ACKNOWLEDGEMENT
Doing a project study involves a great deal of encouragement, innovative ideas and support from different people. After all, success is the epitome of hard work, perseverance, steadfast determination and most of all encouraging guidance. This summer project at Bajaj Allianz Life Insurance Company Ltd., Mumbai was a knowledge gathering experience and opened a vast frontier of practical aspect of theoretical knowledge.
I take this opportunity to express my heartiest thanks to Mr. Arun kaushik, Asst. Manager, Group and Alternate Channel, my project guide, for his invaluable guidance, active involvement and assistance at all stages that made it possible to complete this summer project. I am extremely indebted to him for his consultations, despite his busy schedule.
I am extremely thankful to all the support I received from Prof. Harish Srivastava, Faculty Guide at Institute of Management, Nirma University for his special guidance in helping me complete this project. I also owe special thanks to Mr. Ketul Contractor and Prof. Satish Nair who showed me the right direction before the project.
I express my sincere gratitude to the human resource at Bajaj Allianz Life Insurance Co. Ltd. especially our alumni Mr. Ajay Singh, Asst. Manager; Mr. Ajay Negi, Area Manager, Mr. Gaurav Shah, Deputy Area Manager, Mr. Mukkaram Tarafarosh, Relationship Manager and Mr. Srijit Shah, Operations Manager, for providing me useful assistance in every possible way for the successful completion of this project.
I am extremely indebted to everyone whose name I have not mentioned, but my deepest regard goes to all of them. Their assistance and tolerance is deeply appreciated.
Mukesh Gupta 051132 (SEC-A)
TABLE OF CONTENTS
Project Completion Certificate Acknowledgement
Executive Summary……….4
1. IINTRODUCTION 1.1) Industry Profile……….………...…..5
1.2) Need for Insurance……….…………...….7
1.3) IRDA………..9 1.4) Underwriting……….………….…..10 1.5) Sector Study……….…11 1.6) Winds of Change….……….…16 1.7) Strategic Alternatives………...18 1.8) SWOT Analysis………...21 2. ORGANIZATION PROFILE 2.1) Company Background……….24 2.2) Top Management……….28
2.3) Size of the organization..……….29
2.4) Mission And Vision……….30
2.5) 7S McKinsey Model………31
2.6) Porter Five Forces Analysis………35
2.7) Future Strategy of the Company...……...………...38
3. CHANNEL STUDY 3.1) Channel Distribution………40
3.2) Profiling………47
4. PROJECT WORK 4.1) Database generation……….55 4.2) Tele Calling……….56 4.3) Meetings………..57 4.4) Closure of Deals………..58 5. CONCLUSION 5.1) Recommendations………....62 5.2) Learning’s………64 5.3) Contribution……….66 Bibliography………..67 Annexure A) Plans- Bajaj Allianz………….………...69
B) Type of Plans……….78
C) Questionnaire……….82
D) Proposal……….85
E) List of Corporate License Documents………87
EXECUTIVE SUMMARY
The project involved the study of insurance industry including the comparison of best plans of various players in the industry.
Bajaj Allianz Life Insurance Co. Ltd. has multiple distribution channels and has also got into bancassurance and alternate channels focusing on corporate agents, brokers, online sales and telemarketing. Project also involves identification of newer distribution channels for sales of insurance plans.
I was associated with the Group and Alternate Channel, which involved Corporate Agency Model, Brokers and Franchisees. After studying the industry structure I did the profiling of existing clients so as to understand the nitty-gritty of the operations in the industry. After doing all the groundwork database was generated and calling was done so as to fix up appointments. In the initial meeting business proposal was explained and then follow up was done. In the final meeting Area Manager used to go along and carry forward the closure of the deal. Conversion of prospective leads into Channel Partners was the final and most important part of the project.
CHAPTER 1 INTRODUCTION
1.1 INDUSTRY PROFILE
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 360-degree turn witnessed over a period of almost two centuries. After four decades of being under the purview of the public sector, the Insurance industry is now all set to bloom after the sector has been thrown open to private sector participation. There seems to be a lot of enthusiasm over the potential of the sector. 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 Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies 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.
1972: General Insurance Corporation (GIC) was formed by merging 106 private insurance companies
India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and
competitiveness in the market.
Innovative products and aggressive distribution have become the say of the day. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice.
Life insurance industry is waiting for a big growth as many Indian and foreign companies are waiting in the line for the green signal to start their operations. The Indian consumer should be ready now because the market is going to give them an array of products, different in price, features and benefits. How the customer is going to make his choice will determine the future of the industry.
The insurance market has grown due to public sector continuing its presence by holding on to its market prompting the private companies to market new products. This they have been able to do as they have geared themselves to face the competition. The LIC, for instance, has concentrated on retaining its market in traditional products like endowment and money back and has not slackened its hold in the rural areas. It has simultaneously started experimenting with new products like Unit Linked where there is private sector domination. With its considerable presence in the whole country the LIC would continue to play a major role in the life insurance market. This would, in turn, prompt the private companies to innovate, find niche markets and expand into the rural areas. As a result the insurance penetration would increase and the customer would stand to gain.
Life insurance has today become a mainstay of any market economy since it offers plenty of scope for garnering large sums of money for long periods of time. A well regulated life insurance industry, which moves with the times by offering its customers tailor-made products to satisfy their financial needs is, therefore, essential if we desire to progress towards a worry-free future.
1.2 NEED FOR INSURANCE
The need for life insurance comes from the need to safeguard our family. If you care for your family’s needs you will definitely consider insurance. Today insurance has become even more important due to the disintegration of the prevalent joint family system, a system in which a number of generations co-existed in harmony, a system in which a sense of financial security was always there as there were more earning members.
Times have changed and the nuclear family has emerged. Apart from other pitfalls of a nuclear family, a high sense of insecurity is observed in it today besides, the family has shrunk. Needs are increasing with time and fulfillment of these needs is a big question mark. Factors such as fewer numbers of earning members, stress, pollution, increased competition, higher ambitions etc are some of the reasons why insurance has gained importance and where insurance plays a successful role.
Insurance provides a sense of security to the income earner as also to the family. Buying insurance frees the individual from unnecessary financial burden that can otherwise make him spend sleepless nights. The individual has a sense of consolation that he has something to fall back on. Insurance is a must also because of the uncertain future adversities of life. Moreover, retirement, an age when every individual has almost fulfilled his responsibilities and looks forward to relaxing can be painful if not planned properly. Have you considered the increasing inflation and taxes? Will your investment offer you attractive returns under such circumstances? Will it take care of your family after you? An insurance policy will definitely take care of these and a lot more.
