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CHAPTER 1:
INTRODUCTION:
1.1 INTRODUCTION
1.1. 1) INTRODUCTION OF CRM
1.1. 2) INTRODUCTION OF INSURANCE
1.1. 3) INTRODUCTION OF CRM IN INSURANCE
1.2 SIGNIFICANCE OF CRM IN LIFE INSURANCE SECTOR
1.3 BACKGROUND OF CRM IN LIFE INSURANCE SECTOR
1.4 LIMITATION
1.5 OBJECTIVE OF STUDY
1.6 RESEARCH METHODOLOGY
1.6.1) PRIMARY DATA
1.6.2) SECONDARY DATA
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CHAPTER 1:
INTRODUCTION:
1.1.1) INTRODUCTION OF CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
What is CRM?
People make buying decisions. People have loyalties. Relationship
only can be developed between people. Your Customer Relationship
Management program must be structured around this well-known
fact. CRM is about people. CRM is an approach to organizing yours
company’s interaction with customer that starts with customer-
centered point of view. It’s an entire discipline, not a single activity.
Customer relationship management (CRM) is no longer a buzzword,
but a necessity for business in the knowledge age we live in.
Customer relationship management (CRM) solutions provide
customer-oriented services for planning, developing, maintaining, and
expanding customer relationships, with special attention paid to the
new possibilities offered by the Internet, mobile devices, and multi-
channel interaction. CRM enables a company to capture a
consolidated customer view through multi-channel interactions in a
data warehouse solution.
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Sophisticated analytical techniques are then applied to this customer
information to better understand and predict customer behavior. CRM
can then be used to strategically implement acquired customer
knowledge in every area of the company, from the highest
management level to all employees who come into direct contact with
customers. CRM thus enables an organization to address its
customer’s preferences and priorities much more effectively and
efficiently. CRM is a tool that can help organizations to profitably
meet the lifetime needs of customers better than their competitors.
Creating a definition for CRM is both critical & dangerous. It is
critical because your organization need to have a common
understanding of what you are doing. It is dangerous because so many
definitions & misconceptions are already lodged in people’s minds.
One of the first things that any company should do when launching a
CRM initiative is to the rest what the organizations current
understanding of CRM is.
This definition of CRM covers many but not all activities of the
company. CRM is limited to activities that take place in the customer-
facing functions, including marketing, sales, customer services, &
product support.
3
1.1.2) INTRODUCTION OF LIFE INSURANCE:
Whenever the word insurance comes to here we things of protection.
The protection against life the most precious thing & the property,
assets, etc. The question arise why insurance is required it may be life
or general whatever the answer is there is a fear of loss came into the
picture, so there should be some thing which gives protection against
the loss & to fulfill the loss upto certain extent. That’s why the
insurance is needed because in today’s scenario there is no guarantee
of anything, now let us focuses on life insurance which is topic of
project with related to CRM (customer relationship manager).
CRM & life insurance both are essential for each other because they
both are like wheels of a vehicle (bike) one cannot run efficiently &
effectively without each other. To make survive the life insurance
industry in the market there is a need of CRM (customer relationship
manager). To create CRM there is a need of proper subject (life
insurance). So let know something about life insurance.
Know about life insurance?
Life insurance in India made its debut well over 100 years ago.
In our country, which is one of the most populated in the world, the
prominence of insurance is not as widely understood, as it ought to
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be. What follows is an attempt to acquaint readers with some of the
concepts of life insurance, with special reference to LIC.
It should, however, be clearly understood that the following content is
by no means an exhaustive description of the terms and conditions of
an LIC policy or its benefits or privileges.
For more details, please contact our branch or divisional office. Any
LIC Agent will be glad to help you choose the life insurance plan to
meet your needs and render policy servicing.
What Is Life Insurance?
Life insurance is a contract that pledges payment of an amount to the
person assured (or his nominee) on the happening of the event insured
against.
The contract is valid for payment of the insured amount during:
• The date of maturity, or
• Specified dates at periodic intervals, or
• Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of
premium periodically to the Corporation by the policyholder. Life
insurance is universally acknowledged to be an institution, which
eliminates 'risk', substituting certainty for uncertainty and comes to
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the timely aid of the family in the unfortunate event of death of the
breadwinner.
By and large, life insurance is civilization’s partial solution to the
problems caused by death. Life insurance, in short, is concerned with
two hazards that stand across the life-path of every person:
1. That of dying prematurely is leaving a dependent family to
fend for itself.
2. That of living till old age without visible means of support.
Life Insurance Vs. Other Savings
Contract of Insurance:
A contract of insurance is a contract of utmost good faith technically
known as uberrima fides. The doctrine of disclosing all material facts
is embodied in this important principle, which applies to all forms of
insurance.
At the time of taking a policy, policyholder should ensure that all
questions in the proposal form are correctly answered. Any
misrepresentation, non-disclosure or fraud in any document leading to
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the acceptance of the risk would render the insurance contract null
and void.
Protection
Savings through life insurance guarantee full protection against risk
of death of the saver. Also, in case of demise, life insurance assures
payment of the entire amount assured (with bonuses wherever
applicable) whereas in other savings schemes, only the amount saved
(with interest) is payable.
Aid to Thrift
Life insurance encourages 'thrift'. It allows long-term savings since
payments can be made effortlessly because of the 'easy installment'
facility built into the scheme. (Premium payment for insurance is
monthly, quarterly, half yearly or yearly). For example: The Salary
Saving Scheme popularly known as SSS provides a convenient
method of paying premium each month by deduction from one's
salary.
In this case the employer directly pays the deducted premium to LIC.
The Salary Saving Scheme is ideal for any institution or
establishment subject to specified terms and conditions.
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Liquidity
In case of insurance, it is easy to acquire loans on the sole security of
any policy that has acquired loan value. Besides, a life insurance
policy is also generally accepted as security, even for a commercial
loan.
Tax Relief
Life Insurance is the best way to enjoy tax deductions on income tax
and wealth tax. This is available for amounts paid by way of premium
for life insurance subject to income tax rates in force. Assesses can
also avail of provisions in the law for tax relief. In such cases the
assured in effect pays a lower premium for insurance than otherwise.
1.1.3) INTRODUCTION OF CRM IN INSURANCE
Insurance companies can learn, from customer’s responses, to
improve there business. Insurers can reach the customers expectation
by understanding there needs & behavior of the customers, which will
also help them to improve their profits. To take full advantage of the
CRM program, it should be properly implemented with lot of support
from the organization. A customer-centric has to be embedded in the
organization culture. CRM bring about a positive change in the
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company’s process people & technology over the period of time, &
results in extending the companies customer relationship.
A CRM program accumulates knowledge about the customer’s wants,
& accordingly improves the product & services. This results in
increased customer loyalty, acquisition & thereby revenues. The
program also helps in improving efficiency across the organization,
which helps in cost of reduction. Moreover, customized solutions are
provided to the customers as & when required.
CRM implementation brings about convergence between people &
process, thereby increasing the business of the agent & the employer
group. It also plays a key role in identifying the right mix of tools &
information for optimal profitability.
In order to effectively implement any CRM program, some factors
have to be considered. First of all, the customer segments have to be
defined to keep a better track of the customers. Next comes the
selling of policy. Cross-selling is another accepts seen in most of the
insurer these days. Selling additional policies to the existing policies
holders is one of the aspects happening in insurance companies.
Are the company’s objectives, vision and key performance measures
defined for better control over operation is there a scope to shift the
companies focus on product centric approach to customer centric
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approach to insure that the model is sustainable to generate customer
satisfaction.
CRM can help or hurt the risk management process depending on
how well it is managed. According to industry analysts, CRM and
supply chain application are 81% more profitable for the companies
who utilized them, rather than the company that don’t. According to a
study, the failure rate of CRM projects will increase from 55% to
70% in 2004.research also reveals that after the installation of CRM,
the call centre reporting has improved by 88%. CRM is not merely an
implementing technology solution or customer service, but it should
be able to learn about the customer’s needs, behaviors, and
preferences in order to identify the market segments. CRM programs
might also fail, if the companies don’t include corporate culture and
organization in planning and companies should also never
underestimate the importance of people.
Many managers don’t understand that the customer’s wants, rewards
and recognition are based on efficiency rather than effectiveness.
CRM is more than a customer service as it involves finding the best
customers and directing the resources that will be deployed. Many
organizations look at CRM as a requirement and if it is not operated
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properly it could affect the company’s bottom line, as the company
might lose the customers it does not want to lose.
1.2 SIGNIFICANCE OF CRM IN LIFE INSURANCE SECTOR
Customer Relationship Management i.e. CRM it acting as very vital
role in life insurance sector as it is beneficial for both the parties i.e.
Organization which implement it & the Customers of that particular
company because it focuses on maintenance of relationship with
exiting customers & try to getting more business from them as well as
generating new clients for the industry by giving better services. It is
like a MANTRA for the insurance company in today’s scenario where
the competition is increasing day by day, as its help the organization
to face the new challenges in upgrading & growing market were all
the people are aware the need/importance of insurance but taking it
from the company were it get better/best services & policy’s which
fulfills there need & wants as per there thoughts. CRM is required for
fulfilling these things only, & if CRM program is being successful it
turn the organization as the horse of long race & generate the
profitable business.
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1.3 BACKGROUND OF CRM IN LIFE INSURANCE SECTOR
The need for research felt here to know in detail, the practical &
theoretical aspects of CRM in life insurance. CRM is on today’s
insurance market is emerging as a popular contact. My aim in
selection of this topic is to know more about the future scope of
CRM‘s importance in life insurance sector in India & to know about
its effect on organization & its image in customer mind.
1.4 LIMITATION
 Other services of insurance company have not been covered.
 Project has been restricted to Mumbai in order to avoid
complications.
 Only focuses on customer-centric approach.
1.5 OBJECTIVE
 To study there strategy of tackling there competitors.
 To kwon the perceive future of CRM in insurance.
 To identify how to retain the customers.
 To identify the problems faced by the organizations to maintain
CRM.
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1.6 RESEARCH METHODOLOGY
Primary data has been collected by personal visits to insurance
companies & its branches, Telephonic interview from Consultants,
agents, advisors & with the help of Questionnaires filled by them.
Secondary data has been collected from various sources such as
books, news papers, & etc.
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CHAPTER 2:
HISTORY OF CRM IN LIFE INSURANCE:
CRM in life insurance sector plays a very important role; it is an
activity/program by which the survival of an industry is being easy in
competitive market. As its main functions is to maintain relationship
with the existing (old) customers & new customers. The CRM is
working as an important tool for the insurance industry in today’s
world/scenario as it is not an easy task to maintain the relationship
with customers for long period of time but with the help of CRM it is
being possible. CRM help the companies to face the New Challenges
arises in the market which create problem for increasing the business such
as, competitions, especially after the LPG (Liberalization, Privatization, &
Globalization) concept has been implemented in India. In such tuff
competition the CRM plays a vital role to an industry to getting the business
form the common people & existing customers. The CRM has born just after
the Life Insurance Companies is exist in the globe & from that time it is
playing very important role to increase the business if life insurance sector.
In India, insurance has a deep-rooted history. It finds mention in the
writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and
Kautilya (Arthasastra). The writings talk in terms of pooling of
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resources that could be re-distributed in times of calamities such as
fire, floods, epidemics and famine. This was probably a pre-cursor to
modern day insurance. Ancient Indian history has preserved the
earliest traces of insurance in the form of marine trade loans and
carriers’ contracts. Insurance in India has evolved over time heavily
drawing from other countries, England in particular.
1818 saw the advent of life insurance business in India with the
establishment of the Oriental Life Insurance Company in Calcutta.
This Company however failed in 1834. In 1829, the Madras Equitable
had begun transacting life insurance business in the Madras
Presidency. 1870 saw the enactment of the British Insurance Act and
in the last three decades of the nineteenth century, the Bombay
Mutual (1871), Oriental (1874) and Empire of India (1897) were
started in the Bombay Residency. This era, however, was dominated
by foreign insurance offices which did good business in India, namely
Albert Life Assurance, Royal Insurance, Liverpool and London Globe
Insurance and the Indian offices were up for hard competition from
the foreign companies.
In 1914, the Government of India started publishing returns of
Insurance Companies in India. The Indian Life Assurance Companies
Act, 1912 was the first statutory measure to regulate life business. In
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1928, the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-
life business transacted in India by Indian and foreign insurers
including provident insurance societies. In 1938, with a view to
protecting the interest of the Insurance public, the earlier legislation
was consolidated and amended by the Insurance Act, 1938 with
comprehensive provisions for effective control over the activities of
insurers.
The Insurance Amendment Act of 1950 abolished Principal Agencies.
However, there were a large number of insurance companies and the
level of competition was high. There were also allegations of unfair
trade practices. The Government of India, therefore, decided to
nationalize insurance business.
An Ordinance was issued on 19th
January, 1956 nationalizing the Life
Insurance sector and Life Insurance Corporation came into existence
in the same year. The LIC absorbed 154 Indian, 16 non-Indian
insurers as also 75 provident societies—245 Indian and foreign
insurers in all. The LIC had monopoly till the late 90s when the
Insurance sector was reopened to the private sector.
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The story of insurance is probably as old as the story of mankind. The
same instinct that prompts modern businessmen today to secure
themselves against loss and disaster existed in primitive men also.
