Osmania Journal of International Business Studies

Global Impact & Quality Factor 0.565 ISSN 00973-5372

REFEREED JOURNAL

Osmania Journal of International Business StudiesVol. XII No.1 Bi – Annual January - June 2017

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UGC Approved Journal : Journal No. 44934

Department of CommerceOsmania University

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Osmania Journal of International Business Studies (OJIBS)(ISSN 00973-5372)

Vol. XII No.1 Bi – Annual January-June 2017

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UGC Approved Journal : S.No. 714, Journal No. 44934

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Osmania Journal of International Business Studies (OJIBS)

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OJIBS is the bi-annual research publication of the Department of Commerce, OsmaniaUniversity, Hyderabad. The journal is aimed to publish the research papers in the broadareas of Business Environment, Finance, International Business & Trade, Economics,Commerce and Business Management. It is a double blind referred journal and is listed inISSN. The OJIBS attaches importance to theoretical, empirical, applied and interdisciplinarystudies in the aforesaid areas. Priority will be given to papers with an international outlook.The OJIBS provides a platform for a cross-section of people including researchers,academicians, traders, policy makers and practitioners for sharing the ideas, opinions, anddiscussions on various issues related to the above said areas. The OJIBS publishes originalresearch papers, book reviews, and data pertaining to the above said areas. The views,expressions, observations and interpretations made in the journal are those of the individualauthors and do not necessarily reflect the views of the OJIBS.

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Osmania Journal of International Business Studies (OJIBS)

(ISSN 00973-5372)

Vol. XII No.1 Bi – Annual January-June 2017

RESEARCH PAPERS Page No

1. IMPACT OF FIRM CHARACTERISTICS ON FINANCIAL PERFORMANCEOF INSURANCE COMPANIES IN NEPAL 1- Jagadish Bist, Rabeena Mali, SabitaPuri, Rajesh Kumar Jha, SachyamKayastha, and Salina Bhattarai

2. CROP INSURANCE: FARMERS PERCEPTIONS AND AWARENESS INSELECT DISTRICT OF TELANGANA STATE 12-Dr Sammaiah Buhukya

3. OPPORTUNITY FOR FDI IN INSURANCE SECTOR IN INDIA 19- Dr. Manisha Bhatt, Jayshree Mandaviya

4. A STUDY ON UNIVERSAL INSURANCE PROGRAM FOR RURAL INSURANCE DEVELOPMENT 30- P. Ajith Kumar, R. Sunil

5. MARKETING STRATEGIES OF SELECT PRIVATE LIFE INSURANCE COMPANIES IN INDIA 37- D. Gnyaneswer

6 .A STUDY ON AWARENESS OF HOUSEHOLDS REGARDING RURALPOSTAL LIFE INSURANCE 45- Mr.B.Santosh Kumar, Dr.Byram Anand

7. ETHIOPIAN INSURANCE CORPORATION – A CASE ANALYSIS 55- Dr. Ravi KanthMakarla, Mr. AshenafiDegefa

8. ANALYSIS ON CLAIMS SETTLEMENT RATIOS OF LIFE INSURANCE COMPANIESFOR 2015-16 65- M. Veera Swamy

9. DETERMINANTS OF LIFE INSURANCE POLICY PURCHASE – [A STUDY TOEXPLORE NEW MARKETING STRATEGIES FOR PRIVATE LIFE INSURANCE PRODUCTS] 75- Thangamuniyandi. S, Balaji. P

UGC Approved Journal S.No. 714, Journal No. 44934

REFEREED JOURNAL IMPACT FACTOR : 0.565

10. ROLE OF TECHNOLOGY IN INDIAN INSURANCE SECTOR– A SELECT STUDY 81- Oddepalli Sathish, N. Rajendra Prasad

11. FARMERS’ PERCEPTION AND AWARENESS TOWARDS CROP INSURANCE INVILLUPURAM DISTRICT 88- R. Gnanasekaran Dr. L. Pandiyan

12. A STUDY ON CLAIM SETTLEMENT AND POLICYHOLDER’S SATISFACTION OFMOTOR INSURANCE PACKAGE POLICY 95- Mr. Yalama Reddy, Ashok Kumar Reddy, Dr. Byram Anand

13. PERFORMANCE OF PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY) 103- V. Vinay Kumar, M.AnilKumar

14. IMPACT OF RURAL ENTREPRENEURSHIP DEVELOPMENT PROGRAMME OFNABARD: A STUDY OF SELECT DISTRICTS IN TELANGANA REGION 114- Marri. Ramesh, Dr. Indrakanti Sekhar

15. PERFORMANCE EVALUATION OF NATIONAL PENSION SCHEME– A COMPARATIVEANALYSIS OF SBI AND HDFC 123- Dr. Ravi Kumar Jasti, Mr. B. Arun Kumar

16. EMOTIONS & CUSTOMER PURCHASE DECISION-WITH REFERENCE TO INSURANCE PRODUCTS 130

- Namratha Sharma, Dr.A.Patrick Anthony

17. IMPACT OF TECHNOLOGY ON LIFE INSURANCE CORPORATION OF INDIA 141- Dr. B. Sandhya Rani,

18. ISSUES AND CHALLENGES OF HEALTH INSURANCE IN LIFE INSURANCECORPORATION OF INDIA - A SELECT STUDY 148- Bojja Sampath

19. FARMERS PERCEPTION AND AWARENESS ABOUT CROP INSURANCE IN ADILABAD 154- Dr. Shubangee L. Diwe, J.Anitha

20. IRCTC – INSURANCE SCHEME FOR E – TICKET PASSENGERS 160- S. Anitha Jyothi

21. CONCEPT, GROWTH, CHALLENGES AND PROSPECTS OF TAKAFUL INSURANCE IN INDIA– A STUDY 165- Sabiha Shareef

22. GROWTH AND STATUS OF REINSURANCE BUSINESS IN INDIA: A STUDY 175- P Kalyani, Prof. S Sreenivasa Murthy

23. AN EVALUATIVE STUDY OF RAJIV AAROGYASRI HEALTH INSURANCE SCHEME INWARANGAL DISTRICT OF PRE-BIFURCATION OF TELANGANA STATE 202- A. Raveendar Naik

24. EVALUATIVE STUDY OF RAJIV AAROGYASRI HEALTH INSURANCE SCHEME INTELANGANA STATE 211- Ramavath Ravi

25. POLICYHOLDER’S PERCEPTION TOWARDS ONLINE INSURANCE - A PILOT STUDYIN HYDERABAD 219- Mr. D. Mahipal

26. THIRD PARTY ADMINISTRATORS IN HEALTH INSURANCE BUSINESS- A STUDY 226- Dr.E.Shanker

27. HEALTH INSURANCE IN INDIA- A STUDY OF PUBLIC AND PRIVATE SECTOR 231- Dr.D.Satish, P.Shyam Sunder Goud

28. AN EMPIRICAL STUDY ON THE BEHAVIOUR OF LIFEINSURANCE POLICYHOLDERS 237- Bharla Anand

29. EVALUATION OF PERFORMANCE OF AAROGYASRI SCHEME 247- Ramesh.Vavilala

30. A STUDY ON CUSTOMER PERCEPTION AND SATISFACTION TOWARDS MOBILEINSURANCE PRODUCTS IN INDIA 258- Dr. Sakru Ketavath, V.V.Ramana Murthy

31. HEALTH INSURANCE SCHEMES OPERATIONAL POLICIES ISSUES AND DETERMINGPHENOMENON VARIABLES-A STUDY IN TIRUCHIRAPPALLI DISTRICT, TAMIL NADU 265- Dr. R. Ramachandran

32. A CRITICAL ANALYSIS OF PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY) ANDHEALTH INSURANCE- A WIN-WIN COMBINATION FOR BANKS TO OFFERHEALTH INSURANCE TOPMJDY ACCOUNT HOLDERS 273- Dr. Smitha Sambrani, Balaji Prasad Dantu,

33. CUSTOMER INTELLIGENCE STRATEGY IN INDIA: WITH SPECIAL REFERENCE TOINSURANCE SECTOR 279- Prof. (Dr.) Sandip K. Bhatt, Dr. Yashasvi R. Rajpara

34. EVOLUTION OF HEALTH INSURANCE IN INDIA – AN OVERVIEW 283- Dr. Bandaru Veerababu

35 IMPACT OF DIGITALIZATION OF INSURANCE SECTOR (E-INSURANCE) – A STUDY 291- Dr.P.Yadaiah

36. NEPALESE INSURANCE MARKET, ROLE OF REGULATOR AND FINANCIAL SOUNDNESS 295- Sharda Pandey Lohani

37. A STUDY ON CAPITAL ADEQUACY AND ASSET QUALITY OF SELECT INDIANPRIVATE SECTOR GENERAL INSURANCE COMPANIES 304- J. Jayapradha

38. PERFORMANCE EVALUATION OF GIRIJAN CO-OPERATIVE CORPORATION LTD.IN TELANGANA STATE 314- Dhanraj. S

39 A STUDY ON THE GROWTH OF INDIAN INSURANCE INDUSTRY 319- Dr. L. Srinivas Reddy

40. AN OPPORTUNITY TO EXPAND ACCESS: EVOLUTION OF HEALTH INSURANCE IN INDIA 325- Ramesh. N

41. PRADHAN MANTRI FASAL BIMA YOJANA - A STEP TOWARDS ERADICATION OFCROP INSURANCE PROBLEMS IN INDIA 331- M. Vamshidhar

42 CUSTOMER RELATIONSHIP MANAGEMENT (CRM) PRACTICES IN BANKING SECTOR– A STUDY OF SELECT COMMERCIAL BANKS IN HYDERABAD CITY 339- Prof. H. Venkateshwarlu, M. Pandyanayak

43. FACTORS AFFECTING EMPLOYEE MOTIVATION:(WITH REFERENCE TO ACC CEMENTS , WADI) 347- Tabassum Fatima

44. QUALITY OF WORK LIFE IN BPO SERVICE SECTOR 358- Challa Madhavi, Dr.Bhavannarayana.K, Dr.J.Venugopal,

45. TOURISM IN INDIA - A STUDY 364- Dr. J. Seenaiah.

.

For subscription, the payment can be made by a crossed demand draft in favour of “Osmania

Journal of International Business Studies” and send to Dr. D. Chennappa, Associate

Professor and Executive Editor, Department of Commerce, Osmania University,

Hyderabad 500 007, Telangana, India. You can also log on to www.indianjournals.com

for online subscription. You can also reach through e-mails : [email protected],

[email protected], Mobile No. : 9440 360 149.

1

UGC Approved Journal : Journal No. 44934REFEREED JOURNAL, Global Impact & Quality Factor 0.565 ISSN 00973-5372

IMPACT OF FIRM CHARACTERISTICS ON FINANCIALPERFORMANCE OF INSURANCE COMPANIES IN NEPAL

Jagadish Bist, Rabeena Mali, SabitaPuri, Rajesh Kumar Jha,SachyamKayastha, and Salina BhattaraiUniglobe College (Pokhara University), Kathmandu, Nepal

ABSTRACT

This study examines the impact of firm specific characteristics on the performance of Nepalese insurancecompanies. The return on asset (ROA) is the dependent variable. The independent variables are theleverage, diversification, size, liquidity, age, claim payment and premium growth. This study is based onthe secondary sources of data that are collected from 18 Nepalese insurance companies leading to atotal of 105 observations. The data were collected from annual reports of the selected Nepalese insurancecompanies. The regression models are estimated to test the significance and impact offirm specificcharacteristics onfinancial performance of insurance companies in Nepal. The regression models areestimated to test the significance and impact offirm specific characteristics on financial performance ofinsurance companies in Nepal.

The study reveals that leverage is positively correlated to return on assets. This shows that higher theleverage, higher would be the return on asset.Similarly, premium growth rate is positively correlated toreturn on assets.This indicates that higher the premium growth rate, higher would be the return onassets. However, diversification is negatively correlated to return on assets. This indicates that higherthe number of branches, lower would be the return on assets. Similarly, size is negatively correlated toreturn on assets. This indicates that higher the size of firm, lower would be the return on assets.Theresult also shows that liquidity is negatively correlated to return on assets. This means that higher theliquidity of firm, lower would be return on assets. However, age of firm is positively correlated to thereturn on assets, which shows that higher the age of firm, higher would be return on assets. The studyalso shows that there is negative relation between claim payment and return on assets. This indicatesthat higher the claim payment incurred, lower would be the return on assets.The result of the regressionanalysis shows that beta coefficients are positive for leverage and premium growth. However, thecoefficients are negative and insignificant for the diversification, size, liquidity and claim payments. Thecoefficients are significant for leverage and premium growth at 1% level.

Keywords:Return on assets, leverage, diversification, size, liquidity, age, claim payment, premiumgrowthand insurance companies.

1. IntroductionThe past decade has seen a dramatic rise in thenumber of insolvent insurers. The perceive causesof these insolvencies were myriad. Some of theinsolvencies were precipitated by rapidly risingor declining interest rates, mispricing of insurancepolicies, natural catastrophes, and changes in legalinterpretations of liability and the filing of falseclaims, poor credit policies among others. Thechurning of polices by unscrupulous sales agents,insolvencies among the re-insurers backing the

policies issued, non-compliance with insuranceregulation, and malfeasance on the part of officersand directors of insurance companies affected aswell (Baldoni, 2008). As a result of globalization,deregulation and terrorist attacks, the insuranceindustry has gone through a tremendoustransformation over the past decade (Sanchez,2006).

The insurance industry plays a major role in thesociety as they stimulate the economy at large. Thisis because the sector is part of immune and repair

2

system of an economy and successful operationof the industry can set energy for other industriesand development of an economy (Abate, 2012).Indeed, a well-developed and evolved insuranceindustry is critical to conditions for economicdevelopment as it provides long term funds forlong term investment and at the same timestrengthens the risk taking ability of the country.

The performance of any business firm not onlyplays the role to increase the market value of thatspecific firm but also leads toward the growth ofthe whole sector and the overall success of theeconomy (Ahmed, 2011). In this regards, a soundfinancial management should be consistent withthe drives to improve and increase profitability soas to meet the goal of individual firm owners. Theprimary desire of any firm is to earn more profitand enhance the wealth of its stakeholders(Gitman, 2007). However due to challenges ininternal and external environment, most firms areunable to meet their goals. In other words,performance is a function of the ability of anorganization to gain and manage its resources inseveral different ways so as to develop competitiveadvantages (Iswatia&Anshoria, 2007).

The performance of the businesses is veryimportant because it leads towards the growth ofthe whole sector where it is involved and of theoverall prosperity of the economy. Profitability,defined as proxy of financial performance, is oneof the main objectives of insurance companies’management (Burca&Batrinca, 2014). Discussingand analyzing the determinants of performance ofinsurance companies, is considered important inthe corporate finance literature because of theirrole as intermediaries. These companies providethe mechanism of risk transfer and also theseinstitutions channelize the funds to support thebusiness activities in the economy. However, it hasreceived little attention particularly in Albania.There are studies on insurance schemes in Albania(Sinaj et al., 2014), role and evolution of insuranceindustry (Sharku et al., 2011), management oninsurance companies (Kume&Xhuka, 2010), butthere isn’t any prior research on the factors thatdetermine insurance profitability.

Insurance companies provide unique financialservices to the growth and development of everyeconomy. Such specialized financial services rangefrom the underwriting of risks inherent ineconomic entities and the mobilization of largeamount of funds through premiums for long terminvestments. The risk absorption role of insurerspromotes financial stability in the financial marketsand provides a “sense of peace” to economicentities. The business world without insurance isunsustainable since risky business may not havethe capacity to retain all kinds of risks in this everchanging and uncertain global economy (Ahmedet al., 2010). Insurance companies’ ability tocontinue to cover risk in the economy hinges ontheir capacity to create profit or value for theirshareholders.

Indeed, a well-developed and evolved insuranceindustry is a boon for economic development as itprovides long- term funds for infrastructuredevelopment of every economy (Charumathi,2012). The majority of research on life insurerperformance has been in terms of identifying thoseinsurer-specific variables that aid in identifyinginsurers that are more likely to become insolvent.BarNiv and Hershbarger (1990) andDeakin(2005)examined the run on the bank risk, and found thatprior to 1992 rating organizations generally didnot appreciate the risks inherent in liabilities suchas guaranteed investment contracts. Cummins etal (1999) showed that cash flow simulationvariables add explanatory power to solvencyprediction models.

While insurance companies hold billions ofshillings belonging to the general public, includingbuyers of their products, retirement benefitschemes and fund’s managers, information onthese companies is scanty. For large consumers ofinsurance products, this group usually relies onthe expertise of qualified risk managementconsultants to offer advice on where to place theirinsurance covers (Kumba, 2011).

Financial performance is a measure of anorganization’s earnings, profits, appreciations invalue as evidenced by the rise in the entity’s share

Jagadish Bist, Rabeena Mali, SabitaPuri, Rajesh Kumar Jha, SachyamKayastha, and Salina Bhattarai

3


price. In insurance, performance is normallyexpressed in net premiums earned, profitabilityfrom underwriting activities, annual turnover,returns on investment and return on equity. Thesemeasures can be classified as profit performancemeasures and investment performance measures.Profit performance includes the profits measuredin monetary terms. Simply, it is the differencebetween the revenues and expenses. These twofactors, revenue and expenditure are in turninfluenced by firm-specific characteristics,industry features and macroeconomic variables.Investment performance can take two differentforms. One the return on assets employed in thebusiness other than cash, and two, the return onthe investment operations of the surplus of cash atvarious levels earned on operations (Chen andWong, 2004).

In the insurance business, capital is referred to assurplus. Surplus is required for insurancecompanies to have collateral for outstandingpolicies. Without it, insurance companies cannotfulfil their obligations towards the customers.Legislation requires insurance companies to holdcertain levels of surplus to cover default risks(Myers & Read, 2001).

The subject of financial performance has receivedsignificant attention from scholars in the variousareas of business and strategic management. It hasalso been the primary concern of businesspractitioners in all types of organizations sincefinancial performance has implications toorganization’s health and ultimately its survival.High performance reflects managementeffectiveness and efficiency in making use ofcompany’s resources and this in turn contributestothe country’s economy at large (Naser, andMokhtar, 2004).

Financial distress relates to a broad concept withseveral situations in which a firm faces financialdifficulty. These common situations definingfinancial distress include bankruptcy, insolvencyand failure (Maina and Sakwa, 2012). Accordingto Outechever (2007), financial distress is a gradualdynamic process where a firm moves in and outof financial trouble as it passes out through various

stages. These stages have specific attributes andconsequences as they contribute differently tobusiness failure. Financial distress varies withtime. Therefore as a firm enters one state, it doesnot stay in the same state until it recovers or isliquidated. The change in financial conditiontriggers the transition from one state of financialdistress to another. If these conditions are notaggravated, this may lead the firm into bankruptcyproblems.

Owing to an apparent lack of uniform financialreporting formats, a number of insurancecompanies have not published their profit and lossaccounts, making it difficult for the general publicto gauge their profitability, overall writtenpremiums or even their net incomes. Companiesusing this format simply give a skeleton balancesheet, providing little or no information to thepublic. The scanty financial statements, releasedto the public by some companies, create a lot ofgrey areas and room for such unprofessionalactivities as tax evasion and concealing of criticalratios and figures. Based on available credit ratingmethods, profit combined with other ratios andcomputations can provide useful indicators toanyone looking for a stable and financially soundinsurance company (Kumba, 2011).

Other financial ratios, includes current ratio whichsimply shows how fast an insurance company cansettle a claim. These ratios are critical indetermining the financial strength and ability ofany insurance company to settle claims and stayin business. For those wishing to determine if theirinsurance company is failing, risk managementexperts’ advice that one needs to calculate theDebt/Equity ratio, which is total liabilities dividedby shareholders equity. This ratio is also knownas risk gearing and shows the extent to which acompany is financed by borrowed funds. Otherratios include acid test ratios, which is liquid assetsdivided by current assets and the current ratio. Allthe above ratios can determine whether it is safeto place a cover with the insurance company(Kumba 2011). Carson and Hoyt (1995) found thatsurplus and leverage measures are strongindicators of insurer financial strength, and also

4

found a slightly higher risk of failure among stockinsurers than mutual insurers.

In Nepal, banking industries have been sufferedfrom the various anomalies and in insurance sectormay happen at any time if we are not aware onsuch a vulnerable situation. Insurance industriesget momentum after adopting liberalization policyin financial sector which is become moreorganized, Systematized and well regulated afterestablishment of Insurance Board.

Therefore management of insurance company andthe evaluation of their work are very complex. Asinsurance sector is currently facing manychallenges such as increased competition,consolidation, solvency risks and a changingregulatory environment, maintaining the soundfinancial health of insurance industry is mostchallenging job for regulatory agencies while itscontribution to the economy and society isnoteworthy (Ghimire, 2013).

The main objective of this study is to examine therelationship of financial performance in theinsurance companies in Nepal. Specifically, it

examines the claim experience, premium growth,size of companies, liquidity, Age of companies (no.of years since establishment), and diversification(no. Of branch across the region) and leverage onfinancial performance of Nepalese InsuranceCompanies and motivates for best practice andvalued the benefits of good financial performancein Nepal.

The remainder of this study is organized as follows.Section two describes the sample, data, andmethodology. Section three presents the empiricalresults. Section four draws conclusions anddiscusses the implications of the study.

2. Methodological aspectsThe study is based on the secondary data, whichare gathered from 18 Nepalese InsuranceCompanies for the study periods of 2008-2016leading to a total of 105 observations. The dataare collected from the annual report of listedenterprises.

Table 1 shows the number of Insurance Companiesselected for the study along with the study periodand number of observations.


5


The modelThe model estimated in this study assumes thatthe performance of insurance companies dependson several firm specific characteristics Therefore,the model takes the following form:

Performance = ƒ (leverage, diversification, sizeof companies, liquidity, age of companies, claimexperience and premium growth).

More specifically, the given model has beensegmented into following models:

lnROAit = â

0+ â

1 LEV

it + â

2 DV

it + â

3SZ

it + â

4LQ

it

+ â5AG

it + â

6CP

it +â

7PG

it + e

it

Where,

ROA = Return on total assets; net profit beforetax/ total assets

LEV = Leverage; total liabilities/ total assets

DV = Diversification; no. of branches acrossthe region

SZ = Size of companies; natural log of totalassets

LQ = Liquidity; current assets/ currentliabilities

AG = Age of companies; no. of years sinceestablishment

CP = Claim payment; net claims incurred/ netearned premiums

PG = Premium growth; PG (t)-PG (t-1)/ PG(t-1) and

e = errors.

LeverageLeverage is the ratio of a company’s total liabilitiesto total assets. Insurance leverage is defined asreserves to surplus by (Chen and Wong, 2004).This ratio demonstrates the potential impact ofdeficiencies in technical reserves due to occurrenceof unexpected losses on the equity (Adams andBuckle, 2003). In this study, insurance leverageratio is calculated by dividing the net technicalreserves to the equity. Capital structure literaturesuggests that as the leverage increases up to anoptimum point, so will the firm value and aftersurpassing this optimum level, the firm value will

decline and the likelihood of insolvency willincrease depending on the increased leverage(Carson and Hoyt, 1995). Therefore, it is expectedthat excessive insurance leverage may have anegative impact on profitability. Based on theabove arguments, the following hypothesis isproposed:

H1: There is a positive relationship between theleverage and ROA.

DiversificationFirm diversification is a corporate strategy toincrease sales volume from new products and newmarkets. Diversification is the ratio of the squaredfraction of sales in a segment to total sales andfinancial performance was measured by ROA(Kaguri, 2012). Diversification is the number ofbranches and subbranches of a firm across theregion or country. If large number of branches andsub branches are established by an insurancecompany, the performance of thefirmdecreases.Ramanujam and Varadarajan(1990)found that there are no consistent or conclusivefindings between firm diversification andperformance. Based on the above arguments, thefollowing hypothesis is proposed:

H2: There is a negative relationship between thediversification and ROA.

SizeSize of companies represents the natural log oftotal assets. Company size is positively related tofinancial performance as large insurancecompanies have greater capacity for dealing withadverse market fluctuations than smaller insurancecompanies. Large insurance companies can easilyrecruit capable and skilled employees withprofessional knowledge compared to smallerinsurance companies, which is the most significantproduction factor for delivering insuranceservices.Beard &Dess(1981) has shownempirically that company size is positively relatedto the financial performance. (Beard &Dess, 1981)revealed that firm size has positive impact on firmperformance. Likewise, Ahmed et al. (2011)indicated that firm size is positively related to firm

6

performance. Additionally, Malik (2011) found apositive relationship between firm size andfinancial performance. Based on above discussion,following hypothesis has been developed.

H3: There is positive relationship between firmsize and ROA.

LiquidityLiquidity is the degree to which an asset or securitycan be quickly bought or sold in the market withoutaffecting the asset’s price. A firm can meet theirshort-term financial obligations with the liquidassets available to them. . Liquidity allowsfinancial institutions to seize opportunities byconverting cash easily and quickly. Liquidityposition of a firm can be determined by using ratioanalysis. It is calculated by dividing the totalcurrent assets by the total currentliabilities.Amihud and Mendelson (2008) found apositive association between liquidity and firmperformance. Fang et. al. (2009) indicated thatliquidity is positively related to firm performance.Similarly,Arabsalehi et al. (2014) identified aconsistent positive relationship between liquidityand firm performance. The firm with good liquidityposition shows that the firm is able to maintainemergency situation and the firm has low chanceof solvency. Chen and Wong (2004) explained thatliquidity is the important determinant of financialhealth of insurance companies. Based on abovediscussion, following hypothesis has beendeveloped.

H4: There is positive relationship betweenliquidity and ROA.

AgeCompany’s age measured as the number of yearsa company is operating in the market since it wasfounded. Firm age is an important determinant offinancial performance. Past research shows thatthe probability of firm growth, firm failure, andthe variability of firm growth decreases as firm’sage. Maturity brings stability in growth as firmslearn more precisely their market positioning, coststructures and efficiency levels. Malik (2011)found that there is no relationship between

profitability and age of the company. Similarly,Loderer and Waelchli (2013) stated that there isnegative relationship between the age ofcompanies and firm performance. Firm age is animportant determinant of financial performance.Past research shows that the probability of firmgrowth, firm failure, and the variability of firmgrowth decreases as firm’s age.

H5: There is negative relationship between age ofcompanies and ROA.

Claim paymentClaim payment is apayment made by an insurancecompany in case of loss or accidents incurred bytheir client. The insurance companies review theclaim for its validity and then pay out to theinsured.Claim payment is measured as the ratioof incurred claims to earned premiums. Thesmaller insurance companies have less profitabilityas a result of very high claims as compared to thepremiums earned whereas thelarger insurancecompanies have larger reserves for claimspayment. Kaguri, (2012) found that there isnegative but significant relationship between claimpayment and firm performance. Denuit (2006)stated that amount of premium depends upon theinsured risk profile and claim history. On the basisof premium earned from the client, the companypaid back claim amount.Lemaire(1995)alsoexplained that claim payment is positivelycorrelated to pure premium earned from thecustomer.

H6: There is positive relationship between claimpayment and ROA.

Premium growthPremium growth is an important financial variablethat influences the financial performance ofinsurance companies. It is measured by percentagechange in total assets or sometimes as percentagechanges in premium of insurance companies andalso measures the rate of market penetration. Somestudies view that premium growth has positive andsignificant influence on the performance ofinsurance companies Ahmed et al (2011) andAyele,(2012). Based on their outcome, they argued


7


further that growth in premium improves theprofitability of the core operations of insurers andtheir overall performance. Contrary to the viewCharumathi (2012) states an inverse relationshipbetween premium growth and firm performance.The first reason according to them is theoverwhelming focus of most insurance companieson various marketing activities to generate morepremiums to the detriment of their investmentactivities, that is, if more resources, especiallyhuman and capital, are directed towards theunderwriting of more policies to grow premiumwith a proportionate concentration of suchresources on the management of their assets 28and liabilities, the investment income will declinedespite an increase in net written premiums. Theyfurther argued that much of premiums written areoutstanding which sometimes turn out as bad debt.

H7: There is positive relationship betweenpremium growth and ROA.

3. Results and discussionDescriptive statisticsTable 2 presents the descriptive statistics ofselected dependent and independent variablesduring the period 2008-2016.

Table 2: Descriptive statistics(This table shows the descriptive statistics ofdependent and independent variables of Nepaleseinsurance companies). Dependent variable is ROA(return on assets defined as net income divided bytotal assets, in percentage) and independentvariables are LEV (leverage is defined as totalliabilities divided by total assets),DV(diversification is number of branches acrossthe region ),SZ(size is natural log of total assets ),LQ(liquidity is defined as current assets dividedby current liabilities ), AG(age is number of yearssince establishment), CP(claim payment is definedas the net claims incurred divided by net earnedpremiums) and PG(premium growth is measuredby percent increase in gross written premiums).

Table 2 shows descriptive statistics for dependentand independent variables. The average return onassets is 14 percent. The leverage ranges fromminimum of 0.02 percent to the maximum of 16.47percent with the mean of 1.18 percent. Similarly,diversification range from minimum5numberstomaximum114numbers with mean of 28.15numbers. The size of companies ranges fromminimum0 to maximum 24.27 with mean of 20.28.The liquidity ranges from minimum0.68 tomaximum 38.17 with mean of 3.58. The age ofcompanies ranges from minimum 2 years tomaximum 28 years with mean of 14.45 years. Theclaim payment ranges from minimum 0.01 to

maximum 7.2214 with mean of 0.42. The premiumgrowth ranges from minimum -0.98 to maximum113.49 with mean of 2.11.

Correlation analysisHaving indicated the descriptive statistics, Pearsoncorrelation coefficients are computed and theresults are presented in Table 3.

Table 3: Pearson correlation matrix(This table shows the Pearson correlationcoefficients among dependent and independentvariables. Dependent variable is ROA (return onassets defined as net income divided by total assets,

Table 2 Description Statistics of Nepalese Insurance Companies

8

in percentage) and independent variables are LEV(leverage is defined as total liabilities divided bytotal assets), DV(diversification is number ofbranches across the region ),SZ(size of companiesis natural log of total assets ), LQ(liquidity isdefined as current assets divided by current

liabilities ), AG(age of companies is number ofyears since establishment), CP(claim payment isdefined as the net claims incurred divided by netearned premiums) and PG(premium growth ismeasured by percent increase in gross writtenpremiums).

The result also shows that there is positive relationbetween leverage andreturn on assets indicates thathigher the leverage, higher would be the return onassets. Similarly, age is positively correlated to thereturn on assets. This means that higher the age ofthe company, higher would be return on assets.Likewise, premium growth rate is positivelycorrelated to return on assets, which indicates thathigher the premium growth rate, higher would bereturn on assets. However, diversification isnegatively correlated to return on assets, whichindicates that higher the number of branches andsub branches, lower would be the return on assets.Similarly, size is negatively correlated to returnon assets. It indicates that larger the size of firm,lower would be the return on assets. Likewise,liquidity is negatively correlated to return onassets. This means that higher the liquidity, lowerwould be return on assets. There is negativerelation between claim payment and return onassets. This means that higher the claim payment,lower would be the return on assets.

Regression analysisHaving indicated the Pearson correlationcoefficients, the regression analysis has been

carried out and the results are presented in Table4.

Table 4: Regression of firm characteristics onReturn on Assets(The results are based on pooled cross-sectionaldata of 18 insurance companies with 105observations by using linear regression model. Themodel is, lnROA

it = â

0+ â

1 LEV

it + â

2 DV

it + â

3SZ

it

+ â4LQ

it + â

5AG

it + â

6CP

it +â

7PG

it + e

it, where,

dependent variables is ROA (Return on assetsdefined as net income divided by total assets), andindependent variables are LEV (leverage is definedas total liabilities divided by total assets),DV(diversification is number of branches acrossthe region ),SZ(size of companies is natural log oftotal assets ), LQ(liquidity is defined as currentassets divided by current liabilities ), AG(age ofcompanies is number of years sinceestablishment), CE(claim payment is defined asthe net claims incurred divided by net earnedpremiums) and PG(premium growth is measuredby percent increase in gross written premiums).

Table 3 Pearson Correlation Matrix


9


The table 4 shows that the beta coefficient for theleverage has positive and significant impact onROA at 1% significance level. This indicates thathigher the leverage, higher would be the value offirm. This finding is consistent with the findingsof Carson and Hoyt (1995). Similarly, premiumgrowth has positive and significant impact onROA. This indicates that as the premium ofinsurance company’s increases then the firmperformance also increases. This finding isconsistent with the findings of Ahmed et al (2011)and Ayele, (2012) but inconsistent with thefindings of Charumathi (2012). However, the betacoefficients for diversification, size, and liquidityand claim payments have negative and

insignificant impact on ROA. This indicates thatincrement in the value of these specificcharacteristics leads to the lower ROA. The betacoefficient for age has positive but insignificantimpact on ROA. This indicates that as the age ofcompanies increases, the performance of firmdecreases. This finding is consistent with thefindings of Loderer and Waelchli (2013).

4. Summary and ConclusionThe performance of insurance companies plays animportant role in any economy and Nepal is noexception. The insurance companies collect largeamount of money from general people in terms ofpremium and shares. So the performance ofinsurance companies must be better to protect the

Table 4 Regression Co-efficient Matrix

10

interest of shareholders, buyer of insurancepolicies and employees. The insurance companieshas significant role in development of Nepalesebusiness and economy. Therefore, it needs to beregulated properly to enhance the Nepalesebusiness environment. Insurance companiesprovide the cushion for business to grow andcompete in the market. It gives variety of financialservices range from the underwriting of risksinherent in economic entities and the mobilizationof large amount of funds through premiums forlong term investments.

This study attempts to examine the impact ofleverage, diversification, size of companies,liquidity, age of companies, claim payment andpremium growth on financial performance ofNepalese insurance companies. The study is basedon the secondary data gathered for 18 Insurancecompanies of Nepal with 105 observations of 2008to 2016.

The study shows that leverage and premiumgrowth rate is positively correlated to return onassets. This indicates that higher the leverage andpremium growth rate, higher would be return onassets. However, diversification is negativelycorrelated to return on assets. This indicates thathigher the number of branches, lower would bethe return on assets. Similarly, size is negativelycorrelated to return on assets. This indicates thatlarger the size of firm, lower would be the returnon assets. The result also shows that liquidity isnegatively correlated to return on assets. Thismeans when the liquidity increases, return onassets will decrease. However, age is positivelycorrelated to the return on assets, which shows thathigher the age of firm, higher would be return onassets. The study also shows that there is negativerelation between claim payment and return onassets. This indicates that higher the claimpayment, lower would be the return on assets. Theresult of the regression analysis shows that betacoefficients are positive for leverage and premiumgrowth. However, the coefficients are negative andinsignificant for the diversification, size, liquidityand claim payments. The coefficients are

significant for leverage and premium growth rateat 1% level.

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Ahmed, Junaid, Khalid Zaman, and Iqtidar AliShah. “An empirical analysis of remittances-growth nexus in Pakistan using bounds testingapproach.” Journal of Economics andInternational Finance 3.3 (2011): 176.

Ahmed, Naveed, Zulfqar Ahmed, and IshfaqAhmed. “Determinants of capital structure: A caseof life insurance sector of Pakistan.” EuropeanJournal of Economics, Finance and AdministrativeSciences 24 (2010): 7-12.

Ahmed, Naveed, Zulfqar Ahmed, and AhmadUsman. “Determinants of performance: A case oflife insurance sector of Pakistan.” InternationalResearch Journal of Finance and Economics 61.1(2011): 123-128.

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Arabsalehi, M., M. Beedel, and A. Moradi.“Economic performance and stock marketliquidity: Evidence from Iranian ListedCompanies.” International Journal of Economy,Management and Social Sciences 3.9 (2014): 496-499.

Ayele, Abate Gashaw. Factors AffectingProfitability of Insurance Companies in Ethiopia:Panel Evidence. Diss. Addis Ababa UniversityAddis Ababa, Ethiopia, 2012.

Baldoni, R. “A best practices approach to riskmanagement.” TMA JOURNAL 18 (1998): 30-34.

BarNiv, Ran, and Robert A.Hershbarger.”Classifying financial distress in thelife insurance industry.” Journal of Risk andInsurance (1990): 110-136.


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Beard, Donald W., and Gregory G.Dess.”Corporate-level strategy, business-levelstrategy, and firm performance.” Academy ofmanagement Journal 24.4 (1981): 663-688.

Burca, Ana-Maria, and GhiorgheBatrinca.”Thedeterminants of financial performance in theRomanian insurance market.” InternationalJournal of Academic Research in Accounting,Finance and Management Sciences 4.1 (2014):299-308.

Carson, James M., and Robert E. Hoyt. “Lifeinsurer financial distress: classification models andempirical evidence.” Journal of Risk andInsurance (1995): 764-775.

Charumathi, B. “On the Determinants ofProfitability of Indian life insurers–an EmpiricalStudy.” Proceedings of the World Congress onEngineering.Vol. 1.No. 2. 2012.

Chen, Renbao, and Kie Ann Wong.”Thedeterminants of financial health of Asian insurancecompanies.” Journal of Risk and Insurance 71.3(2004): 469-499.

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Iswati, Sri, and MuslichAnshori.”The influence ofintellectual capital to financial performance atinsurance companies in Jakarta Stock Exchange(JSE).” Proceedings of the 13th Asia PacificManagement Conference, Melbourne, Australia.2007.

Kaguri, A. Relationship between firmcharacteristics and financial performance of lifeinsurance companies in Kenya.Diss. Doctoraldissertation, University of Nairobi, 2013.

Kumba, S. “How to determine whether yourfinancier is financially sound.” The FinancialPost 2 (2011): 16.

Kume, Vasilika, ZanaXhuka, and ZvMinister.”Innovation management in the insurancesector in Albania.” Journal of Entrepreneurshipand Innovation 2 (2010): 94-107.

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Loderer, Claudio F., and UrsWaelchli.”Firm ageand performance.” (2010).

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Malik, Ali, Jonathan Liu, andOrthodoxiaKyriacou. “Creative accountingpractice and business performance: evidence fromPakistan.” International Journal of BusinessPerformance Management 12.3 (2011): 228-241.

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Outecheva, Natalia. Corporate financial distress:An empirical analysis of distress risk. Diss.University of St. Gallen, 2007.

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Sanchez, Jorge. “Calculating insurance claimreserves with fuzzy regression.” Fuzzy sets andsystems 157.23 (2006): 3091-3108.

Sharku, Gentiana, BrikenaLeka, andEtlevaBajrami.”Considerations on Albanian LifeInsurance Market.” Romanian EconomicJournal 14.39 (2011).

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CROP INSURANCE: FARMERS PERCEPTIONS ANDAWARENESS IN SELECT DISTRICT OF

TELANGANA STATEDr Sammaiah BuhukyaAssistant Professor, MBA Department,Siddhartha Institute of Engineering & Technology,Vinobha Nagar, Imbrahimpthnam, R.R.DistEmail Id: [email protected],Contact No: 9963225482

ABSTRACT

Agriculture classified as a primary sector and its playing pivotal role in providing employment, incomeand fulfilment of hunger needs and prime source of livelihood for more than 60% of the population. Itsdefect on vagaries of Nature such as flood, drought, tornado, and lightning. In the face of uncertaintyand risk faced by the farming community, various schemes and programmes have evolved over time indifferent countries to protect farmers against risks, such as guaranteed prices, subsidised credit, andcrop insurance. This paper discusses the farmer’s perceptions and awareness of crop insurance, Firstlyit measures the awareness level and source of awareness, secondly examines the farmers’ perception,towards crop insurance. The study was conducted in selected districts of Telangana state. 100 convenientrespondents were chosen and been carried out in the month of March, 2016. From the analysis farmersawareness level about crop insurance was medium with lack of advertisement, Most of the farmers werenot willing to pay for crop insurance because of insecurity, instable income level, premium rate, no orlow compensation, problems with lack of financial knowledge.

Key words: Awareness, Perception, Crop Insurance.

Introduction :Agriculture is a prime sector for rural India andIndian economy and this sector faces differenttypes of uncertain as natural disaster (drought,flood etc.) and delay monsoon which are beyondthe control of the farmers. Due to the naturalcalamities the agricultural production, grossnational product and also the income of the farmersdecrease. Agriculture in India includes with riskand uncertainty all over the world becauseagriculture is subject to vagaries of nature likeflood, drought and cyclone. Agriculture contributesto 24 per cent of the GDP and any change has amultiplier effect on the economy as a whole.Economic growth and agricultural growth areinextricably linked to each other. Crop insurancehelps in stabilization of farm production andincome of the farming community. It helps in

optimal allocation of resources in the productionprocess. Indian Government has been concernedabout the risk and uncertainty prevalent inagriculture. As all of us are aware about theunfortunate deaths of farmers in Maharashtra whogot caught in a debt trap and the devastating effectit had on their families. In the face of uncertaintyand risk faced by the farming community, variousschemes have evolved over time in differentcountries to protect farmers against risks, such asguaranteed prices, subsidised credit, and cropinsurance. Agriculture is an primary economicactivity for the rural population in India more than60 percept of population directly and indirectlydepends on Agriculture sector. People in TelanganaState about 60% of the total population dependson it. The soil and natural conditions of state ofTelangana and select districts allows multiple

13


cropping pattern and high cropping intensity, butpaddy is being the predominant crop.

Agriculture in sample area is shrinking in termsof arable land and crop net production due toincreasing demand for land from other economicsectors, insufficient labour, frequently affected bynatural calamities, and the increasing cost ofagricultural inputs such as seeds, fertilizers,pesticide and low market price. It is here that cropinsurance plays a vital role in anchoring a stablegrowth of agricultural sector. Crop insurance isan insurance arrangement aiming at mitigating thefinancial losses suffered by the farmers due todamage and destruction of their crops as a resultof various production risks (A.I.C of India). In thisview of this, the need for protecting farmers fromthe various risks and hazards was recognized bythe government and introduce NationalAgricultural Insurance scheme in the state ofTelangana. The crop insurance scheme is deliveredas compulsory along with crop loan from thefinancial institutions like primary agriculturalbanks, regional rural banks and commercial banksand voluntary basis for non crop loaners. But thereis need to study how farmers perceive cropinsurance, are they fully aware about it andwhether the non crop loaners are willing to joinand pay for crop insurance schemes. The presentstudy examines the farmers’ awareness andperception level and source of awareness, finallyidentify the farmers willingness in paying for cropinsurance in the State of Telangana select districts.

Historical Overview of Crop Insurance :The policy makers in India are concerned aboutthe risk and uncertainty prevalent in agriculture.Work on crop insurance received much attentionafter India’s independence in 1947. However, cropinsurance was conceptualized and J.S.Chakravarthi presented a practical scheme suitedto Indian conditions as early as in 1920. A bookentitled “Agricultural Insurance: A practicalScheme Suited to Indian Conditions” waspublished in 1920. In this book he proposed a raininsurance scheme for the Mysore state to protectfarmers against vagaries of monsoon culminatingin drought. The subject of crop insurance was

discussed in the Parliament (Central Legislature)the 1947 and then minister of Food andAgriculture, gave an assurance that the feasibilityof introducing crop and livestock insurance shouldbe considered by government. Two pilot schemeson crop insurance, prepared by Mr. G.S. Priolkar,an officer on special duty, were circulated to thestates for adoption. However, none of the statesagreed to implement the schemes, mainly due topaucity of funds. The interest in the subject wasrekindled during the third five year plan (1961-1966). However, the working group on agriculturewas averse to included crop insurance in the plan.At the same time the government of Punjabproposed the inclination

Mr.Pandaraiah. G & Dr.KV.Sashidar of cropinsurance in its state plan and sort financialassistance from the central government. The stategovernment could not introduce crop insurance asthe power to pass the Legislation related toinsurance was vested with central government.Following these developments and increasingdemand for crop insurance, in 1965, thegovernment of India decided to have a CropInsurance Bill and Model Scheme of CropInsurance. It and it was formulated so that theinterested states could introduce crop insurancein the area under their jurisdiction. A Draft Billand Model Scheme were prepared and circulatedto states to elicit their views and comments on thesame. Further, incorporating the comments and theviews of the states, the government of India inMarch 1970 considered the Draft Bill and ModelScheme. The Draft Bill and Model Scheme werethen referred to the expert committee (Under theChairmanship of Dharm Naraian) in July 1970 forfuller examination of the economic, administrative,financial, actuarial implications. The committeereported that in the conditions obtaining in thecountry, it was not advisable to introduce cropinsurance in the near future on pilot orexperimental basis. Despite the unfavorable reportof the Dharm Naraian Committee, politicalcompulsions forced the government to introducecrop insurance in the country on experimental basisunder the General Insurance Department

14

(Danadekar 1976). The following schemes havebeen implemented by government of India.

Crop Insurance Scheme (CIS) 1972- 1978:-Based on “Individual Approach” the GeneralInsurance Corporation of India introduced thisprogramme and this covered H-4 cotton in Gujaratand it extended to Paddy, Groundnut. Later thisCIS was extended to other States.

Pilot Crop Insurance Scheme (PCIS) 1979-1984:-In the history of Crop Insurance in India thisscheme was introduced based on ‘HomogeneousArea Approach’ by General Insurance Corporationof India. This scheme covered the crops likecereals, millets, oil seeds, cotton, potato, and gramspread across the 13 states but the programme wasrestricted to loanee farmers.

Comprehensive Crop Insurance Scheme(CCIS) 1985-1998:-It had also introduced by GIC based on‘Homogeneous Area Approach’. This schemecovered cereals, millets, oilseeds and pulses spreadcross the 15 states and 2 union territories in India,latter it spill over to five more states in later fewyears. Scheme was restricted to loanee farmers upto of the crop loan or maximum of 10,000 perfarmers.

National Agriculture Crop Insurance Scheme(NAIS) 1999-2000:-India’s modified crop insurance program which iscalled as National Agricultural Insurance Schemeis implemented since Rabi 1999-2000.Unionbudget 2002-03 proposed set up of AgriculturalInsurance Corporation (AIC) with capitalparticipation from General Insurance Corporationof India (GIC), four public sector general insurancecompanies viz. 1. National Insurance Co Ltd., 2.New India Assurance Co. Ltd., 3.OrientalInsurance Co. Ltd and 4. United Insurance Co. Ltd.and NABARD. The promoter’s subscription to thepaid up capital will be: 35 by GIC, by NABARDand each by the four public sector generalinsurance companies. The authorized capital of thenew organization will be Rs.1500 crore, while the

initial paid-up capital will be Rs.200 crore.National Agricultural Insurance Scheme (NAIS)shall be transferred to the new organization andshall form the core of business to begin with.Transition to actuarial regime will be made over aperiod of time. The new organization will, in duecourse of time covers other allied rural/agriculturalrisk along with crop insurance. The specificobjectives of the program are to provide insurancecoverage and financial support to the farmers inthe event of failure of any of the notified crop as aresult of natural calamities; pests and diseases. Toencourage the farmers to adopt progressivefarming practices, high value inputs and improvedtechnology in agriculture.

Review of Literature :Ali, Jabir and Sanjeev Kapoor (2008), this paperprovides an assessment of agriculturaldiversification trends towards fruits and vegetablesproduction in the state of Uttar Pradesh. In the firstpart, food consumption, crop production patternsand value of output in the region during the pasttwo decades are reviewed. Next, the farmers’perceived risks on a variety of sources and the useof different risk management strategies arediscussed. The principal contribution of this paperis to draw of attention towards some neglectedaspects of diversification, especially the biophysical and economic constraints to the processof fruits and vegetables production system. Thedata were collected using a pre tested structuredquestionnaire and data was also collected from theAgricultural Statistics at a glance. The study hasrevealed that the annual growth in production ofhigh value crops has increased to augment incomeand manage risks and uncertainties. Cultivationof high value crops involves risk and uncertaintydue to high resource requirement and high perishesability. Thus, farmers’ adoption of cropdiversification practices requires a favorableenvironment that fulfills resourceRequirements and effective policy support forReducing their risk. Public intervention scanfacilitate better risk management throughimproved information system, development offinancial markets and promotion of market based

Dr Sammaiah Buhukya

15


price and yield insurance schemes, thus ensuringthat the marginal farmers are able to benefit fromthese interventions as well as participate in theemerging system.

Mamata Swain, (2008) The paper attempts toexamine the need for crop insurance in anagriculturally backward state like Orissa in EasternIndia and to what extent the crop insurance schemeas implemented in the state has helped the farmersin managing risk in agricultural production. A cropinsurance scheme was introduced in Orissa on pilotbasis from Kharif 1981 to Rabi 1984-85, but itshowed a high and unfavorable claim- premiumratio. The Comprehensive Crop Insurance Scheme(CCIS) was launched in Orissa in 1985 and itsmajor drawback was that its coverage was verylow. As it was accredit linked insurance scheme,only the farmers taking loans from institutionalcredit agencies (typically the medium and largefarmers) could insure their crops. Further, it wasfound to be financially unsustainable due to highclaim- premium ratio. To overcome the aboveproblems, the improved National AgricultureInsurance Scheme (NAIS) was implemented inOrissa since 1999. This scheme was extended tonon-loanee farmers, as a result of which area andnumber of farmers under the scheme increasedenormously. The claim-premium ration was alsofound to be favorable in most seasons. However,it was also suggested in this scheme that alongwith crop insurance other risk reducing measureslike income generating activities in non-farmsector and food for work programme should beundertaken to lower income variability. In

Mr.Pandaraiah. G & Dr.KV.Sashidar (2010) afrequently disaster affected state like Orissa, alongwith the public sector, private sector participationin agricultural insurance needs to be encouragedby providing subsidy, guarantee and reinsurancefacility. Credible long-term statistical informationshould be made available for formulation ofpolicies. Vulnerability maps of different regionsshould be prepared which will help in setting theprice of risk (premium). Education and training tofarmers on the benefits of crop insurance anddifferent insurance products should be imparted.

Insurance is a contract made for financialarrangement between two parties when fewsuffered losses are met from the funds accumulatedthrough small contributions made by many whoare exposed to similar risks.

Crop Insurance : Crop insurance has been oneof the most reliable and longest running programsfor stabilization and risk management for farmersin many countries. This has been particularly truein parts of North America, where crop insurancebecame more common and commercially availablearound 1960. Multi-peril crop insurance, the mostpopular type of crop insurance, usually insuresfarmers against yield losses from natural causessuch as weather (e.g. drought, excessive moisture,wind, snow, and frost), insects, and disease. Aproperly designed and implemented crop insuranceprogramme will protect the numerous vulnerablesmall and marginal farmers from hardship, bringin stability in the farm incomes and increase thefarm production (Bhende 2002).

The farmer is likely to allocate resources in profitmaximizing way if he is sure that he will becompensated when his income is catastrophicallylow for reasons beyond his control. A farmer maygrow more profitable crops even though they arerisky. Similarly, farmer may adopt improved butuncertain technology when he is assured ofcompensation in case of failure (Hazell 1992). Thiswill increase value added from agriculture, andincome of the farm family. Bhende (2005) foundthat income of the farm households from semi-arid tropics engaged predominantly in rain-fedfarming was positively associated with the levelof risk. Hence, the availability of formal instrumentfor diffusion of risk like crop insurance willfacilitate farmers to adopt risky but remunerativetechnology and farm activities, resulting inincreased income. It is observed that insuredhouseholds invest more on agricultural inputsleading to higher output and income per unit ofland. Interestingly, percentage increase in outputand income is more for small farms. Based on 1991data, CCIS was found to contribute 23, 15, and 29per cent increase in income of insured farmers in

16

Gujarat, Orissa and Tamil Nadu, respectively(Mishra 1996)

Objectives of the Study :1. To assess the farmers awareness and perception

towards crop insurance.

2. To identify the non insured farmers willingnessin join for crop insurance.

Study Area :Warangal district was selected purposively. Totalnumber of 100 respondents was selected throughrandom sampling from five villages. Thestructured schedule was developed keeping in viewthe objectives and variable to be studied. Therespondents were contacted personally for datacollection. For the purpose of the study, knowledgewas defined as the perception and awareness,extent and manner of the use of the Crop insurancescheme was measured by knowledge test used inthis study. Knowledge about the scientific Crop

insurance scheme using the knowledge testdeveloped by the investigator and used. Themodifications in the existing knowledge test werein relation to item regarding scientific Cropinsurance Scheme. All the question for knowledgewas dichotomized having two dimension yes/no,if the answer was yes the respondents wereassigned 1 score and if answer was no, therespondents were assigned 0 score. The study wascarried on knowledge and adoption of Cropinsurance scheme among farmers. The range ofscores obtained by the respondents might vary inlow, medium and high range in the knowledge testwhich indicated the knowledge level of therespondents.

Results and discussionResult and discussion of crop insurance schemein select districts of Telangana state aboutknowledge and awareness about the crop insurancescheme.

12

3

4

56789

10

11

12

13

14

Dr Sammaiah Buhukya

17


InterpretationFrom the Table 1 That among all 24 StatementCrop insurance scheme, Have you heard of cropinsurance and do you know about of crop insuranceawareness and kisahan credit cards (98%) was rankat 1st as far as knowledge possessed by therespondents was concerned. Do you know aboutthe crop insurance period? rank at 2nd (96%),

followed by Do you know about allied agricultureinsurance? at rank 3rd (91%), Do you know aboutcrop insurance scheme at rank 4th (85%),and Itprovides the loan for the Rabi and Kharif cropproduction not for Zayad crop at rank 5th (82%),The overall adoption index was calculated to be68.41 %. Knowledge level of farmers in Cropinsurance scheme

1516

17

18

19

202122

23

24

18

InterpretationTable-2 shows that among all 15 variables do youadopt agricultural insurance from any bank, whichtype of crop insurance scheme is preferred andwhich type of insurance adopted by you at rank 1st

85 % as far as adoption possessed by therespondents was concerned. Are you adopting cropinsurance, and do you prefer crop insurance at rank2nd 82%, Have you prefer the bank for the loan atrank 3rd 81%, and you have adopted crop insurancebased on weather data at respectively. The overalladoption index was calculated to be 70.4 %. It canbe calculated that the extent of knowledge andadoption bout Crop Insurance Scheme seems tobe satisfactory.

CONCLUSIONIt can be concluded that 96% of the farmars areaware about the crop insurance and they wouldlike to do with metionalised Banks only. Thisindicates that crop insurance among selectrespondents in Warangal needs more awarenessamong people.

Reference :

1. Vyas VS, Singh S. Crop insurance in India -scope for improvement. Economic andPolitical Weekly. 2006; 41(43/44):4585-4594.

2. Enjolras G, Sentis P. Crop insurance policiesand purchases in France. AgriculturalEconomics, 2011; 42(4):475-486.

3. Goudappa BS, Reddy SM. Chandrashekhar3Farmers Perception and Awareness about CropInsurance in Karnataka Indian ResearchJournal of Extension Education. 2012, 2.

4. Ibitoye SJ. Assessment of the levels ofawareness and use of agricultural insurancescheme among the rural farmers in Kogi State,Nigeria International Journal of AgriculturalScience, Research and Technology (IJASRT).2012; 2(3):143-148. 1

5. Sundar J, Lalitha R. A Study on Farmers’Awareness, Perception and Willing To Joinand Pay for Crop Insurance InternationalJournal of Business and ManagementInvention ISSN (Online): 2319-8028, 2013.

6. Sadati SA, Ghobadi FR, Sadati SA, MohamadiY, Sharifi. O, Asakereh A. Survey of effectivefactors on adoption of crop insurance amongfarmers: a case study of Behbahan County.Abstracts African Journal of AgriculturalResearch. 2010; 5(16):2237-2242.

7. http; retrieved from the from the Journal ofPharmacognosy and Phytochemistry 2017;6(3): 154-156

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OPPORTUNITY FOR FDI IN INSURANCESECTOR IN INDIA

Dr. Manisha Bhatt Jayshree MandaviyaAssistant Professor Assistant Professor C. Z. Patel College S. R. Luthra Institute of Managementof Business &Management, Surat, Anand, Gujarat, IndiaNear Vallabh Vidhyanagar, [email protected],Anand, Gujarat, India Mo: [email protected] 09427457271

ABSTRACT

Parliament has passed Insurance Laws (Amendment) Bill, 2015. It was first passed in Lok Sabha on 4March 2015 and later in Rajya Sabha on 12 March 2015, which will become an Act when the Presidentsigns it. The amendment bill aims to bring improvements and revisions in the existing laws relating toinsurance business in India. The bill also seeks to remove archaic provisions in previous laws andincorporate modern day practices of insurance business that are emerging in a changing dynamicenvironment, which also includes private participation. It is expected that the foreign investment wouldbring about 20,000-25,000 crore in short funds. The amendment bill hikes Foreign Direct Investment(FDI) cap in the insurance sector to 49 percent from present 26 percent. The foreign investment ininsurance would be routed under foreign direct investment, foreign portfolio investment, foreign venturecapital investment, depository receipts, and non resident Indians. Insurance companies are permitted toraise capital through instruments other than equity shares. Instruments would be specified throughseparate regulations by the Insurance Regulatory and Development Authority of India (IRDA). However,the voting rights of shareholders are restricted only to equity shares. Sale of shares over 1% of the totalequity share capital and purchase of shares resulting in total equity share capital of more than 5%,requires the prior approval of the IRDA. It also adds provision for the establishment of Life InsuranceCouncil and the General Insurance Council. These councils will act as self-regulating bodies for theinsurance sector. The bill also grants permission to PSU general insurers to raise funds from the capitalmarket and increases the penalty to deter multilevel marketing of insurance products. There is a strongrelationship between foreign investment and economic growth. Larger inflows of foreign investmentsare needed for the country to achieve a sustainable high trajectory of economic growth. A major roleplayed by the insurance sector is to mobilize national savings and channelize them into investments indifferent sectors of the economy. FDI in insurance would increase the penetration of insurance in India;FDI can meet India’s long term capital requirements to fund the building of infrastructures. The presentpaper focuses on the overview of the Indian insurance sector along with the opportunities due to expansionof FDI in insurance in India and the major challenges that it faces.

Keywords: Insurance; FDI; Insurance Laws (Amendment) Bill

IntroductionThe insurance industry of India consists of 53insurance companies of which 24 are in lifeinsurance business and 28 are non-life insurers.Among the life insurers, Life InsuranceCorporation (LIC) is the sole public sector

company. Apart from that, among the non-lifeinsurers there are six public sector insurers. Inaddition to these, there is sole national re-insurer,namely, General Insurance Corporation of India.Other stakeholders in Indian Insurance marketinclude agents (individual and corporate), brokers,

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surveyors and third party administrators servicinghealth insurance claims1.

Out of 28 non-life insurance companies, fiveprivate sector insurers are registered to underwritepolicies exclusively in health, personal accidentand travel insurance segments. They are StarHealth and Allied Insurance Company Ltd, ApolloMunich Health Insurance Company Ltd, MaxBupa Health Insurance Company Ltd, ReligareHealth Insurance Company Ltd and Cigna TTKHealth Insurance Company Ltd. There are twomore specialized insurers belonging to publicsector, namely, Export Credit GuaranteeCorporation of India for Credit Insurance andAgriculture Insurance Company Ltd for cropinsurance.

Insurance in India is a flourishing industry in Indiawith both national and international playerscompeting and growing at rapid rate. Together withbanking and real estate it constitutes 12.9% of GDPin India. However the penetration of insurancecoverage for both life and non life insurance isstill very less and was 3.9% in 2013.

Indian insurance sector was liberalized in 2001.Liberalization has led to the entry of the largestinsurance companies in the world, who have takena strategic view on India being one of the toppriority emerging markets. The Insurance industryin India has undergone transformational changesover the last 14 years. With raising the cap on FDIinto Indian insurance companies to 49% from the26% would allow global reinsurance companiesto set up branches in India 2.

According to the insurance amendment bill (2015),the section 24 of the Pension Fund Regulatory andDevelopment Authority ( PFRDA) Act providesthat the foreign investment limit in the pensionsector will be linked with the ceiling in theinsurance sector, which has gone up to 49% from26%. Under the legislation, while up to 26 per centforeign capital will be under the automatic route,the balance 23 per cent has to secure approval fromthe Foreign Investment Promotion Board (FIPB).According to the General Insurance Business(Nationalization) Act, 1972 (GIBNA, 1972) the

four general insurance companies (GICs) had tobe 100% government owned, however TheInsurance Laws (Amendment) Bill, 2015 —passed by the Rajya Sabha on March 12 and bythe Lok Sabha on March 4 — will change that.The GICs “are now allowed to raise capital,keeping in view the need for expansion of thebusiness in the rural and social sectors, meetingthe solvency margin for this purpose and achievingenhanced competitiveness subject to thegovernment equity not being less than 51% at anypoint of time. The amendment also clearly defineshealth insurance business to include travel andpersonal accident cover. It is also expected thatthe proposed increase in the FDI limit will have afollow on impact on other sectors, including thepension industry creating further momentum.

Objectives of the StudyThe present paper focuses on

• The overview of the Indian insurancesector

• To know opportunities and expansion ofFDI in insurance in India

• To know major challenges that it faces.

Global Overview of Insurance SectorThe global insurance industry is facing increasingcompetition, which has put significant pressure oncompanies to become more efficient, enhance theirtechnology-related processes and alter theirbusiness models. Globally, most insurancecompanies are trying to enhance the efficiency oftheir underwriting process, cut their overheads andreduce claims leakage since returns frominvestment are shrinking. With high competitionin the insurance industry, companies will need tostrengthen their product lines, investmentstrategies and corporate infrastructure (Figure 1).

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According to the latest study performed by theglobal re-insurer Swiss Re on world insurance in2013, India ranked 15th in terms of premiumvolume, from 14th in 2012. According to the swissRe report the premiums written in the globalinsurance industry was 2.5 percent in 2012 and itgrew by 1.4 percent in real terms to $4 641 billionin 20131. The reason behind the slowdown wasmainly due to weakness in the life sector in theadvanced markets. In Swiss Re’s sigma study,India’s life insurance penetration was 3.1 per cent,

while in non-life insurance it was 0.8 per cent. Apremium as a percentage of Gross DevelopmentProduct is referred to as insurance penetrationwhereas insurance density refers to per capitapremium or premium per person. The study alsorevealed that the insurance penetration in India fellto 3.9 percent in 2013 when compared to fourpercent in 2012. Also in terms of insurance densityIndia stood at $52 when compared to $53 in 2012,thus in simple words both insurance penetrationand density was low (Tables 1 and 2).

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Indian Insurance SectorInsurance in India is listed in the Constitution ofIndia in the Seventh Schedule as a Union Listsubject, meaning it can only be legislated by theCentral government. The history of insurance datebacks to 1818, when Oriental Life InsuranceCompany was started. In 1870, Bombay MutualLife Assurance Society became the first Indianinsurer. In the year 1912, the Life InsuranceCompanies Act and the Provident Fund Act waspassed to regulate the insurance business. This wasthe first statutory measure to regulate life insurancebusiness. In 1928, the Indian

Insurance Companies Act was enacted to enablethe Government to collect statistical informationabout both life and non-life business transacted inIndia by Indian and foreign insurers includingprovident insurance societies. In 1938, with a viewto protecting the interest of the Insurance public,the earlier legislation was consolidated andamended by the Insurance Act, 1938 withcomprehensive provisions for effective controlover the activities of insurers. The Government ofIndia issued an Ordinance on 19 January 1956nationalizing the Life Insurance sector and LifeInsurance Corporation came into existence in thesame year. The Life Insurance Corporation (LIC)absorbed 154 Indian, 16 non-Indian insurers asalso 75 provident societies—245 Indian andforeign insurers in all. In 1972 the parliamentpassed General Insurance Business(Nationalization) Act, and consequently, GeneralInsurance business was nationalized with effectfrom 1 January 19731. 107 insurers wereamalgamated and grouped into four companies,namely National Insurance Company Ltd., theNew India Assurance Company Ltd., the OrientalInsurance Company Ltd and the United IndiaInsurance Company Ltd. The General InsuranceCorporation of India was incorporated as acompany in 1971 and it commence business on 1January 1973.

In 1993, the Government set up a committee underthe chairmanship of RN Malhotra, former

Governor of RBI, to propose recommendations forreforms in the insurance sector. Following therecommendations of the Malhotra Committeereport, in 1999, the Insurance Regulatory andDevelopment Authority (IRDA) was constitutedas an autonomous body to regulate and developthe insurance industry. The IRDA was incorporatedas a statutory body in April, 2000. The keyobjectives of the IRDA include promotion ofcompetition so as to enhance customer satisfactionthrough increased consumer choice and lowerpremiums, while ensuring the financial securityof the insurance market.

The IRDA opened up the market in August 2000with the invitation for application for registrations.Foreign companies were allowed ownership of upto 26%. The Authority has the power to frameregulations under Section 114A of the InsuranceAct, 1938 and has from 2000 onwards framedvarious regulations ranging from registration ofcompanies for carrying on insurance business toprotection of policyholders’ interests.2

The LIC had monopoly till the late 90s when theInsurance sector was reopened to the private sector.Before that, the industry consisted of only two stateinsurers: Life Insurers (Life Insurance Corporationof India, LIC) and General Insurers (GeneralInsurance Corporation of India, GIC). GIC hadfour subsidiary companies. With effect fromDecember 2000, these subsidiaries have been de-linked from the parent company and were set upas independent insurance companies: OrientalInsurance Company Limited, New IndiaAssurance Company Limited, National InsuranceCompany Limited and United India InsuranceCompany Limited 3.

Registered Insurers in IndiaAt the end of March 2014, there are 53 insurancecompanies operating in India, out of which 24 arein the life insurance business and 28 are in thenon-life insurance business (Table 3).

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Insurance Premium Underwriting

Life insuranceThe Life insurance industry recorded a premiumincome of Rs.3,14,283 crore during 2013-14 asagainst Rs.2,87,202 crore in 2012- 13 registering

a growth of 9.43%. While private sector insurersposted 1.35% decline in their premiumincome,LIC recorded 13.48% growth (Figure 2and Table 4).

District level distribution of life insuranceofficesAs at 31st March, 2014, the sole public sector lifeinsurer, LIC of India had its offices in 597 districtsout of 640 districts (As per the Decennial Census-2011) in the country. As such, it covered 93.28per cent of all districts in the country, whereas theprivate sector insurers had offices in 560 districts

covering 87.50 per cent of all districts in thecountry. In total, both LIC and private insurerstogether covered 94.37 per cent of all districts inthe country. The number of districts with nopresence of life insurance offices stood at 36 inthe country. Out of these, 23 districts belong tothe six of the north eastern states namely ArunachalPradesh, Manipur, Meghalaya, Mizoram,

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Nagaland and Sikkim. In 21 states/union territories(out of a total of 35 states/union territories in the

country), all their districts were covered throughlife insurance offices (Figure 3 and Table 5).

Non-life insuranceThe non-life insurance industry had underwrittena total premium of Rs.70610 crore in India for theyear 2013-14 as against Rs. 62973 crore in 2012-13, registering a growth of 12.13 per cent as againstan increase of 19.10 per cent recorded in theprevious year. The public sector insurers exhibited

growth in 2013-14 at 10.21 per cent; over theprevious year’s growth rate of 14.60 per cent. Theprivate general insurers registered growth of 14.52per cent, which is lower than 25.26 per centachieved during the previous year (Figure 4 andTable 6).

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Segment wise premium of non life insuranceThe Motor insurance business continued to be thelargest nonlife insurance segment with a share of47.90 per cent (47.05 per cent in 2012-13). Itreported growth rate of 14.15 per cent (22.24 percent in 2012-13). The premium collection in healthsegment continued to surge ahead at 15663 crorein 2013-14 from ‘13,975 crore of 2012- 13,registering a growth of 12.08 per cent. However,

the market share of health segment which is 22.18has remained more or less at the same levels ofprevious year which was 22.19 per cent in the year.The premium collection from Fire and Marinesegments increased by 11.01 per cent and 4.13 percent respectively in 2013-14 whereas for theprevious year the growth rate in the Fire andMarine segments were 22.63 and 5.36 respectively(Table 7, Figures 5 and 6).

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Number of non life insurance offices-tier wiseWhen compared to life insurance, the proportionof districts covered by non-life insurers is less.While the four public sector nonlife insurer hasoffices at 601 districts out of 640 districts in thecountry (94 per cent), the private sector insurerscover only 45 per cent of the districts in the countryby having offices in 286 districts. There are 39districts (6 per cent of districts) in the country,which do not have any non-life insurance office.Private sector insurance offices have not yetopened any offices in 354 districts. Further only19 States/ Union Territories (out of 35 States/Union Territories) have non-life insurance offices

in all of their districts. This lower level of coverageof districts by non-life insurers might also haveled to the low non-life insurance penetration inthe country, as compared to penetration of lifeinsurance (Table 8 and Figure 7).

Insurance penetration and density in IndiaThe measure of insurance penetration and densityreflects the level of development of insurancesector in a country. While insurance penetrationis measured as the percentage of insurancepremium to GDP, insurance density is calculatedas the ratio of premium to population (per capitapremium) (Table 9).

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FDI in IndiaA foreign direct investment (FDI) is a controllingownership in a business enterprise in one countryby an entity based in another country. Apart frombeing a critical driver of economic growth, foreigndirect investment (FDI) is a major source of non-debt financial resource for the economicdevelopment of India. Foreign companies investin India to take advantage of cheaper wages,special investment privileges like tax exemptions,etc. For a country where foreign investments arebeing made, it also means achieving technicalknow-how and generation of employment.

Forms in which Business Can Conducted byForeign Company in IndiaA foreign company planning to set up businessoperations in India may: Incorporate a companyunder the Companies Act, 1956, as a Joint Ventureor a Wholly Owned Subsidiary. Set up a LiaisonOffice / Representative Office or a Project Officeor a Branch Office of the foreign company whichcan undertake activities permitted under theForeign Exchange Management (Establishment inIndia of Branch Office or Other Place of Business)Regulations, 2000.

Procedure for receiving Foreign DirectInvestment in an Indian companyAutomatic routeFDI is allowed under the automatic route withoutprior approval either of the Government or theReserve Bank of India in all activities/ sectors asspecified in the consolidated FDI Policy, issuedby the Government of India from time to time.

Government routeFDI in activities not covered under the automaticroute requires prior approval of the Governmentwhich is considered by the Foreign InvestmentPromotion Board (FIPB), Department ofEconomic Affairs, Ministry of Finance.

Opportunities due to Expansion of FDIIncrease insurance penetrationWith the population of more than 100 crores, Indiarequires Insurance more than any other nation.However, the insurance penetration in the countryis only around 3 percent of our gross domestic

annually. This is far less as compared to Japanwhich has an insurance penetration of more than10 percent. Increased FDI limit will strengthen theexisting companies and will also allow the newplayers to come in, thereby enabling more peopleto buy life cover. More companies would enterthe insurance sector, which would lead to highercompetition and cheaper insurance premium forthe customers product with respect to over-allpremiums underwritten.

Level playing fieldWith the increase in foreign direct investment to49 percent, the insurance companies will get thelevel playing field. So far the state owned LifeCorporation of India controls around 70 percentof the life insurance market.

Increased capital flowMost of the private sector insurance companieshave been making considerable losses. Theincreased FDI limit has brought some much neededrelief to these firms as the inflow of more than‘20,000-‘25,000 crore is expected in the near term.This could go up to ‘40,000-‘60,000 crore in themedium to long term, depending on how thingspan out.

Job creationWith more money coming in, the insurancecompanies will be able to create more jobs to meettheir targets of venturing into under insuredmarkets through improved infrastructure, betteroperations and more manpower.

Consumer friendlyThe end beneficiary of this amendment will becommon men. With more players in this sector,there is bound to be stringent competition leadingto competitive quotes, improved services andbetter claim settlement ratio.

ChallengesForeign investment of up to 26% of the total paidup equity of the insurer would be allowed throughthe automatic route and the increase of FDI from26% to 49% (i.e.23%) would be allowed throughForeign Investment Promotion Board, and notthrough automatic route, which means that FIPBwould issue guidelines regarding the management

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control, which would lie with the Indiancounterpart, also there are concerns about thevoting rights of the foreign shareholders, whichshould not go beyond 26%. FIPB guidelines wouldalso decide on the appointments of CEO’s andCFO’s of the insurance joint ventures. Anotherissue is the stability of Indian financial markets asthere is a possibility of insurance companiesbringing in contagion risk such as risky derivativesand contaminated balance sheet. The governmentis looking primarily on how much funds theinsurance companies can bring with them, and noton the amount of business which these companiescould generate as it is expected that their ruralpenetration would be low. To get listed on bourseto raise FIIs may not be attractive for all insurancecompanies. According to Insurance Regulatory andDevelopment Authority (Irda) norms, companieswhose embedded value is two times their paid-upcapital can list on the bourses. Embedded value isa common valuation measure in the insuranceindustry calculated by adding the adjusted net assetvalue and the present value of future profits of afirm. The present value of future profits considersthe potential profits that shareholders will receivein the future, while adjusted net asset valueconsiders the funds belonging to shareholders thathave been accumulated in the past. Another issuecould arise when insurers list their shares on stockexchanges. Indian law requires 25 per cent of alisted company to be owned by public. So if aninsurer launches an initial public offering and theforeign partner increase its stake, then the Indiancompany would end up with a smaller holding inthe joint venture.

Some of the Major Highlights of the InsuranceLaw (Amendment) Bill 2015 areCapital availabilityIn addition to the provisions for enhanced foreignequity, the amended law will enable capital raisingthrough new and innovative instruments under theregulatory supervision of IRDAI. The four publicsector general insurance companies, presentlyrequired as per the General Insurance Business(Nationalization) Act, 1972 (GIBNA, 1972) to be100% government owned, are now allowed to raise

capital, keeping in view the need for expansion ofthe business in the rural and social sectors, meetingthe solvency margin for this purpose and achievingenhanced competitiveness subject to theGovernment equity not being less than 51% at anypoint of time.

Consumer WelfareLaws will enable the interests of consumers to bebetter served through provisions like thoseenabling penalties on intermediaries / insurancecompanies for misconduct and disallowingmultilevel marketing of insurance products inorder to curtail the practice of mis-selling. Theamended Law has several provisions for levyinghigher penalties ranging from up to ‘1 Crore to ‘25 Crore for various violations including mis-selling and misrepresentation by agents / insurancecompanies. With a view to serve the interest ofthe policy holders better, the period during whicha policy can be repudiated on any ground,including mis-statement of facts etc., will beconfined to three years from the commencementof the policy and no policy would be called inquestion on any ground after three years. Theamendments provide for an easier process forpayment to the nominee of the policy holder, asthe insurer would be discharged of its legalliabilities once the payment is made to thenominee. It is now obligatory in the law forinsurance companies to underwrite third partymotor vehicle insurance as per IRDAI regulations.

Empowerment of IRDAIThe Act will entrust responsibility of appointinginsurance agents to insurers and provides forIRDAI to regulate their eligibility, qualificationsand other aspects. It enables agents to work morebroadly across companies in various businesscategories; with the safeguard that conflict ofinterest would not be allowed by IRDAI throughsuitable regulations. IRDAI is empowered toregulate key aspects of Insurance Companyoperations in areas like solvency, investments,expenses and commissions and to formulateregulations for payment of commission and controlof management expenses. It empowers theAuthority to regulate the functions, code of

Dr Sammaiah Buhukya

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conduct, etc., of surveyors and loss assessors. Theonus to prove that a wrong statement was not madeat the time of taking the policy would lie with thepolicyholder and not the insurance company, i.e.if a person dies and his widow and children willhave to prove why the husband or father made awrong statement, i.e. if a person dies and his widowand children will have to prove why the husbandor father made a wrong statement. An insurancepolicy cannot be challenged on any ground afterthree years. This means if a fraud is detected threeyears after the policy has been in force, insurancecompanies will have to pay the policy holder. Italso expands the scope of insurance intermediariesto include insurance brokers, reinsurance brokers,insurance consultants, corporate agents, third partyadministrators, surveyors and loss assessors andsuch other entities, as may be notified by theAuthority from time to time. Further, propertiesin India can now be insured with a foreign insurerwith prior permission of IRDAI; which was earlierto be done with the approval of the CentralGovernment.

Health InsuranceIt empowers the Authority to regulate thefunctions, code of conduct, etc., of surveyors andloss assessors. It also expands the scope ofinsurance intermediaries to include insurancebrokers, reinsurance brokers, insuranceconsultants, corporate agents, third partyadministrators, surveyors and loss assessors andsuch other entities, as may be notified by theAuthority from time to time. Further, propertiesin India can now be insured with a foreign insurerwith prior permission of IRDAI; which was earlierto be done with the approval of the CentralGovernment.

Promoting Reinsurance Business in IndiaThe amended law enables foreign reinsurers to setup branches in India and defines‘re-insurance’ tomean “the insurance of part of one insurer’s riskby another insurer who accepts the risk for amutually acceptable premium”, and therebyexcludes the possibility of 100% ceding of risk toa re-insurer, which could lead to companies actingas front companies for other insurers. Further, it

enables Lloyds and its members to operate in Indiathrough setting up of branches for the purpose ofreinsurance business or as investors in an IndianInsurance Company within the 49% cap.

Strengthening of Industry CouncilsThe Life Insurance Council and General InsuranceCouncil have now been made self-regulatingbodies by empowering them to frame bye-laws forelections, meetings and levy and collect fees etc.from its members. Inclusion of representatives ofself-help groups and insurance cooperativesocieties in insurance councils has also beenenabled to broad base the representation on theseCouncils.

Robust Appellate ProcessAppeals against the orders of IRDAI are to bepreferred to SAT as the amended Law providesfor any insurer or insurance intermediaryaggrieved by any order made by IRDAI to preferan appeal to the Securities Appellate Tribunal(SAT).

ConclusionThe fundamental regulatory changes in theinsurance sector would be significant for the futuregrowth and would have huge impact on varioussectors of economy. Active foreign participationis crucial for the sector as it would bring the bestknow how and implementing the best practices.India is one of the fastest growing insurance marketand it is expected that Indian insurance industrycan grow up to 125% in the next decade. Howeverthere is also a risk that unless given themanagement control the foreign insurers would bereluctant to invest in India.

References1. Bhat R (2005) Insurance Industry in India-

Structure, performance and future challenges.Vikalpa 30: 3-5

2. Budhiraja L (2010) Indian Insurance SectorChallenges and opportunities. IJRIME 3.

3. Chaturvedi I (2011) Role of FDI in EconomicDevelopment of India: Sectoral AnalysisInternational Conference on Technology andBusiness Management.

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A STUDY ON UNIVERSAL INSURANCEPROGRAM FOR RURAL INSURANCE DEVELOPMENT

P. Ajith Kumar R. SunilAssistant Professor, Lecturer in Commerce & Business Management,Vaagdevi Degree & P.G College, C.K.M Arts & Science College,, WarangalHanmakonda, email : [email protected] : [email protected]

ABSTRACT

In spite of a challenging environment in 2015 with moderate global economic growth of 2.5%, directpremiums written grew 3.8% in real terms, up from 3.5% growth in 2014. However, in nominal US dollar(USD) terms, global premiums were down by 4.2%, due to currency depreciation against the USD,particularly in the advanced markets. There was a slight slowdown in the life sector in 2015, with globalpremium growth dipping to 4.0% from 4.3%, due to weaker performance in the advanced markets. Onthe non-life side, strong growth in the advanced markets of Asia, and improvement in North America andWestern Europe, contributed to a 3.6% increase in global premiums, up from 2.4% growth in 2014.Thesigma includes a special chapter on the slowdown in global trade in recent years, and its possibleimpact on the insurance sector. Life insurance dominates the global insurance market, accounting for59.7% of the market2 s value. Europe accounts for 39.3% of the universal insurance market2 s value.With the widening of the economy, the demand for new types of insurance products emerges. Insurancenow extends not only to product market but also to service industries including finance. It is equally truethat growth itself is facilitated by insurance. The global consolidation of the financial services sector isin large part driven by acquisition activity. Companies competing for a greater share of consumer fundsare seeking quick access to new markets, new products and new channels of distribution, both globallyand economically. Even though the insurance industry is facing more problems in International marketsso, there is need to frame a common program for Universal Insurance. Universal Insurance Programhave been a hot topic over the past few years among insurance buyers in Europe, the united states&elsewhere global programs deliver on three C’ that all professional buyers focus on coverage, control &cost.

INTRODUCTION:Life insurance dominates the global insurancemarket, accounting for 59.7% of the market sharevalue. Europe accounts for 39.3% of the globalinsurance market share value. AXA generates 4.4%of the universal insurance market’s value. With ahuge population base and large untapped market,insurance industry brigs opportunity in India fornational as well as foreign investors.

India is the fifth largest life insurance market inthe emerging insurance economies globally andis growing at 32-34% annually. This impressivegrowth in the market has been driven byliberalization, with new player’s significantlyenhancing product awareness and promoting

consumer education and information. The stronggrowth potential of the country has also madeinternational players to look at the Indian insurancemarket. Moreover, saturation of insurance marketsin many developed economies has made the Indianmarket more attractive for international insuranceplayer.

For years, insurers have been striving to reorganizetheir systems and upgrade their technologicalcapabilities to reduce unnecessary costs andimprove productivity while becoming moreflexible and nimble. That quest continues witheven more urgency in the current economicclimate, with organic growth hard to achieve andbottom lines driven more by how efficientlyinsurers manage their operations.

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One major uncertainty in terms of cost is the impactof regulatory reform, both in the United States withthe implementation of the Dodd-Frank Wall StreetReform and Consumer Protection Act and in theEuropean Union with Solvency II capitalizationrequirements and new accounting standards underdevelopment. Indeed, insurers that adapt mosteffectively to the changing rules of the game couldgain a competitive advantage. Another goal is toimprove the quality of an insurer’s decision-making process by taking enterprise riskmanagement to the next level.

NEED FOR THE STUDY:The insurance industry, as an integral part of thefinancial services industry does not stand apartfrom the profound changes in the financial sector.Recently we are witnessing an enhancedcompetition in the insurance industry probably dueto the opening up of this sector to privateparticipants. There is a close inter-action betweeninsurance and economic growth. As economygrows, the living standards of people increase. Asa consequence, demand for insurance increases.As the assets of people and of business enterprisesincrease in the growth process, the demand forgeneral insurance also increases. In fact, with thewidening of the economy, the demand for newtypes of insurance products emerges. Insurancenow extends not only to product market but alsoto service industries including finance. It is equallytrue that growth itself is facilitated by insurance.The global consolidation of the financial servicessector is in large part driven by acquisition activity.Companies competing for a greater share ofconsumer funds are seeking quick access to newmarkets, new products and new channels ofdistribution, both globally and economically. Eventhough the insurance industry is facing moreproblems in International markets so, there is needto frame a common program for Global Insurance.

OBJECTIVES OF THE STUDY:The following are the objectives of the paper:

· To examine the performance of globalinsurance business.

· To overview of Universal Insurance Programe(UIP).

· To describe the GIP approaches and challenges.

METHODOLOGY:For the present study the required data has beencollected from the Secondary sources comprisingof the different websites, text books and articlesrelated to the study. The collected data is arrangedin a systematic order to draw the conclusion.

UNIVERSAL INSURANCE BUSINESS:

The potential performance of the insurance sectoris universally assessed with reference to twoparameters viz, Insurance penetration andinsurance density. These two are often used todetermine the level of development of theinsurance sector in a country. InsurancePenetration defined as the ratio of premiumcountry. Insurance Penetration is defined as therate of premium underwritten in a given year tothe Gross Domestic Product (GDP). InsuranceDensity is defined as the ratio of premiumunderwritten in a given year to the total population(Measured in USD for convenience ofcomparison). The fallowing two tables reveal theInsurance penetration and Insurance Density ofInternational Insurance Business for 2011 and2012.

