27-03-2014, 10:46 AM
STUDY OF CONSUMER’S PERCEPTION ON LIFE INSURANCE POLICIES IN RELIANCE LIFE INSURANCE COMPANY LTD
STUDY OF CONSUMER’S.pdf (Size: 689.94 KB / Downloads: 18)
Company Profile:
Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance – Anil
Dhirubhai Ambani Group. Reliance Capital is one of India‟s leading private sector financial
services companies, and ranks among the top 3 private sector financial services and banking
companies, in terms of net worth. Reliance Capital has interests in asset management and mutual
funds, stock broking, life and general insurance, proprietary investments, private equity and other
activities in financial services.
Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with
the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934.
Reliance Capital sees immense potential in the rapidly growing financial services sector in India
and aims to become a dominant player in this industry and offer fully integrated financial services.
Abstract:
India is a country where the average selling of Life insurance policies is still lower than many
Western and Asian countries, with the second largest population in world the Indian insurance
market is looking very prospective to many multinational and Indian insurance companies for
expanding their business and market share. Before the opening of Indian market for Multinational
Insurance Companies, Life Insurance Corporation (LIC) was the only company which dealt in
Life Insurance and after opening of this sector to other private companies, all the world leaders of
life insurance have started their operation in India. With
their
world market experience and
network, these companies have offered many good schemes to lure all type of Indian consumers
but unfortunately failed to get the major share of market. Still the LIC is the biggest player in the
life insurance market with approx 65% market share. But why Indian consumers do not trust on
many companies and why the major population of India does not have any life insurance policy or
what are the factors plays major role in buying behaviour of consumers towards life insurance
policies.
Origin of Insurance:
Almost 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the caravan
trade by giving loans that had to be later repaid with interest when the goods arrived safely. In
2100 BC, the Code of Hammurabi granted legal status to the practice that, perhaps, was how
insurance made its beginning. Life insurance had its origins in ancient Rome, where citizens
formed burial clubs that would meet the funeral expenses of its members as well as help survivors
by making some payments. As European civilization progressed, its social institutions and welfare
practices also got more and more refined. With the discovery of new lands, sea routes and the
consequent growth in trade, Medieval guilds took it upon themselves to protect their member
traders from loss on account of fire, shipwrecks and the like.
Enter companies :
The first stock companies to get into the business of insurance were chartered in England in 1720.
The year 1735 saw the birth of the first insurance company in the American colonies in
Charleston, SC. In 1759, the Presbyterian Synod of Philadelphia sponsored the first life insurance
corporation in America for the benefit of ministers and their dependents. However, it was after
1840 that life insurance really took off in a big way. The trigger: reducing opposition from
religious groups.
The growing years:
The 19th century saw huge developments in the field of insurance, with newer products being
devised to meet the growing needs of urbanization and industrialization. In 1835, the infamous
New York fire drew people's attention to the need to provide for sudden and large losses. Two
years later, Massachusetts became the first state to require companies by law to maintain such
reserves. The great Chicago fire of 1871 further emphasized how fires can cause huge losses
in densely populated modern cities. The practice of reinsurance, wherein the risks are spread
among several companies, was devised specifically for such situations. There were more offshoots
of the process of industrialization.
In India:
Insurance in India can be traced back to the Vedas. For instance, Yogakshema, the name of Life
Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term
suggests that a form of "community insurance" was prevalent around 1000 BC and practised by
the Aryans. Burial societies of the kind found in ancient Rome were formed in the Buddhist
period to help families build houses, protect widows and children.
Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870.
Other companies like Oriental, Bharat and Empire of India were also set up in the 1870- 90s. It
was during the Swadeshi movement in the early 20th century that insurance witnessed a big boom
in India with several more companies being set up.
As these companies grew, the government began to exercise control on them. The Insurance Act
was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into
investments, expenditure and management of these companies' funds. By the mid- 1950s, there
were around 170 insurance companies and 80 provident fund societies in the country's life
insurance scene. However, in the absence of regulatory systems, scams and irregularities were
almost a way of life at most of these companies.
Meaning of Insurance:
Insurance may be described as a social device to reduce or eliminate risk of loss to life and
property. Insurance is a collective bearing of risk. Insurance spreads the risks and losses of few
people among a large number of people as people prefer small fixed liability instead of big
uncertain and changing liability. Insurance is a scheme of economic cooperation by which
members of the community share the unavoidable risks.
Insurance can be defined as a legal contract between two parties whereby one party called Insurer
undertakes to pay a fixed amount of money on the happening of a particular event, which may be
certain or uncertain. The other party called Insure or Insurant pays in exchange a fixed
sum known as premium. The insurer and the insurant are also known as Assurer or Underwriter
and Assurant, respectively. The document which embodies the contract is called the policy.
General Insurance:
General (non-life) insurance provides a short-term coverage, usually for a period of one year.
General insurers transact fire insurance, motor insurance, marine insurance, and miscellaneous
insurance business. Among these categories fire and motor insurance business are predominant.
Motor vehicle insurance is compulsory in India and the motor insurance industry.
Moreover, motor insurance due to third party liability claims has substantially contributed to
underwriting losses.