and emails.

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Annexure

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GLOSSARY

TERMS USED I N IN SU R ANC E & LIF E INSUR AN CE

INSURER/ASSURE R; The insurance company with whom an article is insured is known as insurer. Also known as underwriter, the insurer issues insurance policies. In life insurance the insurance company is called ASSURER. INSURED/ASSURE D; The person who obtains insurance policies from an insurance company is called insured or assured. Every insured party must possess insurable interest in the subject-matter insured. PROPOSAL; It’s the application made by the assured to secure insurance policy from the insurer. Proposal has to be made on a prescribed form supplied by the insurance company. POLICY; Insurance policy is a contract between insurer and insured. It contains all terms and conditions of the contract as agreed by both parties. Its a stamped and sealed document issued by the insurance company. PREMI UM: It is the amount of installments payable by the insured to the insurance

company

in

consideration

for

the

company’s

assurance

to

indemnify him against a specific loss. CLAIM; It is a demand made by the insured on the insurance company to compensate him against the loss or damage suffered by him in the event of materializing of the risk for which insurance cover was obtained. SURRENDER VAL UE; This is the value which an insurance company assesses and is prepared to Pay to the assured who desires to surrender his policy by giving up his rights the policy. Sometimes the policy holder finds it impossible to continue pay premiums due to his poor economic conditions or some other unavoidable circumstances. A policy can be surrendered only after paying premiums for at least three years

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MetLife India Insurance Co. Pvt. Ltd. 59 Factors Responsible For Lapsed Policies

PAID UP VALUE; A policy holder who wishes to discontinue his policy and stops payments of further premiums may get the policy converted into a paid up value. In such case , the policy holder is entitled to receive the paid up value of the policy. The amount is payable only on maturity or death of the policy holder whichever is earlier. ASSIGNMENT OF POLI CY; Assignment of policy means transfer of property in the policy to the third party It is possible to assign a policy without assigning the rights to it. Assignment of policy is governed by the following rules; (a) Assignment must be made in writing. (b) The notice of assignment must be given to the insurer. It is essential to observe these rules to make these assignee’s title effective against insurance company otherwise If the company makes any payment to the assignor ,without the assignee’s knowledge ,the company would stand protective. The assignment of the policy carries with it the right to all profits, Bonus etc. NOMINATION OF POLICY; When a policy holder specifies the name of the person in the policy with a view to enabling him to get the amount of the policy in case of his death, its called nomination. The person who is so entitled to get the amount of the policy is called Nominee. If the policy matures within the life time of assured, the amount is payable to the assured himself or his nominee as per his own desire .

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MetLife India Insurance Co. Pvt. Ltd. 60 Factors Responsible For Lapsed Policies

QUESTIONNAIRE Pol ic y Holder: ………………………..

Incom e: ……………………..

Pol ic y No: ……………………………..

Type of policy: ……………..

Mod e of Polic y: ……………………….

1. W ho am ong the f ollowin g inf lu ence d you to join MetLife:Frie nds/Fam ily T. V. Adv ertisem ents J&K b ank Hoard ings/Bi ll Boards Others Spec if y ……………………………………….. 2. You chose MetL if e because of its:Tax benef it Variet y of policies High returns o n your investm ents Aff ili atio n with J&K Bank Better R isk Covera ge 3. MetLife m ak es your investm ent secure: Strongl y agr ee Agree Can’t say Dis agree Strongl y D is agree

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MetLife India Insurance Co. Pvt. Ltd. 61 Factors Responsible For Lapsed Policies

4. Is MetL if e staff f riend ly to you:Strong ly agree Agree Can’t sa y Dis agre e Strong ly Disagree 5. You pa y your pre mium via: Cash It autom aticall y gets deduct ed f rom your account (SIM) Cheque Others sp ec if y ……………………………………………. 6. You get renewal p rem ium notice in tim e:Regularl y Usuall y Sel dom Never 7. You rec eive rem inders wh en you don ’t pa y your pr em ium on due date: Always Usuall y Som etim es Never 8. Af ter you pa y yo ur prem ium you rece iv e the receipt of your prem ium Always Usuall y Som etim es Never

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MetLife India Insurance Co. Pvt. Ltd. 62 Factors Responsible For Lapsed Policies 9. In case you don’t receive your prem ium receipt, you Contact yo ur CSO Call MetLif e toll f ree no. Contact Head off ice Others Spec if y ………………………………………… 10. Your p olicy has lapsed Once Twice Man y t im es Never

11. The polic y got lapsed b ecause I paid pr em ium late I got rene wal prem ium rem inder notice late I paid on tim e but it was rec onciled late. Others(Spec if y) 12. Di d you rece ive reinstat em ent?

an y

ticket

no.

or

receipt

regarding

Yes No 13. Do you recom mend an y f avorab le m ode of pa ying prem ium ? Monthl y Quarter ly Half year ly Yearl y

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your

pol ic y

MetLife India Insurance Co. Pvt. Ltd. 63 Factors Responsible For Lapsed Policies 14. W ould you lik e to pay your prem ium and check your polic y stat us onli ne? Yes No Can’t Say 15. Does Met Lif e inf orm you about its new products? Yes No 16. W ould you lik e to recom m end MetLif e to others? Yes No Can’t Say 17. Any s uggestio ns: ____ _____________ _______ _______ _______ _____________ _______

____ _____________ _______ _______ _______ _____________ _______.

Note : This quest ionnair e is designed to get ins ights re gard ing the factors respons ib le for la ps ed p olicies of ex isting policy H olders of MetLife Ind ia Insuranc e Co. Pvt. Ltd. This infor mati on wil l b e kept in security b y A hmad Mustafa, Student of LPU PUNJA B R eg. No. 108116 88.

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MetLife India Insurance Co. Pvt. Ltd. 64 Factors Responsible For Lapsed Policies

Bibliography •

http ://www.metlife .co.in /

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http ://www.all ba n kingsolut ions.com /in sure sub3. ht m

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http ://www.in dia nmb a.com/O ccas iona l_Papers/O P85/ op8 5.ht ml

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http ://ww.smash its.com/ vide o/sn oop /12802/indian-in sur an ce -se ct or-atboom.html

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http ://bu sine ss.ma psofin dia .com/india-insuran ce /ma r ket.html

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http ://www.business-stand ard.com/i nd ia /n ews /mar ket-share psu-pla yers in-mf -indu stry-f alls/3 62390/

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http ://prasath r.sule kha.com/b log/p ost/2006/09/insura n ce-i nd ustr y-in ind ia.ht m

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http ://www.financia lexpress.com/ne ws/met life-wont-ta ke-tarpmone y/446796/

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http ://www.business-stand ard.com/i nd ia /n ews /met life -stre ngt hens-itscust omer -servi ce -p lat for m/328282/

•

D.R. Cooper P. S. Sc hindler, Bus iness Re search Methods-9 t h edit ion, Tata Mc Graw-H ill co m panies, 200 8

• IRDA journal Aug. 2008, vol.-VI, no.8, “lapsation in life insurance , the No-Win”. • Ms. Misbah (2008), project work on “customer satisfaction at MetLife Insurance, Srinagar city” • Mr. Irfan Ali Zargar (2007) project work on “lapsation of policies with MetLife’s loopholes”

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