SIGNIFICANCE OF CUSTOMER REALATIONSHIP MANAGEMENT IN

LIC

Name of the Researcher

MANJODH SINGH BALVINDER SINGH BASSI

(Bachelor of Management Studies)

Academic Year – 2018-2019

Under the Guidance of

Mr. KUSHAL KURANI

UNIVERSITY OF MUMBAI’S
CHANGU KANA THAKUR ARTS, COMMERCE,
AND SCIENCE COLLEGE

1
 University of Mumbai’s
CHANGU KANA THAKUR ARTS, COMMERCE,
AND SCIENCE COLLEGE

Certificate

I, Professor Mr. KUSHAL KIRANI hereby certify that

Mr. MANJODH SINGH BALVINDER SINGH BASSI,
TYBMS Student of C.K.Thakur College, has completed a
project titled “SIGNIFICANCE OF CUSTOMER
RELATIONSHIP MANAGEMENT IN LIC ” in the
academic year 2019. The work of the student is original
and the information included in the project is true to the
best of knowledge.

Signature of Guide with Date: -

2
 Declaration

I, Mr. MANJODH SINGH BALVINDER SINGH

BASSI , TYBMS Student of C.K.Thakur College,
hereby declare that I have completed the project titled
“SIGNIFICANCE OF CUSTOMER REALATIONSHIP MANAGEMENT
IN LIC” during the academic year 2018-19.

The report work is original and the information/data

included in the report is true to the best of my Knowledge.
Due credit is extended on the work of
Literature/Secondary Survey by endorsing it in the
Bibliography as per prescribed format.

Signature of the Student with Date

Name of Student

3
 ACKNOWLEDGEMENT

I wo u l d l i k e t o e x p r e s s my g r a t i t u d e t o t h e officials of
LIC for their kind support and assistance while furnishing the
required information.

I also express m y g r a t i t u de a n d thanks to

Prof. KUSHAL KURANI
for their invaluable co-operation, continued support and
guidance as well as healthy criticism throughout resulting
works. Their able guidance, encouragement and valuable
suggestion led my way pass easily through most difficult period
during this Sales Project .

I would also like to thank the faculty and staff of B.M.S

because without their help this project would not have been
completed.

4
 CHAPTER 1:

INTRODUCTION:

1.1 INTRODUCTION

1.1. 1) INTRODUCTION OF CRM

o 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

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

5
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 multichannel
interaction. CRM enables a company to capture a consolidated customer view
through multi-channel interactions in a data warehouse solution.

 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 customerfacing functions, including
marketing, sales, customer services, & product support.

1.1.2) INTRODUCTION OF LIFE INSURANCE :

6
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 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.

7
 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 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 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

8
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.

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 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

9
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 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 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

10
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.

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.

11
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.

12
 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 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

13
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 1928, the
Indian Insurance Companies Act was enacted to enable the Government to
collect statistical information about both life and nonlife 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.

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.

14
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 BabuMuttylal Seal, the foreign life insurance
companies started insuring Indian lives. But Indian lives were being treated as
substandard 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 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 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
reorganization 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

15
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 reorganization 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 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

16
 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.

17
 CHAPTER 3:

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 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 implemented in such a way tat it does not become a hurdle for

18
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.

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

19
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.

CHAPTER 4: CRM IN INSURANCE -

IMPORTANCE:

4.1 SEGMENTATION

4.2 LONG TERM ASSOCIATION WITH THE CUSTOMER

4.3 NEED – BASED SELLING

20
4.4 PROPER TRAINING INPUTS FOR THE DISTRIBUTOR 4.5 CLAIMS

MANAGEMENT

CHAPTER 4:

CRM IN INSURANCE - IMPORTANCE:

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

21
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.

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
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.

22
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?

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 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

23
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

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 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.

24
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 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:

25
 CUSTOMER SERVICES – CHALLENGES AHEAD:

5.1 NEED FOR EXPLICIT POLICY CONDITIONS

5.2 AGENT’S PRIORITIES

5.3 RETENTION OF BUSINESS

26
5.4 NEED FOR HEALTHY COMPITITION

CHAPTER 5:

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

27
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 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.

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

28
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 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.

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

29
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?

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., &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

30
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 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

31
 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.

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

32
premium spent or rider may not provide any payment in return. This point must

be clearly made to be understood by the 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 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

33
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

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.

34
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.

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.

35
 CHAPTER 6:

METHODOLOGY OF CRM IN INSURANCE:

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.

36
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:-

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

37
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:-

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.

38
 CHAPTER 7:

FUTURE OF CRM / What is CRMnext?

CRMnext is a comprehensive, easy-to-use, hosted customer relationship

management (CRM) solution.

39
 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:

• Ensures fast and hassle free roll-out.

• Develop more profitable marketing campaigns.

• Improve pipeline visibility and sales effectiveness.

• Deliver consistent world class customer service.

40
• 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.

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

41
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:

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.

42
 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.

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

43
 consumers for all three levels of a product. (N.B. 'market' orientation

and 'marketing' orientation are not the same).

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:

Information Technology (IT) perspective.

The Customer Life Cycle (CLC) perspective

Business Strategy perspective

44
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.

Your major efforts should be spent on excellent customers or groups of

customers - i.e. those that are likely to yield good returns.

45
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

why actuaries spend much time trying to improve the lapse rate (persistency).

CRMtherefore 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.

46
 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.

47
 QUESTIONNAIRE ON CRM IN LIFE INSURANCE

Q 1 Are you currently covered under any LIC investment policy?

A. Yes

B. No

Chart Title
16

14

12

10

8
No. of respondent
6

0
Yes No

Q2 What is your major reason for option for an lic investment?

A. Insurance

B. Investment

48
 14

12

10

No. of respondent
6

0
Insurance Investment

Q3 Are you current going under any medical treatment or are ill?

A. Yes

B. No

14

12

10

No. of respondent
6

0
Yes No

Q4 Are you satisfied with your insurance policy?

49
A. Yes

B. No

16

14

12

10

8
No. of respondent
6

0
Yes No

Q5 Are looking for better lic policy ?

A. Yes

B. No

50
 20

18

16

14

12

10
No. of respondent
8

0
No

Q6 Your occupation?

A. Service

B. Business

C. Retired

D. Other

51
 12

10

6
No .of respondent

0
Service Business Retired Other

Q7 Your income

A. 10000-15000

B. 15001-25000

C. Above 25000

12

10

6
No. of respondent

0
10000-15000 15001-25000 Above -25000

52
Q8 How do you feel after investing in lic ?

A. Good

B. Average satisfied with investment decision

C. Cheated

14

12

10

No. of respondent
6

0
Good Average Cheated

Q9 Do you invest in lic because of tax benefit

A. Yes

B. No

53
 18

16

14

12

10

8 No. of respondent

0
Yes No

Q10 Does the insurance agent/ marketing executive recommended for lic

A. Yes

B. No

12

10

6
No. of respondent

0
Yes No

Q11. Does it have a positive image in front of customers?

54
Answer - a) Yes

b) No

18

16

14

12

10

8 No. of respondent

0
Yes No

CHAPTER 9:

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

55
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%.

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.

56
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:

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.

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.

57
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 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.

BIBLOGRAPHY

58
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

www.googlesearch.com www.insurance.com

59