From Tables-1 and 2 The measure of insurancepenetration and density reflects the level ofdevelopment of insurance sector in a country. So,in globalised era the Insurance Sector also enteredin International Market. Globalization keepschanging its colors, it will continue to break downnational borders in pursuit of new businessopportunities, and it will redefine risk managementas we know it. Companies with operationsoverseas need to take just as global a view of riskas they do of their growth opportunities. In additionto the typical property and liability risks thatcompanies face abroad, they also face oftencomplex compliance and insurance regulations.These may vary greatly from one country to thenext. Failure to comply with local insuranceregulations may have serious consequences, even

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causing insurance policies to be declared null andvoid by local authorities in some rare cases. Thesolution is a holistic, centrally managed,international insurance program that anticipatesand satisfies varying insurance and complianceneeds in each country where you do business. Such

a program will include features that addresscoverage gaps that might occur in programscreated from individual policies purchased in eachcountry. It should be a program that can seamlesslyincorporate risk transfer tools such as captives.

P. Ajith Kumar, R. Sunil

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UNIVERSAL INSURANCE PROGRAM:Universal Insurance Program have been a hot topicover the past few years among insurance buyersin Europe, the united states& elsewhere globalprograms deliver on three C’ that all professionalbuyers focus on coverage, control & cost. Theprogram can offer more consistent coverage greatcontrol over risk & loses & lower costs. UniversalInsurance programs first were developed in theUnited States & the United Kingdom, followedclosely by continental Europe & now Asian &Later American companies are starting to buy theirinsurance centrally through a global program. Thelarge players in the global program marketemerged from their strong domestic bases &followed their clients overseas by opening theirown offices or through acquisition of foreigninsures. Industries with sophisticated levels of riskmanagement such energy, mining andmanufacturing companies, are the natural clientsfor global insurance programs, but the key driversis the need for uniformity of coverage and service,rather than an industry sector.

Insurance programs are not simple off the shelfproducts. Their structures vary considerably toreflect clients’ corporate culture and specific needs,but they also are influenced by importantconsiderations such as compliance, cost & service.It is difficult to design a typical global insuranceprogram because structure varies greatlydepending on the client. But there are some keycharacteristics, such as the ability to control acompany’s risks & insurance program centrally.Perhaps the most important driver behind a globalprogram. GIP came in all shapes & sizes, buttypically there is a central insurance policy,knowns as in master policy, potential several localpolicies writer in overseas territories. The masterpolicy can cover international risks on anonasmitted basis or include differences incondition & difference-in-limits classes to plug anygaps in the coverage provided by local policies.

STUCTURE OF UNIVERSAL INSURANCEPROGRAM:When structuring a UIP, it is considered that whereclients risks are located and charts “green” areas,

where it can locally issue local paper or write non-admitted coverage and ‘red’ areas where it doesnot have the ability to issue policies locally anwhere non-admitted cover is not permitted by localinsurance. The insurer then structures globalprogram to offer coverage that complies with locallaws. The program can use difference-in conditionand difference-in-limits policies or financialinterest coverage, which is issued in the hometerritory and will pay the parent company for lossesat a local subsidiary. The global shifts taking placein the insurance market over the last fifty yearsshare of premium shifted away from Europe andAnglo Sexon market to Asian markets. The shareof Europe and Anglo-Sexon market in globalpremium volume fell from 93 per cent in 1962 to56 per cent in 2012. Over the next ten years, thisshift is likely to become the second largestinsurance market after the USA.

APPROACHES TO UNIVERSALINSURANCE PROGRAM:Locally Admitted Approach:In this approach foreign subsidiaries of amultinational compact act autonomously in buyinginsurance. There is no corporate risk managementphilosophy guiding insurance buying. The mainadvantages of this approach are it is legalacceptable, premium are tax deductible andpolicies are in local language. The disadvantagesare loss on purchasing power, lack of uniformityin coverage, possible coverage gap, insufficientinsurance, duplication and difficult to monitor localinsurer’s solvency.

Non-Admitted Approach:This approach consists of a single policy thatcovers all foreign subsidiaries of a multinationalcorporation. The main benefits of this program arethe bulk buying power, broad flexible coverage,single currency and uniform protection worldwide.Limitations of the program are illegal in manycountries, restricted tax deductibility, premium taxissues, investigation, defense of claims maredifferent and loss settlement could be taxable.


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Difference-In Conditions (DIC) Approach:This program takes the minimal admitted coverbought by foreign operations, supported by non-admitted (DIC) policy in the home territory. Thebenefit of this program is DIC covers local-policydifferences, local premiums deductable on taxes,local management can choose their insurer’s. Theproblems with this program are it does not fullyutilize bulk buying power, lack of uniformity incoverage, duplication of coverage and possible taxproblems for claims paid under DIC policy.

Controlled Masters Approach:In this program a single insurer provides masterpolicy in parent company’s home territory that actsas an excess/DIC policy over locally issued policy.Where legal, local policy mirrors the master policy.Where legal, local policy mirrors the master policy.If illegal, local policy issued to follow local laws,regulations. Master policy acts in excess/DICcapacity. Local coverage now meets corporate riskmanagement stands. The pros of this approach arebulk buying power, local/central policy control,enhances local management in controlling losses,premium allocation for calculating tax can be donecontrolling and is more complain, eliminatecoverage gaps and legal in local territories.

Global Approach:This approach combines overseas home territorycover with one insurer. The advantages of thisapproach are premium reflect, size, experience,more efficient loss control, foundation of otherrisk-financing options. The disadvantages arelimited number of underwriters and unsuitable forlarge U.S. casualty risks.

Benefits of Universal Insurance Program:The following are the some important benefits ofUniversal Insurance Program:

1. The UIP are particularly suitable for smallerinsurance-buying departments because theygive comfort and a safety net for a lone riskmanager.

2. A Global Property Program will give all-riskcover internally all insurers wherever he/shemay be.

3. UIP give risk managers comfort that there iscomparable level of insurance provisionglobally.

4. UIP risk tolerance of the group is likely to behigher than that of the subsidy and through riskfinance the group can take a large deduction.

5. UIP will give continuity of cover through theprimary and excess layers.

6. The tax implication while buying insurance iseasily manageable centrally with UIP.

7. With a Global Approach it is easier to keeptrack as to what converge is require andwhether non-admitted coverage is permissible.

8. The evaluation of insurers’ credit worthinesscan be done centrally whereas localsubsidiaries lack the resources.

9. GIP also can help risk-manager withcompliance issues and serve as a support toolto answer reporting and legal requirements.

Challenges of UIP:As companies continue to expand internally, globalinsurance program have proven to be an attractiveand economical way to arrange coverage. But thechallenge of building a program that is complaintwith local tax and insurance requirements threatensto undo some of the benefits. Every country hasits own regulatory requirements, such as whatcoverages are compulsory and where and fromwhom insurance can be purchased. And eachcountry has its own tax requirements, whether theyare insurance premium taxes or levies for nationalinsurance pools. Building a global insuranceprogram can be particularly difficult for companieswith operations in countries such as Brazil, Russia,India and China:; where compliance challengesare most acute.

CONCLUSIONOver the past ten years, universal insurancepremiums have risen by more than 50%, withannual growth rates ranging between 2 and 10%.In 2004, global insurance premiums amounted to$3.3 trillion. The global insurance market growsby 7.6% in 2007 to reach a value of $3,688.9

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billion. In 2012, the global insurance market isforecast to have a value of $4,608.5 billion, anincrease of 24.9% since 2007. The globalconsolidation of the financial services sector is inlarge part driven by acquisition activity.Companies competing for a greater share ofconsumer funds are seeking quick access to newmarkets, new products and new channels ofdistribution, both globally and economically. Eventhough the insurance industry is facing moreproblems in International markets so, there is needto frame a common program for Global Insurance.The potential performance of the insurance sectoris universally assessed with reference to twoparameters viz, Insurance penetration andinsurance density. Global Insurance programs firstwere developed in the United States & the unitedkingdom, followed closely by continental Europe& now Asian & Later American companies arestarting to buy their insurance centrally through aglobal program. The large players in the globalprogram market emerged from their strongdomestic bases & followed their clients overseasby opening their own offices or through acquisitionof foreign insures. As companies continue toexpand internally, global insurance program haveproven to be an attractive and economical way toarrange coverage. But the challenge of building a

program that is complaint with local tax andinsurance requirements threatens to undo some ofthe benefits. Every country has its own regulatoryrequirements, such as what coverage’s arecompulsory and where and from whom insurancecan be purchased.

REFERENCES:

1. Annual Reports of IRDA.

2. A. Akhundov, “International InsuranceCompany’s assets grew almost by 12 percent”,Trend Daily Economic News, April 1, 2013(Retrieved via Nexis, 2013).

3. IIC Becomes Insurance Partner of ASANXidmet Centre”, Economic News(Information Agency Oreanda), April 30, 2013(Retrieved via Nexis on August 21, 2013)

4. The Insurance Industry to issues. An AnnualReport.

5. International Insurance Business Wikipediawebsite

6. International Insurance Business ChallengesWikipedia website.

7. Business Insurance guide to global programe,(Zurich, 2013)


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MARKETING STRATEGIES OF SELECT PRIVATE LIFEINSURANCE COMPANIES IN INDIA

D. GnyaneswerResearch Scholar,Dept. of Commerce, OU, Hyderabad

ABSTRACT

Indian insurance industry has witnessed tremendous growth in the presence of a fairly large number ofinsurers both in life and non-life segment. While the world is eyeing India for growth and expansion,Indian companies are becoming increasingly world class. There is scope for many more players in thislarge underinsured market. India with a population of over one billion, insurance companies compete tocapture market share through better pricing and cliental services based on benefits aimed at specificmarket segmentation. The study recommends strategies to management to meet create new customersbase and to build the long term relationship with the existing customers. It also considers means bywhich management improve the quality of service delivery which in turn contributes for greater efficiencyin meeting customers’ expectations. The purpose of the study is to assess the service marketing mixelements among the customers with respect to their awareness, satisfaction and loyalty. The study alsoto evaluate the sales executives empowerment, service quality delivery, customer relationship managementand e-CRM initiatives of the select private life insurance companies.

INTRODUCTIONHumans today continue their quest to achievesecurity and reduce uncertainty and rely on othersfor financial stability, others may be the employer,the government or an insurance company, but theconcept is the same. This research study exposedtoo many serious perils such as personal losses,property losses from incapacity and death.Although individuals cannot predict or completelyprevent such occurrences, they can provide fortheir financial losses. The function of insurance isto safeguard against such misfortunes by havingcontributions of the many pay for the losses of theunfortunate few. This is the essence of Insurance.

Life insurance, today is vastly more challengingthan that which existed just a decade ago. Not onlyhas competition from other financialintermediaries such as banks, securities firms andmutual funds has forced insurers to recognized thatthey must respond with far greater efficiency and

effectiveness in all operational areas. The lifeinsurance business will continue to evolve. Indeed,change in insurance is occurring at an unpredictedpace. Many of yesterday s insurance practicesdiffer from those of today, and many of tomorrows practices will differ significantly from those oftoday. The fundamentals of risk and insurancehowever do not change, although oneunderstanding of them deepens with time.

The overall purpose of coming up with ServiceMarketing strategies is to improve marketingproductivity and enhance mutual value for bothcustomer and the insurers. Marketing strategiesfacilitate the achievement of operational goals suchas lower cost of acquiring customer, reduction inthe distribution costs, streamlining insurancepolicy processing and retention of customer thateconomize the acquisition cost of new customerswhich contributes for the enhancement ofmarketing efficiency.

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Service Marketing Mix

STATEMENT OF THE PROBLEMThe insurance sector has undergone tremendouschanges, since economic reforms in India.Insurance which was the state monopoly for a quitea long time became an open and regulated marketwith private participants both from India andabroad. Despite of growing numbers of private lifeinsurance companies since 2001, LIC of Indiacontinues to be the giant market shareholder inthe industry. The private insurance companies inthe early years of their entry recorded a rapidgrowth in terms of penetration, density, premiumcollection and the opening up of offices all overthe country.

In the initial years of competitive insurance marketthe ULIPs have shown an unprecedented growthhowever, after 2008, the global economicmeltdown depicted a downward trend, givingscope for replacing a conventional insuranceproduct.

Insurance market in India is of a unique naturewhich is partly oligopolistic as there are only 24players including the public sector LIC which is avery small number when compared to a widemarket of about 127 crores of people. On the otherhand it is a regulated market governed by IRDA sprescriptions. Insurance companies are expectedto operate within the policy guidelines and don thave much to do on their own with the task ofmarketing their products. Though, the privateinsurance companies have initiated severalstrategies to expand their market base, the outcomeis not encouraging enough. There are instances thatduring several financial years, the premium,penetration rate, density and market share ofprivate life insurance companies were on thedecline. Therefore, there is an unidentified bias inthe market, which is still in favor of theconventional products and the public sectorinsurance provider. It has become inevitable toidentify the market drivers and the competitive

D. Gnyaneswer

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strategies that could help the survival of the privatelife insurance companies.

The studies conducted so far provides relativelylittle support for the effectiveness of marketingstrategies of private life insurance companies.Adequate research has not been done to understandand analyze the service marketing mix strategiesof private life insurers. The present study attemptsto bridge this gap of information by studyingmarketing strategies of private life insurancecompanies in India. The industry needs updatedinformation on the customer s expectations andpossible means to fulfill them.

The present study is an attempt to analyze themarketing strategies of the major private lifeinsurance companies to identify the contributingvariables towards their marketing performance.

NEED FOR THE STUDYAt present, there are 23 private life insuranceplayers operating in India along with public giantLIC. There is a tremendous growth of these privatecompanies over 15 years since the entry. Therewas high growth of private life insurance till 2010-11 and after that it has seen the downturn and LIChas started regaining its market share andcustomers started losing trust in the private lifeinsurers. Taking the above background intoconsideration, the main focus of the research is toanalyze such setback and probable solutions toincrease market share of private life insurers, togain the required competitive advantage and tounderstand the present and future expectations ofthe customer to regain the trust and evolve servicestrategies to meet their expectations.

OBJECTIVES OF THE STUDYThe following are the objectives of the presentstudy:

1. To analyze the life insurance environment inIndia after Privatization.

2. To analyze the marketing strategies of selectprivate life insurance companies in India.

3. To evaluate the customer awareness aboutprivate life insurance companies in India.

4. To examine the effectiveness of e-CRM in ofselect private life insurance companies inIndia.

HYPOTHESESThe following are the hypotheses for the presentresearch study:

H0 : There is no significant difference in theservice marketing mix strategies of select privatelife insurance companies.

H1 : There is a significant difference in the servicemarketing mix strategies of select private lifeinsurance companies.

SCOPE OF THE STUDYThe present research encompasses the study ofmarketing strategies of five private life insurancecompanies operating in Mysore and Bangalore.

The data has been collected from the customers,sales and marketing managers/executives,advisors/insurance agents of private life insurancecompanies such as ICICI Prudential Life InsuranceCompany, Reliance life insurance, Birla Sun LifeInsurance Company Limited, Bajaj Allianz LifeInsurance and HDFC Standard Life InsuranceCompany Limited.

METHODOLOGY OF THE STUDYResearch Design: Descriptive method is used forthe purpose of conducting research. Data isgathered from customers, marketing executives/managers, insurance agents/advisors of selectedprivate insurance companies on the basis ofconvenience sampling method for the purpose ofthe study.

Source of the data: The proposed researchrequires both primary and secondary data.

Primary data: Primary data on the marketingstrategies, customer satisfaction and loyalty of Lifeinsurance companies is collected through thestructured questionnaire. The primary data iscollected from the customers, managers, customercare executives, and relationship managers/executives, insurance agents/advisors of selectprivate life insurance companies.

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Secondary data: The secondary data is extractedfrom among different published sources such asIRDA manuals and reports, magazines, voice anddata magazine, research articles, research articles,books and selected websites.

Sampling Design: Around 300 sample customerrespondents are selected from the population forthe purpose of the study. The composition of therespondents includes insurance buyers fromselected private insurance companies ICICIprudential, RELIANCE life insurance, HDFC lifeinsurance, BAJAJ Allianz life insurance, BIRLALife insurance drawn from Mysore and Bangalore.Around 200 employees of five selected private lifeinsurance companies are selected for the study. Outof this, 40 employees are from each private lifeinsurance companies viz. ICICI, RELIANCE,HDFC, BAJAJ, BIRLA from Bangalore andMysore are selected for the study. Around 100advisors of five selected private life insurancecompanies are selected for the study.

To analyze the data collected from respondentsand to prove or disprove hypotheses, various

statistical tools and techniques have been appliedin this study. For the purpose of processing andanalyzing the collected data, statistical tools suchas tables, charts are used in this study. Mean,standard deviation and correlation are used fordescriptive statistics. Cronbach s alpha was usedfor determining the predictive validity andreliability of the questionnaire used in the study.The hypotheses are tested using ANOVA test,Cramers Value, P value and Pearson correlationanalysis. The data collected from respondents isanalyzed with the help of SPSS.

RELIABILITY ANALYSIS OF THEQUESTIONNAIRE:Reliability analysis is normally considered as thedegree of consistency of a scale used in the study.In order to measure the reliability of thequestionnaire, the index of Cronbach s Alpha wascalculated. Cronbach s Alpha determines thereliability based on internal consistency. Typically,items having a co-efficient of 0.60 are consideredadequate for the study. The result of reliabilityanalysis of the variables used in this study ispresented below:

Table 1 Result of Reliability Analysis

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There are several yardsticks to measure this roleand relationship of life insurance and macroeconomy in the context of market development.They can be listed as below:

1. Growth in GDP and its impact on insurancepenetration and insurance density.

2. Increase in household financial savings and itsimpact on life insurance.

3. Inflation, interest rate and life insurancegrowth.

4. Population growth and life insurance.

The summary of all the parameters with Pearsoncorrelation values are shown below.

Growth in GDP and its impact on LifeInsurance Penetration and Life InsuranceDensityLife Insurance penetration is calculated as Lifeinsurance premium as a percentage of GDP of acountry and life insurance density is the premiumper capita. GDP has significant influence on thelevel of life insurance premium. Density is theother important indicator of life Insurance andmacroeconomic relationship. It is calculated as lifeInsurance premium as a percentage of population.

Table 2 Correlation between GDP and Life Insurance Penetration in India

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GDP is expected to have a positive relationshipwith life insurance penetration. To test thisrelationship Pearson Correlation Matrix analysiswas performed with GDP and life insurancepenetration and insurance density for the period2000–2015. The analysis indicated a positivecorrelation with the selected variables, i.e., lifeinsurance penetration (0.34) and life insurancedensity (0.78) with GDP.

The high growth of GDP induces economic effectthrough higher per capita and disposable incomeand savings, which in turn creates favorablemarket and demand for life insurance. On the otherhand life insurance also provides support to thecapital market and generation of savings pertainingto Indian life insurance and macro economicvariables broadly indicate a close relationship and

interdependence between GDP and life insurancepenetration and density. However, it has also beenobserved that in India while the economy ingeneral have registered significant growth, lifeinsurance is not left far behind with a very strongpositive correlation between GDP and lifeinsurance penetration and between GDP and lifeinsurance density.

The insurance density of life insurance businesshad gone up from USD 9.1 in 2001 to reach thepeak at USD55.7 in 2010. During 2014-15, thelevel of life insurance density was USD 44.Similarly the life insurance penetration surgedfrom 2.15 percent in 2001 to 4.60 percent in 2009.Since then, it has exhibited a declining trendreaching 2.6 percent in 2014.

Table 3 Correlation between Gross Domestic Savings and Life Insurance Premium in India

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An attempt has been made to examine therelationship between gross domestic savings andlife insurance premium with the help of data, andit is found that there exists a strong correlationbetween these factors as reflected in the results ofPearson Correlation Matrix analysis with acorrelation coefficient of 0.886 till the year 2000-2015. It is noted that in the year 2011 to 2013though there is an increase in the gross domesticsavings the premium has come down drasticallyfor these 2 years. It picked up again in 2013-14and 2014-15 showing increase in gross domesticsavings also increased the investment in life

insurance. So it can be concluded that there is astrong correlation exists between the grossdomestic savings and the development of the lifeinsurance industry. Reforms and liberalizationhave exerted significant impact on income, savingsand insurance purchase as found above.

Inflation, Interest Rate and Life InsuranceGrowthThe following table no 3.5 shows inflation andtotal life insurance premium underwritten andinterest rates and total life insurance premiumunderwritten from the year 2001-2015.

Table 4 Correlation between Inflation and Total Life Insurance Premium in India

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In general, the year of low inflation rate witnessedhigher growth in life insurance but for someexceptions. Rate of interest and life insurancegrowth is said to be negatively related to lifeinsurance selling, since higher interest rates inalternative savings and instruments maydiscourage purchasing life insurance and lowerinterest rates in alternative savings may encouragepurchasing life insurance.

The impact of inflation and interest rates on lifeinsurance has been studied with the help ofPearson Correlation Matrix analysis and theanalysis indicated a positive correlation betweeninflation and life insurance premium with acorrelation coefficient of 0.730 whereas interestrate has a negative correlation with life insurancepremium as expected with a correlation coefficientof -0.614.

From the table, it is noted that, when the inflationincreased to 10.92 in the year 2012-13, there wasa fall in the life insurance premium to 2,87202.49.It picked up again from 2013-14 when inflationrate came down to 6.37. In the year 2014-15 it isfound that the inflation rate is 5.84 and theinsurance premium is increased to 328101.14.Thus it can be inferred from the above analysisthat when an inflation rate fluctuates it is alsoreflected in the insurance premium. The lower theinterest rate, there is an increase in the totalpremium collected for the year 2014-15.

CONCLUSIONIndian life insurance industry, after opening up forthe private participation since 2001, has madetremendous impact in terms of increasedpenetration and density with as many as 24 lifeinsurance companies along with the public sectorgiant, LIC of India. But the fact that only 26% ofIndian population is insured itself is an indicationthat this industry has huge untapped market onoffer for all the players and also will attract manymore private players in the time to come. In sucha highly competitive environment, the insurancecompanies are focusing on product innovationsand distribution, underwriting and claimsmanagement, use of technology to integratebusiness process, improve service quality delivery,

enhance company’s image, build customer loyaltyand thereby capture high market share. In the background of the above scenario, each insurancecompany have to focus on their marketingstrategies in terms of 7 p s of service marketingmix, namely people, process, physical evidencealong with other conventional 4 p s namelyproduct, price, place and promotion. The regulatorIRDA has given prudent guidelines with respectto products and pricing of insurance products andhas led to similar product offers with more or lesssimilar pricing of the policies by all private lifeinsurers. At last all the players have realized thatit is not IRDA alone that can control the market,the customers interest is continue to be relevant inforce need to analyzed and redefined. In recentyears marketing practitioners have focused uponthe importance of customer centric approach.

REFERENCES

1. Abdel, M. A., Zairi, M., and Abdel, M. A.(2002). Customer satisfaction: The drivingforce for winning business excellence award.

2. Akroush, M. N. (2006). The ServicesMarketing Mix Paradigm: Is it StillAppropriate for Today’s Service Businesses?

3. Al-Khateeb, F. S. (2010). Factors influencingmalls selection from Jordanian customer pointof view. Jordan Journal of BusinessAdministration, 5(1).

4. Baran, R. J., Galka, R. J., and Strunk, D. P.(2008). Principles of customer relationshipmanagement. Cengage Learning.

5. Bhattacharya Anobil. (2005): Improvement ofService Quality in Insurance Industry.

6. Coviello, A. (2008). The impact of ICT in theinsurance industry: The role of CustomerRelationship Management.

7. Fragata, A., and Muñoz Gallego, P. A. (2009).Loyalty by corporate banking customers.

8. Gulati, K., Kumar, A., and Ravi, V. (2012). E-CRM AND CUSTOMER SATISFACTIONIN INDIAN INSURANCE INDUSTRY.Asian Journal of Business and Economics,2(2.3).

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A STUDY ON AWARENESS OF HOUSEHOLDS REGARDINGRURAL POSTAL LIFE INSURANCE

Mr.B.Santosh Kumar Dr.Byram AnandMBA student, Assistant professor,Department of Management (IM), Department of Management (IM),Pondicherry University, Pondicherry University,Karaikal Campus, Karaikal-609605, Karaikal Campus, Karaikal-609605,Pondicherry Pondicherry

ABSTRACT

The postal service is under the Department of Posts, which is part of the Ministry of Communicationsand Information Technology of the Government of India. The country has been divided into 22 postalcircles, each circle headed by a Chief Postmaster General For more than 150 years, the Department ofPosts (DoP) has been the backbone of the country’s communication and has played a crucial role in thecountry’s social economic development.delivering mails, accepting deposits under Small Savings Schemes,providing life insurance cover under Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI)and providing retail services like bill collection, sale of forms, etc. Over the years, PLI has grownsubstantially from a few hundred policies in 1884 to more than 6.4 million policiesRural Postal LifeInsurance (RPLI) came into being as a sequel with the recommendations of the malhotra Committee forReforms in the Insurance Sector (Malhotra Committee).The salient features of the Whole Life, Endowment,Convertible Whole Life and Anticipated Endowment Schemes of RPLI the main purpose of the RPLI is toprovide the insurance benefit to the rural public. But because of lack of awareness on insurance benefitstill now it is not penetrated to the rural people.

Key Words: Department of Post, postal life insurance (PLI), Rural postal life insurance (RPLI), premium

Introduction :The Department of Posts (DoP), trading as IndiaPost, is a government-operated postal system inIndia. Generally referred to within India as “thepost office”, it is the most widely distributed postalsystem in the world. The postal service is underthe Department of Posts, which is part ofthe Ministry of Communications and InformationTechnology of the Government of India.

As of 31 March 2017, the Indian Postal Servicehad 155,048 post offices, of which 139,222(89.86%) were in rural areas and 15,826 (10.14%)in urban areas. It had 25,560 departmental PostOffices and 129,379 Gramin Dak Sevak, BranchPost Offices. On an average, a post office servesan area of 21.22 square kilometers (8.19 sq mi)

and a population of 8,054.Because of its reach andpresence in remote areas, the Indian postal serviceis also involved in other services such as small-savings banking and financial services.

The country has been divided into 22 postal circles,each circle headed by a Chief Postmaster General.Each circle is divided into regions, headed by aPostmaster General and comprising field unitsknown as Divisions. These divisions are furtherdivided into subdivisions. In addition to the 22circles, there is a base circle to provide postalservices to the Armed Forces of India headed bya Director General. The highest post office in theworld is in Hikkim, Himachal Pradesh operated byIndia Post at a height of 15,500 ft (4,700 m).

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For more than 150 years, the Department of Posts(DoP) has been the backbone of the country’scommunication and has played a crucial role inthe country’s social economic development. Ittouches the lives of Indian citizens in many ways:delivering mails, accepting deposits under SmallSavings Schemes, providing life insurance coverunder Postal Life Insurance (PLI) and Rural PostalLife Insurance (RPLI) and providing retail serviceslike bill collection, sale of forms, etc. The DoPalso acts as an agent for Government of India indischarging other services for citizens such asMahatma Gandhi National Rural EmploymentGuarantee Scheme (MGNREGS) wagedisbursement and old age pension payments. With1, 55,048 Post Offices, the DoP has the mostwidely distributed postal network in the world.

Introduction on PLI:Postal Life Insurance (PLI) was introduced on1st February 1884 by Her Majesty, the QueenEmpress of India. It was essentially a scheme ofState Insurance mooted by the then DirectorGeneral of Post Offices, Mr. F.R. Hogg in 1881as a welfare scheme for the benefit of Postalemployees and later extended to the employees ofTelegraph department in 1888. In 1894, PLIextended insurance cover to female employees ofP & T Department at a time when no otherinsurance company covered female lives. It is theoldest Life insurer in this country.

In the beginning, the upper limit of life insurancewas only Rs 4000/- which has now increased toRs 50 lakhs (Rupees Fifty Lakhs) - EndowmentAssurance and Whole Life Assurance. Over theyears, PLI has grown substantially from a fewhundred policies in 1884 to more than 6.4 millionpolicies as on 31.03.2015. It now coversemployees of Central and State Governments,Central and State Public Sector Undertakings,Universities, Government aided Educationalinstitutions, Nationalized Banks, Local bodies,autonomous bodies, joint ventures having aminimum of 10% Govt./PSU stake, credit co-operative societies etc. PLI also extends the facilityof insurance to the officers and staff of theDefense services and Para-Military forces. Apart

from single insurance policies, Postal LifeInsurance also manages a Group Insurance schemefor the Extra Departmental Employees (GraminDak Sevaks) of the Department of Posts.

PLI is an exempted insurer under Section 118 (c)of the Insurance Act of 1938. It is also exemptedunder Section 44 (d) of LIC Act, 1956

Rural Postal Life InsuranceRural Postal Life Insurance (RPLI) came intobeing as a sequel with the recommendations ofthe malhotra Committee for Reforms in theInsurance Sector (Malhotra Committee). TheCommittee had observed in 1993 that only 22%of the insurable population in this country had beeninsured; life insurance funds accounted for only10% of the gross household savings. TheCommittee had observed

The Committee understands that Rural BranchPostmasters who enjoy a position of trust in thecommunity have the capacity to canvass lifeinsurance business within their respective areas.”

The Government accepted the recommendationsof Malhotra Committee and allowed Postal LifeInsurance to extend its coverage to the rural areasto transact life insurance business with effect from24.3.1995, mainly because of the vast network ofPost Offices in the rural areas and low cost ofoperations. The prime objective of the scheme isto provide insurance cover to the rural public ingeneral and to benefit weaker sections and womenworkers of rural areas in particular and also tospread insurance awareness among the ruralpopulation. As on 31.03.2015, there are more than23.51 million RPLI policies

Benefits:· PLI is the only insurer in the Indian Life

Insurance market today which gives thehighest return (bonus) with the lowestpremium charged for any product in the market

PLI/RPLI policy holders also get followingfacilities:

· Change of nomination

Mr.B.Santosh Kumar, Dr.Byram Anand

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· The insured can take loan by pledging his/herpolicy to Heads of the Circle on behalf ofPresident of India, provided the policy hascompleted 3 years in case of EndowmentAssurance and 4 years in case of Whole LifeAssurance. The facility of assignment is alsoavailable

· Assignment of Policy to any FinancialInstitution for taking loan

· Revival of his/her lapsed policy. Policy lapsesafter 6 unpaid premium if it remained in forcefor less than 3 years and after 12 unpaidpremium if it remained in force for more than3 years

· Issue of Duplicate Policy Bond in case theoriginal Policy Bond is lost, burnt or torn/mutilated

· Conversion from Whole Life Assurance toEndowment Assurance and from EndowmentAssurance to other Endowment Assurance asper rules

RPLI Products:RPLI offers following types of plans:

1. Whole Life Assurance ( GRAMASURAKSHA)

2. Convertible Whole Life Assurance(GRAMA SUVIDHA)

3. Endowment Assurance ( GRAMASANTOSH)

4. Anticipated Endowment Assurance (GRAMA SUMANGAL)

5. 10 Year RPLI (GRAM PRIYA)

6. Children Policy (BAL JEEVAN BIMA)

The salient features of the Whole Life,Endowment, Convertible Whole Life andAnticipated Endowment Schemes of RPLI aresame as the corresponding schemes of PLI exceptthat the minimum Sum Assured is Rs.10000 andthe maximum Sum Assured is Rs.10 lac. Themaximum age limit of entry is 55 years in case ofWhole Life and Endowment Assurance but 45years in case of other plans.

All the schemes have compulsory medicalexamination. For the non-medical policies, themaximum limit of Sum Assured is Rs.25000/-, andmaximum age is 35 years. In case of Non-standardage proof for Rural PLI policies, the maximumage limit is 45 years.

Objectives of the Study:1. To know whether general public are having the

postal life insurance

2. To study the awareness level of postal lifeinsurance and their products

3. To enhance the knowledge of post lifeinsurance and its importance

4. To identify the customer preference in optingthe postal life insurance product

Background of the study:The main purpose of the RPLI is to provide theinsurance benefit to the rural public. But becauseof lack of awareness on insurance benefits till nowit is not penetrated to the rural people.

Research Methodology :

· Research Design : Descriptive Research

· Sampling Technique : convenient randomsampling technique

· Sample size : 100

· Sample respondents : households ofSamisragudem ,westGodavari

District, ,Andhrapradesh

· Research instrument : Interview schedule

· Tools used : percentage analysis andchi-square.

Sampling unit:Households of samisragudem, west GodavariDistrict, Andhrapradesh

Data Collection :Primary data have been directly collected fromhouseholds through interview schedule

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Limitation of the study.

· The study was conducted on only onevillage samisragudem.so the result mayvary for another geological regions.

· The sample size of the study is only 100so the result may vary for entire village.

· Time constrained is the one of thelimitation of study.

Table : 1

Table : 2 EDUCATION QUALIFICATION OF FAMILY HEAD.

Table : 3


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Table :6 HOW MANY ARE INSURED IN THE FAMILY BANKS

Banks

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Table :8 HOW YOU GOT INSURED

Table :9 ARE YOU AWARE ABOUT RPLI IF YES HOW DID YOU COME TO KNOWLEVEL OF AWARENES


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Table :15 DO YOU FEEL PAYING INSURANCE PREMIUMBY GOING TO POST OFFICE EVERY TIME IS DIFFICULT?


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From the above table-17 it is inferred that majority of the respondents preferring monthly premiums are60% and least respondents preferring half yearly are 10%and no one preferring annual premiums.

From the above table -18 it is inferred that majorityof the respondents asking single policy for theentire family are 78%.

The result of hypothesis regarding awarenessand demographical factorsH0: There is no significant difference betweenoccupation of the head of the family and awarenessof RPLI (0.336 is rejected)

H0: There is no significant difference betweeneducation qualification and awareness of RPLI.(0.094 is rejected)

H0: There is no significant difference between ageand awareness of RPLI (0.150 is rejected)

H0: There is no significant difference betweenannual income and awareness of RPLI (0.780 isrejected).

The result of hypothesis regarding havinginsurance other than rpli and demographicalfactors

H0: There is no significant difference betweenoccupation of the head of the family and havinginsurance other than rpli(0.045 accepted)

H0: There is no significant difference betweenannual income and having insurance other thanrpli (0.000 accepted).

H0: There is no significant difference betweeneducation qualification and having insurance otherthan rpli. (0.00 accepted)

H0: There is no significant difference between ageand having insurance otherthan rpli. (0.434 isrejected)

SWOT ANALYSIS OF INDIA POSTAn analysis of strength, weaknesses, opportunityand threat (SWOT) of India Post is presentedbelow to shade light on significant strengths andopportunities which are available to POs to caterthe insurance need of the rural Indian.

Strength’s

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Findings of the study:After analyzing the data the following findingswere found

1. Maximum age group of householdrespondent’s age falls between 31-40 years

2. Maximum Educational qualification of therespondents are illiterate and below SSC are65%

3. Majority of annual income of respondent isbelow 60,000 (i.e.) 45% and 40% ofhouseholds does not have any type of Insurance

4. 98.3% people are insured through agent

5. Majority of respondent are not aware of RPLI(i.e) 76%

6. Level of Awareness is moderate and low

7. 90% of respondents responding positively topay premium by going to post office

8. Majority of respondent preferring endowmentpolicy (i.e.) 44% and also 60% preferring topay the premium in monthly basis

9. 78% of respondent prefer to that single policyis better to cover entire family

SUGGESTIONS:There are no special agents to increase awarenessabout Rural Postal Life Insurance as L.I.C. So toincrease awareness, postal department shouldadopt Multilevel Marketing through customers.

The postal department is not promoting theproducts and benefits through marketing channelssuch as Television, Newspapers, and Social Media.

In Rural areas, the literacy level of people is verylow, so to increase awareness regarding insurance,the postal department can conduct campaigns andsocial awareness programs.

CONCLUSIONIndian Postal departmentneeds technological, upgradation and adopt an agent marketing system itcan create a new era in the market.

Bibliography.RURAL LIFE INSURANCE IN POST REFORMERA IN INDIA: GROWTH ANDOPPORTUNITIESDr. Debabrata Mitra & AmlanGhosh

www.Indian postal life insurance.gov.in accessedin July, 2017


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ETHIOPIAN INSURANCE CORPORATION– A CASE ANALYSIS

Dr. Ravi KanthMakarla Mr. AshenafiDegefaAssistant Professor, MBA-Finance Student,Department of Acct. and Finance, Department of Acct. and Finance,College of Business and Economics, College of Business and Economics,Ambo University, Ambo University,[email protected] [email protected]

ABSTRACT

Ethiopian Insurance Corporation(EIC) is the only state owned and the leading insurance company inEthiopian Insurance Industry. Hence, the study was initiated to find the growth rate of EIC’s insuranceservices and its market share.The case study is based only on secondary data resources that are collectedfrom Ethiopian Insurance Corporation for the period of 21 years from 1995 to 2015 and the case analysiswas conducted by using descriptive statistics, CAGR, One way ANOVA and F-test.It is found that Profitbefore tax rose from 56 million to 672 million and Profit after tax risen from 40 million in 1995 to 471million in 2015 with a CAGR of 13.14. Return on assets ranges from 5% to 15% (2015) during the studyperiod. Major segments of EIC insurance business were aviation, fire and marine contributing morethan 85% of the sum insured business.The EIC’s premium revenue has come from by itssub-segments ofFire, Motor, Marine, WC, Aviation, Other and Life representing 6.59%, 39.47%, 16.03%, 2.68%, 9.98%,19.42% and 5.83% respectively during the financial year 2015 and the motor insurance topped in termsof premium revenue. EIC continues to be a market leader with a substantial share of 38 percent ofcountry’s insurance market in 2015. But, EIC share continuous decline from 88 percent in 1995 to 38percent in 2015. This implies that the private players are penetrating more into the insurance marketthan the public sector company EIC. To gain market share EIC must put innovative steps to createawareness of financial literacy and benefits of various insurance products EIC in general and life insuranceto the community by encouraging saving habit. Internal control system must design appropriately andalso the selection and development of human resources of EIC because they are the pillars in pushingthe business to next level.

Key words:EIC, Insurance, Non-Life insurance, Life insurance, premium, Profit before tax, Return onassets.

IntroductionEthiopia being one of the world’s oldestcivilizations, second-most populous country inSub-Saharan Africa with a population of 99.4million, and population growth rate of 2.5% in2015.

The Ethiopian economy has experienced strongand broad-based growth over the past decade,averaging 10.8% per year in 2003/04 - 2014/15compared to the regional average of 5.4% with aper capita income of $590.

The government of Ethiopia is currentlyimplementing the second phase of its Growth andTransformation Plan (GTP II), which will run from2015/16 to 2019/20, with a goal to turn the countryinto a lower-middle-income country by 2025.

Overview of Ethiopian Insurance IndustryIn Ethiopia insurance like social devices such as“Idirs”, “Equib” and “Debbo” were in existencesince early times. However, insurance in its presentform was introduced in 1905 by the Bank ofAbyssinia or Bank of Egypt during the reign ofEmperor Menilik II.

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Prior to October 1975,there were fourteeninsurance companies operating in Ethiopia.Currently in a competitive environment,there areseventeen private insurance companies and onepublic insurance corporation is actively operatingin the country.

Ethiopian Insurance Corporation (EIC)EIC was established in 1976 by proclamationNo.68/1975. The Corporation came into existenceby taking over all the assets and liabilities of thethirteen nationalized private insurance companies,with Birr 11 million (USD 1.29 million) paid upcapital.

EIC was operating the business for about nineteenyears under protected monopolistic system as stateowned-sole insurer. After the demise of the Marxistregime in mid-1991 a fundamental change hastaken place and there was a shift in political,economic and social orientation fromtotalitarianism to that of liberalism. Therefore, EICwas re-established as public enterprise underproclamation number 201/94 with Birr 61 million(USD 7.13 million) paid up capital. EIC is beenadministered under the Financial PublicEnterprises Agency (FPEA) since January 2004and it also complies with the regulations anddirectives of the National Bank of Ethiopia.(Source: http://www.eic.gov.et).

Review of LiteratureSanjay Kumar R. S., (2011), doctoral study meantto compare cost efficiency and financialperformance of Life Insurance Corporation ofIndia and private sector life insurance companiesin India. The financial performance of LifeInsurance Corporation of India is better thanprivate life insurance companies in India. Theprivate life insurance sector has nearly grabbed30% of the market share in terms of total premiumincome. LIC’s new business premium has fallenfrom 99.23% in 2000-01 to 65.08% in 2009-10and it has consistently secured a cost efficiencyscore of 1 in all the years from 2000-01 to 2009-10 stood highest rank.1

Dr. Shaik A. M. P. and Dr. Srinivasa R. K., (2017),research paper revealed the availability and

features of insurance products emerging marketsin general and motor insurance services in specificby comparing Africa, South and East Asia, LatinAmerica and Caribbean, and Central and EasternEurope Insurance Economies. In Ethiopia, theysignified that the share of long term (life insurance)has taken only the marginal share of 5% of theindustry’s capital in the last 10 years. Thedominance of the general insurance business is anindication that an insurance product of thecompanies is not diversified. Hence, still the ruraleconomy has low insurance coverage, most of thebranches are found in the urban centers. By June30, 2015, 50% of the total branches were locatedin Addis Ababa.2

Shuhrat A. &Sharof A., (2006), research revealedthat insurance premiums mostly come fromobligatory insurance and the main reasons for theunderdeveloped insurance market are low level ofinsurance culture, low level of citizens income,lack of understanding by the population and legalentities the need in insurance services.3

Demis H. Gebreal, (2016), research studyconducted on the challenges and opportunities oflife insurance business in Ethiopia. The studyfound that of awareness of people towards lifeinsurance, religious, habit of saving of the peopleand low level of urban to total population ratioand illiteracy are the major demographicchallenges of life insurance business in Ethiopia.The study recommended that insurance companiesshould create awareness with respect to lifeinsurance, training should be provided forinsurance officials and strong training centreshould be established.4

AyeleDesalegn, (2014), study was conducted onmotor insurance in Ethiopia the largest sector innon-life insurance found that motor insuranceconstitutes to be a loss leader for most insurancecompanies. Therefore, the study aimed atidentifying the main causes of the problemsassociated with motor insurance, its impact on therevenue account of the insurer, factors contributedto high motor claims ratio. It focuses on the dataof insurance industry and awash insurance

Dr. Ravi KanthMakarla, Mr. AshenafiDegefa

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company for the past six years (2007/08 to 2012/13). Failure to charge equitable level of premium(inefficiency in pricing); inability to select riskprecisely; increased cost of claims; increasedadministration and acquisition costs; and lowinvestment income; have been identified as a keydeterminants of the problem. This studyrecommends that charging equitable level ofpremium based on statistical data, reducing costsand expenses, and diversifying investmentopportunities. 5

Abdallah N. S., (2012), study revealed that thedemand for micro insurance in the informal sectordepends on the competitive advantage betweenformal insurance services and available informaltechniques. The low demand for micro insurancecan be explained by available informalarrangements which are characterized by closelyknit social networks and groups that providesecurity in exchange for loyalty to the group.6

Adam Mantaye, (2011), doctoral studyinvestigated the long run economic relationshipand the causal direction of the relationship betweenlife insurance development and private creditconsumption across countries using a panel dataanalysis and a dataset of 98 countries over theperiod 1960-2009 and found that Life Insuranceconsumption is positively related to GDP percapita, old age dependency ratio, infrastructural

development and social security and welfare; andnegatively related to the extended familyinstitution, savings, inflation and risk aversion.7

In providingnon-life and life insurance servicesin Ethiopia, EIC is the only state owned andtheleading insurance company in the industry.Therefore, the study intended to answer thefollowing questions:

� In a competitive environment, what is thegrowth rate of EIC’s Insurance Business?

� What is the financial status and market shareof EIC?

Research ObjectiveThe objective of this study is to analyze the trendsand share of Ethiopian Insurance Corporation’s(EIC) services in Ethiopian Insurance Industry.

Data and MethodologyThe study is based on secondary data resourcesthat are collected from Ethiopian InsuranceCorporation for the period of 21 years from 1995to 2015.There are 17 insurance companies arecurrently serving in Ethiopia, of which EIC is theonly public sector undertaking having majormarket share and hence EIC was been taken forthe case analysis by using descriptive statistics,CAGR, One way ANOVA and F-test in the study.

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EIC’s investment income was rose from 16 millionin 1995 to 157 million in 2015 with a CAGR of12% and other income has risen from0.2 millionto 12 million with a CAGR of 22% for the studyperiod. Profit before tax rose from 56 million to672 million and Profit after tax raised from 40million in 1995 to 471 million in 2015 with aCAGR of 13.14. Return on assets ranges from 5%to 15% during the study period. It was financiallysound in the recent financial year with return onassets around 15% which is higher than earlierfinancial years. Capital, Reserves and Insurance

Funds were grown around 9-10% CAGR duringthe study period which is significant improvementin the study period.

Ethiopian Insurance Corporation’s (EIC)insurancebusiness been segmented intoMotor, Marine, Fire,W.C., Aviation, Others and Life they represent3.78%, 8.65%, 9.18%, 0.99%, 67.47%,9.75% and0.17% respectively in terms of sum insured in thefinancial year 2015. Major segments of insurancebusiness are aviation, fire and marine contributingmore than 85% of the sum insured business. TheCAGR of aviation has shown magnificent growth


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From the “F” test one way ANOVA Table ascalculated above it shows that Calculated valueof Fc = 2.922 while tabular value of Ft = 2.289which show that calculated value Fc is greater thantabular value Ft. Since, Fc > Ft and P-Value is less

than 0.05, Null Hypothesis is rejected andAlternative Hypothesis is accepted. Hence, thecontribution of Sum Insured of various non-lifesub-segments was unequal in EIC’s Non-Lifesegment.

with 27% and CAGR of Life Insurance is only8% for the study period reveals that Non-LifeBusiness is more successful than Life InsuranceBusiness in Ethiopia.

Hypothesis 1 [H0]: There is no significantdifference in the means of Sum Insured in varioussub-segments of Non-Life Ethiopian Insurancesegment.

Table - 2 Ethiopian Insurance Corporation - Analysis of Premium by Class of Business

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Premium growth measures the business expansionof EIC. The insurance premium revenue stood at292 million birr in 1995 to 2,095 million birr by2015 with a CAGR of 10.36% for the study period.The premium revenue with it segments of Fire,Motor,Marine, WC, Aviation, Other and Liferepresenting 6.59%, 39.47%, 16.03%, 2.68%,9.98%, 19.42% and 5.83% respectively during thefinancial year 2015 and motor insurance stood firstin terms of premium revenue. Fire insurancepremium shown a share of 10% in 1995 thereafterfor four years slightly shown growth in share stood

at 14% share in 1998, but later its share hasdeclined continuously reached at 6.5% in 2015.Motor insurance premium revenue consistentlyshowing a share of around 30% to 39% throughoutthe study period. Life Insurance’s share isinconsistence but, in terms value in birr has showncontinuous growth.

Hypothesis 2 [H0]: There is no significant

difference in the means of Premium Revenue invarious sub-segments of Non-Life EthiopianInsurance segment.

From the “F” test one way ANOVA Table ascalculated above it shows that Calculated valueof Fc = 6.25 while tabular value of Ft = 2.289which show that calculated value Fc is greater thantabular value Ft. Since, Fc > Ft and P-Value isaround 0, Null Hypothesis is rejected andAlternative Hypothesis is accepted. Hence, thecontribution of Premium Revenue of various non-

life sub-segments was different in EIC’s Non-Lifesegment.


difference in the means of Premium Revenue inbetween Non-Life and Life Segments of EthiopianInsurance.

From the “F” test one way ANOVA Table ascalculated above it shows that Calculated valueof Fc = 19.116 while tabular value of Ft = 4.084which show that calculated value Fc is greater thantabular value Ft. Since, Fc > Ft and P-Value is

around 0, Null Hypothesis is rejected andAlternative Hypothesis is accepted. Hence, thecontribution of Premium Revenue between Lifeand Non-Life segments was different in EIC.


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Ethiopian Insurance Corporation’s (EIC) insurancebusiness been segmented into Motor, Marine, Fire,W.C., Aviation, Others and Life they represent70.34%,3.59%, 1.25%, 1.75%, 12.12%, 4.82%and 6.13% respectively in terms of Gross ClaimsPaid in the financial year 2015. Major segmentsof gross claims paid in insurance business aremotor and aviation contributing more than 82%.The CAGR of aviation claim payment is thehighest with 15.92 and that of lowest is Marine

with 4.5% for the study period.Thestudy revealsthat the claim payment of Non-Life Business wasaccounted for 86-96% share and that of LifeInsurance was at 2-13% share in InsuranceBusiness of Ethiopia.


difference in the means of Claims Paid in varioussub-segments of Non-Life Ethiopian Insurancesegment.

Table - 3

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From the “F” test one way ANOVA Table ascalculated above it shows that Calculated valueof Fc = 10.21 while tabular value of Ft = 2.289which show that calculated value Fc is greater thantabular value Ft. Since, Fc > Ft and P-Value is less

than 0.05, Null Hypothesis is rejected andAlternative Hypothesis is accepted. Hence, theinsurance claims payment of various non-life sub-segments was unequal in EIC’s Non-Life segment.

Table - 4


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The table 5 signifies that EIC continues to be amarket leader with a substantial share of 38 percentof country’s insurance market in 2015. But, EICshare continuous decline from 88 percent in 1995to 38 percent in 2015. This implies that the privateplayers are penetrating more into the insurancemarket than the public sector company EIC. Thisis welcoming and expected results of liberalizedeconomy of Ethiopia where liberalized policies

intended encourage private players intended tocreate fair competitive atmosphere and to rendertheir best serves to the clientele of insuranceindustry.


difference in the means of Premium Revenue inbetween EIC and Private Companies serving inEthiopia.

From the “F” test one way ANOVA Table ascalculated above it shows that Calculated valueof Fc = 0.579 while tabular value of Ft = 4.084which show that calculated value Fc is less thantabular value Ft. Since, Fc < Ft and P-Value is morethan 0.45, Null Hypothesis is failed to reject.Hence, in the Ethiopian Insurance Industry bothpublic sector EIC and all Private Companies areplaying significantly around equal role in termsof Premium Revenue is concerned.

ConclusionEIC reestablished as a public enterprise in 1992has transferred its administration control fromNational Bank of Ethiopia (NBE) to PublicEnterprises Supervising Authority (PESA) andlater to Financial Public Enterprises Agency(FPEA) in 2004. International Community re-initiation of Official Development Assistance(ODA) to provide aid to Africa in fields of PublicHealth, Education, and Debt reduction has directimpact on poverty reduction, sustained GDPgrowth around 8 percent and therefore indirectimpact on growth of insurance industry. EthiopianInsurance Premium has risen from 333 million birrto 5,557 million birr to 2015 with a CAGR of15.12%. During the study period, EIC’s premiumCAGR is 10.36% comparatively lower than privatecompanies’ premium CAGR of 24.82%. Thissignifies that private players are penetrating andexpanding business operations more than public

sector undertaking EIC in Ethiopian InsuranceIndustry.The supportive and advisory role of FPEAneed to be enhanced on par with market needs anddemands to make EIC efficient enough in meetingthe customer requirements.

In the financial year 2015 Life Insurance accountedfor only 0.17% and Non-Life Insurance is claiming99.83% in terms of the sum insured by its class ofbusiness. Motor Insurance segment stood firstpriority in terms of premium revenue in2015.Motor insurance claim payments were thehighest with 690 million birr in 2015 burdenstheEIC compared to other segments.

SuggestionsEthiopia being a developing country, LifeInsurance needs attention from Government andother players in Ethiopian Insurance Industry,where it requires customer education for enhancingits operations to the fullest extent.

EIC being only Government owned insurancecompany and having public trust need toimplement sustainable strategies in order tocompete with private players because it was showncontinuous fall of its market share in EthiopianInsurance Industry. To gain market share EIC mustput innovative steps to create awareness financialliteracy and benefits of various insurance productsEIC in general and life insurance to the communityby encouraging saving habit.

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The administrative and suggested role of FinancialPublic Enterprises Agency (FPEA) needs to beenhanced in empowering EIC. Internal controlsystem must design appropriately about theselection and development of human resources ofEIC because they are the pillars in pushing thebusiness to next level.EIC must consider employeeskill development programs, product innovation,usage of technology in service delivery, etc.Mentoring from some of successful insurancecompanies across the globe by establishing foreigncollaboration with EIC is also needed.

References:

1. Sanjay Kumar R. Shinde, (2011), “AComparative Study of Life InsuranceCorporation of India and Private Life InsuranceCompanies in India”, Ph.D. Thesis,Department of Commerce, Veer Narmad SouthGujarat University, Surat, India.

2. Dr. Shaik A. M. P. and Dr. Srinivasa R.K.,(2017), “Learning Lessons from EmergingMarkets by Ethiopian Motor Insurance-AnEmpirical Study”, International Journal ofInnovative Research & Development, Vol. 6& Issue 4, pp. 33-40.

3. ShuhratAbdulaev&SharofAbdurahmonov,(2006), “Potentials of Insurance MarketDevelopment in Jizzak Region”, BlekingeTechnology Insititute, Uzbekistan.

4. Demis H. Gebreal, (2016), “Challenges andOpportunities of Life Insurance Business inEthiopia”, International Journal of SocialScience, Arts and Humanities, Vol. 2(1), pp.12-22.

5. AyeleDesalegn, (2014), “Assessment of MotorInsurance Business on Financial Performanceof Insurance Company, the Case of AwashInsurance Company, MBA Thesis, St. Mary’sUniversity, Addis Ababa, Ethiopia.

6. Abdallah NaniyoSaqware, (2012), “MicroInsurance in Tanzania: Demand Perspectives”,Ph.D. Thesis, University of Central Lancashire,Tanzania.

7. Adam Mantaye, (2011), “Essays on InsuranceEconomics” Ph.D. Thesis, Department ofEconomics, University of Leicester, England,UK.

8. EDRE. (2012). Insurance BusinessProclamation Number 746/2012. Addis Ababa.


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ANALYSIS ON CLAIMS SETTLEMENT RATIOS FOR2015-2016 OF LIFE INSURANCE COMPANIES

M. Veera SwamyLecturer in Commerce,Loyola Degree &PG College,Contact No:9963908009,Email: - [email protected]

ABSTRACTThe financial service industry has made significant changes after liberalization and globalization. Amongall, insurance sector is also one of the important sectors in India. Claim Settlement Ratio (or IRDAclaim ratio) is the total number of death claims approved by an insurance company, divided by the totalno. of death claims received by the insurance company. It is generally measured for a period of onefinancial year. All claims ratios are measured in percentages standardization done by the IRDA, theInsurance Regulator of India, it’s that simple to measure and it is therefore a great idea to use ClaimSettlement Ratio for Term Insurance buying. IRDA publishes this information annually. Overall, theclaim settlement ratio for the life insurance industry stands at 97%, but a lot of it is because of LIC’slarge base with very high CSR. A lot of private life insurance companies are now ‘matching up’ since thelast 4-5 years. Claims for which decision is pending or not made are shown as Claims Pending. Pendingclaims become the opening balance for the next year of all the claims that are approved, as well as theaverage value of each claim.

Keywords: Claims, Claims Settlement, Efficiency Claim, Pending and rejection claims and life InsuranceCompanies

1. INTRODUCTIONIRDA has announced the Claim Settlement Ratiofor 2015-2016 in Dec 2016. This is valid as mostrecent till Dec 2017, when the next year’s datawill be published by the Regulator. If looking fora term insurance plan, you must know the IRDAClaim Settlement Ratio (CSR) before making thedecision. The financial service industry has madesignificant changes after liberalization andglobalization. Among all, insurance sector is alsoone of the important sectors in India. The Privateand Public Players in insurance industry in Indiaas insurance companies are mushrooming afterliberalization. Further, increase in the foreign directinvestment from 26% to 49% shows that insurancebusiness will grow in India but facing toughcompetition from rest of the world and specificallythe Asian countries. Hence, there is a chance thatthere may be some difference observed in betweenthe private and public insurance firms. With theentry of private players, the competition isbecoming intense.

DEFINITION / FORMULA OF CLAIMSETTLEMENT RATIO:-

Claims Settlement Ratio IRDA 2015-2016IRDAhas announced the Claim Settlement Ratio for2015-2016 in Dec 2016. This is valid as mostrecent till Dec 2017, when the next year’s datawill be published by the Regulator.

Claim Settlement Ratio is the indicator how muchdeath claims Life Insurance Company settled inany financial year. It is calculated as the totalnumber of claims received against the total numberof claims settled. Let us say, Life InsuranceCompany received 100 claims and among that itsettled 98, then claim settlement ratio is said to be98%. Remaining 2% claims the Life InsuranceCompany rejected.Based on this, we can easilyassume how much customer friendly they are indealing with death claims.

Claim Settlement Ratio = Total Claims Approved(paid to nominees) divided by Total Claims

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Received by the Company. So Claim SettlementRatio (or IRDA claim ratio) is the total number ofdeath claims approved by an insurance company,divided by the total no. of death claims receivedby the insurance company. It is generally measuredfor a period of one financial year.

To explain this, if an insurance company received1000 death claims between Apr 1, 2015 and Mar31, 2016, out of which itpaid 973 claims to the

nominees of those dead,rejected 16 claims, andisyet to take a decision on the remaining (1000-973-16=) 11 claims,thenthe claim settlement ratio (orclaims acceptance ratio or claims ratio) of theinsurance company = 973/1000 = 97.3%the claimrepudiation ratio (or claims rejection ratio) of thecompany = 16/1000 = 1.6%

The claim pending ratio of the company = 11/1000= 1.1%

3.REVIEW OF LITERATURE

4. OBJECTIVES1) Analyze the claim settlement ratios for the

life insurance industry and Claim RejectionAmount of Insurers in 2015-16

2) LIC of India Insurance Claims SettlementPerformance and efficiency for 2015-2016

3) Understand the Claims settlement stages,pending status, rejectionand time taken forhandling

5. RESEARCH METHODOLOGY

SecondarySources of data: This study preparedbased on secondary sources i.e. data has beencollected from the Company AnnualReports,IRDA Reports and their internal documents.

M. Veera Swamy

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Claim Settlement Ratio 2015-2016 Announcedby IRDAOverall, the claim settlement ratio for the lifeinsurance industry stands at 97%, but a lot of it isbecause of LIC’s large base with very high CSR.Let us see which the best insurance companies onclaims ratio are. The ranking is based on the sizeof the company (New Business Premiumgenerated) so that you get that perspective as well.

Key Observations on Claims Settlement Ratio:-Older the company better is the claims settlementratio. This includes companies such as LIC, ICICIPrudential Life, and HDFC Life which have beenconsistently higher than 90% in the last 6 years.This is not surprising because as companiesbecome older (and larger in terms of customerbase), they gain in experience on the kind ofpopulation that should be insured.

Table 1: Claim Settlement Ratio 2015-2016 Announced by IRDA

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LIC of India Insurance Claims Ratio - Last 6years TrendThe information below shows the trend in LIC ofIndia Insurance Claims Settlement Ratio for thelast 6 years. This is based solely on the informationpublished by the Insurance Regulatory &

Development Authority of India (IRDA) and ismeasured on consistently used bases. You may usethis information as a key parameter in your terminsurance purchase decision.

M. Veera Swamy

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Figure 2.1: LIC of India Insurance Claims Settlement Performance for 2015-2016

Figure 1: LIC of India Insurance Claims Ratio - Last 6 years Trend

LIC of India Insurance Claims SettlementPerformance for 2015-2016The information below shows how LIC of IndiaClaims Settlement Ratio for LIC of India is arrivedat. It starts with the opening balance (which is

pending claims of the previous year), to which isadded the new death claims made this year. Thisgives the Total Claims that have to be processedin the year.

Claims approved and claims rejected are shownbelow. Claims for which decision is pending ornot made are shown as Claims Pending. Thesepending claims become the opening balance forthe next year. Also shows are the value (in Rs.

Figure 2.2: LIC of India Insurance Claims Settlement Performance for 2015-2016

crores) of all the claims that are approved, as wellas the average value of each claim. Please notethat here claims include death claims from all kindsof life insurance policies and not just terminsurance.

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Figure 3: LIC of India Insurance Claims Settlement Efficiency: 2015-2016

LIC of India Insurance Claims SettlementEfficiency: 2015-2016Especially when buying term insurance, do notwant our nominees to keep waiting for the claimamount. So claims efficiency is a key considerationbefore deciding on our term policy, especially, the

metric around average no. of days taken to settle aclaim. This number shows the importance givenby the company for processing claims. Lower thenumber of days taken higher is the efficiency andbetter is the confidence level when buying a policyfrom the company.

Claim Settlement Ratio 2015-16Below is the Claim Settlement Ratio 2015-16 or up to 31st March, 2016. I differentiated the below tablewith color code for your better understanding.

Notice that among total 24 Life InsuranceCompanies; around 12 companies are in GREEN(Claim Settlement Ratio above 90%). Total 10companies are in YELLOW (Claim Settlement

ratio between 80% to 89%). Total 2 companiesare in RED (Claim Settlement Ratio below 80%).

As usual LIC tops the list. But don’t feel happy.Let us see the claim amount settled by individualcompanies to arrive at best companies.

M. Veera Swamy

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Figure 5: Average Claim Settlement Amount of Life Insurance Companies in 2015-16

The biggest surprising factors from ClaimSettlement Ratio of 2014-15 to Claim SettlementRatio of 2015-16 are as below.

1) Star Union‘s last year the claim settlementratio was 94%. Hence, intentionallyflagged it RED. Now see this year’s result.Its claim settlement ratio dropped to 81%.A drop of 13%.

2) Reliance Life is one more big change. Lastyear the claim settlement ratio was 84%.But this year, it jumped to 94%.

3) PNB Met Life‘s last year’s claimsettlement was 93%. But this year, itdropped to 85%. A change of 8%.

4) Birla Sun Life‘s last year’s claimsettlement was 95%. But this year, itdropped to 88%. A change of 8%.

5) IDBI Federal Life‘s last year’s claimsettlement was 76%. But this year, itincreased to 85%. A change of 9%.

6) Aegon Religare Life‘s last year’s claimsettlement ratio was 90%. But this year, itincreased to 95%. A change of 5%.

7) Edelweiss Tokio‘s last year’s claimsettlement ratio was 60%. But this year, itincreased to 85%. A change of 25%.

8) DHLF Pramerica’s last year’s claimsettlement ratio was 57%. But this year, itincreased to 84%. A change of 27%.

Now you noticed that new companies claimsettlement ratio changing so high around 27% to8%. Why such change? No specific answers tosuch big changes (either positive or negative).

Average Claim Settlement Amount of LifeInsurance Companies in 2015-16As said above, the claim settlement ratio will notgive the clear picture about which type of productsthe insurance companies settled. However, assumethe types of products they settled by looking atthe average claim settlement amount of lifeInsurance Companies in 2015-16.

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Figure 6: Average Claim Rejection Amount of Life Insurers in 2015-16

Here come the results!! LIC stands in lowest withred in colour along with Life Insurance Companieslike Sahara, Reliance Life, Exide and FutureGenerali. What it indicating?

It shows that, even though LIC settled the highestnumber of claims, the majority of such claims areless than Rs.2,00,000 Sum Assured. Hence, it isindicating indirectly that LIC’s claim settlement

is mainly in the category of Endowment Plans butnot Term Insurance.

Average Claim Rejection Amount of LifeInsurers in 2015-16Now let us go deeper into Claim Settlement Ratio2015-16 and try to analyze the how much amountof claims they rejected. Here, I calculated averageamount as I don’t have data to check the maximumand minimum amount.

You notice that Sahara’s claim rejection amountis less and then comes the LIC. LIC’s claimrejection is less because the quantum of claims ithandles is HIGH but value is less. So no need tosay that LIC done a great job here.

Claim Pending Status of Life InsuranceCompanies in 2015-16The greatest fear for all of us is how firstly theLife Insurance Companies settle the claims. Letus now analyze the data of claims pending withLife Insurance Companies in 2015-16 and how oldthey are.

M. Veera Swamy

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6. CONCLUSIONClaim settlement is one of the most important partsof the life insurance services. Person who isholding or planning for the life insurance willalways want to have prompt claim settlement. Forany insurance company sales of insurance policiesis the biggest source of revenue and if claim arenot properly settled then it will affect its sales. Thestudy is based on the secondary data collected fromIRDA annual report and it shows that LIC of Indiacontinue to grow due to its prompt claimsettlement, highest insurance premium collectionsand highest number of policies sold.

Life insurance is mainly taken to cover up risk ofdeath/disability in term of monetary terms andsecondary for the purpose of better return asinvestment option. Claims are filed at the time of

Figure 7: Claim Pending Status of Life Insurance Companies in 2015-16

Source:-Annual Reports 2015-2016 of IRDA

Noticed that Kotak Life, Reliance Life, SBI Life,Shriram and LIC are leading in pending caseswhich are more than a year. Reasons may not beknown. But it indicates that there are some issueseither with insured or insurer.

Best Life Insurance Company in 2017Based on the IRDA’s Claim Settlement Ratio2015-16, which are the Top and Best LifeInsurance Company in 2017? Select only fivebased on above data. May differ in my view andcome up with different set of ideas. But these aremy choices.

1) LIC2) ICICI3) HDFC4) Aegon Religare5) Max Life

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maturity or in case of death/disability. The studyfocuses on the claim settlement process of lifeinsurance services companies. With the increasingnumbers of policies, numbers of claims are alsoincreasing in Life Insurance Company. Thereforeit is very much essential to have simple and clearclaim settlement process.

6. REFERENCES

1. Kaur, M., & Kumar, R. (2014). Universalhealth insurance in India: ensuring equity,efficiency, and quality. Indian journal ofcommunity medicine: official publication ofIndian Association of Preventive & SocialMedicine, 37(3), 142.

2. Hole, A., & Misal, A. (2013). Impact ofCompensation Strategies on Performance ofInsurance Agents in General InsuranceCompanies.Published at university ofmaratwada Volume 2, in 2013,

3. Bertola, G., & Koeniger, W. (2008). Public andPrivate Insurance: Cross country evidence anda model (pp. 1-30). Working paper, Universitàdi Torino and CEPR, University of London

M. Veera Swamy

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DETERMINANTS OF LIFE INSURANCE POLICYPURCHASE -A STUDY TO EXPLORE NEW MARKETING

STRATEGIES FOR PRIVATE LIFE INSURANCE PRODUCTSThangamuniyandi. S Balaji. PUniversity Research Fellow, ICSSR/IPE Doctoral Fellow,Department of Commerce, Department of Commerce,University of Madras, University of Madras, Chepauk,Chepauk, Chennai, Chennai,e-mail ID: [email protected] e-mail ID: [email protected]

ABSTRACT

Insurance sector occupies an important place in nation’s economy. It plays a pivotal role in the economicdevelopment of a country and forms the core of the money market in our country. Insurance sector inIndia has witnessed remarkable changes and development since the onset of the processes of liberalization,globalization and privatization. Marketing strategy converts environmental opportunities into Profitablebusiness activities and helps counter environmental threats .it is a driving force in the corporate strategyto gain sustainable competitive advantage. In this study an attempt has been made to explore thedeterminants of private life insurance policy purchase of customers in Chennai city through non-randomconvenient sampling by adopting descriptive and analytical research design. The empirical evidencesproves that, Information Factor [IF], Advertisement Factor [AF], Guidance Factor [GF], PromotionalFactor [PF], Consideration Factor [CF], Loan Assistance Factor [LAF] and Maintenance Factor [MF]are important underlying dimension for policy purchase in private life insurance companies and themarketers and insurance companies are suggested to give proper guidance, informative advertisementalong with various attractive promotional activities to enhance policy purchase of private life insurancecompanies.

Key Words: Private Life Insurance, Marketing Strategy, Policy Purchase, Information, Advertisement,Consideration and Loan Assistence.

INTRODUCTIONIn the organized segment, insurance sectoroccupies an important place in nation’s economy.It plays a pivotal role in the economic developmentof a country and forms the core of the moneymarket in our country. The insurance sector in Indiacomprises of both public sector as well as privatesector insurance. There are one Public sector andtwenty three private sector insurance companiesfunctioning in the country presently. Insurancedeals with many customers everyday and offeredvarious types of products in the market. It is a wellknown fact that no business can exist withoutmarketing.

Insurance sector in India has witnessed remarkablechanges and development since the onset of theprocesses of liberalization, globalization andprivatization. The challenges ahead for insurancesector have greatly increased with increasingcompetition and the growing demand for a greatervariety and superior quality of insurance services.The growth of the insurance sector has generateda lot of interest primarily because of the entry ofmany private sector insurance companies and alsoforeign insurance companies resulting in theavailability of a wide variety of innovativeproducts and services in the insurance market.

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The marketing orientation of the insurance sectorhas significantly increased in recent year. Theintroduction of a new variety of products andservices with emphasis on quality of service clearlyindicates how insurance address the issue ofmarketing needs and requirements through amarketing -centric approach.

Marketing strategyMarketing strategy is concerned with defining theboard structure of marketing mix in context of thelonger term competitive position of theorganization and its constituent business. The goalof marketing strategy is to achieve long -termcompetitive positions for the company and itsstrategic business units. Marketing strategyconverts environmental opportunities intoProfitable business activities and helps counterenvironmental threats .it is a driving force in thecorporate strategy to gain sustainable competitiveadvantage. Marketing Strategy tries to reducethe impact of surprises and threats emerging inthe environment by developing a long termstrategy for each of the market served.

Marketing strategy may be defined as themanagerial process of developing and maintainingviable fit between the organization objectives,skills and resources and its changing marketopportunities marketing strategy provides anapproach to raising and addressing strategicchoices and to managing complex organization inthe context of changing external pressures andthreats. It helps to achieve synergy among themultiple markets through coordinated use ofresources and skills.

Marketing strategy is characterized as externalmarket orientation, long term perspectiveempirical research marketing information systembase, entrepreneurial thrust and inter disciplinaryapproach.

REVIEW OF LITERATUREFarhad Sadeh et.al, (March 2012) the studystarts with the objectives to explore the importantpromotional and communication strategiesadopted by financial services entities and their

level of effectiveness in Iran the author adoptedPrimary data collection done by survey methodfrom 340 respondents and analyzed through twentythree promotional tools and five promotionstrategies. With these tools and strategies theauthor concludes that the Price-Offs and Conteststools are in the highest position in the Ranking,Publicity and Public Relation (PR) is the effectivepromotional strategy from the respondents viewfollowed by sales promotion activities. Then thestudy particularly concludes that the Publicity andPR, personal selling and sales promotion is mostappropriate strategies for the insurance companiesto informing and reminding.

Archana Kanungo (2014) the study reveals thatone of the Major Research Gaps among theprevious national and internationals studies. Is thestrategic position of life in insurance companiesin general focused on Indian society, the studyparticularly focused on modern life insuranceindustries and emphasized on various strategicposition of Life insurance companies (LIC) like 4Ps, that is People, Product, Price & Promotion andhow it effects on 3Cs, that is Customers,Companies & Clients which are consider as themajor stake holders of Indian LIC.

Alla Venkaiah and Sudhir.B (June 2013) thestudy is focused on 7P’s i.e. Product, Price, PlacePromotion, People, Process and Physical Evidenceof Life insurance Corporation and Privateinsurance companies. The author collected datafrom the sample of 400 policy holders with thehelp of structured questionnaire. This study foundthat the Life Insurance Corporation of India is inbetter position regarding product and price mixand the private life insurance companies are in thebetter position in the aspect of place, promotion,people, process and physical evidence. LIC ofIndia should focuses more on promotion anddistributional activities and it should work onimproving Physical evidence to retain its Top mostposition in the market.

Chilar Mohamed.P and Guru Murthy.R (Nov2012) the author identified from the aboveanalysis, the present Private insurance players are

Thangamuniyandi. S, Balaji. P

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like, ICICI, SBI, etc., had started to pull up themarket share of the Life Insurance Corporation ofIndia which is showed in the annual report of IRDA(2006-2011) that market share of LIC of Indiacame down from 81.92% to 69.78% in the periodof study. the author suggested that the insuranceindustries should focused on market the productsthrough various distributions channel such asagents, bank assurance, internet, and to come upwith new ideas and initiatives the InsuranceIndustry should have well establishedinfrastructure, call centers, different New ProductDevelopment and Studying Market Segmentationwhich is adopted carefully after studying variousfactors.

Aashish S.Jani (2013) the article is to comparethe service quality perception of the consumers inpublic and private Non-Life Insurance Companies.This study inferred that through various statisticaltests and proved that there is a significantdifference exists in the Consumer perception onService quality of Private and Public Sector Non-Life Insurance Companies. It also identified thatthe both Public and Private Non-Life InsuranceCompanies has its own areas of strengths and areaswhich yet to for possible improvement. Itconcluded that there was a change in LPG climategovernment encouraging insurance sectors toincrease FDI limit by granting them incentives. Itis for the public & Private Non-Life InsuranceCompanies which is great opportunity to achievethis insurance companies should understand theCustomers Perception towards service qualitywhich altogether helpful to growth of Private andPublic Non-Life Insurance Companies.

Rajavardhan Reddy.P and JahangirY (Jan2015), this study was examined the perception ofcustomers towards life insurance services in ruralmarket analysis various factors like Age, gender,marital status, household annual income,education, mode of employment, family size ofcustomer. Data collected from 120 samplesthrough survey. It has been concluded that theconsumer’s perception towards Life insurancepolicy is positive mind sets for their investmentpatterns in insurance policies then the insurancemarket need some more actions for developments.

Tanima Kad and Aarti Narang (June 2016) thisstudy analysed the existing status of protocols,investment parameters and policies of Insurancecompanies, role of Life Insurance Company inIndia and their modus operandi and the Satisfactionlevel of clients of Life insurance Products andServices. This study also identified that manyresearch gaps with the analysis of previousresearch protocols and clearly defined major roleof life insurance Company in India and analyzedsatisfaction level of customers of life insuranceproducts and services through various statisticaltests. It also suggested that Insurance Institutionsshould shorten its procedures with regards totransaction which will helpful to reduce the timetaken for enormous transactions which will leadto effective handling of clients.

Reenu Lulla and Monu Bhargava (March 2015)This study reveals that the Life InsuranceCorporation is ruling the market beyond all privatesector insurance companies. The Life InsuranceCorporation has 73.9%. This is the major marketshare in the insurance industry when compared toprivate sector insurance companies. Further it alsoinferred that private insurance companies are gavethe good completion of many innovative and newlife insurance products to attract the customers. Ithas been suggested that the LIC should improvetheir systems and practice to the expanded leveland to retain the same market share than the Privatesector life insurance companies and it shouldensure that the prompt and efficient sales servicesto their customers that may leads to retain theirloyalty in the insurance industry.

Objectives of the study

1. To study the personal profiles of therespondents in Chennai city.

2. To identify the underlying dominantdimensions of determinants of private lifeinsurance policy purchase in Chennai city.

Research MethodologyThis study in descriptive and analytical in natureand the researcher adopted survey method for itsfindings. The primary data were collected through

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well structured and well-designed questionnairefrom 70 private sector life insurance holdersresiding in Chennai city using convenient samplingmethod. The data collected were subjected tocronbach’s Alpha reliability co-efficient to test thereliability and consistency of the instrument thevalue being 0.874, scale is more consistent andhighly reliable

Questionnaire DesignThe questionnaire is divided into two-sections.

Section I deals with personal profiles of therespondents such as, age, gender, marital status,educational qualification, occupation, monthlyfamily income and nature of family.

Section II deals with 24 variables related todeterminants of private sector life insurance policypurchase.

Statistical tools usedThe primary data were collected subjected toanalysis such as percentage analysis and factoranalysis using SPSS Version 17.0.

Table 1 reveals that Majority of the respondentsare Male (54.3%), Married (70.0%) and hailingfrom Nuclear Families (68.6%). Sizeable portionof the respondents are Under Graduates (34.3%),

Government Employees (41.4%) and earning Rs.20,001 to 40,000 Rupees as monthly familyincome (41.4%). Average age of the respondentsis 38.19 Years.


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Table 2 shows that Determinants of PolicyPurchase [DPP] Variables with their communalityvalues and MSA ranging from 0.651 to 0.862 and0.480 to 0.719 have goodness of fit forfactorization. KMO-MSA value of 0.624 and chi-square value of 940.591 with df of 276 and P-valueof 0.000 reveal that factor analysis can be appliedfor factorization of 24 DPP variables. Sevenindependent factors have been extracted out of 24DPP variables of which Information Factor [IF] isthe most dominant one followed by, AdvertisementFactor [AF], Guidance Factor [GF], PromotionalFactor [PF], Consideration Factor [CF], LoanAssistance Factor [LAF] and Maintenance Factor

[MF] in their order of dominance and all the factorstogether explaining 74.922% of variance.

MAJOR FINDINGS OF THE STUDY1. Majority of the respondents are Male,

Married and hailing from NuclearFamilies. Sizeable portion of therespondents are Under Graduates,Government Employees and earning Rs.20,001 to 40,000 Rupees as monthlyfamily income.

2. Average age of the respondents isapproximately 38 Years.

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3. Seven independent factors have beenextracted out of 24 DPP variables of whichInformation Factor [IF] is the mostdominant one followed by, AdvertisementFactor [AF], Guidance Factor [GF],Promotional Factor [PF], ConsiderationFactor [CF], Loan Assistance Factor [LAF]and Maintenance Factor [MF] in theirorder of dominance

SUGGESTIONS AND CONCLUSION1. Respondents are opinion that they are

giving more importance to informationaspects such as, Frequent interaction withthe policy holders, Intermediariesinformation are reliable, Pamphlets areinformative about the schemes and Co-operation to buy the new policy rathermaintenance aspects such as, promptnessof documents, updating accurate records,and claim settlement on maturity.

2. Private life insurance policy holders aregiving importance to Information,advertisement, guidance, promotion,consideration, loan assistance andmaintenance for purchasing private lifeinsurance policies.

3. Advertisers are suggested to createinformative advertisement by usingtechnological platforms and visual appealsthrough website portals of private lifeinsurance companies to attract customersto purchase policies.

To conclude, this study was conducted to identifythe underlying dimensions of determinants ofprivate life insurance policies in Chennai city. Theresults reveal that, Information, advertisement,guidance, promotion, consideration, loanassistance and maintenance are predominantdimensions of private life insurance policypurchase determinants. Finally in order to attractnew customers the private life insurancecompanies are suggested to give proper guidance,

informative advertisement along with variousattractive promotional activities to purchase lifeinsurance products of private companies.

LIMITATIONS OF THE STUDY1. This study adopted convenient non-

random sampling, so, limitationsassociated with non-random sampling isalso applicable to this study.

2. Due to time and cost constraint the samplesize is restricted to 70.

3. This study is only conducted in Chennaicity, so findings of the study may not begeneralised to other cities, states in India.

REFERENCES1. Farhad Sadeh et.al, (March 2012), “Survey on

the Effectiveness of Promotional andCommunication Strategies Adopted byFinancial Services”, African Journal ofBusiness Management, 6 (44), pp. 10925-10937,

2. Archana Kanungo (2014), “Rediscovering theStrategic Position of Life InsuranceCompanies in India: A review of Literature”,International Journal of Recent Advances inEngineering & Technology (IJRAET), ISSN(Online): 2347 - 2812, Volume-2, Issue -6,72014, pp.78-85

3. Alla Venkaiah and Sudhir.B (June 2013),“Marketing of Life Insurance Services”, TheInternational Journal’s Research Journal ofSocial Science& Management, ISSN: 2251-1571,: Volume: 03, Number: 02, June-2013,pp.150-156

4. Chilar Mohamed.P and Guru Murthy.R (Nov2012) “Life Assurance Industry in India: AStudy on Marketing Strategies of IndianInsurance Companies”, Indian Journal ofApplied Research, ISSN: 2249-555X Vol.2,Issue.2, November 2012, pp.24-26


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ROLE OF TECHNOLOGY IN INDIAN INSURANCESECTOR– A SELECT STUDY

Oddepalli. Sathish N. Rajendra PrasadResearch Scholar Research ScholarDept. of Commerce Dept. of CommerceOsmania University Osmania UniversityHyderabad-07 Hyderabad-07Mail:[email protected] Mail: [email protected]: 7095010676 Cell: 9704846563

ABSTRACT

The Insurance Regulatory and Development Authority of India (IRDAI) has released its draft regulationsfor facilitating and regulating e-commerce in the Indian insurance industry. Online sale of policies waspermitted already but that has been neither paperless nor without human interventions. The e-commerceguidelines and regulations, however, point to a clear step forward to usher in an absolutely new channelto market or to purchase an insurance product. The Insurance Self-network Platform indicates a systemor tool which the buyer will use to choose and buy an insurance product without any direct interventionat any stage by the entity setting up the platform. Once the prospective customer visits the website, hewill have access to all available products, their features, terms and conditions regarding eligibility,endorsements and exclusions. A major feature is the opening of e-insurance account by the policyholderwho transacts on ISNP. The insurance repositories approved by IRDAI will take care of this provision.The present paper discussed about the “Role of Technology in Indian Insurance Sector” this papermainly focused on what are the Insurance products and services offered by the insurance companies inIndia and what are the major obstacle hindering the application of insurance companies through adoptthe technology insurance sector.

Key Words: (Customer awareness, products and services, benefits in ITC and major obstacle in InsuranceCompanies)

1. Introduction:Over the last decade the world has seen a meteoricrise in e-commerce, which can be defined as thesharing of business information, maintaining ofbusiness relationships, and conducting of businesstransactions by means of telecommunicationsnetworks. Several distinct categories of e-commerce have emerged. Although business-to-consumer e-commerce has received the mostattention in the press, it is much less prevalent thanbusiness-to-business e-commerce. An increasingnumber of associated transactions and processesthat support both selling and purchasing activitieson the Internet can be also included in thedefinition of e-commerce.

Modern day insurance has evolved into amultifaceted and complex industry involving anarray of divergent products and services. Thecurrent insurance industry landscape ischaracteristically hybrid in nature, offeringeverything from health and life insurance toproperty and casualty. Many insurance companiesalso offer financial services such as assetmanagement as well as commercial leasing andlending.

The use of the Internet is growing throughout theworld at a rapid pace. While the U.S. still holdsthe lion’s share of the global market, it isanticipated that this share will diminish from 36%to 25% by 2005. Not surprisingly, e-insurance isalso being embraced globally. The European

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insurance sector, for example, has been active inmaking the transition. Asia also shows enormouspotential to drive this trend globally.Approximately 50% of domestic Chineseinsurance companies’ Web sites currently offer thecapability to buy policies online, while India isleading the way in the rest of Asia, with rapidlyexpanding growth in the insurance industry

2. Digital Services:In the insurance industry, the biggest challengesfacing the digital journey are typically internal tothe organization. This is because insurance hasbeen a predominantly process driven business.Customer connect has been traditionally achievedusing CRM solutions.

Majesco’s digital services helps insurance carriersengage with customers using channels in a uniquemanner. With an engaged digital strategy,insurance providers are able to chart out all thepossible business touch points for an effectiveimplementation of digital strategy.