Insurance today has opened up new vistas for every section of society. Insurance is an effective tool for Personal Financial Planning. It is the only financial vehicle that pays a lump sum on death, disability, hospitalization, and critical illnesses. It provides the following benefits:
• Provides financial security for the family. Acts as a tool for PROTECTION.
• The tearing of the Joint Family fabric, makes insurance attractive for financial independence of the nuclear family.
• Is a SAVINGS vehicle. Enjoys Tax benefits (Front End Benefits of Section 80C, 80(D); Back end 10(10) D - Maturity/Withdrawal Benefits are Tax Free)
Single Start Buy House
Family Retirement
POSITIVE
Education Good Job Marriage
Children
Wealth
Planned
Premature
Death Loss of job
Accident &
Disability Critical Illness
Unplanned Retirement
Life Insurance mitigates the financial risks of Negative Events while boosting the prospects for Positive events of
Life!
INSTRUMENT
Safety of Capital
Preservation
Liquidity
Post tax
returns
Tax Efficiency
Risk Cover
Provident Fund
High
Low
Good
Good
None
Shares
Uncertain
Good
Uncertain
Low
None
Bonds
Average
Average
Low
Low
None
Fixed Deposits
High
Average
Low
Low
None
Mutual Funds
Average
High
Uncertain
Average
None
Postal Savings Schemes
High
Low
Average
Average
None
LIFE INSURANCE
HIGH
AVERAGE
GOOD
HIGH
YES
1.3 IRDA
Insurance Regulatory Development Authority was constituted in 1999 by an Act of Parliament to protect the interests of the policyholders and to regulate, promote and ensure orderly growth of the insurance industry. IRDA consists of a ten member team that comprises a Chairman, five whole-time members and four part-time members. IRDA allows registration of new players in the insurance field. It also has the authority to renew, modify, withdraw, suspend or cancel such registration.
IRDA ensures protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance. It specifies requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents.
Insurance Regulatory and Development Authority is an autonomous body similarly on the lines of SEBI, which enjoys full functional operational freedom to perform its duties in a fair and efficient manner that will lead to stimulate the public trust in regulatory process.
MISSION OF IRDA
To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
1.4 UNDERWRITING
Underwriting is the process that the insurance company undertakes for selecting and categorizing risks. It is an attempt to find out whether the insured is in fact insurable, and whether the applicant has an insurable interest in the insured.
For the Insurer to issue an insurance policy the customer is responsible for full and accurate disclosure of personal information as well as submit to a medical exam. The underwriting process could take as little as one day or as long as a week.
The first step starts with the filling up of the Application. The proposal form for insurance is the source of insurability information available as General Information and Medical Information. A complete proposal form should be submitted along with the following:
• Proposal Deposit conforming to the premium amount. • ICC/ FSC MHR Report
• Age Proof duly signed by the proponent & verified by the ICC/STM.
Next the applicant needs to undergo a Medical exam, which is at no cost to the applicant. The examiner (cardiologist, pathologist, radiologist) would perform non-invasive or invasive medical tests.
Finally once all of the information has been gathered, the underwriter evaluates the data and classifies the risk/determines the premium.
1.5 SECTOR STUDY
1.5.1 PUBLIC SECTOR COMPANY
1.5.1.1 LIFE INSURANCE CORPORATION OF INDIA (LIC)
Life Insurance Corporation of India (LIC) is an autonomous body authorized to run the life insurance business in India with its Head Office at Mumbai. It has been established by an act of the Parliament and started functioning from 1/9/1956.
LIC is the biggest insurance player in the country. Out of the total premium of Rs 3766 crore generated by the insurance industry through group business in the year 2005-06, LIC alone accounted for Rs 3051 crore.
The mission statement of LIC is to “Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development.”
1.5.2 PRIVATE SECTOR COMPANIES
The focus of the new companies is on revenue generation, growth through geographical expansion, customer acquisition and a need to capture a sizable share. Simultaneously, they are grappling with the issues of expansion, innovation and differentiation in products and services, knowledge dissemination, target marketing, developing alternative channels, maintaining underwriting discipline and implementing an effective service delivery model with optimizing costs.
The listing of various private sector companies is given below along with the names of the Indian partner, the business they are in and the foreign collaborators.
S No Company Indian Company Business Foreign Co. Country
1
Max New York Life Insurance Co. Ltd.
Max India Limited
Clinical Research, IT & Telecom Services, & Specialty Plastic Products businesses
New York Life
International USA
2
Tata AIG Life Insurance Co. Ltd. Tata Group Operating in seven business sectors through 93 comp. Holds leadership positions in many industry segments, among them tea, s/w, automobiles, energy & hospitality. American International Group, Inc. (AIG) US 3
Birla Sun Life Insurance Co. Ltd.
Aditya Birla Group
Aluminium, Copper, Cement, Vircos Staple Fibre, Fertilisers, Textiles, Carbon Black, Garments, Insulators, Telecom, Chemicals Sun Life Insurance Canada 4 ING Vysya Insurance Co. Pvt Ltd
Vysya Bank Financial Service
Institution ING Group Netherland
5 MetLife India Insurance Co. Pvt Ltd J&K Bank, Dhanalakshmi Bank, Karnataka Bank, Karvy Consultants, Geojit Securities, Way2Wealth, Mini Muthoothu Financial Service
Institutions MetLife Group USA
6 Bajaj Allianz Life
Insurance Co. ltd. Bajaj Auto
2 and 3 wheeler
manufacturer Allianz AG Germany
7
Aviva Life Insurance Co. Pvt. Ltd.
Dabur Traditional healthcare
products Aviva Life Insurance UK 8 HDFC Standard Life Insurance Co. Pvt. Ltd. HDFC Ltd. Housing Finance Institution Standard Life Assurance UK 9 ICICI Prudential Life Insurance Co. Pvt. Ltd. ICICI Bank
10
Kotak Mahindra Old Mutual Life Insurance Ltd.
Kotak Mahindra Bank Ltd.(KMBL)
Commercial banking, stock broking, mutual funds, life insurance, investment banking Old Mutual plc South Africa, US & UK. Headquarters in London 11 Reliance Life Insurance Co. Ltd. Reliance Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group
Asset management & mutual funds, life & gen. insurance, pvt. Equity & proprietary investment, stock broking & other fin. Services Acquired 100% shareholding in AMP Sanmar Life Insurance Co. No Foreign Alliance JV between AMP, Australia & the Sanmar Group. Headquarters in Chennai 12 SBI Life Insurance Co. Pvt. Ltd.
