A REPORT ON

Customer satisfaction and retention of IDBI Federal Life

Insurance Company LTD

By

AKSHIT DUBE, ID- 13A3HP011

A report submitted in partial fulfillment of the requirements

of MBA program of IMT HYDERABAD

(IDBI Federal Life Insurance Co Ltd.)

Faculty Guide Company Guide

DR.Sridhar vaithianathan MRS.C.Shanthi

Associate Professor Asst. Branch manager

IMT, Hyderabad IDBI Federal Life

Insurance Ltd

Customer satisfaction and retention of IDBI

Federal Life Insurance Company LTD

AKSHIT DUBE

Company Guide Faculty Guide

Mrs.C.Shanthi Dr.Sridhar Vaithianathan

Asst. Branch manager Associate Professor

IDBI Federal Life Insurance Co Ltd. IMT, Hyderabad

Coimbatore

IMT Hyderabad

ACKNOWLEDGMENT

I sincerely thank Mrs.C.Shanthi (Asst. Branch head), Jay Mala and Mr.

sankeerth(Coordinator) for providing me this wonderful opportunity of working

on this particular project. I have been provided help and got the chance to

learning a lot throughout this project.

I am also thankful to my faculty guide MR.Sridhar vaithianathan for guiding and

encouraging me throughout the internship.

TABLE OF CONTENTS

INTRODUCTION OF THE PROJECT 5

PROBLEM STATEMENT 6

RESEARCH OBJECTIVE 6

SCOPE OF THE PROJECT 6

PERIOD OF STUDY 6

SAMPLE DESIGN 6

LIMITATION 6

THE INSURANCE INDUSTRY 7

COMPANY PROFILE 8

CUSTOMER RETENTION 9

ADVANTAGES OF CUSTOMER RETENTION 11

TYPE OF CUSTOMER RETENTION RATE 12

REFERENCES 13

Introduction of the project

Customer retention and satisfaction are 2 of the most important factors regarding

long term success of the company. These factors are known to be huge

influencing factors in the economic growth of a company.

Customer retention is of the main factor of profit growth.

Following are some of the benefits of customer retention –

1. New customers cost more than keeping existing ones.

2. Companies already know how to do business with the existing customers.

3. Long term customers initiate free promotion through word of mouth and

referrals.

My research aims to study the current customer satisfaction and retention

scenario of IDBI federal life insurance and suggest ways to improve it.

Problem statement IDBI Federal Life Insurance Co Ltd. Is a joint venture company among three

financial companies – IDBI Bank, Federal Bank, European insurance company

AGEAS. It has grown remarkably in the last 6 years but it still has a long way to go

and customer satisfaction and retention are 2 factors which will help the company

in the long run.

Research objective 1. To identify the current scenario of IDBI Federal Life Insurance Ltd.

2. To identify ways to improve the customer satisfaction and retention levels.

Scope of the project Successful companies are continuous working in the field of customer satisfaction

and retention. It is not possible to be successful without keeping the customers

happy and retaining them for future business. This study will help IDBI Federal Life

Insurance in knowing the relinquishment level and how to retain the customers.

PERIOD OF STUDY The period of the report project is 14 weeks.

Sample design The research will be carried out among the customers of IDBI Federal Life

Insurance. The sample would be around 100.

Limitation 1. Survey has the sample size of 100 respondents so it may not be entirely correct.

2. The survey is very objective and entirely based on the views of the respondent.

The insurance industry

The insurance sector has gone through a number of phases and changes.

Insurance in India used to be tightly regulated and monopolized by state-run

insurers. Following the move towards economic reform in the early 1990s, various

plans to revamp the sector finally resulted in the passage of the Insurance

Regulatory and Development Authority (IRDA) Act of 1999.Significantly, the

insurance business was opened on two fronts. Firstly, domestic private-sector

companies were permitted to enter both life and non-life insurance business.

Secondly, foreign companies were allowed to participate, albeit with a cap on

shareholding at 26%. With the introduction of the 1999 IRDA Act, the insurance

sector joined a set of other economic sectors on the growth march. During the

2003 financial year, life insurance premiums increased by an estimated 12.3%in

real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums

rose 12.2%to INR 178 billion (USD 3.8 billion). Growth in insurance premiums has

been averaging at 11.3% in real terms over the last decade. There are strong

arguments in favor of sustained rapid insurance business growth in the coming

years, including India’s robust economic growth prospects and the nation’s high

savings rates.

Company profile

IDBI Federal Life Insurance Co Ltd. is a joint-venture of IDBI Bank, India's premier

development and commercial bank, Federal Bank, one of India's leading private

sector banks and Ageas, a multinational insurance giant based out of Europe. In

this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26%

equity each. Having started in March 2008, in just five months of inception, IDBI

Federal became one of the fastest growing new insurance companies by

garnering Rs.100 Cr in premiums. Through a continuous process of innovation in

product and service delivery IDBI Federal aims to deliver world-class wealth

management, protection and retirement solutions that provide value and

convenience to the Indian customer. The company offers its services through a

vast nationwide network 2,308 partner bank branches of IDBI Bank and Federal

Bank in addition to a sizeable network of advisors and partners. As on 31st

December 2013, the company has issued nearly 5.5 lakh policies with a sum

assured of over Rs. 32,110.48 crores

Currently it is offering 7 products in the market – lifesurance, childsurance,

incomesurance, termsurance, microsurance, loansurance, wealthsurance.