3. Importance of Information Technology in theInsurance Industry:Information technology has become ever soimportant in all industries and this dissertationsought to determine the role and importance thatinformation technology has in the insuranceindustry. The insurance market is an informationbased market since there is lot of gathering,processing and distribution of information and thusinformation technology is needed to manage allthis information. This study shows the way inwhich Information Technology can be used withinthe insurance industry and how it helps companiesto be more effective and efficient. The findingsfrom this study helped to determine how and towhat extent information technology is used withinthe Maltese industry. These findings showed thatthe Maltese market is still lacking behind withregards information technology when comparedto other markets. In Malta, not every company isusing the same type of system and not everycompany has invested enough orin the right wayto have a good IT system. Apart from this, localcompanies are still lacking behind in other areas

such as e-commerce and other systems which arepresent in other markets such as the UK but notyet in Malta. iv In the final chapter of thedissertation the conclusions were outlined i.e. thatlocal companies have to try and make use of theimproved technology that is available. This isimperative since technology is continuouslyimproving and companies have to keep up withsuch advancements in order to remain competitive.

4. Review of Literature:Steward Doss and Kaveri(2000) in their studytitled “Total Quality Assessment in Insurance”observed that empathy and responsivenessdetermine the satisfaction level of urban and ruralcustomers respectively. Pre-sales service such asadvice rendered in selection of policy, productknowledge and capacity of explaining the policybenefits and the after sales service such asreminding of premium due, assistance in premiumremittance and other intermediary services of theagents increases the level of customer satisfaction.

Mony (2003) He says that IRDA of 1999 and itsmain objectives of protecting the interests ofpolicyholders and to regulate, promote, and ensureorderly development of the insurance industry. Heobserved that with the entry of private insurers themarket is seeing an array of products. Insurers arenot merely looking at offering the basic lifeinsurance solutions, but are offering products witha combination of benefits which could be bundledand customized to suit an individual’s need. Hehas rightly expressed that though the agencychannel will remain as dominant distributionchannel alternative channels like corporateagencies, brokers and banc assurance will paymeaningful role in distribution. He has stressedthe importance of customer service by the insurersand the role of technology in the presentcompetitive environment.

R.Kumar and K.Vaidya (2004)hestudied thatcustomer relationship management tools must beused extensively and effectively to identify crossselling opportunities. They had also foreseen theuse of e-service, namely, customer service throughInternet that could play a major role in facilitating

Oddepalli. Sathish, N. Rajendra Prasad

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the process of servicing insurance products to theirpolicy holders.

H. Delport et.al.7 (2011)he concluded that thebanking and life insurance firms were nowfocusing on retaining and building long-termrelationships with their existing customer base byimplementing a relationship marketing strategy.However, they found that not all customers werewilling to invest in building long-termrelationships. So, firms needed to identify andtarget those customers who had a high relationshipintention that is those who intend to support long-term relationships with the firm they are currentlyassociated with.

Alok Mittal and Akash Kumar (2003) in theirstudy “An Exploratory Study of Factors AffectingSelection of Life Insurance Products” haveattempted to identify the factors which areaffecting the consumers in taking intoconsideration before selecting a life insuranceproduct and determining the extent to which thesefactors are taken into consideration for choosinglife insurance products. The study highlighted thatconsumers take into consideration factors like

product attributes, customer delight, paymentmode, product flexibility, risk coverage, graceperiod, professional advisor, and maturity periodas important before making a decision on selectionof a life insurance product but most importantfactors which are of vital importance was productattributes, and the least important was maturityperiod.

5. Objectives:

1. To study the customer perception ofvarious products and services of insurancecompanies.

2. To study the major obstacle hindering theapplication of insurance companies.

6. Methodology:In this paper data collected from both the primaryand secondary data. Primary data means datacollected through structured questionnaire frompolicy holders of insurance companies. Andsecondary data means data is collected fromvarious sources like; books, magazines,newspapers, articles, thesis, annual reports andvarious websites.

Table 1 Benefits obtained by Implementing ICT

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8. The major obstacle hindering the application ICT in insurance companies

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References:

· KamaljiSahay. E-commerce in insurancecan be a game-changer, June 14, 2016.

· Leila Meshkat ,2FatemehFarkhondehnia,Electronic Insurance and its application ine-commerce,Interdisciplinary journal ofcontemporary research in business, vol 4,no 8, december 2012.

· The importance of information technologyin the insurance industry Mangani, Shawn

· Steward Doss and Kaveri, V. S (2000).Total Quality Assessment in Insurance,New Delhi, Akansha Publishing House.

· Mony, S.V (2003). Life Insurance: PrivatePlayers Initiatives, The Hindu-Survey ofIndian Industry, pp.78-80.

· R. Kumar and K. Vaidya, “DifferentiationStrategies of Insurance Companies”,Insurance Chronicle, Vol. 6, No. 3, 2004,pp.43-49.

· H. Delport, T.F.J. Steyn and P.G. Mostert,“Relationship Intention of South AfricanBanking and Life Insurance Customers”,Journal of Financial Services Marketing,Vol. 16, 2011, pp.277-293.

· A Review Of Literature On Life InsuranceIn India, Sumana B. K, InternationalJournal of Research in Finance andMarketing (impact factor – 5.861), ijrfmVolume 6 , Issue 3 (March, 2016) (ISSN2231-5985)

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FARMER’S PERCEPTION AND AWARENESS TOWARDSCROP INSURANCE IN VILLUPURAM DISTRICT

R. GNANASEKARAN Dr. L. PANDIYANPh.D Research Scholar, Assistant Professor,Department of Commerce, Department of Commerce,Annamalai University, Annamalai University,Annamalainagar - 608 002, Annamalainagar - 608 002,E-mail: [email protected] E-mail: [email protected]

ABSTRACT

There are different types of risks prevalent in agriculture. They may broadly be classified into six categoriesviz., price risk, production risk, technology risk, institutional, legal and social risk, personal risk andfinancial risk. Generally farmers produce various commodities and often make decisions under theconditions of risky environment. In India crop insurance is one of the instruments protecting farmersfrom agricultural variability. In the present study attempt the level of awareness and analysis the farmerperception towards crop insurance in the study area. For this purpose, 120 sample farmers were selectedin villupuram district through convenient sampling method. The study reveals that the awareness levelamong the farmers about crop insurance schemes in the study areas is very low, majority of respondents’gets information through bank and finance institutions because the farmer availed credit facility, farmersabout crop insurance schemes in the study areas is not satisfactory and 37.5 per cent of the farmersexpressed high displeasure about the procedural complexities in claims of their insurance if and whenloss happened to occur. The method of area approach (32.5% of the farmer) followed by the insurancecompany viz... National Agricultural Insurance Scheme in loss assessment (30.0% of the farmer) istotally unacceptable and unpleasant to the farmers.

Keywords: Agriculture, Risk, Technology, Perception, Insurance Schemes.

INTRODUCTIONAgriculture is synonymous with risk anduncertainty all over the world because agricultureis subject to vagaries of nature. Agriculturecontributes to 24 per cent of the GDP and anychange has a multiplier effect on the economy asa whole. Economic growth and agricultural growthare inextricably linked to each other. Agriculturalproduction implies an expected outcome or yield.Variability in outcomes from expected those whichare expected poses risks (Harwood et al 1999).Generally farmers produce various commoditiesand often make decisions under the conditions ofrisky environment. The consequences of thedecisions made by the farmers are not known withcertainty and the result may be better or worse thanthe expected. Variability in prices and yields arethe major types of risks in agricultural production.

There are different types of risks prevalent inagriculture. They may broadly be classified intosix categories viz., price risk, production risk,technology risk, institutional, legal and social risk,personal risk and financial risk. The market or pricerisk is generally associated with availability andpurchase of various input and marketing and saleof final products. The variability in prices mayoccur with in a season, year or over the years. Theproduction risk is usually associated withvariability in agricultural production process likevariability in yield, and production. This may bedue to several factors like rainfall, temperature,diseases, pests and the like. Sometimes, fire, wind,theft and other casualties are also lead to variabilityin yield and production. Risk management inagriculture ranges from informal mechanism likeavoidance of highly risky crops, diversificationacross crops and across income sources to formal

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mechanisms like agriculture insurance, minimumsupport price system and future’s markets.

Crop insurance is recognized to be a basicinstrument for maintaining stability in farmincome, through promoting technology,encouraging investment, and increasing credit flowin the agricultural sector. In India crop insuranceis one of the instruments protecting farmers fromagricultural variability. Agriculture instance is animportant risk management tool that has thepotential to provide financial security to the personengaged in agriculture and allied activities. Forcoping with natural risks, crop insurance is the onlymechanism available. It is an important instrumentthat protects agriculturists against uncertainties ofcrop production that are beyond their control. In acountry like India, where crop production has beensubjected to vagaries of weather and large scaledamage due to attack of pests and diseases,agriculture insurance assumes a vital role in thestable growth of the agriculture sector (Bhise etal., 2007).

Crop insurance in India was started with theintroduction of the All-Risk Comprehensive CropInsurance Scheme (CCIS) that covered the majorcrops in 1985 and later substituted and replacedby the National Agricultural Insurance Scheme thatcame into effect from 1999. Indian governmentand private sector companies provide Agricultureand Crop Insurance Schemes in India for farmers/crops including agriculture and crop insurance. Ina country like India the crop production is been asubject to changes in climatic conditions andconstantly tackling with are the large-scaledamages that are caused as a result of the majorcrops in 1985 and later substituted and replacedby the National Agricultural Insurance Scheme thatcame into effect from 1999.

Farmers to be covered include all farmersincluding sharecroppers, tenant farmers growinginsurable crops on:

a. Compulsory basis: All farmers growingnotified crops and availing SeasonalAgricultural Operations (SAO) loans fromFinancial Institutions i.e. Lone Farmers.

b. Voluntary basis: All other farmers growingnotified crops (i.e., Non-lone farmers) whoopt for the Scheme.

The scheme provides comprehensive riskinsurance against yield losses viz.: Natural Fireand Lightning, Storm, Hailstorm, Cyclone,Typhoon, Tempest, Hurricane, Tornado, Flood,Inundation and Landslide, Drought, Dry spells,Pests/Diseases etc. The Sum Insured (SI) mayextend to the value of the threshold yield of thecrop with an option to cover up to 150% of averageyield of the crop on payment of extra premium.The scheme has differential premium rates andvaries across crops. For food crops and oil seeds:Kharif season : 3.5 per cent of the sum insured forbajra and oilseeds and 2.5 per cent of sum insuredfor other food crops or actuarial rates, whicheveris less. For rabi season: 1.5 per cent of sum insuredfor wheat and 2.0 per cent for other food cropsand oil seeds or actuarial rates, whichever is less.

STATEMENT OF THE PROBLEMTraditional agriculture is a way of life for ourfarmers but now it is becoming a business. Alongwith the adoption of new technology in farmingthe problems faced by the farmers are alsoincreasing. There are problem of soil and watermanagement, natural hazards, technical know-how, marketing, finance, pests and diseases andso on. In finding the solution for these problems,crop insurance can be applied. An important rayof hope in this complex scenario of agribusinessis that new generation are more educated, youngand energetic have taken up to this enterprise.About 75% of the population is dependent directlyor indirectly on the agriculture sector. In manycountries crop insurance is accepted as anIntegrated Risk management mechanism managedby public and private enterprises. The knowledgeof crop insurance is very vital for each and everyfarmer. This knowledge on crop insurance will helpfarmers to minimize their risks associated withfarming. Farmers can minimize their risk if thereis a sound risk minimizing tool. The present studyis an attempt made by the researcher to study theFarmers’ Perception and Awareness towards CropInsurance in Villupuramdistrict of Tamil Nadu.

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OBJECTIVES OF THE STUDYThe following objectives are framed for thepresent study

� To measures the level of awareness of farmerabout crop insurance in the study area

� To analysis the farmer perception towards cropinsurance in the study area.

METHODOLOGYVillages from Villupuram district were selected forthe study because this district has the maximum

area of cultivation in various crops. For thispurpose, 120 sample farmers were selected on thebasis of convenient sampling method. Eachquestion item was improved for its relevance andmeaning by constant interaction with the expertsin the areas. The collected data has been analysedby using percentage analysis.

RESULTS AND DISCUSSIONThe results of the survey have been discussed infarmers’ awareness and perceptions towards cropinsurance.

R. Gnanasekaran, Dr. L. Pandiyan

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Table - 5 is evident in the results of the present study also as reported by 45.8


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The responses of the farmers on dissatisfactionover the crop insurance are presented in Table - 7.The respondents expressed dissatisfaction of cropinsurance products and schemes for many reasonsas many as seven in total. 37.5 per cent of thefarmers expressed high displeasure about theprocedural complexities in claims of theirinsurance if and when loss happened to occur. Themethod of area approach (32.5% of the farmer)followed by the insurance company viz...NationalAgricultural Insurance Scheme in loss assessment(30.0% of the farmer) is totally unacceptable andunpleasant to the farmers. The loss due to naturalcalamities is taken into account at firkah level andthe individual losses are not at all considered. Thisis one of the two the important weaknesses of thecrop insurance products or schemes implementedby the government. The other one is the uncertaintyof receiving any monitory claims like in lifeinsurance where there is a sum assured that thepolicy holder can get at least at the maturity. Herein the crop insurance the term sum insured doesnot give any assurance to the farmer who insureshis crop.

CONCLUSIONAgriculture in India is varied, diversified and proneto a variety of risks. Most of the farmers are small

and marginal ones. In most areas, agriculture israin fed, leading to a greater degree of yieldvariability and risk. In this scenario of high riskand uncertainty of rain fed agriculture, mitigatingthe risk of the farmers is an important aspect, whichthe decision makers must have to handle withutmost care. The awareness level of farmers aboutcrop insurance is very poor. They are not awareabout the existing crop insurance schemes of thegovernment. Farmers are dissatisfied with theexisting crop insurance schemes because of thehigh premium rate, less premium subsidy anddelay in the settlement of claims. The governmentshould give more focus on the purification of theexisting crop insurance schemes and to increasethe awareness level of farmers about cropinsurance. The government should give morepremium subsidy to motivate farmers to opt forcrop insurance. Awareness campaign should beconducted by the government from time to timein the village level to enhance the awareness levelof farmers about crop insurance. The existing cropinsurance schemes must be redesigned to attractmore number of farmers towards crop insurance.Insurance products for the rural areas should besimple in design and presentation so that they areeasily understood.

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REFERENCE

Barnett PA, Coble KH (1999). Understanding CropInsurance Principles: A Primer for Farm Leaders,Mississippi Satae Research Report No: 209, USA.

Bhende MJ (2005). Agricultural insurance in India:Problems and Prospects, NABARD OccasionalPaper No. 44.

Governmnet of India, The Working Group on RiskManagement in Agriculture, Report prepared for

the Eleventh Five Year Plan (2007-2012), PlanningCommission, GoI, New Delhi.

Nair, Reshmy. (2010). Crop Insurance in India:Changes and Challenges, Economic and PoliticalWeekly, XLV (6): 19-22.

Sinha, Sidhardh. (2007). Agricultural Insurance inIndia. Working Paper Series, Centre for Insuranceand Risk Management, Institute for FinancialManagement and Research, Chennai.


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A STUDY ON CLAIM SETTLEMENT ANDPOLICYHOLDER’S SATISFACTION OF MOTOR

INSURANCE PACKAGE POLICYMr. Yalama Reddy Ashok Kumar Reddy Dr. Byram AnandMBA Student Assistant professorDepartment of Management (IM) Department of ManagementPondicherry University Pondicherry UniversityKaraikal campus, Karaikal -609608 Karaikal Campus, Karaikal -609608Pondicherry Pondicherry

ABSTRACT

Motor insurance protects vehicles against losses arising from unforeseen risks. It basically covers financiallosses arising from accidents, theft and other natural calamities. Fatalities in road accidents in Indiaare moving up at a compounded annual rate of four per cent. Considering the high number and the poorstate of roads, Motor insurance is a necessary requirement. By law, Motor Insurance is mandatory.Motor Insurance provides financial cover not only to us but also covers damages to third party (peopletravelling with us). Motor Insurance also protects us from losses arising from natural calamities likecyclone, earthquake etc. In FY14, the incurred claims ratio (ICR) for the industry for motor insurancewas 79.5%; this decreased to 77% in FY15 Here third party includes people travelling with us or whomthe insured person injures and claims damages at the time of accident. But this insurance does notprotect us, our vehicle and co-passengers against losses which arise due to bodily injury/death. Buyinga comprehensive insurance coverage for your vehicle means there will be no out-of-pocket expenses.There are rules, limitations and conditions within the policy that will decide our final claim amount

Keywords: Insurance, Motor Insurance, claims settlements, premium, Insured claims, Third partyinsurance, Package Insurance Own-damages

INTRODUCTIONMotor insurance protects vehicles against lossesarising from unforeseen risks. It basically coversfinancial losses arising from accidents, theft andother natural calamities. Motor insurance is acontract for an automobile in which the insurancecompany agrees to pay for financial loss resultingfrom a said specified event.

Motor Insurance

In India, nearly 4 lakh people meet with accidentsevery month. Fatalities in road accidents in Indiaare moving up at a compounded annual rate offour per cent. Considering the high number andthe poor state of roads, Motor insurance is anecessary requirement. By law, Motor Insuranceis mandatory. Motor Insurance provides financialcover not only to us but also covers damages to

third party (people travelling with us). MotorInsurance also protects us from losses arising fromnatural calamities like cyclone, earthquake etc.

Premium paymentsInsurance companies work with different statisticsand use different methods to calculate premiums.Some companies are specialized in certain areasor types and so they are prepared to give discountsin those areas. This adds to the complexity asvarious companies yield varied prices.

Buying Motor InsuranceMotor Insurance can be confusing for many peopleas there is plethora of Motor policies and is anarduous (difficult) task to choose an Motor policywhich carry to protect our self compared to variouscoverage’s available.

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a. Depending on the vehicle you have

b. Claim settlement

c. Customer service

d. Discount & Deductible %

e. IDV (Insured Declared value)

INCURRED CLAIMS In FY14, the incurred claims ratio (ICR) for theindustry for motor insurance was 79.5%; thisdecreased to 77% in FY15. ICR is the ratio of paidclaims to the actual premium collected and iscalculated as net claims incurred/net premiumearned. A high ratio doesn’t bode well for theindustry as it means a large part of the premiumcollected is going into meeting claims.

“ICR has come down because third-partypremiums are increasing every year. But third partypremiums are still inadequate. Due to this, andincreased expense ratio, insurers continue to makelosses on the motor portfolio ,Non-life industry asa whole has improved on ICR-it was 81.70% in2014-15, lower than the 82% in the previous year.

TYPES OF COVERAGES:a. Third party insurance

this insurance is mandatory by law. It protectsa policy holder against losses which arise dueto bodily injury/death to a third party or anydamage to property. Here third party includespeople travelling with us or whom the insuredperson injures and claims damages at the timeof accident. But this insurance does not protectus, our vehicle and co-passengers against losseswhich arise due to bodily injury/death.

b. Package Insurance In addition to third party coverage, this policycovers us, our car and co-passengers againstdamages /losses arising from unforeseencalamities, hence it is prudent to purchase thispolicy.

Own-damages:

Coverage against loss of or damage to the vehiclecaused by accident, theft, fire, explosion, self-ignition, lightning, riots, strikes or act of terrorism,natural calamities

Third-party policy: Covers only our legal liabilityfor the damage that may cause to a third party -bodily injury, death and damage to third partyproperty - while using our vehicle. Personalaccident covers for the owner-driver subject toconditions.

Buying a comprehensive insurance coverage foryour vehicle means there will be no out-of-pocketexpenses. There are rules, limitations andconditions within the policy that will decide ourfinal claim amount

The limitations of and exclusions from a standardown-damages insurance contract

BENEFITS OF MOTOR INSURANCEIt is a financial safety net that can help us offsetthe cost of

• Bodily injuries to our self or others

• Lost wages due to injury

• Benefits to survivors when an accident resultsin death

• Lawsuits brought against you as the result ofan accident

• Repairs made to your vehicle due to damagecaused in an accident

COMMON PROBLEMS

••••• Stale claims (Out of date Claims)

••••• Insufficient documentation

••••• Hazy or unclear insurance coverage

••••• Choose the correct deductibles

••••• Lack of a police report

BACKGROUND OF THE STUDYThe motor vehicle act, 1939 introducedcompulsory insurance against such damage topeople. The insurance of motor vehicles againstown damage is not made compulsory, but theinsurance of third party liability arising out of theuse of the motor vehicles in public places is madecompulsory. As per this provision of the MV Actno motor vehicle can ply on road or in a publicplace without insurance. Hence an attempt is tostudy title of the study is “A study on claim

Mr. Yalama Reddy Ashok Kumar Reddy, Dr. Byram Anand

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settlement and policyholder’s satisfaction ofmotor insurance package policy.”

OBJECTIVES OF THE STUDY

• To understand the claim settlementprocedure in National insurance company

• To measure the customer satisfactiontowards Motor insurance package policyoffered by National insurance company

• To identify the problems faced by thepolicy holders during intimation andgetting the pay-outs

SCOPE OF THE STUDY• The focus of the study is to identify the

problems faced by individualpolicyholders and to measure the level ofsatisfaction towards claim settlement inPondicherry state.

LIMITATIONS OF THE STUDY• The Whole study was conducted only in

Pondicherry. Hence the results may notapplicable to other places

• Limited sample size had been consideredfor the study and therefore, the conclusionsdrawn based on this may not be a reflectionof the entire population may be biased.

REASEARH METHODOLOGY• Research design Descriptive Research

• Sampling technique : Convenient samplingtechnique

• Sample size : 82

• Sample respondents : Policy holders ofNational insurancecompany ltd.Pondicherry

• Research instrument : Interview Schedule

• Tools used : Percentage analysis andChi-square test

Sampling Unit:Motor insurance policy holders of Nationalinsurance company ltd Pondicherry.

DATA COLLECTIONPrimary Data

� Primary data have been directly collectedfrom insured through Interview schedule.

Secondary Data� The Secondary data collected from various

websites and books.

DATA ANALYSIS & INTERPRETATIONAfter collecting the data is analysed using thestatistical techniques. Are as follows:

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TABLE - 4 : OCCUPATION OF THE RESPONDENT

TABLE - 5 : PRODUCT PURCHASED


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TABLE - 6 : OVERALL SERVICE

TABLE - 7 : CLAIMS EXPERIENCED

TABLE - 8 : CLAIMS SATISFACTION

TABLE - 9 : DIFFICULTIES FACED

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TABLE - 10 : DIFFICULTIES FACED BY THE CLAIMANTSIN THE CLAIM PROCESS


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GENDER WITH CUSTOMER SATISFACTION

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Since the value of chi-square statistics is 6.07,degree of freedom 12 and the P- value is 21.02 ishigher than the commonly rejected level at 5%level of significance. Hence it was statically foundthat there is no significant difference between ageand customer satisfaction.

FINDINGS

• Out of 82 respondents 82% are male

• Most number of the respondents are havingpackage insurance policy i.e. 77%

• Majority of the respondents are satisfiedwith the services of the company i.e. 47%and some of respondents are highlydissatisfied with the service of thecompany i.e. 7%

• Most of the respondent’s opinion that delayin settling the claim of 44%.

• The study revealed that 40% respondentsfaced difficulties during the claimsettlement procedure.

• There is no significant difference betweenDemographic factors such as Age, Gender,and Occupation on customer satisfaction.

SUGGESTIONS

• The Company should take necessary actionto settle the claims as quick as possible toincrease the satisfaction level among thecustomers.

• The finding of the study expected to helpthe management to understand the basicdifficulties faced by the claimant in claimsettlement process and the result of thestudy enable the management of insurancecompany to do up their strategy and toredraft their policy regarding the claimssettlement.

Conclusion: It is necessary to have motorinsurance policy to overcome the uncertainty dueuneven of happing causing death. It not only coversthe vehicles insured it also covers the persons andthird parties so all the motor vehicles two wheelersor three wheelers or four wheelers must have totake the motor insurance

Bibliography:

1. R.K Ganatra (2010), Motor Insurance (IC-72), Insurance Institute of India: Mumbai

2. ICAI (2009), Motor Third Party Claims,The Institute of Chartered Accountants ofIndia: New Delhi.


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PERFORMANCE OF PRADHAN MANTRI FASAL BIMAYOJANA (PMFBY)

V. Vinay Kumar M.AnilKumarM.com Research ScholarDepartment of Commerce Department of CommerceOsmania University Osmania [email protected] [email protected]

ABSTRACT

Agriculture is rightly called as “Gambling with Monsoons” as it is dependent on vagaries which arehighly uncertain and farmers are prone to natural calamities like famines, floods, earthquakes, pestattack etc. in order to protect the farmers from the natural calamities and to ensure that they do notsuffer financial loss due to the occurrence of these calamities, the government has been taking up a no.of Crop Insurance Schemes like Comprehensive Crop Insurance Scheme (CCIS), Experimental CropInsurance, Farm Insurance Scheme, National Agriculture Insurance Scheme (NAIS) etc. presently thePradhan Mantri Fasal Bima Yojna is being offered for Crop Insurance which is in line with “One Nation– One Scheme” theme. This scheme replaces the National Agriculture Scheme and modified NAIS.

PMFBY is an efficient scheme framed for the benefits of the farmers as it not only provides insurancecoverage and financial support to the farmers of the natural calamities like floods, cyclones, drought,pests and diseases, but also stabilizes their income by encouraging them to adopt innovative and modernmethod of cultivation and ensures free flow of credit to the agricultural sector.

The present paper makes use of both Primary & Secondary data and attempts to evaluate the performanceof PMFBY. Questionnaire had been administered to farmers as well as the Agriculture & HorticultureOfficers to know their respective perception about the performance of this PMFBY Scheme. After analysisit is concluded that no doubt the PMFBY is an efficient scheme for protecting the farmers but unlessthere is full financial support given to the farmers and Claims are settled quickly they cannot reallybenefitted by it. It is also suggested that more initiatives be taken by the government to bring an awarenessabout the benefits to the farmers

Introduction:Agriculture in India is highly susceptible to riskslike droughts and floods. It is necessary to protectthe farmers from natural calamities and ensuretheir credit eligibility for the next season. For thispurpose, the Government of India introduced manyagricultural schemes throughout the country.

Some of the schemes are ComprehensiveCrop Insurance Scheme(CCIS), ExperimentalCrop Insurance, Farm Insurance Scheme, Nationalagriculture Insurance Scheme(NAIS). PresentlyPradan Mantri Fasal Bima Yojana(PMFBY) iscurrently in existence which was implemented inprevious budget. The PMFBY will replace the

existing two schemes National AgriculturalInsurance Scheme as well as the Modified NAIS.The new Crop Insurance Scheme is in line withOne Nation – One Scheme theme.

Objectives of Pradhan Mantri Fasal BimaYojana

1. To provide insurance coverage andfinancial support to the farmers in the eventof failure of any of the notified crop as aresult of natural calamities, pests &diseases.

2. To stabilize the income of farmers to ensuretheir continuance in farming.

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3. To encourage farmers to adopt innovativeand modern agricultural practices.

4. To ensure flow of credit to the agriculturesector.

Highlights of the schemeThere will be a uniform premium of only 2% tobe paid by farmers for all Kharif crops and 1.5%for all Rabi crops. In case of annual commercialand horticultural crops, the premium to be paid byfarmers will be only 5%. The premium rates to bepaid by farmers are very low and balance premiumwill be paid by the Government to provide fullinsured amount to the farmers against crop losson account of natural calamities.

There is no upper limit on Government subsidy.Even if balance premium is 90%, it will be borneby the Government.

Earlier, there was a provision of capping thepremium rate which resulted in low claims beingpaid to farmers. This capping was done to limitGovernment outgo on the premium subsidy. Thiscapping has now been removed and farmers willget claim against full sum insured without anyreduction.

The use of technology will be encouraged to a greatextent. Smart phones will be used to capture andupload data of crop cutting to reduce the delays inclaim payment to farmers. Remote sensing willbe used to reduce the number of crop cuttingexperiments.

PMFBY is a replacement scheme of NAIS /MNAIS, there will be exemption from Service Taxliability of all the services involved in theimplementation of the scheme. It is estimated thatthe new scheme will ensure about 75-80 per centof subsidy for the farmers in insurance premium.

Farmers to be coveredAll farmers growing notified crops in a notifiedarea during the season who have insurable interestin the crop are eligible.

Compulsory coverage: The enrolment under thescheme, subject to possession of insurable interest

on the cultivation of the notified crop in the notifiedarea, shall be compulsory for following categoriesof farmers:

Farmers in the notified area who possess a CropLoan account/KCC account (called as LoaneeFarmers) to whom credit limit is sanctioned/renewed for the notified crop during the cropseason and Such other farmers whom theGovernment may decide to include from time totime.

Voluntary coverage : Voluntary coverage may beobtained by all farmers not covered above,including Crop KCC/Crop Loan Account holderswhose credit limit is not renewed.

Risks covered under the schemeYield Losses (standing crops, on notified areabasis). Comprehensive risk insurance is providedto cover yield losses due to non-preventable risks,such as Natural Fire and Lightning, Storm,Hailstorm, Cyclone, Typhoon, Tempest,Hurricane, Tornado. Risks due to Flood,Inundation and Landslide, Drought, Dry spells,Pests/ Diseases also will be covered.

In cases where majority of the insured farmers ofa notified area, having intent to sow/plant andincurred expenditure for the purpose, are preventedfrom sowing/planting the insured crop due toadverse weather conditions, shall be eligible forindemnity claims upto a maximum of 25 per centof the sum-insured.

In post-harvest losses, coverage will be availableup to a maximum period of 14 days fromharvesting for those crops which are kept in “cut& spread” condition to dry in the field.

For certain localized problems, Loss / damageresulting from occurrence of identified localizedrisks like hailstorm, landslide, and Inundationaffecting isolated farms in the notified area wouldalso be covered.

Unit of InsuranceThe Scheme shall be implemented on an ‘AreaApproach basis’ i.e., Defined Areas for each

V. Vinay Kumar, M.Anil Kumar

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notified crop for widespread calamities with theassumption that all the insured farmers, in a Unitof Insurance, to be defined as “Notified Area fora crop, face similar risk exposures, incur to a largeextent, identical cost of production per hectare,earn comparable farm income per hectare, andexperience similar extent of crop loss due to theoperation of an insured peril, in the notified area.

Defined Area (i.e., unit area of insurance) isVillage/Village Panchayat level by whatsoevername these areas may be called for major cropsand for other crops it may be a unit of size abovethe level of Village/Village Panchayat. In duecourse of time, the Unit of Insurance can be a Geo-Fenced/Geo-mapped region having homogenousRisk Profile for the notified crop.

For Risks of Localized calamities and Post-Harvestlosses on account of defined peril, the Unit ofInsurance for loss assessment shall be the affectedinsured field of the individual farmer.Thegovernment also expects agriculture to grow at4.1%.

The industry saw big push from the governmentas farmers rushed to cover their crops for both theseason after having seen huge claims in theprevious two years due to rainfall.

Review of Literature:Many surveys are conducted in this crop oragriculture insurance. The main source of thisresearch is annual report of the ministry ofagriculture and farmer’s welfare, and IRDA annualreports of the crop insurance. Crop insurance inIndia a study by Sri G.venkatesh, Mumbai.

In the Absence of formal risk sharing/diffusionmechanisms, farmers rely on traditional modes andmethods to deal with production risk in agriculture.Many cropping strategies and farming practiceshave been adopted in the absence of crop insurancefor stabilizing crop revenue. Availability andeffectivness of these risk management strategiesor insurance surrogates depend on public policiesand demand for crop insurance (Walker and Jodha1986)

The risk bearing capacity of an average farmer thesemi-arid tropics is very limited. A large farmhouse hold or a wealthy farmer is able to spreadrisk over time and space in several ways: he canuse stored grains or savings during bad years, hecan diversify his crop production across differentplots. At a higher level income and staying power,the farmer would opt for higher average yields orprofits over a period of time even if it is achievedat the cost of high annual variability on output (RaoAtal, 1988)

Drought, flood, Freeze, hail, disease and insectsare some of the hazards to farmers face in growingcrops. Crop losses, especially in successive years,can be serious. They can result in increased debt,reduced reserves and curtailed spending. Inextreme situations, farmers may be forced todiscontinue operations, lenders and businessesdealing with farmers and the entire local ruraleconomy may be adversely affected when farmincomes drop. (Minsup Shim, 1988)

Agriculture in India is varied, diversified and proneto a variety of risks. Most farmers are small andmarginal ones in most areas agriculture is rain fed,leading to a great degree of yield variability andrisk. Crop insurance, which aims at addressingyield risk, though necessary for a vast majority offarmers is subject to structural, designed andfinancial problems, consequently crop insuranceschemes facing many problems. In response tosuch problems, schemes based on the area wereintroduced in the year 1980. Large number of smalland marginal farmers, and adoption of area basedapproach crop insurance scheme. However, issuesof governance and inter-agency coordination haveposed many challenges. (M.vamshidar, 2014)

Research Gap:

Many have done their research on variety of riskfactors in farming. Some have done their researchon the problems involved in the insurance scheme.There are very less studies conducted on PradhanMantri Fasal Bima Yojana (PMFBY) as it wasimplemented on February 2016.Till now there isno such research has been conducted to know the

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farmers, Horticulture and Agriculture departmentofficers’ perception towards the PMFBY scheme.

1.4. Need for the study:This study conducted to know the performance ofPradhan Mantri Fasal Bima Yojana (PMFBY)scheme for farmers to continue in farming whenthe damage or uncertainty occurs and stabilisestheir income after the loss of crop due to naturalcalamities or crop disease or pests.

This study is also conducted to know theperception of departmental officers of Horticultureand Agriculture towards PMFBY scheme.

Objectives of the study:i) To know the performance of Pradhan Mantri

Fasal Bima Yojana(PMFBY)

ii) To know whether the farmers are benefitedwith Pradhan Mantri Fasal Bima Yojana(PMFBY) crop insurance scheme.

iii) To know perception of department ofAgriculture and Horticulture officers onregarding PMBFY scheme.

Scope of the study:This study is conducted to know the role ofPradhan Mantri Fasal BimaYojana(PMFBY)scheme, on farmers which isconfined to the District of Mahabubabad,Maripeda mandal area only and on Agricultureofficers and horticulture officers are confined toTelangana state only.

Hypothesis Testing:Chi-square test (÷2)

To identify whether there appears a significantdifference in the respondents based on their gender,age, work experience and designation in contextto the questionnaire answered by them.

*Ho

= There exists no significant differencebetween the gender, type of crop of respondentsand responses of respondents.

**Ha

= There exists a significant differencebetween the gender, type of crop of respondentsand responses of respondents.

*H0= Null Hypothesis

**Ha= Alternative Hypothesis

2.1 Type of project:The project is based on the survey method,manually for farmers and online questionnaire toAgriculture officers and Horticulture officers. Afield of applied statistics of humanresearch surveys, survey methodology studies thesampling of individual units from a population andthe associated survey data collection techniques,such as questionnaire constructionand methods for improving the number andaccuracy of responses to surveys

2.2 Sources of Data:The present study based on primary data only,which was collected from farmers by the wayschedule which is sent through enumerators andalso online questionnaire which is sent throughmails to Agriculture and Horticulture officers.

The size of the sample is limited to 15 respondentsonly in respect of farmers and 19 respondents fromdepartmental officers.

2.3 Sampling Method:The study is conducted by using Conveniencesampling method (Non-random).Conveniencesampling is a non-probability sampling techniqueswhere subjects are selected because of theirconvenient accessibility and proximity to theresearcher.

2.4 Tools for Analysis:Chi-square test is used for this study. The testisapplied when you have two categorical variablesfrom a single population. It is used to determinewhether there is a significant association betweenthe two variables*.

*Gender, Type of crop and responses ofrespondents

2.5. Limitation of the study:Ø The study was conducted by the way of

convenience sampling method for collectingthe data from the respondents which may ormay not be true.


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Ø The size of the sample is limited to 34respondents only.

Ø The study considers only two attributes ofGender and Type of crop from which thewhole perception cannot be studied.

Ø The quantitative performance of the schemeis not evaluated.

DATA ANALYSIS &INTERPRETATIONChi-square test (÷2)

To identify whether there appears a significantdifference in the respondents based on their gender,age, work experience, type of farmer anddesignation in context to the questionnaireanswered by them.

Ho

= There exists no significant differencebetween the gender, type of the crop of therespondents and the responses of respondents.

Ha

= There exists a significant differencebetweenthe gender, type of the crop of therespondents and the responses of respondents.

Case 1- If the Pearson chi-square value (p) isgreater than 0.05(p>0.05) then, there is nosignificant association existing between thevariables. Thus accepting the null hypothesis ( H

o).

Case 2- If the Pearson chi-square value (p) is lessthan 0.05(p<0.05) then, there is significantassociation existing between the variables. Thusrejecting the null hypothesis (Ho) and acceptingthe alternative Hypothesis (H

a).

I) GENDER:Ho = There exists no significant differencebetween the gender of the respondents and theresponses of respondents.

Ha = There exists a significant difference betweenthe gender of the respondents and the responsesof respondents.

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INTERPRETATIONThe table Chi-Square Test of Gender of therespondents infers whether there exists asignificant difference between the gender of therespondents and the various attributes of thequestionnaire. It is evident from the obtainedresults, the calculated p-values all stands nosignificant.

Case 1- p value is greater than 0.05(p>0.05) then,there is no significant association existing betweenthe variables. Thus accepting the null hypothesis( H

o) and denoted as “N/S” in the table.

Case 2- p value is less than 0.05(p<0.05) then,there is significant association existing betweenthe variables. Thus rejecting the null hypothesis

(Ho) and accepting the alternative Hypothesis(H

a)

and is denoted as “S” in the above table.

The above test reveals that the gender of farmer isnot effecting their perception towards the schemePMFBY

I) Type of Crop: Agricultural crop orHorticultural crop

Ho = There exists no significant differencebetween the Type of crop of the respondents andthe responses of respondents.

Ha = There exists a significant difference betweenthe Type of crop of the respondents and theresponses of respondents.

INTERPRETATIONThe table Chi-Square Test of type of crop inferswhether there exists a significant differencebetween the type of crop of the respondents andthe various attributes of the questionnaire. It isevident from the obtained results; the calculatedp-values all stand not significant.

Case 1- p value is greater than 0.05(p>0.05) then,there is no significant association existing between

the variables. Thus accepting the null hypothesis( H

o) and denoted as “N/S” in the table.

Case 2- p value is less than 0.05(p<0.05) then,there is significant association existing betweenthe variables. Thus rejecting the null hypothesis (H

o) and accepting the alternative Hypothesis(H

a)

and is denoted as “S” in the above table.

The above test reveals that the type of the crop ofthe former is not effecting there perception towardsthe scheme PMFBY.


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The below data is Analysedfrom the respondents of department of Agriculture and Horticultureofficers:

The above chart show that 26.3% of respondentsstrongly agreed that PMFBY is supporting thefarmers to cover the risks like natural calamities,crop diseases and pest.

The above chart show that 42.1% of respondentsagreed that PMFBY is supporting the farmers tocover the risks like natural calamities, cropdiseases and pest.

The above chart show that 10.5% of respondentsneutrally agreed that PMFBY is supporting the

farmers to cover the risks like natural calamities,crop diseases and pest.

The above chart show that 21.1% of respondentsdisagreed that PMFBY is supporting the farmersto cover the risks like natural calamities, cropdiseases and pest.

The above chart show that 0% of respondentsstrongly disagreed that PMFBY is supporting thefarmers to cover the risks like natural calamities,crop diseases and pest.

The above chart show that 10.5% of respondentsstrongly agreed that PMFBY stabilizes the Incomeof the farmer when the damage or uncertaintyoccurs

The above chart show that 36.8% of respondentsagreed that PMFBY stabilizes the Income of thefarmer when the damage or uncertainty occurs

The above chart show that 26.3% of respondentsneutrally agreed that PMFBY stabilizes the Incomeof the farmer when the damage or uncertaintyoccurs.

The above chart show that 26.3% of respondentsdisagreed that PMFBY stabilizes the Income ofthe farmer when the damage or uncertainty occurs.

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The above chart show that 0% of respondentsstrongly disagreed that PMFBY stabilizes the

Income of the farmer when the damage oruncertainty occurs.

The above chart show that 5.3% of respondentsstrongly agreed that the PMFBY helps the farmerto continue farming after the losses incurred.

The above chart show that 47.4% of respondentsagreed that the PMFBY helps the farmer tocontinue farming after the losses incurred.

The above chart show that 10.5% of respondentsneutrally agreed that the PMFBY helps the farmerto continue farming after the losses incurred.

The above chart show that 36.8% of respondentsdisagreed that the PMFBY helps the farmer tocontinue farming after the losses incurred.

The above chart show that 0% of respondentsstrongly disagreed that the PMFBY helps thefarmer to continue farming after the lossesincurred.

The above chart show that 10.5% of respondentsstrongly agreed that the PMFBY helps the farmerto access innovative and modern agriculturespractices

The above chart show that 31.6% of respondentsagreed that the PMFBY helps the farmer to accessinnovative and modern agricultures practices.

The above chart show that 15.8% of respondentsneutrally agreed that the PMFBY helps the farmer

to access innovative and modern agriculturalpractices.

The above chart shows that 42.1% of respondentsthe disagreed PMFBY helps the farmer to accessinnovative and modern agricultures practices.

The above chart show that 0% of respondentsstrongly disagreed that the PMFBY helps thefarmer to access innovative and modernagricultures practices.


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The above chart show that 9.5% of respondentsstrongly agreed that the premium for PMFBYinsurance scheme collected is less than theprevious insurance schemes.

The above chart show that 47.6% of respondentsagreed that the premium for PMFBY insurancescheme collected is less than the previousinsurance schemes.

The above chart show that 14.3% of respondentsneutrally agreed that the premium for PMFBY

insurance scheme collected is less than theprevious insurance schemes.

The above chart show that 19% of respondentsdisagreed that the premium for PMFBY insurancescheme collected is less than the previousinsurance schemes.

The above chart show that 9.5% of respondentsstrongly disagreed that the premium for PMFBYinsurance scheme collected is less than theprevious insurance schemes.

The above chart show that 26.3% of respondentsstrongly agreed that the PMFBY Insurance schememore benefited than the previous insurancescheme.

The above chart show that 26.3% of respondentsagreed that the PMFBY Insurance scheme morebenefited than the previous insurance scheme.

The above chart show that 31.6% of respondentsneutrally agreed that the PMFBY Insurance

scheme more benefitial than the previous insurancescheme.

The above chart show that 15.8% of respondentsdisagreed that the PMFBY Insurance scheme morebenefited than the previous insurance scheme.

The above chart show that 0% of respondentsstrongly disagreed that the PMFBY Insurancescheme more benefited than the previous insurancescheme.

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The above chart show that 26.3% of respondentsstrongly agreed that the PMFBY Insurance schememore benefited than the previous insurancescheme.

The above chart show that 42.1% of respondentsagreed that the PMFBY Insurance scheme morebenefited than the previous insurance scheme.

The above chart show that 15.8% of respondentsneutrally agreed that the PMFBY Insurancescheme more benefited than the previous insurancescheme.

The above chart show that 15.8% of respondentsdisagreed that the PMFBY Insurance scheme morebenefited than the previous insurance scheme.

The above chart show that 0% of respondentsstrongly disagreed that the PMFBY Insurancescheme more benefited than the previous insurancescheme.

4. FINDINGS &CONCLUSIONS:4.1 Findings

Ø The study reveals that the Gender of farmer isnot effecting their perception towards thescheme PMFBY.

Ø The study reveals that the type of the crop ofthe farmer is not effecting their perceptiontowards the scheme PMFBY.

Ø Based on the chi-square test on gender tablemy study reveals that there is no significantdifference between the respondents.

Ø Similarly the chi-square test on type of farmertable my study reveals that there is nosignificant difference between therespondents.

Ø The study shows most of the respondents wereagreed that PMFBY is supporting the farmersto cover the risks like natural calamities, Cropdiseases & Pests

Ø The study shows most of the respondents wereneutrally agreed that PMFBY stabilizes theIncome of the farmer when the damage oruncertainty occurs

Ø The study shows most of the respondents wereagreed that the PMFBY helps the farmer tocontinue farming after the losses incurred

4.2 ConclusionBefore this scheme many schemes are there butthey were fail in claim settlement and coverage ofthe insured number of farmers is scheme will begoing to cover the more number of farmers inagricultural insurance. As well as it will givefinancial support to the farmers. Its successcompletely depends upon the banks and districtlevel committees. And also they were howeffectively using the technology for calculating thecrop loss on time.


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And finally nearly 60% of India’s populationdepends upon agriculture and agriculture alliedindustries so we have to secure the agriculturesectors. For that purpose implementing variousschemes to save and secure the Indian agriculture

References:Ø http://farmer.gov.in/FarmerHome.aspx

Ø http://vikaspedia.in/agriculture/agri-insurance/pradhan-mantri-fasal-bima-yojana#section-1

Ø h t t p s : / / e n . w i k i p e d i a . o r g / w i k i /Agricultural_insurance_in_India #Experimental_Crop_Insurance\

Ø h t t p s : / / a r c h i v e . o r g / s t r e a m /c r o p i n s u r a n c e l i t 0 0 s h i m /cropinsurancelit00shim_djvu.txt

Ø http://www.aicofindia.com/AICEng/General_Documents/Product_Profiles/PMFBY/PMFBY.pdf

Ø http://www.fasalbimayojana.in/

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IMPACT OF RURAL ENTREPRENEURSHIPDEVELOPMENT PROGRAMME (REDP) OF NABARD: A

STUDY OF SELECT DISTRICTS IN TELANGANA REGIONMarri. Ramesh Dr. Indrakanti SekharSenior Research Fellow Asst. ProfessorDepartment of Commerce Department of CommerceOsmania University, Hyderabad. Osmania University, Hyderabad.E-mail: [email protected] Email : [email protected] No: 9030039309. Mobile No: 9848451422

ABSTRACT

The present study reveals that REDP is as an efficient instrument in creating income and employmentopportunities for the rural youth especially for women in rural and semi-urban areas. The programmenot only rediscovered the economic potentials in the traditional art but also brought life to artisans. Italso supported the families with a supplementary income. The added advantage of REDP is that thereare large varieties of activities that can be covered under the training programme. It can be organized atany place and can be designed to suit any type / kind of target group. REDPs are designed differently fordifferent target groups. The programme is very flexible so that it can be designed according to the need.Most of the REDP activities are low investment-requirement enterprises. That is why without credit orother financial support the trainee could take up some micro entrepreneurial activities. Of course,sometimes the requirement of working capital and opportunity cost restricts the number of the trainees.

1. INTRODUCTIONNational Bank for Agriculture and RuralDevelopment (NABARD) was set up on 12 July1982 with the mandate to achieve rural prosperitythrough credit and related activities. Recognizingthe importance of the Rural Non-farm Sector(RNFS) in the faster economic development ofrural areas, NABARD had taken a number ofinitiatives, both with refinance support andpromotional assistance, for development of thissector. Of these, Rural EntrepreneurshipDevelopment Programme (REDP) is a majorpromotional initiative, which aims at developingenterprise and creating employment opportunitiesin rural areas.

2. REDP APPROACHPoverty and Unemployment continue to be thetwin bane of the Indian economy, more so in therural areas. The over dependence on agriculturefor employment had led to large scaleunemployment, under employment and disguisedemployment in rural areas, resulting in heavy

migration of rural poor to the urban areas. In orderto check this phenomenon, there is a need togenerate large number of jobs in the rural areas,especially in the decentralized Rural Non-FarmSector (RNFS), comprising of small, tiny, cottage,village industries and rural artisans. Apart fromcredit and other infrastructural support, it isnecessary to provide proper motivation, guidanceand skill training to rural youth for takingenterprises, as most of them is first generationentrepreneurs. Rural EntrepreneurshipDevelopment Programme (REDP) is the quick andtime tested route for development ofentrepreneurship and consequently, establishmentof rural enterprises.

3. OBJECTIVES OF THE REDPDevelop entrepreneurial and activity oriented skillsamong the educated unemployed rural youth, byassisting Voluntary Agencies (VAs) / Non-Governmental Organizations (NGOs) /Development Agencies (DAs), with good track

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record, to conduct REDP. Set up small / micro-enterprises, for creation of sustainable employmentand income-opportunities in rural areas, in a cost-effective manner. The agency conducting theREDP is expected to provide escort services totrainees, monitor the progress in setting up theirunits, at least for 2 years and also to furnish therequisite information / feedback to NABARD.

4. FEATURES AND COVERAGEREDP comprises three distinct phases, viz. Pre-training, training and post-training. Pre-trainingincludes (a) detailed survey for identifyingpotential business activities / market, (b) publicity,awareness creation and motivational campaign (c)coordination with various agencies - especiallyBanks, Govt. Departments, (d) formation ofSelection Committee and Project MonitoringCommittee and (e) selection of trainees.

5. TRAININGDuration of the programme is normally 6-8 weeks.Usually 25-30 trainees are accommodated in abatch. Training module comprises of (i)Achievement Motivation Training, (ii)Opportunity Identification Guidance, (iii)Knowledge on Supporting Agencies and Schemes,(iv) Preparation of Project Reports / Profiles, (v)Management of Resources— Men, Material,Money,(vi) Marketing Aspects and ( vii) Book-keeping / Accounting. In case of technical / activitybased REDPs, inputs on technical aspects / skilldevelopment / appropriate technology are alsogiven. In addition to the above, case studies onpotential activities, field visits to successful units,etc.

6. POST-TRAINING Escort services to trainees for ensuring creditlinkages for setting up units, which would be amajor parameter of success rate, (y) constantfollow-up / monitoring of trainees and their unitsfor at least two years and (z) proper feed back tosponsoring agency. Facilities required forconducting REDPs cover (i) training venue /classrooms (own or hired), (ii) training equipmentlike over head projector ( OHP), slide projector,television, VCR, PCs, etc., (iii) hostel facility for

trainees, (iv) trainer motivator faculty for co co-ordinating programme / taking classes and (v)skilled trainer and fully equipped workshop toimpart skill development programmes.

7. REVIEW OF LITERATURE:Rawal Ketan Ramkrishna Harshida (2013): Itwas observed that the performance of theentrepreneurs was well educated and technicallyqualified were better than the less qualifiedentrepreneurs. The experience and trainedentrepreneurs were able to promote the businessin the international market. The diamond industryis operated and established by their familymembers so at a young age the only majority ofthe entrepreneurs have joined the business due towhich they have a good experience in diamondjewellery industry. This experience of theentrepreneurs helps them to take a high risk to earnmore profit and make them successfulentrepreneurs.

Maria, Dabson and Johnson (2013): The studyconcludes that the recession marked a clear shiftin entrepreneurial motivations. Necessityentrepreneurship increased from approximately 16percent of total entrepreneurial activity in 2007 to28 percent in 2010. This shift was the result bothof individuals in part-time employment and withlower household incomes creating businesses outof need, and by those with full-time jobs beingaverse to taking the risk of starting a new venturewhen the economy is weak and the futureuncertain. Positive employment growth ratesbefore the recession motivated people in ruralAmerica to identify and exploit entrepreneurialopportunities, but this was not the case during therecession. The clear decline in opportunityentrepreneurship during the recession wasconsistent across different levels of rurality.

J. Jeya Ani (2012): The rural womenentrepreneurs having higher secondaryqualification possess higher enterprise skills thanthe other education qualification. The rural womenentrepreneurs doing family business have higherbusiness management skills than the family ofwomen entrepreneurs doing private occupation,

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agriculture and others. The rural womenentrepreneurs doing business as their primaryoccupation have higher technical skills than thewomen entrepreneurs doing private occupation,agriculture and other occupation. The rural womenentrepreneurs who are doing business as theirprimary occupation have higher Enterprise Skillsthan the other categories of respondents. The ruralwomen entrepreneurs doing other business suchas finance, land business have more generalproblems than the women entrepreneurs doingbusiness, private occupation and agriculture astheir occupation. The rural women entrepreneurshaving high school level of education have higherknowledge problems than the other categories ofeducational qualification. The rural womenentrepreneurs doing private occupation have morepsychological problems than the womenentrepreneurs doing business, agriculture and otheroccupations.

8. OBJECTIVE OF THE STUDY:1. To study the impact of REDP on the rural

unemployed youth.

9. METHODOLOGY:(a) Scope of the study:

The present study is confined to study the Role ofNABARD in facilitating REDPs and Rural Haatsfor Rural Development in select districts ofTelangana Region.

(b) Period of the study:The study period is from 2007-2015.

(c) Sources of the Data:The study is based on both primary data as well assecondary data. The primary data was collectedfrom the beneficiaries of the REDP and RuralHaats programmes.

Secondary data was collected from publishedinformation, such as Journals, News Papers, Booksand Internet.

(d) Selection of the Sample:Stratified sampling method is adopted for thestudy. Total sample size is 500. It consists of 400for REDP’s beneficiaries and 100 for Rural Haatsbeneficiaries.

REDP’s: Based on number of REDPs conducted,number of different types of implementingagencies involved (EDI, NGOs) two districts wereselected purposively from Telangana Region forthe study. Mahabubnagar and Medak districts wereselected based on the highest number of REDPs

conducted, number of different types ofimplementing agencies (EDIs, NGOs/ DAS)involved, and number of trainees. Out of 68 REDPsfrom 2007 to 2015 the selected districts conductedhighest number of REDPs (44) representing 64.7per cent of total. The Sample size is 400 out of

Table 1

Marri Ramesh, Dr. Indrakanti Sekhar

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2040 total numbers of beneficiaries. Equal numberof sample is taken for the study from each district.Sample is representative covering major districtsof Telangana region, which would facilitatedrawing meaningful interpretation.

10. IMPACT OF REDP THE RURALUNEMPLOYED YOUTH:

The program features of motivation to start thebusiness, obtaining credit linkage, commitment

level to work, decision making and incomegeneration of REDP training programme. Thestudy is intended to test whether REDP trainingprogramme has any impact on the beneficiariesusing chi-square test. For this purpose test ofhypothesis are has been framed and the test resultsshow below.

Table 2 shows the motivation to start the businessafter attending the NABARD training programme,400 respondents are interviewed based on variouseducational qualifications and then opinion arelisted as very low, low, moderate, high and veryhigh. Out of 400 sample beneficiates 2 arerepresented from below S.S.C, out of it one (50%)beneficiary is stated that the REDP trainingprogramme highly helpful, and another one (50%)beneficiary is stated that the REDP trainingprogramme moderately helpful in starting thebusiness unit.

Out of 400 sample beneficiates 167 are representedfrom S.S.C., out of it 54 (32.3%) beneficiaries arestated that the REDP training programme highlyhelpful, following 47 (28.1%) beneficiaries arestated that the training programme moderatelyhelpful in starting the business unit.

Out of 400 sample beneficiates 187 are representedfrom plus two educations, out of it 67 (35.8%)beneficiaries are stated that the REDP trainingprogramme highly helpful, following 62 (33.2%)are stated that the training programme moderatelyhelpful in starting the business unit.

Out of 400 sample beneficiates 44 are representedfrom degree educations, out of it 16 (36.4%)beneficiaries are stated that the REDP trainingprogramme is moderately helpful; following 10(22.7%) beneficiaries are stated that the trainingprogramme is highly helpful in starting thebusiness unit.

Therefore it is concluded that majority ofbeneficiaries 132 (33.0%) are stated that the REDPtraining programme is highly motivated to startthe business unit. Hence, to study the relationshipbetween educational qualification and themotivation to start the business after the training,a null hypothesis is formulated as below.

Table 2

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H0: There is no significant relationship between educational qualification and motivation to start the

business after the training

From the above table the p-value (0.601) is morethan the significance level (0.05), hence acceptsthe null hypothesis. Thus, it can be concluded thatthere is no relationship between educationalqualification and motivation to start the businessafter the REDP training.

The above analysis reflects that both variables areindependent and suggest that there is no

relationship between motivation to start thebusiness after the training and educationalqualification. Therefore it is concluded that all thebeneficiaries regardless of educationalqualification are motivated to start the businessafter the training based on the primary data.

Table 4 shows the obtaining credit linkage withthe banks start the business after attending theNABARD training programme, 400 respondentsare interviewed based on various educationalqualifications and then opinion are listed as verylow, low, moderate, high and very high. Out of400 sample beneficiates 2 are represented frombelow S.S.C, out of it 2 (100%) beneficiaries arestated that the REDP training programme highlyhelpful in obtaining credit linkage with the banksthrough the NABARD to start the business unit.

Out of 400 sample beneficiates 167 are representedfrom S.S.C., out of it 65 (38.9%) beneficiaries arestated that the REDP training programmemoderately helpful, following 60 (35.9%)beneficiaries are stated that the training programmehighly helpful in obtaining credit linkage with thebanks through the NABARD to start the businessunit.

Out of 400 sample beneficiates 187 are representedfrom plus two educations, out of it 63 (33.7%)beneficiaries are stated that the REDP trainingprogramme moderately helpful, following 62

Table 3

Table 4


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(33.2%) are stated that the training programmehighly helpful in obtaining credit linkage with thebanks through the NABARD to start the businessunit.

Out of 400 sample beneficiates 44 are representedfrom degree educations, out of it 19 (43.2%)beneficiaries are stated that the REDP trainingprogramme is highly helpful; following 12 (27.3%)beneficiaries are stated that the training programmeis less helpful in obtaining credit linkage with the

banks through the NABARD to start the businessunit.

Therefore it is concluded that a maximum ofbeneficiaries 143 (35.8%) are stated that the REDPtraining programme is highly helpful in obtainingcredit linkage with the banks through theNABARD to start the business unit. Hence, tostudy the relationship between educationalqualification and obtaining credit linkage, a nullhypothesis is formulated as below.

H0: There is no significant relationship between educational qualification and obtaining credit linkage

From the above table the p-value (0.132) is morethan the significance level (0.05), hence acceptsthe null hypothesis. Thus, it can be concluded thatthere is no relationship between educationalqualification and obtaining credit linkage to startthe business after the REDP training.

The above analysis reflects that both variables areindependent and suggest that there is no

relationship educational qualification andobtaining credit linkage to start the business afterthe REDP training. Therefore it is concluded thatall the beneficiaries regardless of educationalqualification are obtaining credit linkage to startthe business with the help of NABARD after theREDP training based on the primary data.

Table 5

Table 6

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Table 6 shows the obtaining statutory clearancesfor setting up the unit after attending the NABARDtraining programme, 400 respondents areinterviewed based on various educationalqualifications and then opinion are listed as verylow, low, moderate, high and very high. Out of400 sample beneficiates 2 are represented frombelow S.S.C, out of it one (50%) beneficiary isstated that the REDP training programme highlyhelpful, and another one (50%) beneficiary isstated that the REDP training programmemoderately helpful in obtaining statutoryclearances for setting up the unit

Out of 400 sample beneficiates 167 are representedfrom S.S.C., out of it 68 (40.7%) beneficiaries arestated that the REDP training programmemoderately helpful, following 44 (35.9%)beneficiaries are stated that the training programmehighly helpful in obtaining statutory clearances forsetting up the unit

Out of 400 sample beneficiates 187 are representedfrom plus two educations, out of it 79 (42.2%)

beneficiaries are stated that the REDP trainingprogramme moderately helpful, following 51(27.3%) beneficiaries are stated that the trainingprogramme highly helpful in obtaining statutoryclearances for setting up the unit

Out of 400 sample beneficiates 44 are representedfrom degree educations, out of it 17 (38.6%)beneficiaries are stated that the REDP trainingprogramme is moderately helpful; following 10(22.7%) beneficiaries are stated that the trainingprogramme is highly helpful in obtaining statutoryclearances for setting up the unit

Therefore it is concluded that majority ofbeneficiaries 165 (41.3%) are stated that the REDPtraining programme is moderately helpful inobtaining statutory clearances for setting up theunit under the NABARD training programme.Hence, to study the relationship betweeneducational qualification and obtaining statutoryclearances, a null hypothesis is formulated asbelow. Using one way ANOVA the significanceof the difference has been tested.

H0: There is no significant relationship between educational qualification and obtaining statutory

clearances

From the above table the p-value (0.023) is lessthan the significance level (0.05), hence rejectedthe null hypothesis. Thus, it can be concluded thatthere is a relationship between educationalqualification and obtaining statutory clearances forsetting up the business unit after the REDPtraining.

The above analysis reflects that both variables aredependent and suggest that there is a relationshipeducational qualification and obtaining statutoryclearances for setting up the business unit.Therefore it is concluded that educationalqualification plays a major role in obtainingstatutory clearances to setting up the new businessunit.

Table 7


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Table 8 shows the ready to take risk with tolerancefor failure in the business after the REDP training,400 respondents are interviewed from variouseducational qualifications and then opinions arelisted as very low, low, moderate, high and veryhigh. Out of 400 sample beneficiaries, 2 arerepresented from below S.S.C, out of it one (50%)beneficiary is stated that the REDP trainingprogramme highly helpful, and another one 1(50%) beneficiary is stated that the REDP trainingprogramme very highly helpful in ready to takerisk for failure in the business with tolerance

Out of 400 sample beneficiates 167 are representedfrom S.S.C., out of it 64 (38.3%) beneficiaries arestated that the REDP training programmemoderately helpful, following 55 (32.9%)beneficiaries are stated that the training programmenot helpful in ready to take risk for failure in thebusiness with tolerance

Out of 400 sample beneficiates 187 are representedfrom plus two educations, out of it 76 (40.6%)

beneficiaries are stated that the REDP trainingprogramme moderately helpful, following 65(34.8%) beneficiaries are stated that the trainingprogramme not helpful in ready to take risk forfailure in the business with tolerance

Out of 400 sample beneficiates 44 are representedfrom degree educations, out of it 17 (38.6%)beneficiaries are stated that the REDP trainingprogramme is moderately helpful; following 10(22.7%) beneficiaries are stated that the trainingprogramme is not helpful in ready to take risk forfailure in the business with tolerance

Therefore it is concluded that a maximum ofbeneficiaries 157 (39.3%) are stated that the REDPtraining programme is moderately helpful to takerisk for failure in the business with tolerance.Hence, to study the relationship betweeneducational qualification and the ready to take riskwith tolerance for failure, a null hypothesis isformulated as below.

H0: There is no significant relationship between educational qualification and ready to take risk with

tolerance for failure after the training

Table 8

Table 9

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From the above table the p-value (0.098) is morethan the significance level (0.05), hence acceptsthe null hypothesis. Thus, it can be concluded thatthere is no relationship between educationalqualification and ready to take risk with tolerancefor failure after the training

The above analysis reflects that both variables areindependent and suggest that there is norelationship between ready to take risk withtolerance for failure and educational qualification.Therefore it is concluded that all the beneficiariesregardless of educational qualification are readyto take up risk with tolerance for failure in doingbusiness obtaining statutory clearances to settingup the business unit with the help of NABARDafter the REDP training based on the primary data.

11. CONCLUSION:The majority of beneficiaries 132 (33.0%) arestated that the REDP training programme is highlymotivated to start the business unit. A maximumof 143 beneficiaries (35.8%) are stated that theREDP training programme is highly helpful inobtaining credit linkage with the banks throughthe NABARD to start the business unit. Majorityof beneficiaries 165 (41.3%) are stated that theREDP training programme is moderately helpfulin obtaining statutory clearances for setting up theunit under the NABARD training programme.157 (39.3%) beneficiaries are stated that the REDP

training programme is moderately helpful to takerisk for failure in the business with tolerance.

12. REFERENCE :

1. Rawal Ketan Ramkrishna Harshida (2013):“Entrepreneurship – A Sectoral Study ofDiamond Jewellery Industry” thesisSubmitted to the Department of Commerce& Management Shri JagdishprasadJhabarmal Tibrewala University, Chudela,Jhunjhunu, Rajasthan, 2013.

2. Maria Figueroa-Armijo’s, Brian Dabson,and Thomas G. Johnson (2013): “RuralEntrepreneurship in a Time of Recession”.Institute of Public Policy, Harry S TrumanSchool of Public Affairs, Report-1, January2013.

3. J. Jeya Ani (2012), “A Study on RuralWomen Entrepreneurship in TirunelveliDistrict”, Ph.D thesis, submitted toDepartment Of Commerce, ManonmaniamSundaranar University, Tirunelveli, April2012.

4. . Annual report of NABARD – 2012



7. . Annual report of NABARD - 2015


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PERFORMANCE EVALUATION OF NATIONALPENSION SCHEME – A COMPARATIVE ANALYSIS

OF SBI AND HDFCDr. Ravi Kumar Jasti Mr. B. Arun Kumar

Asst. Professor of Commerce Research ScholarOsmania University, Hyderabad Osmania University, Hyderabademail : [email protected] email : [email protected]

ABSTRACT

The present study is focused on understanding the performance of pension scheme funds collected andmanaged under National Pension Scheme, which was introduced by the Central Government of India.This paper has comprehensively analyzed the issues related to new pension schemes (NPS) and highlightsthe appropriate gaps in the system through analytical studies between the SBI and HDFC pension schemesin India. This study also examines the process of joining in NPS, allocation funds by NPS Fund managersinto three alternative available funds viz, Equity, Corporate and Government Securities. The study furtheranalyzed performance of SBI pension fund and HDFC on the basis of four years of NAV. As per theanalysis the SBI is performing well when compare to HDFC.

KEYWORDS:Social security, Pension, Net Asset Value( NAV), National Pension Scheme (NPS) NationalPension Funds (NPF) and old age security.

I. INTRODUCTIONThe change in the demographic pattern of theeconomies particularly developing ones withtheadvent of time, have created animportantconcern for the population of those countries aswell as the authorities and policy makers. Rise inpopulation with increased rate of life expectancyhas called for social security concerns, especiallyin the Asian economies such as China and India.

Since India is the second most populated countryin the world with maximum young population atpresent, it is going to have a high proportion ofelderly population in coming years. As per thepopulation census of India, 2011, the elderlypopulations (above 60 years) consist of almost 9per cent (100 million) of the total population.According to the estimates by the United NationsPopulation Fund (UNFPA) and Help AgeInternational in 2012, the number of elderlypopulation is about to 325 million which is 23 percent of the total population of India by 2016.

The country therefore has a tremendous burden ofproviding old age security besides issues regardingincome and employment in advancing years withother social security measures

like unemployment relief. The increasingdependency ratio brings more economic pressureon the economy which ultimately has an impacton financial expenditures on social securitymeasures. The old age dependency ratio in Indiahas increased from 13.1 per cent in 2001 to14.2per cent in 2011.

Pension coverage in India has mainly been basedfinance through employer and employeeparticipation. As a result, the major retirementbenefits are mostly been restricted to the organizedsector which constitutes about 10% of the totalworking population. Rest 90%worker who are inunorganized sector are not cover under the ambitof any social security system. Although there havebeen some old age security schemes in Indiahowever an important feature of these schemes is

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that, these are based on Defined Benefit systemwhich poses a great burden on the exchequer.

To reduce this burden, National Pension System(NPS), which is based on Defined Contribution(DC) system, was introduced in January 2004forcivil servants only (except armed forces) butsubsequently it was open for all the citizens ofIndia under All Citizens Scheme in May2009 andintroduced the Swavalamban Scheme under NPSwhich is a Defined Contribution (DC) voluntarypension scheme exclusively for the people of theunorganized sector in 2010. There have been morethan five years since the launch of the NPSSwavalamban Scheme and the participation rateof the unorganized sector in this scheme isinsignificant. This raises the question of whetherthe scheme is actually meeting its purposes. Is itcovering the unorganized sector to provide themthe low cost pension benefit and achieve the broadagenda of financial inclusion.

To manage the contribution of citizens who areinvesting in NPS scheme GOVENAMENT OFINDIA was given permission to eight companies(Insurance and banks) to act as pension fundmanager they are,

· HDFC Pension Management CompanyLimited

· ICICI Pension management companylimited

· KOTAK MAHINDRA Pension fundlimited

· LIC Pension Fund Limited

· Reliance Capital Pension Fund Limited

· SBI Pension Fund Limited

· UTI Retirement Solutions Limited

· Birla Sun Life Pension Management

From the above eight companies to PFMS i.e., SBIand HDFC companies have selected analyse andcompare the performance of NAV for the periodof 2013-17.

II.THE INDIAN PENSION SECTORThe old age pension scheme in India can be tracedback to 1881when the Royal Commission on CivilEstablishments started giving pension benefits tothe government employees during British rule.Since then, the concept of pension was incepted.With the advent of time, Indian Government Actsmade further provisions in 1919 and1935.Schemeslike General Provident Fund (GPF) underWorkmen Compensation Act, 1923 was launchedfollowed by Coal Mines Provident Fund Schemein 1945 for the coal mine employee.

Pension plans provide financial security andstability during old age when people don’t have aregular source of income. Retirement plan ensuresthat people live with pride and withoutcompromising on their standard of living duringadvancing years. Pension scheme gives anopportunity to invest and accumulate savings andget lump sum amount as regular income throughannuity plan on retirement.

United Nations Population Division say’s World’slife expectancy is expected to reach 75 years by2050 from present level of 65 years because ofThe better health and sanitation conditions in Indiahave increased the life span. As a result numberof post-retirement years increases. Thus, rising costof living, inflation and life expectancy makeretirement planning essential part of today’s life.The Government of India has started the NationalPension System to provide social security to morecitizens.

NATIONAL OLD AGE PENSION SCHEME(NOAPS)This scheme came was introduced on 15 August1995. The scheme provides pension to old peoplewho were above the age of 65 (now 60) who couldnot find for themselves and did not have any meansof subsistence. The pension that was given wasRs 200 a month by the central government. Thejob of implementation of this scheme instates andunion territories is given to panchayats andmunicipalities. The state’s contribution may varydepending on the state. The amount of old age

Dr. Ravi Kumar Jasti, Mr. B. Arun Kumar

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pension is Rs. 300 per month for applicants aged60–79. For applicants aged above 80 years, theamount has been revised in Rs. 750 a month.

SWAVALAMBAN YOJANAThis was a government-backed pension schemetargeted at the unorganised sector in India. It wasapplicable to all citizens in the unorganised sectorwho joined the National Pension Scheme (NPS)administered by the Pension Fund Regulatory andDevelopment Authority (PFRDA) Act 2013.Thisscheme has been replaced with Atal PensionYojana, in which all subscribing workers belowthe age of 40 are eligible for pension.And pensionwill be provided on attainment of 60 years of age.

A large portion of India’s population had beenliving without any kind of health, accidental, orlife insurance for so long. It was estimated thatthe unorganised sector workers, which constitute88% of the total labour force of 47.29 crore, asper the 66th Round of NSSO Survey of 2011-12,do not have any formal pension provision. TheBudget 2015-16 highlighted this issue andproposed three social security schemes, PradhanMantri Suraksha Bima Yojna, Atal PensionYojanaand Pradhan Mantri Jeevan Jyoti BimaYojana.These three schemes are based on JanDhanYojana platform to protect citizens at the timeof illness, accidents or old age.

Encouraged by the success of the PradhanMantriJan DhanYojana, the Government of Indiaproposed to work towards creating a universalsocial security system for all Indians, specially thepoor and the under-privileged and the workers inthe unorganised sector, using the bank accountsas the basis for launching the schemes. The PrimeMinister launched the three social securityschemes on 9th May, 2015 to provide pension andinsurance cover to the poor and underprivileged.

Atal Pension Yojana (previously known asSwavalamban Yojana) is a government-backedpension scheme in India targeted at theunorganised sector. It was originally mentionedin the 2015 Budget speech by Finance MinisterArunJaitley in February 2015.[1] It was formally

launched by Prime Minister NarendraModi on 9May in Kolkata.[2] As of May 2015, only 11% ofIndia’s population has any kind of pension scheme,this scheme aims to increase the number.[3]

In Atal Pension Yojana, for every contributionmade to the pension fund, The Central Governmentwould also co-contribute 50% of the totalcontribution or ¹ 1,000 (US$16) per annum,whichever is lower, to each eligible subscriberaccount, for a period of 5 years. The minimumage of joining APY is 18 years and maximum ageis 40 years. The age of exit and start of pensionwould be 60 years. Therefore, minimum period ofcontribution by the subscriber under APY wouldbe 20 years or more.

NATIONAL PENSION SCHEME

National Pension System (NPS) is an investmentcum pension scheme initiated by Government ofIndia to provide old age security and pension ofall citizen of India. The NPS was rolled out for allcitizens of India on May 01, 2009. The Scheme isregulated by Pension Fund Regulatory andDevelopment Authority (PFRDA).

ELIGIBILITY CRITERIA FORSUBSCRIBERS

A citizen of India, whether resident or non –resident can join the NPS subject to followingconditions

· Subscriber should be between 18 – 60years of age as on the date of submissionof her application

· Subscriber should comply with theprescribed Know Your Customer (KYC)norms as detailed in the SubscriberRegistration Form for NPS

RULES OF NPSThe scheme is based on unique PermanentRetirement Account Number (PRAN) which isallotted to each Subscriber upon joining.Subscriber contributes towards NPS (directly orthrough the Employer she is working with) duringher working life. On retirement or exit from thescheme, the Corpus is made available to her/him

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with the mandate that some portion of the Corpusmust be invested in to Annuity to provide amonthly pension post retirement or exit from thescheme

TYPES OF NPS ACCOUNTSUnder NPS, Subscriber gets the option to opentwo accounts. A Tier I account is mandatory toopen in order to join NPS. Difference between TierI and Tier II accounts are as mentioned below

In the entire life span Subscriber will be allowedto open only one NPS Account. The NPS Accountnumber which is also called PRAN is fully portableacross job and geography.

Tier II NPS Account is optional to the Subscriber.Subscriber can open Tier – II NPS Account lateron as wellSubscriber must be in Active Tier – INPS Account is a must criterion for opening Tier– II NPS Account. Subscriber cannot apply for onlyTier – II NPS Account

III.INVESTMENT OF FUNDS UNDER NPSContribution of NPS are investing in threecategories of funds.

· Equities (E)

· Corporate Bonds (C)

· Government Securities (G)

Any case investment in Equities should not bemore than 50 per cent of contribution. However,Subscriber can invest up to 100% in CorporateBonds or Government Securities Fund.

Investment Options under NPSThere are two investment options available underNPS

· Active Choice:(Subscribers choice) underthis option, Subscriber gets the flexibilityto choose her own asset allocation acrossEquity, Corporate Bonds and GovernmentSecurities. Investment in Equity isrestricted to 50% of Contribution amount.However, in Corporate Bonds andGovernment Securities Subscriber caninvest 100% of Contribution amount

· Auto Choice (Pension Fund ManagerChoice) under this option investmentacross Equity, Corporate Bonds andGovernment Securities is done as per theage of the Subscriber the investment ageis between 35 to 55 years


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Above table shows the allocation of funds invarious categories of funds.If the investor join inthe scheme at age of below 35, fifty percentage ofthe funds in equity, thirty percentage of the fundsin corporate bonds and 20 percentage of the fundsgovernment securities will be invested. At the sametime 10 percentage in equities 10 percentagecorporate bonds and at 80 percentage of funds ingovernment securities at the age of 55 years willbe invested.

Performance of the NPS funds is depending onthe returns generated under Equity, CorporateBonds and Government Securities funds.Subscriber can switch the asset allocation patternunder Active Choice twice in a financial year.Subscriber gets this flexibility

Objective of the Study:This paper focuses on the following objectives:

- To understand the concept of NPS and it’sHistorical waves

- To analyse the performance of NPS pensionfunds of SBI and HDFC on the basis of NAV

HypothesisHo1: There is no significance difference in theperformance of investment inGovernmentSecurities of SBI and HDFC.

Ho2:There is no significance difference in theperformance of investment in corporate bonds ofSBI and HDFC.

Ho3:There is no significance difference in theperformance of investment in Equity of SBI andHDFC.

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MethodologyThis study is based on a secondary data collectedfrom SBI and HDFC NAV historical reports andother information from NSDL. We have takenempirical data from The HDFC and SBI pensionfunds on annual average basis. T-test was used totest the performance.

AnalysisPerformance Analysis of NPS investment madein corporate Bonds, Government Securities andEquity has presented in the following tables.

The above table presents the performance variationof investment made by SBI and HDFC inGovernment Securities under NPS Scheme.Sincepvalue (i.e. .511) is greater than our chosensignificance level á = 0.05, Null hypothesisis notaccepted, and it is concluded that the mean of

Government Securities NAV’s for SBI and HDFCis significantly different.

The mean NAV of SBI is 5.52353 is more thanNAV of HDFC. It indicates that the performanceof SBI is better than HDFC in GovernmentSecurities.


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The above table the presents the performancevariation of investment made by SBI and HDFCin Corporate Bonds under NPS Scheme.Since pvalue (i.e. .406) is greater than our chosensignificance level á = 0.05, Null hypothesis notaccepted, and it is concluded that the mean of

Corporate Bonds NAV’s for SBI and HDFC issignificantly different.

The mean NAV of SBI is 6.75893 is more thanNAV of HDFC. It indicates that the performanceof SBI is better than HDFC in corporate bonds.

The above table the presents the performancevariation of investment made by SBI and HDFCin in Equity category under NPS Scheme. Since pvalue (i.e. .707) is greater than our chosensignificance level á = 0.05, Null hypothesis is notaccepted and it is concluded that the mean ofEquity NAV’s for SBI and HDFC is significantlydifferent.

The mean NAV of SBI is 2.57591 is more thanNAV of HDFC. It indicates that the performanceof SBI is better than HDFC in Equity NAV’s.

ConclusionThis paper examines the process of joining in NPS,allocation funds by NPS Fund managers into threealternative available funds viz, Equity, Corporateand Government Securities . The study analyzedperformance of SBI pension fund and HDFC onthe basis of four years of NAV. As per the analysisthe SBI is performing well when compare toHDFC. It is concluded that the SBI’s NationalPension Scheme investments yields more returnscompared to HDFC NPS fund in the all the threecategories if funds.

References:1) https://www.npscra.nsdl.co.in/FATCA-Self-

Declaration.php

2) https://india.gov.in/spotlight/national-pension-system-retirement-plan-allhttps://cra- dl.com/CRA

3) https://npscra.nsdl.co.in

4) The Project Old Age Social and IncomeSecurity (OASIS) Report (2000).

5) Ministry of Social Justice and Empowerment.Government of India.

6) Sadhak H (2013) Pension Reform in India:The Unfinished Agenda. SagePublications,India.

7) Andrews E S and Rashid M (1996); TheFinancing of Pension Systems in Central anEastern Europe; An overview of Major trendsand their Determinants 1990-1993 WorldBank Technical Paper No 339, World BankWashington DC

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EMOTIONS & CUSTOMER PURCHASE DECISION-WITH REFERENCE TO INSURANCE PRODUCTS

Namratha Sharma Dr.A.PatrickAnthonyResearch Scholar, Assistant Professor,Department of Commerce, Department of Commerce,Osmania University. Osmania University

ABSTRACT

The study emphasis on Emotions and Customer Purchase Decision, where it broadly focuses on variousemotions and how these emotions are emotionally involved an individual. It also emphasise on howthese emotional attachment makes the customer purchase .The spotlight of the study is where the numerousemotions are attached to insurance product. Hence the study intent to find the effect of emotions incustomer purchase behaviour. This study is applicable in terms of objective and various hypotheses areimplemented. To collect the data a self administered questionnaire was designed and the data is collectedfrom the region of Hyderabad, Using a convenient sample of 98 respondents. The data is analysed withassorted methods like Greater Point Average, Graphical representation and the Chi squared test. Resultsindicated that there are emotions attached to product purchase, but there is no significant difference ingender specific, age and qualification level. However the effect of emotions in customer purchase designwas supported.

Keywords: Emotional Attachment, Customer Purchase Behaviour, Assorted, Gender Specific,Qualification Level.

INTRODUCTION:Every drive of purchase which an individual goesthrough is attached to the emotions what they carryalong. Emotions are imperative and cannot beoverruled while a purchase decision is being made.Though necessity is a basic reason to buy aproduct, many other factors get involved till theultimate purchase is made. Where, the personalemotions are one of the dominant factors. Reasonbehind a person overspending or under spendingcan be connected to the emotions which he carriesfor a particular purchase.

In Saturated market, apart from state of mind,desires plays a vital role where the emotions,sympathy become predominant. Keeping thingsuntouched like price of the product, qualitysupplied, the customer expects the level of trust,love and dreams which are intangible factors. Thebasic principle of customer pleasure becomes veryimportant when it comes to emotions. Emotionsare that characteristic element that adds value to

enhance the supply of product or services.Especially designed and managed with rigor andethical spirit. The customers not only look for theirpresent need and be rational but also become acentre of idealistic meaning, psychological andcultural. Driven by two various needs customerpurchase decision depends upon functional needwhich satisfy the product function and emotionalneed which is associated with psychological aspectof product ownership which means it should notonly show emotions but also function considerably.The various companies in market sellhomogeneous product it is necessary to diversifythem with other factors. For example people don’tconsider only the product café, ice-cream butconsider how (with music, fragrances) and inwhich context they drink a café or they eat an icecream. The company will not sell a simple perfumebut one component of a complex supply thatconsists on the experience to awaken all sensesderiving from the use of that perfume. In fact, weremember almost entirely the emotions, the smell,

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fragrances and so on. In the advertising it isnecessary to touch the intangible aspects of theproduct: forms and images are linked with aprocess of significations. The generation ofemotions normally passes through themultisensorial involvement of the subject: music,materials, fragrances, colours, tastes, meanings andsymbols of various types

REVIEW OF LITERATURE:Ø Domenico Consoli1 - “Consumers establish

with company brands an overall emotionalrelationship and express, also with webtechnologies, reviews and suggestions onproduct/service.”

Ø Ronald P. Hill & Michael B. Mazis2 -“Emotional responses to ads can beassessed by coding verbal protocols forpositive and negative effect. Also, theemotional component of attitude towardthe ad and toward the brand can bemeasured through “emotional” attitudescales.”

Ø PrernaUjjval Majumdar3 - “The world isdriven by emotions. Gone are the dayswhen Production concept of Marketing.Customers breathe, weep, enjoy and havea heart which drives with emotions, theyalways get attracted with the productswhich make them feel and they getattached with the product emotionally.

Ø Hongxia Zhang, Jin Sun, Fang Liu, JohnG. Knight4 - “The study mainly focuseson emotional and rational advertisingexploring the service option that differin terms of their experience and credenceproperties and exploring the moderatingrole of individual difference in affectintensity on the consumers’ varyingreliance on rational versus emotionalappeals. resulting with the finding ofemotional advertisement appeal led to ahigher purchase intention in theexperience service condition, while arational message generated higher

purchase intention in the credenceservice condition.”

Ø Hye ShinKim5 -”This study examines setof emotions generated by advertisementsfor apparel products and brands for a youngfemale target audience and the effectsof emotions on evaluative perceptions ofapparel brand advertisements. Analysis inthe study was performedacross advertisements, not across people,as sampling units of interest. Resulting inset of three emotional dimensionsgenerated by the apparel brandadvertisements. Two emotionaldimensions, pleasure and hypoactivation,had a positive influence on ad attitude.”

Ø Jennifer Ball, Michael Mackert6 – “Thestudy explores the perspectives ofadvertising professionals working onpharmaceutical brands. Finding that theemotion is used to gain attention,increase involvement, and enhanceinformation processing. Consumer trustof pharmaceutical companies wasrecognized as an issue, and variousthoughts were provided on trust buildingstrategies. The doubt that negativeopinions of the industry translated intonegative evaluations of the specific adsor brands with which consumers werefamiliar.”

Ø S.A. Aduloju, A.O. Odugbesan,S.A.Oke7 –”The study evaluatesNigerian insurance industry and hasexperienced turbulent economicchallenges in recent time thatnecessitated re engineering of itsadvertising and sales core activities,which are important predictors ofstability and growth in theinsurance industry and It foundthat advertising had effects on salesvolume and improved public image.However, the choice of advertisingmedium, the message, and the format are

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critical ingredients of asuccessful advertising program inthe insurance industry.”