They too sought to avert the evil consequences of fire and flood and
loss of life and were willing to make some sort of sacrifice in order to
achieve security. Though the concept of insurance is largely a
development of the recent past, particularly after the industrial era –
past few centuries – yet its beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in
the year 1818. Oriental Life Insurance Company started by
Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that
period were brought up with the purpose of looking after the needs of
European community and Indian natives were not being insured by
these companies. However, later with the efforts of eminent people
like Babu Muttylal Seal, the foreign life insurance companies started
insuring Indian lives. But Indian lives were being treated as sub-
standard lives and heavy extra premiums were being charged on
them. Bombay Mutual Life Assurance Society heralded the birth of
first Indian life insurance company in the year 1870, and covered
17
Indian lives at normal rates. Starting as Indian enterprise with highly
patriotic motives, insurance companies came into existence to carry
the message of insurance and social security through insurance to
various sectors of society. Much later on the 19th of January, 1956,
that life insurance in India was nationalized. About 154 Indian
insurance companies, 16 non-Indian companies and 75 provident
were operating in India at the time of nationalization. Nationalization
was accomplished in two stages; initially the management of the
companies was taken over by means of an Ordinance, and later, the
ownership too by means of a comprehensive bill. The Parliament of
India passed the Life Insurance Corporation Act on the 19th of June
1956, and the Life Insurance Corporation of India was created on 1st
September, 1956, with the objective of spreading life insurance much
more widely and in particular to the rural areas with a view to reach
all insurable persons in the country, providing them adequate
financial cover at a reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch
offices, apart from its corporate office in the year 1956. Since life
insurance contracts are long term contracts and during the currency of
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the policy it requires a variety of services need was felt in the later
years to expand the operations and place a branch office at each
district headquarter. Re-organization of LIC took place and large
numbers of new branch offices were opened. As a result of re-
organization servicing functions were transferred to the branches, and
branches were made accounting units. It worked wonders with the
performance of the corporation. It may be seen that from about
200.00 crores of New Business in 1957 the corporation crossed
1000.00 crores only in the year 1969-70, and it took another 10 years
for LIC to cross 2000.00 crore mark of new business. But with re-
organization happening in the early eighties, by 1985-86 LIC had
already crossed 7000.00 crore Sum Assured on new policies.
Today LIC functions with 2048 fully computerized branch offices,
100 divisional offices, 7 zonal offices and the corporate office.
LIC continues to be the dominant life insurer even in the liberalized
scenario of Indian insurance and is moving fast on a new growth
trajectory surpassing its own past records. LIC has issued over one
crore policies during the current year. It has crossed the milestone of
issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy
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growth rate of 16.67% over the corresponding period of the previous
year.
From then to now, LIC has crossed many milestones and has set
unprecedented performance records in various aspects of life
insurance business. The same motives which inspired our forefathers
to bring insurance into existence in this country inspire us at LIC to
take this message of protection to light the lamps of security in as
many homes as possible and to help the people in providing security
to their families.
Some of the important milestones in the life insurance business in
India are:
1818 Oriental Life Insurance Company, the first life insurance
company on Indian soil started functioning.
1870 Bombay Mutual Life Assurance Society, the first Indian
life insurance company started its business.
1912 The Indian Life Assurance Companies Act enacted as the
first statute to regulate the life insurance business.
1938 Earlier legislation consolidated and amended to by the
Insurance Act with the objective of protecting the interests
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of the insuring public.
1956
245 Indian and foreign insurers and provident societies are
taken over by the central government and nationalized.
LIC formed by an Act of Parliament, viz. LIC Act, 1956,
with a capital contribution of Rs. 5 crore from the
Government of India.
CHAPTER 3:
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CRM IN INSURANCE – NEW MANTRA:
With the increasing in the number of insurance players in the market
& consumers becoming more & more aware of different product,
insures have realized the importance of CRM (Customer Relationship
Management). CRM has been practice for decades now, the grocery
shopkeeper near our home, the paanwala, etc.; all of them have been
practicing it. In today’s competitive era, where customer is the king, it
is a must for the insurers to not only make new clients but also
maintain the existing customer and encourage repeat purchase. It is
estimated that the cost of attracting a new customer is five times more
than that incurred to make an existing customer happy. Life Insurance
Corporation (LIC) of India has been the sole player in the market
before the appearance of private players. It exploited its monopoly
powers are didn’t care much about either attracting new customers or
retaining the existing ones. If anyone needed an insurance policy they
had to purchase from LIC. It was mostly a tax- saving schemes which
encourage the purchase of insurance policy. Customers were not
educated regarding insurance matter & a source of knowledge to them
was only the insurance agent & he was the person who suggests the
policy to the customer instead of the customer making his own
choice. The customers could not even choose some other policy from
22
some other insurer because it was Hobson’s choice, i.e., LIC. But
when private players entered in the market, the competition forced
LIC & the other new entrants to become customer centric.
Customer service is getting more & more as most of the time buying
an insurance policy is a one – time purchase & customers are unaware
of the variation available in the market. In the insurance sector, there
is an agent-client relationship & satisfied client can be the biggest
brand ambassador for the company (word of mouth advertisement). It
is in the interest of the company to build up good relationship with
the client. The insurance agents of the company play an important
role in building this relationship because they are the people who
interact with prospective & existing clients. Therefore, every
organization should build a foundation of relationship marketing
because it acts as a new mantra to all organizations & its help to the
agents to talk about the company’s product & convince the customer.
The best effort is to go for CRM in an integrated approach. To be
more friendly & the customer-centric, organization need to be
implement a CRM strategy which helps them to interacts with there
customers in a more informed manner because CRM helps the
manager, the agent & the other officials (present or past employees)
to understand the status of present client. So, CRM should be
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implemented in such a way tat it does not become a hurdle for the
organization but is its assets, which facilitated the smooth flow of
information & better care of the customer. CRM has been estimated
to be of use of all organizations, be it of service sector or any other
sector still, the experience in the implementation part has not be
successful. In most of the cases, it has been practically observed that
CRM implementation in an unstructured manner has led it to become
a hurdle for the organization instead of becoming valuable assets &
an integrated part of the company.
LIC, the biggest player in the insurance sector has also gone for
implementing CRM in its organization to ‘facilitated better care of the
customer’. Now the customer can deposit there premium in any
computerize branch all over India. But it has not be implemented at
bottom level i.e. agents & managers who are the person interacting
directly with the clients. It is the task of the top-level & middle level
manager to train their agents to practice relationship management &
build relationship with their clients.
1. The agents should be trained to analysis their environment
(society, friends, peer groups, etc.) & build good relationship with
their environment because a good marketer first forms relationship
& then sells his goods.
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2. An agent should make a profit of the prospective targets (or
potential clients).
3. He should be trained to interact with them.
4. He should trained to build the customer database classify them
into potential existing customer into dissatisfied, satisfied highly
satisfied customers.
5. The agents should be trained to get the feedback of the customer
because insurance selling is a confidence building measure were
relationship is build between the agent, which lasts for a long
duration.
To survive & have an upper hand over the competitors, in today’s
scenario insurance companies need to implement CRM in there
organization not only technically (computer, network, database
system, CRM software trained personnel) but also as part of the
culture. Relationship marketing is a key to success in the present era
& only those organizations can succeed who and been able to build a
base of their loyal customers, because a loyal customer advocates the
companies products much better than the organization itself. The
basic existence of the organization lies on the hands of its customers.
It can be easily conclude that for success, it is necessary to implement
CRM in the right manner.
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CHAPTER 4:
CRM IN INSURANCE - IMPORTANCE:
26
4.1 SEGMENTATION
4.2 LONG TERM ASSOCIATION WITH THE CUSTOMER
4.3 NEED – BASED SELLING
4.4 PROPER TRAINING INPUTS FOR THE DISTRIBUTOR
4.5 CLAIMS MANAGEMENT
CHAPTER 4:
CRM IN INSURANCE - IMPORTANCE:
27
With the competitors hotting up in the post liberalized insurance
market, one factor that is contributing to the over all performance of
an insurance player is the customer relationship management (CRM)
that the company including in. each of the insurers is parading its own
leverages in the field & highlighting the importance that they attached
to customer service in their organizations. To what extend the
promises are being delivered is the million dollar question.
One thing which is common to most of the companies is that they are
all relatively new in the field & not been tested seriously. This is
particularly true in the case of life insurance companies who have
long term relationships with their clients. It should be attempt of the
players to not only retain the existing customers but also widen the
customer base by enrolling fresh customers from time to time. This
two activity are inter–depended in the way: if the customer service in
the organization is really good, the customer is unlikely to look
elsewhere. On the contrary, he would act as a great brand ambassador
for the company, which would eventually pave the way for enrolling
the customers. In the case of long term contracts, it is possible that a
policyholder has a host of services to be attended to during the entire
period of contract.
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One aspect that is related to such a long term contract is that the
perishability of service may not be significant. While it may be
broadly believed to be so, it would not apply as an ‘across the board’
characteristic. There may be some service which may have to be
attended with all the urgency. For e.g.:- if a policyholder being
serviced under the Salary Saving Scheme (SSS) of a life insurer is
transferred to one place to another, an undue delay is transferring his
file to the desired destination may result in all the premiums being
kept in the pipeline or the suspense account. It is possible that the
policyholder would realize this only at the time of claim settlement by
which time is either too late or too complicated to rectify the damage.
4.1 SEGMENTATION
One area where the insurers are looking at creating an ideal CRM
platform is the segmentation of customers. This would, however,
presuppose that the players have enough products to cater to different
segments of the customers. In the life insurance contract, however the
players can access the flexibility that is attached to the use of various
riders. Even without having a large product base, by designing several
riders, several customized solutions can be offered. It would be better
for the players to have a long range planning in this regard & the
specific segments that they would like to venture in. this would
29
enable the players to adopt the right CRM solutions, which would be
expected to last for a reasonably long time. One thing that they should
bear in mind is that the CRM solutions do not come on the platter –
they have to be paid for dearly & another pertinent point is,
obsolescence that is associated with the solution should be tackled
properly. Not an easy combination to contend with by any standards,
indeed. It would be a better option to make the solutions as
wholesome as possible. Besides, the players should also keep in mind
the likely changes that are going to occur as regards regulations, the
role of the global economic environment etc.
4.2 LONG TERM ASSOCIATION WITH THE CUSTOMER
Customer service in insurance organizations is beset with some
strange constraints, which may not be very relevant in the other areas
of service organizations. Especially in life insurance, one thing is
strikingly different in the long term nature of the contract. In some
cases, it can go up to a entire life time of the client, if he or she
looking at the backing up the risk coverage during the active working
period with a reasonable & decent pension package. This type of
relationship has to be necessarily built by a rock–solid commitment
towards providing good service throughout the contract period. How
often does this happen really?
30
4.3 NEED – BASED SELLING
The problem is much more complicated in the case of a nascent
market like the Indian one. The role of the insurer in this aspect
begins at the proposal stage – its agent or the advisor is expected to
the primary underwriter. He/she should be capable of identifying the
need of the client & then be in a position to suggest a product that
would best suit his or her needs. This would ensure that the business
would be retained for a long term. If the distributor is himself or
herself not ware of the nuances of the product that is being
recommended, it result in a disillusioned policyholder in due course.
This would eventually lead to poor retention ratios of business. This,
in fact, is the bane of the Indian insurance market & is what is
responsible for high lapsation ratio of several insurance companies,
private players included. Insurance companies should contribute their
own service by providing the back-up support for the distribution
personnel. This would hold well in the case of renewal of short-term
contracts. In the absence of this, all the efforts put in by him or her
may not end in delivering positive results & this would act as a
dampener.
4.4 PROPER TRAINING INPUTS FOR THE DISTRIBUTOR
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What would obviate the above problem is the existence of a
thoroughly trained distribution force. We have several pre-requisites
for being an insurance agent or advisor. But if the high incidence of
default is observed despite all the preconditions attached to the
training of the advisor what would it indicate? It would perhaps
indicate that the right inputs of the training have not been imparted.
While the institutes certify this advisor have apparently fulfilled all
the necessary formalities, ‘the real’ education or the training of the
personnel has not been accomplished. It is good to observed that the
regulator is seriously pursing this aspect of advisor training in all its
seriousness. Apart from the initial training that is mandatory,
insurance companies should also look at imparting refresher courses
for these personnel in order to ensure proper updation of their skills.
By doing this, the insured can be assured of an agency force that is
capable of not only identifying the needs of the prospect & then sell
the product, but they can also look forward to the advisor providing
continued service to the policyholder during the entire period of the
contract.
4.5 CLAIMS MANAGEMENT
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On very vital part of customer relationship management in insurance
business is the way that it looks at claims settlement. For the
policyholder it is the early settlement of claims that is what matters as
an essential service here again, the matter much more significant in
the life arena, because the policyholder looks forward to a quick
settlement after fulfilling his role of premium payment for a very long
time. Insurer should play a very proactive role in the area of maturity
claims by initiating the process ahead of the due dates. This would
ensure that the policyholder would get the ultimate payment on the
day that is due is over. In the settlement of death claims, insurer
should empathize with the policyholder’s beneficiary ensure that
claims are settled a6t the earliest as possible time without unduly
troubling the claimants. Even in case there are some requirements to
be fulfilled, the insurer should help the customer in their processing.
If the service rendered at the time of claim settlement is quick &
efficient, it is bound to improve the image of the insurer & it would
pave the way of more fresh business.
While most of these issues are common to all areas of insurance
business, there are some classes which call for a special mention of
the issues associated with them. E.g. Health insurance. It is to
foregone conclusion that none of the policyholders is in the habit of
33
reading & understanding all the policy conditions. The free look
period that is associated with the life insurance contracts should be
extended to all classes of insurance so that policyholder at least has
the motivation to go through all the policy clauses & conditions. This
would enable the policyholder to understand the contracts in its
detailed thereby avoiding any possible heartburn at a large stage.
A special mention has to be made about the ‘mutually cancelable’
clause of the contract. The insurer should not be undue advantage of
this clause by canceling the contract where the likelihood of claims
being made is high. Even were the repudiation of a claim is
inevitable, the insurer should explain the reasons for such an
eventuality giving details of the relevant clauses & the reasons for the
repudiation. This would create an image in the mind of the
policyholder that the insurers really care. In the absence of this & in
the case of blunt rejection of claims, the policyholder is bound to lose
faith in the concept of insurance. This would be detrimental not only
to the business interest of the insurer but also to the overall insurance
industry.
Above all, the insurance players are looking at creating the CRM
solutions though the rapid advancements being accomplished in
information technology. As mentioned earlier, here the emphasis
34
should be on customizing the needs rather going for humongous
investment in technology. Retrieval from a poor decision would itself
be replete with grave completion as well as loss of investments. One
thing should be born in the mind, however, is that ultimately is it the
person that is delivering the service that is more important than the
means. If the eagerness to help the customer is lacking in a
demotivated employee, what would the technical advancement
achieve. This aspect should be considered seriously by the players
while acquiring CRM solutions. It would be much wiser to go in for a
package which can be implemented easily rather than investing
heavily in a fanciful platform & then try to adapt the human resources
to it. These are some priorities that insurer have to consider while
taking this vital decisions.