CUSTOMER RETENTION

In today’s challenging economy and competitive business world, retaining their

customer base is critical to organization success. If the company doesn’t give their

customer some good reason to stay, organization’s competitors will give the

customer a reason to leave. Customer retention and customer satisfaction drive

profits. It’s far less expensive to cultivate organization existing customer base and

sell more service to the customer than to seek new, single-transaction customers.

Most surveys across industries shows that keeping one existing customer is five to

seven times more profitable than attracting one new customer. A customer-

focused approach among its employees is still not present. In this era of intense

competition .it is very important for any service company to understand that

merely acquiring customer is not sufficient because there is a direct link between

customer retention over time and profitability & growth.

Customer retention to a great extent depends on service quality and customer

satisfaction. Complaints are natural part of any service activity as mistakes are an

unavoidable feature of all human endeavor and thus also of service recovery.

Service recovery is the process of putting things right after something goes wrong

in the service delivery. Customer retention is the maintenance of continuous

trading relationships with customers over the long term. Customer retention is

the mirror image of customer defection or chum.

High retention is equivalent to low defection. In an industry where there are a

multiple purchases over the years, organization’s entire team should be very

focused on retaining those customers. Following are some of the ways -

1. Delivering service that’s consistent with your value proposition and brand.

2. Cross-selling, up-selling and asking for referrals from existing customers

3. Developing programs to increase customer loyalty and decrease turnover

4. Prioritizing retention as a major focus in your annual marketing plan.

Customer retention occurs when a customer is loyal to a company, brand, or to a

specific product or service, expressing long-term commitment and refusing to

purchase from competitors. Of critical importance to such strategies are the wider

concepts of customer service, customer relations, and relationship marketing.

Companies can build loyalty and retention through the use of a number of

techniques, including database marketing, the issue of loyalty cards, redeemable

against a variety of goods or service, preferential discounts, free gifts, special

promotions, newsletters or magazines, members’ clubs or customized products in

limited editions

1. The cost of acquisition occurs only at the beginning of the relationship, so

the longer the relationship, the lower the amortized cost.

2. Long-term customers tend to be less inclined to switch.

3. Long-term customer may initiate free word of mouth promotions and

referrals.

4. Long-term customers are more likely to purchase ancillary products and

high margin supplemental products.

5. Customer that stay with company tend to be satisfied with the relationship

and are less likely to switch to competitors, making it difficult for competitors to

enter the market or gain market share.

ADVANTAGES OF CUSTOMER RETENTION

1. POSSIBILITY OF REPEAT BUSINESS

This is probably the most obvious advantage of customer retention. Effective

services that lead to customer satisfaction will make customer coming back to

again, thus giving repeat business. Repeat business is a win-win proposition for

the business or service and the customer. The business reduces the cost of

customer acquisition, while the customer reduces the cost of finding a reliable

vendor and thus also saves on costs associated with switching vendors.

2. REDUCED COSTS FOR CUSTOMER ACQUISITION

Acquiring a customer has certain associated costs. These include the costs

associated with advertising, following up, sales demos, travel and meeting cost

etc. having a repeat customer means that the customer means that the customer

is already aware of your processes and can predict certain quality of output, thus

minimizing the cost involved in new customer acquisition. Having a repeat

customer also has the potential to open up another channel to advertise your

business – word of mouth. Word of mouth advertising / recommendations are

perhaps the most important outcome of having a satisfied customer.

3. FOSTERING GREATER INTERACTION BETWEEN BUSINESSAND CUSTOMER

Today’s markets are increasingly moving away from mass produced standard

products and service, towards a more customized market, where products and

service are tailored to meet customers’ specific requirements. Having a repeat

customer is an opportunity for you to build a more focused relationship based on

your customers’ specific needs and requirements. Being ensured of having a

customer who comes back, you have more confidence to suggest improvements,

provide an insight to better understand their needs and consequently design

products and services that are relevant. Having a repeat business also provides an

opportunity for the buyer and the seller to co-create products and services.

TYPE OF CUSTOMER RETENTION RATE

RAW CUSTOMER RETENTION RATE

This is the number of customer doing business with a firm at the end of a trading

period, expressed as percentage of those who were active customer at the

beginning of the period.

SALES-ADJUSTED RETENTION RATE:

This is the value of sales achieved from the retained customers, expressed as a

percentage of the sales achieved from all customers who were active at the

beginning of the period.

PROFIT-ADJUSTED RETENTION RATE:

This is the profit earned from the retained customers, expressed as a percentage

of the profit earned from all customers who were active at the beginning of the

period.

REFERENCES

1. http://www.idbifederal.com/

2. http://www.ibef.org/industry/insurance-sector-india.aspx

3. http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page

=PageNo4&mid=2

4. http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-

Maximizing-Customer-Retention.pdf

5. http://www.customer-retention.co.uk/advantages-of-customer-

retention.html

6. The Antecedents of Customer Loyalty:

An Empirical Investigation in Life Insurance Context

Alok Kumar Rai, Srivastava Medha

7. http://www.thefreelibrary.com/A+study+of+customer+satisfaction+with

+life+insurance+in+Chandigarh...-a0297309481