Ø Giehlito, Cammayo, Dulin8 – “Researchedon impact of advertising on consumerbehaviour. This study resulted with the factthat the respondents considered emotionalappeal, promotional advertising, facts andstatistics, bribe and unfinished ads as thetop 5 sources of information which effecttheir buying decision and the least sourceconsidered is endorsements by celebrities

Ø Patti Williams9 - “Emotionaladvertisements have a substantial impacton consumer attitudes, as well as uponpurchase intentions. The current studyaddresses these mixed results by relyingon an accessibility/diagnosticityframework to explore the effect ofemotions on consumer implicit and explicitmemory. The experiment demonstrates thatoverall emotional advertising appeals havea bigger impact on implicit versus explicitmemory performance, though explicitmemory performance is enhanced afterexposure to an intense emotional appealand also covers that the diagnosticity ofemotional appeals can be enhanced, andthat such enhancement leads to betterexplicit memory performance underconditions of high involvement. “

Ø Kemp & Kopp10 - “The process ofmanaging emotions through consumptionwill be referred to in this research as‘emotion regulation consumption’.Emotion regulation consumption entailsconsuming or purchasing a good or servicefor the purposes of alleviating, repairingor managing an emotion in the short term”

GAP IN PREVIOUS STUDIES:The studies are made in the field of Emotional andCustomer purchase decision, but minimal studiesare found on how emotions influence the

purchasing behaviour of consumers in general andspecially, in the area of insurance product. Amodest attempt is made to strengthen theory inthis area through this paper.

OBJECTIVES OF THE STUDY:1. To provide a theoretical framework on

interaction between emotions andconsumer buyer behaviour.

2. To study the influence of emotions oninsurance products.

3. To study the impact of emotions which aregender specific in relation to insurancebuying behaviour.

4. To study the impact of emotions withregard to age in relation to insurancebuying behaviour.

5. To study the impact of emotions withreference to educational qualifications ofselect respondents in relation to insurancebuying behaviour.

Hypothesis Testing:a. Ho1: Individual Emotions and Customer

Purchase Decisionof insurance products hasnosignificant difference based on gender.

b. Ho2: Individual Emotions and CustomerPurchase Decision of insurance products hasnosignificant difference based on age.

c. Ho3: Individual Emotions and CustomerPurchase Decision of insurance products hasnosignificant difference based on qualificationof the select respondents.

SCOPE OF THE STUDY:This study work restricted to the boundaries ofHyderabad. The focus in the present study isrelated to impact of individual emotions onpurchase behaviour of respondents for insuranceproducts. The time consumed for the completestudy to undergo is approximately 2 months.

Namratha Sharma, Dr.A.Patrick Anthony

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RESEARCH METHODOLOGY:The study focuses on both quantitative andqualitative approach. The survey was based onboth primary and secondary data. In accordanceto the demand survey a structured questionnairewas prepared and circulated among 260individuals of whom 96 respondents took thesurvey. The questionnaire was designed with thehelp of google forms and was circulated throughemails. The statistical tools like mean, grade pointanalysis and chi square test were used and wereexecuted with the help of Microsoft Excel.

EMOTIONS AND CONSUMER BUYINGBEHAVIOUR:The language of Emotion can be represented inanother form by universally spoken andunderstood. An emotion can be a mental orphysiological state that can be associated with awide variety of feelings, opinions, and physicalor social behaviours. It is directed at someone orsomething. Emotions are reaction to a person orevent lie seeing a friend at work place or dealingwith rude client makes you aggressive. One showstheir emotions when they are, “Happy about doingsomething, angry at someone, attachment towardssomeone or afraid of something.” Emotions aremore likely to be caused by specific event and maybe more action oriented, which may lead to someimmediate action. They are dozens of emotionswhich includes enthusiasm, anger contempt, envy,fear, frustration, disappointment, embarrassment,disgust, happiness, hate, expectation,possessiveness, joy, love, arrogance, surprise andsorrow.

A customer always keeps logic behind everypurchase they make. Where, they try to prove thatthey made rational decision rather than beingemotional but the ultimate drive which made themmake a final purchase is “Emotions”. An Emotionstimulates the mind faster than the rationalthoughts. One thing that drives the emotions is theindividual’s behaviour. They might think its

Rational thought that leads customers in buyingbehaviour but it is emotion sells make a sell.Rational marketing emphases mainly on productattributes, while sentimental manner takes the gearup in emotional marketing. The strategy focusesnot only on each penny spent from the wallet withjust a purchase, but also goes to make a space inthe heart, by leaving the impact which is longlasting. In general, it was also observed that brandrecall scores were very to height, with level ofinvolvement of the consumer’s being more. Whenadvertising for extensions, the uniqueness of thenew product needs to be well disclosed. Positiveemotional appeals to produce interest in theadvertisements and manage to advance brandrecall scores best but negative emotion also evokesexcitement for product category and induces tomake purchase decision. Thus, Emotions acts asfuel to engine. Therefore emotional channel builta bridge of sale on each product purchased, as itestablishes relation between the brand andemotions that product and services communicate.The Insurance marketers are well aware that inorder to make a sell, they must elicit a certaindegree of emotional involvement which leadscustomers desire so that they can sell what theywant. The Insurance underwriter depends on artof persuasion in order to work efficiently. The besttool for their trade is the words what attractindividual to purchase the policies. Though theinsurance promoters are well aware of hiscompany, product or services, competition ispartially able to produce the product. To be fullblown producer, he must develop his ability toanalyse his clients their wants, needs, desire, likesand dislikes. Each insurance marketing traineereceives full measure of applied psychology andis trained to enhance written and oralcommunication abilities which acquire deepinsight into the art of persuasion in them. Theinsurance marketer enjoy great reward which theyget from ethical emotional appeal as it attractswants and needs of its clients.

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DATA ANALYSIS:EMOTIONS AND ADVERTISMENT :

TABLE 1

The GPA analysis is performed on theLikert scalebased questions, where the majority of therespondents agree on various aspects likeemotional advertisements; emotionalpurchasewhich enlightens how a range of emotions leadsto customers purchase. The pertinent chart abovehelps us with the information that emotionsattached with the celebrity adverts though aremajor in number but few respondents believes thatit depends on the emotions and celebrity which

influence them to make a purchase as they keepthese situations neutral. Majority of respondentseven agreed that the feel unsatisfied rather thanbeing satisfied with their emotional purchase andthese purchases leads to error or post purchasedissonance. This all emotional basedadvertisements and purchase makes individualscautious about avoiding such situations rathergetting involved into it

EMOTIONS AND INSURANCE:TABLE 2


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TABLE 3

TABLE 4

TABLE 5

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Insurance company provide bundle of products,of which very few were listed apart from basicpolicies on which respondent in major has optedto buy Body part Insurance followed by Tourisminsurance. The young generation below 30 preferto buy engagement ring insurance and wedding

insurance, where females opts for this with majorhand when compared to males. PilgrimageInsurance is taken more in number by females andpet by males. Thus all this factors were interpretedwith the help of chart above.

NOTE: The remaining tables of emotions withinsurance policies are appended in appendix.

FINDINGS:The chi squared test has been implemented on theanswers of the respondents. Initially starting withendowment policy (TABLE 6), there is asignificant difference where you reject the nullhypothesis for the emotions like savings (0.0047),covering risk over life (0.0110) and peace of mind(0.0257) when it comes to gender but when itcomes to tax benefit, security to family andsupplements to retirements goals the nullhypothesis get accepted as there is no significantdifference when it comes to these emotions. Whenit comes the level of qualification, emotion for

security to family the null hypothesis get rejectedas there is significance difference resulting in0.0198. As, there is no significant difference withthose emotions though belonging to any headgroup of gender, age or qualification he nullhypothesis get accepted.

When it comes to the head of money back policy(TABLE 7), the null hypothesis gets only rejectedwith the emotion of peace showing the significantdifference of 0.0257 in masculine and femininegender. In rest other cases the null hypothesis getsaccepted as the level of significance is more than0.05.

All the various emotions under pensionplan(TABLE 8)and personal accident (TABLE2.1)

TABLE 6


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insurance has more than 0.05 significant level ofdifference where the null hypothesis get acceptedthough it be gender specific or of any generationor hold a high end degree.

Adjoining to it in health insurance(TABLE2.0),the null hypothesis get rejected with only theemotion- you may not qualify later and in restanother cases the null get accepted.

Finally, with property insurance(TABLE2.1), allthe various emotions under this head get acceptedleaving behind the peace of mind where the nullget accepted only in the case of genderspecification.

CONCLUSION:� The study finds that the individuals has

emotions attached and which lead them topurchase, which lead them to feel unsatisfiedrather than satisfied and there is a fair mindedor balanced opinion when it comes to celebrityendorsement effect.

� Individuals should scrutinize themselves whenconsidering themselves as rational buyerbecause the major pie has responded withemotional attachment with purchase ofproduct.

� Lastly when considered emotions andinsurance policies the null hypothesis getsaccepted in dominance with various emotionsof any insurance policies, depicting that theGender specification, level of qualification andage group has very less difference withcompared between them.

� The null hypothesis is accepted for “individual emotions and customer purchasedecision of insurance products has nosignificant difference based on gender.”therefore it can be concluded that there is nosignificant difference based on gender

� The null hypothesis is accepted for“IndividualEmotions and Customer PurchaseDecision of insurance products have nosignificant difference based on age.” Therefore

it can be concluded that there is no significantdifference based on age

� The null hypothesis is accepted for “IndividualEmotions and Customer Purchase Decision ofinsurance products has no significantdifference based on qualification of the selectrespondents.” Therefore it can be concludedthat there is no significant difference basedon education qualification.

SUGGESTIONS:� The survey helps use to depicts that the

customers haves strong emotions attached andthese emotions lead to the purchase ofinsurance product

� The emotions like saving, covering risk overlife and tax deductions has a strong impact onthe purchase of insurance product.

� It is even found that though the respondentsagrees with their emotional purchase but doesnot prefer to be tag as Emotional buyer asthey consider themselves as rational buyer.

LIMITATIONS:� The study focused only at the minimal area of

products and promotions ignoring the rest areaunder P’s of marketing like pricing and placing(convenience) are untouched.

� Promotion part of marketing though beinghuge only advertising strategy was discussedleaving behind the other promotionalactivities.

� The income level of individuals under thepersonal profile is not discusses where, it playsa vital role in adopting the premium plan ofinsurance.

REFERENCE:

� [1] DomenicoConsoli (2009), “Emotions ThatInfluence Purchase Decisions And TheirElectronic Processing”- Annales UniversitatisApulensis Series Oeconomica, 11(2), pages:996-1008.

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� [2] Ronald P. Hill and Michael B. Mazis(1986) ,”Measuring Emotional Responses toAdvertising”, in NA - Advances in ConsumerResearch Volume 13, eds. Richard J. Lutz,Provo, UT : Association for ConsumerResearch, Pages: 164-169.

� [3] PrernaUjjval Majumdar: “EmotionalMarketing - Chasing The “Share Of Heart”Of Your Prospective Customers”- Asia PacificJournal of Marketing & Management ReviewVol.1 No. 3, November 2012

� [4] Hongxia Zhang, Jin Sun, Fang Liu, JohnG. Knight, (2014) “Be rational or beemotional: advertising appeals, servicetypes and consumer responses”, EuropeanJournal of Marketing, Vol. 48 Issue: 11/12,pp.2105-2126, https://doi.org/10.1108/EJM-10-2012-0613

� [5] Hye Shin Kim, (2000) “Examination ofemotional response to apparel brandadvertisements”, Journal of FashionMarketing and Management: An International

Journal, Vol. 4 Issue: 4, pp.303-313, https://doi.org/10.1108/eb022598

� [6] Jennifer Ball, Michael Mackert, (2013)“Pharmaceutical advertising practitioners’approach to trust and emotion”, InternationalJournal of Pharmaceutical and HealthcareMarketing, Vol. 7 Issue: 3,pp.244264, https://doi.org/10.1108/IJPHM-04-2013-0021

� [7] S.A. Aduloju, A.O. Odugbesan, S.A.Oke, (2009) “The effects of advertisingmedia on sales of insurance products: adeveloping country case”, The Journal ofRisk Finance, Vol. 10 Issue: 3, pp.210227.h t t p s : / / d o i . o r g / 1 0 . 1 1 0 8 /15265940910959357

� [8] GiehlitoCammayo,Dulin, (2016), “TheImpact Of Advertising On Consumer BuyingBehaviour”, International Journal ofAdvanced Research in Management andSocialSciences, Vol. 5 , No. 6

TABLE 7 MONEY BACK POLICY


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TABLE 8 PENSION PLAN

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IMPACT OF TECHNOLOGY ON LIFE INSURANCECORPORATION OF INDIA

Dr. B. Sandhya Rani,Assistant Professor in Commerce,OUCW, Koti,Hyderabad

ABSTRACT

The world is moving towards using less paper and to electronic records, especially financialrecords.Shortly one can get and maintain insurance policies in electronic form.The importance ofinformation technology (IT) in the modern day business transaction cannot be over-emphasised. Theimpact assessment of the technology on any business is expedient so as to objectively determine itsinfluence on a specific aspect of the organisation.

The present study is taken up To examine the organisational impact of InformationTechnology onLifeInsuranceCorporation of India (LICI) and to present the alternative channels of premium payment.The study is based on secondary data, which constitutes the information collected from the AnnualReports of IRDA, Life Insurance Company of India and their portals. Information is also collectedthrough Internet, from various textbooks, journals and magazines. Simple percentages, averages arebeing applied to analyse the data.

INTRODUCTIONThe world is moving towards using less paper andto electronic records, especially financialrecords.Shortly one can get and maintain insurancepolicies in electronic form.The importance ofinformation technology (IT) in the modern daybusiness transaction cannot be over-emphasised.The impact assessment of the technology on anybusiness is expedient so as to objectively determineits influence on a specific aspect of theorganisation.

OBJECTIVESThe present study is taken up with the followingobjectives:

1. To examine the organisational impact ofIT on LIC.

2. To present the alternative channels ofpremium payment

METHODOLOGYThe study is based on secondary data, whichconstitutes the information collected from the

Annual Reports of IRDA, Life Insurance Companyof India and their portals. Information is alsocollected through Internet, from various textbooks,journals and magazines. Simple percentages,averages are being applied to analyse the data.

BRIEF HISTORY OF INSURANCELife Insurance in its modern form came to Indiafrom England in the year 1818. Oriental LifeInsurance Company started by Europeans inCalcutta, was the first life insurance company onIndian Soil. Bombay Mutual Life AssuranceSociety heralded the birth of first Indian lifeinsurance company in the year 1870, and coveredIndian lives at normal rates. Starting as Indianenterprise with highly patriotic motives, insurancecompanies came into existence to carry themessage of insurance and social security throughinsurance to various sectors of society. BharatInsurance Company (1896) was also one of suchcompanies inspired by nationalism. In the year1912, the Life Insurance Companies Act, and theProvident Fund Act were passed. The LifeInsurance Companies Act, 1912 made it necessary,

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that the premium rate tables and periodicalvaluations of companies should be certified by anactuary. But the Act discriminated between foreignand Indian companies on many accounts, puttingthe Indian companies at a disadvantage.The firsttwo decades of the twentieth century saw lot ofgrowth in insurance business. From 44 companieswith total business-in-force as Rs.22.44 crore, itrose to 176 companies with total business-in-forceas Rs.298 crore in 1938. The Insurance Act 1938was the first legislation governing not only lifeinsurance but also non-life insurance to providestrict state control over insurance business. Thedemand for nationalization of life insuranceindustry was made repeatedly in the past but itgathered momentum in 1944 when a bill to amendthe Life Insurance Act 1938 was introduced in theLegislative Assembly. However, it was much lateron the 19th of January, 1956, that life insurance inIndia was nationalized. About 154 Indianinsurance companies, 16 non-Indian companiesand 75 provident were operating in India at thetime of nationalization. Nationalization wasaccomplished in two stages; initially themanagement of the companies was taken over bymeans of an Ordinance, and later, the ownershiptoo by means of a comprehensive bill. TheParliament of India passed the Life InsuranceCorporation Act on the 19th of June 1956, and theLife Insurance Corporation of India was createdon 1st September, 1956, with the objective ofspreading life insurance much more widely and inparticular to the rural areas with a view to reachall insurable persons in the country, providing themadequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and212 branch offices, apart from its corporate officein the year 1956. Since life insurance contractsare long term contracts and during the currency ofthe policy it requires a variety of services needwas felt in the later years to expand the operationsand place a branch office at each districtheadquarter. Re-organization of LIC took placeand large numbers of new branch offices wereopened. As a result of re-organisation servicingfunctions were transferred to the branches, and

branches were made accounting units. It workedwonders with the performance of the corporation.It may be seen that from about 200.00 crores ofNew Business in 1957 the corporation crossed1000.00 crores only in the year 1969-70, and ittook another 10 years for LIC to cross 2000.00crore mark of new business. But with re-organisation happening in the early eighties, by1985-86 LIC had already crossed 7000.00 croreSum Assured on new policies.

LIC functions with 2048 fully computerizedbranch offices, 113 divisional offices, 8 zonaloffices, 1381 satellite offices and the Corporateoffice during 2015 - 16. LIC’s Wide Area Networkcovers 113 divisional offices and connects all thebranches through a Metro Area Network. LIC hastied up with some Banks and Service providers tooffer on-line premium collection facility inselected cities. LIC’s ECS and ATM premiumpayment facility is an addition to customerconvenience. Apart from on-line Kiosks and IVRS,Info Centres have been commissioned at Mumbai,Ahmedabad, Bangalore, Chennai, Hyderabad,Kolkata, New Delhi, Pune and many other cities.With a vision of providing easy access to itspolicyholders, LIC has launched its SATELLITESAMPARK offices. The satellite offices aresmaller, leaner and closer to the customer. Thedigitalized records of the satellite offices willfacilitate anywhere servicing and many otherconveniences in the future.LIC continues to be thedominant life insurer even in the liberalizedscenario of Indian insurance.

THE IMPACT OF TECHNOLOGYInstead of just adding value to the insurance sector,technology underpins its very growth andevolution. In the last few years alone, the use ofmobile devices, GPS, social media and CCTVfootage have all impacted hugely upon the wayclaims are processed and policies assessed.Theanalysis and value of “big data” gleaned throughcustomer interactions has become more importantthan ever, as insurers look to maximize efficienciesand profits whilst keeping customers happy.

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With e-commerce giants impacting the wayconsumers shop for insurance, one of the biggesttrends has been the adoption of multiple channelsby insurers to market and sell their policies.Technology now allows insurers to move from thetraditional broker scenario towards a direct-to-market approach, cutting out the middleman andgoing straight to the customer.

Mobile and internet-based offerings, providecustomers to buy direct and even form groups tonegotiate bulk purchases. Technology has thepotential to shake-up the market further bybringing down premiums and improving claimsprocessing as well as disruptively changing thecustomer experience criteria.The informationtechnology has a huge impact on the insuranceindustry. The unthinkable have become doable.

LIC ALTERNATE CHANNELS OF PREMIUM COLLECTION

ALTERNATE CHANNELS OF PREMIUMPAYMENT

LIC has facility of Premium Payment throughvarious Alternate Channels to enable the Customerto pay the Premium Anytime and Anywhere in thecountry. The Alternate Channels include - a)Standing instructions to bank, b) Credit/DebitCards, c) Net Banking facility, d) IMPS, e)Payment in cash or by cheque by walk in customers

at Authorized Collection Centres.Premiums can bepaid through Alternate Channels only for in-forcePolicies which are not under Salary SavingsScheme (SSS). For the year 2015-16, 48.26% oftotal Renewal Premium Transactions werecollected through Alternate Channels. The variousAlternate Channels for collection of Premium areas under:

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A. OFFLINE PAYMENT CHANNELS1. Electronic Clearance System (ECS): Thisfacility is presently available at all 90 Centresenabled byRBI for ECS. This facility is availableat all locations through Regional ECS (RECS) inTamil Nadu, Andhra Pradesh, Karnataka, Kerala,Gujarat, Rajasthan, Punjab, Himachal Pradesh,Haryana, Odisha, West Bengal, all North EastStates & UT-Chandigarh & Andaman Nicobar.Through ECS, premium can be collected for ULIPand Health Insurance (HI) policies also. Receiptsfor other than Monthly mode policies will be sentthrough ordinary post.

2. Direct Debit: At present, Direct Debit is enabledthrough ICICI Bank, Corporation Bank, Axis BankandSBI. Through this facility all the AccountHolders of these banks pan India can pay premiumthrough standing instruction to the bank. Receiptsfor other than Monthly mode policies will be sentthrough ordinary post.

3. Electronic Bill Presentation and Payment(EBPP) : Premium can be paid throughCorporation Bank,Citi Bank, HDFC Bank, ICICIBank, Federal Bank, Axis Bank, LIC Credit Cardsand through Service Providers - Bill Desk and TechProcess which cover almost all other banksthroughout the country. Premium can be paidthrough Credit Card also availing this facility.

4. ATM: Banks can collect premium throughATMs also for the registered policies. At presentCorporationBank, Axis Bank and ICICI Bank haveenabled this facility.

5. Automated Premium Payment System(APPS) : Investors of LIC Mutual Funds can paytheir LICpremium through their LICMFSystematic Withdrawal Plan (SWP) by givingstanding instructions toLICMF. Premiumcollection facility for all (excluding ULIP & HealthInsurance) in-force policies other than MonthlyMode and Salary Savings Scheme is availableunder EBPP, APPS and through ATM. Receiptswill be sent to the registered email-ids if opted fore-receipts, else same will be sent through ordinarypost.

B. ONLINE PAYMENT CHANNELS

6. Customers’ Portal Payment Gateway:Premium can be paid online on LIC Website,www.licindia.in with the help of Net BankingFacility of 50+ major Banks, VISA/ Master Creditand Debit domestic Cards, American ExpressCredit cards, Rupay Debit Cards and throughIMPS. For premium payment through cards, asmall flat fee is levied as interchange fee by theBanks concerned. Premium can be paid for ULIPpolicies and Health Insurance policies also.

7. Premium Collection through Banks

• Corporation Bank: Premium can be paidat any of the Branch or Extension Counterof Corporation Bank in cash or chequesdrawn on Corporation Bank.

• Axis Bank: Premium can be paid at anyof the Branch or Extension Counter of AxisBank in cash or cheques drawn on AxisBank.

Premium collection for ULIP and HI Policies isnot yet enabled through the cash counters of theBanks.

8. Premium collection through Franchisees Following are the approved Franchisees :

a. APOnline : A digital gateway for theGovernment of Andhra Pradesh andTelangana. (website : www.aponline.gov.in)

b. MPOnline : A digital gateway for theGovernment of Madhya Pradesh. (website :www.MPonline.gov.in)

c. Suvidhaa Infoserve Pvt. Ltd. : It has morethan 30,000 collection centers pan India forbillcollection.

d. CSC Centers through CSC e-GovernanceService India Ltd.: The CommonServicesCenter (CSC) Scheme is a part of theNational e-Governance Plan (NeGP). Thereare more than 1.25 lac CSC centersthroughout the country out of which approx.25000 have been activated for LIC Premiumcollection. Other Collection Centers also are

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gradually being enabled for PremiumCollection.

9. Premium Collection through SeniorBusiness Associates (SBA): SelectedDevelopment officers called SBAs areauthorized to collect the premium both inCash and Cheque and issue receipt instantly.Premium can be collected for Conventional,ULIP and Health Insurance policies. TheseCollection Centres are referred to as “LifePlus”.

10. Premium collection through EmpoweredAgents: In tune with the increasing customerexpectation for more conveniences inServicing, the Corporation has empoweredselected Agents to collect the RenewalPremium through their Collection Centreswho can collect the premium (including ULIPand HI Policies) in CASH or CHEQUE andissue a valid receipt instantly.

11. Premium collection through RetiredEmployees: Selected retired LIC Employeesare also authorized to collect the premiumonline and issue receipt instantly. At presentmore than 330 Retired Employees areauthorized across the country that cancollected premium for all policies through“Premium Points”.

12. LIC Mobile Application: Premium can bepaid online using LIC Mobile application onWindows and Android phones.

INDIVIDUAL NEW BUSINESS – CHANNEL-WISE

The table below exhibits the channel-wiseindividual new business for the number of policiesand first year premium income procured by LICduring 2010 – 11 to 2015 -16.

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From the above table, it is clear that, the numberof new policies procured through conventionalmode has reduced from 91.48% (Rs. 339.35 lakhs)of the total policies (Rs. 361.12 lakhs) during 2010-11 to 83.13% (Rs. 176.84 lakh) policies by theend of 2015 - 16. Similarly, first year premiumincome also has reduced from 90.44% (Rs.39,850.30 Crores) of the total premium (Rs.44,064.60 Crores) to 87.61% (Rs. 28,752.25Crores) by the end of 2015 - 16.

The number of policies and first premium amounthas increased from 6.45% and 6.33% for theinsurance raised through Chief Life InsuranceAdvisor (CLIA) during 2010-11 to 10.11% and8.95% respectively by the end of 2015 -16.Similarly, there is an increase in policies andpremium payment through direct marketing during2010-11 from 0.14% and 0.33% to 0.30% and1.11% respectively by the end of 2015 - 16.

From the above table, it can be observed that thereis a slight increase in number of policies and firstpremium by direct marketing with theimprovement in technology. Despite of rapidtechnological advancement, conventional mode ofpayment is mostly preferred by general public,reasoning being lack of technological awareness,low literacy. Hence, LIC should bring awarenessamong the public by campaigning the variousalternative channels by which the premium canbe paid and e-policies can be raised.

BANCASSURANCE & ALTERNATECHANNELSBancassurance and Alternate Channel (B&AC)completed 2,91,801 policies and garnered ¹ 766.71crore of First Year Premium Income (FYPI). Thepercentage share of B&AC First Premium Incometo Total First Premium Income (IndividualAssurance) was 2.93% during the year 2015 – 16.Bancassurance & Alternate Channel was startedin the year 2001 after Reserve Bank of Indiaallowed banks to sell other financial products likeInsurance and Mutual Funds. Starting from 1455policies and ¹ 2.21 crore premium, the channelhas multiplied manifold in the period of 15 years.Currently, the channel has tie-ups with 12 PSUBanks, 3 Private Banks, 10 Regional Rural Banks,34 Co-operative Banks and 1 Foreign Bank. LICalso has 59 Corporate Agents on roll. During theyear, 10 new Corporate Agents were appointed.Bank partners contributed 85.90% of policies and93.46% of FPI of the total Bancassurance andAlternate Channel business by completing2,50,659 policies and ¹ 716.61 crore of FYPI.Corporate Agents completed 40443 policies with¹ 44.68 crore of FYPI. Brokers completed 699policies with ¹ 5.42 crore of FYPI.20 BankBranches procured ¹ 1 crore and above FPI, while78 Branches procured ¹ 50 lacs and above FPIduring the year.

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DIRECT MARKETING

Direct Marketing Channel was established inAugust, 2009 with 6 Units and has expanded overthe period and is currently having 124 Units spreadacross the length and breadth of the Country. Thepurpose of the Channel is to bring a culturallydifferent approach to the Marketing of LifeInsurance products. The initiative was started withan Objective of creating new systems for BusinessGeneration, Sales Process Monitoring andBusiness Process with a view to reach out tountapped Markets and providing new andimproved buying experience to the Customers,especially to today’s young, tech savvy Executivesand High Net Worth Individuals.

The Channel is driven by the values of Passion,Performance and Professionalism and is promotedthrough a committed professional Sales Force,providing excellent buying experience toCustomers with enhanced use of technology. Inthe FY 2015-16, the Channel procured a FirstPremium Income of ¹ 363.41 Cr on 59,832Policies. The Distance Marketing Centre of theChannel at Vile Parle processes Online Productsand has procured a premium of ¹ 47.06 cr on 11236Policies in the FY 2015-16. The Chief Organiser(LIC Direct) Scheme, 2015 has been launched w.e. f. 01.04.2015 to take forward the objectives ofthe Channel.

CONCLUSION: Technology is no longer a niceto have but a differentiator — keeping up with thepace of change and future proofing the technologyis key to making it work. With aging legacysystems rife among the insurance industry,modernization is a necessity to ensure they are fitfor purpose.Technology will continue to evolve,so it is imperative that insurers don’t stand stilland have solid and robust procedures in place todeal with the next trend. This level of “big data”collection and analysis has become possible onlythrough advances in software and hardware andis fast becoming integral to increasing revenuesand improving the customer experience. Add tothis, constantly changing industry regulations andhigh customer expectations, insurers need to stay

on their toes, when it comes to technology as anenabler, by making it a central and successful partof their operation. How well the technologyperforms for both staff and customers is vital forfuture reputation and growth, as insurers vie forbusiness amidst an online price and policy war.

References

1. Ajit Ranode and Rajeev Abuja, “LifeInsurance in India – Emerging Issues”,Economic and Political Weekly, Jan 1999, P.16-23.

2. Appi Reddy and Narasimha Murthy, G.,“Marketing of Life Insurance Services inRural Areas”, Management Researcher, Vol.11, No 3 &4, Jan- Jun 1996, P. 23.

3. Ashok Thampy and Sitharama, S., “LifeInsurance Potential in India-An EconomicApproach”, Vision: The Journal of BusinessPerspective, July –Dec 2002, P.11-18.

4. Bodla, B.S. and Sushma Rani Verma, “LifeInsurance Policies in Rural Area:Understanding Buyer Behaviour”, ICFAIUniversity, 2007, P. 18.

5. Krishnamurthy, S., “Insurance Sector:Challenges of Competition and FutureScenario”, Vikalpa, Vol. 30, No. 3, September2005.

6. Mittal and Anil Chandnok, “Privatization ofLife Insurance Sector in India – Impact andPerspective”, Indian Journal of Marketing,Vol. XXXII, No. 11, Nov 2002, P.5-7.

7. Mony, S.V., “New Initiatives in the InsuranceSector: Opportunities and Challenges”,Vikalpa, Vol. 30, No. 3, September 2005.

8. Rajesham Ch. and Rajendar, K., “ChangingScenario of Indian Insurance Sector”, IndianJournal of Marketing”, July 2006, P. 9.

9. Ramakrishna Reddy and Raghunadha Reddy,“Life Insurance Corporation of India: Needfor New Lessons”, Prestige Journal ofManagement and Research, Vol. 4, No.2,October 2000, P.206- 214.

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ISSUES AND CHALLENGES OF HEALTH INSURANCEIN LIFE INSURANCE CORPORATION OF INDIA

- A SELECT STUDYBojja SampathResearch ScholarDept. of CommerceOsmania UniversityHyderabad-07Mail:[email protected]:9618222218

ABSTRACT

Health insurance is insurance that covers the whole or a part of the risk of a person incurring medicalexpenses, spreading the risk over a large number of persons. By estimating the overall risk of healthcare and health system expenses over the risk pool, an insurer can develop a routine finance structure,such as a monthly premium or payroll tax, to provide the money to pay for the health care benefitsspecified in the insurance agreement. The benefit is administered by a central organization such as agovernment agency, private business, or not-for-profit entity. According to the Health InsuranceAssociation of America, health insurance is defined as “coverage that provides for the payments ofbenefits as a result of sickness or injury. It includes insurance for losses from accident, medical expense,disability, or accidental death and dismemberment”. The present study discussed about what are themain issues and challenges in Indian insurance sectors.

Keywords: (LIC, Issues and challenges, Health insurance, Role of LIC in India )

1. Introduction:The Health insurance market covers very smallerpart of the total population (about 10%) in India.Presently, schemes like Voluntary health insuranceschemes or private-for-profit schemes, Employer-based schemes, Insurance offered by NGOs /community based health insurance and Mandatoryhealth insurance schemes or government runschemes (ESIS, CGHS) are found in India. Thehealth insurance market in India is unique and hasdeveloped a strong growth potential in the recentyears with the entry of many foreign players inthe market. The health insurance market in Indiawas worth INR 5,125 crores with a compoundedannual growth rate of 37 present between 2002and 2008. While the penetration of the healthinsurance market is still quite small, it is one ofthe fastest growing industries in India.

The Life Insurance Corporation of India popularlyknown as “LIC of India” was incorporated onSeptember 1, 1956 by nationalizing 245 Indian aswell as foreign companies. It was established 52years ago with a view to provide an insurancecover against various risk in life. The luminarieswho spearheaded this move at that time visualizedan entity that will provide life insurance to Indians,especially the vast rural people, at an economicalcost and channel the savings for the betterment ofthe nation. It is the largest life insurance companyin India and also the countries largest investor. Itis fully owned by the Government of India andheadquarter is Mumbai. Today LIC function with2048 fully computerized branch offices, 100divisional offices, 7 Zonal offices and the corporateoffice. LIC’s wide area Network covers 100divisional offices and connects all the branchesthrough a Metro area network. LIC has tied upwith some Banks and service providers to offer

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online premium collection facility in selectedcities.

LICs ECS and ATM premium payment facility isan addition to customer convenience. Apart fromon-line kiosks and IVRS, info centres have beencommissioned at Mumbai, Ahmedabad,Bangalore, Chennai, Hyderabad, Kolkata, NewDelhi,Pune and many other cities. With vision ofproviding easy access to its policyholders, LIC haslaunched its SATELLITE SAMPARK offices. Thedigitalized record of the satellite offices willfacilitate anywhere to serve and other conveniencein the future.

The history of life insurance in India started afterthe establishment of a British firm, Oriental LifeInsurance Company at Calcutta in 1818 andBombay Life Assurance Company in 1923. Beforethe establishment of Bombay Mutual LifeAssurance Society (the Indian insurance company)in 1871, the Indian lives were treated as sub-standard and charged extra premium of 15 to 20percent. The Bombay Mutual Assurance Societywas covering Indian lives at normal rates. TheMadras Equitable Life Insurance Society in 1874,Bharat Insurance Company in 1896, HindustanCo-operative Insurance Company (Calcutta) in1907; the Indian Mercantile, General Assuranceand Swadeshi Life (Bombay Life) were alsoestablished during the same period. To regulatethe life insurance business, the government passedthe Indian Life Assurance Companies Act in1912

2. Concept of Health Insurance:The concept of Health Insurance was proposed inthe year 1694 by Hugh the elder Chamberlen fromPeter Chamberlen family. In 19th Century“Accident Assurance” began to be available whichoperated much like modern disability insurance.This payment model continued until the start of20th century. During the middle to late 20thcentury traditional disability insurance evolved into modern health insurance programmes. Today,most comprehensive health insurance programmescover the cost of routine, preventive andemergency health care procedures and also mostprescription drugs.

Health Insurance is more complex than othersegments of insurance business because of seriousconflicts arising out of adverse selection, moralhazard, unavailability of data and information gapproblems. Health sector policy formulation,assessment and implementation are an extremelycomplex task, especially, in changingepidemiological, institutional, technological andpolitical scenario. Proper understanding of IndianHealth situation and application of principles ofinsurance, keeping in view the social realities andnational objectives, are important.

3. Objectives:This paper is mainly focused onmajor two objective as follows:

1. To Study the overview of health insuranceof LIC in India

2. To Analyse the issues and challenges inIndian Life insurance corporation

4. Methodology:The present study based on the secondary data.Like; newspapers, journals, books, magazines,annual reports, thesis and various websites.

5. Health Insurance Scenario in India:

Health is a human right. It’s accessibility andaffordability has to be ensured. The escalating costof medical treatment is beyond the reach ofcommon man. While well to do segment of thepopulation both in Rural and Urban areas haveaccessibility and affordability towards medicalcare, the same cannot be said about the people whobelong to the poor segment of the society. Healthcare has always been a problem area for India, anation with a large population and largerpercentage of this population living in urban slumsand in rural area, below the poverty line. Thegovernment and people have started exploringvarious health financing options to manageproblem arising out of increasing cost of care andchanging epidemiological pattern of diseases. Thecontrol of government expenditure to managefiscal deficits in early 1990s has let to severeresource constraints in the health sector. Under thissituation, one of the ways for the government toreduce under funding and augment the resources

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in the health sector was to encourage thedevelopment of health insurance. In the light ofescalating health care costs, coupled with demandfor health care services, lack of easy access of

people from low income group to quality healthcare, health insurance is emerging as an alternativemechanism for financing health care.

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Their share continues to be at the same level overthe last four years. While private sector non-lifeinsurers contribute 26 per cent of the gross healthinsurance premium, the remaining 12 per cent hasbeen contributed by stand-alone health insurancecompanies. The contribution of these two sets ofcompanies too remains more or less same for thepast four years. According to the IRDA, the healthinsurance business can be classified into threecategories i.e. 1. Group health insurance (otherthan government sponsored), 2. Governmentsponsored health insurance and 3. IndividualHealth Insurance. During 2013-14, the share ofgroup health insurance business (other thangovernment) was 46 per cent. While individualbusiness contributed 42 per cent of gross healthinsurance premium and government businesscontributed the remaining 12 per cent. Form thetable 2 one can observe that while the share ofgroup health insurance business remains at around46 per cent, the share of individual health insurancebusiness is increasing over the years. During 2013-14, the non-life insurance industry has covered atotal population of 21.62 crore. While Governmentsponsored health insurance policies havecontributed 72 per cent of the total number ofpersons covered, the commercial health insurancepolicies had contributed the balance 28 per centof all persons covered during 2013-14. However,over the last four years, the number of personscovered under Health insurance has seen moderatedecline mainly due to decrease in number ofpersons covered under Government healthinsurance schemes (IRDA Annual report, 2013-14).

6. Issues and Challenges of Health Insurancein Indian Insurance Sectors:The wide range of economic reforms were initiatedin the year 1991 through the advent of LPG, whichnot only brought forth drastic changes in theirfunctional set up of a country but also in thestructure of insurance sector, routed through theexamination carried out by Malhotra Committee.The recommendations of the committee are mainlyfostered to open up the sector for the players. Theobjectives of the committee were implementedinthe later part of the year 2000 under the ableleadership of Insurance RegulatoryDevelopmentAuthority of India. These new insurancecompanies started operating from metros andurban areas. The urban population got moreattention and it led to good insurance penetrationin urban areas as compared to the rural markets.Hence, the rural people didn’t have a chance tolearn more about insurance. The major challengeswhich have to be channelized for the growth ofinsurance sector are:

6.1 Issues:6.1.1 Cut Threat Competition: Liberalizationwill create acute competition in the insurancemarket. Fierce competition to increase volume andmarket share will continue as more and moreplayers join the race for the greater Indianinsurance.

6.1.2 Customer Relationship Management:Customer behavior will be influenced byenvironmental factors as well as intrinsic personalaspirations. The environmental factors are socio

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economic and demographic factors, inputs ofinsurance advisors, the company’s efforts tomanage customer satisfaction and experience

6.1.3 Distribution of Products: Segmentation ofmarkets, selling segment oriented products,focusing on fuller satisfaction of customer’saspiration misstates multiple distribution networks.While the traditional channel of tied up agents oradvisors would be the most important distributionchannel, insurers should innovate and find newmethods of delivering products to customers.

6.1.4 Risk Management: With the environmentchanges in the economic scenario of the countrythe risk landscape has undergone significantchanges. With the opening up of economy and theentry of MNC in almost all sectors, there hasbeena surge in the income levels, especially in themiddle class. The globalization has also resultedin cultural exchanges more than in the past.

6.1.5 Untapped Market Segments: It is importantto increase the customer base in semi-urban andrural areas which offer a huge potential. The factthat a major chunk of business for LIC comes fromthese areas stand as a testimony to this indisputablefact. There are difficulties in approaching thissegment which will take us back issues of customereducation.

6.1.6Relationship Management: The relationshipmanagement of insurance companies is mainlytrapped by individuals as well as corporate agent.The relationship of the clients should be evermaintained, but the mistakes of the agent are themajor causes in the relationship management.

6.1.7 Human Resource Management: Theinsurance market is now filled with players, whoare mature, globally prominent and big players inthe TransNationally competitive globalcompetitive insurance market. Each of them hasability to influence the market. The humanresource competency will be another big challenge.

6.1.8 Managing the Regulatory Authority: Asthe competition acute, the customer becomes morevulnerable to the vagaries on market environment.The regulators have a duel responsibility. They has

to ensure that the insure adhere to sound insuranceprinciples and practices as well as maintainadequate financial resources to meet theirliabilities.

6.2. Challenges:6.2.1 Promote Awareness: It is necessary topromote more awareness among public aboutinsurance. Because the level of insurancepenetration is very low.Customer needs a gooddeal of customer education in which the insureshave to invest a lot of their resources in terms oftime, effort, infrastructure and money. Though aknow ledged customer is a challenge for thecompany to convince and sell a product to him,the brighter side is that his awareness had broughthim to the threshold of insurance.

6.2.2 Multiple Channels of Distribution:Distribution being a key determinant of successfor insurance companies. Because at more numberof distribution channels the insures have a largedatabase of their disposal. By data miningprospects can be accurately together for business.Linking insurance with allied finance products likehousing loan, mutual fund investment incompanies, banks credit cards etc are the newchannels for life insurance. It is definite that thenew channels will help the insurance companiesto reach out farther, wider and deeper.

6.2.3 Professionalism in Insurance Marketing:There are quality insurance advisors in this fielddue to the passing of IRDA bill. To obtain anagency license training and written test arenecessary. Many educated youth, retired officialsare taking insurance agency as a career. They guidethe customers so that they can select productsaccording to their need, rather than to force selling.

6.2.4 Huge Untapped Market: There is a lot ofuntapped market in the country. This gives spacefor all players to grow and expand the insuranceindustry. Middle class people are having moreawareness than the lower class and high classpeople. They want to provide money for theeducation and marriage of their children and alsoto meet their old age needs. So there is marketexpansion for pension plans and child career plans.

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6.2.5 Threat to Health and Life: People die dueto natural calamities and terrorism unexpectedly.The environmental pollution affects the health ofmankind. In cities people got employment inindustries like IT, ITES etc. Due to heavy workand occupational stress they get diseases. Hencethere is a growing need for these people to go fordifferent kinds of insurance.

6.2.6 Regulations of IRDA: IRDA regulationsenacted for the protection of policy holders interesthas also set out the bench marks for servicing,settlement of claims, grievance redressal and soon. It also contains matters relating to disclosuresin proposal for insurance, statutory content of ainsurance document, duties and responsibilities ofthe agent etc. The IRDA watch the insurancecompanies always. So the companies cannotprovide deficient customer service

7. Conclusion:The Indian health insurancescenario today is a mix of Governmental insuranceschemes, Social Health Insurance (SHI), voluntaryprivate health insurance and Community-BasedHealth Insurance (CBHI). As per therecommendations of High Level Expert Group onUniversal Health Coverage on institutionalreforms, to make quality health care affordable,insurance penetration should increase to at least50 per cent of the population by 2020 and 80percent by 2030 from the current 15 per cent Themixture of various health insurance serviceproviders must be used effectively to ensure thehealth of citizens. For the Indians the healthinsurance is the need of the hour. Product

innovation would be one of the key drivers to reachthis penetration target. The present study “issuesand challenges in health insurance in life insurancecorporation of India” is very positively growingin Indian life insurance sector.

References:

• wikipedia.org/wiki/Health insurance

• researchandmarkets.com/reports/1195955/health_insurance_industry_in_india.pdf

• Life Insurance Corporation of India,Company and Area Profile

• life insurance corporation of India: a giantin India’s insurance sector

• Emerging Health Insurance in India – Anoverview, 10th Global Conference ofActuaries.

• PritiJha and Bindu Roy Role of LIC in LifeInsurance Industry, International Journalof Management and Social SciencesResearch (IJMSSR) ISSN: 2319-4421Volume 4, No. 2, February 2015

• G. Chandrayya,Opportunities andChallenges of Insurance Industry in India,International Journal of AcademicResearch ISSN: 2348-7666 Vol.2, Issue-2(3), April-June, 2015

• Dr.RamaiahItumalla, health insurance inIndia: issues and challenges

• inflibnet.ac.in/bitstream/10603/9524/11/11_chapter%204.pdf

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FARMERS’ PERCEPTION AND AWARENESS ABOUTCROP INSURANCE IN ADILABAD

Dr. Shubangee L. Diwe J.AnithaResearch Guide, Assistant Professor of Commerce,Department of Commerce, Govt. Degree College (men)Baliram Patil College, Adilabad and Research ScholarKinwat, SRTMU Nanded at SRTMU, Nanded.

ABSTRACT

Most of the Indian people as well as Indian economy depend on agriculture. Uncertainty of rainfalldrastically affects the agricultural income of the farmers. To face these losses, farmers are insuring theircrops with crop insurance schemes available in the country. In this paper we made an attempt to find outthe farmer’s level of awareness towards crop insurance schemes in Adilabad district of Telangana fromthe data available from past five years. A sample of 50 farmers were selected randomly from five mandalsof Adilabad district namely Indravelly, Utnoor, Thamsi, Bheempur and Gudihathnoor as this region ishighly dependent on rainfall and also the illiteracy rate is high. The present study focused mainly on theawareness and perception of the farmers regarding crop insurance schemes. Our study revealed thatthere is a high correlation between the farm size and the annual income per acre. However in the studyarea majority of the respondents are unaware of the details of crop insurance schemes and also under amisconception that the banks that lend loan are completely responsible for availing insurance too.

1. INTRODUCTION:Agriculture is the prime occupation and the basicsource of income for many Indians. Farm yieldand incomes in India are affected by many naturaland man-made disasters. While accidental naturaldisasters like drought, floods, storms, cyclones,earthquakes and landslides take a major hold ofthe agriculture output, human interventions likesupply of spurious seeds, fertilizers and pesticidesetc further intensify the loss. With the growingcommercialization of agriculture, the magnitudeof loss due to unforeseen events is increasing. Thelosses are more in dry land farming. Nearly two-thirds of the nation’s arable land is dependent onmonsoon rainfall and is termed as rain fed. Themonsoons in India are very important for theeconomy of the country as it affects the agriculturewhich is the mainstay of a huge workforce of thenation. Drought is a situation which arises due tothe scarcity of water. Poor irrigation facilities andshortage or failure of water results in the below-average crop yields. Andhra Pradesh, Rajasthan,Gujarat, Odisha, some parts of Maharashtra,

Karnataka and the few areas of the newly formedstate Telangana are some of the drought-proneareas in the country. Due unpredictability of naturaldisasters, the structural risk management measuresmay not be an effective strategy to overcomeagricultural losses. Agricultural insurance isconsidered as an important mechanism to addressthe risk of output resulting from various naturaland manmade events. Crop insurance is onemethod which ensures farmers a stabilized sourceof income and investment that protects againstdisastrous effect of losses due to natural hazardsor low market prices. Apart from providingmonetary support these schemes also uplift thefarmer’s motto to initiate farming practices after abad agricultural year. However, one need tounderstand that crop insurance should be part ofoverall risk management strategy to redistributethe cost of losses of few at the end of riskmanagement process and also this may notcompletely cover up the economic loss incurred.Soon after the Independence many different cropinsurance scheme’s like PCIS, CCIS, ECIS,

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PSSCI, FIIS, Sookha Suraksha Kavach, NAIS,MNAIS, WBCIS, etc. were implemented in thecountry over a period of time. Among differentcrop insurance products, NAIS was popular oneand has been implemented throughout the country.To compensate for the seasonal variations, a newscheme WBCIS was introduced to help cultivatoragainst season based shortfall in crop yield.Unfortunately, the different agricultural schemesintroduced in the country for the past two to threedecades seem to be not so progressive. Thoughthe reasons vary from region to region, the needto protect farmers

has been continuing to be one of the majorconcerns of agriculture policy. As a modificationand to circumvent the lacunae of the previousschemes, government has launched a new schemePradhan Mantri Fasal Bheema Yojana (PMFBY)in 2015-2016.

Adilabad is one of the most backward districts ofthe 31 districts of Telangana. The literacy ratesand health indices are very low as per a recentsurvey in Telangana 2014. The poor agriculturaloutput adds to the low economic status ofAdilabad. In the present situation of the droughtand flood, perception and awareness of cropinsurance schemes will helps us to document thedraw backs of the previous policies and to takeproactive measures in efficient implementation ofexisting crop insurance policy. This may directlybenefit the farmers of Adilabad to establish asustainable life style and also encourage farmingas a healthy livelihood.

RESEARCH METHODOLOGY:To understand ground level working of CropInsurance Schemes in Adilabad, primary data wascollected from different mandals of the district.The study involved survey of farmers includingthose who have been covered under different cropinsurance schemes (Loanee farmer) and also thosefarmers who did not avail any credit from thefinancial institution, called non-loanee farmer. Ourprime aim of the field survey was to analyze theawareness and perception levels of the farmingcommunity in regard to crop insurance schemes

and the extent of benefits provided by variousschemes. The study was initiated in five mandalsof Adilabad comprising Utnoor, Indravelly,Thamsi, Gudihathnoor and Bheempur. Personalinterviews were conducted with each samplefarmer by using a pre-tested structuredquestionnaire to collect the primary data. Randomsampling procedure was followed to collect dataand in the present study we maintained a samplesize of 10 per mandal.

RESEARCH OBJECTIVES:In view of the above, our present study is focusedon the following objectives:

1. To understand and analyze the socio-economicprofile of farmers who availed crop insurance.

2. To ascertain the levels of perception andawareness regarding crop insurance and

3. To document the opinion of farmers regardingdraw backs of existing crop insurance scheme.

HYPOTHESIS:There will be a significant relationship witheducation level of farmers and awareness aboutcrop insurance schemes.

RESULTS AND DISCUSSIONSocio-economic characteristics of loanee andnonloanee farmers are presented in Table 1.Average size of family among borrowers and nonborrowers was six. In the present study, only 12percent of the farmers were illiterate and nearly44 percent have completed college level education.Level of education, family size and experience infarming did not show any significant differenceamong the mandals selected for study. The mandalwise analysis revealed that majority of the farmersbelong to medium category followed by small andlarge in Bheempur, Thamsi and Gudihathnoormandals, whereas small farmers dominated in thesample in Indravelly and Utnoor. The parametersfarm size and crop income is generally correlatedto each other and this is high in Bheempurcompared to other mandals (Figure. 1).

As per the preliminary data collected it is wellunderstood that the major source of income is from

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sale of agriculture product followed by livestockand other sources. From mandal wise comparisonit is evident that bheempur mandal farmers havehigher annual income from crop enterprisecompare to other four mandals. Indravelly andUtnoor mandals have comparatively lower annualincome. However, the details furnished by thesample farmers are erratic i.e always not correlatedto farm size in some areas. This might be mainlydue to higher land holding in some areas,

availability of water resources, fertility of the soiletc. Though NAIS and MNAIS crop insuranceschemes are being operating since 2002-03 and2010-11 respectively, in the study area majorityof respondents (>80%) are not aware that who hasbeen implementing the schemes and who are beingresponsible for the compensation. Almost allfarmers were in the wrong perception that bankswould be responsible to pay compensation andthey are the implementing agency (Table- 2).

Dr. Shubangee L. Diwe, J. Anitha

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Figure 1: Details of Land holding capacity ofthe study. Different mandals of farmers consideredin the study are mentioned on X-axis. The irrigated,non-irrigated and total land (in acres) is plottedon Y axis. Bheempur and Thamsi mandals havehigh land holding capacity and also the irrigatedland (in acres) is recorded to be high in thesemandals respectively. Gudihathnoor, Utnoor andIndravelly the cultivated land under irrigation is34 %, 25.4% and zero percent respectively.

Views of sample farmers regarding various aspectsof insurance were consolidated in the present study.These include source of motivation, experiencewith agricultural insurance schemes and claimingprocedures and also opinion on premium rate(Figure. 2). More than 90 percent of the farmersmentioned that bank compulsion was themotivation for opting insurance. The loanee wasenquired regarding the type of agricultureinsurance they are aware of and their knowledgeof the implementing agency, compensationpayment details were questioned. The study alsorevealed that only 4 percent of the respondentswere fully aware of crop insurance and nearly 60percent were not aware of any of the schemes. Itis deplorable to notice that nearly 44 percent ofthe farmers fall under the category of college andabove level of education, but still have partial

awareness of the schemes like NAIS, MNAIS andWCBIS. In the present study, we cannot correlatelevel of education to the level of awareness of cropinsurance schemes among the respondents.However, on the contrary awareness for PMFBYwas fairly high compared to the previous schemes.This can be attributed to the extent ofadvertisements in newspapers, radio and eventhrough the banks. Further, more than 80% ofrespondents were not aware of extent of coveragepremium paid, last date, procedure for insuringcrops and method of loss determination andcompensation worked out by agriculture insurancecompany. Loanee/ Farmers made severalsuggestions for improving existing schemes. Mostof the farmers suggested for quick settlement ofclaims which is usually taking more than one year.Based on their knowledge on the previousschemes, around three fourth of the beneficiariessuggested to provide facilities for Insurance serviceat door step, sufficient time for opting insurance(notification should be done well in advance) andsimplified procedure. The wide publicity for therecently launched insurance scheme PMFBY hasawakened the farmers and raised a hope for asolution to claiming insurance for crop loss.Further detailed study on the implementation ofPMFBY would definitely help us in understandingthe bottlenecks in crop

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Figure 2: Graphical representation awarenessof farmers regarding crop insurance schemesin the study area. Out of 50 farmers taken for thestudy, no farmer was fully aware of the schemesof crop insurance. Only 20 farmers (40%) werepartially aware and 30 farmers (60%) werecompletely unaware.

insurance from a farmer’s perspective.Respondents were suggested to consider actualcrop condition/ actual loss, total sum insured andother agri parameters for working outcompensation (indemnity). The source ofinformation through which they are aware of cropinsurance indicated that grameen and commercial

Dr. Shubangee L. Diwe, J. Anitha

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banks, neighbors and gram sevak were the mostpreferred media through which awareness on cropinsurance has been created. At present service forPMFBY scheme to loanee farmers is provided bythe concerned institution like Co-operative societyor ACI. Nearly 85 present borrowers/ respondentssuggested that a special rural agent at village levellike LIC agent should facilitate insurance services.

CONCLUSION:From the present study it could conclude thatmajority of the farmers both loanee and non loaneeare not fully aware of the crop insurance schemes.They are being motivated by the banks to opt forinsurance schemes and premium is being chargedregularly. Further, Majority of the farmers arebeing under the apprehension that banks are theimplementing agencies, which are collecting thepremium to pay the actual implementing agencyon behalf of the farmers. Nearly 50 percent ofthe farmers in this study were educated but theydo not clearly understand the procedural andother requirements of formal financialinstitutions. So our proposed hypothesis isrejected and it is concluded that there is norelationship between education level of farmersand awareness regarding crop insuranceschemes. Hence, there is need to create awarenessabout Crop Insurance by providing effectiveservice centers or appointing Crop Insurance Agentlike LIC agent to provide insurance service at thefarmers door step as suggested many of the

farmers. With the introduction of PMFBY schemewhich is crop specific and low premium, there isan enormous insurance potential that can becaptured to address the needs of the farmingcommunity. Enhancing the efficiency of insuranceimplementation can mitigate the adverse impactsof uncertainties, which is on the individual farmers.A further detailed study on PMFBY of the samesample farmers would give an idea to overcomethe problems with awareness of crop insuranceschemes.

REFERENCES:

1. Agriculture Insurance in India Scope forparticipation of private insurers,Economic andPolitical weely,June 19

2. B.Goudappa,B.S.Reddy,S.M.ChandraShakhar Farmers Perception and AwarenessAbout Crop InsuranceSchemess. researchgeneral of extension education,specialissue(Volume II) 2002

3. India Development gateay,VarshaBima-2005,www.indg.in/agriculture

4. Mr PandaraiahG and Dr.K.V.Sashidar: cropinsurance:farmers perception and awareness:EPRAInternational journal of Economic andBusiness Review,Jan, 2015,Vol-3,Issue 1

5. Shrikrishna S.Mahajan,AmolH.Bobade:Awareness of Farmeers About CropInsurance Scheme in Khatav Taluka ofSatara District(Maharashtra)Article

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IRCTC – INSURANCE SCHEME FOR E – TICKETPASSENGERS

S.ANITHA JYOTHIAssistant Professor,P.G. College, Secunderabad.emial : [email protected]

ABSTRACTTravelling has become an important part in ones life. We daily travel for some or the other purpose maybe enjoyment, trip, work etc. The most cheapest and convenient way of travelling to long distances isthrough train. People of lower and middle class preferred mode of travelling to a distance place isthrough train. The travelling charges are minimal compared to other modes of travel. So people in Indiamostly prefer trains for long distance travelling. But when we see the risk of train travelling in India,there is one or the other major train accident every year. There are lakhs of people who loose their livesand are getting disabled.

Looking into the severity of the train accidents government of India wanted to ensure safety to trainpassengers and introduced 92 paisa travel insurance scheme. Travellers who book tickets throughIRCTC website can avail this 92 paisa travel insurance scheme .

So this paper makes an attempt to study the importance of Travel Insurance and mainly focused on theIRCTC 92 paisa Travel Insurance Scheme. The Benefits, conditions and viability of the 92 paisa schemehas been presented in the paper.

Keywords: Travel insurance, IRCTC, 92 paisa travel Insurance,Shriram,ICICI Lombard,Royal Sundaram.INTRODUCTION:Insurance is a financial protection for anunexpected loss which may occur in our dailylife. It is an agreement between an individual oran entity with an Insurance company wherecompensation is paid for an exchange of periodicpayment. It is termed as buying financial peaceof mind against the uncertainties and risks in lifesuch as untimely death, loss of property, serioushealth issues incurring heavy expenditure,accidents etc.There are different types ofinsurances like life, health, motor, business, traveletc., to cover different types of loss.

Travelling has become a most important andregular aspect in one’s life. Travelling may be forleisure or work. People love travelling and wouldlike to cherish the happy moments life long. Butthere may be unforeseen situations which mayoccur while travelling. It may be loss or theft ofbaggage, trip cancellation, terrorist attack, accidentetc. So due to this uncertainties and risks we areunable to spend good time while travelling.

So to have a safe and better travel we need to buya travel insurance. But many people ignore it anddo not feel worth to buy travel insurance. It is notexpected that everytime bad happens but ifsomething goes wrong then it becomes a hugequestion mark..So there is a saying that“Prevention is better than Cure”. which isapplicable for insurance also. Travel Insurance isbetter to go for rather than taking a chance. Butbefore taking Travel Insurance a person should beaware of how the Travel Insurance would benefityou for your trip. List out all the pros and cons ofthe Insurance with your trip and go for a bettertravel insurance plan.

All travel insurance policies have specific benefitsand exclusions. So its common sense,imperativeness which are absolutely necessary totake time to read the policy carefully and opt forit.

IMPORTANCE OF THE STUDY:Every year the country witnesses at least one majortrain accident, where large number of people die

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and get injured. According to National CrimeRecords Bureau Approximately 15,000 passengersare said to die in rail mishaps every year andaccident rate is 300 train accidents each year.

There are many poor people who cannot opt fortravel insurance as the insurance premium are toocostly and not worthwhile. But there are manypeople who lost their lives and got disabled dueto train accidents. Though the accidents whiletravelling by train are rare but they are intense andcannot be ignored. Passengers should be awareof the importance of travel insurance and shouldopt for a right travel insurance. Thus it is alwaysgood for passengers to avoid risk and get protectedby a proper insurance. So, Government of Indiatook an initiative to provide Travel Insurance tothe passengers who cannot afford for the travelinsurance schemes which is benefitting many poorpeople.

OBJECTIVES OF THE STUDY:

1. To study about 92 paisa Travel InsurancePolicy.

2. To study the features and benefits of theScheme.

3. To study the viability and trend of Scheme.

RESEARCH METHODOLOGY:The information for the present study has beenobtained through secondary data from variouswebsites, newspapers, reports of Indian railwaysand IRCTC. I also had discussion with theofficials of the IRCTC and collected the data.

92 PAISA TRAVEL INSURANCE SCHEME:Indian Railway Catering and Tourism Corporationstarted the facility of providing travel insurancefor the e – ticket passengers at a cheaper cost 92paisa. This 92 paisaTravel Insurance Scheme waslaunched by Union Railway Minister SureshPrabhu on 1st September 2016. This scheme isintroduced to ensure safer journeys via IndianRailways.

The Insurance claim is covered upto 10 lakhrupees at the cost of 92 paisa premium includingtaxes. The insurance cover is uniform for all the

classes. The passenger who book e-ticket onlycan avail this scheme. Any Citizen irrespectiveof class, status like Confirmed and RACpassengers can avail this Insurance. It applies notonly for accidents but terrorist attacks, riots,robbery, shoot outs, arson, accident falls fromtrains which are described under Sec 123,124 and124A of the Railways Act 1989.

Later, from 23rdNovember 2016, 92 paisa travelinsurance scheme was mademandatory and madefree of cost to all the e ticket passengers whereIRCTC is paying the 92 paisa premium to theInsurance Companies on behalf of the passengersso that it could benefit more number of passengers.

FEATURES:To avail the 92 paisa travel insurance there arecertain conditions

1. The scheme is only applicable for Indiancitizens.

2. Foreign citizens cannot avail this Scheme.

3. Any passenger travelling by local or suburbantrains cannot avail this insurance.

4. A passenger should be above 5 years of age.

5. This Scheme has become mandatory on e-ticketing and there is no need of paying anypremium.

6. The citizens those who book ticket on NewGeneration E - ticket (NGet) website areeligible for this scheme.

7. The policy information is provided throughSMS on their registered email and Mobiles.

8. The nomination details should be filled atrespective Insurance companies.

9. The coverage for the policy shall be for eachpassenger under the PNR incase if death,permanent disability, partial disability,hospitalization expenses for injury andtransportation of mortal remains following railaccident or untoward accident.

10. The contractual obligations are betweenpassengers and the insurance company and noway with IRCTC.

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11. The policy also covers the alternate mode oftransport arranged by railway till thedestination level.

12. If there is any diversion of train the coverageis also considered for diverted route.

13. The travel insurance scheme is uniform for allclasses.

14. The coverage is valid for the Vikalp trains also.

15. The Insurance claim should be made within 4months of the incident.

BENEFITS OF THE SCHEME:

This Insurance scheme offers the passengers orthere families a compensation ofRs.10,00,000 fordeath or permanent total disability, Rs. 7,50,000for permanent or partial disability, Rs. 2,00,000for hospitalization expenses and Rs. 10,000 fortransportation of mortal remains in the event ofdeath or injury from a train accident or otherincidents like terrorist attacks, dacoity, rioting,shoot-out or arson, as well as for short termination,diverted route and Vikalp trains.

Compensation assured for 92 paisa Travel Insurance Scheme:

INSURANCE PROCESSING:The Indian railways has selected three insurancecompanies for providing insurance to thepassengers who book tickets online.

1. Shriram General Insurance

2. ICICI Lombard General Insurance

3. Royal Sundaram General Insurance

These Insurance companies were selected throughcompetitive bidding where 19 companies hadparticipated in which 17 companies were foundeligible and 3 companies were selected. Of thethree companies selected, each company wouldget insurance policies on a rotation basis from anautomated system.IRCTC has engaged the firmsfor one year with the provision of extending thecontract on a performance basis.

Shriram General Insurance was the lowest bidderquoting 92 paisa, ICICI Lombard quoted 99 paisaand Royal Sundaram Rs.1.15 paisa. The other twocompanies have to match the lowest bid of 92paisa.

This states that this policy is the cheapest amongall other policies in the world. The premium isway below the Global Market Standards. There

is no other insurance policy which can becompared with such a low cost.

Here comes thequestion whether this 92 paisaInsurance policy is viable or not?

It was stated by the IRCTC that there were 3.2million daily logins to the website and where 5.5lakh tickets are booked per day and from that only3.5 lakh people opted for this 92 paisa TravelInsurance Scheme. Then later on from December2016 IRCTC made the scheme mandatory andstated that the passengers need not pay thepremium of 92 paisa and it was offered free ofcost to every passenger who opted for e - ticket.

IRCTC has also estimated that 22 crore rupeeswould be generated through e-ticketing systemalone. If this 92 paisa Travel Insurance Scheme isextended to all 2.3 crore passengers travelling dailyon India 65000 km network, the revenues are alsoestimated to grow up to Rs.670 crore annually.

The below statistics depicts the statistics of thepassengers who opted for E – Ticketing andInsurance which shows the viability of the TravelInsurance Scheme.

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Note: Since the Travel Insurance has become mandatory from the month of Dec 2016, the total noof e-ticket passengers is equal to total no of passengers opting for 92 paisa Travel Insurance scheme.

In addition to the data provided by the IRCTC (etickets) the graph states that there is an increasein passengers of the scheme from the month ofDecember 2016 as the government made it amandatory travel insurance scheme for the E –ticket passengers.

A CASE STUDY PERTAINING TO THE 92PAISA TRAVEL INSURANCE SCHEME:In a incident that took place on 20th

November,2016 of Patna - Indore derailment a 148passengers were killed and 200 were injured. The92 paisa travelinsurance scheme has compensatedall the eligible victims.

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There were 695 passengers in the train amongwhich only 209 passengers have chosen travelinsurance while booking their tickets online and78 passengers were eligible for insurance and thusclaimed the insurance compensation.

The three companies Royal Sundaram,Shriramand ICICI Lombard has providedinsurance to the devasted victims of the incident.

This incident has forcedthe Railways to make the92 paisa Travel Insurance Scheme mandatory toall the e – ticket passengers . The IndianGovernment decided to offer it free of cost to allthe e-ticket passengers so that more number ofpassengers are covered under this scheme and canbe benefitted through e – ticketing.

TREND OF THE SCHEME:92 paisa Travel Insurance Scheme got a positiveresponse in the beginning as 35% of passengersopted for the scheme per day. Though it was agood start with the scheme it was not 100% ofpassengers. In spite of various benefits the total e-ticket passengersi.e 100% passengers were notopting for the scheme due to various reasons likeignorance, carelessness and lack of interest etc.Later on the 92 paisa Travel Insurance Schemewas made mandatory after the Indore – Patnaderailment of the train accident to benefit morenumber of passengers and all e - ticket passengersmaking it 100%.

One of the benefits of demonetization is awarenessand increased use of modern technology and thishas influenced the Indian Railways also. Nowmore number of passengers are using technologyand opting for e-ticket through IRCTC and thusthis also brings greater prospects for opting the92 paisa Travel Insurance Scheme. This clearlyindicates greater prospects for the 92 paisa TravelInsurance Scheme which is beneficial to everyonein providing financial security and givingprotection against various unforeseencontingencies that we face while travelling.

CONCLUSION:IRCTC Travel Insurance Scheme is a passengerfriendly scheme and offers lot of benefits to the

passengers. In spiteof benefits only 35%passengers had only opted for the scheme. Untilthe Government of India made it mandatory 100%passengers did not avail it due to reasonslikeunawareness, not bothered, has not beenintroduced in IRCTC mobile application etc. Ifthe importance of Travelinsurance is made knownto the people then passengers wouldopt for it for aminimal premium also. There was no need toprovide free of cost since the premium is affordableas it is minimal amount i.e 92 paisa where a poorperson can also afford. To benefit more numberof passengers theinsurance scheme should beopened for the Counter ticket passengers also.Oneof the suggestions is that allthe State GovernmentRoad Transport Corporations should also adoptsuch type of scheme so that more number of poorand middle class people would be benefitted bysuch schemes as Road accidents are more than theTrain accidents. If such a provision is made by allthe State Tourism Development Corporation forthe tourists who are visiting the states for a trip,the passengers and corporations would alsobebenefitted by such schemes.

REFERENCES:

1. h t t p s : / / w w w. i r c t c . c o . i n / e t i c k e t i n g /loginHome.jsf

2. h t t p : / / c o n t e n t s . i r c t c . c o . i n / e n /InsuranceTermCondition.pdf

3. http://indianexpress.com/article/business/business-others/railways-launches-travel-insurance-scheme-with-cover-up-to-rs-10-lakh-3008899/

4. http://www.hindustantimes.com/india-news/after-92-paise-scheme-irctc-may-launch-insurance-for-gadgets- laptops/s tory-AwXl0rpHw3LSTcLaC2iRRP.html

5. http://www.financialexpress.com/india-news/indian-railways-offers-rs-10-lakh-insurance-cover-just-for-92-paise-for-train-travel/364432/

6. h t t p : / / w w w. l i v e m i n t . c o m / P o l i t i c s /OzFlsGMMpBEXuferxrPBvK/Railway-passengers-to-get-Rs10-lakh-insurance-cover-from-31.html

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CONCEPT, GROWTH, CHALLENGES AND PROSPECTS OFTAKAFUL INSURANCE IN INDIA – A STUDY

Sabiha ShareefAssistant ProfessorDepartment of CommerceUniversity College for Women, KotiHyderabadE Mail ID : [email protected]

ABSTRACT

India’s life insurance sector is the biggest in the world with about 360 million policies(Indian InsuranceIndustry Overview & Market Development Analysis, June 2016) and is expected to increase at a CAGRof 12-15 per cent over next five years.The current population of India is 1.327 Billion in 2016 as per theCensus Report, of which the Muslim population is 172 million i.e. around 14.2% of total population ofIndia and is stated to be the third largest Muslim populated country of the world (being the home for10.97 % of the world’s Muslim population), next to Indonesia and Pakistan. (as per Islam in India –Wikipedia). 2011 Census data reveals that the muslim community still lags behind on most counts despitethe country’s rapid economic growth and they come out pretty much at the bottom of most socio-economicindices. Muslims do not take the conventional insurance policies because of the element of interest(which is Haram in Islam), uncertainty (Al- Gharar) & gambling (Al-Maisir), present in them.

In such a scenario when the Government of India is planning to achieve inclusive growth, steps need tobe taken to improve the financial conditions of the weaker sections of the society including the downtrodden muslims. The conventional insurance industry is currently facing the short term painful effectsand financial crisis mainly due to demonetisation and implementation of GST norms. In such a scenariothe Takaful Insurance which is based on the ethical principles of mutual cooperation, help and protectionto all, can prove to be a good solution. The present paper has been prepared by using both secondaryand primary data. An attempt is made to understand the concept of Takaful insurance and to find out theawareness and feasibility of it, in India through administering a questionnaire to 150 muslims inHyderabad City.

Keywords: Takaful Insurance, Tabarru, Shariah, Al-Mudarabah, Al- Wakalah and Al-Waqf Models, CAGR,Gross Takaful Contributions.

Introduction

India’s life insurance sector is the biggest in theworld with about 360 million policies1 which areexpected to increase at a Compound AnnualGrowth Rate (CAGR) of 12-15 per cent over thenext five years. The insurance industry of Indiaconsists of 53 insurance companies of which 24are in life insurance business and 29 are non-lifeinsurers. Among the life insurers, Life InsuranceCorporation (LIC) is the sole public sectorcompany. Apart from that, among the non-life

insurers there are six public sector insurers. Inaddition to these, there is sole national re-insurer,namely, General Insurance Corporation of India(GIC Re). The insurance industry plans to hikepenetration levels to five per cent by 2020.

The Indian insurance market is a huge businessopportunity waiting to be harnessed. Indiacurrently accounts for less than 1.5 per cent of theworld’s total insurance premiums and about 2 percent of the world’s life insurance premiums2

despite being the second most populous nation.

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The country is the fifteenth largest insurancemarket in the world in terms of premium volume,and has the potential to grow exponentially in thecoming years.

The current population of India is 1.327 Billion in2016 as per the Census Report, of which theMuslim population is 172 million i.e. around14.2% of the total population of India and is statedto be the third largest Muslim populated countryof the world(being the home for 10.97 % of theworld’s Muslim population), next to Indonesia andPakistan3.

Almost a quarter of India’s 370,000 beggars areMuslims, newly released data from the 2011Census reveals that the muslim community stilllags behind on most counts despite the country’srapid economic growth.They come out prettymuch at the bottom of most socio-economicindices, even a decade after a high-levelgovernment probe into their historicaldisadvantages led to policy actions. Governmentemployment is up from 5% a decade ago to 8.50%in 2014-15, but that’s way below their share in thepopulation. Higher education indices for 2014-15put the gross enrolment rate at 13.8% for Muslims,compared to an all-India figure of 23.6%. Withintheir community, the literacy rate of Muslim adultmales is 81%, compared to 91% among Hindus,94% among Christians and 84% among Sikhs,according to a 2013 report of the National SampleSurvey Organisation. Though there are noauthentic figures to be quoted regarding the no. ofinsurance policies taken by Muslims in India, stillwe can say that it is minimal as most Muslims donot take the conventional insurance policiesbecause of the element of interest or usury calledriba in Arabic (which is Haram in Islam),uncertainty ( Al- Gharar) and gambling ( Al-Maisir), present in them.

In such a scenario when the Government of Indiais planning to achieve inclusive growth, steps needto be taken to improve the financial conditions ofthe weaker sections of the society including thedown trodden muslims. Besides this theconventional insurance industry is currently facing

the short term painful effects and financial crisismainly due to demonetisation and implementationof GST norms, which are being stated as the“Game Changers” and are claimed by the ModiGovernment, to impact the growth of the economypositively, in the long run. In such a scenario ifthe public have an option to move to such an ethicalmodel of insurance, which is based on the principleof mutual cooperation, help and protection to thetakaful holders, we need to check out the feasibilityof such an insurance in India.

Takaful is the Islamic concept of insurance whichis emerging as one of the dynamic concepts intoday’s globalised insurance industry bringing inthe new dimension of ethical financing based onthe principle of cooperation, mutual help andprotection.

Even as the Reserve Bank of India is exploringIslamic banking opportunities for Indian banks,the Life Insurance Corporation of India has set theball rolling on takaful (Islamic insurance).

LIC’s new international joint venture company -Indo-Saudi Insurance Company — will be the firstto introduce takaful. This Arabic word means‘guaranteeing each other’ or joint guarantee.

“The entire pricing will be different as the benefitsdiffer from conventional insurance policies,” LICManaging Director K Mehrotra told BusinessStandard. “Its actuarial team has started workingon the pricing mechanism and senior officials havebeen sent to Saudi Arabia to look into the product”,he added.

Literature ReviewIssa Khan et.al(2016)in their study reveal thatIslamic insurance in Bangladesh is regulated bythe Insurance Act 2010 which is contradictory withIslamic insurance causing numerous problems forIslamic insurance. Their study also points out thatIslamic insurance is a fast growing industry withhuge prospects in Bangladesh. The governmentshould introduce separate regulations for bothIslamic and conventional insurance. The researchconcludes with suggestions for the furtherdevelopment of Islamic insurance in Bangladesh.

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C.K.Hebbar et.al (2014) in their article explainedabout the concept and operational details ofTakaful,its history, growth and prospects in themuslim countries of the world.they explainedabout the takaful operation models along with theirmerits and drawbacks and also gave a cleardistinction between conventional insurance and thetakaful insurance, along with the basic challengesthat the takaful insurance is facing in the countrieswhich have implemented it. Besides using thesecondary data, their study made use of primarydata by administering a questionnaire on takafulinsurance in South Canara to both Muslim andNon- Muslim Communities to study about itsawareness and feasibility and concluded thatthough most people are aware of only the basicconcept of Islamic insurance, still a lot of effortsneed to be put in to meet the challenges of takafulinsurance and to educate the people about itsadvantages.

Syed Ahmed Salman and Sheila Nu NuHtay(2013) opined that the conventional insurancecontains the prohibited elements such as interest,uncertainty and gambling which calls for analternative insurance, i.e. Islamic insurance,suitable for both Muslims and non-Muslims. ManyMuslim and non-Muslim countries haveintroduced Islamic insurance due to its ethicalnature and have succeeded in improving itspotential growth. In their study they explained theconcept, origin and growth of Takaful industryworld-wide and stated that the prospects of Islamicinsurance in India are high as it ranks third amongthe highest Muslim populated countries of theworld.

Many more studies were conducted on viabilityof Takaful Insurance by researchers like HafsaSadat (2016), Khalid Al-Amri and MohammadZakir Hossain (2015), A Bhatty (2010) and others

Research GapAs the Islamic Insurance is still in the nascent stageand not so far introduced in India most of thestudies are based on secondary data collected fromvarious articles on Takaful published / availableon websites. Only a few researchers have made

use of primary data and no such study is taken upin Hyderabad City of Telangana State where, outof 44.65 lakh muslims about 17.13lakh muslims(i.e.43.5% of the total muslim population of thestate) reside. So the present study is carried out byadministering the questionnaire to muslims inHyderabad to know about their awareness onTakaful.

Objectives of the StudyThe present study is carried out with the followingobjectives:

1. To understand the concept, growth,challenges and prospects of TakafulInsurance in the world.

2. To know whether the muslims inHyderabad are taking the conventionalinsurance policies or not.

3. To evaluate the awareness of the muslimsregarding Takaful Insurance and itsfeasibility in India based on theirresponses.

Research MethodologyCollection of DataThe study makes use of both primary andsecondary data to achieve the stated objectives

The concept, growth, challenges and prospects ofTakaful Insurance are studied through thesecondary sources like books, articles and researchpapers published in various journals and websites,Reports related to takaful insurance published byWorld Islamic Directory and other organisations.

Primary data has been collected by administeringthe questionnaire to muslims at Hyderabad usingconvenience sampling technique to evaluate theawareness and feasibility of takaful insurance inIndia

Area SelectionHyderabad City is selected for thepresent study because among the muslimconcentrated states of India like Lakshadweep,Jammu and Kashmir, Uttar Pradesh, West Bengal,Bihar, Assam, Kerala, Maharashtra, Jharkhand,Karnataka and Telangana, the highest Muslimpercentage is in Hyderabad (40%) among all thebig cities in India as per the 2011 Census.

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Sample Size:150 respondentsTools for Analysis: Simple Statistical tools likeAverages, Percentages, Bar Diagrams and Pie-Diagrams are used for analysing the data.

Concept and working of Takaful InsuranceTheoretically, takaful is perceived as cooperativeor mutual insurance, where members contribute acertain sum of money to a common pool. It is basedon the principle “Pay a defined loss from a definedfund”. The purpose of this system is not profits,but to share the burden of others who suffer fromunexpected misfortune. Takaful insurance workswith the following ethical principles.

Ø Helping the needy: Subscriptions are paidby the policy holders to help the needy.

Ø Mutual Help for collective good: Themembers taking the policy come togetherfor a common purpose of cooperating witheach other for their collective good.

Ø Community pooling system: Takafulinsurance does not derive advantage at thecost of others as the liabilities are spreadand losses are divided according to theprevalent community pooling system.

Ø Gambling and uncertainty eliminated: Iteliminates gambling and uncertainty andinstead compensation and subscriptions arecontributed.

Ø Cooperation and support: It is based onthe concept of cooperative insurance whichupholds the principle of “bear ye oneanother’s burden”.

For entering into Takaful Contract, the participantscontribute some amount to the takaful fund in thename of “Tabarru” and agree to mutually help eachother, if any of the participants suffer any form ofmisfortune like death, permanent disability, loss,damaged etc. Under takaful, the contributionscollected from the policy holders are consideredas donations to the takaful fund, from which allclaims are reimbursed. The amount to becontributed is determined based on the type ofcover they require.

At the end of each financial year, after deductingthe claims operating expenses and makingprovision for reserves the surplus is not taken bythe shareholders, but it is distributed to the policyholders in the form of cash dividends as profitsfor their investments. The Investment assetsrepresenting the Takaful Fund gets accumulatedand is invested by the shareholders who managethe company on behalf of the policy holders andget rewards as percentage of profit on theseinvestments.

There are three basic Models of Takaful Insurance

1. Al-Mudarabah Model

2. Al- Wakalah Model

3. Al- Waqf Model

The Mudarabah Model

This is essentially a basis for sharing profit andloss between the Takaful operator and thepolicyholders. The Takaful company acts as thetrustee and manager of the Mudarabah fund inreturn for a share of the surplus on underwritingand a share of profit from investment. Managementexpenses of the operator shall be borne by theshareholders’ fund and not from the Takaful funds.This model is commonly used in Malaysia.

The Wakalah ModelWakalah is a contract between the Takaful operatorand the participant in which the policyholderauthorizes the Takaful operator to manage the fundin return for a fee. This model was formulated byscholars in the Middle East and is still thepredominant form of Takaful in this region.

Al- Waqf Model or the Mudarabah Cum WakalahModel

This is a hybrid model, which combines theprinciples of both Mudharabah and Wakalahmodels. Here the Takaful agent receives both ashare of the profits generated from the investmentactivities of the Takaful fund, as well as apredetermined share of the contributions paid bypolicyholders in the form of Wakalah fees.

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Whatever may be the model adopted, in a “Takafulsystem” there is no reference to a ‘policy holder’and instead the beneficiary is called as participant.The entity which collects the common fund(Takaful fund) and issues the policy is referred toas “Takaful operator”. The intention of this schemeis to share responsibility and indemnify the lossesand not to solely make profits. In regard of the

profits made by the Takaful Operator, theprinciples of the Islamic Shariah are to consider itas a surplus fund and to distribute the same in theproportionate manner among the participants. Thestrides of its progress throughout the world arevisible from figures related to the Global GrossTakaful Contributions as stated in the given table

Table 1: The Global Gross Takaful Contributions

The Gross Takaful Contributions were only 1.384billion$ in 2004 but with the progress in TakafulInsurance over various countries across the worldthe global Takaful contributions increased to14.029 billion $ in 2014 according to WorldTakaful Reports and it is estimated to reach 20billion $ by 2017 (ICD Thomson Reuters (2015)).The Compound Annual Growth Rate of TakafulInsurance in the world, over the period 2004 to2017 is estimated to be 27.481 % which is quitehigh. Around year-end 2014, the Takaful assetswere estimated to be around USD 33 billion.Besides this, the number of Takaful operators wereonly 150 in 2009 (Keat, 2009) and by 2014 thisnumber increased to 308 (Source: ICD ThomsonReuters (2015)) These figures, no doubt are small

Source: World Islamic Directory (2012) & Ernst & Young, Global Takaful Report (2014)

when compared to the conventional insurancemarket across the globe but the Takaful insurance,still in its nascent stage and with a smaller assetbase has registered more varied performance.

Findings of Primary Data collected throughQuestionnaire:To know whether the Muslims are taking Insurancepolicies in Hyderabad or not and to find out theirawareness with regard to the Takaful Insuranceand to understand the perceptions of Muslims onthe feasibility of takaful Insurance in India aQuestionnaire was administered to 150 muslimsrandomly using convenience sampling techniqueand the analyses revealed the following details:

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As per the primary data collected throughQuestionnaire, it is found that out of 150respondents 94 are Males and 56 are Females, thisshows that 63% of the respondents are Males and47% are Females. Though the questionnaire wasadministered in equal numbers to both, morepercentage of males responded and among thefemales who responded to the questionnaire mostof them are highly educated and are working.

42% of the respondents (most of them) belong tothe age group of 20 – 30 years, while 20% eachbelong to the age group of 30 – 40 & 40 – 50 Yearsand 17% are above 50 years. This shows that theyoung generation is now more enthusiastic andwilling to go ahead to adopt changes and work fortheir better future.

Out of the 150 respondents only 68 of them(i.e.45%) said that they have an insurance policyand most of them 82 members (i.e.55%) do nothave any insurance policy. If we carefully analyse

the respondents, it is found that majority of themare Graduates (52%) and Post Graduates (40%).It means even in the educatedMuslim communitymost of them prefer not to take an insurance policyas it is having Interest which is Haramin Islam.This clearly points out that the situation is muchworse when we consider the illiterate Muslimswho don’t take insurance policies.

When the occupation of the respondents isconsidered it is found that most of them areworking in Private Sector (58) or they are SelfEmployed (29), very few of them (11) are Govt.Employees and remaining are either students,housewives or retired people.

The average monthly income of most of therespondents in the present survey was reported tobe less than Rs. 20,000 (31%) and surprisingly29% of them have reported to have income aboveRs. 60,000 (This may be because most of theMuslim families in Hyderabad are working in Gulf

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countries and they were also requested to respondto the questionnaire. But majority of them haveaverage monthly incomes less than Rs. 40,000.