State Bank of India Banking franchise Cardif SA France
13 Shriram Life Insurance Co. Pvt. Ltd. Shriram Group Ins. Consultancy, Consumer Durable Finance, Stock Broking busi., IT, Pharma, Property Development, Project Engg, Packaging & Auto Components.
Sanlam South Africa
14 Sahara India Life
Insurance Sahara India
Public Deposit, Infra. & Housing, Media &
Entertainment, Aviation, Consumer Prod., IT, Sundarbans Proj., Sahara Hosp., Araria Jute Project, Life Insurance, MFs, Housing Finance, Power Proj., Comp. Manufacturing, Hotel, Caring Scheme
No foreign
1.5.2.1 MARKET SHARE
The market share for the various private sector companies for the year ended 31st march, 2006 is listed below:
S. No. Company Market Share for year ended 31st March, 06 Premium U/W % Share No. of Policies % Share No. of lives covered under group schemes % Share 1 MetLife India Insurance Co. Pvt Ltd 14262 1.39 95605 2.47 331919 8.94 2 Reliance Life Insurance Co. Ltd 19344 1.89 79464 2.05 129335 3.48 3
Max New York Life Insurance Co. Ltd.
44327 4.32 423780 10.95 66919 1.80
4
Kotak Mahindra Old Mutual Life Insurance Ltd.
39753 3.88 96750 2.50 149653 4.03
5
Tata AIG Life Insurance Co. Ltd. 46348 4.52 295949 7.64 574549 15.47 6 Aviva Life Insurance Co. Pvt. Ltd. 40753 3.97 164015 4.24 54607 1.47 7 Bajaj Allianz Life Insurance Co. ltd. 271561 26.49 781694 20.19 396186 10.67 8
Birla Sun Life Insurance Co. Ltd. 67808 6.61 265895 6.87 191541 5.16 9 HDFC Standard Life Insurance Co. Pvt. Ltd. 102893 10.04 374331 9.67 207925 5.60 10 ICICI Prudential Life Insurance Co. Pvt. Ltd. 263747 25.72 838242 21.65 474693 12.78
11 ING Vysya Insurance Co. Pvt Ltd 28407 2.77 126135 3.26 56459 1.52 12 SBI Life Insurance Co. Pvt. Ltd. 82851 8.08 285442 7.37 1069237 28.80 13 Shriram Life Insurance Co. Pvt. Ltd. 1031 0.10 20797 0.54 0 0.00 14 Sahara Life Insurance Co. Pvt. Ltd. 2182 0.21 23320 0.60 10054 0.27 1025267 100.00 3871419 100.00 3713077 100.00
MARKET SHARE (Premium U/ W)
Bajaj Allianz 26%
MetLife Reliance Max New York Kotak Tata AIG Aviva Bajaj Allianz Birla Sun HDFC Standard ICICI Prudential ING Vysya SBI Shriram Sahara
1.6 WINDS OF CHANGE
Reforms have marked the entry of many of the global insurance majors into the Indian market in the form of joint ventures with Indian companies. The entry of new players has rejuvenated the erstwhile monopoly player LIC, which has responded to the competition in an admirable fashion by launching new products and improving service standards. The following are the key winds of change brought about by privatization.
1.6.1 Market Expansion: There has been an overall expansion in the market. This has been possible due to improved awareness levels thanks to the large number of advertising campaigns launched by all the players. The scope for expansion is still unlimited as virtually all the players are concentrating on large cities and towns - except by LIC to an extent there was no significant attempt to tap the rural markets.
1.6.2 New Product Offerings: There has been a plethora of new and innovative products offered by the new players, mainly from the stable of their international partners. Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional money-back policies, which is not considered very appropriate for long-term protection and savings.
1.6.3 Customer Service: Not unexpectedly, this was one area that witnessed the most significant change with the entry of new players. There is an attempt to bring in international best practices in service and operational efficiency through use of latest technologies. Advice and need based selling is emerging through much better trained sales force and advisors. There is improvement in response and turnaround times in specific areas such as delivery of first policy receipt, policy document, premium notice, final maturity payment, settlement of claims etc. However, there is a long way to go and various customer surveys indicate that the standards are still below customer expectation levels.
1.6.4 Channels of Distribution: Till two years back, the only mode of distribution of life insurance products was through Agents. While agents continue to be the predominant distribution channel, today a number of innovative alternative channels are being offered to consumers. Some of them are bancassurance, brokers, the Internet and direct marketing. Though it is too early to predict, the wide spread of bank branch network in India could lead to bancassurance emerging as a significant distribution mechanism.
1.7 STRATEGIC ALTERNATIVES
If one analyses the history of growth of the insurance industry since reforms, it is marked by all-round growth of all players. More or less all players (including the market leader LIC) have aggressively recruited and trained advisors, appointed agents, launched new products, improved customer service standards and revamped/expanded their distribution networks. If at all there was any major difference between players it was only in time lag in launching of services. Every player would like the customers to believe that its service standards are the best or that its agents are the most informed and ethical, but is debatable whether there are any significant differences.
In other words, each company is trying to be ‘everything to everybody’. Our argument is that the strategy of being everything to everybody is risky. Some players justify the above strategy on the basis that the Indian market is huge and it can accommodate everybody. Still, in a market where it is difficult to distinguish oneself sufficiently on service or any other parameter to be able to charge a premium, it will lead to unmitigated price competition to the detriment of all players. One may achieve sales turnover, but margins and profitability will suffer severely. In the insurance industry where large amounts of capital are required, this is risky. While there is room for a few scale players with a finger in every pie, it is profitable for other players to focus on different segments to survive and thrive in a multi-firm open environment.
While each company has to choose its own unique positioning based on its unique strengths, the below-mentioned generic positioning alternatives appear worth considering. Needless to say the positioning choices discussed here are not mutually exclusive and can be overlapping.
1.7.1 Variety-based Positioning
This type of positioning is based on varieties in products and services rather than customer segments. It is a sensible strategy for those companies who have distinctive advantages or strengths in offering certain products and services.
In the insurance industry too, it is possible to achieve a unique position by focusing on certain category of products. One such example is Birla Sunlife Insurance, which has
been placing particular focus on investment-related products since its launch in India. Through its superior fund management capabilities, the insurance company can deliver better returns on its investment-linked products and thereby carve for itself a leadership position in this segment.