CHAPTER 5:
35
CUSTOMER SERVICES – CHALLENGES AHEAD:
5.1 NEED FOR EXPLICIT POLICY CONDITIONS
5.2 AGENT’S PRIORITIES
5.3 RETENTION OF BUSINESS
5.4 NEED FOR HEALTHY COMPITITION
CHAPTER 5:
36
CUSTOMER SERVICES – CHALLENGES AHEAD:
Customer service is the buzzword of the corporate world & a firm
will be better known by the quality of service it provides rather than
its market share or profits-earning capacity. While providing good &
efficient service is a perquisite for any entity, it posses several
problems as far as service organizations are concerned. On account of
an invisible & intangible ‘product’, it makes the assessment of the
services provided, that much more complicated & difficult. This
holds true for an insurance organization & in fact, the problem is of
very significance, especially in a life insurance product, where the
contract runs for very long term, sometimes for a few decades. Hence,
it is very essential for insurance companies to sustain the quality of
service to retain the loyalty of the client. All business entities claim to
provide the best of customer’s service, but how much of it is being
translated into reality of the question of doubt. In order to be sure that
they really delivering the best service, business houses should first
know clearly what the customers expects & then ensures that the
service is delivered. Several fail in this regard & in spite of heavy
expenditure they incur preparation of this customer’s services
package, the real service is not delivered, leading to a disillusioned
customers. Hence, it is very essential to know at the outset, what the
37
customer expects rather then investing the sum of money in attainting
what the company feels is the real customer services.
5.1 NEED FOR EXPLICIT POLICY CONDITIONS
In an insurance contract, there are several clauses which maybe
beyond the comprehension of a policyholder as a part of an innate
nature of an insurance contract. While a part of it be totally ruled out,
insures should make these clauses as explicit as they can be. This
would pave the way for a reasonable settlement of the claim, if &
when it arises. In the absence of such a clarity & openness, it is bound
to be lead to a situation wherein the two parties the insured & insured,
would fail to come to a consensus, leading to a third party viz., the
legal mechanism. The courts may take ambiguity of the clauses to
work against the insurers & to this extent, the customer is well
protected. But why should not avoid the whole episode by putting
simple & comprehensible clauses. In India, the problem is more
complicated to the extent that no policy holder has the practice of
reading the clauses. In this regard the new players deserve to be
complimented for the introduction of the free look-in period.
Whatever be the ‘free’ part of it the policyholder is being made to go
through the clauses or the policy conditions & to this extent alone, it
is the great achievement.
38
5.2 AGENT’S PRIORITIES
Another problem that confronts the industry (both insurer as well as
insured’s) is the lopsided priority of the distributor, either the agent of
the broker, in canvassing the product to the prospect. There is certain
tilt toward his own interests in the form of higher commission & his
target to be achieved rather than the proponents need profile. This
could lead to a sense of dissatisfaction of the policyholder & could
possibly lead to an abortive end to the contract. One possible solution
to this problem could be having in place better system remuneration
to the agent, which would compel him to look at long term prospect
rather than short term interest like an immediate high rate of
commission.
It would also be in the interest of the industry to have more
‘educated’ distributor who can explain the nuances of the proposed
contract to the prospect & do the job of the primary underwriter,
which he is purported to be. This would eventually lead to lesser
heartburn& a higher retention ratio for the insurer. Further, an agent
is the link between the insurer & insured.
For whatever service policyholder requires during the team of the
contract, he looks up to the agent to be his representative. In the
absence of the agent playing this middlemen’s role positively the
39
policyholder may be deprived of the service that he expects. This is
one more reasons for a better regulated compensation system for the
agent, in order to sustain his interest in the continuation of the
contract.
5.3 RETENTION OF BUSINESS
Taking about the retention ratios, one is compelled to know about the
insurer’s obsession about the higher retention ratio. One gets to hear
that a particular company is progressively improving its customer
retention ratio. It is merely to satisfy the company’s ego that these
ratios are considered from time to time, are we objectively looking at
the improvement of retaining the client? Let us considered a few
point to this regard. As discussed above, the large skew in the agents
commission rate could be a factor for several contact being with the
half way through, if not initial year itself. By having more regulated
commission payment system, perhaps, the agent would be, more
interest in the continuation of that policy thereby leading to a possible
improvement in the retention ratio. Further, when a contract is
achieved by the payment of the huge rebate, the policy holder may
not have sufficient motivation to continue the policy & could drop out
at the slightest possible excuse.
40
It is strong case for ruling against rebate payment in insurance, if it
can be helped. There may be some other factor compelling a policy
holder to discontinue his life insurance like inability to sustain the
premium payment, other commitment etc. the insurance company has
to consider all these factors in absolute detail, in order that genuine
retention ratio improved in the long run.
The insurers should adopt a customer-centric approach rather than
being product-centric. This would ensure that the customer would not
shift loyalties as he develops a feeling that he is being taken care of.
This would a ballooning effect on the business as it would ensure that
the satisfied client would spread the good word around. In this way,
the customer base can be widened to a great extend. It is not for
nothing that one says a satisfied customer is the greatest brand
ambassador.
On e positive development which would work towards the
accomplishment of the objective is the introduction of the riders in
the life insurance policies. While the needs of the customer are
multifaceted, there cannot be a matching number of basic products for
obvious reasons. The role of riders comes into play exactly in such
situations. What exactly are these riders & how do they add to the
flexibility of options for a customer?
41
Ever ordered a pizza from the neighborhood baker? If you did, you
must be aware that the baker would ask is ‘What is the topping of
your choice?’ Only after you make your choice can the order be
finalized, which goes to indicate that the toppings are the only
differentiating factor, while the pizza base remain the same. The
riders in a life insurance policy are exactly like the topping of pizza &
can be ordered as per one’s needs. Just as the cost of the pizza
changes by the topping(s) that one prefers, the cost of the policy (or
the total premium) also changes with the rider that the policyholder
orders for himself/ herself. Above all, a policyholder can ordered
several riders for himself/ herself (once again like the multiple
toppings of a pizza) & pay for them separately.
The convenience of having riders in a policy is that one does not need
to obtain a separate policy for each of the needs. By taking just one
policy, several needs can be fulfilled by going for several riders. In
this aspect, there is a great deal of flexibility for the customer. The
overriding factor, however, is that these riders have to be paid for and
in a few cases can be quite expensive.
In the Indian insurance market, however, these riders were not
significant hitherto, before the opening up of this industry. One could
here of some riders like accident benefit, disability benefit, etc., &
42
nothing more. The emergence of newcomers on the horizon has
suddenly shot up the importance of the riders & several new
companies are offering the riders with there base policies. These
riders actually are a value addition to the policies. A look at some of
the riders would enable a better understanding if the role of the riders.
 The Accidental Death rider has been the oldest & the most
among the several riders universally. It has been in extensive use
in the Indian insurance industry as well. Under this rider, the
beneficiary gets an additional amount (beside the some
additional policy, usually an equal additional amount) if the
policyholder were to die in an accident. The premium for this
rider is also very reasonable & makes it doubly attractive. The
term ‘accident’ for this clause covers a wide range of events.
However there is a maximum limit put on the amount of
coverage in all the policy put together. Besides, there is also an
upper age limit until when the accident cover is provided
(usually 70 years).
 Premium Waiver Benefit rider, where under the payment of
future premiums by the policyholder is totally waived if the
policyholder were to be afflicted with one of the covered
43
crippling eventualities & be disable to live a normal life.
Normally, it goes with tandem with the disability benefit rider.
There is a condition on the extend of disability & it is covered
above certain percentage of disability. The other conditions the
policy continues as if the premiums are being remitted regularly
& the policy is in full force.
 Guaranteed Insurability rider, under which the further
renewal of the policy when the present terms ends, is guaranteed
without proving further insurability. Normally, a person would
have to prove himself / herself insurable for a fresh policy of the
renewal. Besides, if a policy were to obtain a policy for a very
long term, surrender of the policy in case of need would not be
profitable. This rider gives the flexibility of choosing shorter
terms with guaranteed insurability at the end, if the policyholder
so prefers.
 Critical Illness rider, under which the policyholder can
combine the advantage of health insurance without having to
obtain a separate health insurance policy. The coverage is against
a list of disease mention under the policy which is restricted as
per the age & a personal / family profile of the policyholder.
44
 Family income benefit rider, which is a very good value
addition to the policy, as it’s ensure the regular stream of income
for the family, if the sole breadwinner of the family dies during
active, working period. The rider along with the base policy
takes care of both the cash needs as well as income need of the
family. The policyholder should be prudent in choosing the term
for which the family income should be payable, as it decides the
rate.
These are some of the riders that insurer offers. Not all these riders
are offered by all the insurers everywhere (nor each of them is
required by every policyholder), but there are at least some which are
available for the policyholder. As mentioned earlier, these riders are
available at an additional cost, over & above the base premium. Life
insurance is an assurance; whereby there is solemn promise to make
payment, either on maturity or on earlier death. The riders which are
attached to the life insurance policies, however, defeat this property
as they only cover certain eventualities that occur during the contracts
period. Besides all said and done life insurance is still treated as an
investment by several sections of the society, especially in India & in
this regard the premium spent or rider may not provide any payment
in return. This point must be clearly made to be understood by the
45
insured, so that it does not lead to any sort of misgivings at the time
of claim settlement.
The entry of foreign, private players into the insurance industry in
India marked the onset of several riders. While the trend in the earlier
era was to have bundled product, the new players are emphasizing the
importance of the riders. Most of the new players have only a few
base products to offer & there contention is, by mixing different
combinations of riders, several policies can be designed. They are
leveraging on these on the utilities of these riders to come up with
customized solutions, rather than rigid bundled products. While it
sound very customer-friendly & dynamic, it is very essential that the
public awareness in insurance is at a high level, which unfortunately
not the case in India. The introduction of the brokers as a distribution
channel, coupled with a board understanding of the various riders
may provide a solution in the long run.
While the new players are very enthusiastic about the usefulness of
the riders for the policyholders, the erstwhile monolith, Life
Insurance Corporation of India has its reservation about them. Their
contention is that the riders cannot provide any surrenders value,
should a policy be stopped during the contract period, due to some
impending & unavoidable reasons. This argument could hold some
46
water in a market like India where insurance is still seen as an
investment tool by a large section of people.
Considering the exclusive risk-coverage feature of the riders, IRDA
has initially prescribed an upper limit on the premium paid towards
the coverage of riders if the life insurance policy. This limit was set at
30 percent of the premium to be paid on the base policy. There was a
furore in the industry over the cap of the premium toward riders. The
new players’ contention was, when the riders are meant to provide
customized solutions, what is the sanctity in having the cap on the
premium? There was been a serious debate on the raising of this cap,
if not totally doing away with it. There are been immense pressure
from the industry in this area to do away with the cap totally. The
regulator would, no doubt, take a judicious decision before restoring
to this elimination of the upper limit, considering the brokerage
activity as a distribution channel, the way insurance is being
understood by the common man & also the way the insurance
industry develops over a period of times.
5.4 NEED FOR HEALTHY COMPITITION
47
It is a universal fact that there is resistance to change. This holds well
in the insurance domain as well. The policyholder, on his part, is
resistance to changes occurring in the domain, post- liberalization, or
he has been so attuned to the working of insurance companies that he
is not able to appreciate anything novel in this regard. The incumbent
insurance companies suffer from a similar limitation & are finding it
very hard to come to grips with a competitive scenario. In the process,
the customer has to pay the price. Being incumbent, if the public
sector behemoths take the lead in spreading a healthy competition, it
would be better for the industry as well as for the customer in the long
run. The competition that one gets to see presently is leaving a lot to
be desired.
While some new product & riders have been introduced into the
market, information with regard to them is not being disclosed
completely thereby putting customer in the quandary. In some cases,
it sound as if one companies is announcing the onset of the new
product just as the competition for another, rather than a genuine
customer interest. If this is the trend, are we not product-centric &
defeating the very basic tenet? Insurance companies should try to see
beyond mere alternative to products & aim at coming out with
customize solutions for the policyholder.
48
The best thing that has happened in the post-liberalization scenario is
the introduction of brokers into the system. These brokers, being
better literate & also being neutral to a particular company can be
good crusaders for the policyholders. However, the institution has not
taken of to the expected level & the market is yet to experience
positive results. One hopes that the real benefit of the institution of
broker is present, for all to see, in the near future.
CHAPTER 6:
METHODOLOGY OF CRM IN INSURANCE:
49
The utility of the applications is vast & extend across the value chain.
There are applications that the customer-facing, adding more value &
satisfaction to the customer. Such application enhance customer’s
intelligence & empower them to perform a host of activities at there
own convenience over the internet.
The Customer Relationship Management (CRM) solutions pack such
applications. The utility extended by such solutions are plentiful, a
few of which are detailed below.
Needs Analysis:-
Enable prospective customers to identify the product that match there
risk profile the help of an interactive needs analysis process. The
customer’s answers a series of logically presented questions, based on
the options selected for these questions, the most suitable product(s)
that match the customers requirements are presented to the customer.
For example, while guiding the prospective customer toward a
suitable product, the application will present questions related to the
age, professional status & marginal status. Based on the answer
provided by the customer the product line will be narrowed down &
only those products that suit the prospective customer’s profile will
be presented. The prospective customer can then select the product
based on the features & optioned provided by the product.
50
Online Selling:-
Enable prospective customers to submit the proposal forms online. In
this process, applications will enable the following:
╬ Captures of the details from the proposal forms.
╬ Match proposal details to existing data to check if the
customer already exists in the system, if exist, link customers
details.
╬ Enable lead management by triggering alerts to the marketing
& distribution channels of the prospective customer.
╬ Trigger alerts to the actuarial personnel to determine the
premium quotation for the policy proposal.
╬ E-mail the prospective customer of the premium quotations.
Online Payments:-
Enables customers to make online premium payment. Application
will enable such online payment of the premium in a secured manner
& register such information in to the internal systems; generates the
customize policy certificate which give the customer unique
identification code, the policy details, start the expiry dates of the
policy & other terms & conditions.