Out of the 68 respondents who had taken aninsurance policy it is reported that 28 had LifeInsurance Policy and 24 had taken medicalinsurance(most of them have either not claimed itor claimed only once), 7 General Insurance and 8of them had taken both Medical and life insuranceand only 1 person had all the three.

As most of them are working in Private Sector orare self-employed, majority of them have stated

that they have taken the policy for savings andinvestment (15) and it is the policy of the companywhere they work, to take an insurance policy (20out of 68 respondents have given this reason)andother reasons stated are, meeting medical expenses(10); for claiming tax deduction (6) and remainingfor covering financial risk.

When the reasons for not taking any insurancepolicy were enquired, majority of them cited thebasic reason of interest being haram in Islam andso not interested (68) other reasons cited were lackof knowledge and ignorance and no sufficientincome to pay premium etc.

With regard to the awareness about TakafulInsurance it has been found out from the datacollected that only 20% of the respondents areaware about it and only 15% of the respondentsknow about the differences between theconventional and the Takaful Insurance, this isbecause the concept of such an Islamic Insurancehas not been started so far in India and it is in anascent stage in the Islamic countries of the world.

Majority of them (51%) have stated that theywould surely prefer to take the Takaful insuranceif offered by the Indian Insurance Companies inIndia and others (44%) expressed their willingnessto buy it but where not very sure and only 5 %were not interested in it.

When their perceptions were taken regarding thefeasibility of Takaful Insurance in India 37 of them

(25%) were very sure that it will be feasible and100 (67%) were hopeful but not very sure and 13(8%) stated that it is not feasible in India.

Challenges in implementation of TakafulInsurance in India

Takaful Insurance with its ethical principles ofmutual cooperation and protection is beingaccepted worldwide as one of the new dimensionalalternative insurance business not only by theMuslims but also by the non-Muslimsbut itsgrowth rate is not satisfactory and facing a numberof challenges which are stated as follows:

� The process of starting a new companywith all legal aspects of insurance such asTakaful is lengthy.

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� The Shariah requirements are not uniformthroughout the globe and hence it isdifficult to create uniform product.

� The conventional insurance is already wellestablished and Takaful insurance will takeits time.

� The benefits of Takaful insurance are notknown to everyone and hence educatingthe people about them is necessary.

� Tapping local markets is not enough forTakaful insurance. It should gaininternational acceptability to becomeviable.

� Profits are not much in the Takafulbusiness, so it is not easy to succeed.

� Considering the cost factor and therequirement of transparency as per theIRDA regulations make it more difficult.

� The success of Takaful business lies in theefficiency and dedication of well qualifiedand trained Takaful operators and there isshortage in the availability of suchpersonnel.

Suggestions for improvementsProper steps should be taken to improvegovernance competence in the working of theTakaful insurance.

Risk management function along withdevelopment of Shariah compliant products are tobe taken care of by the takaful operators and theadministration team for the success of thisbusiness.

Training the takaful operators with regard toimproving their sales and marketing capabilitiesand targeting strategic target market will help inachieving the targets.

Accounting regulations, Solvency and Fundstreatment operations should be taken up so thattransparency is maintained.

Government support and direction and a goodregulatory framework is necessary for its wideracceptability.

Above all these, the most important one is bringingin awareness and education regarding the Takafulinsurance among the target market audience ismust.

ConclusionsFrom the analysis of the primary data it isconcluded that the future prospects of takafulinsurance in India are bright as 95% of therespondents were willing to buy Takaful insuranceif offered by the insurance companies in India.

It is found that only 20% of the respondents wereaware of takaful insurance and majority of themare not aware of the benefits of it. So it is concludedthat unless proper education and awareness abouttakaful insurance is brought about there is nochance of that being successful.

Though the ethical concept of takaful insurancewould help many people to save and invest moneyand consequently contribute to the growth of theeconomy but it is not easy to implement it in Indiaas it requires strong support from the governmentand necessary changes in the legal frame work ofthe present insurance sector to include Islamicinsurance in it.It also requires qualified andcompetent people who have knowledge regardingthe working of modern economies and also haveproper understanding and insight into the IslamicShariah so that they develop appropriate Takafulmodel. It is likely to succeed if proper awarenessand education about the benefits of Takafulinsurance is brought about to all including the non-muslims.

References

1. Issa Khan; Rahman, Noor Naemah; Binti;Abdul; Yusoff, MohdYakub; Zulkifli; Bin;Mohd; Nor, MohdRoslan; Bin;Mohd. History, problems, and prospects ofIslamic insurance (Takaful) inBangladesh,SpringerPlus; Heidelberg5.1 (Jun 2016): 1-7.

2. SyazrinSyimeeSharifuddin,, NorAzlindaKasmoen,, NurHabibahanin Mat Taha, Nor Shaiza Mir Ahmad Talaat, Aida ZurainaMir Ahmad Talaat, The Concept of Takaful

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(Islamic Insurance) and Its Functions in theEstablishment of Syarikat Takaful Malaysia;the First Takaful Operator in Malaysia,International Journal of Humanities andSocial Science Invention ISSN (Online): 2319– 7722, ISSN (Print): 2319 – 7714www.ijhssi.org ||Volume 5 Issue12||December. 2016 || PP.43-48

3. Jacky Lim, Mohammed Fahmi Idris, YuraCarissa, History, Progress and FutureChallenge of Islamic Insurance (Takaful) InMalaysia, Oxford Business and EconomicsConference Program ISBN: 978-0-9742114-1-9https://www.academia.edu/953632/History_Progress_and_Future_Challenge_of_Islamic_Insurance_Takaful_In_Malaysia

4. Hafsa Sadat Mubashir, 2016, “Viability ofTakaful (Islamic) Insurance in India”,

5. https://prezi.com/o9p40ttxorps viability-of-takaful-islamic-insurance-in-india

6. Dr. C K. Hebbar, Sandeep S. Shenoy, GuruPrasad Rao,SantoshNayak , “ FeasibilityStudy of Islamic Insurance (Takaful) in India: Challenges and Prospects”, ISSN 22501673,2015

7. http://eprints.manipal.edu/140879/1/Takaful%20Insurance.pdf

8. Syed Ahmed Salman, Sheila Nu NuHtay,Prospects of Islamic Insurance in India,International Journal of Business,Management & Social Sciences, IJBMSSISSN: 2249 - 7463 Vol. II, Issue 7 (III), March2013 pp 104-106

9. S.A. Cader History and values of TakafulIslamic Insurance, Business Times Mar 9th

2014 retrieved on 2nd June 2017

10. Jamaldeen, Faleel. ”Key Sharia Principlesand Prohibitions in Islamic Finance”.Retrieved 24 July 2016.

11. ICD-Thomson Reuters Islamic FinanceDevelopment Report 2016

12. ICD-Thomson Reuters Islamic FinanceDevelopment Report 2015

13. ICD Thomson Reuters (2014),

14. World Takaful Directory (2012)

15. The World Takaful Report 2010, Ernst andYoung

16. Ezamshah,Essential guide to Takaful (Islamicinsurance). Malaysia: CERT publications.(2011).

17. Basic Takaful broking hand book. Malaysia:IBFIM. IRDA, Annual Report. (2010-2011).

18. John Wiley and Sons,Azman, UnderstandingIslamic Finance. UK: (2013).

19. Legal and Shariah framework of Takaful inMalaysia. Aznan, H. (2011).

20. G Pavithra, U Sekeran, Islamic Banking inIndia: Status, ProspectsandRecommendations. Retrieved from http://www.crisil.com/crisil-young-thoughtleader2 0 0 8 / d i s s e r t a t i o n s /Dissertation_GPavithra.pdf Sekeran, U.,&Bougie, R. (2010).

21. Frenz, T. &YounesSoualhi (2010). “Takafuland Retakaful: Principles and Practices”,Kuala Lumpur, Malaysia: Munich ReRetakaful

22. Keat, Simon Archer, Rifaat Ahmed AbdelKarim and Volker Nienhaus. (2009) “TakafulIslamic Insurance concepts and regulatoryissues. Singapore”,Johnwiley and sons (Asia)pte. Lt

23. Zuriah, A. R., & Hendon, R. RiskManagement. John Wiley & Sons. (2009).

24. Engku Rabiah& Hassan Scott. (2008).“Essential guide to Takaful (Islamicinsurance)”. Malaysia: CERT publications

25. Frenkel (Ed.), Risk Management Challengeand Opportunity. Berlin: Springer Engku, R.,& Hassan, S. (2008).

26. Azman Bin Mohd Noor and MohamadAsmadi bin Abdullah, (2008) “Takaful(Islamic Insurance) Benefit: Ownership andDistribution Issues in Malaysia”.

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GROWTH AND STATUS OF REINSURANCE BUSINESS ININDIA: A STUDY

P Kalyani Prof. S Sreenivasa MurthyResearch Scholar, Dean and Head PlacementsDepartment of Management, Institute of Public Enterprise,Osmania University HyderabadICSSR Research Fellow at Institute of Email ID: [email protected] Enterprise (IPE), HyderabadEmail ID: [email protected]

ABSTRACTVaried literature on Insurance and Reinsurance emphasises that Reinsurance is a very valuable andmulti-faceted product that enhances the fundamental financial risk spreading function of insurance.Reinsurance provides a helping hand to insurers to unlock their full potential. In the simplest terms thepurchase of insurance by an insurance company is known as Reinsurance. India on one hand being anatural catastrophes prone area and on the other hand the year on year growth in the market size ofinsurance business highlights the need of a high reinsurance capacity. In the backdrop of growingimportance of Reinsurance in India and dearth of research and publications on the same, the currentstudy has been taken up to analyse the growth and status of Reinsurance business in India.

The focus of the study is on the Reinsurance business of the Non-life insurance companies operating inIndia and also on the Indian National Reinsurer GIC Re. Further a comparative analysis of the publicand private sector non-life insurance companies with respect to reinsurance business is done. The growthis measured on the basis of two parameters viz. Reinsurance Demand and Reinsurance Supply. Tenyears data from 2006-07 to 2015-16 pertaining to 21 Non-Life insurance companies (4 from the PublicSector and 17 from the Private Sector) have been taken as sample for the study. The data collected hasbeen analysed using trend analysis, graphical analysis, descriptive statistics and basic accountingprocedures.

Key words: Reinsurance, Insurance, Growth, Non-life Insurance companies, GIC Re, ReinsuranceDemand, Reinsurance Supply, Reinsurance Ceded, Reinsurance Accepted, Profitability

Introduction:In the current competitive insurance scenario, thesuccess of an insurer depends not only on chargingadequate rates to cover costs, but also on providingcredible assurances to policy holders that claimspayments will be made (James Garven and LammTennant (2003)). Reinsurance is one suchmultifaceted product which provides a helpinghand to insurers in providing this credibleassurance. In the simplest terms the purchase ofinsurance by an insurance company is known asReinsurance. It serves at least four basic functionsfor the direct insurance company: increasing thecapacity to write insurance; stabilizing financial

results in the same manner that insurance protectsany other purchaser against spikes from realizedfinancial losses; protecting against catastrophiclosses; and financing growth (David and Joy2007). In India reinsurance is an emerging domainwhich exhibits tremendous long term growthpotential. India on one hand being a naturalcatastrophes prone area and on the other hand theyear on year growth in the market size of insurancebusiness highlights the need of a high reinsurancecapacity. The Non-life insurance sector dominatesthe reinsurance market in India with a share ofalmost 94%. In this backdrop understanding thegrowing importance of Reinsurance in India and

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dearth of research and publications on the same,the current study has been taken up to study thegrowth and status of Reinsurance business of thenon-life insurance companies operating in Indiaand also to study the growth and status of thenational reinsurer GIC Re.

The Concept of Reinsurance:According to M. Grossmann, Reinsurance isdefined as “the transfer of a part of the hazards orrisk that a direct insurer assumes by way ofinsurance contract or legal provision on behalf of

History of Reinsurance in India:Prior to 1950s there were no professionalreinsurance companies in India. Indian insurancecompanies could avail reinsurance protection onlythrough overseas reinsurers. This would obviouslylead to foreign exchange drain. After 1950s thegeneral insurance business started growingsignificantly and a strong need for reinsurancecapacity in India was felt. Consequently a groupof general insurance companies came together andformed the Indian Reinsurance Corporation in1956 which was the first professional reinsurancecompany in India. All its member companiesvoluntarily ceded 10% of their gross directpremiums to it. Later in 1961 the Indian Guaranteeand General Insurance Company Limited , agovernment company was also notified as aprofessional reinsurer and a compulsory cessionsof 20% on fire and marine cargo, 10% on marinehull and miscellaneous insurance and 5% on creditand solvency business were fixed by the Indiangovernment. These compulsory cessions were to

an insured, to a second insurer carrier, theReinsurer, who has no direct contractualrelationship with the insured”.The company whorequests for the cover is called the cedant and thereinsurer is called the ceded. The reinsurancecontract does not change the direct, or originalinsurer’s responsibility to its policyholder (the“original insured” or “policyholder”), and theinsurer must fulfil the terms of its policy whetheror not it has reinsurance or whether or not thereinsurer is rightly or wrongly refusing to perform.

Figure 1: Process of Insurance and Reinsurance

be shared between the two professional reinsurers.In 1966 reinsurance pools in fire and marine hullwere initiated to further improve the retentions inthe country(Palande and Lunawat (2003)). Theentire reinsurance business in India wasnationalised by General Insurance Business(Nationalisation) Act 1972 (GIBNA). GeneralInsurance Corporation was also formed in the sameyear. Later in 1973, 107 general insurancecompanies were merged and GIC of India wasformed as the holding company with foursubsidiaries Viz. The New India AssuranceCompany Ltd., National Insurance Company Ltd.,Oriental Insurance Company Ltd., and UnitedIndia Insurance Company Limited. GIC apart fromits Direct Insurance operations used to providereinsurance capacity to its four subsidiaries.

After the opening up of the Indian insurance sectorin the year 2000 and the formation of IRDA, GICwas notified as the Indian Reinsurer. In 2003 GICceased to be the holding company of its foursubsidiaries. Further in the same year GIC started

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its life reinsurance underwriting activities and iscalled GIC Re. Currently GIC Re would receive5% obligatory cession on each policy written inIndia. In order to focus on reinsurance, both inIndia and through its overseas offices and tradingpartners, GIC has divested itself of any directbusiness that it wrote prior to November 2000, withthe temporary exception of crop insurance. Till theyear 2016 GIC Re is the only ReinsuranceCompany in India registered with IRDA. ThoughGIC Re is the only reinsurance company in Indiaregistered with IRDA, the Indian regulatoryframework acknowledges that the Indian insurerscan seek reinsurance protection from overseasreinsurers also and there was a steady supply ofReinsurance capacity from the overseasReinsurers.

Current Scenario of Re/insurance industry inIndia:Currently there are 55 insurance companiesoperating in India of which 24 are in the lifeinsurance business, 29 are in non-life insurancebusiness and 2 are exclusive reinsurancecompanies. The recent amendments to theinsurance laws (amendments) Act2015 (IRDAexposure draft (2015)) has paved way for somemajor reforms likeincreasing the percentage of FDIfrom 26% to 49% and enabling the foreignreinsurers to set up branch offices in India.Concurrently many leading reinsures across theworld have started to set up their branch offices inIndia. Presently eight overseas reinsurancecompanies namely Munich Re, Swiss Re, SCORSE, Hannover Re, RGA Life ReinsuranceCompany of Canada, XL insurance company SE,General reinsurance AG, Lloyds India Reinsurancehave set up their branch offices in India. ITIreinsurance is the first private sector reinsurancecompany in India Registered with IRDA which isexclusively for life reinsurance.

Review of Literature:

The various studies related to the growth and statusof insurance and reinsurance business in India andabroad have been briefly discussed below:

Peter Falush (1996) has studied the generaldevelopment of insurance markets in theeconomies of transition in central and EasternEurope and the former Soviet Union with specialemphasis on reinsurance developments. Theirfocus of the study was primarily non-life insurance,although matters of relevance on life insurancewere also included.

MezgebeMihretu (2010) report the findings onthe influence of the cross border reinsurancebusiness on the insurance industry and theeconomy and perceptions of the management ofthe industry regarding the reinsurance businessregulations in the Ethiopian context. Their studyused ten years data from 2000 to 2009 includingfinancial transactions of the insurance companies,GDP and sample primary data of the perceptionsof the management of the insurance industryregarding reinsurance business regulations.Quantitative and qualitative research approach wasused. Their results have shown that cross borderreinsurance business affects negatively theinsurance industry from the financial performanceperspective. The insurance industry is contributinglittle to the economy of the country. Awarenessgap regarding the reinsurance regulation persistsin both top and middle management levels. Lackof awareness induced the industry to engage inthe international business without the appropriateregulations.

Nema and Parul Jain (2012) discussed thegrowth of reinsurance sector in India during 2005-2010 in various forms of reinsurance. They alsostudied the growth of GIC Re the Indian nationalreinsurer during the period. Their analysisconcludes that the business of GIC Re as reinsurerhas recorded a continuous growth pattern duringthe study period in terms of its earned premiumand profit. They also reveal that the miscellaneous,fire and engineering reinsurance business showedmaximum earned premium in comparison to othersegments of reinsurance. Reinsurance claims alsoregistered continuous growth pattern andmaximum claims were recorded in themiscellaneous, fire and marine reinsurancebusiness.

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Chaitra KS & Savitha S (2014) have studied theimportance and the performance of GIC Re duringthe years 2008-09 to 2013-14. They have alsoanalysed the major source of income; premium ofthe sampled unit and the major components ofexpenses i.e. claims, commission and operatingexpenses of GIC Re to measure its operatingefficiency.

A comparative analysis of financial performanceof public and private non-life insurance companiesoperating in India was performed by Showket andIshfaq (2015). Three parameters taken fromCARAMEL model Viz. Earnings and Profitability,Management Soundness and Liquidity have beenused to analyse and evaluate the financialperformance of selected public and private non-life insurers. Statistical tools like mean, standarddeviation and F test have been used to test theparameters statistically. Their analyses revealedthat there was improper risk selection andmismanaged expenditure policy. In terms ofmanagement soundness both the sectors havebreached the standard benchmark of 20% ofmanagement to premiums ratio and both sectorslack high degree of liquidity.

Sanjib Kumar Pakira (2015) in his papercompared the growth performance of private andpublic sector non-life insurance companies interms of affiliation and association between netprofit after tax and growth performance indicators.The period of study was 2001-02 to 2013-14.Secondary data was used with application ofdescriptive methods of statistical analysisincluding multiple regression.

Need for the study:The review of literature has shown that there arevery few studies on reinsurance in developingcountries. Further there are no studies on thegrowth of reinsurance by the primary insurers inthe Indian context. The studies on the growth andperformance of GIC have not covered the netprofitability of reinsurance and a comparison ofreinsurance ceded and accepted was also notstudied. This creates a need to take up a study onreinsurance business in India.

Objectives of the study:1. To study the growth and status of

Reinsurance business of Non-Lifeinsurance companies operating in India

2. To compare the growth of Reinsurancebusiness of Public and Private sector Non-Life insurance companies in India

3. To study the growth and status ofReinsurance business of the NationalReinsurer GIC Re.

Research MethodologyThe study is analytical and explorative in nature.The focus of the study is on the Non-life insurancesector in India as it dominates the Reinsurancemarket in India with a share of almost 94%. Outof the 29 Non-life Insurance companies currentlyoperating in India, 21 companies are selected forthe study. The Public Sector excludes specialisedinsurers ECGC and AIC. The Private Sectorexcludes five standalone health insurancecompanies and Kotak General Insurance CompanyLimited which was incorporated in 2015-16 andhas not completed one year of operation. On theother hand a separate analysis of GIC Re wasperformed which excludes the life reinsurancesegment. The sample period is ten years from2006-07 to 2015-16. The data for the sample iscollected from Public disclosures and Annualreports of the insurance companies. The datacollected has been analysed using growth rate,trend analysis, graphical analysis, descriptivestatistics and basic accounting procedures. The fullforms of abbreviations of non-life insurancecompanies is given in Annexure 1.

Data Analysis, Results and Discussion:The analysis of data, results and discussion hasbeen presented under the following heads:

I. Growth, Status and Comparative analysis ofReinsurance business of Public and PrivateSector Non-Life insurance companiesoperating in India

II. Growth and Status of Reinsurance Businessof National Reinsurer GIC Re


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I. Growth, Status and Comparative analysisof Reinsurance business of Public and PrivateSector Non-Life insurance companies operatingin India:

The growth and status of reinsurance business ofpublic and private sector non-life insurancecompanies operating in India was studied usingtwo parameters viz. Reinsurance Demand andReinsurance Supply.

· Reinsurance Demand is measuredthrough the ratio of Premium onReinsurance Ceded to Gross WrittenPremium.

· Reinsurance Supply is measured throughthe ratio of Premium on ReinsuranceAccepted to Gross Written Premium.

The analysis of Reinsurance Demand and Supplyparameters is performed in three stages:

1. The Growth of Reinsurance Demand andSupply.

2. The Gap betweenReinsurance Demandand Supply

3. Net Profitability of Reinsurance operations.

1. The Growth of Reinsurance Demand andReinsurance Supply:

The growth of reinsurance demand and reinsurancesupply is studied under two heads

i. Growth of underlying parameters ofreinsurance demand and reinsurancesupply

ii. Growth of the main parametersreinsurance demand and reinsurancesupply

i. Growth of underlying parameters ofreinsurance demand and reinsurancesupply:

In this paper an attempt has been made to studythe growth of reinsurance demand and supplyconsidering the underlying parameters such as

a. Premium on Reinsurance Ceded

b. Premium on Reinsurance Accepted

c. Gross Direct Premium

a. Premium on Reinsurance Ceded:The premium which is paid or payable by aninsurance company to another insurer or reinsurerfor the risk protection is known as premium onreinsurance ceded. An analysis of data pertainingto premium on reinsurance ceded by the non-lifeinsurance companies (see table 1, table 2 and figure2) indicate that it has increased from Rs.9023.47crores in 2006-07 to Rs.18395 crores in 2015-16registering a growth of 104%. The premium onreinsurance ceded has shown an upward trend till2011-12 and was maximum in the same year whichwas Rs.18652.77 crores.There after it showed afluctuating trend till 2015-16.

Public Sector: The public sector has registered agrowth of 51% from Rs.4969.70 crores in 2006-07 to Rs.7502.51 crores in 2015-16 in terms ofpremium on reinsurance ceded. Among the publicsector companies The New India AssuranceCompany Limited is on the top continuously from2006-07 to 2015-16 with the maximum amountof premium on reinsurance ceded. On the otherhand National Insurance Company Limited wason the bottom for most of the years except in 2007-08, 2011-12 and 2012-13 with the lowest amountof premium on reinsurance ceded. In 2007-08United India Insurance Company Limited and in2011-12 and 2012-13 The Oriental InsuranceCompany Limited were on the bottom. Theaverage premium on reinsurance ceded by thepublic sector was Rs.1242.43 crores in 2006-07and has increased to Rs.1875.63 crores in 2015-16 registering a growth of 50%. The standarddeviation of the public sector has increased from292.11 in 2006-07 to 851.92 in 2015-16 whichmeans that the deviation of premium onreinsurance ceded among the public sectorcompanies has increased.

Private Sector:The premium on reinsuranceceded of the private sector has registered a growthof 169% from Rs.4053.77 crores in 2006-07 toRs.10892.49 crores in 2015-16. Whereas theaverage premium on reinsurance ceded by theprivate sector was Rs.506.72 crores in 2006-07and has increased to Rs.640.73 crores in 2015-16registering a growth of just 26%. Among the

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private sector companies ICICI Lombard GeneralInsurance Company Limited is continuously onthe top from 2006-07 to 2015-16 with the highestamount of premium on reinsurance ceded. RahejaQBE General Insurance Company Limited was onthe lower end with lowest premium on reinsuranceceded since its establishment in 2009-10 exceptin the year 2012-13 during which Liberty VideoconGeneral Insurance Company Limited ceded theminimum. Before 2009-10 HDFC ERGO GeneralInsurance Company Limited ceded the minimumin 2006-07 and 2007-08 and Universal SompoGeneral Insurance Company Limited was on thelower end in 2008-09. The standard deviation ofthe private sector has also increased from 480.11in 2006-07 to 730.57 in 2015-16 indicating a largerspread among the companies premium onreinsurance ceded.

b. Premium on Reinsurance Accepted:The premium received or receivable by aninsurance or reinsurance company from anotherinsurance company for providing the risk coverageis known as premium on reinsurance accepted. Ananalysis of data pertaining to premium onreinsurance accepted by the non-life insurancecompanies (see table 3, table 4 and figure 3)indicate that it has increased from Rs.782.99 croresin 2006-07 to Rs.2976.95 crores in 2015-16registering a growth of 280%. Similar to Premiumon reinsurance ceded the premium on reinsuranceaccepted has also shownan upward trend till 2011-12 and was maximum in the same year which wasRs.8525.26 crores. There was a steep decrease in2012-13 and was steady till 2015-16.

Public Sector: The public sector has registered agrowth of 213% from Rs.702.64 crores in 2006-07 to Rs.2201.64 crores in 2015-16 in terms ofpremium on reinsurance accepted. Among thepublic sector companies The New India AssuranceCompany Limited is on the top continuously from2006-07 to 2015-16 with the highest amount ofpremium on reinsurance accepted. On the otherhand National Insurance Company Limited andUnited India Insurance Company Limited were onthe bottom in different years from 2006-07 to2015-16 except in 2011-12 during which The

Oriental insurance Company Limited was on thelower end. The average premium on reinsuranceaccepted by the public sector was Rs.175.66 croresin 2006-07 and has increased to Rs.550.41 croresin 2015-16 registering a growth of 213%. Thestandard deviation of the public sector hasincreased from 196.50 in 2006-07 to 468.53 in2015-16 which means that the deviation ofpremium on reinsurance accepted among thepublic sector companies has also increased.

Private Sector:The premium on reinsuranceaccepted of the private sector has registered agrowth of 90% from Rs.80.35 crores in 2006-07to Rs.775.31 crores in 2015-16. The averagepremium on reinsurance accepted by the privatesector has registered a growth of 354% from 2006-07 to 2015-16. Among the private sectorcompanies ICICI Lombard General InsuranceCompany Limited is continuously on the top from2007-08 to 2015-16 with the highest amount ofpremium on reinsurance accepted. In 2006-07 TataAIG was on the top. The company on the lowerend was differing in each year from 2006-07 to2015-16. When compared to public sector thestandard deviation of the private sector has notchanged much from 2006-07 to 2015-16.

c. Gross Written Premium:Gross written premium is the sum of the premiumreceived or receivable from direct business andthe premium on reinsurance accepted. An analysisof data pertaining to gross written premium by thenon-life insurance companies (see table 5, table 6and figure 4) indicate that it has increased fromRs.21713.03 crores in 2006-07 to Rs.93311.57crores in 2015-16 registering a growth of 249%.The gross written premium has shown a stableupward trend till from 2006-07 to 2015-16.

Public Sector: The public sector has registered agrowth of 194% from Rs.17986.09 crores in 2006-07 to Rs.52845.88 crores in 2015-16 in terms ofpremium on reinsurance ceded. Among the publicsector companies The New India AssuranceCompany Limited is on the top continuously from2006-07 to 2015-16 with the highest amount grosswritten premium. The Oriental Insurance


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Company Limited was on the bottom for most ofthe years except in 2006-07, 2007-08 and 2009-10. United India Insurance Company Limited in2006-07 and 2007-08 and National InsuranceCompany Limited in 2009-10 were on the lowerend. The average gross written premium by thepublic sector was Rs.4496.52 crores in 2006-07and has increased to Rs.13211.47 crores in 2015-16 registering a growth of 194%. The standarddeviation of the public sector has increased from1292.60 in 2006-07 to 4213.92 in 2015-16indicating a greater deviation in the gross writtenpremium among the public sector companies.

Private Sector: The gross written premium of theprivate sector has registered a growth of 364%from Rs.8726.94 crores in 2006-07 to Rs.40465.69crores in 2015-16. Whereas the average grosswritten premium by the private sector wasRs.1090.87 crores in 2006-07 and has increasedto Rs.2380.33 crores in 2015-16 registering agrowth of 118%. Among the private sectorcompanies ICICI Lombard General InsuranceCompany Limited was continuously on the topfrom 2006-07 to 2015-16 with the highest amountof gross written premium. Raheja QBE GeneralInsurance Company Limited was on the lower endwith lowest premium on reinsurance ceded sinceits establishment in 2009-10 except in the year2012-13 during which Liberty Videocon GeneralInsurance Company Limited ceded the minimum.Before 2009-10 HDFC ERGO General InsuranceCompany Limited ceded the minimum in 2006-07 and 2007-08 and in 2008-09 Universal SompoGeneral Insurance Company Limited was on thelower end. The standard deviation of the privatesector has also increased from 923.11 in 2006-07to 2136.23 in 2015-16 indicating a larger spreadamong the companies gross written.

ii. Growth of the main parameters ReinsuranceDemand and Reinsurance Supply:Having studied the underlying parameters ofreinsurance demand and supply we further proceedto study the growth of main parameters

a) Reinsurance Demand

b) Reinsurance Supply

a) Reinsurance Demand:According to Curak (2014), Kader, Adams andMouratidis (2010), James Garven and LammTennant (2002) reinsurance demand is measuredthrough the ratio of Premium on ReinsuranceCeded to Gross Written Premium. An analysis ofdata pertaining to reinsurance demand by the non-life insurance companies (see table 7, table 8 andfigure 5) indicate that it has decreased from 0.34in 2006-07 to 0.20 in 2015-16 with a decline of41%. The trend of reinsurance demand has beensame by both public and private sectors showinga steady decrease from 2006-07 to 2015-16. Thereinsurance demand was more by the private sectorthan the public sector.

Public Sector:The reinsurance demand by thepublic sector has decreased from 0.28 in 2006-07to 0.14 in 2015-16 indicating a decline of50%.Among the public sector companies NationalInsurance Company Limited has demanded theleast reinsurance throughout the period of study.The maximum demand for reinsurance was by TheOriental Insurance Company Limited in 2006-07,2007-08, 2008-09, 2011-12, 2014-15 and 2015-16, United India Insurance Company Limited in2009-10 and 2010-11 and The New IndiaAssurance Company Limited in the remainingyears. The mean value of the reinsurance demandwas same as the total reinsurance demand. Therewas a slight change in standard deviation from0.02in 2006-07 to 0.03 in 2015-16 indicating that thevariation among the companies reinsurancedemand has not changed much.

Private Sector: The reinsurance demand by theprivate sector has decreased from 0.46 in 2006-07to 0.27 in 2015-16 indicating a decline of 41%.Among the private sector companies ICICILombard General Insurance Company Limited in2006-07, Royal Sundaram Alliance InsuranceCompany Limited 2007-08 to 2011-12 andShriram General Insurance Company Limitedfrom 2012-13 to 2015-16 has demanded the least.On the other hand the company with maximumreinsurance demand has been changing every year.The mean value of reinsurance demand hasdecreased from 0.44 in 2006-07 to 0.25 in 2015-

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16 with a decline of 43%. The standard deviationwas highest in 2009-10 with a value of 0.58 whichshows that the reinsurance demand has varied moreamong the private sector companies.

b) Reinsurance Supply:According to (OECD 2013) reinsurance Supplyis measured through the ratio of Premium onReinsurance Accepted to Gross Written Premium.An analysis of data pertaining to reinsurancesupply by the non-life insurance companies (seetable 9, table 10 and figure 6) indicate that it hasincreased at a high rate till 2011-12 and then theywas a steep decrease. The Reinsurance Suppliedby both public and private sector has shown asimilar pattern from 2006-07 to 2015-16. Thereinsurance supply was more by the public sectorthan the private sector.

Public Sector: The reinsurance supply by thepublic sector has increased from 0.04 in 2005-06to 0.15 in 2011-12 and decreased again to 0.04 in2015-16. Among the public sector companiesNational Insurance Company Limited has suppliedthe maximum reinsurance throughout the periodof study. The reinsurance supplied by other

companies was same or very close to each other.The mean value has increased from 0.03 in 2006-07 to 0.14 in 2011-12 and then decreased to 0.04in 2015-16. The standard deviation is very low andhas further decreased by 2015-16 which clearlyshows that the reinsurance supplied by publicsector companies is very close to each other.

Private Sector: The reinsurance supply by theprivate sector has increased from 0.01 in 2006-07to 0.12 in 2011-12 and then decreased to 0.02 in2015-16. Among the private sector companiesTATA AIG General Insurance Company Limitedhas supplied maximum reinsurance till 2008-09and since then Raheja QBE General InsuranceCompany Limited has supplied the maximumreinsurance till 2015-16. The company withminimum reinsurance supply was varying till2010-11 and from 2011-12 to 2015-16 ShriramGeneral Insurance Company Limited was on thelower end. The mean value of reinsurance supplyhas increased from 0.01 in 2006-07 to 0.13 in 2011-12and then decreased to 0.03 in 2015-16. Thechange in the standard deviation from 2006-07 to2015-16 was slightly higher in private sectorcompared to public sector.

TABLE 1 - PREMIUM ON REINSURANCE CEDED BY NON LIFE INSURANCECOMPANIES IN INDIA


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TABE 5 - GROSS WRITTEN PREMIUM OF NON LIFE INSURANCECOMPANIES IN INDIA

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1. The Gap between Reinsurance Demand andSupply:

The Gap between reinsurance demand and supplyis calculated by finding the difference betweenreinsurance demand and reinsurance supply. Ananalysis of data pertaining to gap between

reinsurance demand and supply (see table 11, table12 and figure 7) indicates that the Gap betweenthe Reinsurance Demand and Supply has narroweddown from 0.31 in 2006-07 to 0.17 in 2015-16.Both the public and private sectors have shownsimilar trend in terms of gap.


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Public Sector: In the case of public sector thegap has reduced from 0.24 in 2006-07 to 0.10 in2015-16. Among the public sector companies TheOriental Insurance Company Limited hasmaximum gap followed by The United IndiaInsurance Company Limited. The New IndiaAssurance Company Limited had least gap during2006-07 to 2010-11 and in 2012-13. In theremaining years National Insurance CompanyLimited has least gap. The mean value was almostsame as the total value in all the years. There was

no significant change in the standard deviationfrom 2006-07 to 2015-16.

Private Sector: In the case of private sector thegap has reduced from 0.46 in 2006-07 to 0.25 in2015-16. The company with the Minimum gap andMaximum gap was varying in each year duringthe sample period. The mean value has decreasedfrom 0.43 in 2006-07 to 0.22 in 2015-16. Thestandard deviation has slightly increased from 0.07in 2006-07 to 0.10 in 2015-16.

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1. Net Profitability of Reinsurance Operations:The net profitability of Reinsurance operations isthe sum of reinsurance demand side profitabilityand reinsurance supply side profitability. Thereinsurance demand side profitability and supplyside profitability are calculated in the followingway:

· Reinsurance Demand side profitability =Premium on reinsurance ceded – claims onreinsurance ceded - commission received onreinsurance ceded

· Reinsurance Supply side profitability =Premium on reinsurance accepted – claims onreinsurance accepted - commission paid onreinsurance accepted

An analysis of data pertaining to net profitabilityof reinsurance operations of the public and privatesector non-life insurance companies (see table13and table 14) indicate that the net profitability wasnegative in all the years except in 2011-12. Furtherit has declined from Rs.1050.03 crores in 2006-07 to Rs.1171.01 crores in 2015-16.

Public Sector: The net profitability of reinsuranceoperations of public sector was negative in sevenyears during the period of study. The profitabilityof demand side operations and supply sideoperations has shown a mixed result with eitherof them resulting in loss or both of them resultingin loss. Among the public sector companies

National Insurance Company Limited iscomparatively in a better profitable position inalmost 6 years and The New India AssuranceCompany Limited was on the bottom in terms ofprofitability in almost 7 years during the period ofstudy. The mean value has decreased fromRs.104.45 Crores in 2006-07 to Rs. -282.32 Croresin 2015-16. The standard deviation value increaseddrastically from 136.87 in 2006-07 to 1583.78 in2011-12 and then decreased to 576.35 in 2015-16. The Variability of net profitability relativelyhigher in public sector than private sector.

Private Sector: The net profitability ofreinsurance operations of private sector wasnegative in all the years during the period of study.The negative value of net profitability is mainlydue to the losses in demand side operations. Thesupply side profitability has been favourable inalmost 6 years during the period of study. Amongthe private sector companies ICICI LombardGeneral Insurance Company Limited was on thebottom in terms of profitability for almost 6 yearsduring the period of study. On the other hand thecompany with maximum profitability was varyingin different years during the period of study. Themean value has improved from Rs.-183.48 Croresin 2006-07 to Rs.-2.46 Crores in 2015-16. Thestandard deviation values are much lesser inprivate sector compared to public sector indicatingthat the profitability among the companies didn’tvary much.

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I. Growth and Status of Reinsurance Businessof National Reinsurer GIC Re:As GIC Re is a purely reinsurance company itdoesn’t have direct premiums. ThereforeReinsurance Ceded and Reinsurance Accepted arethe two parameters taken to study the growth andstatus of GIC Re.

· Reinsurance Ceded is measured through theabsolute value of Premiums on ReinsuranceCeded.

· Reinsurance Accepted is measured through theabsolute value of Premium on ReinsuranceAccepted.

The Life Reinsurance segment is excluded fromthe Analysis of GIC Re.

The analysis of Reinsurance ceded and acceptedof GIC Re is performed in three stages:

1. The Growth of Reinsurance Ceded andAccepted.

2. The Gap between the Reinsurance Ceded andAccepted.

3. Net Profitability of Reinsurance operations.

1. The Growth of Reinsurance Ceded andReinsurance Accepted:

An analysis of data pertaining to reinsurance cededand reinsurance accepted by GIC Re (see table 15and figure 8) has indicated that the reinsuranceceded has increased from Rs.983.30 crores in2006-07 to Rs.2020 crores in 2015-16 registeringa growth of 105%. On the other hand reinsuranceaccepted has increased from Rs.7402.21 crores in2006-07 to Rs.18205.16 crores in 2015-16registering a growth of 146%. The ReinsuranceAccepted is very high compared to ReinsuranceCeded. The reinsurance ceded by a reinsurer isknown as retrocession and GIC was successful inmaintaining a very low level of cessions.

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2. The Gap between the Reinsurance Ceded andAccepted:Unlike the calculation of gap in case of non-lifeinsurance companies which was the differencebetween the reinsurance demand and supply whichare expressed in ratios the gap of reinsurance ceded

and accepted of GIC is calculated by taking thedifference of absolute values. An analysis of datapertaining to gap between reinsurance ceded andaccepted (see table 16 and figure 9) indicate thatthe gap has shown an increasing trend. The gaphas increased from Rs.6418.91 crores in 2006-07to Rs.16184.52 crores with a growth of 152%.


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2. Net profitability of Reinsurance Operationsof GIC Re:The net profitability of Reinsurance operations ofGIC Re is the sum of profitability of reinsuranceceded and profitability of reinsurance accepted.The profitability of reinsurance ceded andprofitability of reinsurance accepted is calculatedin the following way:

• Profitability of Reinsurance Ceded = Premiumon reinsurance ceded – claims on reinsuranceceded - commission received on reinsuranceceded

• Profitability of Reinsurance Accepted =Premium on reinsurance accepted – claims on

reinsurance accepted - commission paid onreinsurance accepted

An analysis of data pertaining to net profitabilityof reinsurance operations of GIC Re (see table 17)has shown that the net profitability has grown by78% from 2006-07 to 2015-16. The profitabilityof reinsurance ceded has fallen by 147% andprofitability of reinsurance accepted has grown by99.63% from 2006-07 to 2015-16. Net profitabilityof reinsurance operations of GIC Re has beenfavourable in almost all the years except in 2013-14 and 2014-15. The Reinsurance Cededoperations have continuously shown losses acrossthe sample period. On the other had the profitsfrom Reinsurance Accepted operations has helpedto offset these losses leading to a net profitability.

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Findings and Conclusion:Findings:

1. The premium on reinsurance ceded wasinitially more by the public sector than theprivate sector from 2006-07 to 2012-13 andlater the private sector has over taken thepublic sector. The growth from 2006-07 to2015-16 in premium on reinsurance ceded(51%) was less than the growth of total publicand private sector (104%). Whereas thegrowth of private sector during the sameperiod (169%) was more than the total publicand private sector growth.

2. On the contrary the public sector hasdominated the private sector in premium onreinsurance accepted throughout the period ofstudy. The growth of premium on reinsuranceaccepted from 2006-07 to 2015-16 was alsomore by the public sector (213%) than theprivate sector (90%). Another notable pointis the variability of premium on reinsuranceaccepted was very high among public sectorcompanies compared to private sector.

3. In the case of gross written premium thoughthe private sector’s growth from 2006-07 to2015-16 (364%) was almost double than theprivate sector (194%), in terms of volume thepublic sector’s share was more than the privatesector in all the years.

4. The reinsurance demand was more by theprivate sector compared to public sector in allthe years of study. Further there was a steadydecline in the ratio of reinsurance demand byboth public and private sectors from 2006-07to 2015-16.

5. On the other hand the reinsurance supply wasmore by the public sector than the privatesector. Both the sectors have shown a similartrend of high increase till 2011-12 and then asteep decrease till 2015-16.

6. The gap between the ratio of reinsurancedemand and ratio of reinsurance supply of boththe sectors has narrowed down from 2006-07to 2015-16.

7. The net profitability of both the sectors wasnot satisfactory throughout the period of study.There was net loss in most of the years. Thedeviation of net profits was very high amongthe public sector companies compared toprivate sector.

8. Being an exclusive reinsurance company thereinsurance accepted by GIC Re was very highcompared to reinsurance ceded in all the yearsof study. Further the growth from 2006-07 to2015-16 in reinsurance accepted (146%) wasmore than the growth of reinsurance ceded(105%).

9. The gap between the volume of reinsuranceceded and reinsurance accepted of GIC Re haswidened from 2006-07 to 2015-16.

10. The profitability of reinsurance ceded by GICRe has fallen by 147% and the profitability ofreinsurance accepted has grown by 100%resulting in the growth of net profitability by78% from 2006-07 to 2015-16.

Conclusion:A stronger capital base, experienced staff andbetter risk management practices of the publicsector non-life insurance companies has led togreater supply of reinsurance and reduction in thevolume of cessions by them compared to privatesector. The reinsurance capacity supplied by theIndian non-life insurers is only to overseasinsurance companies as they are not permitted toaccept reinsurance from Indian insurers. Thechanges in the regulatory framework of differentcounties could be a reason for the sudden decreasein the reinsurance supply from 2013-14 by the non-life insurance companies in India. They shouldmake efforts to improve the supply of profitablereinsurance as it can also help in improving theprofits before tax of the companies. On the otherhand GIC Re has shown a healthy growth in termsof both reinsurance ceded and accepted. GIC’sAnnual reports show that more than 50% of itscapacity has been constantly supplied to Indianinsurers throughout the period of study. This ismainly because of the compulsory cessions to bemade to GIC by the Indian insurers. However the


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establishment of branch offices by the overseasreinsurers in India will definitely give a thoughcompetition to GIC Re. The primary insurers willhave more options in terms of reinsurance productsand competitive prices to reinsure their risks inthe domestic front. Finally reinsurance which actsas a backbone for the insurance sector to prosperhas gained greater momentum in India in past fewyears and would definitely be a value propositionto deepen the roots of insurance.

References:

Chaitra K S and Savitha S (2014). ‘PerformanceEvaluation of General Insurance Corporation(GIC) of India’. Acme Intellects InternationalJournal of Research in Management, SocialSciences & Technology Vol 2 No. 1 November2015

Curak Marijona, Utrobicic Marija and DanielKovac, (2014). ‘Firm Specific Characteristics andReinsurance – Evidence from Croatian insurancecompanies.’ Ekonomska Misao I Praksa, 2014,V.23, iss.1, pp. 29-42

David and Joy (2007). ‘UnderstandingReinsurance’, Chapter 40, published by Mathewbenders and company

Edwin W Kopf, ‘Notes on the origin andDevelopment of Reinsurance’. Casuality ActuarialSociety (CAS) publication

James R. Garven and Joan Lamm Tennant(2002). ‘Economic and Financial Perspectives onthe Demand for reinsurance.’ Chapter 10 inRational Reinsurance Buying,NickGolde,Editor(London: Risk Publications),December 2002, pp.163-186

James R. Garven and Joan Lamm Tennant,2003. ‘The Demand for Reinsurance: Theory andEmpirical Tests.’ Assurance, Vol.7, No.3 (July2003)

Grossmann, M (1990). ‘Reinsurance- AnIntroduction’. The Institute of Insurance,University of St. Gallen, 3rd edition 1990.

IMC Report (2014). ‘A framework for developinga reinsurance hub in India’ A perort published byIMC India in June 2014

IRDA Exposure Draft, (2015). ‘InsuranceRegulatory and Development Authority of India,Exposure Draft’ dated 02.12.2015.

Kader Hala Abdul , Mike Adams and KostasMouratidis, (2010). ‘Testing for tradeoffs in theReinsurance Decision of U.K. Life InsuranceFirms’ Journal of Accounting, Auditing andFinance, Summer 2010, 25, iss.3, pp. 491-522

Mezgebe Mihretu Woldegebriel(2010).‘Assesment of Reinsurance Business inDeveloping Countries: Case of Ethiopia.’ AResearch Report Presented to the Graduate Schoolof Business Leadership, University of South Africa

Dr. Nema D K and Parul Jain (2012). ‘Growthof Reinsurance in India’ Zenith InternationalJournal of Business Economics & ManagementResearch. Vol.2 Issue 1, January 2012

P S Palande R S Shah, M L Lunawat (2003)‘Insurance in India: Changing policies andEmerging Opportunities’ Sage Publications

Peter Falush (1996). ‘Development ofReinsurance Markets in the economies intransition’ OECD publishing 1996.

OECD (2013). ‘OECD Insurance Statistics 2012’,OECD Publishing, 2013

Ramachandran K (2016). ‘Practice ofReinsurance-2016 and Forward’, Bimaquestvolume 16, issue 1, January 2016

Dr. Sanjib Kumar Pakira (2015). ‘GrowthPerformance Analysis – A Comparitive StudyBetween Private and Public Sector Non-LifeInsurance Companies’.International Journal ofArts, Humanities and management Studies.Volume 1 No. 11, November 2015

Showket Ahmad Dar, Ishfaq AhmadThaku(2015). ‘A comparative Analysis ofFinancial Performance of Public and Private Non-Life Insurers in India’ International Journal ofManagement, Volume 6, Issue 1, January 2015,pp 507-526

Other Sources:1. Annual Reports of IRDA2. Annual Reports of GIC Re3. Annual Reports of Non-Life InsuranceCompanies In India

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AN EVALUATIVE STUDY OF RAJIV AAROGYASRIHEALTH INSURANCE SCHEME IN WARANGAL DISTRICT

OF PRE-BIFURCATION OF TELANGANA STATEA .RAVEENDARNAIK,Doctorial Research Scholar,Department of Commerce,Osmania University, HyderabadEmail: [email protected] no. +91 9701046411

ABSTRACT

Governments all over the world today have come to accept the health of people as a public responsibility.Health is a very significant and vital factor for the prosperity of a country. Health is one of the mostimportant indicators for socio-economic development. After independence, in India, health has beengiven a constitutional recognition as a major factor for the national development. Article 47 of theDirective Principles of Indian Constitution points out that the basic responsibility of the state as thepromotion of health and standard of living of its people. It also, further says, ‘the state shall regard theraising of the level of nutrition and improvement of public health as among the primary duties and inparticular, the state shall endeavor to introduce prohibition of the consumption, except for medicalpurposes of intoxicating drinks or drugs which are injurious to health While visiting a hospital in India,one often contemplates the sheer impossibility of delivering quality health care services to the economicallydowntrodden. It is commonplace for poor Indians to use their life savings to access quality treatment forthemselves and their loved ones. To address this problem of indebtedness of the poor due to overwhelminghealth costs, the Government of Andhra Pradesh launched the Rajiv Aarogyasri Health Insurance Schemeon 01-04-2007 in three backward districts of Mahboobnagar, Anantapur and Srikakulam on pilot basiswas subsequently extended to the entire state in phased manner to cover 2.3 crore Below Poverty Linefamilies in 23 districts from 17-07-2008. Thus from the past Nine years Rajiv Aarogyasri Scheme workingin the state and provides health insurance to Below Poverty Line, it is the right time to evaluate thescheme and to offer suggestions to improve its performance.

Keywords: Health; Aarogyasri; Health insurance

IntroductionGovernments all over the world today have cometo accept the health of people as a publicresponsibility. Health is a very significant and vitalfactor for the prosperity of a country. Health isone of the most important indicators for socio-economic development. World DevelopmentReport 1993 says, “Improved health reducedproduction losses, permits the proper utilizationof natural resources, increases the ability to literatefor the next generation and frees the resources thatwould otherwise have to be spent treating illness”.According to preamble of Constitution of the

World Health Organization, health is defined as“a state of complete physical, mental and socialwellbeing and not merely an absence of diseaseor infirmity, nothing could be greater importancethan the health of the people in terms of resourcesfor socio-economic development”. Healthaccording to the Constitution of India is a statesubject. The State Government assisted by localbodies is responsible for providing health carefacilities to its people. This results in differentpolicies and programs of health care in variousstates. They make use of different systems ofplanning, acquisition and maintenance of

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equipment, hospital administration, charging ofservices, patients services etc. Theresult isincompatible information requirements and thedecision-making process causing wide variationsin the overall health status of people in variousstates. This does not allow any standards to beadopted for the better achievement of healthobjectives. After independence, in India, health hasbeen given a constitutional recognition as a majorfactor for the national development. Article 47 ofthe Directive Principles of Indian Constitutionpoints out that the basic responsibility of the stateas the promotion of health and standard of livingof its people. It also, further says, ‘the state shallregard the raising of the level of nutrition andimprovement of public health as among theprimary duties and in particular, the state shallendeavor to introduce prohibition of theconsumption, except for medical purposes ofintoxicating drinks or drugs which are injuriousto health’. Poverty is undoubtedly one of thegreatest challenges facing by India. Given the largeproportion of its underprivileged population, thedelivery of basic universal services seems almostunattainable. This issue is exemplified in publichealth service delivery. While visiting a hospitalin India, one often contemplates the sheerimpossibility of delivering quality health careservices to the economically downtrodden. It iscommonplace for poor Indians to use their lifesavings to access quality treatment for themselvesand their loved ones. To address this problem ofindebtedness of the poor due to overwhelminghealth costs, the Government of Andhra Pradeshlaunched the Rajiv Aarogyasri Health InsuranceScheme on 01-04-2007.

The State Government of Andhra Pradeshlaunched a community health insurance schemecalled “Rajiv Aarogyasri Health InsuranceScheme” with effect from 01.04.2007. Onconsequent reorganization of the State of AndhraPradesh into the States of Telangana and AndhraPradesh with effect from 02-06-2014, theGovernment of Andhra Pradesh was issued theorders (G.O.MS.No. 127, dated 27-09-2014) torename the ‘Rajiv Aarogyasri Scheme’ as “Dr.NandamuriTarakaRamaraoAarogyaSeva” and 100

procedures shall be added to the existing 938procedures to provide cashless treatment in theempanelled network hospitals (total 1038procedures), and also the then existing limit offinancial coverage of Rs.2.00 lakhs per family per

annum is hereby enhanced to Rs 2.50 lakhs perfamily per annum. Latter a new G.O was passedby the state on 17-12-2014.

Need for the StudyHealth insurance is a safeguard against risingmedical costs. The burden of expenditure on healthcare indicates a potential for community healthinsurance schemes for such sections of the society.It is estimated that the Indian workforce is coveredby some form of health insurance through CentralGovernment health schemes, State Governmenthealth schemes, and medi-claim. The low level ofhealth insurance coverage’s is due to the fact thatGovernment policies have been designed toprovide free health services through the publicsector. Public insurance companies have paid verylittle attention to community health insurancebecause of low profitability and high risk involved.Keeping the above scenario in mind, the StateGovernment of Andhra Pradesh in an effort toassist the Below Poverty Line families (BPL) hasdecided to introduce health insurance for treatingthe dreaded diseases. Big successes under thisscheme have brought back the smile on the faceof poor families.

Specific Objectives of the Present StudyThe study is taken up with the followingobjectives:

• To study the evolution of HealthAdministration in India and Health caresystem in Andhra Pradesh.

• To examine the structure of Rajiv AarogyasriCommunity Health Insurance scheme appliedto the beneficiaries under Below Poverty Linefamilies.

• To analyze the perceptions of patients relatingto the services Rendered to them by thehospitals through Rajiv Aarogyasri scheme.

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• To analyze the experiences and difficultiesfaced by the beneficiaries in obtaining RajivAarogyasri Health Insurance Scheme.

• To find out the drawbacks and suggestnecessary measures to reduce impedimentsand improve the quality of services renderedthrough Rajiv Aarogyasri scheme.

HypothesisIn order to conduct the study, some hypotheseswere formulated based on the observations madeby studying the related literature. The followingare the hypothesis of the present study:

• The lower and middle age group patients mayprefer Privatehospitals for treatment throughRajiv Aarogyasri scheme.

• There may be a variation between caste andpreference of hospitalfor getting treatment inPrivate as well as Government hospitals.

• There may be significant difference betweenselection of hospitalsand patients employmentstatus for treatment.

• There may be a significant relationshipbetween income level andselection of hospital.

• There may be key role played by the AarogyaMithra in the RajivAarogyasri healthinsurance scheme.

• Media may be responsible for creatingawareness about the RajivAarogyasri scheme.

• The facilities provided to the patients by thehospitals may not upto the mark.

• 108/104 ambulances may be rendering goodservices to thepatients.

• There may be a significant relationshipbetween ration card andselection of hospital.

Tools and MaterialsResearcher has retrieved data and literature fromsecondary sourceslike published and unpublishedliterature in the form of books andarticles in thejournals. Reports and Governmental documents aswellas leaflets and broachers and from variousauthentic sources werecollected and studies forgetting information. Researcher has preparedwell-

structured schedule which contains both closedended and openended questions to collect datafrom the beneficiaries of RajivAarogyasri schemefrom Warangal district. Primary data hasbeencollected through field survey byadministering schedules to thesample respondentswho were drawn from the Warangal district.Itcontains 33 items in which the first item (1-7) isused to gather thepersonal information of thebeneficiaries, 8-17 items relatedperceptions onRajiv Aarogyasri scheme, 18-22 relatedtohospitalization, 23-27 items are related to posthospitalization and28-33 items are related toadministration of Aarogya Mithra. Interviewandobservation and focus group discussion techniqueswere also usedto collect the necessary data to fulfillthe objectives2.

SamplingOut of 23 districts in Andhra Pradesh (at presentTelangana state is having31districts), the corefocus of research has beenfocused on the regionof Warangal which consists of 51mandals. Withthe heterogeneity of beneficiaries hailing fromWarangal district, the researcher selected this areausing Purposive andconvenient samplingtechnique was used to selecting respondents.Thefield survey for primary data collection wasconducted in threedifferent phases. In the firstphase, a pilot survey was conducted toprepare aprototype questionnaire, in the second phase,questionnairewas tested and finalized. In the thirdphase, final field survey had beenconducted byadministrating the finalized questionnaire to thesamplerespondents. Simple random sampling hasbeen used to select 51mandals and thereby 10beneficiaries from each mandal. Thecurrentsample size undertaken for research is 510.Out of the total selectedbeneficiaries only 400 wastaken as sample by using convenientsampling andthey were responded and showed their willingnesstoprovide information for the present researchstudy.

Key ConceptsThe following are the key concepts of the presentstudy to evaluatethe Rajiv Aarogyasri scheme.

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• Awareness: Knowledge of the beneficiariesregarding rules, regulations and proceduresand practices of the Rajiv Aarogyasrischeme.

• Responsiveness: Doctors response to patientsrelating to theservices rendered to them.

• Grievances: Complaints lodge by beneficiariestowards the servicesrendered through RajivAarogyasri health insurance scheme.

• Delay: Duration of the time taken in renderingservices to thebeneficiaries.

• Equity: Treatment given to the beneficiarieswithout anydiscrimination under the RajivAarogyasri scheme.

Computation of Data (Data Analysis)Information on this study, as already stated isobtained in threeforms information from officialrecords, questionnaire and informalinterviews.Each type of information has been carefullyanalyzed andtabulated according to the need ofthe study. Simple percentages arethus mostly used.Interpretation and generalization of data weremadeon the basis of empirical analysis. Tables andgraphs present theunivariate and bipartitefrequency and percentage distribution.

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Telangana State Brief ProfileTelangana is the 29th state of India, formed on the2nd of June 2014. The state has an area of 1, 12,077Sq. Km. and has a population of 3,52,86,757. TheTelangana region was part of the Hyderabad statefrom Sept 17th 1948 to Nov 1st 1956, until it wasmerged with Andhra state to form the AndhraPradesh state. After decades of movement for aseparate State, Telangana was created by passingthe AP State Reorganization Bill in both housesof Parliament. Telangana is surrounded byMaharashtra and Chhattisgarh in the North,Karnataka in the West and Andhra Pradesh in theSouth and East directions. Major cities of the stateinclude Hyderabad, Warangal, Nizamabad andKarimnagar.

Warangal District ProfileWarangal is spread over 12, 84,000 ha with merelyone-fourth of the geographical area under forests.Gross cropped area is 5, 50,000 ha and net sownarea is 29.1%. The cropping intensity is 123%, thehighest among the NAIP districts. Areas underpermanent pastures constitute 3.3%, highest nextto Nalgonda. The district has a total population of32, 46,004 of which 17% belong to ScheduledCastes and 14% to Scheduled Tribes. The literatesin the rural area constitute 52%. About 68.1% ofthe workers are engaged in agricultural activities.

Back ground of Rajiv AarogyasriPublic health care in India often faces heavycriticism. Seriousshortcomings in quality of andaccess to services, quantity of personnelandequipment, and levels of funding haunt the publichealth caresystem. Moreover, governmenthospitals face a myriad of problems,exposing thepoorest sectors of society to insufficient and lowqualitytreatment. With diseases and the numbersof affected on the rise, it iscrucial to develop asound and effective health care delivery process.Insuch circumstances, a public private partnershipmay offer a solution4.The Government of AndhraPradesh was introduced the scheme i.e.,RajivAarogyasri Health Insurance Scheme on 01-04-2007 in threebackward districts of Mahboobnagar,Anantpur and Srikakulam onpilot basis was

subsequently extended to the entire state inphasedmanner to cover 2.3 core Below PovertyLine families in 23 districtsfrom 17-07-2008.While designing the scheme, experience gainedinother States implementing similar schemes viz.Yeshasvini ofKarnataka, Karuna of Tamilnadu, andUniversal Health InsuranceScheme of Govt. ofIndia was carefully studied5.A list of 533(389surgical and 144 medical) such procedureswereidentified for inclusion under the scheme.These procedures werecovered under the bannerAarogyasri-II and launched in the State on17thJuly 2008 in order to enable all BPL families availcashlesstreatment for more procedures. 79 newprocedures in the specialties ofObstetrics, Eye,ENT, Cardiology, and Trauma and Critical carewerefurther added in the Scheme with effect from14th November, 2008,thus bringing the totalprocedures covered under the Scheme to 942.Atpresent the scheme is covering 1038 procedures6.

Objectives of the Rajiv Aarogyasri CommunityHealthInsurance Scheme

• Improve overall health infrastructure for thebetterment of citizenwell-being.

• Provide social protection by addressing theproblem of growingindebtedness faced by thepoor due to burdensome health carecosts.

• Monitor trends in diseases and treatment ofailments to ensure thathealthcare reaches thegrassroots.

• Provide health security to the largest and mostdisadvantagedsegment of the population.

• To increase access to health care.

• To protect families from high medicalexpenditure.

• To provide options in terms of health careproviders.

• To improve quality of public health caresystem.

Major Findings of the Study• The middle age group patients and lower age

groups prefer Private hospitals and there is

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significant relation between the age andselection of hospitals for treatment throughRajiv Aarogyasri Scheme.

• Majority of the male and female patients preferto visit private hospitals for treatment. Hencethere is no relation between the gender andselection of hospitals for treatment throughRajiv Aarogyasri Scheme.

• Most of the P.G level educated beneficiariesprefer Government hospitals and majority ofthe graduate level educated beneficiaries liketo get treatment at private hospitals throughRajiv Aarogyasri scheme. Hence there is asignificant relation between the education andselection of hospitals for treatment throughthis Scheme among the patients. • More than50 percent of BC and OC patients preferPrivate hospitals and ST, SC patients areinterested in Government hospitals fortreatment. Hence, there is a significantdifference between the category and selectionof hospitals for treatment through this scheme.

• Employed and Unemployed patients preferredboth Private andGovernment hospitals andthere is no significant differencebetweenselection of hospitals and patient employmentstatus fortreatment through Rajiv AarogyasriScheme.

• The study reports a significant relationbetween the income andselection of hospitalsfor treatment through RajivAarogyasriScheme. Hence, Income is one ofthe factor which influencesselection ofhospital for treatment among the beneficiaries.

• Daily and weekly beneficiaries preferGovernment hospitals,whereas, monthlyincome patients prefer to visit Privatehospitals.Hence, there is a significant relationbetween the payment receivedand selection ofhospitals for treatment through RajivAarogyasriScheme.

• It is observed in the study that networkhospitals are not providingfood and beveragesto the patients, although there is a provisionforsuch service in Rajiv Aarogyasri Scheme.

• Network Hospitals having limited resourcesand management hasto improve all types ofservices under Rajiv Aarogyasri strategy.

• As per the respondents’ views, the top threemeasures used toevaluate the importance ofRajiv Aarogyasri irrespective of thetype ofhospital, bed capacity, specialization or qualityservice, on

Time service and responsiveness.

• The network hospitals opined that the cashlesstreatment service isone of the most importantreasons for the success of RajivAarogyasriprogramme.

Suggestions

• Patients reported lack of bed facilities and theylose time andresources in searching alternatehospital for treatment. This may beovercomeby coordinating, the scheme with morenetworkhospitals and by increasing the bedcapacity than the existing one. This way thescheme will reach out to more numberofbeneficiaries at the right time and at the rightplace.• The Government should take measuresto inspect the networkhospitals on a regularbasis in order to find the discrepancies inthefunctioning of the scheme. As it has beenfound by the researcherthat some networkhospitals are not providing food andbeveragefacilities to the beneficiaries. As theprovision of food andbeverages to thebeneficiaries is of utmost importance astheybelong to BPL families and they do nothave the resources to feedthemselves. This iscrucial where post-operative care is needed[3].

• The Government can engage more socialwelfare workers to spreadinformation aboutthe scheme in rural areas. More awarenesscanbe brought about by repeated broad castin T.V and Radio. Eventhough theGovernment has provided for mandatorymedicalcamps, the researcher is of the opinionthat more frequent medicalcamps will bringproper awareness of the scheme and willenablefaster dissemination of information to

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the population in ruralareas. It is also observedby the study that some network hospitalsdonot conduct medical camps which needimmediate notice andaction of theGovernment to make the scheme a successfulone.

• In order to prevent post-operativecomplications it is suggestedthat the networkhospitals should provide well experienceddoctorsfor cases that require such expertise.It is also suggested thatallotment of doctorsfor this scheme must be done on a basisofgrouping the diseases under the categoriesof critical/severe/ andgeneral to provide goodtreatment to the beneficiaries.

• Since the reach of 108/104 ambulances hasbeen proved successfulin several areas it issuggested that more such services canbeintroduced to cover several rural areas.

• The advantage of the researchers’ suggestionof grouping cases under critical/severe/generalill enable immediate and proper treatment tothe beneficiaries which will increase thesatisfaction levels of the respondents towardsthis scheme.

• The Government should take measures torelease funds to the network hospitalsproviding this scheme at the earliest as thiswill bring about better response to thebeneficiaries in this scheme

From the private hospitals, who otherwise arehesitant to extend this scheme, due to delay insettlement of their claims

• Government should take measures toinvestigate the operational efficiencies of thenetwork hospitals under this scheme to servethe interest of the down-trodden segment ofthe society.

• A strict vigil is necessary on private hospitalsproviding this scheme as they are notproviding the required medication to thebeneficiaries at the time of discharge. •AarogyaMithra’s cabin must be placed at aprime point which is easily, clearly visible and

can be identified with ease by thebeneficiaries.

• Finally, the health staff including doctorsshould develop motivation towards serving theunder privileged community and provide theservices with full commitment in fulfilling thetask assigned to them.

CONCLUSION:Rural population of state, majority of whom arefarmers, are not having access to advanced medicaltreatment and are silent sufferers of ill health. Thisis truer in case of diseases related to heart, kidney,brain, cancer and injuries due to domesticaccidents and burns. While the Government is inthe process of adequately strengthening the healthinstitutions for basic health care, lack of specialistdoctors and equipment for treatment of seriousdiseases has created a wide gap between thedisease load and the capacity of the Governmenthospitals to serve the poor. These facilities thoughavailable in private sector are catering mainly tothe affordable sections of society and are beyondthe reach of poor families living in villages.Because of this gap poor patients are constrainedto go to private hospitals for treatment and in theprocess land is a huge debt leading to sale ofproperties and assets or are, sometimes, lefteventually to die. While critics of Aarogyasri sayit is limited to tertiary healthcare while the pressingconcerns are still in primary healthcare delivery.However, the fact is that an insurance company,Government and private hospitals have created aframework for a genuine, health insurance scheme.The scheme undoubtedly regarded as a boon toBPL families who are otherwise vulnerable todiseases and lack of treatment by professionallyqualified doctors. There is an imminent need toenlarge the scope of the scheme and improvedelivery of health care in the interest of societyand social wellbeing of people, especially thefamilies from BPL. Without proper health care andconcern of all in any society, there is no meaningof economic and social developments in thecontext of human development criteria formeasuring progress of a nation.

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References

1. Ekman B (2004) Community-based healthinsurance in low-income countries: asystematic review of the evidence. HealthPolicy and Planning 19: 249-70.

2. Shukla, Rajan, Shatrugna, Veena, &Srivatsan,R. (2011). Aarogyasri health care model:Advantage private sector. Economic andPolitical Weekly, 3 December 2011, XLVI(49): 38–42.

3. Prasad, N. Purendra, &Raghavendra, P.(2012). Health care models in the era ofmedical neo-liberalism: A study of Aarogyasriin Andhra Pradesh. Economic PoliticalWeekly, XLVII (43): 118–26.

4. Reddy S, Mary I. Rajiv AarogyasriCommunity Health Insurance Scheme inAndhra Pradesh, India: A comprehensiveanalytic view of private public partnershipmodel. Indian J Public Health 2013; 57:254-9

5. Rao et al.: “A rapid evaluation of the RajivAarogyasri community health insurancescheme in Andhra Pradesh, India”. BMCProceedings 2012 6(Suppl1):O4.

6. Gopi M (2015) Evaluation of Rajiv AarogyasriHealth Insurance scheme in Andhra Pradesh:a case study of Vizianagaram district. Lap-Lambert Academic Publishing, Germany.

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EVALUATIVE STUDY OF RAJIV AAROGYASRI HEALTHINSURANCE SCHEME IN TELANGANA STATE

RAMAVATH RAVIAssistant Professor of CommerceGovernment Degree College Mahabubabad,TELANGANA.E- Mail. ID. [email protected]

ABSTRACTHealth is an important constituent of human resource development. Good health is real wealth of society.It not only increases human efficiency but also decreases private and public expenditure on sickness anddiseases.The government of Andhra Pradesh introduced Aarogyasri as a cashless health insurance programfor households living Below Poverty Line(BPL) inApril 2007.A Scheme is a unique Community HealthInsurance Scheme being implemented in State of Telangana. The Scheme provides financial protectionto families living BPLupto Rs.2 lakhs in a year for the treatment of services ailments requiringhospitalization and surgery. The objective of the scheme is to improve access BPL families to qualitymedical care for treatment of identified diseases involving hospitalization. Surgeries and therapies throughan identified network of health care providers are carried out.

The present paper focuses, the examine the structure of Rajiv Aarogyasri Health Insurance Scheme(RAHIS),toevaluate the accessibility of RAHIS whether home or outside of the district wisebeneficiariesand study the demographic profile of beneficiaries of RAHISand also study the understandthe availment of benefits of RAHIS by respondents in government or private hospitals. The presentstudy relied on secondary data and for analysis of data statistical techniques are used like coefficient ofcorrelation, pie, bar and line chats.

The Aarogyasri Scheme covered all districts of Telangana State. Nearly about four-fifths of thehouseholdshave Rajiv Aarogyasri Health Card in Telangana state. Among these highest in Medak districtand lowest in Hyderabad district and 92 percent of STs and 80 percent of SC have this facility, residingin 10859 villages 584 Revenue Mandals of all districts ofTelangana State in five phases.The schemestarted with 163 procedures covered and has been gradually extended to 938 procedures. The majority ofbeneficiaries utilizing the scheme are illiterate and have a rural address. Since inception of the schemetotill 17695 Medical camps were conducted and 4250864 patients were screened held by the networkhospitals in rural areas.2177848 Pre-authorisations were performed and 1977992 surgeries were done.Thepre-authorised amount for the surgeries/therapies is Rs.5497.45crores. The claim paid is Rs.5431.41croresfor the surgeries/therapies performed. It is concluded that the majority i.e., 72.4 percent of householdsaccess medical services from Private/Corporate hospitals and 27.6 percent from Government hospitals.The community wise medical services rendered by beneficiaries of RAHIS are highest i.e., percent fromBCs community and followed by minorities (14.8%), OCs (14.4%), SCs (10%) and STs (6.7%)respectively. Hence, it is that suggested appropriate steps are initiated at the earliest for development ofinfrastructural facilities and recruit required staff in government hospitals to meet the needs of the medicalservices of poor families.

Key words: Below Poverty Line, Aarogyasri Health Insurance Scheme, Surgeries, Therapies.

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IntroductionHealth is an important constituent of humanresource development. Good health is real wealthof society. It not only increases human efficiencybut also decreases private and public expenditureon sickness and diseases. Health has been declaredas a fundamental human right. Healthcare serviceshelp to reduce infant mortality rate, check crudedeath rate, keep diseases under control and raiselife expectancy1. The government of AndhraPradesh introduced Aarogyasri as a cashless healthinsurance program for households living below thepoverty line on 01.04.20072. The program provided“medical assistance to families below poverty linefor the treatment of serious ailments such as cancer,kidney failure, heart and neurosurgical disease etc.,requiring hospitalization and surgery/therapy”.Under the scheme, Below Poverty Level (BPL)households in Telangana were eligible and coveredfor medical expenditure towards 938 listedtreatments up to Rs. 200,000 (USD 3300)3.UnderAarogyasri Scheme, 256 network hospitals bothunder Government and Private Sectors have beenempanelled. A total of 17695 Health Camps wereconducted and 4250864 patients were screened.1439869 Pre-authorisations were performed and1255010 surgeries were done. The pre-authorisedamount for the surgeries/therapies is Rs.3773.64crores. The claim paid is Rs.2983.32 crores forthe surgeries/therapies performed.

Of the total coverage, 75% is on family floaterbasis, i.e., unutilized coverage will be available tothe other household members. The remainingcoverage, Rs. 50,000 is available on the basis ofrecommendations of a technical committee. Theinsurance does not have any deductible or co-payment. All transactions are cashless, where abeneficiarycan go to any authorized hospital andreceive care without paying for the procedurescovered under the scheme. As of Feb 2016, 256Government and Private Hospitals wereempanelled under Aarogyasri in every district ofTelangana.

Objective of the study1. To examine the structure of Rajiv

Aarogyasri Health Insurance Scheme.

2. To evaluate the accessibility of RajivAarogyasri Health Insurance Schemewhether home or outside district wisebeneficiary.

3. To study the demographic profile ofbeneficiaries of Rajiv Aarogyasri HealthInsurance Scheme.

4. To understand the availment of benefits ofRajiv Aarogyasri Health Insurance Schemeby respondents in Government or PrivateHospitals.

Methodology:In order to conduct the study, information has beengathered mostly from secondary sources such asscheme website, available assessment reports, andthe data provided by the Aarogyasri health caretrust, Scheme website and published articles.Foranalysis of the data by using statistical tools likeKarl person’s coefficient, line, bar and pie charts.

Rajiv Aarogyasri Health Insurance SchemeIn the Government hospitals lack ofbasic health,care specialists doctors and equipment fortreatment of serious diseases. These facilitiesthough available in private sectors are cateringmainly to the affordable sections of society andare beyond the reach of poor families living invillages. Because of this gap poor patients areconstrained to go to private hospitals for treatmentand in the process land in a huge debt leading tosale of properties and assets are sometime lefteventually to die1. Hence, there is a felt need inthe state to provide medical assistance to BPLfamilies for the treatment of serious ailments.However, the fact is that an insurance company,Government and Private hospitals have created aframework for genuine health insurance scheme.The State Government of Andhra Pradeshlaunched a community health insurance schemecalled “Rajiv Aarogyasri Health InsuranceScheme” with effect from 01.04.2007. Onconsequent reorganization of the State of AndhraPradesh into the States of Telangana and AndhraPradesh with effect from 02-06-2014, theGovernment of Telangana was issued the ordersto rename the ‘Rajiv Aarogyasri Scheme’ as

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“Aarogyasri Health Care Trust” and 100procedures shall be added to the existing 938procedures to provide cashless treatment in theempanelled network hospitals.

Eligibility:All below poverty line residents of the state ofTelangana are technically entitled to Aarogyasribenefits. The scheme has been implemented in alldistricts in the state. Nearly about four-fifths ofthe households in the state have food security cardearlier is called white ratio card for access to thePDS; level of access is highest in Medak districtat 94.5 per cent, lowest in Hyderabad with justabout half of the households having Food SecurityCard. Nearly 92 per cent of the STs in the statehave food security card; among SC householdsabout 80 per cent have ration cards. The selectionof beneficiary under Aarogyasri Scheme uses dataof food security card which was issued by CivilSupply Department, Government of Telangana.Such of the beneficiaries who are covered for the“listed therapies” by other insurance schemes suchas CGHS, EHS, ESIS, Railways, RTC etc., willnot be eligible for any benefit under this scheme.

FundingThis is a state government scheme. Under this,hospital bills of the insured persons are paid bythe insurance company. The premium for insurancecompany is paid by the government. People donot have to pay anything under this scheme. Thestate wanted to ensure that the benefits of thescheme reached the poorest, who might otherwisebe deterred from enrolling even if the premium tobe paid out of pocket was nominal.

Institutional structureRajiv Aarogyasri Trust under the Government ofAndhra Pradesh has an overall responsibility ofimplementing the scheme in the state. Theadministrative structure of Aarogyasri is comprisedof four main organizations:

Aarogyasri Healthcare Trust: The Trust isresponsible for oversight of the entire insuranceprogram as well assome important administrativefunctions such as setting benefits and pricing,managing contracts with insurer (s)and networkproviders, approving claims, and monitoring.

Insurer: The insurer is selected based on acompetitive bidding process to bear risk andmanage all back endinsurance administration,including claims processing, reimbursements toproviders, and oversight of hospitals.The Insureris also responsible for holding health camps invillages to screen, diagnose, treat, andmakebeneficiaries aware of any health problemsthey might have; health camps are also used toenroll eligiblebeneficiaries.

Network hospitals: Network hospitals providecare to Aarogyasri beneficiaries. Under the scheme256 networks hospitals both under government andprivate sectors in Telangana State.

Aarogya Mithras: Aarogya Mithras is patientadvocates and assists Aarogyasri beneficiaries tonavigatethrough the system and ensurebeneficiaries receive quality care. Aarogya Mithrasis also responsible forcommunity outreach.

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Looking at the table shows about district wise totalnumber of therapies preauthorized underAarogyasri Scheme. It has been found that the totalnumber of therapies preauthorized that have beentaken under this scheme since the inception to tilldateis 1794073. Among these 48.4 percent(870567) therapies pre-authorized in home districtsand 51.6 percent (923506) are outside of thedistricts in Telangana State. The pre-authorizationsamount for the therapies is Rs.464259.9956 lakhs,during the study period. Among these homedistricts pre-authorizations amount is 212894.1246lakhs and outside of the districts amount incurredRs. 251365.871 lakhs. It is observed from theabove table that major share of claim amount i.e.,14.3 percent utilized in Hyderabad district fortherapies preauthorization and followed by RangaReddy, Karimnagar, Nalgonda, Mahabubnagar,Warangal, Medak, Khammam, Nizamabad andAdilabad districts with 13.6%, 12.3%, 11.7%,11%, 10,6%, 7.8%, 7%, 6.4% and 5%respectively. It is clearly evident from the abovetable that the highest number of therapiespreauthorized performed in home districts areHyderabad with 12.6 percent (226432), Ranga

Reddy with 9.2 percent (164712), Warangal with9.1 percent (163455) and Karimnagar with 7.7percent (137371). Lowest number of number oftherapies preauthorized in Adilabad district 0.5percent (10042), Medak district .075 percent(13596), Nalgonda district 1.5 percent (26635),Khammam district 2 percent (37500),Mahabubnagar 2.4 percent (42313) andNizamabad district 2.7 percent (48511). In caseoutside of the districts highest number of therapiespreauthorized performed districts are Nalgondawith 10.3 percent, Mahabubnagar with 8.5 percent,Medak with 6.6 percent and Karimnagar with 4.8percent. And lowest number of therapiespreauthorized districts was both Hyderabad andWarangal districts with 2.3 percent, andNizamabad 3.7 percent respectively.

In the above table an attempt has been made tomeasure the relationship between home andoutside districts regarding beneficiaries ofAarogyasri Health Insurance Scheme in TelanganaState by computing Karl Pearson’s Coefficient ofCorrelation is -0.618. Which indicates a negativerelation among them?

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It is noticed that the more number of therapiesperformed in outside of the districts than the homedistricts. It is indicates that Hyderabad, RangaReddy, Warangal and Karimnagar districts havesufficient basic health care facilities along with

specialist and equipment for treatment of seriousdiseases. Hence, people are giving priority to thesedistricts for taken medical treatments for seriousdiseases.

Community wise distribution: In the above table,it shows that the caste wise distribution ofbeneficiaries of Rajiv Aarogyasri Health InsuranceScheme in Telangana State. It is indicates majority54.4 percent of the backward class (BC), while14.7 percent are minorities, 14.1 percent are OCcommunity and 10 percent are Scheduled Caste.

And 6.6 percent beneficiaries are ScheduledTribes. It is noticed that most of the Aarogyasrischeme beneficiaries are BCs, Minorities and OCscommunities and meager percent of ScheduledCaste and Scheduled Tribes people are utilizingthis scheme.

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Gender distribution: It is evidence that the 57percent of the beneficiary of RAHIS holders aremale, among these 6 percent are male child and51 percent are male. 43 percent respondents arefemale among these 3.7 percent are female childand 39.3 percent are female. It is indicates that themajority of the beneficiary are male than thefemale.

Age distribution: In the present study beneficiaryof Rajiv Aarogyasri Health Insurance Schemeholders are categorized into four groups based ontheir age, viz the less than 14 year age group of15-35 year age group, 36-60 year group and above60 year age group.It is found from the above tablethat 51.8 percent of Aarogyasri schemebeneficiaries belongs to the age group of 36-60years, 22.5 percent in the age group of 15-35 years,16.5 percent belong to above 60 years age groupsrespondents. And 9.2 percent of Aarogyasrischeme beneficiaries are less than 14 years agegroup. It is observed that the most of thebeneficiaries are matured and old age grouppeople.

Types of hospitals: It is observed that the majorityi.e., 72.4 percent of the Rajiv Aarogyasri HealthCard holders access the medical services fromPrivate/Corporate hospitals and 27.6 percent ofbeneficiary access the medical services fromGovernment hospitals of Telangana State.It isnoticed that there is a huge gap between theCorporate Hospitals and Government Hospitalsregarding services providing under RajivAarogyasri Health Insurance. Hence, it issuggested that appropriate steps are initiated at theearliest for development of infrastructural facilitiesand recruit required staff in government hospitalsto meet the needs of the medical services of poorfamilies.

Table 3.1 shows about district wise total numberof pre-authorized and surgeries performed underAarogyasri Scheme. It has been found that the totalnumbers of surgeries performed that have beentaken under this scheme since inception of the

scheme to till 2177848 Pre-authorisations wereperformed and 1977992 surgeries were done.Thepre-authorised amount for the surgeries/therapiesis Rs.5497.45 crores. The claim paid is Rs.5431.41crores for the surgeries/therapies performed.

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Highest number of surgeries performed inHyderabad district with 63 percent, Warangaldistrict with 6 percent, Ranga Reddy district with5.5 percent and Karimnagar district with 5.2percent. Lowest number of surgeries performedin Adilabad district with 2.1 percent and followedby Khammam, Nizamabad, Medak,Mahabubnagar Nalgonda, with 2.7 percent, 2.7percent, 3.1 percent, 4.6 percent and 4.8 percent

respectively. It is also observed that major shareof claims amount utilized in Hyderabad districtfor surgeries under Aarogyasri scheme. Andfollowed by Warangal, Ranga Reddy, Nalgonda,Mahabubnagar, Medak, Khammam, Nizamabad,Adilabad and Karimnagar with 5.7%,5.2%,4.5%,4.4%,3%,2.7%,2.5%,2% and .05%respectively.

It is clearly indicates that the majority i.e., 63percent of the surgeries performed in Hyderabaddistrict, 6 percent in Warangal districts and 5.5percent in Ranga Reddy district. And remainingdistricts are low in number of surgeries performeddue to that in these districts lack of basic healthcare specialities doctors and equipment fortreatment of serious diseases. It has created a widegap between the disease load and the capacity ofthe Public and Private hospitals to serve the people.Therefore, most of the people were giving priorityto the private hospitals in urban areas likeHyderabad and Warangal. Hence, it is suggestedthat the Public and Private sector hospitals haveto develop medical facilities especially in thesedistricts to meet the need of poor families.

ConclusionThe Aarogyasri Scheme covered all districtsofTelangana State. Nearly about four-fifths of thehouseholds have Aarogyasri health cardin State.Among these highest in Medak district and lowestin Hyderabad district and 92 percent of STs and80 percent of SC have this facility, residing in

10859 villages 584 Revenue Mandals of alldistricts ofTelanganaState in five phases. Thescheme started with 163 procedures covered andhas been gradually extended to 938 procedures.Since inception of the scheme to till date17695Medical camps were conducted and 4250864patients were screened held by the networkhospitals in rural areas.2177848 pre-authorisationswere performed and 1977992 surgeries weredone.The pre-authorised amount for the surgeries/therapies is Rs.5497.45 crores. The claim paid isRs.5431.41 crores for the surgeries/therapiesperformed.

It is concluded that the majority i.e., 72.4 percentof households access medical services fromPrivate/Corporate hospitals and 27.6 percent fromGovernment hospitals. The majority ofbeneficiaries utilizing the scheme are illiterate andhave a rural address. Most of the beneficiaries areBCs, Minorities and OC communities and meagerpercent of SC and ST categories. From all thecommunities’ most ofbeneficiaries of Scheme i.e.,57 percent are male and 43 percent female

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respondents. It is noticed that 51.8 percent ofAarogyasri scheme beneficiariesbelong to the agegroup of 36-60 years, 22.5 percent in the age groupof 15-35 years, 16.5 percent belong to above 60years age groups respondents.And9.2 percent ofAarogyasri scheme beneficiaries are less than 14years age group. It clearly indicates that the highesti.e., 63 percent of the surgeries performedinHyderabad district and followed by Warangaland Ranga Reddy districts with 6 percent and 5.5percent respectively. And remaining sevendistricts are low in number of surgeriesperformed.These districts lackof basic health carespecialities, doctors and equipment for treatmentof serious diseases. It has created a wide gapbetween the disease load and the capacity of thePublic and Private hospitals to serve the people.Therefore, most of the people were giving priorityto the private hospitals in urban areas likeHyderabad.