Then there is the entire category of pension products, which is widely touted to have immense growth potential in India due to imminent pension reforms. It is possible to achieve profitable positioning by focusing and excelling in only pension products.
1.7.2 Needs-based Positioning
This is the most commonly understood positioning and is based on the differing needs of different groups of consumers. This can be done successfully if a company has unique strengths to service a group of customer needs better than others.
The insurance needs of customers vary significantly for different groups of customers. The insurance needs of young family with small children will be quite different from that of a family in which the income-earner is close to retirement. However, in India most of the life insurance companies have a wide variety of products tailored for different customer needs and there is no company focusing on a particular customer need. An example would be a life insurance company that focuses only on High Net-worth Individuals (HNIs). The needs of HNIs would be quite different from those of a general consumer and would require an entirely different marketing mix right from the type of products offered and the way they are distributed, to the promotion methods employed.
1.7.3 Access-based Positioning
Positioning of customers can also be done by the way they are accessible. That is
different groups of customers may be accessible in different ways even though they may have similar needs. Access is typically a function of customer geography or customer scale.
There is excellent opportunity in the insurance industry to employ access-based
positioning by targeting the rural insurance sector. The rural market for life insurance is very different from the urban market in terms of needs, income levels and distribution (seasonality, for example), penetration of media and so on. So far except for LIC, no
other player has paid any attention or focus on the rural sector. Rural market can be a highly profitable position if one is able to carefully plan and tailor an entire set of low-cost activities of advertising, distribution, and product design etc. to successfully exploit the potential.
1.7.4 Choosing the right strategy
The right strategic choice is not a matter of positioning choice alone. It involves the very way a company organizes itself to do business. It is the configuration of the entire value chain of the company through a different set of activities to deliver unique value to consumers. The set of activities cover all upstream and downstream activities, from the selection of the product mix, the way the products are priced, promoted, the type of distribution mechanism used, the way customers are serviced and so on.
1.8 SWOT ANALYSIS 1.8.1 STRENGTHS
• Huge potential market. Insurable population of 300 million • The variety of products is increasing.
• Authority has always believed in openness and transparency and has followed the practice of prior consultation with various interests before finalization of regulations.
• The regulators provide for constant monitoring of the performance of the companies as a check against lax management practices
• Regulators protect policyholders against excessive insolvency risk by requiring insurers to meet certain financial standards and to act prudently in managing their affairs.
• There is rigorous scrutiny of the companies at the entry level
• Existence of diligent monitoring of their activities with special reference to maintenance of solvency margins and prudent investment policy
• The accounting standards are in alignment with international standards
1.8.2 WEAKNESS
• There is weakness in the legislative framework.
• Insurance companies are often slow to respond to changing needs. • Lax management within insurance companies
• There is an increasing trend of financial weakness among the companies.
• There are more competitors for agencies to compete with banks and Internet
players.
• Weak corporate governance.
• Prevalence of ineffective market discipline
• There is inadequate information flows due to a lack of transparency or
• The brokers have also not been able to deliver the value added services expected
of them.
• New developments have taken place in the insurance world, which do not find a
reflection in the law
• Total computerization still in the process of implementation.
• Sophisticated covers do not have adequate demands because of general attitude to
insurance in India.
• Players have to build their own distribution networks • Huge investments are required
1.8.3 OPPORTUNITIES
• The Indian insurance industry relies heavily on the traditional agency distribution channel, with a large number of agents of varying levels of professionalism and productivity. There is thus scope for developing alternative distribution channels, which are often more efficient, and which can offer lower costs and better benefits for policyholders.
• There is no fixed limit with regard to the number of entrants, so there always is scope for new entrants in the market.
• The ability to cross sell financial services is barely being tapped.
• Technology is improving to the point that paperless transactions are available. • The client's increasing need for an “insurance consultant" can open new ways to
service the client and generate income
• The coverage of rural areas and social sectors is a sound business proportion. • Management and staff buy-in to a new business
• Effective sales management and organization- Joint ownership of targets • Robust machinery for quality lead generation
• Continuous training for lead generators and sales persons
• Existing players are slow and bureaucratic in nature. Outmaneuvering them will be relatively easier
1.8.4 THREATS
• In the absence of incentives to the funds in the form of tax exemptions very little of paid premiums shall become available to meet future catastrophe claims and liabilities under the policies issued.
• The potential risk factors emerging every day leave the regulators unawares. • Competition in Domestic Market
• The increasing cost and need for insurance might hit a point where a backlash will occur.
• Government regulations can quickly change the direction of insurance market. • Increasing expenses and lower profit margins will hit hard on the smaller agencies
and insurance companies.
• Repatriation of benefits not allowed
• Joint ventures in insurance industry have a history of falling apart • Market may not accept new products
CHAPTER 2
ORGANIZATION PROFILE
2.1 COMPANY BACKGROUND
2.1.1 Bajaj Allianz Life Insurance Co. Ltd.
The company is a joint venture between two leading conglomerates- Allianz AG, one of the world's largest insurance companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the world. The Management Control is with Allianz AG. It was registered in 2001.
The company is currently capitalized with Rs 2500 Million. (~ € 45 mn.). It is the fastest growing private life insurance company in India, with a growth rate of 380%. It has sold over 1 million policies to satisfied customers. It is present in over 510 towns across the country and is backed by a network of 570 offices spanning the country
Bajaj Allianz is ranked No.1, among private life insurance companies in India. It funds top fund with highest growth since inception as per Outlook money analysis & survey for all Insurance cos. released in July 2005 & Jan 2006.
Accelerated Growth
Fiscal Year Policies sold New Business
2001-2002 (6mths) 21,376 Rs 70 Mln (~€1.32mn.)
2002-2003 1,15,965 Rs 610Mn(~€11.5mn.)
2003-2004 1,86,443 Rs 1800 Mln (~€ 34 mn.) 2004-2005 2,88,189 Rs 8350 Mln (~€158mn.) Apr’05 – Jan 06 4,43,856 Rs 16,800 Mln(~€317mn.)
The Bajaj Allianz- DIFFERENCE
• Strong Brand awareness in the mass market segment
• The widest range of products catering to all customer segments • Customisation & Co-branding of products with partners
• Sales focussed organisation with fastest growth in Insurance • Quick implementation of sales model
• Internationally experienced Core Team with local background who understands Indian risks & market supported by the international experience of Allianz
• Business Strategy aligned to Clients’ needs and trends in the Indian and global economy/industry
• Long-term Commitment to market and clients • Customer Focus
• Fast Decentralised Decision making
• Solutions & Services of International Quality Standard • Customised ‘Indian’ Products
• Unit Linked Equity Investments guided by DSP Merrill Lynch • Is the fastest growing private life insurance company in India • Assets under management Rs 20000 + Mln (~€378mn.)