Claim intimation & Settlements:-
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Enables faster & easier mechanism for reporting losses. Application
capture necessary information from the forms & documents submitted
& trigger alerts to the customer for additional information required,
trigger claim handling process & alerts the loss assessors, process
claims settlement on obtaining the assessment details & finally
intimate the customer of the claims settlements details.
Online Customers Servicing:-
Provide authenticated access to confirmed customers enabling them
to interact online with the insurer. Application can be triggered to get
information on regarding the policy, premium to be paid, bonus
issued & claim settlements status, make basic endorsement like
changes to customer profile or policy etc.
Loan Processing:-
Customer can make online requests for loan against existing policies.
Applications will enable processing of loan requests; provide status of
loan sanction, the loan repayment schedules, online repayment,
trigger reminders for outstanding installments etc.
Knowledge Management:-
52
Customers can be updated about the significant developments that
will enable them to review there risk profile, the need for modify
existing policies or to go for additional insurance.
CHAPTER 7:
53
FUTURE OF CRM / What is CRMnext?
CRMnext is a comprehensive, easy-to-use, hosted customer
relationship management (CRM) solution.
With CRMnext you can easily evolve and implement customer
facing strategies, using industry best practices, without any
upfront cost. It enables you to manage and seamlessly share
information, across departments by centralizing all customer data.
The powerful reporting and analytical capabilities delivers
actionable business intelligence that can significantly improve
company's bottom line revenues..
Key Benefits:
54
• Ensures fast and hassle free roll-out.
• Develop more profitable marketing campaigns.
• Improve pipeline visibility and sales effectiveness.
• Deliver consistent world class customer service.
• Enforce processes with a single-click.
• Ensure better, more informed decision-making
The CRMnext Foundation:
CRMnext is more than a CRM. We're successful because we
(its)married a comprehensive CRM with an advanced business
process management suite. The result, with CRMnext you can not
only manage data (like other CRM's) but also the process behind
the data.
55
Big companies (foreign insurance industry) leverage the
CRMnext foundation, to standardize and enforce uniform
processes across geographical locations. Each business unit can
further redefine process to accommodate requirements of local
businesses. Smaller companies take advantage of the enforcement
engine to implement built-in global best practices and grow right.
The Business Strategy Perspective on CRM
We now consider the Business Strategy Perspective on CRM. Here,
we propose a model, which is a hybrid, and typical of many of the
models and diagrams of CRM that you will find on The Internet and
in popular books on the topic of eMarketing/eCommerce. The model
has three key phases and three contextual factors:
56
Three key phases:
1. Customer Acquisition.
2. Customer Retention.
3. Customer Extension.
Three contextual factors:
4. Marketing Orientation.
5. Value Creation.
6. Innovative IT.
1. Customer Acquisition - This is the process of attracting our
customer for the first their first purchase. We have acquired our
customer.
Growth - Through market orientation, innovative IT and value
creation we aim to increase the number of customers that
purchase from us for the first time.
2. Customer Retention - Our customer returns to us and buys for
a second time. We keep them as a customer. This is most likely
to be the purchase of a similar product or service, or the next
level of product or service.
Growth - Through market orientation, innovative IT and value
creation we aim to increase the number of customers that
purchase from us regularly.
57
3. Customer Extension - Our customers are regularly returning
to purchase from us. We introduce products and services to our
loyal customers that may not wholly relate to their original
purchase. These are additional, supplementary purchases. Of
course once our loyal customers have purchased them, our goal
is to retain them as customers for the extended products or
services.
Growth - Through market orientation, innovative IT and value
creation we aim to increase the number of customers that
purchase additional or supplementary products and services.
4. Marketing Orientation - means that the wholes organisation
is focused upon the needs of customers. Customer needs are
addressed by the Three Levels of a Product whereby the
organisations not only supplies the actual, tangible product, but
also the core product and its benefit, and also the augmented
product such as a warranty and customer service. Marketing
orientation will focus upon the needs of consumers for all three
levels of a product. (N.B. 'market' orientation and 'marketing'
orientation are not the same).
58
5. Value Creation - centres on the generation of shareholder
value based upon the satisfaction of customer needs (as with
marketing orientation) and the delivery of a sustainable
competitive advantage.
6. Innovative IT - is exactly that - Information Technology must
be up-to-date. It should be efficient, speedy and focus upon the
needs of customers. Whilst IT and/or software are not the entire
story for CRM, it is vital to its success. CRM software collects
data on consumers and their transactions. Huge databases store
data on individuals and groups of individuals. In some ways,
CRM means that an organisation is dealing with a segment of
one person, since every consumer displays different purchasing
habits and preferences. Organisations will track individuals,
and try to market products and services to them based upon
similar buyer behaviour seen in other individuals (e.g. When
Amazon tells you that customers that viewed/bought the same
product as you, also bought another product).
CRM is a term that is often referred to in marketing. However,
there is no complete agreement upon a single definition. This is
because CRM can be considered from a number of Perspectives
In summary, the three perspectives are:
59
 Information Technology (IT) perspective.
 The Customer Life Cycle (CLC) perspective
 Business Strategy perspective
DISCLAIMER
Our model is a hybrid of many other commonly cited models from a
number of sources. If you are undertaking higher-level academic
work you need to clarify with your tutor, the nature of his or her
preferred model on the topic.
What is CRM?
It is based around a few premises on customers:
 New customers are expensive to capture (estimates put the cost
at as much as ten times the cost of a retained customer) and
take time to deliver value.
 Lost customers tell many others about their experiences and
rarely come back.
 Retained customers are better value and in time move from
being clients to becoming advocates working on your behalf.
60
 Your major efforts should be spent on excellent customers or
groups of customers - i.e. those that are likely to yield good
returns.
Much research has been carried out into customer profitability and the
conclusions are consistent (see chart above). The longer a customer is
with you the better the profitability and the chart clearly shows that
after the second year you start to make money from cross-sales,
repeat orders, referrals etc. Clearly the higher the turnover (and
therefore the shorter the time they stay with you) the less likely you
are to make profits. In life insurance this is critical as the embedded
value of a customer takes even longer to become established and is
61
why actuaries spend much time trying to improve the lapse rate
(persistency). CRM therefore is about managing your customer base
to ensure that they stay with you and therefore yield a better profit. It
is also about getting rid of those customers that take up a
disproportionate amount of time for the profit that they yield.
62
CHAPTER 8:
PRIMARY DATA ANALYSIS:
The most easy and popular way of collecting data is with the help of
Questionnaire and taking interview.
Questionnaire means a list of question which is drawn in systematic
way for the purpose of collection data. The questionnaire is the
outline, of what information is required in the project content by
which the data can be drawn efficiently. The discussion with
professionals or experts, give very valuable idea about how the
questionnaire should be framed and as to the phrasing of the
questions.
Interview that take personally is not so easy. Thus, interviewer
should have that much skill which makes him/her to give a proper
answer of the questions. The person whom you are interviewing is
having a limited time to answering to your questions & having many
other work to do, and attending there clients.
I have done the project by sampling method.
For gaining a knowledge regarding my project & completion of it
efficiently, I had an interview with few insurance companies &
agents, managers.
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Q1. Does the CRM provide benefits or opportunities to Customers?
Answer –
Provide Benefits or
Opportunities
NO. of approachement (%)
Yes 10
No 0
Don’t know 0
From the above table it has been easy to understand that CRM
activity provide benefits or opportunities to Customers & it has been
clearly shown in above table that 100% CRM people says that it
really helps to customers to get benefits & opportunities from life
insurance.
It has been shown in more welled manner in the following diagram:
Yes No Don’t
know
NO. of
approachem
ent
Provide Benefits or
Opportunities
CRM provide benefits or opportunities
to Customers
NO. of
approachement
64
From the above diagram it has been come to know that the 100%
CRM people says that it gives benefits or opportunities to Customers
as new policy is being invented as the period is passing.
Q2. Does it help to increase the saving of customers via. Life
Insurance?
Answer –
Increase saving of customers NO. of approachement(%)
Yes 8
No 1
Don’t know 1
From the above table it has been easy to understand that through
CRM help to increase the saving of customers via. Life insurance.
And it has been proved form the above table that 80% people says
yes, only10% says no & 10% says they don’t know. It has been more
clearly explain through graph as under:
Helps to increase the saving of customers via. Life
insurance
Yes
80%
No
10%
Don’t know
10%
Yes No Don’t know
65
From the above graph it has been come to know that most of the
people i.e. 80% that CRM help to increase the saving of customers
via. Life Insurance only the 10% of people says no & 10% people say
they don’t know.
Q3. Does it have a positive image in front of customers?
Answer –
Positive Image NO. of approachement (%)
Yes 10
No 0
Don’t know 0
From the above table it is become easy to recognize that CRM has
positive image in front of customer as it provides all related
information’s to the customers as 100% CRM people says that.
It has been clearly explain in the form of graph which is as under:
66
It has been clearly shown in the above graph that CRM has positive
image in front of customers i.e. also 100% as it is said by CRM
people. As it gives benefits or opportunities to Customers.
Q4. Does CRM helps out to sell the policy to existing customers?
Helps to sell the policy NO. of approachement (%)
Yes 8
No 2
Don’t know 0
From the above table it has been easily come to know that CRM helps
them to sell the policy to existing customers as good relation has been
generate between them. These results to sell out more policy to them.
And it has also said by the CRM people .i.e. 80% CRM people, 20%
people says that it does not work in efficient manner.
Have a positive image in front of customers NO. of
approachement
0
2
4
6
8
10
12
Yes No Don’t
know
Positive Image
approachement
NO. of
approachement
67
And it has been shown in more effective manner by the way of
diagram as under:
CRM helps out to sell the policy to
existing customers
80%
20% 0%
Yes
No
Don’t know
From the above diagram it has been clearly come to know that the
CRM activity helps to CRM people to sell out the policy to the
existing customer. And most of the people i.e. 80% people says yes &
20% people says no.
Q5. What problems faced by your organization to maintain CRM?
Answer – The CRM people are facing the major problem is to
maintain such huge data of there customers (old & new). As the
information technology is not has been updated & reached to all the
offices or branches all over the country. Secondly, the records of the
68
premium paid or remain, is one of the big problem as customers
relationship management people as it also requires IT support because
this much record is to be maintain in the files i.e. in hard copy, is not
so easy even for search it takes lot of time of both the parties.
Q6. What is the reaction of the customers when your agent
approaches them?
Answer –
Reaction of customers NO. of approachement (%)
Will our money be return 0
Is there any guarantee of your
insurance company
2
We don’t want policy 3
At present we don’t have
money
5
As from the above table we can easily come to know that what are the
reaction of the customers when an agents approaches them to sell
policy the answer of most of the people i.e. 50% says that they won’t
have money, were 30% people say they don’t want policy & rest 20%
people ask Is there any guarantee of your insurance company? It has
been clearly shown in following diagram:
69
Reaction of customers when an agent approaches them.
0%
20%
30%
50%
Will our money be
Return
Is there any
Guarantee of your
Insurance
Company
We don’t want
Policy
At present we
Don’t have money
70
From the above graph it has been come to know that what are the
reactions of customers/prospects when agents approaches them the
50% population says that they don’t have money to take policy were
as 20% people asking about the guarantee of the insurance company
& 30% people says that they don’t want policy.
Q7. How do you tackle your competitors?
Answer –
Strategy used to tackle the
competitors
NO. of approachement (%)
By investing heavy on
advertisements
0
By offer better service to
customers
6
By providing extra benefits to
customers
4
From the above table it has been easy to understand that what strategy
the CRM department used for tackling there competitors most of
them i.e. 60% people says that they offer better service to there
customers, were 40% says that by providing extra benefits to the
customers to retain in the market & increase the business. It has been
more clearly explain in diagram which is as under:
71
Strategy used to tackel to
competitors
0%
60%
40%
By investing heavy on advertisements
By offer better service to customers
By providing extra benefits to customers
From the above diagram it has been clearly shown that the CRM
people or department is using the strategy to survive in the market is
said by 60% that they provide better service to customers % rest 40%
people says that they providing extra benefits to customers to get
policy & retain in the competitive market.
Q8. How do you perceive future of CRM in insurance?
Answer –
Perceive future of CRM NO. of approachement (%)
May increase 6
May remain same 2
May decrease 2
From the above table we can easily come to know that what the CRM
people says about perceive future of CRM in insurance the 60%
people says it will be increase were as 20% people says that it may
72
remain same & rest 20% people says that it may decrease. Because in
future they may not be only manage data (like other CRM's) but also
the process behind the data. It has been clearly shown in the
following graph:
From the above graph it has been seen that the future of CRM may
increase as 60% of CRM people says that, were as 20% CRM people
says that it may remain same & remaining 20% people says that it
may decrease, but prediction is not the final answer as future of any
thing is unpredictable no one knows about future what happens when.
CHAPTER 9:
Perceive future of CRM in life insurance
60%20%
20%
May increase
May remain same
May decrease
73
FINDINGS AND CONCLUSION:
It has been conclude that from the all question that most of the CRM
people says that it is providing opportunities & benefits to the
customers as it launches the new policies in every 3-6 months or in a
year, by keeping the attention on the needs & wants & there
requirement. As the CRM is a tool or activity which help to the
company tom survive in today’s competitive market.
Even the CRM activity is advantage for the customer as it help to sell
the policies to the customers which help the customer to make saving
through taking life insurance policy for his/her or for there family as
it gives financial protection to the policyholder or nominee & as there
is 100% guarantee of getting money back.
Well its awareness in the customer is not yet known 100% then also
whoever know about these facilities through there agent or respective
managers has a positive image about CRM in life insurance sector.
It is one of the activity that CRM to sells out the policies to the
existing customers as the good relation is been maintain by the
agent/manager with there existing customer but it has not being 100%
successful because there are the customer who does not required more
policy it has been success up to 80%.
74
The CRM managers /agents are facing some problem to maintain
relation with there existing customers as there is not possible to
maintain large amount of data /record or information related to there
old customers and new customers and even of premium statements, as
most of the CRM people says that they are lacking behind because the
Information Technology not has been developed yet to all over the
offices or to the agent.