Hence, it is suggested that appropriate steps areinitiated at the earliest for development ofinfrastructural facilities and recruit required staffin government hospitals to meet the needs of themedical services of poor families. And also

suggested that public and private sector hospitalshave to equally develop medical facilities fortreatment of severe diseases inall district ofTelangana State. Then only people can accessquality medical services with affordable cost.

References

1. J.Yellaiah (2013) “Health Insurance in India:Rajiv Aarogyasri Health Insurance Scheme inAndhra Pradesh” Journal of Humanities andSocial Science, Volume 8, Jan-Fe, 2013.

2. GopiMadaboyina (2016) “An EvaluativeStudy of Rajiv Aarogyasri Health InsuranceScheme in Vizianagaram district of AndhraPradesh” Arts and Social Sciences Journals,Volume, 7 issue, 6 page 1-5.

3. Socio-Economic Outlook, Government ofTelangana, 2017.

4. Sunita Reddy and Immaculate Mary (2013)Aarogyasri Scheme in Andhra Pradesh, India:Some Critical Reflections, Social Change, 43,2 (2013): 245–261.

5. Related websites.

Ramavath Ravi

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POLICYHOLDERS PERCEPTION TOWARDS ONLINEINSURANCE - A PILOT STUDY IN HYDERABAD

Mr. D. MahipalResearch Scholar,Dept. of Commerce,O.U, Hyderabad

ABSTRACT

The emergence of new financial technology and growth of outsourcing services in insurance createshighly competitive market conditions which have a critical impact on consumer behaviour. Hence, it isthe need of the hour for the insurance sector, to better understand their customer’s attitudes towardstechnology in general, to enhance increased satisfaction of their customers using online insurance. Ifthey succeed, insurance companies will be able to influence and even determine customer behaviour,which will become a major issue in framing appropriate strategies in the future. This study explores theperception of customers on the online insurance. It also tries to identify the level of satisfaction towardsonline insurance. The study also aims at understanding customer attitude towards the service qualitydimension set by the insurance companies in general and the extent of customer satisfaction derived.The paper concludes with the suggestion to adopt specific measures to enhance the online initiatives todrive the growth further.

Keywords: Internet banking, Customer Satisfaction, On-line Insurance, Service Quality

INTRODUCTIONThe insurance industry of India consists of 52insurance companies of which 24 are in lifeinsurance business and 28 are non-life insurers.Among the life insurers, Life InsuranceCorporation (LIC) is the sole public sectorcompany. Apart from that, among the non- lifeinsurers there are six public sector insurers. Inaddition to these, there is sole national re-insurer,namely, General Insurance Corporation of India.Other stakeholders in Indian Insurance marketinclude agents (individual and corporate), brokers,surveyors and third party administrators servicinghealth insurance claims. Three key social securityschemes had a nationwide launch in May 2015,the schemes - which include accident insurance,life insurance and a pension plan — target thepeople from the economically deprived and theunorganized sections, The Pradhan Mantri JeevanJyoti Bima Yojana will offer a renewable one-yearlife cover of Rs 2 lakh to all savings bank accountholders in the age group of 18-50 years coveringdeath due to any reason, for a premium of Rs 330per annum. The Pradhan Mantri Suraksha Bima

Yojana will offer a renewable one-year accidentaldeath-cum-disability cover of Rs 2 lakh for partial/permanent disability to all savings bank accountholders in the age group of 18-70 years for apremium of Rs 12 per annum per subscriber. AtalPension Yojana will focus on the unorganizedsector and provide subscribers a fixed minimumpension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000or Rs 5,000 per month, starting at the age of 60years, depending on the contribution optionexercised on entering at an age between 18 and 40years.

THE DIGITAL MARKETING OFINSURANCE PRODUCTSToday, the digital revolution of the marketplaceallows much greater customization of products,services, and promotional messages than oldermarketing tools. By doing so, it enables marketersto build and maintain relationships with customers.Over a period of a decade or so, the digitalrevolution has introduced several drastic changesinto the business environment Consumers havemore power than ever before.

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· Consumers have access to moreinformation than ever before.

· Marketers can offer more services andproducts than ever before

· The exchange between marketers andcustomers is increasingly interactive andinstantaneous.

· Marketers can gather more informationabout consumers more quickly and easily.Impact reaches beyond the PC-basedconnection to the Web.

REVIEW OF LITERATUREZhang, Jansen, and Chowdhury (2011) [4] specifiedthat businesses should have a brand presence onmany different social media sites to increase theirconsumer audience. “Research has shown thatexposure to electronic word of mouth (EWOM)messages can generate more interest in a productcategory than can exposure to informationproduced by marketers”

Yasser Mahfooz, et al. (2013) [5], in their researcharticles titled “A Study of the Services Qualityissues of internet banking in Non-metro Cities inIndia’’, confirms that non-users can be convertedinto users by proper education on the servicesavailable and assuring them of the secureenvironment.

Keerthi, P. and Vijayalakshmi, R. (2009)[1] “AStudy on the Expectations and Perceptions of theServices in Private Life Insurance Companies”reveals that the policyholders’ expectations arewell met in the case of certain factors reacting toservice quality. But in the case of other variables,there exists a significant gap which means thatpolicyholders have experienced low levels ofservice as against their expectations.

Kunz (1997) [2] ease in using the Internet as ameans of shopping positively impacted theconsumer’s online shopping behavior. Productpromotions attempt to influence the consumers’purchasing behavior.

Blattberg & Wisniewsk, (1989) [3]. Like other retailmethods, online channels have various

promotional tools such as corporate logos, banners,pop-up messages, e-mail messages, and textbasedhyperlinks to web sites. These types of promotionshave positively affected Internet buying.

STATEMENT OF THE PROBLEMNowadays internet has become indispensable partof marketing, in some international markets as highas 30% of motor insurance is transacted online.All retail insurance products such as cars, bikes,health, and travel, home, personal, accident andcritical illness insurance are available online withinstant real -time policy issuance. Even thoughonline insurance benefit customers in many waysstill many people do not trust the insurance throughinternet. There are some frauds or proxy websiteswhich can hack information. Due to the aboveproblems the customers highly hesitate to makeuse of the online insurance service offered by theinsurance companies. At this backdrop, followingquestions stand as challenges for the entireinsurance industry operating in online.

1. What is the source of awareness of theinsurance customers?

2. What factors influence a customer to adoptonline insurance services?

3. What are the determinants of customersatisfaction on online insurance services and

4. What problems are faced by the customers inonline insurance?

OBJECTIVES OF THE STUDYBased on these questions the following objectiveswere framed for the study.

1. To study the socio economic profile of thecustomers and their association betweenvarious factors and their level of awarenesstowards online insurance.

2. To study the on-line insurance Awareness andbuying behaviour of the consumers

3. To analyse the variables influencing customersatisfaction on on-line insurance

4. To identify the problems faced by customerson on-line insurance and suggest suitable

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measures to improve quality of on-lineinsurance services.

RESEARCH METHODOLOGYThe study was conducted in Hyderabad whichconsist mainly the areas Hyderabad andSecunderabad in Hyderabad. Primary data werecollected through questionnaire and field work.Secondary data were collected from government

records, newspapers, business magazines, websitesand some important sources of information usedin this work. The main reason for choosingHyderabad is that investigator is located here andis familiar with the people. The study includes allcategories of respondents. The respondents wereselected on the basis of non- probabilityconvenience sampling. Statistical tools used forthe study area.

DATA ANALYSIS &INTERPRETATION

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It is clearly identified from the above table7 thatthe calculated chi-square value is greater than thetable value in all the variables and the result issignificant at 5% level. Hence, the null hypothesisis rejected for all the variables. That is, from theanalysis, it is concluded that there is a closerelationship between the selected independentvariables and level of satisfaction regarding theonline insurance consumers.

Service Quality Dimension and Customersatisfaction

In order to analyse the satisfaction of policyholders towards the various aspect of onlineinsurance it was decided to select 10 variableswhich are highly related to the service quality interms of reliability, security, timely performanceof service, claim settlement, product pricing,employees skill, service policies and compliancewith IRDA guideline etc. policy holders pinionswere taken by the use of 5 point scale with differentoptions/weights such as Strongly Agree-5, Agree-4, Neautral-3, Disagree-2, Strongly Disagree-1.

The above statements were used to understand thepriority given by the company to establish strongservice quality to influence the customers onvarious issues on online insurance. The customerswere given 10 choices and according to theweighted score assigned to the various statementstheir priority was ranked.

Table 9: Ranking of Customer Satisfaction FactorsAccording to Service Quality Dimension

Table: 9 reveal the ranking of the service qualityissues faced by the customers according to theperception of customer, it shows that Easyaccessibility of information through websites werethe most preferred area by the customers. Abilityto comply with IRDA guidelines to bring positiveopinion on customer is given second preference.Reliability & Security of services rendered wasthe third choice and availability of products todifferent consumer segments comes in fourthpriority according to the customer choice. Abilityto finalise claim settlement online was the leastpriority of most of the policy holders.

FINDINGS OF THE STUDYThe study came out with interesting findings, theywere as follows

1. The respondents of age group 30-49 werefound to be maximum in these studywith36%.degree/diploma holders were found

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to be at maximum number in this study(39%).maximum respondents are working forthe private sector organization (43%).Also itis found that maximum number of therespondents were in the income range of 2.5lakhs to 5 lakhs (45%).

2. That is, from the analysis, it is concluded tobe a close relationship between the variablessuch as age, marital status, income,qualification, employment and level ofsatisfaction regarding the online insuranceconsumers.

3. It is understood from the study thatrespondents give more priority for theinformation availability through websites andbrochures for knowledge and instant decisionmaking.

4. Need to comply with IRDA guidelines and theapplication of insurance laws for fair businesspractices are the next major preference of therespondents in insurance business. Reliability& Security of services rendered was also thevery important area to positively engage onlineinsurance transaction with companies.

SUGGESTIONSThe study prefer to offer the following suggestions,Companies must provide frequent updates of theironline insurance services to customers

1. The procedure for usage of online transactionmust be in simple mode

2. The processing speed should be increased forfast use of all services

3. The pages setup and procedure for registrationshould be simple

CONCLUSIONUndoubtedly on-line insurance is a strong catalystfor the economic development and in order toenhance the propensity to use online insurance asa primary channel, it must be tailored suiting tothe need of the customer. As more and more

customers adopt the internet for their insurancetransactions. It becomes important formanagement of insurance companies to beinnovative in their approach to meet customerrequirements.

REFERENCES

1. Zhang Mimi, Bernard J Jansen, AbdurChowdhury. Business engagement on Twitter:a path analysis. Electron Markets 2011;21:161-175. DOI 10.1007/s12525-011-0065-z.S

2. Yasser Mahfooz, Mohammed Al-Motairi,Farah Ahmed, Altafn Khan. A Study of theServices Quality issues of internet banking inNon-metro Cities in India, Journal ofAdvanced Management Science.2013; 1:75-79.

3. Keerth P, Vijayalakshmi R. A Study on theExpectations and Perceptions of the Servicesin Private Life Insurance Companies, SMARTJournals. 2009; 5:291-309

4. Kunz M.B. On-line customers: identifyingstore, product and consumer attributes whichinfluences shopping on the Internet. Doctoraldissertation. The University of Tennessee,Knoxville, 1997.

5. Blattberg R, Wisniewsk K. Price-inducedpatterns of competition. Marketing Science,8(4 Krishnamurthy, S., Insurance Sector:Challenges of Competition and FutureScenario, Vikalpa, 1989-2005, 30(3).

6. Insurance Products Provided by InsuranceCompanies to the Disadvantaged Groups inIndia, Geneva, International Labour Office,Strategies and Tools against Social Exclusionand Poverty (STEP) Programme, 2005

7. Leon G. Schiff man and Leslie LazarKanuk,(2004) Consumer Behaviour, Prentice,Hall of India Private Limited New Delhi – 110001, Eighth Edition, Page 4 to 6

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THIRD PARTY ADMINISTRATORS INHEALTH INSURANCE BUSINESS- A STUDY

Dr.E.ShankerAsst.Professor of Commerce,M.V.S. Govt. Degree College (A)Mahabubnagar-509001Mobile: 9441512966,Email:[email protected]

ABSTRACT

This paper covers TPAs functions, duties, claim settlement, health insurance business in India. It’s alsocovers health insurance claims handled through TPAs, health insurance claims handled directed by theinsurers, aging claims handled through TPAs. Therefore, health insurance business in India during theyear 2015-16 in terms of number of claims settled, 73 percent of the claims were settled through TAPsadministrators, during the year insurers have settled 82.13 percent of claims registered and haverepudiated 10.62 percent of the number of claims registered.

Key wards: Third Party, Health Insurance, Claims, IRDA

1. INTRODUCTIONNeed of health insurance is on a rise these daysowing to intimidating reasons like souringnumbers of communicable and non communicablediseases, changing disease patterns, low publicspending on health care, high out of pocketexpenses, poor public health institutesinfrastructure, shortage of drugs and equipmentsupply in public healthcare setup, advent ofcorporate hospitals, costly line of treatment inprivate hospitals due to highly paid qualifieddoctors and other challenges of health goals.

The proliferation of various healthcaretechnologies and increase in cost of care hasnecessitated the exploration of health financingoptions to manage problems arising out ofhealthcare costs. Health insurance is emerging fastas an important mechanism to finance thehealthcare needs of people1. Insurance systemworks on the basic principle of preventingpopulation from getting indebted in times of illnessor accident by pooling of risks of unexpected costsof ill persons needing medical treatment orhospitalization by charging some basic amount(premium) from a wider group of population of

the same community undergoing through sametypes of environment and risk.

The ILO defines health insurance as “the reductionor elimination of the uncertain risk of loss for theindividual or household by combining a largernumber of similarly exposed individuals orhouseholds who are included in a common fundthat makes good the loss caused to any onemember”2 . Third party administrators wereintroduced through the notification on TPA HealthServices Regulation 2001 by IRDA. Their basicrole is to function as an intermediary betweeninsured and insurer (policy holder) and facilitatethe cashless service of the insurance.

The Insurance Regulatory and DevelopmentAuthority of India (IRDA) defines TPA as a ThirdParty Administrator who, for the time being, islicensed by the Authority, and is engaged, for afee or remuneration, in the agreement with aninsurance company, for the provision of healthservices3 . An insurance company hires TPA tomanage its claims processing, provider networkand utilization review. While some TPA operatesas units of insurance companies, most are oftenindependent.

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Primary Functions of TPA:

• Cashless Hospitalization: The TPAs areresponsible to help the insured go throughthe process of availing this benefit

• Manage Claims: The insured is supposedto file all the necessary documents with theTPA regarding their claims, whetherthey are hospitalized in a network hospitalor non-network hospital. After verifyingthe details and confirming with theinsurance company, TPAs disburse theclaim amount, ask for more documents orreject the claims and give valid reasons forthe same

• Maintain Customer Database: TPAs areauthorized to maintain complete customerrecord, their medical history, claim history,assign unique identification numbers andalso collect premiums from them.

• Value-added Services: TPAs also providesextra health care services like helping ingetting beds in a hospital, ambulanceservices, consultation with a specialist,supply of medicines etc.

• Customer Service: This is a highly valuableservice provided by the TPA. They have afull-time medical practitioners working forthem who can guide a patient about theneed for hospitalization as well as withother queries if there is a plannedhospitalization.

1. LITERATURE REVIEWCurrent health insurance, general and stand alonehealth insurance companies have settled 80.35 lakhhealth insurance claims and paid Rs. 21,759 croretowards claims. Interm of number of claims settled,73 percent of the claims were settled through TAPsand the balance were settled through in-house. Interms of mode of settlement of claims, 58 percentof the total claims were settled by cashless mode.The remaining 42 percent of the claims are settledthrough reimbursement mode.

2. OBJECTIVES OF THE STUDY1. To study the third party administrators in

insurance business.

2. To analyse the third party administratorsclaim settlement.

3. METHODOLOGYFor the study, statistical data has been collectedfrom the annual reports published by IRDA. Thestatistical techniques like, average, men, standarddeviation, t-test have also been applied.

4. LIMITATIONS OF THE STUDYAs the report is mainly based on secondary data,the following limitations are expected to be partof the required study; the performances of TAPshave been shown for just one year 2015-16. Theanalysis is based on only claims settlementinformation by the third party.

5. THIRD PARTY ADMINISTRATORS ININSURANCE BUSINESS

Third Party Administrators:

TPA or Third Party Administrator (TPA) is acompany/agency/organisation holding licensefrom Insurance Regulatory DevelopmentAuthority (IRDA) to process claims - corporateand retail policies in addition to providing cashlessfacilities as an outsourcing entity of an insurancecompany.

LIST OF TPAs in INDIA AS ON 31ST MARCH2016

1. United Healthcare Parekh TPA Pvt. Ltd.

2. Medi Assist India TPA Pvt. Ltd.

3. MD India Healthcare (TPA) Services (Pvt.)Ltd.

4. Paramount Health Services & InsuranceTPA Pvt. Ltd.

5. E Meditek (TPA) Services Ltd.

6. Heritage Health TPA Pvt. Ltd.

7. Focus Health Services TPA Pvt. Ltd.

8. Medicare TPA Services (I) Pvt. Ltd.

9. Family Health Plan (TPA) Ltd.

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10. Raksha TPA Pvt. Ltd.

11. Vidal Health TPA Private Limited

12. Anyuta TPA in Healthcare Pvt. Ltd.

13. East West Assist TPA Pvt. Ltd.

14. Med Save Health Care TPA Ltd.

15. Genins India TPA Ltd.

16. Alankit Health Care TPA Limited

17. Health India TPA Services Private Limited

18. Good Health TPA Services Ltd.

19. Vipul Med Corp TPA. Pvt. Ltd.

20. Park Mediclaim TPA Private Ltd.

21. Safeway TPA Services Pvt. Ltd

22. Anmol Medicare TPA Ltd.

23. Dedicated Healthcare Services TPA (India)Private Limited

24. Grand Health Care TPA Services PrivateLimited

25. Rothshield Healthcare (TPA) ServicesLimited

26. Happy Insurance TPA Pvt. Ltd.27.Ericson Insurance TPA Pvt. Ltd.

28. Health Insurance TPA of India Ltd.

The above table 1 reveals that the health insuranceno of claims pending at the beginning of the periodis 226249 cashless amount is Rs. 61678.00, newclaims registered during the period 3534858cashless amount 1046203.00. Claims settledduring the period 3225958 cashless amount is Rs.833360 claims repudiated during the period230002 cashless amount Rs. 113816.00. claims

handled through TPAs 2015-16 year average cashless amount Rs. 336285.00 and standard deviationRs 43128.49. The health insurance no of claimspending at the beginning of the period is 134950Reimbursement amount is Rs. 81439, new claimsregistered during the period 3076073Reimbursement amount 998477, Claims settledduring the period 2621230 Reimbursement amount

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is Rs. 774190 claims repudiated during the period413060 Reimbursement amount Rs.177451.claims handled through TPA s 2015-16year average Reimbursement amount Rs. 507889.3and standard deviation Rs 448197.01.the Healthinsurance no of claims pending at the beginningof the period is 197 Benefit Based Amount is Rs.38, new claims registered during the period 1416

Benefit based amount 418, Claims settled duringthe period 915 Benefit based amount is Rs. 307claims repudiated during the period 591 Benefitbased amount Rs. 122 .claims handled throughTPA s 2015-16 year average Reimbursementamount Rs. 221.25 and standard deviation Rs172.7182.

The above table 2 reveals that the Health insuranceno of claims pending at the beginning of the periodis 136067 Cashless Amount is Rs. 18,256, newclaims registered during the period 1662818cashless amount 314607, Claims settled during theperiod 1454499 cashless amount is Rs. 237721claims repudiated during the period 163951cashless amount Rs. 353381. Claims pendingat the ending at the end of the Year 180435 cashlessamount Rs. 25647, Claims Handled directed bythe insurers 2015-16 year average cash lessamount Rs. 129,922.00 and standard deviation Rs136867.00. the Health insurance no of claimspending at the beginning of the period is 67942Reimbursement Amount is Rs. 42290.000, newclaims registered during the period 910272Reimbursement amount 383734.00, Claims settledduring the period 707372 Reimbursement amount

is Rs. 323698.00 claims repudiated during theperiod 226321 Reimbursement amount Rs.79947.00, Claims pending at the ending at the endof the year 44521 cashless amount Rs. 43863.00,.Claims handled directed by the insurers 2015-16year average Reimbursement amount Rs. 174706.4and standard deviation Rs 165472.4.the Healthinsurance no of claims pending at the beginningof the period is 197 Benefit based amount is Rs.38, new claims registered during the period 1416Benefit Based amount 418, Claims settled duringthe period 915 Benefit based amount is Rs. 307claims repudiated during the period 591 Benefitbased amount Rs. 122. Claims handled directedby the insurers 2015-16 year averageReimbursement amount Rs. 221.25 and standarddeviation Rs 172.7182.

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The above table 3 reveals that the claims handledthrough TPAs less than one month is 2705759cashless amount is Rs. 662,435, claims handledthrough TPAs 1-3 months 435985 cashless amount149349.00, claims handled through TPAs 3-6months 67117 cashless amount is Rs. 16943.00,claims handled through TPAs 6-12months 14567cashless amount Rs. 3255.00. Claims handledthrough TPAs 1-2years 2096 cashless amount Rs.632.00, Claims handled through TPAs 2years 434cashless amount Rs. 746.00, Claims handledthrough TPAs 2015-16 year average cash lessamount Rs. 138,893.00 and standard deviation Rs262935.6. the Claims handled through TPAs lessthan one month is 2021775 Reimbursementamount is Rs. 519587, Claims handled throughTPAs 1-3 months 404534Reimbursement amountRs. 177382.00, Claims handled through TPAs 3-6 months 139397 Reimbursement amount is Rs.49196.00 ,Claims handled through TPAs 6-12months 46934 Reimbursement amount Rs.16445.00. Claims handled through TPAs 1-2years6734 Reimbursement amount Rs. 10514.00,Claims handled through TPAs 2years 1856Reimbursement amount Rs. 1066.00, Claimshandled through TPAs 2015-16 year averageReimbursement amount Rs. 129031.7.00 andstandard deviation Rs 202159.50. the Claimshandled through TPAs less than one month is 597Benefit based amount is Rs. 125.00, Claimshandled through TPAs 1-3 months 201 Benefitbased amount 82.00, Claims handled through TPAs3-6 months 57 Benefit based amount is Rs. 31.00,Claims handled through TPAs 6-12months 38

Benefit based amount Rs. 40.00. Claims handledthrough TPAs 1-2years 15 Benefit based amountRs. 22.00, Claims handled through TPAs 2yearsBenefit based amount Rs.7.00,Claims handledthrough TPAs 2015-16 year average Benefit basedamount Rs. 51.16667.00 and standard deviationRs 44.12445.

7. CONCLUSIONIt can be concluded that on an average Rs.10,21,875 have been cleared by TPAs, Rs.3, 13,967.8by the insurers. However it can be started thatwithin one month time Rs.11, 82,147 claim settledby the TPAs.

In Indian non life insurance sector witnessed agrowth of 8.1 percent during 2015 where as thegrowth in global non-life insurance premium was3.6 only. However, the share of Indian non-lifeinsurance premium in global non-life insurancepremium was at 0.75% and India ranks 18th amongthe 88 countries.

8. REFERENCES1 R. Bhat, S. Maheshwari, S. Saha, “Third Party

Administrators and Health Insurance in India:Perception of Providers and Policyholders”,Indian Institute of Management Ahmadabad,pp. 1-24, 2005.

2 Adapted from www.irda.gov.in.

3 S. Manjushree, “TPAs: A Cure for The IndianHealth Insurance Sector”, InternationalJournal of Research in Commerce, IT andManagement, Volume No.4, Issue No. 03,March 2014.

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HEALTH INSURANCE IN INDIA-A STUDY OF PUBLIC AND PRIVATE SECTOR

Dr.D.Satish P.Shyam Sunder GoudResearch Associate Research ScholarDepartment of Commerce Department of CommerceOsmania University Hyderabad Osmania University HyderabadTelangana State Telangana State

ABSTRACT

Health insurance is essential need to the human life; health insurance is protecting against healthproblems, financial protection, and family protection of human life. World is rapidly growing at thesame time human life also rapidly changing human activities, day by day human life is felt into unsecurehealth zone. This paper covers trend, progress, in health insurance, public and private insurers, Numberof Persons Covered under Health Insurance, Classification of Health Insurance, CAGR, ANOVA ofHealth Insurance Segments Wise. It is also explained the insurance Inter-Mediaries, Third PartyAdministrators, and IRDA.

Keywords: Health Insurance, IRDA, Third Party, CAGR

INTRODUCTION:In today’s global environment with rapidlygrowing economy, the changes in politicalscenario, changing cultural patterns, social valuesand the development precipitated in the businessscenario predominantly

In the information technology have brought asignificant transformation in the lifestyles in theurban and rural areas of our economy. Thesechanges have caused an element of uncertainty inevery sphere of business, at the same time; thehealth insurance sector has emerged as one of theimportant service sector of growth in Indianeconomy. While health insurance is not anexception to face dynamic global businessenvironment, radical changes are being witnessedin products and services offered by the insurancecompanies. Further, the appearance of new risks,new types of covers to match the needs andrequirements of customers are also beingsynchronized with innovative ideas.

The survival and growth of insurance companiesare becoming stringent due to competitive rates,changing customer needs and the highly uncertaineconomic conditions. Health Insurance is a subtle

aspect and administratively monitored andcontrolled in India by the Government till the year2000. Since the decision of the Government wasto encourage private players in all segments of thefinancial sector, it was inevitable that the insurancesector had no option. Subsequently, with the entryof many foreign players in the form of jointventures with private agencies in the Indianmarket, the insurance companies have beenexperiencing fierce competition. As aconsequence, the Indian healthcare insuranceindustry has closely integrated with the worldeconomy1.

OBJECTIVES OF THE STUDY:1. To study the present trends and growth rate of

health insurance.

2. To analyse the health insurance in public,private and standalone insurers.

HYPOTHESIS:Ho: there is no relationship between public, privateand standalone health insurers with regard to trend,number of persons covered and classification ofhealth insurance.

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RESEARCH METHODOLOGY:This study is an exploratory research to examinethe trends and progress in health insurance sector.Information sourced for this study is based onsecondary data from various sources such asbooks, annual reports, journals, and internetsource.

Statement of the Problem:The need of the study is felt to analyse the trends,progress and growth rate of the health insuranceindustry.

REVIEW OF LITERATURE:A detailed review of literature on the subject hasgiven insight into various aspects related to healthcare and insurance. The summary of the review ispresented herewith.

A study conducted by BhagabatBarik (2014) on„Emerging Trends in Insurance emphasizes thatPeople have realized the importance of healthinsurance due to rise in the healthcare cost. Withthe advent of latest technology in medical scienceand demand for good service is the main cause forhigher medical cost. Private insurance companieshave played a pivotal role in enlarging the visionof the people about healthcare. A study conductedby Girish (2014) on „Health Insurance Evolutionin India opined that healthcare transformationmust focus on the three key areas namelybeneficiaries, cost, and quality. Innovative productdevelopment, proximity to the consumer, andchampioning efficiency will be the critical successfactors.A study conducted by Aanchal Aggarwal1(2013) on „Health Insurance: Innovation andChallenges Ahead summarizes that the Indianhealth insurance scenario today is a mix ofGovernmental insurance schemes, Social HealthInsurance (SHI), voluntary private healthinsurance and Community-Based Health Insurance(CBHI). As per the recommendations of UniversalHealth Coverage Committee on institutionalreforms, insurance companies should strive tomake quality health care affordable, insurancepenetration should increase to at least 50 per centof the population by 2020 and 80 percent by 2030from the current 15 per cent. It may be necessaryto pool various health insurance service providers

to effectively use their services to ensure thehealthcare of people. For Indians the healthcareinsurance is the need of the hour. Productinnovation would be one of the key drivers to reachthis penetration target. A study conducted byOnicra Credit Rating Agency (2013) on „EmergingTrends in Healthcare Industry reports that thereis an increased demand of Health Insurance byvirtue of an increased healthcare awareness levelamong people about its need which in turn hasincreased the demand. A study conducted byKPMG (2011) on „Emerging Trends in Healthcareindicates that the healthcare sector, in India, is atan inflection point and is poised for rapid growthin the medium term. However, Indian healthcareexpenditure is still amongst the lowest globallyand there are significant challenges to be addressedboth in terms of accessibility of healthcare serviceand quality of patient care. While this representssignificant opportunity for the private sector, theGovernment can also play an important role infacilitating this evolution.

A study conducted by RDLele (2004) on „HealthInsurance as an Integral Component of HealthMaintenance Organization (HMO) highlights thatthe Institute of Medicine (IOM) in USA presentedin its report that the healthcare system fails tofulfil six aims of quality health care viz., safety,effectiveness, efficiency, timeliness, patientcenteredness and equity. As regards safety the IOMdocument- „ To Err is Human”, in 1999, noted thatalmost 100,000 deaths occur yearly in USA alonedue to medical errors, most of which arepreventable. It was also noted that “Healthcareinsurance is seen more as a troublesome, androutinely fails to deliver its potential benefits”.IOM calls for a “high quality, safer and moreintegrated twenty first century healthcare deliverysystem by collaborating and communicatingappropriate information to the customers. AStudyconducted by DileepMavalankar (2000) on„Health Insurance in India Opportunities-Challenges and Concerns emphasize that healthinsurance, which remained highly underdevelopedand a less significant segment of the productportfolios of the nationalized insurance companiesin India, is poised for a fundamental change in its

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approach and management. Further, theprivatization of insurance and constitution ofIRDA envisages in improving the performance ofthe state insurance sector in the country byincreasing benefits from competition in terms oflowered costs and increased level of consumersatisfaction.

Thus, the review of literature indicates that thehealth insurance is a growing sector and it is theneed of the hour to analyse the issues andchallenges on hand to make the system moreeffective and patient centeredness.

Concept of Insurance:Insurance is a product and service term related tofinance which has gained its popularity in India.The insurance is the term used to express a contractbetween insurers and insured. The insurer is thecompany and the insured are the customers. Itcompensates the financial loss due to any uncertaindeath or other situations of the insured person. Theinsurance is for the specified period needs a carefulplanning in both design and implementation.Insurance is classified as Life Insurance andGeneral Insurance.

Over a period of time, Health insurance has comeout of General insurance, which a medicalinsurance is given by an insurance company,wherein it reimburses the medical expensesincurred for a valid hospitalization. In a globalperspective, health insurance is very wellestablished in many countries. But in India it isyet to take big leap except for the organized sectoremployees. In India only about 2 to 3per cent oftotal health expenditure is funded by public/socialhealth insurance while around 18 per cent is fundedby government budget. In many other low andmiddle income countries contribution of socialhealth insurance is much higher2.

Linkage and Functions of Healthcare InsuranceCompanies:

Health Insurance Companies:

The health insurance companies are generallyinvolved only in selling the insurance policies andto some extent handling of claims not made to thirdparty administrators. The process of medical

underwriting is carried out which pertains to theselection of customers to insure and assigning themto specific risk pools for which insurancepremiums can be specifically determined. Oncethe underwriting is done, the actuaries perform therole of understanding the various kinds of financialrisks associated with the policy, and use statisticalmethods to arrive at a suitable premium. At presentin our country four insurance companies aremanaged by Government and twenty oneinsurance companies are operated by privateagencies.

Third Party Administrators:

Third party administrators serve as facilitators inclaims processing between the insurers andpatients. The primary role of a TPA in India is toenable cashless hospitalisation for the patient. Theservices rendered by TPA shall include servicesin connection with health insurance business.However, this shall not include the business ofinsurance company or the soliciting, directly orthrough an insurance intermediary including aninsurance agent. TPA s may recommend throughits association with hospitals to IRDA regardingstandard and quality of treatment, period oftreatment, and rates. TPAs get a fixed commissionof 5.5% for handling claims. Some of the claimsin India are still handled by the insurersthemselves. Some of the TPA s include MediAssist,Raksha, Medicare, Paramount health services, etc.

Intermediaries:

Intermediaries can be brokers or agents. Whileagents are individuals who work on a commissionbasis for a single insurance company, insurancebrokers may form a group and sell productsbelonging to different companies. The insurancebrokers and agents are like salesmen for theinsurance company, and are required to pass thelicentiate exam by the Insurance Regulatory andDevelopment Authority. More than the knowledgeof medical terminology, they need to know aboutthe terms and conditions governing anyinsurancepolicies. Some of the intermediariesinclude Prudent Insurance Brokers, OptimaInsurance Brokers, Vantage Insurance Brokers,universal insurance brokers, etc.

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Insurance Regulatory and Development Authority(IRDA):

Is a body that regulate the insurance business inIndia. The objective of IRDA is to promote andensure orderly growth of the insurance andreinsurance businesses across the country whichis specified under Section 14 of IRDA Act, 1999.It is also the responsibility of the body to look intothe training issues and concerns of theintermediaries and agents of a given insurancecompany. The IRDA introduced regulations forlicensing of Third Party Administrators (TPA)

during 2002 in order to popularize healthinsurance3.

Average:The arithmetic mean is a mathematicalrepresentation of the typical value of a series ofnumbers, computed as the sum of all the numbersin the series divided by the count of all numbersin the series.

Compound Annual Growth Rate

(CAGR): is the mean annual growth rate of aninvestment over a specified period of time longerthan one year.

It is evident from table-1 that the (average) meanvalue of trend in public, private and standaloneinsurance companies average 1138.8, 4285.2 and2444.6 respectively. Over a period of study the(CAGR) Compound Annual Growth Rate is 0.142of public sector insurance, -0.068 of private sectorinsurer and -0.16424 of standalone healthinsurance companies.

It can be concluded that the rate is positive growthrate public sector than is negative growth rateprivate and standalone insurance.

The ANNOVA test results between Public SectorInsurance and RSBY, Private Sector Insurance,Stand Alone Health Insurance companies. Thecalculated p-value is (0.056834 greater than0.05). Hence, the null hypothesis is no acceptedand it is concluded that there is significantrelationship between health insurance companies.


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It is evident from table-2 that the (Average)Meanvalue of trend in public, private and standaloneinsurance companies were 1907, 406.6 and 251respectively. Over a period of study the CompoundAnnual Growth Rate (CAGR) is 0.1113 of publicsector insurance, -0.9232 private sector insuranceand -0.7345 of standalone health insurancecompanies.

It can be concluded that the result is a positivegrowth rate public sector insurer than is negativegrowth rate private and standalone insurer.

The ANOVA test results between governmentsponsored scheme including, RSBY, Group (otherthan govt. business) Individual business. Thecalculated p-value is (0.191 greater than the 0.05)Hence, null hypothesis is accepted and it isconcluded that there is no significant relationshipbetween classification of health insurancebusiness.

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It evident from table-3 that (Average) Mean valueof trend in public health insurance, private healthinsurance and standalone insurer companies were2310.8, 8342.4, and 7459 respectively. Overaperiod of study.TheCompound Annual GrowthRate (CAGR) is 0.0173 of public health insurer,0.1433 private health insurer and -0.9499standalone health insurance companies

It can be conclude that the rate is positive growthrate public, private sector and negative growth rateis standalone insurance companies.

The ANOVA test results betweengovernmentsponsored scheme including, RSBY, Group (otherthan govt. business) Individual business. Thecalculated p-value is (0.03 less than 0.05). Hencethe null hypothesis is rejected and it is concludedthat there is significant relationship betweennumbers of persons covered under healthinsurance.

CONCLUSION:Finally it can be concluded that the governmentsponsored schemes were witnessed positivegrowth rate, but on the other hand the governmentand individual business health insurer havenegative growth rate. It is better to understand thatthe policy holders are giving more priority to thegovernment health insurance policies.Hence, it issuggested that the private and individual businessinsurers to must change the health insuranceproducts to attract the prospective customers inthe future.

REFERENCES:

1. 1. BhagabatBarik&RakeshPatra (2014),‘Emerging Trends in Insurance – A Study inIndian Life Insurance Industries’, AbhinavJournal of Research in Commerce &Management, Vol (3) (6), pp8-12.

2. Health Innovation Trends in India (2014),www.accenture.com

3. Healthcare & Changing Trends in India (2014),www.novaspecialityhospitals.com/blog

4. Healthcare industries in India(2014),www.ibef.org/ind/health

5. GirishShetty (2014), ‘HealthInsuranceEvolution in India- An Opportunityto Expand Suc- cess’,www.cognizant.com

6. AanchalAggarwal, etal. (2013), ‘HealthInsurance – Innovations and ChallengesAhead’, Global Journal of Management &Business Studies, Vol (3) (5), pp475-479.

7. Onicra(2013), ‘Emerging Trends: IndianHealthcare Industry’, www.onicra.com

8. KPMG (2011), ‘Emerging Trends inHealthcare’, www.kpmg.com

9. Lele RD (2004), ‘Health Insurance an IntegralComponent of HMO – Urgent need forParadigm Shift’, Vol(52), www.japi.org

10. DileepMavalankar& Ramesh Bhat (2000),‘Health Insurance in India-Opportunities &Challenges’, IIM Ahmadabad.

11. www.irda.com

12. IRDA Annual Report.


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AN EMPIRICAL STUDY ON THE BEHAVIOUR OFLIFEINSURANCE POLICYHOLDERS

Bharla AnandJRF Research ScholarDepartment of CommerceOsmania University, Hyderabade-mail id:[email protected]

ABSTRACT

The dynamics of insurance business has changed the economy in good measure. A key driver for thegrowth of the insurance industry is the behaviourof insurance policyholders. Existing literature does notindicate significant research on the behaviour of life insurance policyholders. Hence, the rationalebehind the paper is to measure their behaviour. The objective of this present paper is to identify theproblems faced by the life insurance policyholders in Hyderabad. The study is based on primary dataobtained from structured questionnaire. For the analysis of data, Percentile, Mean, Chi-square andANOVA are applied with the help of SPSS 20.0. The studyfound that delay in policy settlement, excessivedocumentation, hidden charges, non-cooperation ofagents for claim settlement,non-responsiveness onthe part of the company were the major problems faced by the policyholders. This paper providessuggestions to the regulatory authorities and government to take some steps to control problems facedby policyholders and should try to increase their wealth, which helps in the development of the economyof the country as well as the financial market.

Keywords: life insurance,financialmarket,percentile, mean, chi-square,ANOVA

1. INTRODUCTION

Life is full of peril and uncertainties.Since we arethe social human being we have certainresponsibilities too. Our India consumers have biginfluence of emotions and rationality on theirbuying decisions. They believe in future rather thanthe present and desire to have a better and securedfuture, in this direction life insurance services haveits own value in terms of minimizing risk anduncertainties. Insurance is not an investment, it’sa protection plan. These are the problems withinsurance as insurance returns are less thaninflation. This means the money you invest ininsurance will be actually reducing its value. Moreoperating charges andcommission, low liquidity& no flexibility while investing. Its complex tounderstand, cannot withdraw the money in middlewithout loss, which factors may be positive ornegative impact by customer behavior. Indianeconomy is developing and having huge middleclass societal status and salaried persons. Their

money value for current needs and future desireshere the pendulum moves to another side whichgenerate the reasons behind holding a policy. Thedynamics of insurance business has changed theeconomy in good measure. A key driver for thegrowth of the insurance industry is the behaviourof insurance policy holders.Here the attempt hasbeen made in this research paper to study thebehavior of consumers towards life insuranceservices.

2. REVIEW OF LITERATUREMote SiddeshSudhiret al. (2017)have made astudy to assess the extent of marketing knowledgeof respondents and to identify the problems facedby the policyholder under Crop Insurance Schemein Pune district of Maharashtra. The studyrevealed that only 13% famers were benefitted bythe schemeand rest 87% were not benefited. Theysuggested that the farmers are to be promoted moreabout the crop insurance scheme so that it wouldfacilitate in increasing their income.

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D Mukhopadhyayet al (2016) examined theimpact of e-insurance services on customerpurchasing behaviour for non-life insuranceproducts in Delhi/NCR. The findings highlightsthat it has a great influence on consumerpurchasing behaviour and argued that the outcomeof the study will certainly useful for the marketingto define marketing strategy accordingly. Thestudy reveals that the cost of the product offeredby e-insurance, security of transaction using e-insurance & review of product from other customeravailable with e-insurance play significant role ininfluencing the purchasing decision of non lifeinsurance.

Dr. Syed ShahidMahzharet al (2015)have madean empirical study on impact of demographicvariables on purchasing of e-insurance productsin urban areas of India. The outcome of the studywas that factors like saving, investment andchildren education influence the most on demandof insurance by people of urban population

DhimenJani&Dr.Rajeev Jain (2014) have madea study comparing the difference in buyingbehaviour pattern among the population of urbanand rural region in the state of Gujarat. Theoutcome of the study showed a significant relationbetween the demographic factors and investmentmade by rural and urban people whereas there wasno impact on the premium payment which waspreferred was monthly by both of them. Also, theyboth invested with an intention to have a retirementplanning and financial stability.

Suneja Ajay andvSharmaKirti (2012) havemade a study to understand theprepurchasebehaviour of an insurance consumer.The study has come up with factors such asmarketing communication, companyrepresentative and referrals, which also includevarious variables as sub-factors. They revealedthat insurance companies should focus on thesefactors for making the information search a moreeffective and easy exercise for customers.

Dr. Praveen Sahu, GauravJaiswal& VijayKumar Pandey(2009) in their study indicate theimportance of Life Insurance Corporation (LIC)

as it was the only company which dealt in LifeInsurance and after opening of this sector to otherprivate companies, all the world leaders of lifeinsurance have started their operation in India.With their world market experience and network,these companies have offered many good schemesto lure all type of Indian consumers butunfortunately failed to get the major share ofmarket. Still the LIC is the biggest player in thelife insurance market with approx 65% marketshare. The study revealed that the major factorsplaying the role in developing consumer’sperception towards Life Insurance Policies areConsumer Loyalty, Service Quality, Ease ofProcedures, Satisfaction Level, Company Image,and Company-Client Relationship

Durvasulaetal(2004) examined that satisfactionwas positively associated with customers’ re-purchase intentions but its relationship withcustomers’ willingness to recommend to otherswas relatively weak. This finding has importantmarketing implications as word-of-mouth haspreviously been found to have significant influenceon customers’ purchase decisions.

MukeshSrinivasa& Sanjay Medhar (2015)haveinvestigated the different situational variablesaffecting the satisfaction level of the customers inthe life insurance industry. It reveals the role ofthese variables for the creation of positive andnegative satisfaction index in the whole lifeinsurance industry. So, trying to find the situations(post and pre consumption) through which thesatisfaction level is affected. The study found that,in post purchasing situation, factors effectingcustomer satisfactions were Tax advantage/saving/risk cover, relationship of insurance agent asrelative/friend/colleague etc. and post purchasingsituational as non-disclosure of facts, insurer hadregretted to settle the claim on the ground ofmisrepresentation and at the time of renewal ofpremium deposits.

Kirthiagarwal (2015) investigated in depth detailsof the causes of dissatisfaction among customer,various measures taken to resolve the issues anddata related to complaints in the life insurance

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industry. The study reveals that the Insurer needsto create awareness among customers and provideneed-based selling while policyholders need to bemore cautions while buying life insuranceproducts.

3. RESEARCH GAP AND NEED FOR THESTUDYMost of the previous studies revealed the fact thatbehaviour of policyholders depending on thedemographic factors, pre purchasing and postpurchasing factors. Some lead-lag relationships arecommonly observed in most of the cases. Thedearth of conclusive statement on behaviour of lifeinsurance policyholders creates scope for furtherexamination of the issue in detail in the lifeinsurance industry. Though life insurance industryin emerging economies like India has beengrowing, not much research has been done ontesting the behaviourof life insurancepolicyholders. Therefore, it has become necessary,from time to time, to conduct empirical studies tomeasure the behaviour of life insurancepolicyholders.

4. OBJECTIVE OF THE STUDY

(a) To study the behaviour of life insurancepolicyholders among purpose of buyinglife insurance, insecurity, advertisementand post purchasing behaviour.

(b) To study the impact of the behaviour oflife insurance policyholders on purpose ofbuying life insurance, insecurity,advertisement and post purchasingbehaviour.

Hypothesis:

Ho1: Thebehaviour of life insurance policyholdersand purpose for purchasing life insurance,insecurity, advertisement and post purchasingbehaviour are independent

Ho2:There is no influence onthebehaviour of lifeinsurance policyholders on purpose of buying lifeinsurance, security, advertisement, post purchasebehaviour.

5. RESEARCH METHODOLOGYType of research: This study is aanalytical innature

Type of data: Primary data & secondary data havebeen used for the study.

Sources of data:A well-structured Questionnaireis used to collect primary data. Secondary sourceof data was from Journals, Magazines, Thesis, andReports etc.

Sampling Technique: Conveniencesamplingtechnique is used for present study.

Areas of the research: The researcher conductedthe study in Hyderabad.

Sample size: Sample size is 120 respondents

Techniques for analysis: Percentile, Mean, Chi-Square and ANOVA Test have been used foranalysis. Quantitative data are analysed using 5point Likert scale.

Software Packages used for the data analysis:In analysing and presenting data SPSS was used.SPSS comprises remarkable capabilities andflexibilities in analysing huge data within a shorttime.

6. DATA ANALYSIS AND RESULTS

Reliability statistics:

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Since the P-value is less than 0.05 level ofsignificance, so the null hypothesis cannot beaccepted. Therefore, there is significant influenceof marital status on the above four dimensions

7. FINDINGS & CONCLUSIONSPurpose of buying life insurance is an importantfactor and it is fulfilled by the purchased productthen it will raise the level of satisfaction in thecustomer. This situation does have a positiveimpact on the customer behaviour.

The case of relatives/ friend/neighbour/colleaguedoes have any impact the level of thecustomer’ssatisfactioninlife insurance industry. Somarketershouldmake their agents/broker/otherchannel partners as much as they can so as toestablish some relations with their customers.These can enhance the level of customer’ssatisfaction in a positive way.

Advertisements are not having any impact on thesatisfaction level of the life insurance customers.It to the minimum level so as to enhance thesatisfaction level

The impact of the hidden charges on maturity doeshamper the satisfaction level of the customers.They get a reduced sum assured at the time ofmaturity. So marketer should think and try toreduce and pull it to the minimum level so as toenhance the satisfaction level.

Claim settlement process& excessivedocumentation is also an important point wherecustomers feel dissatisfaction if it is too lengthyand rigid. So marketers are advised to shorten andassociate meaningful claim settlement process forthe organization so as to improve the level ofcustomer satisfaction.

The agents help in settlement process improvesthe level of customer satisfaction. So marketersare advised to train and educate their agents/brokers and other channel partners to help theircustomers in claim settlement process as soenhance loyalty and level of customer satisfaction.

If insurers reject the claim onthe paper on somelame excuses, faultypaper works etc. Then it will

create a great deal of dissatisfaction in the mindof the customer. So proper investigation and a validreason is needed for rejection of claim. So insurersshould make their investigation so transparent andclean that this type of false claims cannot be raisedand right claims could not be rejected.

Study found that delay in policy settlement,excessive documentation, hidden charges, non-cooperation of agents for claim settlement, non-responsiveness on the part of the company werethe major problems faced by the policy holders.This paper provides suggestions to the regulatoryauthorities and government to take some steps tocontrol problems faced by policyholders andshould try to increase their wealth, which helps inthe development of the economy of the country aswell as the financial market.

8. LIMITATION OF STUDY AND SCOPE OFFURTHER RESEARCH

The existing literature provides the direction forfurther research. In the same manner, the limitationof the current research paves way for furtherresearch. There are certain limitations of thecurrent study: the area of research is limited onlyto Hyderabad. The research can be furtherextended by taking more areas. Another limitationis that the research has been conducted only forthe behaviour of life insurance policyholders.Future researchers can include more health,vehicle, property insurance and professionalliability, general liability, workers compensationinsurance.

Referances:Mote Siddesh Sudhir, Sharma Amita, PandaShubhaom, RathoreRakesh(2017)”Impact of cropinsurance on farmers’ income in Pune district ofMaharashtra”,Indian Journal Of Economics AndDevelopment( Vol.13,Issue:2a,Pp:617-622)DOI: 10.5958/2322-0430.2017.00140.8

D.Mukhopadhyay,Rajeshvarma& ThirupathiMahajan(2016)”A Study of Revolution Marked byICT in purchasing behaviour of customers for Non-Life insurance products in Delhi NCR” TheJournal of Insurance Institute ofIndia(Vol.IV,Issue.01,pp.75-81)

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Dr Syed ShahidMahzhar. Dr Anlsur Rehman &Mr.ShahabUd Din (2015)”Impact of demographicvariables on purchase of e-insurance in urban areasin India”, Indian Journal of Management (vol.1,Issue.01)

Mukeshsrinivasa&sanjaymedhar (2015)”A studyof situational factors effecting customersatisfaction in india life insurance industry”,thejournal of insurance institute of India (vol.3,issue.1, pp.69-79)

Kirthiagarwal(2015)” Customer dissatisfactionand complaints in life insurance industry, thejournal of insurance instituation of india,(vol.3,issue.1,pp.96-102)

DhimenJani&Dr.Rajeev Jain: “A comparativeanalysis of buying behaviour if urban and ruralinvestors for insurance”, Journal of Commerce andManagement(vol 3, 2014)

Suneja Ajay, Sharma Kirti(2012)”Pre-Purchasebehaviour regarding Life Insurance Products”,TheJournal Of Indian Management &Strategy(Vol.14,No.3;Pp.36-42)

Dr. Praveen Sahu, GauravJaiswal& Vijay KumarPandey(2009)” A Study Of Buying Behaviour OfConsumers Towards Life Insurance Policies” All

India Management Association (Vol.03,Issue.3/4,pp.1-10)

Durvasula, Srinivas; Lysonski, Steven; Mehta,Subhash C; Tang, Buck Peng(2004)”Forgingrelationships with services: The antecedents thathave an impact on behavioural outcomes in thelife insurance industry”,Journal of FinancialServices Marketing(Vol.8,No.4,pp.314-326(13))

Hae-young kim (2014)”Analysis of variance(ANOVA) comparing means of more than twogroups”. Restor dent endod,39(9):74-77.doi: 10.5395/rde.2014.39.1.74

Insurance and behavioural economics: improvingdecisions in the most misunderstood industry byprofessor howard C kunreuther, professor mark.V.pauly, Dr Stacey mcmorrow

https://www.insuranceinstituteofindia.com/web/guest/earlier-issues

https://www.insurancenewsnetmagazine.com/article/using-behavioral-economics-to-market-life-insurance-3085#.WWdPhVltHIU

https://www.licindia.in/Products/Insurance-Plan https://www.policybazaar.com/insurance-companies/life-insurance/

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EVALUATION OF PERFORMANCE OFAAROGYASRI SCHEME

Ramesh.VavilalaResearch ScholarDepartment of CommerceOsmania UniversityHyderabad.Email: [email protected]

ABSTRACT

Community based health insurance (CBHI) is more suited than alternate arrangements to providinghealth insurance to the low-income people living in developing countries. The universal health insurancescheme, launched recently by the Prime Minister of India, is only one of the forms that CBHI can take.While analyzing the proposed scheme, it examines alternate forms of CBHI schemes prevalent in thecountry. The development of private health insurance market in the country will not leave the poorunaffected. Health insurance as a tool to finance healthcare has very recently gained popularity inIndia.Government has been putting serious efforts to introduce health insurance for the poor in recentyears in order to improve access of poor to quality medical care and for providing financial protectionagainst high medical expenses. There have been several attempts to introduce similar schemes in otherstates but Telangana has been one of the only states to successfully roll out the scheme. The Insurancescheme covered 198.25 lack families out of total across 229.11 Lack families (87% families covered)residing in 27138 villages 1128 mandals of all districts of the State in five Phases. The scheme startedwith 330 procedures covered and has been gradually extended to 938 procedures. The majority ofbeneficiaries utilizing the scheme are illiterate and have a rural address. Since inception of the scheme(01.04.2007) till 20th January 2016- 35713 Medical camps were held by the network hospitals in ruralareas. Total Surgeries/Therapies done by under this scheme is 1753466, Government is 440655 andPrivate is 1312811.

Key words: Aarogyasri Health insurance scheme, Health Insurance, Community Health insurance,Healthcare,Healthcare Expenditure.

Introduction:Even after more than 70 years of independence,inequalities in access to health care is widelyprevalent in Indian communities. Health is animportant constituent of human resourcedevelopment. Health is an important constituentof human resource development. Good health isreal wealth of society. It not only increases humanefficiency but also decreases private and publicexpenditure on sickness and diseases. Health hasbeen declared as a fundamental human right.Healthcare services help to reduce infant mortalityrate, check crude death rate, keep diseases undercontrol and raise life expectancy. World

development report 1993 stated, “Improved healthcontributes to economic growth in four ways: Itreduces production losses caused by workerillness, it permits the use of natural resources thathad been totally or nearly increasable because ofdisease, it increases the enrolment of children inschools and makes them better able to learn, andit frees for alternative uses resources that wouldotherwise have to be spent on treating illness. Theeconomic gains are relatively greater for poorpeople, who are typically most handicapped by illhealth and who stand to gain the most from thedevelopment of underutilized resources.

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Various studies examine effect of Out-Of-Pocket(OOP) health expenditure on poverty head countand whether such expenses push householdsdeeper into poverty. Adversities related to out-of-pocket spending are apparent in the form ofintensified poverty and ill fare in the country. Forinstance, in 1995-96 an estimated 2.2% of theIndian population fell into poverty because of out-of-pocket spending (Peters et al 2002) and itincreased to around 3.2% in 1999-2000 (Garg andKaran 2009). A significant proportion ofpopulation may have had to sell their assets(productive) for inpatient care (Peters et al. 2002;Dilip and Duggal 2002). A significant proportionof population may have had to forgo treatment alltogether due to scarcity financial resources (NSSO,60th Round, 2004).

Health insurance can provide financial protectionto households in the event of health shock and canreduce catastrophic out-of-pocket expenditure onhealth care (Joglekar, 2009). So that it can protectfamilies from impoverishment and empower thepatient to seek health care as a right (Gilson, 1998).

In developing and low income countries Healthcare finance is still predominantly based on out-of-pocket (OOP) payments, and the lack ofprepayment mechanisms like insurance. In theabsence of insurance, an illness not only reduceswelfare directly, it also increases the risk ofimpoverishment due to high treatmentexpenditures (Wagstaff, A and E. van Doorslaer,2003).

Review of Literature:AshishBansal, ShewtankGoel, Abhishek Singh,AnuragAmbroz Singh, Anil Kumar Goel, SulabhaM. Naik, Virender K. Chhoker, SheleshGoel(2015)1 suggested to educate the people in orderto make rural communities aware of the need ofhealth insurance to meet the ever rising medicalexpenses in view of unpredictable illness andinjuries.

Bhaskar,Purohit, B. (2014)2 stated that there is agreat scope for CBHI in India to effectively expandthe coverage to the uninsured, especially the oneswho are poor and the one in the informal sector.

Success of such schemes can be achieved withcollaborative efforts from both government andnon-government organizations.Ceri Averill(2013)3

opined that Universal health coverage (UHC) hasthe potential to transform the lives of millions ofpeople by bringing life-saving health care to thosewho need it most. UHC means that all people getthe treatment they need without fear of falling intopoverty. These schemes prioritize advantagedgroups in the formal sector and drive up inequality.Donors and governments should abandonunworkable insurance schemes and focus onfinancing that works to deliver universal andequitable health care for all.Victoria Fan (2013)4

tells the story of how RSBY came into being underthe leadership of Anil Swarup whom she describesas an “unassuming officer of theIndianAdministrative Service” and outlines theprogram’s early successes and opportunities forfuture progress.Victoria Fan, Anup Karan(2012)5

in conclusion it can be said that the sub-groupanalysis that undertook suggests that there aresmaller (and in some cases insignificant) programeffects on SC/ST households (that tend to be bettertargeted by BPL cards) relative to non-SC/SThouseholds. Given this within-health fungibility,the cost-benefits of Aarogyasri need to becompared to alternatives in public health.Dr.RumkiBasu (2012)6 in most Asian countries healthcare is financed by out-of-pocket payments byindividuals. RSBY is considered one of the mostsuccessful government funded social protectionschemes in India in a public-private partnershipmode. It may be considered a precursor to othersocial protection schemes in the country infuture.Mr. Shijith V.P.& Dr. T.V. Sekher (2011)7

This study examines health insurance scenario ofIndia by analyzing the trends and patterns andhousehold characteristics of health insurancepolicy holders. Only 5 percent of the householdsin India were covered under any kind of healthinsurance. Within the insurance schemes, the stateowned health schemes are the most subscribed(39.2), followed by the Employee State InsuranceScheme (17 percent). Among the householdsbelonging to the lowest economic categories, lessthan 3 percent were covered by any health schemeor health insurance.

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Statement of the Problem:Rural population of State, majority of whom arefarmers, are not having access to advanced medicaltreatment and are silent sufferers of ill health. Thisis more true in case of diseases related to heart,kidney, brain, cancer and injuries due to domesticaccidents and burns. While the government is inthe process of adequately strengthening the healthinstitutions for basic health care, but lack ofspecialist doctors and equipments for treatment ofserious diseases has created a wide gap betweenthe disease load and the capacity of the governmenthospitals to serve the poor. Though, facilities areavailable in empanelled hospital under Aarogyasrischeme, either they claim exorbitant bills in thename of tests and the empanelled hospitals are veryfew and mostly located in urbanareas. Some time,these facilities corporate sector are catering mainlyto the affordable sections of society as they tooclaim as the BPL families resulting poor familiesliving in villages. Abstain from availing the eligiblebenefits under this scheme. Due to this hassles poorpatients are constrained to go to private hospitalsfor treatment and in the process they incur hugedebts, further it is leading to sale of properties andassets or are sometimes, left eventually to die. Inthis scenario. This present study mainly focuseson what extend this Aarogyasri scheme isprotecting the BPL families from chronic diseases,assumes importance.

Objectives of the Study:

1. To discuss the coverage and features ofmajor health insurance schemes in India.

2. To examine the role of Telangana statehealth insurance scheme (Rajeev AarogyaSri) in Telangana

3. To Over view of Rajiv AarogyasriCommunity Health insurance scheme inTelangana State.

Hypotheses:

H1: There is no significant difference between interdistrict variations in implementation of RajivAarogyasri Scheme in Telangana State.

H2: Corporate hospitals do not play significant rolein properly implementing Rajiv Aarogyasrischeme in Telangana State.

H3: There is no impact of Aarogyasri scheme onBPL diseased families in selected districts.

Methodology:The data collected from secondary sources suchas scheme website, available assessment reports,and the data provided by the Aarogyasri health caretrust, Scheme website and published articles.

Data Analysis:Data collected will be analyzed by using thestatistical tools viz., multiple correlation analysis,Regression analysis, Chi-square test and ANOVA.

Health Insurance Coverage in IndiaThe current trends in the health insurance coverageindicate a quantum leap, especially since the lastthree years, mainly because of the implementationof the health insurance schemes such as RashtriyaSwasthya Bima Yojana (2008), Rajiv Arogyasrischeme (2007), Kalingar (2009) and VajapayeeArogyasri scheme (2009). In India, in the year2009-10 all forms of insurance both Governmentand non-government together coveredapproximately 302 million individuals or 25percent of Indias population in 2010 (Table 1). Andof this nearly 82 percent are covered bygovernment schemes.

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* Estimate; N/A Not Applicable; 1No. ofBeneficiaries = No. of families (card holders)

Source: A Critical assessment of the ExistingHealth Insurance models in India. Reportsubmitted by Public Health Foundation of India

It may be observed that a substantial portion iscovered (32 %) through Rashtriya Swasthya BimaYojana (RSBY), followed by the state of AndhraPradesh with has covered 28.34% of the totalbeneficiaries through Rajiv Aarogyasri scheme.And Tamil Nadu (Kalaignar) health insurancecovers 14.17% of population. These are two stateswhere state sponsored health insurance schemesare strongest in their outreach. Private healthinsurance schemes are covering 18.21 %population.

Key Design Features of Government SponsoredHealth Insurance SchemesA useful framework to discuss the characteristicsof insurance schemes is through the lens of threekey functions namely revenue collection, riskpooling and purchasing. The source of funds,mechanisms used to collect funds and the agency

that pools funds together are collectively referredto as the Revenue collection function. While,pooling of fundsrefers to the accumulation andmanagement of funds to ensure that financial riskof having to pay for health care is borne by all andnot by individuals who fall ill. The third functionis Purchasing Care which refers to paying forhealth care. In health insurance the insurer or theorganizer of the scheme purchases services onbehalf of a population. It broadly involvescontracting with providers of care, designing anappropriatebenefit package and making choicesaround paying for them (McIntyre,2007).Provision of care is generally separated frompurchasing in health insurance and is an integralpart of it.

Rajiv Aarogyasri Health Insurance Scheme ofTelanganaFinancing health care of persons living belowpoverty line, especially for the treatment of seriousailments such as cancer, kidney failure, heartdiseases, is one of the key determinants that affectthe poverty levels in Andhra Pradesh. Indebtednessdue to hospital expenditures is one of the main

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reasons for people falling into poverty in the state.Available network of government hospitals do nothave the requisite equipment or the facility or thespecialist pool of doctors to meet the state widerequirement for the treatment of such diseases.Large proportions of people, especially belowpoverty line borrow money or sell assets to payfor hospitalization. Presently many peoplesuffering from such diseases are approaching theGovernment to provide financial assistance to meethospitalization expenses for surgical procedures.Hence, there is a felt need in the state to providemedical assistance to families living below povertyline for the treatment of serious ailments such ascancer, kidney failure, heart and neurosurgicaldiseases etc., requiring hospitalization and surgery/therapy. During the period from 14.05.2004 to26.06.2007, financial assistance to a tune of Rs.168.52 crores has been provided from ChiefMinister’s Relief Fund in 55361 cases to meethospitalization expenses for such people. From theexperience gained, it is felt that the assistance couldbe institutionalized so that its benefit can beaccessed by poor people across the State easilyand in a trouble free manner. Therefore,Government of Andhra Pradesh has launched RajivAarogyasri Health Insurance Scheme on01.04.2007 to improve access of poor to qualitymedical care and for providing financial protectionagainst high medical expenses.

Objective of the SchemeAccording to PK Agarwal, Principle Secretary atthe Department of Health, Medical and FamilyWelfare, Andhra Pradesh the objective of the RajivAarogyasri Health Insurance scheme is “socialprotection, addressing healthcare problems thatcause indebtedness and often bring people intodevastating financial and physical distress.” Toimprove access of BPL families to quality medicalcare for treatment of identified diseases involvinghospitalization, surgeries and therapies, throughan identified network of health care providers.

EligibilityAll below poverty line residents of the state ofAndhra Pradesh are technically entitled toAarogyasri benefits. The scheme has been

implemented in all districts in the state. The statealready had a mechanism for defining, identifying,and enrolling below poverty line families. Eacheligible family is issued a “White Card” (a rationcard) to identify them as below poverty line.Aarogyasri uses the “White Card” as a targetingmechanism for its scheme. Such of thebeneficiaries who are covered for the “listedtherapies” by other insurance schemes such asCGHS, ESIS, Railways, RTC etc., will not beeligible for any benefit under this scheme.

FundingThis is a state government scheme. Under this,hospital bills of the insured persons are paid bythe insurance company. The premium for insurancecompany is paid by the government. People donot have to pay anything under this scheme. Thestate wanted to ensure that the benefits of thescheme reached the poorest, who might otherwisebe deterred from enrolling even if the premium tobe paid out of pocket was nominal.

For rollout of Aarogyasri, the State governmentengaged in an open, competitive bidding processto select a single insurer to implement the program.The insurer with the lowest premium bid (for thespecified benefits package) won the contract tobe the insurer (Star Health and Allied InsuranceCompany) for Aarogyasri. For the first phase ofAarogyasri, the premium was set at Rs.210(US$4.50) per household annually. The coverageamount for the services to the beneficiaries is uptoRs.1.50 lakh per family per annum. The premiumis the same across all districts in the state and theamount reimbursed per procedure to any networkhospital is also the same.

Institutional structureRajiv Aarogyasri Trust under the Government ofAndhra Pradesh has an overall responsibility ofimplementing the scheme in the state.

Aarogyasri Healthcare Trust: The Trust isresponsible for oversight of the entire insuranceprogram as well assome important administrativefunctions such as setting benefits and pricing,managing contracts with insurer (s) and networkproviders, approving claims, and monitoring.

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Insurer: The insurer is selected based on acompetitive bidding process to bear risk andmanage all back endinsurance administration,including claims processing, reimbursements toproviders, and oversight of hospitals. The Insureris also responsible for holding health camps in

villages to screen, diagnose, treat, and makebeneficiaries aware of any health problems theymight have; health camps are also used to enrolleligible beneficiaries.

Network hospitals: Network hospitals providecare to Aarogyasri beneficiaries.

Aarogya Mithras: Aarogya Mithras are patientadvocates and assist Aarogyasri beneficiaries tonavigatethrough the system and ensurebeneficiaries receive quality care. AarogyaMithras are also responsible for communityoutreach.

STAR Health Insurance Company is responsiblefor enrolment, empanelment of hospitals,processing claims and monitoring of the scheme.STAR is also responsible for recruitment ofArogyamithra s, field level first contact personfor the beneficiaries responsible for facilitatingaccess to health care services. STAR is alsoresponsible for managing call centres, and for

facilitating access to health care services bybeneficiaries. Aarogyasri Trust also empanelshospitals, mainly public health care hospital andfew private health care hospitals. They are alsoresponsible for ensuring facilitation of health careaccess of beneficiaries whose primary contactpoints are primary health care centres orcommunity health care centres.

Scheme Coverage:Population Cover: Population Cover during the2015-16 year, Rajiv Aarogyasri Health Insurancescheme was extended to the entire state in 5 Phases.

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The Insurance scheme covered 198.25 lackfamilies out of total across229.11 Lack families(87% families covered) residing in 27138 villages1128 mandals of all districts of the State in fivePhases. A poor family having a white ration cardbecomes eligible for the scheme. The beneficiaryis identified and authenticated through the onlinedatabase of the Civil Supplies department ofGovernment of Andhra Pradesh. There is no limit

on the size of the family. Andhra Pradesh has theadvantage of photo ration cards issued to alleligible BPL families by Civil SuppliesDepartment. Taking advantage of this unique foolproof facility, BPL ration cards issued by CivilSupplies Department with family details andphotograph were taken as the eligibility card forthe scheme. The authentication under the schemeis done through a white ration card.

This shows that 86% of the families of the Stateare BPL. This figure is at large variance with thatgiven by Government of India which is in the rangeof 40%. It is believed that Aarogyasri Scheme hasfuelled the demand for possessing a BPL card. Thiscause along with the Government of TelanganaBPL line fixation at Rs.60000 in rural areas andRs.75000 in urban areas could explain the reasonfor a high number of BPL families in the state.

Benefit Coverage:The scheme covers 932 therapies in 29 specialtiessuch as cancer, cardiology, poly trauma etc. Thereare 380 network hospitals serving the patients. Thebenefit coverage under the scheme increased from166 procedures to 884 procedures.

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Performance of the Scheme:M.Rao.et.al(2011), the Rajiv AarogyasriCommunity Health Insurance Scheme (RACHIS)impact of this scheme was evaluated by a rapidassessment, commissioned by the government ofAndhra Pradesh. The aim of the assessment wasto explore the contribution of the scheme to thereduction of catastrophic health expenditureamong the poor and to recommend ways by whichdelivery of the scheme could be improved. Thisnovel scheme was beginning to reach the BPL

households in the state and providing access tofree secondary and tertiary healthcare to seriouslyill poor people. An integrated model encompassingprimary, secondary and tertiary care would be ofgreater benefit to families below the poverty lineand more cost-effective for the government. Thereis considerable potential for the government tobuild on this successful start and to strengthenequity of access and the quality of care providedby the scheme.

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Table 5 shows about Vital statistics of AarogyasriHealth Insurance Scheme as on 20 th January,2016. Since inception of the scheme (01.04.2007)till 18th January 2013- 35713 Medical camps wereheld by the network hospitals in rural areas. TotalSurgeries/Therapies done by under this scheme is1753466, Government is 440655 and Private is1312811. Total Patients Screened under the schemeis 6575227 and Patients Registered under the

scheme is 6539949. Total Out Patients 4232829,Government 527390, and Private 3644189 and InPatients Total 1959655, Government 534017, andPrivate 1425622.

Total Number of therapies preauthourized underAarogyasri scheme is 1766119, Government501799 and Private 1411335. Total AmountPreauthorized under this scheme is Rs.4723 Cr,Government Rs.1071 Cr and Private Rs.3652 Cr.

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Table 6 shows about District wise Total Numberof therapies preauthorized under Aarogyasrischeme. It has been found that the total number oftherapies preauthorized that have been taken underthis scheme is 1766119. Highest number oftherapies preauthorized in Hyderabad district28.70 percent (506896), Krishna district 8.63percent (152545) and Visakhapatnam district 8.59percent (151796). Lowest number of therapiespreauthorized in Adilabad district 0.12 percent(2156) and Medak district 0.13 percent (2357).

Conclusion:The state of Telangana in India established theRajiv Aarogyasri Community Health InsuranceScheme (RACHIS) in 2007 with the aim ofbreaking this cycle by improving the access ofbelow the poverty line (BPL) families to secondaryand tertiary healthcare. It covered a wide range ofsurgical and medical treatments for seriousillnesses requiring specialist healthcare resourcesnot always available at district-level governmenthospitals. The Insurance scheme covered 198.25lack families out of total across229.11 Lackfamilies (87% families covered) residing in 27138villages 1128 mandals of all districts of the Statein five Phases. The scheme started with 330procedures covered and has been graduallyextended to 938 procedures. The majority ofbeneficiaries utilizing the scheme are illiterate andhave a rural address. Since inception of the scheme(01.04.2007) till 20th January 2013- 35713

Medical camps were held by the network hospitalsin rural areas. Total Surgeries/Therapies done byunder this scheme is 1753466, Government is440655 and Private is 1312811. Total PatientsScreened under the scheme is 6575227 andPatients Registered under the scheme is6539949.Total Number of therapies preauthorized underAarogyasri scheme is 1766119, Government501799 and Private 1411335. Total AmountPreauthorized under this scheme is Rs.4723 Cr,Government Rs.1071 Cr and Private Rs.3652Cr.The Aarogyasri Health Insurance Scheme isgiving more protection to the poor people. Andthe can access Government hospital or Privatehospital which they required for treatment. Mostof the people were giving priority to the private/corporate hospitals in urban areas of the Telangana.N. Purendra Prasad and P. Raghavendra (2012),the scheme is only the construction of a newsystem that supplants the severely underfundedstate healthcare system. It is also a classic exampleof promoting the interests of the corporate healthindustry through tertiary hospitals in the publicand private sectors.

Remarks of the SchemeThe priorities of this scheme have been criticizedin India and internationally. The main criticism hasbeen about the benefit package that focuses onalleviating the financial distress associated withcatastrophic illness and ignores health problemsfaced by the majority of the poor such as fever

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and gastrointestinal disorders. The two mainreasons for the chosen focus of Aarogyasri are:(1) the purpose of addressing indebtedness due tohealth care costs; and (2) the challenges withmonitoring treatment of ailments withouthospitalization.

Shukla, et al., (2011) they pointed out that,corporate hospitals handle the biggest share of thecases and there is no provision for outpatienttreatment of everyday illnesses that affect theworking capacity of the patient. The focus ontertiary healthcare and exclusion of all other formsof medical assistance leads to an inefficientmedical care model with a low level of real impacton meeting the needs of the healthcare and thehealth of the population. Mitchell et al., (2011) intheir study provide evidence that poor patientscontinue to spend significantly on conditions thatare not covered by the Rajiv Aarogyasri Sri (RAS)at both government and private facilities. Theirfindings show that RAS alone is not likely toreduce the financial burden of illness on the BPLpopulation. They suggested that strong referralsystem and fundamental changes to the healthsystem are needed to meet goals of financial riskprotection.

References:1. AshishBansal, ShewtankGoel, Abhishek

Singh, AnuragAmbroz Singh, Anil KumarGoel, Sulabha M. Naik, Virender K. Chhoker,SheleshGoel (2015), “A community-basedstudy to assess the awareness of healthinsurance among rural orthern Indianpopulation”,http://www.ijhsdm.org onTuesday, March 17, 2015, IP:14.139.82.34.International Journal of HealthSystem and Disaster Management | Vol. 3 |Issue 1 | Jan-Mar 2015.

2. Bhaskar. B, Purohit (2014)”Community BasedHealth Insurance in India: ProspectsandChallenges”.Health, 6, 1237-1245. http://dx.doi.org/10.4236/health.2014.611152.

3. Ceri Averill (2013),”Universal HealthCoverage -Why health insurance schemesareleaving the poor behind” Published by

Oxfam GB for Oxfam International underISBN 978-1-78077-483-1 in October 2013.Oxfam GB, Oxfam House, John Smith Drive,Cowley.

4. Victoria Fan,( 2013),”The Early Success ofIndia’s Health Insurance for thePoor,RSBY”,center for globaldevelopment,www.cgdev.org.

5. Victoria Fan, Anup Karan(2012),”State HealthInsurance and Out-of-PocketHealthExpenditures in Andhra Pradesh, India”Center for Global Development 1800Massachusetts Ave., NW Washington,publication by the International Journal ofHealth

6. Care Finance and Economics. DC20036, 202.416.4000 (f)202.416.4050 www.cgdev.org.

7. Dr. Rumki Basu (2012),” Rashtriya SwasthyaBima Yojana : Pioneering Public-PrivatePartnership in Health Insurance”.

8. Mr. Shijith V.P.& Dr. T.V. Sekher(2011), “WhoGets Health Insurance Coverage InIndia? :New Findings From Nation-WideSurveys”.XXVII IUSSP InternationalPopulation Conference. Busan, Korea.

9. Aarogyasri Healthcare Trust (2010): RajivAarogyasri Health Insurance SchemeBrochure.

10. Annual Report of Aarogyasri health insurancescheme 2011-12, PP 11-13.

11. Dilip, T.R., and Duggal, R., (2002): Incidenceof non-fatal Health Outcomes and Debt inUrban India, Draft paper presented for urbanresearch symposium, 9-11 December 2002, atWorld Bank, Washington D.C.

12. Dror, and D.M.Jacquier(1999): Micro-insurance: Extending health insurance to theexcluded , International Social SecurityReview, 52(1):71-97.

13. Ellies, R.P, Monner Alam and Indrani Gupta(2000): Health insurance in India: Prognosisand Prospects, Economic and Political Weekly,35(4).

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A STUDY ON CUSTOMER PERCEPTION ANDSATISFACTION TOWARDS MOBILE INSURANCE

PRODUCTS IN INDIADr. Sakru Ketavath V.V.Ramana MurthyLecturer in Commerce, Asst.Professor,Department of Commerce Department of Business Management,City College, DR.BROU, Hyderabad Pragati Mahavidyalaya P.G.College,[email protected] Koti, Hyderabad - 95

[email protected],

ABSTRACT

Over the past few years the smart phone industry has undergone huge changes. Smart phone is becomea necessity, luxury item and status elevator in entire personal and professional life. Customers are nowspending more than ever on smart phones, the cast it can easily go up to lakh just like any other articleof value. Smart phone is at a potential risk of being stolen besides the theft smart phones are prone tohardware or software damages or failures which may occur due to an accident, drop, water spillage,screen crack , or variety of other reasons. Considering all it is only wise for one to get their smart phoneto be insured to protect any internal and external damages caused damages. So the researcher conductedresearch on the customer satisfaction and on 4 P’s influenced to obtain the insurance to protect themobile phones.

Keywords: Mobile Phones, Mobile phoneinsurance, customer Satisfaction,

1.Introduction:Customers are now spending more than ever onsmartphones, the cost of which can easily go upto a lakh. Just like any other article of value, asmartphone too, is at a potential risk of beingstolen. Beside theft, being an electronic gadget,smartphones are very prone to hardware orsoftware damage or failure which may occur dueto an accident, drop, water spillage, screen crack,or a variety of other reasons. Considering all that,it is only wise for one to get their smartphoneinsured, to help protect in case of any internal orexternal damage which may be caused to thedevice.

The best solution is to pick mobile phoneinsurance. Past few years have seen lot ofcompanies offering smartphone insurance for yourdevice. Mobile phone insurance will be able tocover technical faults and accidental breakages andthefts of the devices. Each insurance has their ownterms and conditions and also have the conditions

which are excluded from coverage, so it is betterto have a look at the terms and conditions offered.

The concept of mobile insurance is rather recentand not many smartphone owners are aware of it,or willing to purchase it. Theft of smartphones hasbecome a very common occurrence, making it allthe more important for owners to insure theirdevices. For higher end smartphones, thisprotection is even more important as they are verylucrative targets for theft. In this article, you canget to know about the various benefits whichmobile insurance offers, what do mobile insurancepolicies provide coverage for (in general), whatare some of the exclusions of mobile insurancepolicies, some of the companies in India whichoffer mobile insurance to customers and how theclaim process works in case of mobile insurance.

The smartphone market in India is growing vastlywith lots of new OEMs entering the highlycompetitive market. With so many devicesavailable in each segment, mobile phone market

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is expanding rapidly and people are willing toinvest even in high end devices. But there are highchances that you end up losing your high endsmartphone in public transport or gets stolen orlost. There can be even chance of accidental dropor even water splash. So how to protect your devicein such situations?

Mobile insurance and warranty are completelydifferent, as warranty covers manufacturingdefects only, but insurance covers physicaldamages as well.

1.1 What Warranty CoversThe warranty is valid only when the warranty cardis properly completed, and upon presentation ofthe proof of purchase consisting of original invoiceor sales slip, indicating the date of purchase,dealer’s name, model and serial no.of the product.

If your mobile software, or any of the apps ondevice, does not perform properly. Under warrantypolicy, you can get the software updated or re-installed on your phone from authorized servicecentre.

Warranty cover will be void, if a repair has beenattempted by any unauthorized service centre.

Due to any manufacturer fault, if phone stopsworking, that is also covered under warranty. But,on few conditions that the reason of damage shouldnot be physical, or liquid damage. Also, the faultyparts of the device are replaced or repaired.

Warranty also covers battery, charger, and otheraccessories for 6 months only.

1.2 Mobile Insurance Covers:Mobile insurance policies provide protectionagainst a variety of perils and damages, internalor external. Given that smartphones are electronicdevices, they could be prone to software failurewhich can often render the device useless. Besidesinternal damage, external damage can also occurdue to various reasons. Listed below are some ofrisks and damages which are commonly coveredunder mobile insurance policies.

1. Physical Damage:- Covers accidental physicaldamage to insured equipment, like crackedscreen, shattered screen, Damage due to fire.

2. Liquid Damage:- If a person spills a drink onthe phone, by mistake, or accidentally dropshis/her phone in water, resulting in stoppage ofthe device, that is also covered under policy.

3. Technical Support:- Provide 24*7 assistanceto users about technical queries of their device,like how to use hotspot, tethering and so on.Hardware Failure like malfunctioningtouchscreen, faulty earphone jack or chargingport problem.

4. Anti-virus:- Protection for your mobile phoneagainst virus attacks.

5. Anti-theft:- Anti-theft is a feature that helpsyou to localize your device in case of loss ortheft, Loss of device from a securely lockedvehicle or building.

6. Contact & SMS Backup:- Enable you to takethe scheduled back-up of your contacts to youre-mail.

1.3 List of companies providing MobileInsurance:1. Quick Heal Gadget Insurance – Quick Heal

is a name synonymous with reliable anti-virusproducts. They have recently started offeringinsurance for Android based mobile devicesand provides cover for variety of damages /losses like theft, damage caused due to liquidspillage, physical damage or damage causedby fire. Plans offered by QuickHeal start fromRs 599 onwards and go up to Rs 2,499. Thecost of the insurance plan will depend on thecost of the device. TO give you better valuefor money, you will also get QuickHeal’smobile security suite, along with your mobileinsurance.

2. New India Assurance - New India Assuranceoffers competent mobile insurance covers formobile phones against a variety of damageslike malicious damage (caused by riot, strike,etc.), damage by fire, accidental damage, ordamage caused under fortuitouscircumstances.

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3. AppsDaily – Another popular mobileinsurance provider is AppsDaily. Thecompany provides a wide range of coveragefor a wide variety of smartphones. Cover isprovided against liquid damage, physicaldamage, loss due to theft or burglary. Themobile insurance schemes start from Rs 799(for phones priced at or under Rs 10,000) andup to Rs 3,999 (for phones costing up to Rs90,000). The notable features of this insuranceprovider is that it supports cashless claims,along with providing prompt service, whichcan be invaluable.

4. MobileAssist – MobileAssist is anothermobile insurance provider which helps protectyour device and the data stored on it against aspectrum of damages or loss. There aredifferent plans which you can choose frombased on the amount of the insurance. Eachplan carries differing features and has beendesigned to fit differing requirements. TheUSP of this company is that it providesdoorstep pick-up and drop of your device, incase of a major repair or damage. Also, youwill be provided with a temporary phone incase your phone is lost or has been damaged.

5. SyncNScan – SyncNScan offers multipleinsurance plans with additional features likedamage / theft insurance, spam guard andcloud backup. Cover is provided for a widevariety damages like accidental damage,damage due to water spillage, burglary, theftdue to house break-in, riot, strike, if phone isstolen from a locked vehicle or building,internal or external damage (to componentsof the device), wilful / intentional damagecaused by third party, damage due to externalimpact.

6. Onsite Secure – Onsite Secure is anothergadget insurance provider which providesinsurance not only for smartphones but alsofor digital cameras, laptops and tablets. Thecompany offers multiple insurance plansdepending on the value of the device.Insurance provides cover against commonlyoccurring faults like malfunctioning touch

screen, faulty charging port, hardware failure,etc. One of the notable feature of this insurancecompany is that it provides onsite service,which means that your damaged device willbe picked from your doorstep, repaired at theauthorized repair center and returned to you.

7. GadgetCops – One of the first mobileinsurance providers in India is GadgetCops.The company provides all-round insuranceplans for a variety of electronic devices, witha special focus on smartphones. The variousplans offered by the company cover theft andaccidental damage, along with providing ahost of other value added services. Plansoffered by GadgetCops will protect yoursmartphone for a duration of 2 years, whilealso providing for repair and replacement of avariety of electrical or mechanical faults. Theyalso provide cashless service as a part of whichthe costs of repair done at the repair centerwill be borne by the company and not theinsured.

8. Times Global Insurance – One of the popularmobile insurance providers is Times GlobalInsurance. The company offers trusted mobileinsurance plans which start from as low as Rs125 per month (for phones costing betweenRs 3,000-15,000) and Rs 310 per month (forphones valued between the range of Rs 30,000to Rs 60,000). The USP of their insuranceplans is that it provides 100% cashlessinsurance cover against damages caused dueto accidents, water spillage or cracked screens.With dedicated plans for iPhones and someother smartphones, customers can get up to90% reimbursement for a stolen or lostsmartphone.