• Effective management of large Sales teams – 3000 ISEs in Franchisees • Currently has over 4,40,000 satisfied customers
• Presence in more than 550 locations with 60,000 Insurance Consultants, providing the finest customer service.
2.1.2 The ALLIANZ GROUP
Allianz Group is one of the world's leading insurers and financial services providers. Founded in 1890 in Berlin, Allianz now has almost 174,000 employees. It has around 700 subsidiaries. At the top of the international group is the holding company, Allianz AG, with its head office in Munich, Germany. Allianz’ global network extends to more than 70 countries in Europe, Asia Pacific, North & South America and Africa & Middle East.
Allianz Group provides its more than 60 million customers worldwide with a comprehensive range of services in the areas of
• Property and Casualty Insurance, • Life and Health Insurance, • Asset Management and Banking
In fiscal year 2005, Allianz's total revenues amounted to some 100.9 billion euros. At the end of 2005 Allianz Group had more than 1.26 trillion euros in assets under management. Of this, 743 billion euros were assets managed for third parties.
Allianz’ shares trade at the 5 leading international stock exchanges: Frankfurt, London, Paris, Zurich & New York. It has Gross Written Premium of € 85 billion (~ Rs 4,67,500 cr.). The company has 60 million Clients and is number two by Gross Written Premium in the world. It has ‘A+’ rating by A.M. Best. It provides insurance to about half the ‘Fortune 500’ Companies. It is the 12th largest corporation in the world having 49.8 % of global business from Life Insurance
2.1.3 BAJAJ AUTO LTD.
Bajaj Auto Ltd, the flagship company of Bajaj group is the largest manufacturer of two-wheelers and three-two-wheelers in India and one of the largest (4th largest) in the world. Bajaj Group, a Rs 80000 Mln (~€1511mn.) group is a household name in India with a strong brand image and brand loyalty. Bajaj Group is synonymous with Quality and Customer Focus. It has employee strength of more than 15,000 employees. The annual turnover was Rs 67320 Mln (~€1272mn.) in 2004-05 and Profit after tax was Rs 7660 Mln (~€145mn.) in 2004-05.
There are more than 21 million Bajaj vehicles on the roads across the globe. It manages funds of over Rs 4000 cr. Bajaj Auto finance one of the largest auto finance cos. in India.
As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has the following to offer:
• Financial strength and stability to support the Insurance Business. • A strong brand-equity.
• A good market reputation as a world class organization. • An extensive distribution network.
• Adequate experience of running a large organization
• A 10 million strong base of retail customers using Bajaj products. • Advanced Information Technology in extensive use.
2.2 TOP MANAGEMENT
Sam Ghosh, who was the CEO of Bajaj Allianz earlier, has taken over as Country Manager and is also the CEO of Bajaj Allianz Life Insurance Company Limited.
The top management of Bajaj Allianz General Insurance consists of people having domain knowledge of insurance as well as specialists in their respective field.
Retail Head Mr. Ajay Singh
Group and Alternate Head Mr. Malai Ghosh Bancassurance Head / CFO Mr. Mukul Gupta
Group Head Mr. Manjeet Siddhu
Alternate Head Mr. Neeraj Kumar
At the regional level, there is an area manger. The Alternate Channel of Bajaj Allianz Life Insurance Company Ltd., Mumbai is looked after by Mr. Ajay Negi who is an Area Manager. Under an Area Manager are 2 Deputy Area Managers and around 5 Relationship Managers. Under DAM’s are around 10 Relationship Managers. The RMs handle the Insurance Sales Representatives (ISRs). The ISRs work with the help of Junior Insurance Sales Representatives (JISRs). Finally, there are Training Insurance Sales Executives (TISE) under JISRs.
2.3 SIZE OF THE ORGANIZATION
• 550 offices in over 400 cities
• 60,000 Insurance Consultants
Head office: GE Plaza, Airport Road, Yerawada
Pune - 411 006. Tel: 91-20-5602 6777
2.4 VISION AND MISSION
Vision
• To be the first choice insurer for customers
• To be the preferred employer for staff in the insurance industry • To be the number one insurer for creating shareholder value
Mission
As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money.
2.5 THE 7S MCKINSEY MODEL
Today's companies are working in a war zone of rapidly changing competitors, technological advances, new laws and more critical, flirtatious customer loyalty. Companies find themselves competing in a race where the road signs and rules keep changing, where there is no finish line, no definite win.
This implies that existing market leaders have also to take a fresh look at all aspects of their business, more specifically the strategic dimensions such as positioning and brand equity, in order to retain and further improve their market share.
The marketing discipline has to redevelop its assumptions, concepts, skills, tools and systems for making sound business decisions.
The 3Ss across the top of the model are described as 'Hard Ss':
• Strategy:
This implies the direction and scope of the company over the long term. The strategy can be internal and external.
The company took a major initiative to change its name. The change in company name comes in conjunction with research findings from existing customers, business associates, prospective customers and other stakeholders indicated higher comfort level and ease of recalling the Bajaj name first and then Allianz, and hence the name Bajaj Allianz
To strengthen the emerging bancassurance sector in the country Bajaj Allianz Life Insurance has launched a quarterly magazine Bancassurance Vantage. This newsletter identifies emerging trends, offers views from experts and regulatory and industry developments in the Indian bancassurance sector.
Bajaj Allianz Life made its presence in India in the remotest parts of the country providing access to common man in India with simple and easy life insurance and investment products flexible enough to suit their needs — jaisi jaroorat vaisa insurance — with world class service.
• Structure:
This is the basic organization of the company, i.e. its departments, reporting lines, areas of expertise, and responsibility (and how they inter-relate).
In pre-Ghosh days, the organisational structure was like a multi-layered pyramid with authority largely centralized. The CEO was assisted by deputy chief operating officer, chief financial officer (CFO), president (R&D), head sales and head marketing. He turned the organisational approach upside down. From top down it is now the bottom up approach. Branches that were earlier acting like post offices sending the proposals to head office for decisions now have the freedom to accept or reject proposals. Allianz Bajaj underwent a change in top management that has resulted in a change of strategy. Their strategy is to have a lower number of tie-ups but deep relationships. From its earlier focus on numbers, in terms of individual assurance policies, the company has decided to go with the market and concentrate on increasing the sum insured.