As the human being all the people has some or the other reaction
when an insurance agent approaches them to get the policies from
them. There are certain doubt in the mind of the customer as they
were asking about there money will get them back or not, question is
about the stability of the company which is asked by 20% peoples or
the most fruitfully reason is that they don’t have money these reason
is given by 50% peoples & they don’t want policy as they already
have there life insurance is said by 30% of peoples.
As today’s competitive scenario the survival of the company is
depend on CRM as it a Mantra to get success in the market as it plays
a vital role in the company like life insurance as there business is
mostly rely on it. They have to face the competition to be in the
market & generate profit from it they tackle there competitors in the
following way:
75
 By making heavy in advertisement.
 By offering better service to there customers.
 By providing extra benefits to customers.
As most of the CRM people says i.e. 60% that they usually giving
better service to there customers & remaining 40% says that they
providing extra benefits to the customers such as diaries, gift on
occasions, etc & no CRM managers/agents says that they are
spending more on the advertisement to attract the customers or
getting more number of policies.
The CRM people perceive the future of CRM in life insurance as it
may increase as said by the 60% of the CRM people were some are
i.e. 20% saying that it may remain same & rest 20% says that it may
decrease.
76
CHAPTER 10:
SUGGESTIONS & RECOMMENDATIONS:
This project is conducted for getting the knowledge (theoretical &
practical) as well as for the future aspects of the CRM services in
insurance sector in India. As it is a very vast area which includes
more number of services related to it. It is very competitive activity
for insurance which directly provides a various type of services under
one roof. As it includes various types of services it has its advantage
as well as disadvantage. Same, as coin has two sides, this service is
valuable to the customers, clients, dual/ individual, etc... But on the
other hand it has its limitations which show that people are not aware
of it such as (clients, group/individuals, etc…). So to make it helpful
to its providers & services buyers or policy holders, the awareness of
it is necessary because some or the other are taking the policy for
longer or short period of time. It plays a very important role in the
development of a country especially in industrial sectors. So, CRM
service providers(department) should be careful always about the
services while provided to their customers & try to make its
77
awareness to all the customers, not only to maximization the profit,
but because there is a rising of competition in this sector.
To the insurer, make its awareness to yours staff members/agents of
all branches by the way of training programs, seminars, workshops,
etc. because many of them don’t know that how the CRM actually is
to be conduct may be there some of branches are providing this
services, in real term all the agents, advisors, etc. are providing this
service in effective manner but they don’t know the importance of it,
at industry level so the awareness of this is necessary, only the
managers or big post personality know about the CRM & its services
as well its activities in better way.
78
BIBLOGRAPHY
BOOKS
 CRM IN INSURANCE – AN INTRODUCTION
- V .V GOPAL, PUBLISHED BY: THE ICFAI UNIVERSITY
PRESS
 INSURANCE CHRONICLE
(LIFE & HEALTH INSURANCE)
PUBLISHED BY: THE ICFAI University Press
EDITION OF APRIL - 2005.
 INSURANCE CHRONICLE
(RATEMAKING IN INSURANCE)
PUBLISHED BY: THE ICFAI University Press
EDITION OF DECEMBER - 2005.
WEBSITES
79
www.googlesearch.com
www.insurance.com
ANNEXURE -I
QUESTIONNAIRE ON CRM IN LIFE INSURANCE
Q1. Does the CRM provide benefits or opportunities to Customers?
Answer - a) Yes - b) No - c) Don’t know –
Q2. Does it help to increase the saving of customers via. Life
Insurance?
Answer - a) Yes - b) No - c) Don’t know –
Q3. Does it have a positive image in front of customers?
Answer - a) Yes - b) No - c) Don’t know –
Q4. Does CRM helps out to sell the policy to existing customers?
Answer - a) Yes - b) No - c) Don’t know –
Q5. What problems faced by your organization to maintain CRM?
Answer –
80
Q6. What is the reaction of the customers when your agent
approaches them?
Answer - They are:-
a) Will our money be returned?
b) Is there any guarantee of your insurance company?
c) We don’t want policy.
Q7. How do you tackle your competitors?
Answer - They are:-
a) By investing heavy on advertisements.
b) By offer better service to customers.
c) By providing extra benefits to customers.
Q8. How do you perceive future of CRM in insurance?
Answer - They are:-
a) May increase.
b) May remain same.
c) May decrease.
81

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Crm in lic

  • 1. CHAPTER 1: INTRODUCTION: 1.1 INTRODUCTION 1.1. 1) INTRODUCTION OF CRM 1.1. 2) INTRODUCTION OF INSURANCE 1.1. 3) INTRODUCTION OF CRM IN INSURANCE 1.2 SIGNIFICANCE OF CRM IN LIFE INSURANCE SECTOR 1.3 BACKGROUND OF CRM IN LIFE INSURANCE SECTOR 1.4 LIMITATION 1.5 OBJECTIVE OF STUDY 1.6 RESEARCH METHODOLOGY 1.6.1) PRIMARY DATA 1.6.2) SECONDARY DATA 1
  • 2. CHAPTER 1: INTRODUCTION: 1.1.1) INTRODUCTION OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) What is CRM? People make buying decisions. People have loyalties. Relationship only can be developed between people. Your Customer Relationship Management program must be structured around this well-known fact. CRM is about people. CRM is an approach to organizing yours company’s interaction with customer that starts with customer- centered point of view. It’s an entire discipline, not a single activity. Customer relationship management (CRM) is no longer a buzzword, but a necessity for business in the knowledge age we live in. Customer relationship management (CRM) solutions provide customer-oriented services for planning, developing, maintaining, and expanding customer relationships, with special attention paid to the new possibilities offered by the Internet, mobile devices, and multi- channel interaction. CRM enables a company to capture a consolidated customer view through multi-channel interactions in a data warehouse solution. 2
  • 3. Sophisticated analytical techniques are then applied to this customer information to better understand and predict customer behavior. CRM can then be used to strategically implement acquired customer knowledge in every area of the company, from the highest management level to all employees who come into direct contact with customers. CRM thus enables an organization to address its customer’s preferences and priorities much more effectively and efficiently. CRM is a tool that can help organizations to profitably meet the lifetime needs of customers better than their competitors. Creating a definition for CRM is both critical & dangerous. It is critical because your organization need to have a common understanding of what you are doing. It is dangerous because so many definitions & misconceptions are already lodged in people’s minds. One of the first things that any company should do when launching a CRM initiative is to the rest what the organizations current understanding of CRM is. This definition of CRM covers many but not all activities of the company. CRM is limited to activities that take place in the customer- facing functions, including marketing, sales, customer services, & product support. 3
  • 4. 1.1.2) INTRODUCTION OF LIFE INSURANCE: Whenever the word insurance comes to here we things of protection. The protection against life the most precious thing & the property, assets, etc. The question arise why insurance is required it may be life or general whatever the answer is there is a fear of loss came into the picture, so there should be some thing which gives protection against the loss & to fulfill the loss upto certain extent. That’s why the insurance is needed because in today’s scenario there is no guarantee of anything, now let us focuses on life insurance which is topic of project with related to CRM (customer relationship manager). CRM & life insurance both are essential for each other because they both are like wheels of a vehicle (bike) one cannot run efficiently & effectively without each other. To make survive the life insurance industry in the market there is a need of CRM (customer relationship manager). To create CRM there is a need of proper subject (life insurance). So let know something about life insurance. Know about life insurance? Life insurance in India made its debut well over 100 years ago. In our country, which is one of the most populated in the world, the prominence of insurance is not as widely understood, as it ought to 4
  • 5. be. What follows is an attempt to acquaint readers with some of the concepts of life insurance, with special reference to LIC. It should, however, be clearly understood that the following content is by no means an exhaustive description of the terms and conditions of an LIC policy or its benefits or privileges. For more details, please contact our branch or divisional office. Any LIC Agent will be glad to help you choose the life insurance plan to meet your needs and render policy servicing. What Is Life Insurance? Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. The contract is valid for payment of the insured amount during: • The date of maturity, or • Specified dates at periodic intervals, or • Unfortunate death, if it occurs earlier. Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to 5
  • 6. the timely aid of the family in the unfortunate event of death of the breadwinner. By and large, life insurance is civilization’s partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person: 1. That of dying prematurely is leaving a dependent family to fend for itself. 2. That of living till old age without visible means of support. Life Insurance Vs. Other Savings Contract of Insurance: A contract of insurance is a contract of utmost good faith technically known as uberrima fides. The doctrine of disclosing all material facts is embodied in this important principle, which applies to all forms of insurance. At the time of taking a policy, policyholder should ensure that all questions in the proposal form are correctly answered. Any misrepresentation, non-disclosure or fraud in any document leading to 6
  • 7. the acceptance of the risk would render the insurance contract null and void. Protection Savings through life insurance guarantee full protection against risk of death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable. Aid to Thrift Life insurance encourages 'thrift'. It allows long-term savings since payments can be made effortlessly because of the 'easy installment' facility built into the scheme. (Premium payment for insurance is monthly, quarterly, half yearly or yearly). For example: The Salary Saving Scheme popularly known as SSS provides a convenient method of paying premium each month by deduction from one's salary. In this case the employer directly pays the deducted premium to LIC. The Salary Saving Scheme is ideal for any institution or establishment subject to specified terms and conditions. 7
  • 8. Liquidity In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides, a life insurance policy is also generally accepted as security, even for a commercial loan. Tax Relief Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force. Assesses can also avail of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise. 1.1.3) INTRODUCTION OF CRM IN INSURANCE Insurance companies can learn, from customer’s responses, to improve there business. Insurers can reach the customers expectation by understanding there needs & behavior of the customers, which will also help them to improve their profits. To take full advantage of the CRM program, it should be properly implemented with lot of support from the organization. A customer-centric has to be embedded in the organization culture. CRM bring about a positive change in the 8
  • 9. company’s process people & technology over the period of time, & results in extending the companies customer relationship. A CRM program accumulates knowledge about the customer’s wants, & accordingly improves the product & services. This results in increased customer loyalty, acquisition & thereby revenues. The program also helps in improving efficiency across the organization, which helps in cost of reduction. Moreover, customized solutions are provided to the customers as & when required. CRM implementation brings about convergence between people & process, thereby increasing the business of the agent & the employer group. It also plays a key role in identifying the right mix of tools & information for optimal profitability. In order to effectively implement any CRM program, some factors have to be considered. First of all, the customer segments have to be defined to keep a better track of the customers. Next comes the selling of policy. Cross-selling is another accepts seen in most of the insurer these days. Selling additional policies to the existing policies holders is one of the aspects happening in insurance companies. Are the company’s objectives, vision and key performance measures defined for better control over operation is there a scope to shift the companies focus on product centric approach to customer centric 9
  • 10. approach to insure that the model is sustainable to generate customer satisfaction. CRM can help or hurt the risk management process depending on how well it is managed. According to industry analysts, CRM and supply chain application are 81% more profitable for the companies who utilized them, rather than the company that don’t. According to a study, the failure rate of CRM projects will increase from 55% to 70% in 2004.research also reveals that after the installation of CRM, the call centre reporting has improved by 88%. CRM is not merely an implementing technology solution or customer service, but it should be able to learn about the customer’s needs, behaviors, and preferences in order to identify the market segments. CRM programs might also fail, if the companies don’t include corporate culture and organization in planning and companies should also never underestimate the importance of people. Many managers don’t understand that the customer’s wants, rewards and recognition are based on efficiency rather than effectiveness. CRM is more than a customer service as it involves finding the best customers and directing the resources that will be deployed. Many organizations look at CRM as a requirement and if it is not operated 10
  • 11. properly it could affect the company’s bottom line, as the company might lose the customers it does not want to lose. 1.2 SIGNIFICANCE OF CRM IN LIFE INSURANCE SECTOR Customer Relationship Management i.e. CRM it acting as very vital role in life insurance sector as it is beneficial for both the parties i.e. Organization which implement it & the Customers of that particular company because it focuses on maintenance of relationship with exiting customers & try to getting more business from them as well as generating new clients for the industry by giving better services. It is like a MANTRA for the insurance company in today’s scenario where the competition is increasing day by day, as its help the organization to face the new challenges in upgrading & growing market were all the people are aware the need/importance of insurance but taking it from the company were it get better/best services & policy’s which fulfills there need & wants as per there thoughts. CRM is required for fulfilling these things only, & if CRM program is being successful it turn the organization as the horse of long race & generate the profitable business. 11
  • 12. 1.3 BACKGROUND OF CRM IN LIFE INSURANCE SECTOR The need for research felt here to know in detail, the practical & theoretical aspects of CRM in life insurance. CRM is on today’s insurance market is emerging as a popular contact. My aim in selection of this topic is to know more about the future scope of CRM‘s importance in life insurance sector in India & to know about its effect on organization & its image in customer mind. 1.4 LIMITATION  Other services of insurance company have not been covered.  Project has been restricted to Mumbai in order to avoid complications.  Only focuses on customer-centric approach. 1.5 OBJECTIVE  To study there strategy of tackling there competitors.  To kwon the perceive future of CRM in insurance.  To identify how to retain the customers.  To identify the problems faced by the organizations to maintain CRM. 12
  • 13. 1.6 RESEARCH METHODOLOGY Primary data has been collected by personal visits to insurance companies & its branches, Telephonic interview from Consultants, agents, advisors & with the help of Questionnaires filled by them. Secondary data has been collected from various sources such as books, news papers, & etc. 13
  • 14. CHAPTER 2: HISTORY OF CRM IN LIFE INSURANCE: CRM in life insurance sector plays a very important role; it is an activity/program by which the survival of an industry is being easy in competitive market. As its main functions is to maintain relationship with the existing (old) customers & new customers. The CRM is working as an important tool for the insurance industry in today’s world/scenario as it is not an easy task to maintain the relationship with customers for long period of time but with the help of CRM it is being possible. CRM help the companies to face the New Challenges arises in the market which create problem for increasing the business such as, competitions, especially after the LPG (Liberalization, Privatization, & Globalization) concept has been implemented in India. In such tuff competition the CRM plays a vital role to an industry to getting the business form the common people & existing customers. The CRM has born just after the Life Insurance Companies is exist in the globe & from that time it is playing very important role to increase the business if life insurance sector. In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in terms of pooling of 14
  • 15. resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 15
  • 16. 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non- life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. 16
  • 17. The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub- standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered 17
  • 18. Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of 18
  • 19. the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re- organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re- organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy 19