9. Syska Gadget Secure: Syska Gadget Securegets you a complete insurance cover for yourphone against accidental damages, water/fluiddamage, theft, burglary and fire damage. Incase your handset gets theft or if gets stolen,the insurance cover will provide compensationequivalent to the cost of replacement of theinstrument by a new instrument of similarspecification and similar capacity.There are

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different plans available and you can chooseit based on the features each plan offers. Thebasic plan is Rs 599 a year and it goes up toRs 1999 per year.

10. Warranty Bazaar : Warranty Bazaar providesextended warranty and accidental damageprotection plans for mobile phones and tablets.If your phone or tablet is not older than 90days then you can purchase Warranty Bazaarextended warranty for phones. AccidentalDamage Protection is designed to protect theowner from the cost of repairs which is notcovered by the manufacturer. 12 MonthsAccidental Damage Protection for phone andtablets protects your device with all damages,spills, drops and more for 12 months.

1.4 The 4 P’sProduct: Product is defined as a physical productor service to the consumer for which he is willingto pay. It includes half of the material goods, suchas furniture, clothing and grocery items andintangible products, such as services,

Price: Price is one of the most important marketingmix items and many scientists consider the priceas one of the most important elements of themarket, which increases not only profits, but alsomarket share. However, the price is not only oneof the key factors in a competitive situation, whichdirectly affects the company’s sales andprofitability indicators, but also one of the most

flexible marketing mix elements, which canquickly adapt to environmental changes.Therefore, it is the price is perceived as the onlyelement of the marketing mix, generating revenueand the most important customer satisfaction andloyalty factor.

Place: Another very important element ofmarketing is a place that is also called thedistribution, which is defined as the process andmethods by which products or services reachcustomers

Promotion: The last 4P marketing complexelement of the promotion, which helps to increaseconsumer awareness in terms of their products,leads to higher sales and helps to build brandloyalty. Thus, the promotion of the marketing mixis a tool that helps disseminate information,encourage the purchase and affects the purchasedecision process.

2. Research Methodology:The study is based on primary data. The datacollected by using structured questionnaire of 4P’s.Secondary data collected form websites. Thecollection of primary data 100 respondentsselected form Hyderabad city. The collected datawas analyzed by using MS Excel and SPSS

3. Data Analysis and Interpretation:Demographic Profile of Respondents (Gender,Age, Educational Qualification, Occupation)

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Interpretation: The above table revels that the outof 100 respondents 67% were male and 33% werefemale. Out of 100 respondents less than 18 agegroup respondents are 15%, 19-25 age grouprespondents were 16%, 25-35 age grouprespondents were 44%, 35-40 age grouprespondents were 12% and above 40 age group13%. Out of 100 respondents occupation students

respondents were 35%, Business respondents were10%, Govt. employee respondents were 26%,professional respondents were 25% and otherswere 4%. out of 100 respondents educationalqualification SSC were 15% and flows Interrespondents were 38%, Degree respondents were35%, and PG respondents were 12%.


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The above table 2 reveals that the aware of mobilephone insurance and insured mobile respondentswere 100%. Type of insurance providers new Indiaassurance were 55% and warranty bazzar were45%, aware of insurance providers formrespondents mobile retail shops were 75%,advertisements in TV were 2%, advertisements inmobile phones were 5%, and form friends were18%. The insurance providers location near to myplace respondents were 34%, far away form myplace respondents 55%, and somewhat okrespondents were 11%. The insurance price isreliable purchased insurance product Yes were64% and No were 36%. The type of insurancepolicy purchased physical damage respondentswere 10%, antitheft respondents were 15%, andall type respondents were 75%. The satisfaction

level of policy purchased highly satisfiedrespondents were 48%, satisfied respondents were35%, neutral respondents were 15% anddissatisfied respondents were 2%.

Hypothesis Test:Ho1: there is no association between Gender andSatisfaction Level of Mobile insurance products

Ho2: Ho: there is no association between Age andSatisfaction Level of Mobile insurance products

Ho3: Ho: there is no association betweenEducational Qualification and Satisfaction Levelof Mobile insurance products

Ho4: Ho: there is no association betweenOccupation and Satisfaction Level of Mobileinsurance products

The above table reveals that the associationbetween gender and satisfaction level of mobileinsurance F- value was 2.751957, F-critical valueis 6.607891, and p-value 0.158032 is less than0.05significance level. Hence there is a significantdeference between gender and satisfaction level.The association between age and satisfaction levelof mobile insurance F- value was 0, F-critical valueis 5.317655, and p-value 1 is greaterthan 0.05

significance level. Hence there is no significantdeference between age and satisfaction level. Theassociation between Education Level andsatisfaction level of mobile insurance F- value was0, F-critical value is 5.317655, and p-value 1 isgreater than 0.05 significance level. Hence thereis no significant deference between age andsatisfaction level. The association between

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Occupation and satisfaction level of mobileinsurance F- value was 0, F-critical value is5.317655, and p-value 1 is greater than 0.05significance level. Hence there is no significantdeference between age and satisfaction level.

4. Conclusion:Majority of the respondents were Male ( 67%.),the highest respondents are form 25-35 age groupwere 44%,the highest respondents form occupationstudents were 35%. educational qualificationsrespondents inter mediate highest were 38%.Theawareness of mobile phone insurance and insuredmobile respondents were 100%., Type of insuranceproviders new India assurance were 55% , awareof insurance providers were mobile retail shopswere 75%,. The insurance provider’s location faraway from my place respondents 55%, Theinsurance price is reliable purchased insuranceproduct Yes were 64% and No were 36%. Therespondents type of insurance policy purchasedalltype were 75%. And the satisfaction level ofpolicy purchased highly satisfied respondents were48%, satisfied respondents were 35%. Theassociation between gender and satisfaction level

of mobile insurance there is a significant deference,age and satisfaction level of mobile insurance thereis no significant, Education Level and satisfactionlevel of mobile insurance there is no significantdeference, Occupation and satisfaction level ofmobile insurance there is no significant. Hence itconclude that the mobile insurance companiesshould take care on promoting insurance productsmore on TV and mobiles and they have to provideinsurance provision by using the mobile phonesby giving an advertisement.

References:1. http://www.nirmaltv.com/2015/07/16/best-

mobile-insurance-for-smartphones/

2. https://www.quora.com/Which-is-the-best-mobile-insurance-company-in-India-What-is-the-difference-between-the-warranty-of-a-mobile-and-the-insurance-of-a-mobile

3. https://www.bankbazaar.com/miscellaneous-insurance/mobile-insurance.html

h t t p s : / / g a d g e t s t o u s e . c o m / f e a t u r e d /smartphone-insurance-plans-india/41346


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HEALTH INSURANCE SCHEMES OPERATIONAL POLICIESISSUES AND DETERMING PHENOMENON VARIABLES-ASTUDY IN TIRUCHIRAPPALLI DISTRICT, TAMIL NADU

Dr. R.RAMACHANDRANAssistant Professor in Commerce,DDE, Annamalai University,Annamalai Nagar – 608 002, Tamil Nadu, IndiaEmail ID : [email protected] : 094438 20418

ABSTRACTHealth insurance is very well established in many countries, but in India it still remains an untappedmarket. Less than 15% of India’s 1.1 billion people are covered through health insurance. And mostly itcovers only government employees. At any given point of time 40 to 50 million people are on medicationfor major sickness and share of public financing in total health care is just about 1% of GDP. Over 80%of health financing is private financing, much of which is out-of-pocket payments and not by any pre-payment schemes. Given the health financing and demand scenario, health insurance has a wider scopein present day situation in India and this study attempts to probe into the public- private role in healthinsurance market in India with particular reference to Tiruchirappalli District, Tamil Nadu. The presentstudy aims to find out the health insurance schemes in Tiruchirappalli district, Tamil Nadu. As this studyis an empirical one, the field survey method and personal interview techniques were used for the collectionof the required data from the respondents. The researcher met all the visitors on the work spot andcollected the necessary data through interview and schedules. The total estimated sample size is 100were taken for the study. The statistical tools such as ANOVA and Cross tabulation analysis have beenapplied for this study. The findings and observations are the result and outcome of the interpretationsmade during the study of analysis.

Keywords: Health Insurance, GDP, Medicare, Demographic variables.

INTRODUCTION

The concept of health insurance was proposed inthe year 1694 by Huge, the Elder Chambelen fromPeter Chambelen Family (Anitha 2005). In 19th

century “Accident Assurance” began to beavailable which operated much like moderndisability insurance to cover the cost of emergencycare arising out of different injuries occurring as aresult of unexpected catastrophes. This paymentmodel continued until the start of 20th century.During the middle to late 20th century traditionaldisability insurance evolved in to modern healthinsurance programme.

Health insurance has become a necessity todaybecause it plays a major role in the financing ofhealth care. This is because one never knows when

illness may strike; sometimes hospitalization andmed claim expenses can be unaffordable. At suchtime, health insurance can prove to be a source offinancial support. Moreover, health care is unusualin nature because health care is irregular andunpredictable, sometimes, care can be lengthy andexpensive. Insurance, at such times, aims to protectthe individual and family against uncertain events.

Health care costs are rising rapidly today, the besthealth care involves high technologies that latestadvancements in medical field facilitate. Addedto this is the expertise of professionals, and utilities.A citizen has to pay huge fees to avail such healthcare. Low and middle income people who are notprepared to pay for their emergency health careexpenses, during un unforeseen accident or majorillness, find health insurance a viable alternative.

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Health insurance helps in ensuring that no one isdeprived of the minimum health care. Its primaryaim is to protect a patient and his family fromfinancial disaster and simplifying the mode ofpayments. For example, instead of making separatepayments, say for the doctors, surgeon, pathologist,and nurse. The insured will pay premium to theinsurer who in turn will take care of all sicknessand helps reduce anxieties of different nature -economic, medical and moral. Health insurancecompanies thus provide financial assistance to theinsured incase of disability or loss of health, sothat he/she can take curative measures and alsomaintain their dependents during the period ofsickness/disability with the benefits the insurerprovides.

Health insurance is classified into three categories.

1. Medical Expense Insurance: The expenses ofthe insured, such as hospital, physician and otherhealth care expenses are covered by thisarrangement.

2. Disability Income Insurance: Disabilityincome policies replace lost income when theinsured is disabled as a result of sickness or injurypayment is made because physical or mentalincapacity prevents the insured from working.

3. Long Term Care Insurance: Long terminsurance policies promise to pay expenses if theincapacity prohibits the insured’s activities of dailylife.

LITERATURE – AN OVERVIEWThe responsibility of social scientist is to derivenew outcome from the nature, concept anddeveloped outcomes. Hence, every research workis in position to undergo to find out the researchgap and hence following reviews are collected.Misra (2013), in his paper on Changing IndianHealth System: Current issues, Future Directionsestimated that Rs.40 OPERATIONALVARIABLES, 000 million is required for coveringhospitalization cost per annum of the BPLpopulation. He opined that if instead of directlybearing the cost, government provides them healthinsurance, then the demand on government fundsmay come down significantly as insurance helps

for mobilization of resources from the peoplethemselves. The author remarked that the healthinsurance for the poor can take different forms. Itcould be community based or non-communitybased (like Jan Arogya policy of the government).Jan Arogya policy offered by the non-life publicinsurers started in 2013 targeting the low- incomepopulation. At the nominal premium of 70, anadult individual up to 45 years can get the benefitof up to ‘. 5,000 incase of hospitalization. Thepremium is ‘. 90 for an individual above 45 yearsand ‘. 50 for a dependent. An adult member caninsure maximum of two dependents.

Moneer Alam (2013), in this article on Insuringto Ensure Better Health Care: How Promising isthe New Paradigm remarked that health insurancecould provide better and timely health care withsome sense of equity and efficiency. Exclusion ofcertain diseases from the benefit package is veryimportant and need to be carefully designed withattempts to see if they are revocable with time.When insurance driven demand is more and morefor Medicare, the existing services might fall shortand as a result bigger and metro-based hospitalsmight enjoy scarcity pricing. It is advocated that asocial insurance mechanism should be establishedwith an attempt to finance the premiums througha mix of sources, including some of tax/ cess onpolluting and health hazardous manufacturingunits, public transfers, user changes, etc,.

Ajay Mahal (2013), in his study on Health PolicyChallenges for India: Private Health Insurance andLessons from International Experience found thatfirst entry of private insurance sector may notnecessarily have large cost increasing effects inthe health sector especially if appropriateregulatory structure were in place and enforce. Heexpressed that worrying fact of course was thegenerally poor state of the regulatory structurepertaining to the health sector in India. He opinedthat the entry of private health insurance wouldsignificantly worsen the quality, although there isno reason to believe that it would lead to improvecare. In another paper titled Assessing PrivateHealth Insurance in India: Potential Impacts andRegulatory Issues stated that private health

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insurance companies in India is likely to have animpact on the costs of health care, equity in thefinancing of care quality and cost-effectiveness ofsuch care and expressed that an informed consumerand well- defined and implemented insuranceregulation regime will ameliorate some of the badoutcomes. They opined that regulation relating tobenefit packages, restrictions on risk selection andconsumer protection would be clearly useful; alsorequired are improved enforcement of regulatoryregimes, creating large insurance buyer groups,and better coordination between groups, and bettercoordination between IRDA and other regulatorybodies. They suggested for new legislation inimproving standards in health care provision.

Chollet, and Lewis (2014), in their article PrivateInsurance: Principles and Practice explained that,in principle, both public and private insurancecompanies can participate in the insurance market.In reality, participation of private insurancecompanies seems unlikely, especially when thereare other more lucrative areas still to be tapped.Prior to liberalization, when insurance was a publicmonopoly, launch of such a scheme would havemade perfect sense. Indeed, two health insuranceproducts- Mediclaim and Jon Arogya- werelaunched at that time, and it is known to al aboutthe dismal recode of these products. Now withcompetition at the market place, public insurerswill be disadvantaged. Even though the subsidy isbeing paid by the government to cover for anypossible short fall it is unlikely to attract even thepublic insurance companies.

Rangachary (2014), in his paper discussed healthinsurance business remaining underdeveloped inIndia. Impediments to the establishment anddevelopment of private health insurance stemdirectly or indirectly from government policiesregarding insurance, and health care sector (GoI2014). The most important impediments arise fromthe supply side i.e. from the side of health careproviders. Lack of standards for diseases andtreatment procedures (and where these standardsand procedures exists, their adoption is lacking),absence of rating and credentialing of theproviders.

Mahal (2014), in his article Private Entry intoHealth Insurance in India pointed out that currentMediclaim policy distorts the balance betweenprice adequacy and coverage, restricts the abilityof competitors to come up with more balancedproducts. Once the entry barriers are removed,additional regulations need to be put in place forthe smooth functioning of health insurancebusiness. Typically insurers tend to develop anumber of underwriting and pricing practices toavoid accepting high risk people. This kind ofmarket segmentation is economically efficient butmay be considered socially unacceptable. Afterregulators ensure that equal access is available tothe payers of health care, that companies cannotexclude high risk individuals or costly preexistingconditions. More over, health insurance contractsare typically more complex than other insurancecontracts.

In the paper titled, Health Insurance in India:Opportunities, Challenges and Concerns DilipMavalankar (2014), opined that over the last 50years India had achieved a lot in terms of healthimprovement. But still India is way behind manyfast developing countries such as china, Vietnamand Sri Lanka in health indicators. In case ofgovernment funded health care system, the qualityand access of services had always remained majorconcern. A very rapidly growing private healthinsurance market has developed in India. Thusprivate sector bridges most of the gaps betweenthat government offers and what people need.

Anitha (2015), in her paper on Emerging HealthInsurance in India: An Overview, narrated thatprivatization of health insurance will divert scarceresources away from the pool, escalate healthcosts, allow cream skimming and adverseselection. According to this view, private healthinsurance largely neglects the social aspect ofhealth protection.

Bloom (2015), in his article on Public and PrivateRoles in providing and Financing ReproductiveHealth Care pointed out that most countries areunder going an epidemiological transition fromlow-cost, easy to treat, communicable diseases tohigh cost chronic diseases such as hypertension,

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cancer and coronary artery blockages Coupledwith rising income the increased prevalence ofnon-communicable diseases that are expensive totreat leads many individuals to seek healthinsurance. However, private insurance markets areoften not viable because of the problem of adverseselection.

Jost (2015), in his study about Private or PublicApproaches to Insuring the Uninsured Lessonsfrom International Experience with PrivateInsurance, stressed that insurance markets,particularly those that are voluntary, are subjectto a variety of market failures, which arecompounded in the case of insurance for healthservices. Governments in developed countries withwell – established private health insurance marketsroutinely intervene in the market to protectconsumers and promote pubic health objectivesof equity, affordability and access to healthservices. Through policies, incentives andregulations they essentially, conscript privateinsurance to serve the public goal of equitableaccess.

Research GapLiterature review is the basic perspective of anystudy in social science and it paves way for to findout and health insurance schemes inTiruchirappalli district. However, majority ofliterature has ignored the health insurance and thus

this study realises to new path for these parametersin application and utility expectancy of healthinsurance at Tiruchirappalli district. And hencenecessary data are collected over to assess theperformance of its function over to healthinsurance related variables.

OBJECTIVE OF THE STUDYThe objective of the study is:

1. To analyses significant of health insuranceschemes in Tiruchirappalli district, Tamilnadu.

METHODOLOGY DESIGNBasically, the study is an empirical in nature, thefield survey method and personal interviewtechniques were used for the collection of therequired data from the respondents. There was aneed to sample the population because not all thepopulation elements use health insurance. Thestudy therefore used random sampling method wasadopted used in this study. Total sample size was100.

DISCUSSION AND RESULTSThis paper furnishes the analyses andinterpretation of the collected data for “HealthInsurance Schemes in Tiruchirappalli District,Tamil Nadu”. Various statistical procedures suchas ANOVA and Cross tabulation analysis wereapplied.

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Influence of the selected variables on thesatisfactory level of the Health Insurance policyholders is stated in Table 1. 27.33 of therespondents are highly dissatisfied, 54.33 aredissatisfied, 14.00 are satisfied and 4.33 are highlysatisfied regarding the time taken in claimsettlement. With the claiming procedures, 19.33are highly dissatisfied, 54.00 percent aredissatisfied, 21.67 are satisfied, and 5.00 are highlysatisfied respectively. 20.67 of the respondents arehighly dissatisfied, 60.67 are dissatisfied, 15.33are satisfied and 3.33 is highly satisfied regardingthe premium paid by the respondents. Relating toinformation’s provided by the agents, 14.33percent are highly dissatisfied, 50 percent are

dissatisfied, 19.33 are satisfied, 13 are highlysatisfied 3.33 did not give any opinion. 11.33 arehighly dissatisfied, 54 are dissatisfied, 24 aresatisfied, 7.67 are highly satisfied and 3 percentdid not give their opinion relating to thecompensation made by the insurance companies.Out of total respondents, 17.67 are highlydissatisfied, 44.33 are satisfied, 5.33 are highlysatisfied, and 3.33 percent did not give theiropinion with regard to the treatment given bycashless hospital. In disease coverage by the healthpolicy, 19 are highly dissatisfied, 54.33 aredissatisfied 18.67 are satisfied, 4.33 are highlysatisfied and 3.67 did not give their opinion aboutdisease coverage respectively.

Gender and Satisfactory LevelGender has a significant influence on premiumpaid by the respondents, compensation made bythe insurance companies, treatment given bycashless hospitals respectively. Time taken in claim

settlement, claiming procedures, information’sprovided by the agents and disease coverage havenot been influenced by gender, since the P valueof all these variables are more than 0.05.

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Age and Satisfactory LevelAge and satisfactory level is analyses by one-wayANOVA. The result shows that age has aninfluence on the time taken in claim settlement,claiming procedures, compensation made by theinsurance companies respectively. Other variables

namely premium paid by the respondents,information’s provided by agents, treatment givenby cashless hospitals, disease coverage are notinfluenced by age, since the P value of thesevariables are more than 0.05.

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Marital Status and Satisfactory LevelMarital status of the policy holders has significantinfluence on premium paid by respondents,compensation made by insurance companies anddisease coverage, since the P values of thesevariables are 0.014, 0.007 and 0.008 respectively.

Other variables namely time taken in claimsettlement, claiming procedures, information’sprovided by agents, treatment given by cashlesshospital are not influenced by the marital statussine the P value of these variables more than 0.05.

Literacy and Satisfactory LevelsLiteracy levels of the sample policy holders areclassified as school graduate, post graduate levelsand diploma holders. The literacy levels have aninfluence on the time taken in claim settlement,premium paid by the respondents, compensationmade by the insurance companies respectively.Other variables namely claiming procedures,information’s provided by the agents, treatment

given by cashless hospitals, disease coverage arenot influenced by the literacy levels since the Pvalue of these variables are more than 0.05.

MANAGERIAL IMPLICATIONS1. Health insurance providers may focus on

different age groups other than 41-51 yearage group since 93 percent of the claimantsbelong to the age group of 41-51.

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2. Sufficient training should be given to theagents since 27.78 of the respondentsexpressed that dealing with agents was theirproblem.

3. Health insurance service providers mayreduce the time to settle the claims. In thestudy, it is found out that 54 of the samplerespondents were dissatisfied about claimingprocedures. So insurance companies musttake appropriate steps to avoid moreformalities when making the claims

4. Majority respondents are dissatisfied aboutthe information’s provided by the agents. Sothe agents must reveal all the relevantinformation’s to the insured. Thus by solvingthe asymmetric information problem, themarket for health insurance in study area canbe extended.

5. Majority respondents are dissatisfied aboutthe diseases covered by the health serviceproviders. So the health insurance serviceproviders must take steps to reconsider thepolicies relating to disease coverage.

6. The public sector, to increase their profitmargins, must diversify their healthinsurance products as done by the privatesector.

7. Use of various media by the public sector isnecessary to increase its market share.

CONCLUSIONTo conclude the outcomes of the present researchregarding the growth of health insurance schemesand also the functioning of health insurancecompanies in Tiruchirappalli District. The studyhas chosen 100 health insurance policy holders assample respondents randomly selected to assesstheir different views about various public andprivate health insurance products. In thecompetitive scope, there are multi forms of healthschemes offered by various insurance corporationsand in this perspective it is understand that theprogress and success lies only on their productsfeatures and characteristics in qualitatitive andquantitative issues.

SCOPE OF THE FURTHER STUDYThe scope of the study is examining the healthinsurance schemes and conceives to Tiruchirappalidistrict. Health insurance schemes is the vast, wideand recently emerged, more importantly in thepresent study the most common areas like factorsinfluencing the various health insurance schemeshave been considered in the pertinent issues ofdifferent towns of the state in India.

REFERENCESAjay Mahal (2013), “Health policy Challenges forIndia”. Private Health Insurance and Lessons fromInternational Experience Economic and PoliticalWeekly p. 1-35

Alam Moneer (2013), “Insuring to Ensure BetterHealth Care: How Promising is the New Pandigm”The National Seminar held in IEG Institute, Dec.29-30.

Anitha (2015) “Emerging Health Insurance inIndia” – An overview, 10th Global Conference ofActuaries, pp.95.

Chollet, D. and Lewis. M (2014), Private InsurancePrinciples and Practice, in George J. Schieberedited, Innovations in Health Care Financing:Proceedings of a World Bank Conference”, March10-11, World Bank Discussion paper No. 365,World Bank, Washington D.C.

David E. Bloom (2015), Public and Private Rolesin Providing and Financing Reproductive HealthCare, “Harvard Institute for InternationalDevelopment, Harvard University”.

Dilip Mavalankar (2014), “Health Insurance inIndia; Opportunities, Challenges and Concern”.Indian Institute of Management, Ahmedabad.Report on Conference on Health Insurance, March18-19.

Jost. TS (2015), “Private and Public Approachesto Insuring the Uninsured: Lessons fromInternational Experience with Private Insurance”New York University Law Review 76(2): p.419-492

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A CRITICAL ANALYSIS OF PRADHAN MANTRI JAN-DHANYOJANA (PMJDY) AND HEALTH INSURANCE- A WIN-WIN

COMBINATION FOR BANKS TO OFFER HEALTHINSURANCE TO PMJDY ACCOUNT HOLDERS

Dr. Smitha Sambrani, Balaji Prasad Dantu,BE, MBA, PhD, M.Sc, M.Tech,Assistant Professor, Vice President,Department of Business Management, AxSysHealthTech Ltd.Osmania University, Hyderabad – 500007.Email: [email protected]

ABSTRACT

The Government has a vision of providing the most necessary financial inclusion to the rural populacethrough the PMJDY, this article examines the necessity of health insurance cover considering the socio-economic factors for extending the health insurance to the PMJDY Account holders whilst understandingthe spiraling costs in healthcareand the inability of the Government in providing affordable care to allits citizens due to various reasons which is outside the scope of this article.This article explores theopportunity for banks in extending various financial services notably health insurance to the PradhanMantri Jan-Dhan Yojana (PMJDY) Account Holders. Finally, this article suggest ways to tap the vastpotential for the banks in providing health insurance and reducing the overall burden on the Governmentin extending financial support by providing healthcare for all.

Keywords: Pradhan Mantri Jan-Dhan Yojana, PMJDY, Health Insurance, Banking Services

INTRODUCTIONAccording to the census 2011, the rural and urbandistribution of Indian population stands at 68.84%and 31.16%respectively with many of the ruralfolks having minimal access to a formal financialsystem leave aside having an affordable healthinsurance for financial protection during anycritical illness or other health emergencies. Dueto the lack of this financial protection many ruralhouseholds end-up selling up their bread & butterearning agricultural lands and properties leadingthem to utmost poverty and in some dire situationssuicides are becoming the norm.

Financial Inclusion is important aspect to everycitizen of India for bringing them into the formalfinancial system and providing new financialproducts and services for better management oftheir financial resources. This was long eluded forthe rural families because earlierschemesfocus was

more on supply side by providing banking outletsin the villages with a population of over 2000 andthe encouragement was missing in enrolling thehouseholds into the financial system.Consequently, a large number of bank accountsremained dormant and the desired benefits offinancial inclusion could not be achieved. Due tothis fact, the core aspect of socio-economic activityof convergence of financial and allied services tothe rural populace was long overdue. Convergencefor a comprehensive financial inclusion likeopening of bank accounts, availing of micro credit,health & life insurance and pension will form animportant aspect towards providing the requiredfinancial support to rural populace. Theintroduction of PMJDY is the stepping stone aimedtowards, the convergence of financial inclusion forevery citizen of India. This convergence opens aplethora of opportunities which can be explored

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by the banking sector to introduce new productsand services to the rural populace and one suchoffering is Health Insurance.

Technological ChallengesIn the past technology and digital access alsoeluded the vast majority of Indian populace inembracing the financial products for a betterfinancial inclusion. The lack of affordabletechnology and adoption of the latest best-in-breedpractices also had an impeding effect on thebanking sector in reaching out to every corner ofthe Indian villages.

Due to advancement in the telecommunications,mobile phones, access to internet over mobile andother devices along with the exponential andsubstantial affordability of technological advanceshas helped in reaching to vast majority of thepeople.These technological advances and theadoption of CBS (Core Banking System) by bankslike electronic payment, NEFT, RTGS, mobilebanking, banking through internet etc., haveenabled the most necessary access of financialproducts and services to the vast rural populace.

Identity CrisisThe vast populace especially in rural India hadalways faced the identity crisis due to lack ofstandardized identification documents. The onlymost sought after identification was the ColoredRation Cards which were being issued by the localstate governments based on the socio-economicstatus.Everytime, whenever a new government iselected they always tinkered with these papersmaking the rural folks more vulnerable in losingthe basic identity status. These papers neveraddressed the true necessity of properidentification of the rural household for betteraccess to financial products and services;at thesame time due to lack of authenticity of thesepapers and changing Government rules &regulations on these papers, banks were alsoreluctant in accepting these papers as trueidentification documents.

Aadhar – Simple, Authenticated and BiometricidentityThe introduction of Aadhaar has created the mostneeded unique identification of every citizen ofIndia. With the arrival of Aadhaar andAadhaarenabled products like e-KYC has opened a newworld of easy access to the large populaceespecially for opening of bank accounts, AadhaarEnabled Payment System (AEPS), Micro-ATMs,biometric authentication of customer from UIDAI(Unique Identification Authority of India) database.On 11thMarch 2016, the Aadhaar (TargetedDelivery of Financial and other Subsidies, benefitsand services) Act, 2016, was passed in theLokSabha, and on 26thMarch, 2016 was notifiedin the Gazette of India giving complete legal statusfor Aadhaar. Apart from these the launching ofmobile banking by NPCI (National PaymentsCorporation of India) has given a strong impetusin changing the entire landscape of FinancialInclusion to every citizen of India. With the supportfrom the Government in making available andaccess to these financial products will usher in alarge way to ensure coverage of hitherto excludedsection of Indian populace.

ACCOUNTS STATUS IN JAN-DHANYOJANAAccording to PMJDY website, as on 27-Jul-2016,there are 22.65 crore accounts with 13.93 crore(61.5%) accounts in rural and 8.72 crore (38.5%)accounts in urban habitat. Of the 22.65 croreaccounts, 17.83 crore(78.7%) accounts are inpublic sector banks, 3.98 crore(17.6%) accountsin regional banks and 0.84 crore(0.04%) accountsin private banks. Of the total 22.65 crore accounts11.01 crore(48.6%) accounts have been Aadhaarseeded and the seeding of the other accounts arein the process. The total balance in these accountsstands at 40,750.82 crores with public sector bankshaving a lion share of 32,190.45 crores (78.9%)and regional banks having 7060.98 crores (17.3%) and private banks at 1499.39 crores (3.7%).

According to the PMJDY, there are about 24.18%accounts with zero balance. The public sectorbanks had 24.38%,regional banks had 20.59% and

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36.96 % private banks with zero balances. The zeroaccount balance trend according to the website,has started receding from 44.9% on 26-Aug-2015to 25.29% on 29-Jun-2016 which clearly indicatesthat the people have started utilizing the bankingservices underthese accounts.

POPULATION & HEALTHCAREEXPENDITURE IN INDIAIndian population accordingly to Census 2011stood at 1.21 billion and in 2015 according to

work-bank it stood at 1.31 billion. Accordingly tothe world-bank report published in 2014 indicatedthat the Indian Government spent around 1.4% ofits GDP towards public healthcare whereas UnitedStates spends around 8.3%, United Kingdom at7.6% and Netherlands at 9.5% of their respectiveGDP which is clearly evident from the Table-1.

India expenditure towards public healthcare isclearly at dismally low levels which forces thecitizen of India in managing their health throughtheir pocket or other means like mortgaging orselling their properties.This certainly pushes thelarge folk of rural population into poverty.Giventhe larger social constraints on Government ofIndia in managing the primary needs of food &living and other social securities, it is evident thatan increased healthcare expenditure in the comingyears is not on the horizon.

HEALTH INSURANCE BY GOVERNMENTGovernment of India has been offering manyNational Level Health Insurance schemes andnotable ones are Employment State InsuranceScheme (ESIS), Central Government HealthScheme (CGHS) and Rashtriya Swasthya BimaYojana (RSBY).

ESIS covers the organized and employed structureapplicable only to factories and otherestablishments employing over 10 or more personsproviding full medical care for self and dependents,from day one of insurable employment, the insuredpersons are also entitled cash benefits in time of

sickness, temporary or permanent disablement.This scheme has been extended to cover shops,hotels, restaurants, cinemas including previewtheatres and other establishments employing 20or more persons.

The CGHS provides comprehensive healthcarefacilities for the Central Government employeesand pensioners and their dependents residing inCGHS covered cities.The scheme is again offeredto the employees who are working with the centralgovernment and its allied institutions.

Government of India, introduced RSBY in 2008,a Health Insurance Scheme for the below povertyline (BPL) families and has expanded to coverother defined categories of unorganized workers.This schemehas a mission to cover 70 millionhouseholds by the end of 2017.This scheme iscurrently managed by Ministry of Health & FamilyWelfare and the scheme is implemented through adecentralized structure at the State level. Thepremium cost for enrolled beneficiaries under thescheme is shared by Central and StateGovernments. The beneficiaries under RSBY areentitled to hospitalization coverage up to INR30,000/- per annum on family floater basis, for

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the diseases that require hospitalization. RSBYprovide the cover mostly for the common ailmentsand are limited to primary and secondaryhealthcare requirements which are treated at thelocal or community hospitals.

Certainly given the quantum of cover provided bythe RSBY would not address the need for tertiaryand super-specialty healthcare for critical and lifethreatening illness which is often delivered by theprivate sector than the public sector. Consideringthe spiraling healthcare costs every year, thecoverage under RSBY is dismally low. Hence, itis important for every individual householdinhaving an alternate source of healthcare coveragewithout throwing them into acute poverty due tounforeseen hospitalization.

HEALTH INSURANCE BY BANKS –BENEFITS & CHALLENGES

Healthcare costs are escalating at a rapid paceevery year hence, it is important for everyhousehold to have a health insurance policy. Withthe formation of Insurance Regulatory and

Development Authority (IRDA) in standardizingthe health plans a plethora of options are availablein the market offered by both public and privateplayers. Banks are also expanding in offering otherrange of services apart from its core banking to itsauthenticated account holders.One such offeringby many banks is Health Insurance. Banks usuallyoffer the health insurance either through tie-up withpublic and/or private insurance providers or withits other subsidiaries. Banks are also making theprocess simpler to attract their account holders inavailing the new range of services. The only pre-condition set by many banks is that thehouseholder must be an authenticated accountholder in the bank which is achieved now throughAadhaar. The most important aspect is that thenationalized banks offer the health insurance atvery low premium rates to cover the entirehousehold, as compared to private players. TheTable-2 indicates some of the banks which areoffering the health insurance either through theirsubsidiaries or other private and public healthinsurance providers.


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Benefits to Parties in Offering Health Insuranceto PMJDY account holdersThereare many benefits for every party involvedin offering various financial products not just thehealth insurance. This will also helpthe banks andinsurance companies in building a strongrelationship for the betterment of the bankingcustomers through other offerings.

Benefit to Customers

1. They can have direct access to a wide rangeof financial products offered by banks andthrough its associates and partners

2. Access to better risk coverage within theirown bank

3. They can seek appropriate financial advicefor better financial planning and makingbest use of their financial resources

4. Ease of renewals of insurance policiesthrough their own bank branches

Benefit to Banks

1. Banks can increase their relationship andassociation with the consumers therebyincreasing the trust and confidence of theconsumer

2. Bank can generate additional revenue andother non-interest income through sale offinancial products

3. Bank can attract new customers enablingbetter penetration of new financialproducts and services to the existingcustomer base

4. Lower cost of sale of other financialproducts and services by the bank

Benefit to Insurance Companies and AssociateCompanies of Banks

1. Insurance companies and associatecompanies of banks can have greatergeographical reach through the existingbanks network at relatively lower cost

2. Win the trust and gainconfidencefrom thebanking consumers

3. Large potential for cross-selling, up-sellingincluding a greater depth and width ofvarious insurance products to consumers

4. Lower cost of sale of various insuranceproducts to the consumer as the bank actsas the primary interface

Challenges in Health Insurance from BanksThe health insurance offered by banks has its ownchallenges and notable ones are:

1. Policies from a nationalized banks areknown to have poor service quality, sinceselling allied products like insuranceespecially health insurance is not their corebusiness

2. Most insurance products are sold throughexternal insurer or through its associatesand banks have least interest in doing across-sell as it adds a minuscule amountto its bottom line

3. Lack of portability of retail healthinsurance policieswithin the bank if theyare tied up with multiple insuranceproviders

4. Long delays in settlement of claims andlower claim settlement ratio

RECOMMENDATIONS SUGGESTED FORBANKSIn order to make the health insurance offeringsfrom banks to be more attractive and compelling,the following are some of the suggestions &recommendations that banks should considerbefore moving forward:

1. Provide EMI (Equated MonthlyInstallment) for the insurance premium

2. Branch would act as a nodal agency forpremium collection and settlement of theclaims

3. Club Government sponsored insuranceofferings along with the individualhealthcare plans into a single largerumbrella for lucrative coverage and betterfinancial support

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4. Partner with Government in claiming theinsurance premium electronically of all theeligible consumers in the governmentsponsored health insurance schemes

5. Partner with local primary health centersand community health centers inpercolating better healthcare managementthrough changes to lifestyle and food habits

CONCLUSIONHealthcare coverage and assurance of supportduring the need of the hour boosts economicgrowth, reduces poverty and lowers mortalityrates. The success lies in an effort to cover therural population with a simple scheme of healthinsurance that keep them protected againstunforeseen healthcare incidents requiringhospitalization.This assurance will also enable instrengthening the required healthcareinfrastructure like building new specializedhospitals, nursing homes, diagnostic centers whichis lacking to a very large extent in the rural domain.

With the introduction of Aadhaar the much neededidentification is being addressed and PMJDYprovides convergence of financial inclusion to therural populace. Banks have certainly a hugeopportunity in offering other financial productsespecially health insurance to its PMJDY accountholders and providing the much needed healthcareassurance support when in need. The banks canwork with the government for incentivizing andsubsidizing the offer through appropriate taxrebates and reducing the overall burden on thegovernment in supporting healthcare for all.

REFRENCES

1. Genesis of Pradhan Mantri Jan-Dhan Yojana-http://www.rsby.gov.in/about_rsby.aspx

2. Jan-Dhan Yojana, Progress card as on 27-Jul-2016 http://www.pmjdy.gov.in/account

3. Census 2011, accessed on 02-Aug-2016 athttp://censusindia.gov.in/2011-prov-results/paper2/data_files/india/Rural_Urban_2011.pdf

4. National Health Portal of India and NationalHealth Insurance Schemes – http://www.nhp.gov.in/national-health-insurance-schemes_pg

5. Financial Inclusion & e-KYC https://uidai.gov.in/fi-e-kyc.html

6. Public Health expenditure in % of GDP byWorld bank -http://data.worldbank.org/indicator/SH.XPD.PUBL.ZS

7. Population data by world bank http://data.worldbank.org/indicator/SP.POP.TOTL

8. World bank data on GDP – http://d a t a . w o r l d b a n k . o r g / i n d i c a t o r /NY.GDP.MKTP.CD

9. Per Capita Healthcare expenditure by World-Bank - http://data.worldbank.org/indicator/SH.XPD.PCAP

10. Out-of-Pocket expenses by WHO - http://a p p s . w h o . i n t / g h o / d a t a /view.main.HEALTHEXPRATIOIND?lang=en


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CUSTOMER INTELLIGENCE STRATEGY IN INDIA: WITHSPECIAL REFERENCE TO INSURANCE SECTOR

Prof. (Dr.) Sandip K. Bhatt Dr. Yashasvi R. RajparaDepartment of Business Studies, SEMCOMSardar Patel University, Sardar Patel University,Vallabh Vidyanagar Vallabh Vidyanagar

ABSTRACT:

In the recovering, low-growth economy, insurers are beginning to explore ways to leverage data,technol-ogy and tools to achieve profitable growth. According to recent research, insurers are seekingnew ways to retain existing customers and attract new ones. Yet, many insur-ers report that that theircurrent efforts to gather customer insights and execute marketing campaigns are not as effec-tive as theycould be and that many challenges stand in the way of improving their results.

This paper summarizes the research results, highlighting the business drivers, the challenges, and thepriority areas for insurers’ marketing activities, multi-channel strategies, social media and internal use.

Introduction:The insurance sector in India has completed allthe facets of competition, from being an opencompetitive market to being nationalized and thengetting back to the form of a liberalized marketonce again. The history of the insurance sector inIndia reveals that it has witnessed completedynamism for the past two centuriesapproximately.

With the establishment of the Oriental LifeInsurance Company in Kolkata, the business ofIndian life insurance started in the year1818. IRDA has till now provided registration to12 private life insurance companies and 9 generalinsurance companies. If the existing public sectorinsurance companies are considered then there arepresently 13 insurance companies in the life sideand 13 companies functioning in general insurancebusiness. General Insurance Corporation has been

sanctioned as the “Indian reinsurer” forunderwriting only reinsurance business.

Customer Intelligence Strategy Goals:Insurance organizations are looking to accomplisha wide variety of objectives with their customerintelligence (CI) strategies. Not surprisingly,majority of respondents reported that they seek tobetter manage cus-tomer data. Insurers are alsolooking to improve overall business and/ortechnology skills and capabilities, predict customerbehaviors and trendsdesign and executemarket-ing campaigns and develop and optimizesegment strategies.

While low percentage of insurers responding tothe survey said that forecasting customer attritionis a key objective of their customer intelligencestrategy, many listed improving retention rateswhen asked to identify their key business drivers.

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Research Survey:I have asked Employees of various InsuranceCompanies for better understanding thechallenges, business drivers and priorities involvedin gaining customer insights and to provide aglimpse into the marketing activities, multichannel

strategies and social media use that help insur-ersgain valuable customer information.

The survey covers 5 questions, and conductedamong 200 Employees of various InsuranceCompanies. The result of survey is as follows:

As insurers emerge from the recession and softmarket, customer analytics is a key technology thatenables these organizations to gain insight intotheir customer base to successfully grow theirbusiness.In fact, survey respondents indicated thattheir overall business focus is currently onincreased customer acquisitions, new business and

increasing or hold-ing onto market share. 31% seekto grow by increasing new business, and 19% arefocusing on improving market share. Additionalkey business drivers cited include improvingretention rates (16%) and enhanc-ing wallet share(14%).

Respondents indicated that the lack of a singlecustomer view is a major obstacle in helping theirorganization leverage cus-tomer information. Poordata quality, incomplete data, and budgetaryconstraints are also daunting obstacles tocarriers.For most insurers, it’s not so much a

technology issue as it is a budget issue, for smallercompanies, the budget constraint is alsocompounded with a lack of employee technicalskill sets. Budget constraints as a top obstacleclearly illustrate a gap in insurers understandingthe full potential of harvesting data with

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technologies and analytic tools to provide bettercustomer insight; past experience shows that if thebusiness sees value, it will find the budget.

A well-orchestrated customer interac-tionrequires coordination and synchronization

across multiple channels. What tools andtech-nologies does your organization currentlyuse to facilitate effective interactions andchannel coordination to support its customerstrategies.

Insurers are currently using a wide array of toolsand tech-nologies to facilitate effective interactionsand channel coor-dination, as well as in theirmarketing strategies. However, survey respondentsindicate that a majority of insurers of all types andsizes still haven’t invested in technologies that candeliver high return on investment, such aspredictive model-ing and Web analytics. Manycarriers are still using older and ineffectivemethods of facilitating effective interactions and

channel coordination and in their marketingstrategies. For instance, spreadsheets are the mostwidely used tool for these purposes among thoseworking in the business side of insurance firms.The key message is that today’s insurance businessis still very dependent on spreadsheets, CRM stillhas a place, email, mobile and Web-basedmarketing tools are emerg-ing, and businessintelligence tools are gaining traction.

Only about 12% of insurers feel theirorganization’s current customer marketing strategyis very effective, and a full 47% believe theirstrategy is only somewhat effective. The remaining41%of respondents reported that their customermarketing strategy is neither effective norineffective, somewhat ineffective, or veryineffec-tive.

Clearly, there’s room for improvement. Even inrecov-ering economy, insurers can improvemarketing strategy effectiveness with tools andtechnologies that can help them improve dataquality and get a comprehensive understand-ingof their customers – and how to meet their needsnow and in the future. To maximize the returnsfrom their marketing strate-gies, insurers need to

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optimize each customer contact with a carefullyplanned campaign that elicits information derivedfrom analytics.

Which technology capabilities for develop-ingdeeper insight into your customers andprospects is your organization most likely toinvest in within the next 12 to 24 months

21% respondents plan to invest in data warehouseand/or data master management technolo-gies,16% plan to spend on business intelligence toolsand just 14%said they planned to invest in CRM.Only 11% will invest in customer analytics tools,9% will spend on proprietary/in-house builtsolutions. Despite social media’s ability to providevaluable customer insights, build brandrecognition and increase customer loyalty and actas a vehicle to market new offerings, very few (7%)insurers will invest into that.

Conclusion:Although insurers are clearly mindful of theircustomer intelligence strategy, they continue to behampered by a lack of a single customer view andpoor data quality. Many insurers are still highlyreliant on spreadsheets and haven’t exploredeffective technologies like predictive analyticstools and Web analytics.

Insurers must continue to explore the capabilitiesof the business intelligence tools that enable themto manage and predict customer insights, trendsand behaviors. Then, insurers will get beyond thetraditional static reports and spreadsheets, and havea clear lens into what the future can hold.

Given the ongoing economic challenges andincreasing competition, the time has never beenmore critical for insur-ers to deepen customerinsights and understand current and futurecustomer attitudes and behavior. Insurers lookingto grow in the current economy need to make smartdecisions. Technology can enable insurers to gainreliable customer information and predict futuretrends, leading to a competi-tive edge and steadygrowth.

Today’s technology is mature, robust and proven,It’s a matter of insurance compa-nies makingtechnology a priority, really understanding thepower of its capabilities, and leveraging it to thefullest.

Bibliography:

1 Economic Times, Various Issues

2 Insurance: AjitRanade& Rajiv Ahuja, IndiaDevelopment Report

3 Insure for life: Navjit Gill: Business World

4 Report on Indian Insurance Industry: Steppinginto next generation of growth, Confederationof Indian Industry&Ernst & Young PrivateLimited.

5 The Insurance Sector: ICFAI Press

Prof. (Dr.) Sandip K. Bhatt, Dr. Yashasvi R. Rajpara

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EVOLUTION OF HEALTH INSURANCE IN INDIA– AN OVERVIEW

Dr. Bandaru VeerababuPDF Scholar,Dept. of Economics,OU, Hyderabad, IndiaEmail:[email protected]

ABSTRACT

Health Insurance is more complex than other segments of insurance business because of serious conflictsarising out of adverse selection, moral hazard, unavailability of data and information gap problems.Health sector policy formulation, assessment and implementation are an extremely complex task,especially, in changing epidemiological, institutional, technological and political scenario. Properunderstanding of Indian Health situation and application of principles of insurance, keeping in view thesocial realities and national objectives, are important. This paper attempts to discuss the followingareas: Review of health insurance scenario in India, Various Health Insurance products available inIndia, Comparison of health insurance offered by a Life and General Insurer

Health Insurance for senior citizens, Need for Long term care plans, Models of Long term care in othercountries Health Ratios, Implications of privatization on health insurance Role of IRDA

IntroductionThe concept of Health Insurance was proposed inthe year 1694 by Hugh the elder Chamberlen fromPeter Chamberlen family. In 19th Century“Accident Assurance” began to be available whichoperated much like modern disability insurance.This payment model continued until the start of20th century. During the middle to late 20th centurytraditional disability insurance evolved in tomodern health insurance programs. Today, mostcomprehensive health insurance programs coverthe cost of routine, preventive and emergencyhealth care procedures and also most prescriptiondrugs. But this is not always the case. Healthcarein India is in a state of enormous transition:increased income and health consciousness amongthe majority of the classes, price liberalization,reduction in bureaucracy, and the introduction ofprivate healthcare financing drive the change.

Over the last 50 years, India has achieved a lot interms of health insurance. Before independence,the health structure was in dismal condition i.e.high morbidity and high mortality and prevalenceof infectious diseases. Since independence,

emphasis has been put on primary health care andwe made considerable progress in improving thehealth status of the country. But still, India is waybehind many fast developing countries such asChina, Vietnam and Sri Lanka in health indicators.Health insurance, which remains highlyunderdeveloped and less significant segment ofthe product portfolios, is now emerging as a toolto manage financial needs of people to seek healthservices. The new economic policy andliberalization process followed by Government ofIndia since 1991 paved the way for privatizationof insurance sector in the country. The InsuranceRegulatory and Development Authority (IRDA)bill, passed in Indian parliament, is the importantbeginning of changes having significantimplications for the health sector.

HEALTH INSURANCE SCENARIO ININDIAHealth is a human right. It’s accessibility andaffordability has to be ensured. The escalating costof medical treatment is beyond the reach ofcommon man. While well to do segment of thepopulation both in Rural and Urban areas have

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accessibility and affordability towards medicalcare, the same cannot be said about the people whobelong to the poor segment of the society. Healthcare has always been a problem area for India, anation with a large population and largerpercentage of this population living in urban slumsand in rural area, below the poverty line. Thegovernment and people have started exploringvarious health financing options to manageproblem arising out of increasing cost of care andchanging epidemiological pattern of diseases. Thecontrol of government expenditure to managefiscal deficits in early 1990s has let to severeresource constraints in the health sector. Under thissituation, one of the ways for the government toreduce under funding and augment the resourcesin the health sector was to encourage thedevelopment of health insurance. In the light ofescalating health care costs, coupled with demandfor health care services, lack of easy access ofpeople from low income group to quality healthcare, health insurance is emerging as an alternativemechanism for financing health care.

Indian health financing scene raises number ofchallenges, which are:

• Increase in health care costs

• High financial burden on poor eroding theirincomes

• Need for long term and nursing care forsenior citizens because of increasingnuclear family system

• Increasing burden of new diseases andhealth risks

• Due to underfunding of government healthcare, preventive and primary care andpublic health functions have beenneglected

In the above scenario, exploring health financingoptions became critical. Naturally, health insurancehas emerged as one of the financing options toovercome some of the problems of our system. Insimple terms, health insurance can be defined as acontract where an individual or group purchasesin advance health coverage by paying a fee called“premium”. Health insurance refers to a wide

variety of policies. These range from policies thatcover the cost of doctors and hospitals to thosethat meet a specific need, such as paying for longterm care. Even disability insurance, whichreplaces lost income if you cannot work becauseof illness or accident, is considered healthinsurance, even though it is not specifically formedical expenses.

Health insurance is very well established in manycountries, but in India it still remains an untappedmarket. Less than 15% of India’s 1.1 billion peopleare covered through health insurance. And mostof it covers only government employees. At anygiven point of time, 40 to 50 million people are onmedication for major sickness and share of publicfinancing in total health care is just about 1% ofGDP. Over 80% of health financing is privatefinancing, much of which is out of pocketpayments and not by any pre-payment schemes.Given the health financing and demand scenario,health insurance has a wider scope in present daysituation in India. However, it requires careful andsignificant efforts to tap Indian health insurancemarket with proper understanding and training.

VARIOUS HEALTH INSURANCEPRODUCTS AVAILABLE IN INDIAThe existing health insurance schemes availablein India can be broadly categorized as:

1. Voluntary health insurance schemes orprivate-for-profit schemes

2. Mandatory health insurance schemes orgovernment run schemes (namely ESIS,CGHS)

3. Insurance offered by NGOs/Communitybased health insurance

4. Employer based schemes

1. Voluntary health insurance schemes orprivate-for-profit schemes:

In private insurance, buyers are willing to paypremium to an insurance company that poolssimilar risks and insures them for health relatedexpenses. The main distinction is that thepremiums are set at a level, which are based onassessment of risk status of the consumer (or of

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the group of employees) and the level of benefitsprovided, rather than as a proportion of consumer’sincome. In the public sector, the General InsuranceCorporation (GIC) and its four subsidiarycompanies (National Insurance Corporation, NewIndia Assurance Company, Oriental InsuranceCompany and United Insurance Company) providevoluntary insurance schemes.

The most popular health insurance cover offeredby GIC is Mediclaim policy

• Mediclaim policy: - It was introduced in 1986.It reimburses the hospitalization expensesowing to illness or injury suffered by theinsured, whether the hospitalization isdomiciliary or otherwise. It does not coveroutpatient treatments. Government hasexempted the premium paid by individualsfrom their taxable income. Because of highpremiums it has remained limited to middleclass, urban tax payer segment of population.

• Some of the various other voluntary healthinsurance schemes available in the market are:-Asha deep plan II , Jeevan Asha plan II, JanArogya policy, Raja Rajeswari policy,Overseas Mediclaim policy, Cancer Insurancepolicy, Bhavishya Arogya policy, Dreadeddisease policy, Health Guard, Critical illnesspolicy, Group Health insurance policy, ShaktiShield etc. At present Health insurance isprovided mainly in the form of riders. Thereare very few pure health insurance policiesunder voluntary health insurance schemes.

2. Mandatory health insurance schemes orgovernment run schemes (namely ESIS,CGHS)

• Employer State Insurance Scheme (ESI):-Enacted in 1948, the employers’ stateinsurance (ESI) Act was the first majorlegislation on social security in India. Thescheme applies to power using factoriesemploying 10 persons or more and non-power& other specified establishments employing20 persons or more. It covers employees andthe dependents against loss of wages due tosickness, maternity, disability and death due

to employment injury. It also covers funeralexpenses and rehabilitation allowance.Medical care comprises outpatient care,hospitalization, medicines and specialist care.These services are provided through networkof ESIS facilities, public care centers, non-governmental organizations (NGOs) andempanelled private practitioners. The ESIS isfinanced by three way contributions fromemployers, employees and the stategovernment.

• Central Government Health InsuranceScheme (CGHS):- Established in 1954, theCGHS covers employees and retirees of thecentral government and certain autonomousand semi autonomous and semi-governmentorganizations. It also covers Members ofParliament, Governors, accredited journalistsand members of general public in somespecified areas. Benefits under the schemeinclude medical care, home visits/care, freemedicines and diagnostic services. Theseservices are provided through public facilitieswith some specialized treatment (withreimbursement ceilings) being permissible atprivate facilities. Most of the expenditure ismet by the central government as only 12% isthe share of contribution. The CGHS has beencriticized from the point of view of quality andaccessibility. Subscribers have complained ofhigh out of pocket expenses due to slowreimbursement and incomplete coverage forprivate health care (as only 80% of the cost isreimbursed if referral is made to privatefacility, when such facilities are not availablewith the CGHS).

• Universal Health Insurance Scheme(UHIS):- For providing financial riskprotection to the poor, the governmentannounced UHIS in 2003. Under this scheme,for a premium of Rs. 165 per year per person,Rs.248 for a family of five and Rs.330 for afamily of seven , health care for sum assuredof Rs. 30000/- was provided. This scheme hasbeen made eligible for below poverty linefamilies only. To make the scheme more

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saleable, the insurance companies provided fora floater clause that made any member offamily eligible as against mediclaim policywhich is for an individual member. In spite ofall these, the scheme was not successful.

3. Insurance offered by NGOs/Communitybased health insuranceCommunity based schemes are typicallytargeted at poorer population living incommunities. Such schemes are generally runby charitable trusts or non-governmentalorganizations (NGOs). In these schemes themembers prepay a set amount each year forspecified services. The premia are usually flatrate (not income related) and therefore notprogressive. The benefits offered are mainlyin terms of preventive care, though ambulatoryand inpatient care is also covered. Suchschemes tend to be financed through patientcollection, government grants and donations.Increasingly in India, CBHI schemes arenegotiating with for profit insurers for thepurchase of custom designed group insurancepolicies.

4. Employer based schemesEmployers in both public and private sectoroffers employer based insurance schemesthrough their own employer. These facilitiesare by way of lump sum payments,reimbursement of employees’ healthexpenditure for out patient care andhospitalization, fixed medical allowance orcovering them under the group healthinsurance schemes. The Railways, Defenseand Security forces, Plantation sector andMining sector run their own health servicesfor employees and their families.

GENERAL INSURANCE VS. LIFEINSURANCESeveral life insurance companies have of lateplunged into the health segment, which till recentlywas dominated by general insurance companies.Among others, ICICI Prudential has launchedHospital Care and Crisis Cover and Bajaj Allianz,the Care First plan. Life Insurance Corporation,too, plans to roll out products soon. But, are theseproducts any different from those offered by thegeneral insurance companies, popular asmediclaim policies?


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HEALTH INSURANCE FOR SENIORCITIZENSAgeing health policy questions are now frequentlyraised in India. India has not yet found a clear, fairand adequate system for financing the growingdemand for long-term care as the population ages.The migration of population for jobs and livelihoodfrom rural areas to urban areas and between citieshas led to the breaking down of the age oldtraditional “joint” or “extended” family system inIndia. This system provides a good supportingstructure for the care of older persons by keepingfamilies together, pooling financial resources andmaking family members available in case of need.This weakening in the traditional support systemsfor older people is expected to lead to a rapidincrease in the demand for formal care providedby institutions such as nursing and residentialhomes and also services provided in thecommunity. At present, there are no social schemesor federal or central government mechanisms forfunding of health care for the aging population.The reliance is currently on private sector,voluntary organizations and indigenous programsthat deliver 80% of health care (the remainder isin the form of Government hospitals and Municipalcorporations). The medical infrastructure to handlesubstantial number of older adults is lacking. Thereis no provision for organized long term care forchronically sick, except for the upper middle classand the rich who can afford to provide good care

at home with some professional help. Hence, thereis a need for innovative, cost effective healthinsurance products for senior citizens which catereffectively to their needs.

LONG TERM CAREThis paper focuses primarily on long-term care asthe subject of long-term care (LTC) is receivingincreasing attention both in the researchcommunity and by Government because of thebelief that an ageing population will greatly swellthe demand for long term care services and createhuge public expense. One of the issues which needto be determined is by how much demand willincrease; another is to address the ambiguity overwhether long-term care is a response to a medicalcondition, a social need or both. The corollary isto decide how the burden is to be shared betweenthe individual, the family and the state. Beforegoing on to discussing what different nations aredoing, it is essential we first appreciate the natureand significance of long-term health care. Long-term care is administered to people who havereached a stage in life in which they are dependenton others for social, personal and medical needs.It is usually associated with the very old, but, infact, could begin at any age depending on thereasons for their disability – perhaps a roadaccident, a mental or a congenital condition. Animportant social objective for long-term care is toensure that people are given the opportunity to

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choose where their care is delivered. Given thatolder people prefer to remain at home theavailability and affordability of help to support thisis crucial. Furthermore, there has been broad

agreement that the system is unfair since itpenalizes savers and fails to offer comprehensivecoverage despite the fact that public financing isuniversal through the tax system.


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IMPLICATIONS OF PRIVATIZATION ONHEALTH INSURANCEThe privatization of insurance sector andconstitution of IRDA envisage improving theperformance of state insurance sector in thecountry by increasing benefits from competitionin terms of lowered costs and increased level ofconsumer satisfaction. However, the implicationsof the entry of private insurance companies inhealth sector are not very clear. There are severalcontentious issues pertaining to development inthis sector and these need critical examination.Role of private insurance varies depending on theeconomic, social and institutional settings in acountry or a region.

Critics of private insurance argue that privatizationwill divert scarce resources away form the pool,escalate health costs, allow cream skimming andadverse selection. According to this view, privatehealth insurance largely neglects the social aspectof health protection. In the contrast, supporters ofprivate health insurance claim that privateinsurance can bridge financing gaps by offeringconsumers value for money and help them avoidwaiting lines, low quality care and under the tablepayments-problems often observed whenhouseholds can use public health facilities for freeor participate in mandatory social insuranceschemes. Both the arguments are correct in thesense, private health insurance can be valuable toolto compliment or supplement existing healthfinancing options only if they are carefullymanaged and adapted to local needs andpreferences.

India, with relatively developed economy and astrong middle class population, offers mostpromising environment for private healthinsurance development. Currently, private healthinsurance plays only a marginal role in health caresystems but it is gradually gaining importance.Private health insurance is certainly not the only

alternative or the ultimate solution to addressalarming health care challenges in India. However,it is an option that warrants- and already receives-growing consideration by policy makers in thecountry. Thus the question is not if this tool willbe used in the future but whether it will be appliedto the best of its potential to serve the needs of thecountry’s health care system.

The IRDA will have a significant role in regulatingthe health insurance sector and safe guarding theinterests of the policy holders by minimizing theunintended consequences.

Conclusion:Health insurance is like a knife. In the surgeon’shand it can save the patient, while in the hands ofthe quack, it can kill. Health insurance is going todevelop rapidly in future. The main challenge isto see that it benefits the poor and the weak interms of better coverage and health services atlower costs without negative aspects of costincrease and overuse of procedures and technologyin provision of health care.

References

1. IRDA journals

2. Health Policy Challenges for India: PrivateHealth Insurance and Lessons from theinternational Experience by Ajay Mahal

3. Health Insurance in India by Sujatha Rao

4. Different Countries, Different Needs: TheRole of Private Health Insurance inDeveloping Countries by Denis Drechsler,Johannes Jütting

5. Health Insurance in India by KasturbhaiLalbhai

6. Health Insurance For The Poor In India byRajeev Ahuja

7. Health Insurance - Wikipedia


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IMPACT OF DIGITALIZATION OF INSURANCE SECTOR(E-INSURANCE) – A STUDY

Dr.P.YadaiahMBA., Ph.D., PDF (UGC)Department of Business ManagementOsmania University, HyderabadTelangana State - India

ABSTRACT

The insurance sector recognizes this need for digitalization. As the presence of other sectors like retailand travel expands in the digital sphere, stakeholders in the insurance sector realize the benefits of tap-ping into digital technology. The research study has tried to study the impact of digitalization of Insur-ance sector (e-Insurance) and as per the study, it is observed that in the 3-5 years, 3 out of every 4insurance purchase decisions will be influenced by digital channels of sales and marketing

IntroductionThe usage of internet by insurers has significantlyaugmented over the past few years and is expectedto grow further. The Insurance industry is playinga vital role in in global economy. It has become akey influencer by employing millions of peopleand touches many more as policyholders. Globally,insurance sector is emerging new ways to converttheir business into digitalization. With recentdevelopments and changes in IT (informationtechnology) - web and mobile enabled applicationsmade it easier and convenient for insurers tooperate their business and transactions that wouldhave not been possible two years ago.

Insurers are reaping advantages from ITdevelopments in internal areas such as diverse asclaims, underwriting, policy administration,human resources and financial reporting. In nearfuture, internet may have impact on at least twomajor sections of the insurance industry i.e. on costefficiencies and broader distribution. Theseefficiencies will arise as insurers experiencea greater obtainability of data from internet andtransfer of business processes from traditional(manual) insurance to e-insurance systems.

Digitalization: Through digitalization, acompany’s digitized resources such as machinesequipped with digital sensors, online channels,agile design and development teams equipped withsmart phones and tablets and cloud-based softwareare transformed into new sources of revenue andoperational gains.

Objectives of the Study

1. To study the impact of digital insurance on thecustomers

2. To understand the significance of e-insurance

3. To analyze the demand for digital insuranceamong the customers

Review of literatureRanjit Shankar (2016) in his blog inwww.finextra.com had an opinion that, maincomponents of a successful digital strategy includeenhancing customer experience and focusedmanagement of customer relationship. Owing toincreasing market competitiveness in the insuranceindustry, a cost involved in acquiring customershare is rising. Therefore, it becomes imperativefor companies to retain customers. This can happenwith continuous improvement in delivering a bettercustomer experience that is digitally inclined.

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Pahuja and Chitkara (2016), analysed the datarelated to the study on perception towards E-insurance and awareness, collected throughstructured questionnaire returned by sampleselected through convenience sampling technique.Hypothesis was tested through one way ANOVA.Author concluded that age and gender do not haveany relationship with use of E-insurance.

Jagendra Kumar (2016), quoting industry researchand analyses of BCG, said that in the 2-3 years,three out of every four insurance purchasedecisions will be influenced by digital channelsof sales and marketing. That’s an astoundingnumber. It simply demonstrates the power ofdigital media and its growing role in the insurancesector in India.

Supriya G., Sangita P., Madhuri G. (March2014),”Impacts of ICT Application on theInsurance Sector (E-Insurance)”, they haveanalysed that to step in the world of e-insurance,as the first step, it is necessary to know the positivebenefits of ICT application on insurer and itscustomers and the probable barriers they may faceto have complete electronic interaction based onICTs. Also comparative study of benefits toconsumers from commerce (manual insurance)and e-commerce (e-insurance) will help to improvethe shortcomings.

Dr.S.Hariharaputhiran (March2012,) “Challengesand Opportunities of E-Commerce” revealed theopportunities and weakness of e-commerce. Hehas suggested that in order to increase consumeradoption of e-services, the sources of consumerconfusion, apprehension and risk need to beidentified, understood and alleviated. E-commerceprovides tremendous opportunities in differentareas but it requires careful application forconsumer protection issues. Lastly, the paper wasconcluded with, while many companies,organizations, and communities in India arebeginning to take advantage of the potential of e-commerce, critical challenges remain to beovercome before e-commerce would become anasset for common people.

E-insurance: E-insurance can be defined as theapplication of Internet and related informationtechnologies (IT) to the productionand distribution of insurance services. It can alsobe defined as the facility of an insurance coverwhereby an insurance policy is offered, solicited,negotiated and contracted online.

Insurance Regulatory and Development Authority(IRDA) guidelines for e-insurance policies: TheIRDA has specified that the main goal is to initiatethe insurance repository to help the policy holdersreview, modify, or change their plans in a accurateand fast manner. According to the guidelines, theproviders of e-insurance policies will requireavailing the services of authentic repositories andthe e-policies will also be regarded as legitimatecontracts.

Digitalization of Insurance Sector and itsimportanceThe growth of the insurance sector in India hasbeen phenomenal. It has undergone a massivechange over the last few years. It has reached toits all-time high because of internet associations.India is going digital in a massive way. RecentlyPrime Minister Narendra Modi launched the‘Digital India’ campaign. Insurance industry inIndia will not be an exception.

Research MethodologySample size:-A sample of 50 policy holders fromHyderabad city (who have availed their policyeither through manual or through online) is takenfor the study.

Data collection Methods: - Data was collectedfrom both primary and secondary sources.

Primary data is collected through questionnairemethod. The questionnaire was

Secondary data is collected through the followingsources:-

1. Use of Internet - Internet was extensively usedto seek data from the websites of variousInsurance Companies.

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2. Published/ Unpublished Data – Journals, booksregarding Insurance, e-insurance.

Data Analysis and Interpretation

Demographic Profile of Respondents: The tablebelow shows the demographic profile ofrespondents with respect to their Gender.

Opinion of the customer’s about online helpcomparison: The results in the table shows that76% of the respondents agreed that various IRDAwebsites helps in comparison of policies and 24%of the respondents opined that they never buypolicies online because of lack of trust anddependency on agents.

Opinion of customer’s on scope of Digitalinsurance:- From the table below, it is observedthat out of the total respondents 46% said that ithas a wide scope in future as there is increase inuse of technology like computers & mobilephones, 30% said that there is narrow scopebecause they don’t trust the authentication ofinformation provided online and 24% were unableto give any opinion.

Opinion of customer’s on completedigitalization of insurance sector- The results inthe table below reveals that 86% of the totalrespondents said that it will take around 5 years

for complete digitalization of insurance sector and4% said that it will take 6-7 years and 10% of therespondents were unable to give their opinion.

Findings

- It is observed from the study that customerswho are tech savy or having knowledge ofcomputers do comparison of variousinsurance policies online.

- It is also seen that very few websites whichare approved by IRDA for doingcomparison of policies before buying (likepolicyX.com) which facilitates and helpsto increase customer’s satisfaction leveland thereby the growth of e-insurance

- It has also seen that 76% of customersprefer comparison of plans online beforebuying any policy.

- More than 60% were strongly agree withthe Prime Minister Narendra Modi’sDigital India Campaign

- 86% of the respondent’s opined that it willtake at least 5 years for completedigitalization of insurance sector.

ConclusionDigitization is driving greater innovation, helpingimprove service levels as well as outcomes.Investigating the situation of business in the worldconclude that these industries, based on the natureof their activity has undergone significant changes,and at least in every 5 years have experienced newmethods of doing activities. The research studyhas tried to study the impact of digitalization ofInsurance sector (e-Insurance) and as per the study,it is observed that in the 3-5 years, 3 out of every4 insurance purchase decisions will be influencedby digital channels of sales and marketing. Withthe Government of India itself supporting

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digitization, the level of trust will go up and thereis no looking behind for industry like insurance.

References

1. Gupta, P.(2011), “Insurance and riskManagement”, Second edition, HimalayaPublishing House

2. Supriya G., Sangita P., Madhuri G. (March2014), “Impacts of ICT Application on theInsurance Sector (E-Insurance)” IBMRD’sJournal of Management and Research,Volume-3, Issue-1, pp. 314-320.

3. Dr.S.Hariharaputhiran(March 2012),“Challenges and Opportunities of e-

commerce” International Journal of marketing,financial services & management research,vol.1 no. 3, pp.98-108.

4. Kumar, Jagendra(2016) Time for Data drivenMarketing decisions to InsuranceIntermediaries, IRDAI Journal, Vol. 14, No2,pp. 45-50

5. Pahuja, Anurag and Chitkara, Saloni(2016),Perceptual Exploration of Factors and IssuesAffecting Adoption of E-Insurance, CaseStudies in Business and Management, Vol3,No.1, pp. 99-112

6. www.irda.gov.in

Dr.P.Yadaiah

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NEPALESE INSURANCE MARKET, ROLE OF REGULATORAND FINANCIAL SOUNDNESS

Sharda Pandey LohaniAI.I.IPhD ScholarAct. Joint Manager (Rastriya Beema Sansthan)

ABSTRACT

Insurance sector is an important part of the financial sector. Financial soundness is the life blood of anyorganization. The growth of any organization can be influenced by financial fragility and instability. Asfinancial intermediaries, insurers tap savings of the public in the form of premium for the covering ofrisk. In order to sustain the confidence of public, they have to maintain their financial credibility intact.In other words, a strong financial background enables insurance companies to enhance their business.The principal aim of insurance regulation is to make sure that insurance companies keep their promisesby properly using their financial indicator. This includes solvency and equity of insurer. The “InternationalMonetary Fund has suggested indicators to diagnose the health of the insurance sector i.e. CARAMEL(Capital adequacy, Assets quality, Reinsurance and Actuarial issues, Management soundness, Earningsor profitability, and liquidity framework) In this paper ratio of the secondary data collected from theannual report is the descriptive analysis of the life and non life insurers in Nepalese insurance market.Various ratios of non life insurers Balance Sheet, Revenue accounts and Profit and Loss Accounts fromthe year 2008/9 to 2013/14 are used. On the basis of seven years data, various ratios are used fromconsolidated data which are common for life and nonlife insurer.

Keywords: Financial Soundness, Regulator, Insurance Market, CARAMEL

INTRODUCTIONOne of the primary functions of insurancecompany regulation is to monitor the financialsoundness and stability of firms in that industry.(Trieschmann, 1974)Regulator needs to use keyfinancial indicators to evaluate the financialperformance of the insurers. (Ghimire, 2013)Insurance companies are institutions that mobilizerisk from individuals and companies throughinsurance contract making exposure to risk to thewhole economy lower. Financial soundness is akey to their success and stability of this part offinancial sector and therefore regulators havedeveloped different kinds of models to evaluatetheir work. (Samajla)Financial soundness can helpto enhance the overall economy because financialmarkets are crucial to fund production-relatedactivities. (Valev, 2003)

The principal aim of insurance regulation is tomake sure that insurance companies keep theirpromises. This entails two further objectives:solvency and equity. Solvency, in non-technicalterms, means that the insurer is in such financialcondition that it will be able to meet its obligations.Equity means that the insurer will treat itspolicyholders fairly, impartially, and reasonably.(Mayerson, 1967)

OBJECTIVE: The objective of this paper is toassess the financial efficiency of Nepalese insureron the basis of CARAMEL model. For theassessment of financial efficiency of overallNepalese insurance market, consolidated balancesheet and revenue accounts for seven years (2007/8 to 2013/14) have been taken. The aim of thispaper is to identify the overall efficiency ofNepalese insurance market by using CARAMELmodel. However, the consolidated data may not

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show the individual efficiency of insurer but thetrend of capital adequacy, assets quality ,reinsurance and actuarial issues managementsoundness, earning and profitability, and liquidityas a whole, can be analyzed for seven years. Sothe aim of this paper to study the financial ratiosof overall insurance sector of Nepal byCARAMEL Model.

METHODOLOGY: CARAMELS (Capitaladequacy, Assets quality, Reinsurance andActuarial issues, Management soundness,

Earnings or profitability and liquidity framework)model of ratio analysis is the base of this study. Inthis paper ratio of the secondary data collectedfrom the annual report and it is descriptive analysisof the life and non life insurers. Various ratios ofnon life and life insurers Balance Sheet, Revenueaccounts and Profit and Loss Accounts from theyear 2007/8 to 2013/14 are used. On the basis ofseven years data, six ratios (i.e common for bothlife and non life insurer) are calculated in aggregatebasis for both life insurer and nonlife insurer.

REVIEW OF LITERATUREInsurance market activity, both as financialintermediary and as provider of risk transfer andidentification, may promote economic growth byallowing different risks to be managed moreefficiently. This activity would encourage theaccumulation of new capital and mobilizedomestic savings into productive investments. Inthis context, the evidence mentioned above raisesquestions regarding the impact that the fastergrowth of insurance activity would have oneconomic growth. (Arena, 2008 )

Insurance has come to play a central role in thefunctioning of modern economies. Insuranceissues, traditionally a stodgy domain, have becomesubjects for intense public debate and concern

everywhere in the recent years. Together with othereconomic services, insurance is of primaryimportance both in regard to national economy andinternational trade. Yet its role in development ismore difficult to assess and harder to appreciatethan that of other services which involve moretangible products. Insurance is a contingentservice, whose purchase is not an end in itself, butrather complementary to or required in connectionwith the production of goods and other services.(Pant, 2000)

Every country in the world in which an insurancemarket exists, it is at least to some extent regulated.It will be subject to specific rules and proceduresover and above the standard framework of lawsconcerning contracts, bankruptcy, fraud andcorporate governance. (Kessner, 1999)

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Supervisors and regulators need to understand thepotential implications of the insurance sector forfinancial and systemic stability as well as the toolsavailable for surveillance of insurer. (UdaibirS.Das, 2003 )

The risk profiles of insurers and banks differ.Insurance companies generally are exposed togreater volatility in asset prices and face thepotential for rapid deterioration in their capitalbase. Insurance companies typically haveliabilities with longer maturities and assets withgreater liquidity than banks have, thus enablingthe insurance companies to play a larger role inlong-term capital markets. Life insurers often havesignificantly higher exposure to equities and realestate and lower exposure to direct lending thanto banks. In some countries, insurers offer productswith guaranteed returns, further exacerbating risksfor life insurers. ( World Bank/The InternationalMonetary Fund , 2005)

In the matter of solvency there are many thoughtsare found. The principal job of the state insurancecommissioner is to ensure that all insurers doingbusiness in his state are, and remain, solvent. Or,if a company is in danger of failure, he should seeto it that its business is reinsured and the companyis closed up while there are still sufficient assetsto cover all the company’s liabilities. (MayersonA. L., 1967). The word “solvency” is commonlydefined in two ways. First, a condition of “actualsolvency” is said to exist when a company’s assetsexceed its liabilities. Second, a condition of“technical solvency” is said to exist when acompany is able to meet its obligations as theyfall due. (Belth, 1967 )

NEED OF FINANCIAL SOUNDNESSINDICATORS (FSIs)It is widely accepted that, the measurement offinancial soundness is proper indicator of thehealth of overall body of any organization.Otherwise we might rarely listen about thenumbering of richest person, richest country etc.by using their financial indicators.

Capital Adequacy : Capital adequacy is a majorcomponent, is to ensure the financial soundness

of insurers and the need for it generated by costlyinformation and by agency problems(limitedliability diminishes incentive to maintain safety).The check against solvency risk, regulators requirethat insurers maintain a minimum amount ofcapital to meet their financial obligations. Capitaladequacy requirements, solvency regulationincludes additional restriction on investments,reinsurance, reserves, assets-liability matching etc.(Mathur, 2001) Capital is viewed as a cushion thatprotects the interests of the policyholders andpromotes the stability and financial efficiency ofthe non-life insurers. It also provides an indicationthat whether the insurers have sufficient capital tocover up the losses arising out of unexpectedclaims. (Chakraborty, Financial Efficiency of thePublic-sector General Insurance Firms in India,2016)

Assets Quality: The ratio assesses the share offinancial investments in the total assets. Thefinancial investments include deposits, providedloans, repurchase agreements, securities,components of insurance and reinsurancecontracts, non-current investments in statutorycapital of other entities, other investments. It showsthe relationship between equities and total assets.

Reinsurance and Actuarial Issues: It includesthe issue of risk retention that is shown by the ratioof net profit and gross profit. It reflects the overallunderwriting strategy of insurer because it showswhat proportion of risk is passed on the reinsurers.In insurance market this ratio indicates the riskbearing capacity of the country.

Management Soundness: Sound management iscrucial for financial stability of insurers. Howeverit is very difficult to find any direct quantitativemeasure of management soundness, we can findit by the ratio of operating expenses and grosspremium. It can also find by the ratio of grosspremium and number of employees likewise theratio of total assets and number of employees.

Earning and Profitability: The objective ofprofitability is to earn a satisfactory income forthe company so that the investors and shareholderscontinue to provide capital. A company’s

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profitability is also closely linked to its liquiditybecause earnings ultimately produce cash flow.

Liquidity: Liquidity means the ability to convertany assets to cash within a short time for pay outof short term liabilities. The inability to pay shortterm liabilities affects its credibility as well ascredit rating. It leads to commercial bankruptcy ifthere is continuous default which eventually leadsto sickness and dissolution. Mostly, short termcreditors and lenders are interested in knowing theliquidity position of their financial stake. Insurercreate liquidity, insurer invest policyholder fundsto make long term loans and other investments.Policyholders, however, have immediate access toloss payments and savings while borrowers neednot repay their loans immediately. Alternatively,if all individuals undertook equivalent directlending the proportion of their personal wealth heldin long term illiquid assets would be unacceptablyhigh. Insurers and other financial intermediariesthereby reduce the illiquidity inherent in directlending. (Klein, 2000) So the liquidity conditionis also considered to be the most importantcondition to fulfill the quick requirement of claimand short term liability.

NEPALESE INSURANCE MARKET ANDCARAMELBeema Samiti (Insurance Board) an autonomousbody, established to develop, systemize, regularizeand regulate the insurance market of Nepal underInsurance Act, 1992. At present, policy holders’protection has become main focal point. Accordingto Beema Samiti (Insurance Board) at present thereare 27 insurance companies and in which one isReinsurance Company. As per economic survey2015 the rate of premium contribution to GDP isonly 1.71 percent in Nepal as there is the need of

financial soundness enhancement of Nepaleseinsurer by economic protection to people in massagainst natural and social risks. Financialsoundness can be obtained by the strategicfinancial planning. Because strategic financialplanning financial risk management, investmentmanagement, cash management, security andsolvency, and financial accounting and reportingare the main issues in insurance sector as financialintermediary. (Pant, 2000) As mentioned in IAIS,ICP 2003 the Conditions for effective insurancesupervision which includes institutional and legalframework for financial sector supervision, a welldeveloped and effective financial marketinfrastructure and efficient financial markets. Thiscan enhance to financial soundness by properregulatory supervision. Likewise in NepalInsurance regulatory authority of Nepal should payproper attention to maintain the financial healthof industry at minimum acceptable level. Similarly,insurers also must be aware on their financialhealth and need to be more efficient and effectivetheir management. (Ghimire, 2013) Although theinsurance premium continued to grow in itssubsequent years due to the expansion anddevelopment of insurance business reaching totalearnings of Rs. 36,289.0 million in 2014/15. Theinvestible amount with life and non-life insurersstood at Rs. 43939.8 million for FY 2010/11, Rs.63145.5 million for FY 2011/12, Rs. 74560.04million for FY 2012/13 Rs. 91351.6 million forFY 2013/14, Rs. 112099.3 million for FY 2014/15. (Economic Survey ) A brief description offinancial soundness indicators are taken to analyzethe Nepalese insurance market. Those ratios whichare common to both insurers i.e. life and non lifeinsurer are used from seven years of consolidateddata of balance sheet revenue account and profitand loss account.


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Table 2 depicts from the view of overall insurancemarket the capital adequacy ratio of Nepaleseinsurer is very low. This means that thecombination of capital and total assets are notadequate; there is the lack of capital in insurancemarket. Likewise Assets quality ratio which showsthe relationship between equities and total assetsis also decreasing. Reinsurance and actuarial issues

shows the retention and underwriting capacity ofthe Nepalese insurer which is constant for andincreasing because the retention ratio has increasedin 2013/14. Controversially the managementsoundness is very low .While the earning andprofitability ratio is comparatively high, conditionof liquidity is not good enough. This can beobserved by the figure 1

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As in the respect of life insurer Table 3 depictsthat there is also the lack of capital adequacy.Assets quality ratio seems good enough. Highdegree of retention capacity in life insurer showsthe sound capability of underwriting. Earning and

profitability ratio is not good enough. Likewisethe condition of management soundness andliquidity is very low. This can be observed by thefigure 2


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As in the respect of non life insurer Table 3 depictsthat there is also the lack of capital adequacy.Assets quality ratio seems good enough. Very lowdegree of retention capacity in non life insurershows that there is the lack of underwriting

capability among the Nepalese non life insurer.Earning and profitability ratio is good enough.Likewise the condition of management soundnessand liquidity is very low. This can be observed bythe figure 3

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Conclusion: Low level capital adequacy ratio ofNepalese insurer shows that the lack of capital inNepalese insurance market. So the policy of capitalincrement (i.e 500 million for life and 250 millionfor non life insurer) for life and non life insurerseems urgent need for Nepalese insurance market.Likewise Assets quality ratio which shows therelationship between equities and total assets isalso decreasing. The lack of capital adequacy isthe one of main the reason among others.Reinsurance and actuarial issues show theretention and underwriting capacity of theNepalese insurer .The reason for that has to beanalyzed because the Report of Insurance Board(IB) shows that due the lack of capital adequacyand risk retention capacity in Nepalese insurancemarket there is limited access to reinsurancemarket. Controversially the managementsoundness is very low which means there is roomfor investigation on the underwriting andmanagerial capacity of insurer. The earning andprofitability ratio is comparatively high. Conditionof liquidity is not good enough. As in the respectof life insurer there is also the lack of capitaladequacy. Assets quality ratio seems good enough.High degree of retention capacity in life insurershows the sound capability of underwriting.Earning and profitability ratio is not good enough.Likewise the condition of management soundnessand liquidity is very low. As in the respect of nonlife insurer, there is also the lack of capitaladequacy. Assets quality ratio seems good enough.Very low degree of retention capacity in non lifeinsurer shows that there is the lack of underwritingcapability among the Nepalese non life insurer.Although there is the general thought about theNepalese insurer that, there is lack of access toreinsurer due to their low capital and risk retentioncapacity. Earning and profitability ratio is goodenough. Likewise the condition of managementsoundness and liquidity is very low. Finally as weconsidered that financial soundness is the lifeblood of any organization, the financial fragilityand instability can seriously harm growth of anyorganization. So, the role of Nepalese insurancemarket is to make sure that Nepalese insurer keep

their promises by proper usage of their financialindicator.

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World Bank/The International Monetary Fund .(2005). Financial Sector Assessment. World Bank/The International Monetary Fund. World Bank/The International Monetary Fund.

Arena, M. (2008 ). Does Insurance Market ActivityPromote Economic Growth? A cross country studyfor Industrialised and Developing Countries . Thejournal if Risk and Insurance . American Risk andInsurance Association .

Belth, J. M. (1967 ). Observations on Solvency inthe Context of Life Insurance Regulation. TheJournal of Risk and Insurance, Vol. 34, No. 4 pp.539-560. American Risk and InsuranceAssociation.

Chakraborty, J. (2016). Financial Efficiency of thePublic-sector General Insurance Firms in India.Pacific Business Review International. PacificBusiness Review International.

Economic Survey . (n.d.). Economic Survey 2014/15 . Ministry of Finance Nepal .

Existing Scenario of Nepalese Insurance Industry. (2012). Existing Scenario of Nepalese InsuranceIndustry . Beema Samiti. Beema Samiti.