Systems:
This is related to the formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call centre systems, online systems, etc).
Bajaj Allianz was shifting its operational structure to a hub and spoke model, whereby it would widen its presence through a large number of satellite offices that would be controlled through few branches. The satellite offices will act as collection centers while the branch will issue the policies
Only those proposals, which have a pre-existing medical history, now come to the head office. Ninety per cent of the policies are now underwritten through the software programme, Black Box. Within six days the final policy reaches the policyholder.
The 4Ss across the bottom of the model are less tangible, more cultural in nature, and were termed 'Soft Ss' by McKinsey:
• Skills:
These are the capabilities and competencies that exist within the company and what it does best.
The insurers are expected to be responsive in their claim settlement processes to reboot their images. They must also demonstrably improve their negotiating and strategic skills to contain losses.
• Shared values:
These are the values and beliefs of the company. Ultimately they guide employees towards 'valued' behavior.
As a responsible, customer focused market leader, Bajaj Allianz strives to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money. The company believes in decentralized management practices and the endeavor of introducing wide array of customized insurance solutions that cater to all possible segments of customers.
• Staff:
The staff means the company's people resources and how they are developed, trained, and motivated.
Branch managers were asked to prepare their own targets. In addition to chalking out an achievable target, they also have to provide what is referred internally as a 'dream target'.
• Style:
The leadership approach of top management and the company's overall operating approach is what is considered to be the style of a company.
At the operational level the underwriting authority of the branch head was restricted and proposals had to be sent to the head office for acceptance or rejection, leading to delays and customer dissatisfaction. The senior leadership creates an environment for empowerment, innovation and ethical values. This has led to the congenial atmosphere and the same is reflected in the style of working of various employees in the organization. BJAZ is very aggressive as far as achievement of targets is concerned and same is communicated through the top leaders.
2.6 COMPETITIVE POSITION (PORTER’S FIVE FORCES ANALYSIS)
In his Competitive Model Porter (1979) argued that the nature and degree of competition in an industry hinged on five forces: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and the jockeying among current contestants. He said the collective strength of these forces determines the ultimate profit potential of an industry. This section will examine the effects on insurance industry with respect to the five forces that Porter identified in his Industry 5-Forces Competitive Model.
Porter had identified these five forces that shape any industry or market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The ultimate goal of any corporate is to maximize the wealth of its investors, and the wealth maximization depends upon the external as well as the internal competitive environment in which an industry operates.
Threat of new entrants:
The threat of new entrants depends on:
• Access to industry distribution channel
• The likelihood of retaliation from existing industry players • Customer switching costs
• Capital/Investment requirements
The new entrants may pose a threat to the existing players as: • Other financial services companies entering the market • Dilution of investor base
• Increased cost of retaining the investors
• Increased cost of marketing and promoting the product, which otherwise could be used in research and development.
Power of buyers:
The bargaining power of buyer depends on: • Product differentiation
• Threat of backward and forward integration to the industry • Role of quality and service
• Switching costs
The individual doesn't pose much of a threat to the insurance industry. Large corporate clients have a lot more bargaining power with insurance companies. Large corporate clients like airlines and pharmaceutical companies pay millions of dollars a year in premiums. Insurance companies try extremely hard to get high-margin corporate clients.
Power of suppliers
Services by nature are intangible and hence the question of bargaining power of suppliers does not arise. The suppliers of capital thus might not pose a big threat, but the threat of suppliers luring away human capital does. If a talented insurance underwriter is working for a smaller insurance company (or one in a niche industry), there is the chance that that person will be enticed away by larger companies looking to move into a particular market.
Threat of substitutes
The threat of substitutes depends on:
• Quality of service given by the substitute • Buyer’s willingness to substitute
• The relative price and performance of substitutes • Cost of switching to substitute
Most large insurance companies offer similar suites of services. In some areas of insurance, however, the availability of substitutes are far and few between. Companies focusing on niche areas usually have a competitive advantage, but this advantage depends entirely on the size of the niche and on whether or not there are any barriers preventing other firms from entering. With so many varied substitutes available, the threat is massive. But India’s savings is one of the highest in the world (close to 25%). And hence there is bright future ahead.
Competitive rivalry
Although LIC is a clear market leader but in private life insurance companies there are lots of small and equally sized competitors making the rivalry more intense. The difference between one insurance company and another is usually not that great. As a result insurance has become more like a commodity, an area in which the insurance company with the low cost structure, greater efficiency, and better customer service will beat out competitors. Insurance companies also use higher investment returns and a variety of insurance investment products to try to lure in customers. In the long run, we're likely to see more consolidation in the insurance industry. Larger companies prefer to takeover or merge with another rather than spend the money to market and advertise to people.
2.7 FUTURE STRATEGY OF THE COMPANY
The future strategy of the company is penetration by targeting varied segments including large corporate, small & medium enterprises, government, retail, bancassurance, and Internet sales. They have multiple distribution channels and have also got into bancassurance and alternate channels focusing on corporate agents, brokers, online sales and telemarketing. Technology will remain the key enabler for cost effective product distribution, increased operational efficiencies, as a risk mitigation tool, reduced customer response times, faster claims servicing and to ensure quality processes are standardized company-wide.
• Products: Bajaj Allianz has already launched a complete set of need-based products to cater to varied needs of the customer. Currently Bajaj Allianz has a product portfolio of 26 products and more need-based products are in the pipeline. The company also benefits from product innovations by the foreign partner which helps in bringing new products into India
• Distribution: Satisfied with the performance of the satellite offices, Bajaj Allianz Life plans to open 100 more outlets. The company is also looking at non- traditional insurance distribution channels. A separate team under the head Brand Assurance has been created to identify unconventional distribution networks. Ultimately, insurance is a retail game; unless your distribution is strong, you can’t really compete. In the last two years, it has opened more branch offices. They have about 600 branch offices in 560 towns – largest number among the private players. They plan to add more offices in the existing towns and add offices in more towns as well, so as to reach more customers across the country in this financial year.
• Sustainability: Though the company is now selling large policies, these mainly come from unit-linked ones. And the sustainability of the current bull run in that product portfolio remains uncertain. Like other insurers it is a waiting game for Bajaj Allianz Life. Except that the company aims through uncertainties to be at the top of the industry rather than languishing at the bottom of the heap.
• Relationships: The company strategy is to have a lower number of tie-ups but deep relationships. More than 30 per cent of the new business is from banking channels. The APPP from this channel is Rs35, 000
• Tie-Ups: The Company is tying up with NGOs and other organizations, which have strong presence in rural and semi urban areas. Besides, it is also going to open its own offices in these areas as well.