  • 20. growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families. Some of the important milestones in the life insurance business in India are: 1818 Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870 Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1938 Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests 20
  • 21. of the insuring public. 1956 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. CHAPTER 3: 21
  • 22. CRM IN INSURANCE – NEW MANTRA: With the increasing in the number of insurance players in the market & consumers becoming more & more aware of different product, insures have realized the importance of CRM (Customer Relationship Management). CRM has been practice for decades now, the grocery shopkeeper near our home, the paanwala, etc.; all of them have been practicing it. In today’s competitive era, where customer is the king, it is a must for the insurers to not only make new clients but also maintain the existing customer and encourage repeat purchase. It is estimated that the cost of attracting a new customer is five times more than that incurred to make an existing customer happy. Life Insurance Corporation (LIC) of India has been the sole player in the market before the appearance of private players. It exploited its monopoly powers are didn’t care much about either attracting new customers or retaining the existing ones. If anyone needed an insurance policy they had to purchase from LIC. It was mostly a tax- saving schemes which encourage the purchase of insurance policy. Customers were not educated regarding insurance matter & a source of knowledge to them was only the insurance agent & he was the person who suggests the policy to the customer instead of the customer making his own choice. The customers could not even choose some other policy from 22
  • 23. some other insurer because it was Hobson’s choice, i.e., LIC. But when private players entered in the market, the competition forced LIC & the other new entrants to become customer centric. Customer service is getting more & more as most of the time buying an insurance policy is a one – time purchase & customers are unaware of the variation available in the market. In the insurance sector, there is an agent-client relationship & satisfied client can be the biggest brand ambassador for the company (word of mouth advertisement). It is in the interest of the company to build up good relationship with the client. The insurance agents of the company play an important role in building this relationship because they are the people who interact with prospective & existing clients. Therefore, every organization should build a foundation of relationship marketing because it acts as a new mantra to all organizations & its help to the agents to talk about the company’s product & convince the customer. The best effort is to go for CRM in an integrated approach. To be more friendly & the customer-centric, organization need to be implement a CRM strategy which helps them to interacts with there customers in a more informed manner because CRM helps the manager, the agent & the other officials (present or past employees) to understand the status of present client. So, CRM should be 23
  • 24. implemented in such a way tat it does not become a hurdle for the organization but is its assets, which facilitated the smooth flow of information & better care of the customer. CRM has been estimated to be of use of all organizations, be it of service sector or any other sector still, the experience in the implementation part has not be successful. In most of the cases, it has been practically observed that CRM implementation in an unstructured manner has led it to become a hurdle for the organization instead of becoming valuable assets & an integrated part of the company. LIC, the biggest player in the insurance sector has also gone for implementing CRM in its organization to ‘facilitated better care of the customer’. Now the customer can deposit there premium in any computerize branch all over India. But it has not be implemented at bottom level i.e. agents & managers who are the person interacting directly with the clients. It is the task of the top-level & middle level manager to train their agents to practice relationship management & build relationship with their clients. 1. The agents should be trained to analysis their environment (society, friends, peer groups, etc.) & build good relationship with their environment because a good marketer first forms relationship & then sells his goods. 24
  • 25. 2. An agent should make a profit of the prospective targets (or potential clients). 3. He should be trained to interact with them. 4. He should trained to build the customer database classify them into potential existing customer into dissatisfied, satisfied highly satisfied customers. 5. The agents should be trained to get the feedback of the customer because insurance selling is a confidence building measure were relationship is build between the agent, which lasts for a long duration. To survive & have an upper hand over the competitors, in today’s scenario insurance companies need to implement CRM in there organization not only technically (computer, network, database system, CRM software trained personnel) but also as part of the culture. Relationship marketing is a key to success in the present era & only those organizations can succeed who and been able to build a base of their loyal customers, because a loyal customer advocates the companies products much better than the organization itself. The basic existence of the organization lies on the hands of its customers. It can be easily conclude that for success, it is necessary to implement CRM in the right manner. 25
  • 26. CHAPTER 4: CRM IN INSURANCE - IMPORTANCE: 26
  • 27. 4.1 SEGMENTATION 4.2 LONG TERM ASSOCIATION WITH THE CUSTOMER 4.3 NEED – BASED SELLING 4.4 PROPER TRAINING INPUTS FOR THE DISTRIBUTOR 4.5 CLAIMS MANAGEMENT CHAPTER 4: CRM IN INSURANCE - IMPORTANCE: 27
  • 28. With the competitors hotting up in the post liberalized insurance market, one factor that is contributing to the over all performance of an insurance player is the customer relationship management (CRM) that the company including in. each of the insurers is parading its own leverages in the field & highlighting the importance that they attached to customer service in their organizations. To what extend the promises are being delivered is the million dollar question. One thing which is common to most of the companies is that they are all relatively new in the field & not been tested seriously. This is particularly true in the case of life insurance companies who have long term relationships with their clients. It should be attempt of the players to not only retain the existing customers but also widen the customer base by enrolling fresh customers from time to time. This two activity are inter–depended in the way: if the customer service in the organization is really good, the customer is unlikely to look elsewhere. On the contrary, he would act as a great brand ambassador for the company, which would eventually pave the way for enrolling the customers. In the case of long term contracts, it is possible that a policyholder has a host of services to be attended to during the entire period of contract. 28
  • 29. One aspect that is related to such a long term contract is that the perishability of service may not be significant. While it may be broadly believed to be so, it would not apply as an ‘across the board’ characteristic. There may be some service which may have to be attended with all the urgency. For e.g.:- if a policyholder being serviced under the Salary Saving Scheme (SSS) of a life insurer is transferred to one place to another, an undue delay is transferring his file to the desired destination may result in all the premiums being kept in the pipeline or the suspense account. It is possible that the policyholder would realize this only at the time of claim settlement by which time is either too late or too complicated to rectify the damage. 4.1 SEGMENTATION One area where the insurers are looking at creating an ideal CRM platform is the segmentation of customers. This would, however, presuppose that the players have enough products to cater to different segments of the customers. In the life insurance contract, however the players can access the flexibility that is attached to the use of various riders. Even without having a large product base, by designing several riders, several customized solutions can be offered. It would be better for the players to have a long range planning in this regard & the specific segments that they would like to venture in. this would 29
  • 30. enable the players to adopt the right CRM solutions, which would be expected to last for a reasonably long time. One thing that they should bear in mind is that the CRM solutions do not come on the platter – they have to be paid for dearly & another pertinent point is, obsolescence that is associated with the solution should be tackled properly. Not an easy combination to contend with by any standards, indeed. It would be a better option to make the solutions as wholesome as possible. Besides, the players should also keep in mind the likely changes that are going to occur as regards regulations, the role of the global economic environment etc. 4.2 LONG TERM ASSOCIATION WITH THE CUSTOMER Customer service in insurance organizations is beset with some strange constraints, which may not be very relevant in the other areas of service organizations. Especially in life insurance, one thing is strikingly different in the long term nature of the contract. In some cases, it can go up to a entire life time of the client, if he or she looking at the backing up the risk coverage during the active working period with a reasonable & decent pension package. This type of relationship has to be necessarily built by a rock–solid commitment towards providing good service throughout the contract period. How often does this happen really? 30
  • 31. 4.3 NEED – BASED SELLING The problem is much more complicated in the case of a nascent market like the Indian one. The role of the insurer in this aspect begins at the proposal stage – its agent or the advisor is expected to the primary underwriter. He/she should be capable of identifying the need of the client & then be in a position to suggest a product that would best suit his or her needs. This would ensure that the business would be retained for a long term. If the distributor is himself or herself not ware of the nuances of the product that is being recommended, it result in a disillusioned policyholder in due course. This would eventually lead to poor retention ratios of business. This, in fact, is the bane of the Indian insurance market & is what is responsible for high lapsation ratio of several insurance companies, private players included. Insurance companies should contribute their own service by providing the back-up support for the distribution personnel. This would hold well in the case of renewal of short-term contracts. In the absence of this, all the efforts put in by him or her may not end in delivering positive results & this would act as a dampener. 4.4 PROPER TRAINING INPUTS FOR THE DISTRIBUTOR 31
  • 32. What would obviate the above problem is the existence of a thoroughly trained distribution force. We have several pre-requisites for being an insurance agent or advisor. But if the high incidence of default is observed despite all the preconditions attached to the training of the advisor what would it indicate? It would perhaps indicate that the right inputs of the training have not been imparted. While the institutes certify this advisor have apparently fulfilled all the necessary formalities, ‘the real’ education or the training of the personnel has not been accomplished. It is good to observed that the regulator is seriously pursing this aspect of advisor training in all its seriousness. Apart from the initial training that is mandatory, insurance companies should also look at imparting refresher courses for these personnel in order to ensure proper updation of their skills. By doing this, the insured can be assured of an agency force that is capable of not only identifying the needs of the prospect & then sell the product, but they can also look forward to the advisor providing continued service to the policyholder during the entire period of the contract. 4.5 CLAIMS MANAGEMENT 32
  • 33. On very vital part of customer relationship management in insurance business is the way that it looks at claims settlement. For the policyholder it is the early settlement of claims that is what matters as an essential service here again, the matter much more significant in the life arena, because the policyholder looks forward to a quick settlement after fulfilling his role of premium payment for a very long time. Insurer should play a very proactive role in the area of maturity claims by initiating the process ahead of the due dates. This would ensure that the policyholder would get the ultimate payment on the day that is due is over. In the settlement of death claims, insurer should empathize with the policyholder’s beneficiary ensure that claims are settled a6t the earliest as possible time without unduly troubling the claimants. Even in case there are some requirements to be fulfilled, the insurer should help the customer in their processing. If the service rendered at the time of claim settlement is quick & efficient, it is bound to improve the image of the insurer & it would pave the way of more fresh business. While most of these issues are common to all areas of insurance business, there are some classes which call for a special mention of the issues associated with them. E.g. Health insurance. It is to foregone conclusion that none of the policyholders is in the habit of 33
  • 34. reading & understanding all the policy conditions. The free look period that is associated with the life insurance contracts should be extended to all classes of insurance so that policyholder at least has the motivation to go through all the policy clauses & conditions. This would enable the policyholder to understand the contracts in its detailed thereby avoiding any possible heartburn at a large stage. A special mention has to be made about the ‘mutually cancelable’ clause of the contract. The insurer should not be undue advantage of this clause by canceling the contract where the likelihood of claims being made is high. Even were the repudiation of a claim is inevitable, the insurer should explain the reasons for such an eventuality giving details of the relevant clauses & the reasons for the repudiation. This would create an image in the mind of the policyholder that the insurers really care. In the absence of this & in the case of blunt rejection of claims, the policyholder is bound to lose faith in the concept of insurance. This would be detrimental not only to the business interest of the insurer but also to the overall insurance industry. Above all, the insurance players are looking at creating the CRM solutions though the rapid advancements being accomplished in information technology. As mentioned earlier, here the emphasis 34
  • 35. should be on customizing the needs rather going for humongous investment in technology. Retrieval from a poor decision would itself be replete with grave completion as well as loss of investments. One thing should be born in the mind, however, is that ultimately is it the person that is delivering the service that is more important than the means. If the eagerness to help the customer is lacking in a demotivated employee, what would the technical advancement achieve. This aspect should be considered seriously by the players while acquiring CRM solutions. It would be much wiser to go in for a package which can be implemented easily rather than investing heavily in a fanciful platform & then try to adapt the human resources to it. These are some priorities that insurer have to consider while taking this vital decisions. CHAPTER 5: 35
  • 36. CUSTOMER SERVICES – CHALLENGES AHEAD: 5.1 NEED FOR EXPLICIT POLICY CONDITIONS 5.2 AGENT’S PRIORITIES 5.3 RETENTION OF BUSINESS 5.4 NEED FOR HEALTHY COMPITITION CHAPTER 5: 36
  • 37. CUSTOMER SERVICES – CHALLENGES AHEAD: Customer service is the buzzword of the corporate world & a firm will be better known by the quality of service it provides rather than its market share or profits-earning capacity. While providing good & efficient service is a perquisite for any entity, it posses several problems as far as service organizations are concerned. On account of an invisible & intangible ‘product’, it makes the assessment of the services provided, that much more complicated & difficult. This holds true for an insurance organization & in fact, the problem is of very significance, especially in a life insurance product, where the contract runs for very long term, sometimes for a few decades. Hence, it is very essential for insurance companies to sustain the quality of service to retain the loyalty of the client. All business entities claim to provide the best of customer’s service, but how much of it is being translated into reality of the question of doubt. In order to be sure that they really delivering the best service, business houses should first know clearly what the customers expects & then ensures that the service is delivered. Several fail in this regard & in spite of heavy expenditure they incur preparation of this customer’s services package, the real service is not delivered, leading to a disillusioned customers. Hence, it is very essential to know at the outset, what the 37
  • 38. customer expects rather then investing the sum of money in attainting what the company feels is the real customer services. 5.1 NEED FOR EXPLICIT POLICY CONDITIONS In an insurance contract, there are several clauses which maybe beyond the comprehension of a policyholder as a part of an innate nature of an insurance contract. While a part of it be totally ruled out, insures should make these clauses as explicit as they can be. This would pave the way for a reasonable settlement of the claim, if & when it arises. In the absence of such a clarity & openness, it is bound to be lead to a situation wherein the two parties the insured & insured, would fail to come to a consensus, leading to a third party viz., the legal mechanism. The courts may take ambiguity of the clauses to work against the insurers & to this extent, the customer is well protected. But why should not avoid the whole episode by putting simple & comprehensible clauses. In India, the problem is more complicated to the extent that no policy holder has the practice of reading the clauses. In this regard the new players deserve to be complimented for the introduction of the free look-in period. Whatever be the ‘free’ part of it the policyholder is being made to go through the clauses or the policy conditions & to this extent alone, it is the great achievement. 38
  • 39. 5.2 AGENT’S PRIORITIES Another problem that confronts the industry (both insurer as well as insured’s) is the lopsided priority of the distributor, either the agent of the broker, in canvassing the product to the prospect. There is certain tilt toward his own interests in the form of higher commission & his target to be achieved rather than the proponents need profile. This could lead to a sense of dissatisfaction of the policyholder & could possibly lead to an abortive end to the contract. One possible solution to this problem could be having in place better system remuneration to the agent, which would compel him to look at long term prospect rather than short term interest like an immediate high rate of commission. It would also be in the interest of the industry to have more ‘educated’ distributor who can explain the nuances of the proposed contract to the prospect & do the job of the primary underwriter, which he is purported to be. This would eventually lead to lesser heartburn& a higher retention ratio for the insurer. Further, an agent is the link between the insurer & insured. For whatever service policyholder requires during the team of the contract, he looks up to the agent to be his representative. In the absence of the agent playing this middlemen’s role positively the 39
  • 40. policyholder may be deprived of the service that he expects. This is one more reasons for a better regulated compensation system for the agent, in order to sustain his interest in the continuation of the contract. 5.3 RETENTION OF BUSINESS Taking about the retention ratios, one is compelled to know about the insurer’s obsession about the higher retention ratio. One gets to hear that a particular company is progressively improving its customer retention ratio. It is merely to satisfy the company’s ego that these ratios are considered from time to time, are we objectively looking at the improvement of retaining the client? Let us considered a few point to this regard. As discussed above, the large skew in the agents commission rate could be a factor for several contact being with the half way through, if not initial year itself. By having more regulated commission payment system, perhaps, the agent would be, more interest in the continuation of that policy thereby leading to a possible improvement in the retention ratio. Further, when a contract is achieved by the payment of the huge rebate, the policy holder may not have sufficient motivation to continue the policy & could drop out at the slightest possible excuse. 40
  • 41. It is strong case for ruling against rebate payment in insurance, if it can be helped. There may be some other factor compelling a policy holder to discontinue his life insurance like inability to sustain the premium payment, other commitment etc. the insurance company has to consider all these factors in absolute detail, in order that genuine retention ratio improved in the long run. The insurers should adopt a customer-centric approach rather than being product-centric. This would ensure that the customer would not shift loyalties as he develops a feeling that he is being taken care of. This would a ballooning effect on the business as it would ensure that the satisfied client would spread the good word around. In this way, the customer base can be widened to a great extend. It is not for nothing that one says a satisfied customer is the greatest brand ambassador. On e positive development which would work towards the accomplishment of the objective is the introduction of the riders in the life insurance policies. While the needs of the customer are multifaceted, there cannot be a matching number of basic products for obvious reasons. The role of riders comes into play exactly in such situations. What exactly are these riders & how do they add to the flexibility of options for a customer? 41
  • 42. Ever ordered a pizza from the neighborhood baker? If you did, you must be aware that the baker would ask is ‘What is the topping of your choice?’ Only after you make your choice can the order be finalized, which goes to indicate that the toppings are the only differentiating factor, while the pizza base remain the same. The riders in a life insurance policy are exactly like the topping of pizza & can be ordered as per one’s needs. Just as the cost of the pizza changes by the topping(s) that one prefers, the cost of the policy (or the total premium) also changes with the rider that the policyholder orders for himself/ herself. Above all, a policyholder can ordered several riders for himself/ herself (once again like the multiple toppings of a pizza) & pay for them separately. The convenience of having riders in a policy is that one does not need to obtain a separate policy for each of the needs. By taking just one policy, several needs can be fulfilled by going for several riders. In this aspect, there is a great deal of flexibility for the customer. The overriding factor, however, is that these riders have to be paid for and in a few cases can be quite expensive. In the Indian insurance market, however, these riders were not significant hitherto, before the opening up of this industry. One could here of some riders like accident benefit, disability benefit, etc., & 42
  • 43. nothing more. The emergence of newcomers on the horizon has suddenly shot up the importance of the riders & several new companies are offering the riders with there base policies. These riders actually are a value addition to the policies. A look at some of the riders would enable a better understanding if the role of the riders.  The Accidental Death rider has been the oldest & the most among the several riders universally. It has been in extensive use in the Indian insurance industry as well. Under this rider, the beneficiary gets an additional amount (beside the some additional policy, usually an equal additional amount) if the policyholder were to die in an accident. The premium for this rider is also very reasonable & makes it doubly attractive. The term ‘accident’ for this clause covers a wide range of events. However there is a maximum limit put on the amount of coverage in all the policy put together. Besides, there is also an upper age limit until when the accident cover is provided (usually 70 years).  Premium Waiver Benefit rider, where under the payment of future premiums by the policyholder is totally waived if the policyholder were to be afflicted with one of the covered 43
  • 44. crippling eventualities & be disable to live a normal life. Normally, it goes with tandem with the disability benefit rider. There is a condition on the extend of disability & it is covered above certain percentage of disability. The other conditions the policy continues as if the premiums are being remitted regularly & the policy is in full force.  Guaranteed Insurability rider, under which the further renewal of the policy when the present terms ends, is guaranteed without proving further insurability. Normally, a person would have to prove himself / herself insurable for a fresh policy of the renewal. Besides, if a policy were to obtain a policy for a very long term, surrender of the policy in case of need would not be profitable. This rider gives the flexibility of choosing shorter terms with guaranteed insurability at the end, if the policyholder so prefers.  Critical Illness rider, under which the policyholder can combine the advantage of health insurance without having to obtain a separate health insurance policy. The coverage is against a list of disease mention under the policy which is restricted as per the age & a personal / family profile of the policyholder. 44
  • 45.  Family income benefit rider, which is a very good value addition to the policy, as it’s ensure the regular stream of income for the family, if the sole breadwinner of the family dies during active, working period. The rider along with the base policy takes care of both the cash needs as well as income need of the family. The policyholder should be prudent in choosing the term for which the family income should be payable, as it decides the rate. These are some of the riders that insurer offers. Not all these riders are offered by all the insurers everywhere (nor each of them is required by every policyholder), but there are at least some which are available for the policyholder. As mentioned earlier, these riders are available at an additional cost, over & above the base premium. Life insurance is an assurance; whereby there is solemn promise to make payment, either on maturity or on earlier death. The riders which are attached to the life insurance policies, however, defeat this property as they only cover certain eventualities that occur during the contracts period. Besides all said and done life insurance is still treated as an investment by several sections of the society, especially in India & in this regard the premium spent or rider may not provide any payment in return. This point must be clearly made to be understood by the 45
  • 46. insured, so that it does not lead to any sort of misgivings at the time of claim settlement. The entry of foreign, private players into the insurance industry in India marked the onset of several riders. While the trend in the earlier era was to have bundled product, the new players are emphasizing the importance of the riders. Most of the new players have only a few base products to offer & there contention is, by mixing different combinations of riders, several policies can be designed. They are leveraging on these on the utilities of these riders to come up with customized solutions, rather than rigid bundled products. While it sound very customer-friendly & dynamic, it is very essential that the public awareness in insurance is at a high level, which unfortunately not the case in India. The introduction of the brokers as a distribution channel, coupled with a board understanding of the various riders may provide a solution in the long run. While the new players are very enthusiastic about the usefulness of the riders for the policyholders, the erstwhile monolith, Life Insurance Corporation of India has its reservation about them. Their contention is that the riders cannot provide any surrenders value, should a policy be stopped during the contract period, due to some impending & unavoidable reasons. This argument could hold some 46
  • 47. water in a market like India where insurance is still seen as an investment tool by a large section of people. Considering the exclusive risk-coverage feature of the riders, IRDA has initially prescribed an upper limit on the premium paid towards the coverage of riders if the life insurance policy. This limit was set at 30 percent of the premium to be paid on the base policy. There was a furore in the industry over the cap of the premium toward riders. The new players’ contention was, when the riders are meant to provide customized solutions, what is the sanctity in having the cap on the premium? There was been a serious debate on the raising of this cap, if not totally doing away with it. There are been immense pressure from the industry in this area to do away with the cap totally. The regulator would, no doubt, take a judicious decision before restoring to this elimination of the upper limit, considering the brokerage activity as a distribution channel, the way insurance is being understood by the common man & also the way the insurance industry develops over a period of times. 5.4 NEED FOR HEALTHY COMPITITION 47
  • 48. It is a universal fact that there is resistance to change. This holds well in the insurance domain as well. The policyholder, on his part, is resistance to changes occurring in the domain, post- liberalization, or he has been so attuned to the working of insurance companies that he is not able to appreciate anything novel in this regard. The incumbent insurance companies suffer from a similar limitation & are finding it very hard to come to grips with a competitive scenario. In the process, the customer has to pay the price. Being incumbent, if the public sector behemoths take the lead in spreading a healthy competition, it would be better for the industry as well as for the customer in the long run. The competition that one gets to see presently is leaving a lot to be desired. While some new product & riders have been introduced into the market, information with regard to them is not being disclosed completely thereby putting customer in the quandary. In some cases, it sound as if one companies is announcing the onset of the new product just as the competition for another, rather than a genuine customer interest. If this is the trend, are we not product-centric & defeating the very basic tenet? Insurance companies should try to see beyond mere alternative to products & aim at coming out with customize solutions for the policyholder. 48
  • 49. The best thing that has happened in the post-liberalization scenario is the introduction of brokers into the system. These brokers, being better literate & also being neutral to a particular company can be good crusaders for the policyholders. However, the institution has not taken of to the expected level & the market is yet to experience positive results. One hopes that the real benefit of the institution of broker is present, for all to see, in the near future. CHAPTER 6: METHODOLOGY OF CRM IN INSURANCE: 49
  • 50. The utility of the applications is vast & extend across the value chain. There are applications that the customer-facing, adding more value & satisfaction to the customer. Such application enhance customer’s intelligence & empower them to perform a host of activities at there own convenience over the internet. The Customer Relationship Management (CRM) solutions pack such applications. The utility extended by such solutions are plentiful, a few of which are detailed below. Needs Analysis:- Enable prospective customers to identify the product that match there risk profile the help of an interactive needs analysis process. The customer’s answers a series of logically presented questions, based on the options selected for these questions, the most suitable product(s) that match the customers requirements are presented to the customer. For example, while guiding the prospective customer toward a suitable product, the application will present questions related to the age, professional status & marginal status. Based on the answer provided by the customer the product line will be narrowed down & only those products that suit the prospective customer’s profile will be presented. The prospective customer can then select the product based on the features & optioned provided by the product. 50
  • 51. Online Selling:- Enable prospective customers to submit the proposal forms online. In this process, applications will enable the following: ╬ Captures of the details from the proposal forms. ╬ Match proposal details to existing data to check if the customer already exists in the system, if exist, link customers details. ╬ Enable lead management by triggering alerts to the marketing & distribution channels of the prospective customer. ╬ Trigger alerts to the actuarial personnel to determine the premium quotation for the policy proposal. ╬ E-mail the prospective customer of the premium quotations. Online Payments:- Enables customers to make online premium payment. Application will enable such online payment of the premium in a secured manner & register such information in to the internal systems; generates the customize policy certificate which give the customer unique identification code, the policy details, start the expiry dates of the policy & other terms & conditions. Claim intimation & Settlements:- 51
  • 52. Enables faster & easier mechanism for reporting losses. Application capture necessary information from the forms & documents submitted & trigger alerts to the customer for additional information required, trigger claim handling process & alerts the loss assessors, process claims settlement on obtaining the assessment details & finally intimate the customer of the claims settlements details. Online Customers Servicing:- Provide authenticated access to confirmed customers enabling them to interact online with the insurer. Application can be triggered to get information on regarding the policy, premium to be paid, bonus issued & claim settlements status, make basic endorsement like changes to customer profile or policy etc. Loan Processing:- Customer can make online requests for loan against existing policies. Applications will enable processing of loan requests; provide status of loan sanction, the loan repayment schedules, online repayment, trigger reminders for outstanding installments etc. Knowledge Management:- 52
  • 53. Customers can be updated about the significant developments that will enable them to review there risk profile, the need for modify existing policies or to go for additional insurance. CHAPTER 7: 53
  • 54. FUTURE OF CRM / What is CRMnext? CRMnext is a comprehensive, easy-to-use, hosted customer relationship management (CRM) solution. With CRMnext you can easily evolve and implement customer facing strategies, using industry best practices, without any upfront cost. It enables you to manage and seamlessly share information, across departments by centralizing all customer data. The powerful reporting and analytical capabilities delivers actionable business intelligence that can significantly improve company's bottom line revenues.. Key Benefits: 54
  • 55. • Ensures fast and hassle free roll-out. • Develop more profitable marketing campaigns. • Improve pipeline visibility and sales effectiveness. • Deliver consistent world class customer service. • Enforce processes with a single-click. • Ensure better, more informed decision-making The CRMnext Foundation: CRMnext is more than a CRM. We're successful because we (its)married a comprehensive CRM with an advanced business process management suite. The result, with CRMnext you can not only manage data (like other CRM's) but also the process behind the data. 55
  • 56. Big companies (foreign insurance industry) leverage the CRMnext foundation, to standardize and enforce uniform processes across geographical locations. Each business unit can further redefine process to accommodate requirements of local businesses. Smaller companies take advantage of the enforcement engine to implement built-in global best practices and grow right. The Business Strategy Perspective on CRM We now consider the Business Strategy Perspective on CRM. Here, we propose a model, which is a hybrid, and typical of many of the models and diagrams of CRM that you will find on The Internet and in popular books on the topic of eMarketing/eCommerce. The model has three key phases and three contextual factors: 56