• Belief: Customer focus is what drives them to excel and perform aggressively. Two years back when they started to reorient the company, they started from the basics, analysing the customers and their needs and they rebuilt the product portfolio and the company structure around those needs. Their basic promise is ‘Jaise Zaroorat Viasa Insurance' Insurance as per the customers need - no fancy commitments but a honest promise that they can deliver and customer believes value based economical products with good appreciation and security. The company believes in growing aggressively and maintaining quality of service. • Expansion: The company planning to expand to 750 towns in this financial year
and explore various ways in which it can capitalize on health and await the opening up of the pension sector. The strategy is to first target companies with German parentage and those from the Bajaj group. Then expand the reach.
• Promotion: The company plans to spend around Rs15 crore on promotion. The communication strategy is to familiarize its brand with the public so that doors for agents open fast.
• Portfolio Management: Regarding the company’s investment portfolio and the yields, the policyholders decide the parking avenues of unit-linked policy investments. In the case of traditional products aim is to match the assets with liabilities. Normally Bajaj Allianz invests in debt funds and the target yield is 6 per cent. The shareholders' funds are used to meet the solvency margin. While unit-linked products contribute nearly 70 per cent of the company's business, Bajaj Allianz Life's focus is on group business
CHAPTER 3
CHANNEL STUDY
3.1 CHANNEL DISTRIBUTION
Competition in the market has led to exploration of new innovative and diversified channels of distribution for capturing wider market, which will provide cost-effective services to policyholders. These alternative channels will also build strong and effective customer relationship. Entry of private players in the market has explored new channels on the lines of developed economics. Besides, traditional intermediaries as corporate agent, brokers, and new methods like bancassurance, direct marketing, telemarketing, independent financial advisors and sale of policy through internet would play a crucial role in penetrating the insurance market in India. The choice of channel is directly related to the kind of product complexity and level of service.
3.1.1 AGENCY CHANNEL
A life insurance agent is a representative of an insurance company authorized to sell insurance policies. A life insurance agent advises which policy is best for you. An unscrupulous agent could not only sell you the wrong policy, but may also lie that he got you a loaded premium, or be untraceable when you need him. The agent draws commissions from the insurer irrespective of the quality of service he provides to the policyholder and, as long as the policy is in force and premiums are being paid. The policyholder can go to the company directly if he is not fully satisfied with the agent. In case the agent leaves the insurance company, then the company may assign another agent to the person.
The IRDA has prescribed a code of conduct for agents and may cancel the agent’s license in case of gross misconduct and fraud. So most companies normally terminate the agency agreement with the particular agent where a case of malpractice is actually found, and then, the agent is probably free to go to some other insurance company. Every individual company frames it's own set of internal guidelines of how they would deal with the agents. Each company decides the action to be taken against its agent depending on the
Bajaj Allianz Life Insurance - Distribution Network
Agency Channel Branches (102) Satellites (450) Bancassurance Standard Chartered Syndicate Bank IndusInd Bank Leading Co-Op & Rural Banks
Catering to mass & Rural markets
Group & Alternate Channel
Employee Benefit Group
Corporate Agents (406) Franchisees (600+) Direct Mktg (22 locations) Brokers (51) 75,000 Tied Agency Network
severity of complaint received and may even terminate the contract with the agent in case of an agent found guilty of malpractice.
In India most of the insurance agents are actually part timers. The agent does plays a very important role but, the company is actually holding on and backing up the agent to ensure that he gives you the best service available.
3.1.2 BANCASSURANCE
Bancassurance is a word, which appeared in France (around 1980) to define the sale of insurance products through a banking network. Bancassurance success is based on mix of factors (legal/regulatory environment, banks’ image and networks, products, banks’ marketing strategy). Bancassurance is allowed in all but one Asian market (Philippines). Though it is too early to predict, bancassurance has the potential to emerge as a significant distribution mechanism. Banks have not only data from which they can identify potential clients, but have also extensive reach and provide a point of contact for the insured. Bancassurance is very well fitted to Life products
• High level of complementarity’s with banking products
• Bank tellers are comfortable with the products (mostly financial products) • Product Mix: Banks sell more unit-linked than other Life distributors
Banks have pushed the sale of Life Insurance for 5 main reasons:
• Mature and highly competitive banking markets, need for diversification • Broadening the Product Range
• Capture the lion’s share of households’ long-term savings • Leverage banks’ competitive edge on marketing side • A substantial contribution to profits
The Bank branch unlike an agent cannot be elusive after the sale of the product and has to respond to the needs of the insured. If there is proper disclosure at the time of sale of policy and efficient post sale service, there will be significant increase in the use of this model by the insurers to enlarge their business. Bancassurance has tied with a complete
spectrum of banking sector and alternate channel has more then 100 corporate agents and district co-operative banks.
3.1.3 GROUP AND ALTERNATE CHANNEL
Besides the traditional agency model and through bancassurance, the fastest way of increasing the revenues is through the Group and Alternate Channel business.
During my project I was associated with the Alternate Channel office of Bajaj Allianz in Mumbai. This model operates through corporate agents, brokers and franchisees.
3.1.3.1 CORPORATE AGENCY
Corporate Agency is another area, which has been expanding rapidly. This is a new institution and we have no experience of the functioning of this new class of intermediary, as such an institution is not prevalent in insurance markets in the world. While this model has the potential to reach a large section of the population in a short time, there are concerns about the mode of sale of the policies. Insurance products are becoming complicated and unless the agent is conversant with the benefits and conditions attached to the policy, there is a distinct possibility of the sale being affected without full disclosure. While this may not be intentional the repercussions could have far-reaching consequences. The insurers will have to be extremely careful in dealing with corporate agents and keep a vigilant eye on the way the sales are affected. The IRDA would be issuing some guidelines on the manner of selection of corporate agents, the manner in which their activities should be monitored and the precautions to be taken to ensure that there is complete disclosure to the clients of the policy implications.
3.1.3.2 BROKER CHANNEL
The insurance broker offers the most efficient distribution system through which clients purchase commercial insurance. As the non-life insurance market open gradually, the value of the insurance broker's role will be better understood. There will be increasing opportunities to serve the needs of midsize companies arid small enterprises by delivering the specific services these clients need and in the way they want them delivered.
3.1.3.3 FRANCHISEE
Franchisees are the budding entrepreneurs with requisite professional experience seeking financial freedom that can eventually be developed into corporate agents.