  • 57. Three key phases: 1. Customer Acquisition. 2. Customer Retention. 3. Customer Extension. Three contextual factors: 4. Marketing Orientation. 5. Value Creation. 6. Innovative IT. 1. Customer Acquisition - This is the process of attracting our customer for the first their first purchase. We have acquired our customer. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us for the first time. 2. Customer Retention - Our customer returns to us and buys for a second time. We keep them as a customer. This is most likely to be the purchase of a similar product or service, or the next level of product or service. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us regularly. 57
  • 58. 3. Customer Extension - Our customers are regularly returning to purchase from us. We introduce products and services to our loyal customers that may not wholly relate to their original purchase. These are additional, supplementary purchases. Of course once our loyal customers have purchased them, our goal is to retain them as customers for the extended products or services. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase additional or supplementary products and services. 4. Marketing Orientation - means that the wholes organisation is focused upon the needs of customers. Customer needs are addressed by the Three Levels of a Product whereby the organisations not only supplies the actual, tangible product, but also the core product and its benefit, and also the augmented product such as a warranty and customer service. Marketing orientation will focus upon the needs of consumers for all three levels of a product. (N.B. 'market' orientation and 'marketing' orientation are not the same). 58
  • 59. 5. Value Creation - centres on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage. 6. Innovative IT - is exactly that - Information Technology must be up-to-date. It should be efficient, speedy and focus upon the needs of customers. Whilst IT and/or software are not the entire story for CRM, it is vital to its success. CRM software collects data on consumers and their transactions. Huge databases store data on individuals and groups of individuals. In some ways, CRM means that an organisation is dealing with a segment of one person, since every consumer displays different purchasing habits and preferences. Organisations will track individuals, and try to market products and services to them based upon similar buyer behaviour seen in other individuals (e.g. When Amazon tells you that customers that viewed/bought the same product as you, also bought another product). CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of Perspectives In summary, the three perspectives are: 59
  • 60.  Information Technology (IT) perspective.  The Customer Life Cycle (CLC) perspective  Business Strategy perspective DISCLAIMER Our model is a hybrid of many other commonly cited models from a number of sources. If you are undertaking higher-level academic work you need to clarify with your tutor, the nature of his or her preferred model on the topic. What is CRM? It is based around a few premises on customers:  New customers are expensive to capture (estimates put the cost at as much as ten times the cost of a retained customer) and take time to deliver value.  Lost customers tell many others about their experiences and rarely come back.  Retained customers are better value and in time move from being clients to becoming advocates working on your behalf. 60
  • 61.  Your major efforts should be spent on excellent customers or groups of customers - i.e. those that are likely to yield good returns. Much research has been carried out into customer profitability and the conclusions are consistent (see chart above). The longer a customer is with you the better the profitability and the chart clearly shows that after the second year you start to make money from cross-sales, repeat orders, referrals etc. Clearly the higher the turnover (and therefore the shorter the time they stay with you) the less likely you are to make profits. In life insurance this is critical as the embedded value of a customer takes even longer to become established and is 61
  • 62. why actuaries spend much time trying to improve the lapse rate (persistency). CRM therefore is about managing your customer base to ensure that they stay with you and therefore yield a better profit. It is also about getting rid of those customers that take up a disproportionate amount of time for the profit that they yield. 62
  • 63. CHAPTER 8: PRIMARY DATA ANALYSIS: The most easy and popular way of collecting data is with the help of Questionnaire and taking interview. Questionnaire means a list of question which is drawn in systematic way for the purpose of collection data. The questionnaire is the outline, of what information is required in the project content by which the data can be drawn efficiently. The discussion with professionals or experts, give very valuable idea about how the questionnaire should be framed and as to the phrasing of the questions. Interview that take personally is not so easy. Thus, interviewer should have that much skill which makes him/her to give a proper answer of the questions. The person whom you are interviewing is having a limited time to answering to your questions & having many other work to do, and attending there clients. I have done the project by sampling method. For gaining a knowledge regarding my project & completion of it efficiently, I had an interview with few insurance companies & agents, managers. 63
  • 64. Q1. Does the CRM provide benefits or opportunities to Customers? Answer – Provide Benefits or Opportunities NO. of approachement (%) Yes 10 No 0 Don’t know 0 From the above table it has been easy to understand that CRM activity provide benefits or opportunities to Customers & it has been clearly shown in above table that 100% CRM people says that it really helps to customers to get benefits & opportunities from life insurance. It has been shown in more welled manner in the following diagram: Yes No Don’t know NO. of approachem ent Provide Benefits or Opportunities CRM provide benefits or opportunities to Customers NO. of approachement 64
  • 65. From the above diagram it has been come to know that the 100% CRM people says that it gives benefits or opportunities to Customers as new policy is being invented as the period is passing. Q2. Does it help to increase the saving of customers via. Life Insurance? Answer – Increase saving of customers NO. of approachement(%) Yes 8 No 1 Don’t know 1 From the above table it has been easy to understand that through CRM help to increase the saving of customers via. Life insurance. And it has been proved form the above table that 80% people says yes, only10% says no & 10% says they don’t know. It has been more clearly explain through graph as under: Helps to increase the saving of customers via. Life insurance Yes 80% No 10% Don’t know 10% Yes No Don’t know 65
  • 66. From the above graph it has been come to know that most of the people i.e. 80% that CRM help to increase the saving of customers via. Life Insurance only the 10% of people says no & 10% people say they don’t know. Q3. Does it have a positive image in front of customers? Answer – Positive Image NO. of approachement (%) Yes 10 No 0 Don’t know 0 From the above table it is become easy to recognize that CRM has positive image in front of customer as it provides all related information’s to the customers as 100% CRM people says that. It has been clearly explain in the form of graph which is as under: 66
  • 67. It has been clearly shown in the above graph that CRM has positive image in front of customers i.e. also 100% as it is said by CRM people. As it gives benefits or opportunities to Customers. Q4. Does CRM helps out to sell the policy to existing customers? Helps to sell the policy NO. of approachement (%) Yes 8 No 2 Don’t know 0 From the above table it has been easily come to know that CRM helps them to sell the policy to existing customers as good relation has been generate between them. These results to sell out more policy to them. And it has also said by the CRM people .i.e. 80% CRM people, 20% people says that it does not work in efficient manner. Have a positive image in front of customers NO. of approachement 0 2 4 6 8 10 12 Yes No Don’t know Positive Image approachement NO. of approachement 67
  • 68. And it has been shown in more effective manner by the way of diagram as under: CRM helps out to sell the policy to existing customers 80% 20% 0% Yes No Don’t know From the above diagram it has been clearly come to know that the CRM activity helps to CRM people to sell out the policy to the existing customer. And most of the people i.e. 80% people says yes & 20% people says no. Q5. What problems faced by your organization to maintain CRM? Answer – The CRM people are facing the major problem is to maintain such huge data of there customers (old & new). As the information technology is not has been updated & reached to all the offices or branches all over the country. Secondly, the records of the 68
  • 69. premium paid or remain, is one of the big problem as customers relationship management people as it also requires IT support because this much record is to be maintain in the files i.e. in hard copy, is not so easy even for search it takes lot of time of both the parties. Q6. What is the reaction of the customers when your agent approaches them? Answer – Reaction of customers NO. of approachement (%) Will our money be return 0 Is there any guarantee of your insurance company 2 We don’t want policy 3 At present we don’t have money 5 As from the above table we can easily come to know that what are the reaction of the customers when an agents approaches them to sell policy the answer of most of the people i.e. 50% says that they won’t have money, were 30% people say they don’t want policy & rest 20% people ask Is there any guarantee of your insurance company? It has been clearly shown in following diagram: 69
  • 70. Reaction of customers when an agent approaches them. 0% 20% 30% 50% Will our money be Return Is there any Guarantee of your Insurance Company We don’t want Policy At present we Don’t have money 70
  • 71. From the above graph it has been come to know that what are the reactions of customers/prospects when agents approaches them the 50% population says that they don’t have money to take policy were as 20% people asking about the guarantee of the insurance company & 30% people says that they don’t want policy. Q7. How do you tackle your competitors? Answer – Strategy used to tackle the competitors NO. of approachement (%) By investing heavy on advertisements 0 By offer better service to customers 6 By providing extra benefits to customers 4 From the above table it has been easy to understand that what strategy the CRM department used for tackling there competitors most of them i.e. 60% people says that they offer better service to there customers, were 40% says that by providing extra benefits to the customers to retain in the market & increase the business. It has been more clearly explain in diagram which is as under: 71
  • 72. Strategy used to tackel to competitors 0% 60% 40% By investing heavy on advertisements By offer better service to customers By providing extra benefits to customers From the above diagram it has been clearly shown that the CRM people or department is using the strategy to survive in the market is said by 60% that they provide better service to customers % rest 40% people says that they providing extra benefits to customers to get policy & retain in the competitive market. Q8. How do you perceive future of CRM in insurance? Answer – Perceive future of CRM NO. of approachement (%) May increase 6 May remain same 2 May decrease 2 From the above table we can easily come to know that what the CRM people says about perceive future of CRM in insurance the 60% people says it will be increase were as 20% people says that it may 72
  • 73. remain same & rest 20% people says that it may decrease. Because in future they may not be only manage data (like other CRM's) but also the process behind the data. It has been clearly shown in the following graph: From the above graph it has been seen that the future of CRM may increase as 60% of CRM people says that, were as 20% CRM people says that it may remain same & remaining 20% people says that it may decrease, but prediction is not the final answer as future of any thing is unpredictable no one knows about future what happens when. CHAPTER 9: Perceive future of CRM in life insurance 60%20% 20% May increase May remain same May decrease 73
  • 74. FINDINGS AND CONCLUSION: It has been conclude that from the all question that most of the CRM people says that it is providing opportunities & benefits to the customers as it launches the new policies in every 3-6 months or in a year, by keeping the attention on the needs & wants & there requirement. As the CRM is a tool or activity which help to the company tom survive in today’s competitive market. Even the CRM activity is advantage for the customer as it help to sell the policies to the customers which help the customer to make saving through taking life insurance policy for his/her or for there family as it gives financial protection to the policyholder or nominee & as there is 100% guarantee of getting money back. Well its awareness in the customer is not yet known 100% then also whoever know about these facilities through there agent or respective managers has a positive image about CRM in life insurance sector. It is one of the activity that CRM to sells out the policies to the existing customers as the good relation is been maintain by the agent/manager with there existing customer but it has not being 100% successful because there are the customer who does not required more policy it has been success up to 80%. 74
  • 75. The CRM managers /agents are facing some problem to maintain relation with there existing customers as there is not possible to maintain large amount of data /record or information related to there old customers and new customers and even of premium statements, as most of the CRM people says that they are lacking behind because the Information Technology not has been developed yet to all over the offices or to the agent. As the human being all the people has some or the other reaction when an insurance agent approaches them to get the policies from them. There are certain doubt in the mind of the customer as they were asking about there money will get them back or not, question is about the stability of the company which is asked by 20% peoples or the most fruitfully reason is that they don’t have money these reason is given by 50% peoples & they don’t want policy as they already have there life insurance is said by 30% of peoples. As today’s competitive scenario the survival of the company is depend on CRM as it a Mantra to get success in the market as it plays a vital role in the company like life insurance as there business is mostly rely on it. They have to face the competition to be in the market & generate profit from it they tackle there competitors in the following way: 75
  • 76.  By making heavy in advertisement.  By offering better service to there customers.  By providing extra benefits to customers. As most of the CRM people says i.e. 60% that they usually giving better service to there customers & remaining 40% says that they providing extra benefits to the customers such as diaries, gift on occasions, etc & no CRM managers/agents says that they are spending more on the advertisement to attract the customers or getting more number of policies. The CRM people perceive the future of CRM in life insurance as it may increase as said by the 60% of the CRM people were some are i.e. 20% saying that it may remain same & rest 20% says that it may decrease. 76
  • 77. CHAPTER 10: SUGGESTIONS & RECOMMENDATIONS: This project is conducted for getting the knowledge (theoretical & practical) as well as for the future aspects of the CRM services in insurance sector in India. As it is a very vast area which includes more number of services related to it. It is very competitive activity for insurance which directly provides a various type of services under one roof. As it includes various types of services it has its advantage as well as disadvantage. Same, as coin has two sides, this service is valuable to the customers, clients, dual/ individual, etc... But on the other hand it has its limitations which show that people are not aware of it such as (clients, group/individuals, etc…). So to make it helpful to its providers & services buyers or policy holders, the awareness of it is necessary because some or the other are taking the policy for longer or short period of time. It plays a very important role in the development of a country especially in industrial sectors. So, CRM service providers(department) should be careful always about the services while provided to their customers & try to make its 77
  • 78. awareness to all the customers, not only to maximization the profit, but because there is a rising of competition in this sector. To the insurer, make its awareness to yours staff members/agents of all branches by the way of training programs, seminars, workshops, etc. because many of them don’t know that how the CRM actually is to be conduct may be there some of branches are providing this services, in real term all the agents, advisors, etc. are providing this service in effective manner but they don’t know the importance of it, at industry level so the awareness of this is necessary, only the managers or big post personality know about the CRM & its services as well its activities in better way. 78
  • 79. BIBLOGRAPHY BOOKS  CRM IN INSURANCE – AN INTRODUCTION - V .V GOPAL, PUBLISHED BY: THE ICFAI UNIVERSITY PRESS  INSURANCE CHRONICLE (LIFE & HEALTH INSURANCE) PUBLISHED BY: THE ICFAI University Press EDITION OF APRIL - 2005.  INSURANCE CHRONICLE (RATEMAKING IN INSURANCE) PUBLISHED BY: THE ICFAI University Press EDITION OF DECEMBER - 2005. WEBSITES 79
  • 80. www.googlesearch.com www.insurance.com ANNEXURE -I QUESTIONNAIRE ON CRM IN LIFE INSURANCE Q1. Does the CRM provide benefits or opportunities to Customers? Answer - a) Yes - b) No - c) Don’t know – Q2. Does it help to increase the saving of customers via. Life Insurance? Answer - a) Yes - b) No - c) Don’t know – Q3. Does it have a positive image in front of customers? Answer - a) Yes - b) No - c) Don’t know – Q4. Does CRM helps out to sell the policy to existing customers? Answer - a) Yes - b) No - c) Don’t know – Q5. What problems faced by your organization to maintain CRM? Answer – 80
  • 81. Q6. What is the reaction of the customers when your agent approaches them? Answer - They are:- a) Will our money be returned? b) Is there any guarantee of your insurance company? c) We don’t want policy. Q7. How do you tackle your competitors? Answer - They are:- a) By investing heavy on advertisements. b) By offer better service to customers. c) By providing extra benefits to customers. Q8. How do you perceive future of CRM in insurance? Answer - They are:- a) May increase. b) May remain same. c) May decrease. 81