Need for Franchisee
• Inroads into the market
• Utilizing the entrepreneurial capabilities • Increasing the market Penetration
Prerequisite for Franchisee:
• Channel Partners Requisite: Financially sound. Well Educated.
Have access to huge database.
Experience of dealing with Financial Instruments should be preferred. Ability to manage a team of 10 sales Executives and 2 Tele Callers. Have a good reputation in the market.
Office Space – 500 Square feet Tele callers –2
Telephone –2 Computer-1
• Company Support
Insurance Service executive –10 Recruitment, Training & Development Back office support
Brand Name
Viability and Profitability of the Franchisee
Approach to Appointment ratio - 40: 5 Appointment to Sales ratio - 5: 1
2 Tele Callers x 80 Calls a day - 160Calls(Approx/ day) 120 Calls (Approaches) will yield - 20 Appointments 20 Appointments will yield - 4 Sales
4 Sales x 25 working days - 100 Sales Assuming each sale of Rs. 7,500 - Rs. 7,50,000 Income of Franchisee @ 40% - Rs. 3,00,000
Miscellaneous outflow - Rs 29,000
Minimum Estimated Profit - Rs 2,71,000
Franchisee Model Role out Plan
The Franchisee will be required to take Corporate Agency/Individual Agency of Bajaj Allianz. The Branch Manager of the Franchisee shall be Corporate Insurance Executive (CIE)/Individual Agent. The Sales Executives shall be imparted 4 day induction training at the time of appointment and shall be given half day Product and Sales Training every week. Each Franchisee shall be provided a Password through which they can log on to the Bajaj Allianz website to download Care Quote, Benefit Illustrations, etc. In case the average flow of business exceeds Rs. 25 lacs per month, dedicated operational support shall also be provided to the Franchisee to facilitate quick acceptance of proposals, etc. The Franchisee will need to have a separate bank account wherein the Company shall directly credit their commission.
Choosing the right channel:
The challenge is to develop efficient and cost effective distribution systems that
• Are integrated with a sound strategy and the product offering • Reflect an intimate knowledge of your target customers • Match their desired product experience
Product Complexit y Direct Broker/ Agents Bancassurance Retailers/ Utilities Internet Retail Corporate Increasing suitability Decreasing High product complexity
High transaction value High advisory content
Low complexity Low transaction value Standardized product Decreasing distribution costs Low High High Distribution Reach
3.2 PROFILING
While the insurance sector is seeking to maintain a balance between acquiring customers and developing existing ones, customer acquisition is vital, as no retention strategy will entirely stem customer defection. That said, insurance companies are experiencing unacceptable levels of customer churn, thanks to which they are focusing on keeping the customers they already have in a bid to ensure a net growth in their customer base. Today, the focus is on selling more products to existing customers to improve profitability. Customer-focused strategies require CRM (Customer Relationship Management) to help acquire customers thorough various touch points and translate operational data into actionable insights for proactively serving customers.
Customer Profiling helps one find new customers for the business. It helps in extracting people and/or businesses that match the profile of the current customers. This provides you with a list of prospective customers, who could have already bought similar products, have a need for your product or are more inclined to buy your product or service. One will have a highly targeted prospect list to work from.
As it applies to remodeling, Predo's Law--known as the 80/20 Rule--states that 80% of your sales come from 20% of your customers. Taken to the next level, it may well be true that 50% or more of your sales are coming from just 5% of your customers. Whatever the case at your company, you know who your "best" and "worst" customers are.
Thus, a salesperson is more apt to spend the greatest percentage of time trying to close sales with the hardest-to-close prospects. A salesperson should really do just the opposite: spend the most time closing sales with the easiest-to-close prospects.
To find out which prospects are easier to close, client profile need to be created. Sales of the future generally resemble sales of the past. It is great to "fire" all of your problem accounts and replace them with clients who are more like your favorites. Customer profiling helps you identify the common attributes of your best clients.
Through profiling and using CRM insurance companies can enhance:
• Cross-and up-selling capability to provide market opportunities within an existing customer database.
• Predictive capability to determine customer behavior.
• Information regarding customer retention or attrition helps determine the likelihood of policy lapses and helps identify customers worth targeting for retention campaigns.
• Customer segmentation that leverages data to create accurate categories for use in marketing strategies.
• Market automation that combines analytics with campaign management functionality to help drive a more effective and efficient marketing campaign.
For the same, we met officials from several existing corporate agents and brokers. They helped us by:
• Telling about their primary business and categorizing their customer base • Expressing their view on various service quality parameters
• Revealing their experience with the company and their expectations
During this activity we met the following:
Corporate Agents J2 Infocomm (India) Pvt. Ltd. Mr. R. K. Shah Brokers Mata Insurance and Reinsurance
Saviour Insurance Vantage
Anand Rathi Edelweiss
Pioneer Insurance Services Pvt. Ltd. Continental Suraksha
Mr. Karn Dutt Sharma Mr. Jignesh Shah Mr. Khanindra Barman Ms. Rekha Popat Ms. Bakhtawar
Mr. Himanshu Kawley
Franchisees Harshad Hardwares Finlife
Mr. Harshad R. Parikh Mr. Kalpesh
Questionnaire, which is annexed with the report was prepared to study the:
Operations of the Companies:
To generate business the companies need to create leads and work on them by making them work and extracting profits. The BJAZ partners generally do it by taking out relevant details from the databases available. Even HSBC and Citibank provide databases, which are segmented into several sections that can help any business. They also follow the referral model.
Once the lead is generated, the Insurance Sales Representatives take over. In case the deal is big Joint calls take place i.e., the Relationship Manager assists the ISR.
The kind of profits they earn:
From the interaction I came to realize insurance does not play a major role in contributing towards the annual turnover of the companies, in case they are involved in other financial service distribution as well, for e.g., mutual funds. In Finlife less than 5% of turnover comes from insurance.
The kind of customers they have:
Generally major chunk of the customer base of most of the partners falls in the corporate category. But there are brokers like Saviour Insurance who target all sectors of the society; professionals, corporate and government service officials. Also, Mr. Harshad Parikh who has taken up a franchisee generally targets professionals.
Association with Bajaj Allianz:
Most of the partners have recently joined hands with the company. Alternate channel started in 2004. Thus, the association with most of the companies is less than 6 months.
Service Parameters affecting a company:
The parameters that affect the companies were found to be promise – orientation, promptness, reliability, initiation, product variety, marketing efficiency and administration. In case of Bajaj Allianz, the partners were satisfied with the product