Ghimire, R. (2013). Financial Efficiency of nonlifeInsurance Industries in Nepal . The LumbiniJournal of Business and Economics . The LumbiniJournal of Business and Economics .

Kessner, R. a. (1999). Regulation and Efficiencyin European Insurance Markets. Economic Policy.Wiley on behalf of the Centre for Economic PolicyResearch, Center forEconomic Studies, and theMaison des Sciences de l’Homme.

Kimball, S. L. (1962). The Goals of InsuranceLaw: Means versus Ends. The Journal ofInsurance,. American Risk and InsuranceAssociation.

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Competitive Market. The Geneva papers on Riskand Insurance : Issues and Practice . PalgraveMacmillan Journals .

Mathur, S. K. (2001). Insurance Regulation: SomeIssue . The Geneva Papers on Risk and Insurance.Issues and Practice,. Palgrave Macmillan Journals.Mayerson, A. L. (1967). How to Rewrite anInsurance Code. The Journal of Risk andInsurance, Vol. 34, No. 1 , pp. 95-119. AmericanRisk and Insurance Association.

Mayerson, A. L. (1967). How to Rewrite anInsurance Code. The Journal of Risk andInsurance, Vol. 34, No. 1, pp. 95-119. AmericanRisk and Insurance Association.

Pant, N. (2000). Development Agenda InsuranceRegulation . Economic and Political Weekly .Economic and Political Weekly .

Samajla, N. (n.d.). Measuring Financial soundnessof Insurance Companies by using CARAMELSmodels: Crotia . Nikolina Samajla . NikolinaSmajla, univ.spec.oec.

Trieschmann, G. E. (1974). The Efficiency ofAlternative Models for Solvency Surveillance inthe Insurance Industry. The Journal of Risk andInsurance, Vol. 41, No. 4 , pp. 563-577. AmericanRisk and Insurance Association.

Udaibir S.Das, N. D. (2003 ). Insurance and Issuesin Financial soundness . International MonetoryFund . International Monetory Fund .

Valev, F. R. (2003). Finance and the Sources ofGrowth at Various Stages of EconomicDevelopment. Andrew Young School of PolicyStudies Department of Economics Georgia StateUniversity. Georgia State University.

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A STUDY ON CAPITAL ADEQUACY AND ASSET QUALITYOF SELECT INDIAN PRIVATE SECTOR GENERAL

INSURANCE COMPANIES

J. JayapradhaSr. Asst. Professor,Badruka College of Commerce and Arts,Kachiguda, Hyderabad-500027,Mobile No: 91-9959182961E-mail Id: [email protected]

ABSTRACT

The Liberalization of insurance sector in India and also with the formation of the IRDAI, as the insuranceregulator in the year 2000, has brought major changes and challenges in the way the insurance businessis carried out in India. The main objective is to bring more competitiveness and boost innovation in theinsurance sector and give the benefits to the common man in the form of more insurance penetration.The detariffication of general insurance sector in the year 2007 has thrown stiff competition among theplayers in the market. To woo more and more customers, private sector general insurance companiesstarted playing smart with innovative products and offering products at cheaper rates compared to theircounter parts. At this backdrop, an attempt is being made to know the financial performance of privatesector general insurance companies after detariffication. This paper highlights the financial performanceevaluation on select financial soundness indicators (Capital Adequacy and Asset Quality) of privatesector general insurance companies in India from 2009-10 to 2015-16. Capital Adequacy is vital toknow whether insurance company is having enough capital backup to meet future contingencies andface market risks. It is the key indicator to know adequacy in capital with solvency as the focus. TheAsset Quality analysis reflects the quantum of existing and potential credit risk associated with the loanand investment portfolios, real estate assets owned and other assets, as well as off-balance sheettransactions.

Key Words: Asset Quality, Capital Adequacy, Capital Coverage, Detariffication, General Insurance,Net Premium, Liberalization, Solvency, Unquoted Equities.

1.1 INTRODUCTION:Detariffication has been the most awaited reformin the general insurance industry ever since theMalhotra Committee recommended gradualremoval of tariffs in the non-life insurance sector.The detariffing exercise has two phases. The firstphase started on January 1, 2007 when the IRDAallowed companies to charge their own premiumfor all classes of business that had been under atariff till then. The exception was Motor ThirdParty Liability Insurance for commercial vehicles.The second phase was started from 1st January,2009 as the General Insurance Companies have

given more freedom to design their own products.IRDA in its circular issued on November 6, 2008has given the general insurance companies thefreedom to offer certain covers outside the scopeof the descriptions in the erstwhile tariffs (GICRe News, 2008).

The reforms have changed the whole scenario ofIndian insurance industry. Its character haschanged altogether in the wake of transition froma controlled to a competition-driven market.Several new players have entered into theinsurance business. The foreign insurers haveentered through the joint venture route. Their entry

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into the field has generated a tough competitionin the market which resulted into better customerservice. The quality and price of insuranceproducts has greatly improved. The range ofproducts and services has increased so as to givea wider choice to the customers. Both the existingas well as new players have got ampleopportunities to penetrate into untapped areas,sectors and sub-sectors and unexploited segmentsof population as presently both insurance densityand penetration are at a low level. Thus, the reformprocess started in India has helped the insurancesector to grow in a quick and orderly manner forthe benefit of the common man.

The Financial Soundness Indicators (CARAMEL-Capital Adequacy, Asset Quality, Reinsuranceand Actuarial Issues, Management Soundness,Earnings and Profitability and LiquidityAnalysis) prescribed by the InternationalMonetary Fund (IMF) and World Bank in theHandbook on Financial Sector Assessment1.Among these indicators, only Capital adequacyand Asset Quality is treated as more important inknowing the financial performance and stabilityof the company. So, only two parameters areadopted for the present study.

1.2 REVIEW OF THE LITERATURE:Chakraborty, Joy (2016) in his research papertitled “Financial Efficiency of the Public SectorGeneral Insurance Firms in India” analyzed thefinancial efficiency of four public sector generalinsurance companies using CARAMEL financialsoundness indicators. These indicators were givenranking in three steps. Initial ranks, average ranksand final ranks were given to analyze the financialefficiency. The major findings were, the liquidityratios were encouraging for all the companies andUnited India Insurance was ahead of other threecompanies. The market share of the public sectorgeneral insurers is declining continuously in thepost-reform period.

Seema Sharma and Sujit sikidar (2014), in theirresearch article titled “Performance Measurementof Public Sector Insurance Units after De-Tariffication”, analyzed four public sector general

insurance companies in India by usingperformance indicators such as i). Number of NewPolicies issued ii). Premium Underwritten in Indiaiii). Operating Expenses iv). Investment Incomev). Net Incurred Claims vi). Underwriting Losses.The study concluded that all the four public sectorgeneral insurance companies have performed wellin the Detariffed regime based on aboveparameters.

Verma, Swathy (2012), in her Ph.D thesis titled“the comparative performance of public andprivate sector general insurance companies inIndia”, analyzed the performance of four publicand eight privates sector companies during postand pre reform period post reform period from1991-2000 and post reform period from 2001-2010. She also analyzed customer perceptions andsatisfaction level towards public and privategeneral insurance companies using SERQUALparameters. She concluded that there is an upwardtrend in gross direct premium income of the publicsector general insurance companies in post-reformperiod.

Modi Manisha. S (2011), in her Ph.D thesis titled“A comparative performance study of GeneralInsurance Public Sector Companies of India”,analyzed financial efficiency, productivity andperformance of all the four public sectorcompanies. Researcher used ratio analysis, trendanalysis, chi-square and f-test to test hypotheses.The study also covered factors influencingprofitability. The study concluded thatmanagement expenses should be kept under morecontrol and efficient investment managementshould be applied to earn more investment income.Training of the investment managers should begiven priority.

Tanveer Ahmad Darzi (2010), in his PhD thesistitled,” Financial Performance of InsuranceIndustry in Post Liberalization era in India”,studied financial performance and solvency of nonlife insurance companies using CARAMELparameters pre and post liberalization. Hecompared public and select private insurancecompanies financial performance from 2004-05 to

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2007-08. He concluded that private companies areperforming well based on CARAMEL parameterswhen compared to public sector companies in spiteof their late entry. Price deregulation of January2007, has affected both private and public insurersin terms of soaring profit margins and premiumdeficiency. Every segment is seen in terms ofprofitability. The market imperfections have beenreduced to a great extent.

N. Srinivasa Rao (2010), in his research papertitled “A study of Government Insurance Schemes”highlighted the new general insurance policies thatwere introduced by the government owned generalinsurance companies. This research paper alsofocused on the role of National AgriculturalInsurance Scheme (NAIS) in covering four seasonsfor the four selected annual year periods with thestatistical information. This paper also threw lighton the success of the Crop Insurance Schemes thatwere in place from the 1979 to 2005.

Somil Nagpal (2009), in his article titled “Workingin Tandem – Best Practices in Health Insurance”emphasized on the growth registered in Healthinsurance in more recent times and found thatseveral initiatives taken by the several stakeholdersare the reasons for the success in the Healthinsurance.

S.L. Mohan (2009), in his research paper titled“Adding Value to your Client – Best practices inNon-life Insurance” emphasized that today’scorporate world firmly believes that they owe theirexistence to the consumer; and that ‘Consumer isthe king’. The paper also highlighted on thehealthy competition between the general insurancecompanies and the pro-active activities of thegeneral insurance companies in achieving asignificant growth in the general insurancebusiness.

G.V. Rao (2009), in a research article titled “LongTerm Prospects for Health Insurance” emphasizedon the long term profitability of Health insurancebusiness. In his research article, he also pointedout the opportunities in the Health insurance sectorand the role of Third Party Administrators in theera of post liberalization.

1.3 OBJECTIVES:1. To assess the financial performance based

on capital adequacy of select private sectorgeneral insurance companies in India.

2. To assess the financial performance basedon asset quality of select private sectorgeneral insurance companies in India.

1.4 HYPOTHESIS OF THE STUDY:The following are the null hypothesis of the study:

1. Ho: There is no significant differencebetween private sector general insurancecompanies with regard to the ratio of netpremium to capital.

2. Ho: There is no significant differencebetween private sector general insurancecompanies with regard to the ratio ofcapital to total assets.

3. Ho: There is no significant differencebetween private sector general insurancecompanies with regard to the ratio of ratioof equities to total assets.

4. Ho: There is no significant differencebetween private sector general insurancecompanies with regard to the ratio of RealEstate + Unquoted Equities* + Debtors/Total Assets.

1.5 RESEARCH METHODOLOGY:The sample includes eight private sector generalinsurance companies which started their businessfrom the year 2002-03. The list of private generalinsurance companies is:

1. ICICI Lombard General InsuranceCompany Limited

2. Royal Sundaram Alliance InsuranceCompany Limited

3. Reliance General Insurance CompanyLimited

4. IFFCO Tokio General Insurance CompanyLimited

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5. TATA AIG General Insurance CompanyLimited

6. Bajaj Allianz General Insurance CompanyLimited

7. Cholamandalam General InsuranceCompany Limited

8. HDFC-ERGO General InsuranceCompany Limited

1.6 BASIS FOR SELECTION OF SAMPLE /JUSTIFICATION OF THE SAMPLEThe general insurance industry was opened up toprivate players from the year 2000. Until the year2003, very few private companies entered theindustry. The eight private players that are includedin the sample are the companies that figure on thetop in terms of average premium over the studyperiod (till 2014). All these companies are alsoearly entrants and have been operating since theyear 2002-03. 90% of the private sector’s marketshare will be covered by the sample.

1.7 SOURCES OF DATA:The secondary sources of data include the IRDAAnnual Reports, Annual reports of all the fourpublic sector general insurance companies (from2003-04 to 2014-15). Annual Reports of the selectPrivate General Insurance Companies (from 2003-04 to 2014-15), the IRDA Journals, Journal ofInsurance Institute of India (III), InsuranceChronicle (ICFAI), Journal of the NationalInsurance Academy (NIA), Journal of the SwissRe and Munich Re, published and unpublishedreports, theses and books on non-life insurancebusiness, specialized insurance journals such asAsia Insurance Post, Bima Quest, Journal ofInsurance and Risk Management, Working Paperson general insurance, WHO and NCEAR reports,articles published in other Journals, businessmagazines and internet sources.

1.8 CAPITAL ADEQUACY ANALYSIS:Capital adequacy analysis measures the financialsoundness of the insurance companies in terms ofboth assets and liabilities. It is the key indicator toknow adequacy in capital with solvency as thefocus. There are no internationally acceptedstandards as such for capital adequacy. Capital isseen as the cushion to protect the insured andpromote stability and efficiency of financialsystem, it also indicates whether the insurancecompany has enough capital to absorb lossesarising from claims. The analysis of capitaldepends on realistic valuation of both assets andliabilities.

The IRDAI has fixed Rs.100 crore as the minimumcapital base for each the general insurancecompany. It does not issue registration to thosecompanies with less than the limit of Rs.100 Crore(IRDAI Annual Report, 2007-08). The minimumsolvency margin is fixed at 1.5 (excess of assetsover liabilities) which is monitored on a quarterlybasis by the regulator. Capital adequacy analysisis done with the help of two ratios, i.e., ratio ofNet Premium to Capital which reflects the riskarising from underwriting business and the ratioof Capital to Total Assets which determines therisk of assets. Capital is defined as total equitycapital plus reserves plus long term debt minusmiscellaneous expenses.

The growth in the net premium should besupported by balanced capital, to bear the shocks.The risks in the form of huge claims can be handledwith balanced and optimal capital requirements.More capital infusion is required to overcome therisk of higher claims. The higher the ratio of netpremium to capital the better it is. However thereis no benchmark prescribed for the ratio of netpremium to capital by the IRDAI. To ensure safetyagainst insolvency, higher capital adequacy ratiois required. The higher ratio is treated as better.Table 1 presents the capital adequacy of privatesector general insurance companies.

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1.8.1 RATIO OF NET PREMIUM TOCAPITAL:Royal Sundaram occupied the first position interms of highest ratio of net premium to capital,i.e., 268.88 percent followed by IIFCO Tokio227.73 percent and Bajaj Allianz with the averageratios of 216.94 percent. Reliance General withan average ratio of 115.26 percentage occupiedrelatively last position among the selected sampleof eight private sector general insurancecompanies. The impact of detariffication in theyear 2007-08 and 2008-09 is positive for privatesector general insurance companies. The norm of

Rs.100 Crore minimum capital required to start ageneral insurance company is very low in thepresent scenario. All the private sector companies’capital adequacy ratio increased in the year 2015-16 except for Cholamandalam and HDFC ERGO.Private sector general insurance companies aremaintaining more capital than the minimum capitalrequirement, but this may be enough to face toughtimes. Table 1.1 presents the summary of one wayANOVA for the ratio of net premium to capital.

· Ho: There is no significant difference betweenprivate sector general insurance companies withregard to the ratio of net premium to capital.

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Table 1.1 Ratio of Net Premium to Capital of Private Sector General Insurance Companies

There is a statistically significant differencebetween the private sector general insurancecompanies with regard to the ratio of net premiumto capital, as the F=10.053 is found to be significantat 5 percent level of significance and the sig(p=.000) is less than 0.05. Therefore, the nullhypothesis is rejected.

1.8.2 RATIO OF CAPITAL TO TOTALASSETS:“The second measure of capital adequacy is theratio of capital to assets. Generally size of acompany is measured by its amount or value ofsales or by the value of assets of the company.Funds generated in any company need to beinvested in assets which assure revenue generationfor the company. In insurance companies apartfrom capital, funds mainly flow in as collection ofpremium. These funds are invested in varioussecurities both short term and long term and arealso held in the form of land and buildings andreal estate assets as a proportion to the capital fundsis considered as an important indicator of financial

soundness. A lower ratio however is consideredgood because, a greater assets base is always goodfor a company and indicates its strength.” (Dr. H.Shankar and T. Rani, 2014)

There is no standard fixed by the IRDAI for thispurpose. The ratio which determines the risk ofassets and capital is defined as total equity capitalplus reserves plus long term debt minusmiscellaneous expenses to capital.

The ICICI Lombard and Royal Sundaram areperforming better in terms of the ratio of capitalto total assets with the lowest average ratio of 19.34percent. Both the companies are having a requiredadequacy in terms of asset base during the studyperiod. Reliance has relatively lesser performanceamong private sector general insurers with themean ratio of 36.96 percent. The table 1.2 showssummary of one way ANOVA for the ratio ofcapital to total assets.

· Ho: There is no significant differencebetween private sector generalinsurance companies with regard to theratio of capital to total assets.

Table 1.2 Ratio of Capital to Total Assets of Private Sector General Insurance Companies

There is a statistically significant differencebetween the private sector general insurancecompanies with regard to the ratio of capital tototal assets, as the F=8.660 is found to besignificant at 5 percent level of significance and

the sig (p=.000) is less than 0.05. Therefore, thenull hypothesis is rejected.

The analysis of ratios of capital adequacy clearlyindicates that the private sector general insurancecompanies are maintaining good capital adequacy

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ratio and have infused more and capital during thestudy period. They could maintain requiredsolvency margin because of more capital infusion.It is further understood that underwriting lossesare met through more capital infusion.

IRDAI has mentioned a statutory requirement ofhaving a minimum initial capital of Rs. 100 crore.However, all the private sector general insurancecompanies are maintaining the capital base of overand above 100 crore. During the study period, theyhave infused more and more capital. The ratiosare showing healthy picture in terms of capitaladequacy and solvency position.

1.9 ASSET QUALITY ANALYSIS:Asset quality is a very important factor indetermining the financial health of an insurancecompany. The quality of real estate investment andcredit administration program affects the overallasset quality. As per IRDAI norms, Investments

in real estate and housing sector cannot exceed 10percent of the total asset base of the company. Theasset quality analysis reflects the quantum ofexisting and potential credit risk associated withthe loan and investment portfolios, real estateassets owned and other assets, as well as off-balance sheet transactions. The ratio of real estate+ Unquoted Equities + Debtors/ Total Assetshighlights the exposure of insurers to credit riskbecause these asset classes have the largestprobability of being impaired. Real estate andunquoted equities are illiquid assets. The ratio ofequities to total assets reveals the degree ofinsurer’s exposure to the stock market risk andfluctuations of the economy. The indicator willmention the quality of asset base in comparison toequities. In India insurance companies are notallowed to invest in stock markets and even thecompanies are not listed till the end of the studyperiod, so unquoted equities could not becomputed for the calculation of the second ratio.

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# Note: 1 - Ratio of Equities to Total Assets and 2- Ratio of Real Estate + Unquoted Equities* +Debtors/ Total Assets

*Information on Unquoted Equities was notavailable due to the fact that companies were notlisted up to the submission of the study; as a result,the term has been omitted in the calculation of theratio.

1.9.1 RATIO OF EQUITIES TO TOTALASSETS:It is observed from the above table that, BajajAllianz General Insurance Company is ranked first

with the lowest mean ratio of 1.972 percent duringthe study period. HDFC ERGO is ranked eighth(last) with 23.56 percent with regard to the ratioof equities to total assets. Table 2.1 presents thesummary of one way ANOVA with regard to theratio of equities to total assets.

· Ho: There is no significant differencebetween private sector generalinsurance companies with regard to theratio of ratio of equities to total assets.

There is a statistically significant differencebetween the private sector general insurancecompanies with regard to the ratio of equities tototal assets, as the F=9.545 is found to besignificant at 5 percent level of significance andthe sig (p=.000) is less than 0.05. Therefore, thenull hypothesis is rejected.

1.9.2 RATIO OF REAL ESTATE +UNQUOTED EQUITIES* + DEBTORS/TOTAL ASSETS:The quality of assets is affected by the quality ofthe real estate investment and the creditadministration program. The investments in realestate and housing sectors amount to 10 percentof the total investments. The asset quality indicatesthe present and future credit risk associated withthe loan and investment portfolios, real estateassets and other assets as well as off-balance sheettransactions. The two ratios used to check the assetquality are the ratio of Equities to Total Assets andthe ratio of Real Estate + Unquoted Equities*+Debtors/ Total Assets. Table 2 depicts the asset

quality of the private sector general insurancecompanies.

it is observed that Bajaj Allianz General InsuranceCompany are ranked first among the eight privategeneral insurers during the study period and ICICILombard is ranked eighth (last) during the periodin terms of the ratio of real estate+ unquotedequities+ debtors to total assets.

Unquoted equities could not be figured out due tonon listing of companies during the study period.The ratio has increased gradually which revealsthat there is a mandatory investment in the realestate by the private sector general insurancecompanies. The higher ratio is better for thecompanies. It is visible from the balance sheet ofthe companies that investments have grown manytimes when compared to the earlier years.Investments are subject to regulations as perguidelines of IRDAI i.e. in the central governmentsecurities (25%), state government (10%), loansto state government (35%), the investments maybe termed as risk free and at the time of unexpected

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claims occurrences, the companies may not facesolvency problems. Table 2.2 presents thesummary of one way ANOVA with reference tothe ratio of real estate + unquoted equities +debtors to total assets.

· Ho: There is no significant differencebetween private sector generalinsurance companies with regard to theratio of Real Estate + UnquotedEquities* + Debtors/ Total Assets.

There is a statistically significant differencebetween the private sector general insurancecompanies with regard to the ratio of real estate +unquoted equities + debtors to total assets, as theF=7.475 is found to be significant at 5 percentlevel of significance and the sig (p=.000) is lessthan 0.05. Therefore, the null hypothesis isrejected.

1.10 FINDINGS:

1. There is a significant difference in theprivate sector general insurance companieswith regard to the capital adequacy andasset quality ratios.

2. Royal Sundaram general insurancecompany is doing better in terms of theratio of net premium to capital.

3. ICICI Lombard and Royal Sundaram aredoing better in terms of ratio of capital tototal assets.

4. Bajaj Allianz is relatively ranked first andis doing better in terms of ratio of equitiesto total assets.

5. In terms of the ratio of real estate +unquoted equities + debtors to total assetstoo Bajaj Allianz is ranked first and isdoing better throughout the study period.

6. Private sector general insurance companiesare able to bring in more capital from timeto time making a strong capital base. Their

net premiums are also on increasing trendyear on year.

7. All the private sector companiesperformed well by increasing their capitalbase and as well as assets. The companiesstarted depending less on equity as theirassets base got strengthened over the years.They could comply with IRDAIregulations to invest in government andsemi government sectors, which arehelping them not to depend on equity.

8. Underwriting losses are offset by capitalin the case of many private sector generalinsurance companies (under study) whichis evident from fresh capital infusion fromtime to time. This is not a sustainablepractice in the long run.

9. The competition to woo customers isdriving the companies to reduce thepremium rates of the products worseningthe situation further. The underwritinglosses are increasing due to premiumdeficiency.

10. IRDAI should relax ownership norms byenhancing more flow of FDI (now 49 %)in to the insurance sector from time to timeto bring more and more capital and newtechnologies and methods.

11. Defining the IPO norms for insurancecompanies so that they get benefitted withthe decision of the government to permit

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insurance companies to enter capitalmarkets.

1.11 CONCLUSION:Private sector general insurance companies haveentered the market very late when compared topublic sector companies, still they are doing betterin terms of capital adequacy and asset quality. Allthe companies under the study are found to bemaintaining good investment policy and they arenot investing more in low quality investments likereal estate and unquoted equities as the investmentpolicy of the general insurance companies is moreregulated and individual decisions taken by thecompany is limited. As the private players infusedmore and more capital throughout the study periodthey are able to having good capital adequacy tomeet the solvency position from time to time.Private insurance companies are capturing themarket share of the insurance industry very quicklyand are playing aggressively to attract more andmore customers which is reflected in theirpremium collected.

1.12 BIBLIOGRAPHY:

1. Chakraborthy, J. (2016), “FinancialEfficiency of the Public Sector GeneralInsurance Firms in India”, Pacific BusinessReview International, Vol.1, Issue 1, June,pp.177-188.

2. Das, U.S., Davies, N. and Podpiera, R. (2003),“Insurance and Issues in FinancialSoundness”, IMF Working Paper, WP/03/138,Monetary and Exchange affairs Department,International monetary Fund, July, pp.1-43.

3. G.V. Rao, “Preparing Underwriters – in aDetariffed Scenario”, IRDA Journal, October,2006, pp.21-23.

4. Shankar, H. and Rani. T., (2014), “FinancialPerformance of General Insurance Business

in India – A Study of Select Indicators”, IndianJournal of Applied Research, Vol. 4, Issue 10,October, pp.281-285.

5. Modi, Manisha. S, (2011), “A comparativeperformance study of General InsurancePublic Sector Companies of India”, PhDthesis, Saurashtra University.

http://etheses.saurashtrauniversity.edu/id/eprint/95.

6. Mohan S.L., “Adding Value to Your Client -Best Practices in non-life insurance” IRDAJournal, Vol. No. VII, No.8, August, 2009, pp.10-14.

7. Seema Sharma and Sujit sikidar, PerformanceMeasurement Of Public Sector InsuranceUnits After De-Tariffication, Journal ofBusiness Management & Social SciencesResearch (JBM&SSR) ISSN No: 2319-5614,Volume 3, No.3, March 2014, pp 44-50.

8. Somil Nagpal, “Working in Tandem – Bestpractices in health Insurance”, IRDA Journal,Vol VII, No.8, August, 2009, pp. 26-29.

9. Srinivasa Rao. N, “A study of GovernmentInsurance Schemes – Progressive growth”,IRDA Journal, Volume VIII, No.4, April,2010.

10. Tanveer Ahmad Darzi, “FinancialPerformance of Insurance Industry in PostLiberalization era in India”, Ph.D thesissubmitted to Department of Commerce andBusiness Management Studies, University ofKashmir, Srinagar, 2010.

11. Verma Swathi (2012), “A Comparative Studyon Public and Private Sector GeneralInsurance Companies in India”, PhD thesis,Inflib.net, UGC.

12. IRDA Annual reports 2003-04 to 2014-15.

13. irda.gov.in

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PERFORMANCE EVALUATION OF GIRIJAN CO-OPERATIVE CORPORATION LTD. IN TELANGANA STATE

Dhanraj. SAsst. Professor,Department of Commerce,SUM Govt. Degree College,Kondanagula, Nagarkurnool Dist.Telangana State.E- mail: [email protected]

ABSTRACT

The Girijan Co-operative Corporation (GCC) is a public Sector undertaking of Govt. of Andhra Pradeshestablished in the year 1956 with a Single Mission which is the Socio-economic upliftment of Tribals inthe State of Andhra Pradesh. GCC was instituted with the sole purpose to protect Tribals from exploitativemiddlemen, petty traders and establish a mutually beneficial relationship between them and rest of theworld. After the bifurcation of united Andhra Pradesh State in 2014, the Corporation also divided andrenamed as the Telangana Girijan Cooperative Corporation. The Girijan Cooperative Corporation isfunctioning with the 3 divisional offices in Bhadrachalam, Utnoor and Eturunagaram in Telanganastate. Since establishment of the new state, the government of Telangana has been initiating the Tribledevelopment through 18 Girijan Primary Cooperative Marketing Societies in various agency areas ofTelangana State. The present study is an evolutionary study which focuses on the functional activitiesand performance of the Girijan Co-operative Corporation after the establishment of the separate state.

Keywords: Girijan Co-operative Corporation, functional activities, performance, Telangana State.

INTRODUCTIONThe Girijan Co-operative Corporation (GCC) is apublic Sector undertaking of Govt. of AndhraPradesh established in the year 1956 with a SingleMission which is the Socio-economic upliftmentof Tribals in the State of Andhra Pradesh. GCCwas instituted with the sole purpose to protectTribals from exploitative middlemen, petty tradersand establish a mutually beneficial relationshipbetween them and rest of the world. After thebifurcation of united Andhra Pradesh State in 2014,the Corporation also divided and renamed as theTelangana Girijan Cooperative Corporation. TheGirijan Cooperative Corporation is functioningwith the 3 divisional offices in Bhadrachalam,Utnoor and Eturunagaram in Telangana state.Since establishment of the new state, thegovernment of Telangana has been initiating theTrible development through 18 Girijan PrimaryCooperative Marketing Societies in various agencyareas of Telangana State.

Objectives of Girijan Cooperative Corporation

Through the bye-laws of the Girijan Corporationwere pronounced as many as twelve objectives thefollowing main objectives are which deliberatelychosen for the explicit purpose of reveling thetribes from the unfair practices adopted by thetraders from the plans and to improve theireconomic lot.

1. Procurement of Non-Timber ForestProduce (NTFP/MFP) collected by thetribals and Agricultural Produce (AP)grown by the tribal farmers duly payingthem remunerative prices.

2. Supply of Essential Commodities under thePublic Distribution System (PDS) andother Daily Requirements (DRs) atreasonable prices to the tribal consumersthrough a net work of Daily Requirement(DR) Sales Depots to ensure food security.

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3. To provide short-term credit to the tribalfarmers for their seasonal agriculturaloperation (SAO).

4. Supply of Rice, food provisions andcosmetics to TW Institution working underthe jurisdiction of ITDA.

5. To undertake activities such as processingand grading for the benefit of thecorporation and its affiliated societies andtheir members.

REVIEW OF THE LITERATUREDr.D.Satish Babu (2016): Found that there arewide fluctuations reported in the coverage andactivities of the Girijan Cooperative Corporation,particularly in purchase & sales of MFP, loansdisbursement and purchase and sales of DRs overthe period. Besides this the beneficiaries, non-beneficiaries survey and institutional survey resultsare envisage that several problems and deficienciesexist in organsational functional activity marketingand infrastructural aspects of reorganization.

Ravi Prakash (2016): Stated that the tribals willget a true and fair price by eliminating themiddlemen and petty traders. Introduction ofComputerization will make the system transparentand corruption-free and he mention that the GirijanCo-operative Corporation Ltd. is shortly planningto make available their products like Honey,Nannari Sharabth, Triphala churnam, JasmineSoaps etc., at shopping malls in main cities.

Manish Mishra and Mukta Shrivastava (2015):Concluded that the rates of minor forest produceare highly fluctuating and there were no regulatingagency and hence, rate in these markets are governby big traders. Traders are often accused ofexploiting gathers some cooperative societies,including those of the forest department and tribalwelfare department do sometimes assist the tribalfolk in getting proper price for NTFPs but moreorganized effort is suggested. There is however, aneed to recognize that traders carry out manyuseful marketing functions and that they are theones who have to be a most of the risk of difficultmarkets and costly transport. In general terms these

local haat bazaar or local markets are moreprofitable than markets of big cities particularlyin case of chaar gthli, Amla, Mahua flowers Imlifruits etc.

Vikas Kumar (2015): Found that the non timberforest produce were found to be collected andutilized for various purposes such as food,medicines and raw materials for makingimplements and also a source of income, thealternate source of income to the villagers toimprove their socio-economic conditions as wellas increasing the income level and employmentopportunities by effective collection and sellingof Minor Forest Produce.


1. To know the functional activities of theGirijan Co-operative Corporation Ltd. inTelangana State.

2. To Evaluate the Performance of the GirijanCo-operative Corporation in TelanganaState.

SCOPE OF THE STUDYThe present study is restricted to identify thefunctional activities and the operationalperformance of the Girijan Co-operation ofTelangana state.

RESEARCH METHODOLOGYThe present study is based on the secondary dataand this data has been collected form Girijan Co-operation annual reports, tribal welfare sub-planreport of Telangana, the ministry of tribal affairs -India and tribal cooperative marketingdevelopment federation of India (TRIFED). Theperiod of the study is during 2014-2016. Thecollected data is presented using simple statisticaltool such as bar charts.

I. Functional Activities of the GirijanCooperative CorporationThe Girijan Corporation has taken up severalactivities and they are classified into the followingfour broad-categories-buying, selling, agro-creditsupply and establishment of forest and agro-basedindustries.

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i) Buying: Perhaps, buying is the most importantamong the various functions of the corporation.The buying function springs out of thecorporation’s avowed objective to shield the tribalsfrom the exploitation of local merchants in thepurchase of forest and agricultural products.Augmenting tribals, income by supplying theirdomestic requirements at reasonable prices internnecessitates their acquisition in the whole salemarkets. Accordingly, the buying functionincludes:

· Procurement of minor forest produces fromthe tribals;

· Procurement of agricultural produce fromthe tribals and

· Purchase of domestic requirements fromthe wholesale markets.

ii) Selling: The corporation’s selling and buyingfunctions are inter-dependent whatever ispurchased by the corporation is intended to beresold either to the ultimate consumers or industrialusers or middlemen or to the tribals themselves incase of domestic requirements. Sale of minor forestproduce, sale of agricultural produce anddistribution of domestic requirements to tribals orother consumers.

iii) Providing Agro-Credit: Tribals are found tobe most vulnerable to be exploited by the moneylenders. Having realized this, the GirijanCorporation has started extending both short andmedium-term agricultural loans to the tribalmembers.

iv) Setting Up of Forest and Agro-BasedIndustries: Mere buying and selling of the forestand agricultural products in the form they areacquired may not bring in adequate returns to thecorporation. Further, processing of such raw –produce or their conversion into manufacturedgoods is intended to enhance the corporation’sreturns. It also creates employment opportunitiesto the tribals. These considerations prompted thecorporation to set up forest and agro – basedindustries.

II. Performance Evaluation of Girijan Co-operative Corporation

Table 1 shows the business turnover of the GirianCo-operative corporation turnover during 2013 to2016. As per the results, it is identified that thetotal turnover is Rs. 11580 laks in 2013-14 andthe same is decreased to Rs. 11122 laks during2014-2015. It is also observed that the totalturnover is increased to Rs. 12094 laks in 2015-16 financial year.

Chart 1 presents the business turnover of theGirihan Co-operative Corporation during 2014-2016. It is observed that the turnover is decreasedin 2014-15 where as it is increased in 2015-16. Itis concluded that during the two years, thecorporation performance is satisfactory due tosufficient rainfall and proper strategy of GCC inTelangana State.

Table 2 shows the business turnover of the GirianCo-operation turnover during 2014 to 2016. Asper the results, it is identified that the corporationhas been focusing on Sale of EC & other domesticrequirements. It is observed that Rs. 8600.56 laksearned by the corporation during 2014-15 whereasthe same is increased to Rs. 9022.56 laks in 2016.It is also observed that the credit recovery is verylow because of no credit disbursement during the

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period. It is found that the RMD sale is decreaseddue to existing of processing units in AndhraPradesh state instated of Telangana state.Regarding to MFP, registered 50% decrease in2015-2016 due to directly selling of MFP to private

Table 3 shows the quantity and the value of theminor project produces, agriculture produce andmedicinal herbs collected from the tribals invarious agency areas in Telangana State during

traders by the tribals. It is also identified that APis increased to Rs. 3046.71 over 1337.65 in 2014-15 because additional stalls provided by GCC inagency areas.

2014-2016. As per the table, it is observed thatGCC has been collecting Mohwa flower and seedquantity is higher than other products in Telangana.It is also observed that the GCC is not collectedthe Medicinal Herbs related products for the lasttwo years.

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SUMMARY OF THE STUDY

� The Girijan Corporation has taken upseveral activities and they are classifiedinto four broad-categories-buying, selling,agro-credit supply and establishment offorest and agro-based industries.

� The total turnover is Rs. 11580 laks in2013-14 and the same is decreased to Rs.11122 laks during 2014-2015. It is alsoobserved that the total turnover is increasedto Rs. 12094 laks in 2015-16 financial year.

� The corporation has been focusing on Saleof EC & other domestic requirements. Itis observed that Rs. 8600.56 laks earnedby the corporation during 2014-15 whereasthe same is increased to Rs. 9022.56 laksin 2016.

� It is identified that AP is increased to Rs.3046.71 over 1337.65 in 2014-15 becauseadditional stalls provided by GCC inagency areas.

� The GCC has been collecting Mohwaflower and seed quantity is higher thanother products in Telangana. It is alsoobserved that the GCC is not collected theMedicinal Herbs related products for thelast two years.

SUGGESTIONS AND CONCLUSIONAfter the above deep discussion, it is concludedthat the GCC has been focusing to develop thetribals by providing various marketing

opportunities. It is noticed that after the bifurcationof the state, majority of the processing units weregone to Andhra Pradesh state hence, there is a highneed to establish more processing units inTelangana state to attempt the objectives of thecorporation. It is also suggest that the stategovernment has to provide enough funds to theGCC for the establishment of processing units andto extend the services among the remote areas.

REFERENCE1) Dr.D.Satish Babu (2016) “The Role of

Girijan Corporation in the Developmentof Rural Markets”, International Journalof Multifaceted and Multilingual Studies,Vol.III, Issue-I, January, 2016, pp 1-9.

2) Ravi Prakash A.S.P.S (Vice Chairman‘)“GCC Products in Shopping Malls Soon”.The Hindu, Hyderabad, 26th May 2016,P05.

3) Manish Mishra and Mukta Shrivastava(2015) “Trade of Minor Forest Productsin the Rural Markets of Central India”,Biological Forum-An InternationalJournal, Vol.7 (2) 516-521, 2015, pp 516-521.

4) Vikas Kumar (2015) “Impact of Non-Timber Forest Produces (NTFPs) on Foodand Livelihood Security: An Economicstudy of Tribal Economy in Dang’s Districtof Gujarat, India”, International Journalof Agriculture, Environment andBiotechnology, citation: IJAFB; 8 (2) 387-404, June, 2015, pp 387-399.

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A STUDY ON THE GROWTH OF INDIANINSURANCE INDUSTRY

DR. L. SRINIVAS REDDYPrincipalAristotle PG [email protected]

ABSTRACT

With the insurance sector in full clatter today, it would not be wrong to say that in the present marketscenario, there is an insurance available for just about anything and everything. Insurance is no doubtan area of immense importance with regard to the financial and monetary sectors of every individual.The whole idea behind insurance is, it is a security tool which is designed to secure the financial statusof an individual and also of his/her dependents, in case he/she undergoes an unforeseen loss related tohealth, property or liability. Insurance sector in India has been growing continuously after its openingup for private players in 1999

Post liberalization, the insurance industry in India has recorded significant growth. The Indian insuranceindustry is expected to grow to US$ 280 billion by FY2020, owing to the solid economic growth andhigher personal disposable incomes in the country.

There are 24 life insurance and 28 non-life insurance companies in the Indian market who compete onprice and services to attract customers. The industry has been spurred by product innovation, vibrantdistribution channels, coupled with targeted publicity and promotional campaigns by the insurers.

Government has approved the ordinance to increase Foreign Direct Investment (FDI) limit in Insurancesector from 26 per cent to 49 per cent which would further help attract investments in the sector.

Keywords: IRDA , FDI ,Insurance Sector , Investments, Risk

IntroductionThe IRDA opened up the Indian insurance marketin August 2000 by inviting application forregistration proposals. Foreign companies wereallowed entry into Indian insurance sector withan upper ceiling on ownership of up to 26%participation. The IRDA has been granted thepowers to frame regulations under Section 114Aof the Insurance Act, 1938. From 2000 onwards,IRDA has framed various regulations for carryingon insurance business to protection of Indianpolicyholders’ interests including the registrationof Life & Non-Life (General) Insurancecompanies. Just recently, the FDI (Foreign DirectInvestment) in Indian Insurance Companies hasbeen increased up to 50%.

The subsidiaries of the General InsuranceCorporation (GIC) of India were re-structured asindependent companies and simultaneously GICwas converted into a national re-insurer with effectfrom December, 2000. The Indian Parliamentpassed a bill de-linking the four subsidiaries fromGICin2002.

The insurance sector is a colossal industry and isin an expansion mode growing at an astoundingrate of 15-20%. Along with banking services,insurance services constitute 7% to the country’sGDP (Gross Domestic Product). A well-developedand constant evolution of insurance sector is a boonfor economic development of a nation since itprovides long- term funds for infrastructuredevelopment of that particular nation and at the

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same time strengthens the risk-taking ability bythe citizens of the country.

The insurance industry of India consists of 53insurance companies of which 24 are in lifeinsurance business and 29 are non-life insurers.Among the life insurers, Life InsuranceCorporation (LIC) is the sole public sectorcompany. Apart from that, among the non-lifeinsurers there are six public sector insurers. Inaddition to these, there is sole national re-insurer,namely, General Insurance Corporation of India(GIC Re). Other stakeholders in Indian Insurancemarket include agents (individual and corporate),brokers, surveyors and third party administratorsservicing health insurance claims.

Out of 29 non-life insurance companies, fiveprivate sector insurers are registered to underwritepolicies exclusively in health, personal accidentand travel insurance segments. They are StarHealth and Allied Insurance Company Ltd, ApolloMunich Health Insurance Company Ltd, MaxBupa Health Insurance Company Ltd, ReligareHealth Insurance Company Ltd and Cigna TTKHealth Insurance Company Ltd. There are twomore specialised insurers belonging to publicsector, namely, Export Credit GuaranteeCorporation of India for Credit Insurance andAgriculture Insurance Company Ltd for cropinsurance.

The Insurance Regulatory and DevelopmentAuthority (IRDA) recently allowed life insurancecompanies that have completed 10 years ofoperations to raise capital through Initial PublicOfferings (IPOs). Insurance products are alsocovered under the Exempt Exempt Exempt (EEE)method of taxation, which translates to an effectivetax benefit of approximately 30 per cent on selectinvestments. In 2015, Government introducedPradhan Mantri Suraksha Bima Yojna (PMSBY)and Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJBY) to bring more people under the insurancecover.

Going forward, increasing life expectancy,favourable savings and greater employment in theprivate sector is expected to fuel demand for

pension plans. Likewise, strong growth in theautomotive industry over the next decade wouldbe a key driver for the motor insurance market.

During the first half of FY 2016-17 the LifeInsurance industry reported a 20 per cent growthin overall annualised premium equivalent with thehelp of both private players and Life InsuranceCorporation.


· To understand the insurance density, and relateit with India density.

· The study of premium analysis forunderstanding improvement of insurance inIndia.

Market SizeGovernment’s policy of insuring the uninsured hasgradually pushed insurance penetration in thecountry and proliferation of insurance schemes areexpected to catapult this key ratio beyond 4 percent mark by the end of this year, revealsthe ASSOCHAM latest paper.

The number of lives covered under HealthInsurance policies during 2015-16 was 36 crorewhich is approximately 30 per cent of India’s totalpopulation. The number has seen an increase everysubsequent year as 28.80 crore people had thepolicy in the previous fiscal.

During April 2015 to March 2016 period, the lifeinsurance industry recorded a new premiumincome of Rs 1.38 trillion (US$ 20.54 billion),indicating a growth rate of 22.5 per cent. Thegeneral insurance industry recorded a 12 per centgrowth in Gross Direct Premium underwritten inApril 2016 at Rs 105.25 billion (US$ 1.55 billion).The life insurance industry reported 9 per centincrease in overall annual premium equivalent inApril-November 2016. In the period, overallannual premium equivalent (APE)- a measure tonormalize policy premium into the equivalent ofregular annual premium- including individual andgroup business for private players was up 16 percent to Rs 1,25,563 crore (US$ 18.76 billion) andLife Insurance Corporation up 4 per cent to Rs1,50,456 crore (US$ 22.48).

Dr. L. Srinivas Reddy

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India’s life insurance sector is the biggest in theworld with about 360 million policies which areexpected to increase at a Compound AnnualGrowth Rate (CAGR) of 12-15 per cent over thenext five years. The insurance industry plans tohike penetration levels to five per cent by 2020.

The country’s insurance market is expected toquadruple in size over the next 10 years from itscurrent size of US$ 60 billion. During this period,the life insurance market is slated to cross US$160 billion.

The general insurance business in India is currentlyat Rs 78,000 crore (US$ 11.44 billion) premiumper annum industry and is growing at a healthyrate of 17 per cent.

The Indian insurance market is a huge businessopportunity waiting to be harnessed. Indiacurrently accounts for less than 1.5 per cent of theworld’s total insurance premiums and about 2 percent of the world’s life insurance premiums despitebeing the second most populous nation. Thecountry is the fifteenth largest insurance marketin the world in terms of premium volume, and hasthe potential to grow exponentially in the comingyears.

InvestmentsThe following are some of the major investmentsand developments in the Indian insurance sector.

· New York Life Insurance Company, thelargest life insurance company in the US,has invested INR 121 crore (US$ 18.15million) in Max Ventures and IndustriesLtd for a 22.52 per cent stake, which willbe used by Max for investing in new focusareas of education and real estate.

· New York Life Investments, the globalasset management division of New YorkLife, along with other investors like JacobBallas, will own a significant minorityownership in Centrum Capital by beingone of the leading global investors inbuying the available 30 per cent stakeworth US$ 50 million of Centrum Capital.

· Max Life Insurance Co Ltd and HDFC LifeInsurance Co Ltd have signed a mergeragreement, which is expected to createIndia’s largest private sector life insurancecompany once the transaction iscompleted.

· Aviva Plc, the UK-based Insurancecompany, has acquired an additional 23 percent stake in Aviva Life InsuranceCompany India from the joint venture (JV)partner Dabur Invest Corporation for Rs940 crore (US$ 141.3 million), therebyincreasing their stake to 49 per cent in thecompany.

· Insurance firm AIA Group Ltd has decidedto increase its stake in Tata AIA LifeInsurance Co Ltd, a joint venture ownedby Tata Sons Ltd and AIA Group from 26per cent to 49 per cent.

· Canada-based Sun Life Financial Inc plansto increase its stake from 26 per cent to 49per cent in Birla Sun Life Insurance CoLtd, a joint venture with Aditya Birla NuvoLtd, through buying of shares worth Rs1,664 crore (US$ 244.14 million).

· Nippon Life Insurance, Japan’s secondlargest life insurance company, has signeddefinitive agreements to invest Rs 2,265crore (US$ 332.32 million) in order toincrease its stake in Reliance LifeInsurance from 26 per cent to 49 per cent.

· Bennett Coleman and Co. Ltd (BCCL), themedia conglomerate with multiplepublications in several languages acrossIndia, is set to buy Religare EnterprisesLtd’s entire 44 per cent stake in lifeinsurance joint venture Aegon ReligareLife Insurance Co. Ltd. The foreign partnerAegon is set to increase its stake in the jointventure from 26 per cent to 49 per cent,following government’s reform measureallowing the increase in stake holding byforeign companies in the insurance sector.

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· GIC Re and 11 other non-life insurers havejointly formed the India Nuclear InsurancePool with a capacity of Rs 1,500 crore(US$ 220.08 million) and will provide therisk transfer mechanism to the operatorsand suppliers under the CLND Act.

· State Bank of India has announced thatBNP Paribas Cardiff is keen to increase itsstake in SBI Life Insurance from 26 percent to 36 per cent. Once the foreign jointventure partner increases its stake to 36 percent, SBI’s stake in SBI Life will getdiluted to 64 per cent.

Government InitiativesThe Union Budget of Current Year 2017-2018 hasmade the following provisions for the InsuranceSector:

· The Budget has made provisions forpaying huge subsidies in the premiums ofPradhan Mantri Fasal Bima Yojana(PMFBY) and the number of beneficiarieswill increase to 50 per cent in the next twoyears from the present level of 20 per cent.As part of PMFBY, Rs 9,000 crore (US$1.35 billion) has been allocated for cropinsurance in 2017-18.

· By providing tax relief to citizens earningup to Rs 5 lakh (US$ 7500), thegovernment will be able to increase thenumber of taxpayers. Life insurers will beable to sell them insurance products, tofurther reduce their tax burden in future.As many of these people were understatingtheir incomes, they were not able to getadequate insurance cover.

· Demand for insurance products may riseas people’s preference shifts from formalinvestment products post demonetisation.

· The Budget has attempted to hasten theimplementation of the DigitalIndia initiative. As people in rural areasbecome more tech savvy, they will usedigital channels of insurers to buy policies.

The Government of India has taken a number ofinitiatives to boost the insurance industry. Someof them are as follows:

· The Union Cabinet has approved the publiclisting of five Government-owned generalinsurance companies and reducing theGovernment’s stake to 75 per cent from100 per cent, which is expected to bringhigher levels of transparency andaccountability, and enable the companiesto raise resources from the capital marketto meet their fund requirements.

· The Insurance Regulatory andDevelopment Authority of India (IRDAI)plans to issue redesigned initial publicoffering (IPO) guidelines for insurancecompanies in India, which are to lookingto divest equity through the IPO route.

· IRDAI has allowed insurers to invest upto 10 per cent in additional tier 1 (AT1)bonds, that are issued by banks to augmenttheir tier 1 capital, in order to expand thepool of eligible investors for the banks.

· IRDAI has formed two committees toexplore and suggest ways to promote e-commerce in the sector in order to increaseinsurance penetration and bring financialinclusion.

· IRDAI has formulated a draft regulation,IRDAI (Obligations of Insures to Rural andSocial Sectors) Regulations, 2015, inpursuance of the amendments broughtabout under section 32 B of the InsuranceLaws (Amendment) Act, 2015. Theseregulations impose obligations on insurerstowards providing insurance cover to therural and economically weaker sections ofthe population.

· The Government of Assam has launchedthe Atal-Amrit Abhiyan health insurancescheme, which would offer comprehensivecoverage for six disease groups to below-poverty line (BPL) and above-poverty line(APL) families, with annual income belowRs 500,000 (US$ 7,500).


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· The Uttar Pradesh government haslaunched a first of its kind banking andinsurance services helpline for farmerswhere individuals can lodge theircomplaints on a toll free number.

· The select committee of the Rajya Sabhagave its approval to increase stake offoreign investors to 49 per cent equityinvestment in insurance companies.

· Government of India has launched aninsurance pool to the tune of Rs 1,500 crore(US$ 220.08 million) which is mandatoryunder the Civil Liability for NuclearDamage Act (CLND) in a bid to offsetfinancial burden of foreign nuclearsuppliers.

· Foreign Investment Promotion Board(FIPB) has cleared 15 Foreign DirectInvestment (FDI) proposals including largeinvestments in the insurance sector byNippon Life Insurance, AIA International,Sun Life and Aviva Life leading to acumulative investment of Rs 7,262 crore(US$ 1.09 billion).

· IRDAI has given initial approval to openbranches in India to Switzerland-basedSwiss Re, French-based Scor SE, and twoGermany-based reinsurers namely,Hannover Re and Munich Re.

ROLE OF INSURANCE IN INDIA’SFUTURE:

· Insurance would assist business to operatewith less volatility and risk of failure andprovide for greater financial and societalstability from the growth pangs of anestimated growth rate over 8% in GDP.

· Government has arranged for disastermanagement and for funds. NGO’s andpublic institution assists with fund raisingand relief assistance. Beside governmentprovides for social security programs.There is considerable impact upongovernment in these respects. Insurance

substantially steps in to provide theseservices. The effect would be to reduce thestrain on the tax payers and assist inefficient allocation of societal resources.

· Facilitates track, business and commerceby flexible adaptation to changing riskneeds particularly of the burgeoningservices sector.

· Like any other financial institutioninsurance companies generate saving fromthe insurance sector. Within the economyand make available the same in welldirected areas of the economy deservinginvestment, a sector with potential forbusiness as is the case with Indianinsurance provides incentive to develop itall the more faster.

· It enable risk to be managed moreefficiently through risk pricing and risktransfer and this is an area which providesunlimited opportunities in the Indiancontext for consulting, broking andeducation in the post privatization phasewith newer employment opportunities.

· The insurance sector on its own accord isinterested in loss of minimization. It’sexpertise in understanding losses assists itto share the experience across the economythus enabling better loss control andpreservation of national assets

CONCLUSIONIndia’s insurable population is anticipated to touch750 million in 2020, with life expectancy reaching74 years. Furthermore, life insurance is projectedto comprise 35 per cent of total savings by the endof this decade, as against 26 per cent in 2009-10.

The future looks promising for the life insuranceindustry with several changes in regulatoryframework which will lead to further change inthe way the industry conducts its business andengages with its customers.

Demographic factors such as increasing middleclass and young insurable population and growing

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awareness of the need for protection and retirementplanning will support the growth of Indianinsurance sector.

References:

1. Festus M. Epetimehin. (2011). AchievingCompetitive Advantage in Insurance Industry:The Impact of Marketing Innovation andCreativity. European Journal of SocialScience, 19(1), 126.

2. Lai, G.C., & Limpaphayom, P. (2003).Organizational Structure and Performance:Evidence from the Non-Life Insuranceindustry in Japan. The Journal of Risk andInsurance, 70(4), 735-757. http://dx.doi.org/10.1046/j.0022-4367.2003.00073.x

3. Rudolf, E. (2001). Profitability of the Non-Life Insurance Industry: Its Back to BasicsTime. SWISS RE, SIGMA, 5, 1-38.

4. Verma, S. (2000). Performance Appraisal ofthe General Insurance Corporation on IndiaM. Phil. Thesis Submitted to Department ofCommerce, Delhi School of Economics,University of Delhi, Delhi.

5. Annual reports of IRDA from 2001-02 to2015-16

6. www.irda.gov.in

7. www.nationalinsuranceindia.com

8. www.newindia.com

9. www.orientalinsurance.org.in

10. www.uiic.co.in

11. Media Reports,

12. Press Releases,

13. Press Information Bureau,

14. Union Budget 2017-18,


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AN OPPORTUNITY TO EXPAND ACCESS:EVOLUTION OF HEALTH INSURANCE IN INDIA

RAMESH. NPh.D Research ScholarDept. of CommerceOsmania University

ABSTRACT:

Private health insurance companies in India must embrace evolving technology and create an integratedecosystem to expand access to healthcare. For the last century, healthcare delivery and financing inIndia has been shrouded by life insurance challenges and importantly, shares key landmarks with generalinsurance.

Keywords: Insurance, Private Health insurance, Pre Independent

INTRODUCTIONSince India’s independence in 1947, thegovernmentsector has been the backbone of thehealth care ecosystem, including healthcaredelivery and insurance. The term “insurance” isprimarily associated with life insurance – the mostpopular form of insurance in India (around 570million insurable lives in 2011) There are tworeasons for this- first, with low life expectancy (37yearsin 1951) and a tight-knit family structure,people primarily sought financial security. Second,life insurance has been traditionally positioned asatax-planning tool.

Despite some progress, the current state of India’shealthcare outcome leaves much to be desired. Ithas glaring challenges around high out-of-pocketspending, inequality of services, and fragmentedsocial and regulatory standards. Since 2001,medical insurance has gained ground amid theproliferation of private health insurance (PHI)entities. However, it still remains a minorcontributor in the current healthcare ecosystem.

Amid its ongoing transformation, a government-driven universal healthcare delivery andfinancingmodel is likely. However, PHIs still havea key roleto play in shaping goals of access, costand quality.

With healthcare financing opening toprivateplayers, current challenges offer opportunities.Astrong synergy between private andpublic players,complementing each other is amajor objective. Afocused approach encompassingpublic and privatesectors and leveragingemerging technology willplay a disruptive role in the healthcaretransformation ahead.

Health insurance evolved slowly in tandem withgeneral insurancewith both sharing key landmarks.The growth of healthcare delivery too was limitedin the pre-liberalization (pre-1991) era. However,after economic liberalization in 1991, care deliveryequipment, methodology, and process sharing fromdeveloped nations became main stream. With theimprovement in healthcare delivery and increasein disposable income, life expectancy hadincreased to 65 years by 2011. The InsuranceRegulatory and Development Authority (IRDA)legislation in 2000 served as a key milestone inhealthcare insurance. It opened up the healthinsurance industry to private players. Healthinsurance membership quadru-pled between 2007and 2011 (300 million in 2011) and is expected tobe 700 million by 2018.

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IMPORTANT ACTS AND AMENDMENTS GENERAL INSURANCE AND LIFE INSURANCE

CURRENT STATUS OF HEALTHINSURANCECurrently, healthcare delivery and financing ismarked by around 72% out-of-pocket spending.India’s per capita spending on healthcare of $109is much lower than the global average of $863India trails in health outcomes behind its South

Asian neighbors like Sri Lanka and Bangladesh,which have compa-rable per capita income. Thereis a wide gap in healthcare delivery for the insuredand for the total population.

Health insurance is dominated by governmentschemes. The major public health insurer in Indiais the government-owned General Insurance

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Corporation (GIC) and its four subsidiaries withabout 60% market share. However, Private HealthInsurers (PHIs) expanded rapidly in tier-1 and tier-2 cities post 2005 with products cen-tered on ‘in-patient reimbursements’ and ‘cash-less payments’.

Health insurance in India, which covered around11% of the population by August 2005, is providedthrough voluntary (2%) and mandatory (9%)health insurance schemes. The market share ofPSU insurers in health insurance decreased from64% in 2006-07 to 57% in 2008-09. The averageannual premium growth in private sector was 47%compared with the PSU insurers’growth rate of27% for the period 2006-07 to 2008-09 whichindicates growing presence of pri-vate insurancein India.

Most health insurance products offered by privateentities are similar to the government-definedproduct, med claim, and are indemnity-based.Given its high premiums, most med claim andsimilar policy holders belong to the middle andupper class.

While the urban population has witnessed aproliferation in the means of healthcare financ-ingand delivery over the past two decades, the ruralpopulation lacks basic healthcare delivery andfinancing. Community health insur-ance schemessponsored by the government and non-governmental organizations (NGOs) are evolvingto cater to the needs of the rural population.However, healthcare delivery and finance stillleave much to be desired.

KEY CHALLENGES IN THEHEALTHCARE ECOSYSTEM· Affordability and accessibility : There is a

large gap between healthcare delivery andfinancing in urban areas and rural areas. Whilea majority of the population resides in ruralIndia (68.4 %), only 2% of qualified doctorsare available to them. The rural populationrelies heavily on government-funded medicalfacilities. This gap is exacerbated because theprivate and public systems do not complementeach other. Affordable care (government

hospitals or community-based care) suffersfrom quality issues and is unable to cater to thebasic healthcare needs of the population. Whilesome private care delivery centers andprofessionals are accessible to the needy, theyare not affordable for a majority of thepopulation.

· High variation in quality of services: Oftenan individual has to reach out to multiple lev-elsof care delivery providers (professionals,physicians, government hospitals, and privateproviders) to seek care for the same episode.This leads to compartmentalized care with costand quality concerns. Moreover, issues withmedical procedures account for a large shareof adverse drug events (around 19.1 % in NewDelhi, according to a recent study). Over-alldeaths in India due to adverse drug reac-tionsare estimated to be 400,000 annually.

· Medical health insurance penetration:Health insurance is a minor contributor in thehealth-care ecosystem. Insurance paymentstruc-tures are based on an almost retrospectivearrangement of indemnity-based payments.Indian insurance has been limited to criticalillness coverage for inpatient surgicalproce-dures and often one-time lump-sumpayouts.

· Associated social facilities: Inadequate socialdeterminants of health such as nutri-tion, foodsecurity, water and sanitation is a majorhindrance in the success of healthcare deliveryand financing.

· Absence of regulatory and standardizedoperating procedures: There is a need for astrong regulatory framework to organize andstandardize healthcare delivery and financ-ing.The dominant reimbursement method is fee forservice (FFS) which differs from pro-vider toprovider. Providers are the dominant entitiesand influence the pricing and contractarrangement.

· Lifestyle changes: There have been disrup-tivelifestyle changes in the country over the past

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two decades mainly due to the rapidly evolvingurban economy and the Indian middle class. Itis estimated that around 130 million people maysuffer from lifestyle diseases such as diabetesand obesity in the next few years, leaving a $160billion hole in the national econ-omy between2010 and 2016

EVOLVING FUTURE MODELA recent study by a High Level Expert Group(HLEG) commissioned by the governmentevaluated Indian healthcare and proposed agovernment-driven framework for a UniversalHealthcare (UHC) system. The goal of the UHCsystem is to ensure equitable access for all Indiancitizens to affordable, accountable, appropriatehealth services of assured quality and redefinepublic health services addressing the widerdeter-minants of health. The government will bethe pri-mary guarantor and enabler. Healthcareservices to all citizens covered under UHC areproposed to be made available through the publicsector and contracted-based private facilities(including NGOs and nonprofits).We envisage thefollowing two scenarioswhich differ primarily interms of participation of private entities.

· Scenario 1: Entities in the UHC system mustensure that at least 75% out-patient services and50% in-patient services are offered to citizensunder the National Health Package (NHP). Forthese services, they should be reimbursed atstandard rates as per levels of services offered,and their activities should be appropriatelyregulated and monitored to ensure that servicesguaranteed under the NHP are deliveredcashless with equity and quality. For theremainder of out-patient (up to 25%) and in-patient (up to 50%) coverage, service providerscan offer additional non-NHP services beyondthe NHP package.

· Scenario 2: Entities participating in UHC shallprovide only the cashless services related to theNHP and no other services that would requireprivate insurance coverage or out-of-pocketpayment.

While scenario 1 makes it easier for thegovern-ment to contract ‘inprivate’ serviceproviders, it may compromise quality of care. Thesecond option may not be desirable to privateentities. However, in both scenarios, citizens arefree to supplement NHP services with paidvoluntary medical insurance from insuranceentities.

While the HLEG proposed a government-drivenhealthcare transformation, there are numer-ouschallenges. The enormous requirements offinancing, infrastructure, design, processdefinition, quality, staffing, and implementationcan inhibit implementation in both scenarios. Insuch an event, a third scenario will evolve. Inscenario 3, PHIs are likely toproliferate and caterto the needs of the popu-lation. A relatively smaller(15-20%) uninsured population will still exist.

Regardless of which model eventually evolvesprivate entities both in delivery and financing havean opportunity to execute government con-tractscovering NHP and beyond. The guaranteedpayment assurance through NHP will be the keyvalue proposition on which new insurance modelsand care delivery will thrive. Cost standardizationacross services will result in a level playing fieldfor PHIs.

In the future models, the role of healthcare enti-tieswill undergo several changes. Increasingdis-posable income, a desire for better qualityhealth services and increase in life expectancy willdras-tically increase the demand for healthinsurance. In addition, transformative marketforces are re-shaping the future of healthcare andthese transformative forces can be leveraged torespond to and exploit market opportunities.

· New virtualized ways of working: Newbusi-ness models of delivering care areevolving via the virtualization of processes (the“any-where, anytime worker”) and businessmodels (Anything as a Service – AaaS) withconsumer-centric mobility paradigms aregaining ground.

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· Increasing globalization: It is no longer atac-tic but is core to business success.Perform-ing end-to-end business processes asif they were done in one location, laborarbitrage and global network-operatingsystems are help-ing organizations control costand improve competencies.

· Disruptive innovation: Medical diagnostics,artificial intelligence and big data are sparkingdisruptive innovations that are redefining careparadigms.

· Demographic shifts: Millennia’s grew up withthe internet and have increased expectations;technology adoption rates are increasingexponentially for all age groups

Technology will be a key enabler in thistrans-formation and will serve supportdifferentiation among various players. Disruptiveemerging technologies such as cloud computing,mobility solutions, telemedicine, and socialcomputing are poised to enter mainstreamoperations.

Healthcare delivery and financing is at aninflec-tion point with an expected CAGR of around23%. Private healthcare entities will play a keyrole in providing comprehensive coverage. We seefive key characteristics of the Indian healthcaredelivery and financing that impact PHIs.

· Participation of private players: Currently,PHIs accounts for about 5% of the coveredpopulation; this can increase to around 30%by 2020. The key is to devise products andservices to cover out-of-pocket expenses,primarily due to outpatient services andinad-equate coverage.

The recent changes in FDI (2012) norms open upthe health insurance market to global play-ers. Thehealth insurance market in most developedcountries is on the verge of satura-tion. However,the health insurance sector in India has plenty ofpotential. It is very likely that there will be aproliferation of cashless and outpatient-based plansfollowed by other innovations in areas such as

health and well-ness. An example would bestandardizing claims reimbursements for majorillnesses, grouped based on the type of the disease.PHIs can leverage best practices fromothermarkets including process and technology toget a jumpstart in a 1.3 billion market.

Integration of players and standardization ofcare delivery: The emerging healthcare modelswill see closer integration of players to penetratethe semi-urban and rural sec-tors. Health insuranceand pharma players are likely to drive the evolutionof an integrated healthcare model with increasedtransparency and accountability. Professional drugdelivery mechanisms will emerge with aconsequent decline in buying drugs over thecounter.

Ø Standardization and role of hospitals/ careproviders: Coordinated and regulated modelswill evolve with a focus on stan-dardizing caredelivery platforms and the reimbursementrates. We are likely to see an emergence ofstandard reimbursement rates in the industry.It is highly likely that remote health diagnosisand monitoring will become mainstream, withprivate hos-pitals already betting on it.

Ø Role of third-party administrators (TPAs):Recent IRDA draft regulations such asstip-ulations around check issuance effectivelymarginalize the role of TPA. Private insurersare likely to shift their administrative controlsinhouse and focus on consumer centricoperations.

Increasing use of technology in care delivery:Healthcare Information Technology spending isexpected to be around $609.5 million in 201313and touch ~$1.8 billion by 2020. Health-caredelivery and remote healthcare paradigms are setfor major technology transformation. Technologywill find new avenues in broker channels, wellness,and self-health manage-ment. Healthcare entitieswill deal with lifestyle diseases through aconsumer-centric care management approach.Healthcare transfor-mation is likely to parallel themobile penetra-tion in India (2000–2010),leapfrogging multiple technology evolution cycles

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with proliferation in the first round followed byconsolidation in the second.

Create awareness and differentiation: In asurvey conducted by NCAER for IRDA in 2012,most people link insurance with death. Of thosesurveyed, only 54% were aware of healthinsur-ance which implies that the differencebetween health and financial security is not wellunder-stood. Effective campaigns highlighting thedif-ferences between health and financial securityare necessary to highlight the need for healthinsurance among the population.

Private insurance players will redefine their corecompetencies with consumer-centric themes. Tocater to a diverse population, healthcare entitiesneed to estimate risk and subsequently positionproducts through an effective under-writingprocess to the exact needs of the populationsegments - urban rich, urban middle class, urbanpoor, rural rich, rural middle class and rural poor.Against a fast-changing business landscape,players need to continually evaluate and redefinecompeten-cies. Distinguishing core and non-corecompe-tencies will aid in appropriate partnershipwith other entities and form the basis ofdifferen-tiation. The success stories will havetargeted products with a standalone healthinsurance business or a separate line of businessfor health insurance.

GEARING UP FOR A MAJOR CHANGEThe Indian healthcare Industry is estimated to growto ~ $280 billion by 2020, up from $79 billion in2012. With over 70% ‘out-of-pocket’ expenseburden on the consumers, the market is ripe forhealth insurance entities including global players.The industry is likely to undergo major reforms.Whichever model evolves, it is clear that the entirehealthcare financing and delivery system is poisedfor a major change.

Healthcare transformation must focus on the threekey goals of access, cost, and quality. Entities willencounter multiple challenges in catering to theneeds of the 1.3 billion populations, stratified onculture, economy, and means. Private entities need

to complement public initiatives to develop acomprehensive healthcare delivery and financingsystem. Targeted product develop-ment, proximityto the consumer, and champion-ing efficiency willbe the critical success factors. A focused approachencompassing public and private sectors, andleveraging emerging technol-ogy will play adisruptive role in the healthcare transformationahead.

REFERENCES:

· http://pib.nic.in/newsite/erelease.aspx?relid=77883 – Press Information Bureau,Government of India

· http://link.springer.com/article/10.1186%2F1472-6963-7-43

· WHO world statistics 2016

· http://planningcommission.nic.in/aboutus/committee/strgrp12/str_health0203.pdf

· h t tp : / / sa i india .gov. in /engl i sh /home/Our_Products / Audit_report/Government_Wise / union_audit/recent_reports/union_performance / 2010_2011 / Commercial/Report_no_10/chap5.pdf

· HLEG report on Universal health care

· Data from National Health Accounts in India

· Statistical Analysis of Medication Errors inDelhi, India – Indo Global Journal ofPharmaceutical sciences

· 2015- Apollo hospitals Educational andResearch Foundation – http://www.patientsafety.co.in / Pdf /Prof_Chaudhury’s_ Presentation.pdf

· Report of the National Commission onMacroeconomics and Health of India (2015-16)

· Universal health coverage – Planningcommission

· http://business.rediff.com/report/2009/oct/07/lifestyle-diseases-may-cost-india-dollar-160-bn.htm

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PRADHAN MANTRI FASAL BIMA YOJANA - A STEPTOWARDS ERADICATION OF CROP INSURANCE

PROBLEMS IN INDIAM.VAMSHIDHARResearch Scholar,Dept. of CommerceOsmania University

ABSTRACT

Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to protect thefarmers from natural calamities and ensure their credit eligibility for the next season. For this purpose,the Government of India introduced many agricultural schemes throughout the country.Agriculture inIndia is varied, diversified and prone to a variety of risks. Most farmers are small and marginal ones. In

most areas, agriculture is rain fed, leading to a great degree of yield variability and risk. Crop insurance,aims at addressing yield risk, though necessary for a vast majority of farmers is subject to structural,design and financial problems. Consequently crop insurance schemes are facing many problems. Inresponse to such problems, schemes based on the area were introduced in the 1980. Large number ofsmall and marginal farmers and adaption of area based approach crop insurance schemes. Howeverissues of governance and inter-agency coordination have posed many challenges. This scheme is dedicatedto bring in more than 50 per. Cent of the farmers under its wing. Around 25 per. Cent of the claims willbe sent to the farmer’s direct account. Also, the scheme will remain as it is. This means that there will beno cap on coverage. Also there won’t be any cap on the reduction in the insured sum. This paper attemptsto identify the reasons behind the failure of previous crop insurance schemes and to identify the importanceof this scheme.

Keywords: Crop insurance, susceptible, Eradication and natural calamities

INTRODUCTIONAgriculture is the back bone of the Indian economyapproximately 60%, of the population in India isdepends upon the agriculture and agriculture alliedindustries. Agriculture in India is varied,diversified and prone to a variety of risks. In thissector most formers are small and marginal ones.It leads to greater degree of yield variability andrisk. Crop Insurance aims to yield risk throughnecessary for a vast majority of farmers in India.Presently farmers paying 15% premium under theexisting national agriculture crop insuranceschemes.

Presently Union government of India launched anew scheme called Pradhan Mantri Fasal BimaYojana for the agriculture insurance. Pradhan

Mantri Fasal Bima Yojana scheme offers 5 per.cent and 2 per. cent Premium only.

This schemeis targeted to cover minimum 50% ofthe crop area in India. Earlier schemes cover 23per.Cent only.Apart from lowering premiums, therewill be no crops on the sum insured by the farmers.This scheme promises to provide prompt and easysettlement of claims through the use of technologylike GPS, Smart phones, remote sensing anddrones to access actual crop damage. The claimamount will be directly transferred to the bankaccount of the farmers.

As per the national crime research bureau of India(NCRB), 5642 formers commit suicide in 2014across the India. in that Maharashtra were paced

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first with the number 2568, then Telanganaoccupied second place with the number 898followed by Madhya Pradesh with 826 number.In the main cause these suicides is indebtness ofthe formers, and natural calamities.

Based on these reasons Indian formers need helpfrom the Governments to secure theirlivesand tostrengthen the formers credit facilities. Providingbank loans and making new insurance schemes inIndia.

REVIEW OF LITERATURE:(Blende 2002): A properly designed andimplemented Crop insurance programme willprotect the numerous vulnerable small andmarginal farmers from hardship, brings in stabilityin the farm incomes and increase the farmproduction.

(Ray 1971): Access and availability of insurance,changes the attitude of the farmers and induceshim to take decisions which otherwise would nothave taken due to aversion to risk

(V.M Dandekar 2016): Thisstudy focuses on cropinsurance is too important for agriculturedevelopment particularly in area prone to droughtand frequent Crop failures, to be discharged in themanner.

OBJECTIVES;� To analyze the farmers awareness on crop

insurance schemes

� To examine performance of existing andearlier national agricultural insuranceschemes implemented in India

� To analyze the importance of PradhanMantri Fasal Bima Yojana- insurancescheme on agriculture.

RESEARCH METHODOLOGY: The study isbased upon and secondary data which has beencollected from annual reports of IRDA, IRDAJournal, Annual reports of Ministry of Agriculturegovernment of India and. Economic survey ofIndia year 2014, 2015 and 2016. The access todata and information is for an analysis purposeand it is obtained in documented form and the datais predominantly secondary in nature.

HISTORY OF CROP INSURANCESCHEMES IN INDIA:

A crop insurance scheme linking institutionalcredit (crop loan based on area approach) wassuggested by Prof. Dandekar in 1976& this schemecalled as CCI was implemented from Kharif 1985on all India level.

History of agriculture in Indiadates back to theRig-Veda to Today, India ranks second worldwidein farm output. Agriculture and allied sectors likeforestry and Fisheries accounted for 13.7 per. Centof the GDP (gross domestic product) in 2013,In2014 17.9 per. Cent and 2014-15 was 16.11 per.Cent where as in the 1950 to 1970’s it occupiedan average 40 to 50 per. Cent of total GDP andaround 50 per. Cent of the workforce. Theeconomic contribution of agriculture to India’sGDP is steadily declining with the country’s broad-based economic growth. Still, agriculture isdemographically the broadest economic sector andplays a significant role in the overall socio-economic fabric of India. India exported $39billion worth of agricultural products in 2013,making it the seventh largest agricultural exporterworldwide and the sixth largest net exporter. Mostof its agriculture exports serve developing and leastdeveloped nations

Analysis of existing agriculture insuranceschemes in India;1.Comprehensive Crop Insurance Scheme (CCIS):

The Comprehensive Insurance Scheme (CIS)covered 15 states and 2 union territories.Participation in the scheme was voluntary. Around5 million farmers and between to 8 - 9 millionhectares were annually covered by this scheme. Ifthe actual yield in any area covered by the schemefell short of the guaranteed yield, the farmers wereentitled to an indemnity on compensation to theextent of the shortfall in yield. The GeneralInsurance Corporation of India administered thescheme on behalf of the Ministry of Agriculture,Government of India.

A major drawback of the scheme could be seenfrom the fact that out of the entire all-India claimsof ¹ 16.23 billion (US$240 million) Gujarat alone

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received ¹ 7.92 billion (US$120 million) for onesingle groundnut crop. The scheme was scrappedin 1997.

2. An experimental crop insurance scheme

An experimental crop insurance scheme wasintroduced in 1997-98, covering non-loanee smalland marginal farmers growing specified crops inselected districts. The premium was subscribed.The premium collected was about Rs3 crore(US$450,000) and the claims amounted to Rs 40crore, (US$5.9 million). The Governmentdiscontinued the scheme during 1997-98themselves.

3.Farm Income Insurance Scheme:

The Central Government formulated the FarmIncome Insurance Scheme (FIIS) during 2003-04.The two critical components of a farmer’s incomeare yield and price. FIIS targeted these twocomponents through a single insurance policy sothat the insured farmer could get a guaranteedincome.

The scheme provided income protection to thefarmers by insuring production and market risks.The insured farmers were ensured minimumguaranteed income (that is, average yieldmultiplied by the minimum support price). If theactual income was less than the guaranteedincome, the insured would be compensated to theextent of the shortfall by the Agriculture InsuranceCompany of India .Initially; the scheme wouldcoveronly wheat and rice and would becompulsory for farmers availing crop loans. NAIS(explained in the section below) would bewithdrawn for the crops covered under FIIS, butwould continue to be applicable for other crops.The FIIS was withdrawn in 2004.The recentattempt by the Gujarat government to reintroducethe Farm Income Insurance Scheme (FIIS) canreform agricultural insurance and prevent farm-level distress.

4. National Agriculture Insurance Scheme (NAIS):

The Government of India experimented with acomprehensive crop insurance scheme whichfailed. The Government then introduced in 1999-

2000, a new scheme titled “National AgriculturalInsurance Scheme” (NAIS) or “Rashtriya KrishiBima Yojana” (RKBY). NAIS envisages coverageof all food crops (cereals and pulses), oilseeds,horticultural and commercial crops. It covers allfarmers, both loaneesand non-loanees, under thescheme.The Premiumrates vary from 1.5 percentto 3.5 percent of sum assured for food crops. Inthe case of horticultural and commercial crops,actuarial rates are charged. Small and marginalfarmers are entitled to a subsidy of 50 percent ofthe premium charged- the subsidy is shared equallybetween the Government of India and the States.The subsidy is to be phased out over a period of 5years.

NAIS operates on the basis of� Area approach- defined areas for each

notified crop for widespread calamities.

� On individual basis- for localizedcalamities such as hailstorms, landslides,cyclones and floods.

Under the scheme, each state is required to reachthe level Gram Panchayat as the unit of insurancein a maximum period of 3 years. AgricultureInsurance Corporation of India is implementingthe scheme.

Analysis of failure of these schemes:� Due to lack of awareness about the scheme.

� Premium rates are high; formers are unableto provide the funds for the premium alongwith the capital of the cultivation.

� And the crop yields are also very low dueto the natural calamities.

� The coverage of these schemes is unableto meet its targets.

� Claiming settlement take long time ascompared to life insurance schemes.

� Lofty goal of financial viability.

� Mandatory for loanee farmers.

� Adverse selection, 0.in the case of non-loanee farmers.

� Premium do not equal risk level.

� And main reason is the area approach

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Introduction of Pradhan Mantri Fasal BimaYojana Insurance Scheme:Pradhan Mantri Fasal Bima Yojana is a newcrop insurance scheme that was announced by theGovernment on 13th January 2016. It will be rolledout from June 2016.This scheme will let farmerspay a very low premium to insure their crops.Farmers will have to pay a premium of only 2 per.Cent of the sum insured for Kharif crops, 1.5 per.Cent for Rabi crops and5 per. Cent forhorticultureand cash crops. The difference between thepremium paid by the farmers and the premiumfixed by the insurance companies willbesubsidized and there will be no cap on themaximum subsidy paid by the Government. Thesubsidy will be borne equally by central and therespective state Government.Currently, farmerspay around as high as 15 per. Cent of the suminsured as premium under the existing NationalAgricultural Insurance scheme and the modifiedNational Agricultural Insurance scheme. The newscheme will replace all these existing cropinsurance schemes in India

Objectives Of this scheme:

� To provide insurance coverage andfinancial support to the farmers in the eventof failure of any of the notified crop as aresult of natural calamities, pests&diseases.

� To stabilize the income of the farmers toensure their continues in farming

� To encourage farmers to adopt innovativeand modern agriculture practices.

� To ensure flow if credit to the agriculturesector

Farmer friendly guidelines of schemeCROPS AND NOTIFIED AREA:

CROPS: The scheme can cover all the crops forwhich past yield data is available and grown duringthe notified session, in a Notified Area and forwhich yield estimation at the Notified Area levelwill be available based on requisite number of CropCutting Experiments being a part of the Generalcrop estimation survey.

NOTIFIED AREA:Notified Area is a Unit ofInsurance decided by the state Government fornotifying a crop during a session. The Unit size ofinsurance shall depends up on the area undercultivation within the unit. For major crops, theunit of Insurance shall ordinary be village/villagepanchayath level and for minor crops may be at ahigher level so that the requisite number of CCEscould be conducted during the notified cropseason. State may notify village/villagepanchayath as insurance unit in case of minor cropstoo if they so desire.

Farmers to be covered: All farmers growingnotified crops in a notified area all farmers growingnotified crops in a notified area during the seasonwho have insurable interest in the crop are eligible.

COMPULSORY COVERAGE: The enrollmentunder the scheme, subject to possession ofinsurance on the cultivation of the notified crop inthe notified area shall be compulsory for followingcategories of farmers:

Farmers in the notified area who possess a croploan account/KCC account (called as loaneeFarmers) to which credit is sanctioned/ renewedfor the notified crop during the crop season.

And such other farmers whom the Governmentmay decide to include from time to time.

VOLUNTARY COVERAGE: Voluntarycoverage may be obtained by all farmers notcovered in compulsory coverage farmers,including crop KCC/Crop Loan account holderswhose credit limit not renewed.

RISKS TO BE COVERED ANDEXCLUSIONS:

A. RISKS: Following risks leading to crop lossare to be covered under the scheme

� YEILD LOSSES ( Standing crops on,notified area basis ) : Comprehensive riskinsurance is provided to cover yield lossesdue to non-preventable risk, such as

� Natural Fire And Lighting

� Storm, Hailstorm, Cyclone, Typhoon,Tempest, Hurricane, Tornado etc.

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� Flood, Inundation And Landslide

� Drought, Dry Spells

� Pests/Diseases Etc.

PREVENTED SOWING (On Notified AreaBasis):In case where majority of the insuredfarmers of a notified area, having intent to sow/plant and incurred expenditure for the purpose areprevented from sowing/planting the insured cropdue to adverse weather conditions, shall be eligiblefor indemnity claims up to a maximum of 25 per.Cent of the sum-insured.

POST-HARVEST LOSSES (Individual farmbasis): Coverage is available up to a maximumperiod of 14 days from harvesting for those cropswhich are kept in cut & spread condition to dry inthe field after harvesting, against specific perilsof cyclones/cyclonic rains, Unseasonal rainsthroughout the country.

LOCALISED CALAMITIES (Individual FarmBasis): Loss or damage resulting from occurrenceof identified localized risks i.e. Hailstorm,landslide, and inundation affecting isolated farmsin the notified area.

B.EXCLUSIONS: Risks and losses arising outof following perils shall be excluded;

War& kindred perils, nuclear risks, riots, maliciousdamage, theft, act of enmity, grazed and/ ordestroyed by domestic and/or wild animals, in case

of post-harvest losses the harvested crop bundledand heaped at a place before threshing, otherpreventable risks.

SUM INSURED / LIMIT OF COVERAGE:In case of loanee farmers under compulsorycomponent, the sum insured would be equal toscale of finance for that crop as fixed by districtlevel technical committee which nay extend up tothe value of the threshold yield of the insured cropat the option of insured farmer. The value ofthreshold yield lower than the scale of finance,higher amount shall be the sum insured.Multiplying the national threshold yield with theminimum support price (MSP) of the current yeararrives at the value of sum insured, Where currentMSP is not available, MSP of previous year shallbe adopted. The crops for which, MSP is notdeclared, farm gate price established by themarketing department/ board shall be adopted.

Premium rates:The actual premium rate (APR)would be charged under PMFBY by DAC&FW/STATES will monitor the premium ratesconsidering the basis of loss cost i.e. claims as persome per. Cent of sum insured, observed in caseof the notified crops in notified unit area ofinsurance whatever may be the level of unit areaduringthe preceding 10 similar crop seasons kharif& Rabietc. The rate of premium charges payableby the farmer will be as per the following table

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The difference between premium rate and the rateof insurance charges payable by the farmers shallbe treated as rate of normal premium subsidy,which shall be shared equally by the Centre andstate.

Premium rate comparison:One might disagree that previously schemes havebeen such insurance schemes available for thefarmers namely NIAS& MNAIS but given belowis a tabular study which has differentiated theprevious schemes on comparison with the currentPMFBY

Source: Ministry of agriculture Government ofIndia (2016 Report)

Sharing of risk:Risk will be shared by IA and the Government asfollows

The liability of the insurance companies in caseof catastrophic losses computed at the nationallevel for an agriculture crop season shall be up to350 per. Cent of total premium collected (farmershare plus Govt. subsidy) or 35 per. Cent of totalsum insured (SI), of all the insurance companies

combined, whichever is higher. The losses at thenational level in a crop season beyond this ceilingshall be met by equal contribution (i.e.50:50 basis)from the central govt. and concerned state govt.

Procedure for settlement of claims:

For coverage through banks - the claim amountalong with particulars will be released to theindividual nodal bank. The banks at the grass-rootlevel, in turn, shall credit the accounts of theindividual farmers and display the particulars ofbeneficiaries in their noticed board. The banksshall provide individual farmer wise details to IA

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and shall be incorporated in the centralized datarepository.

The claim amount will be released electronicallyto the individual insured bank account.PMFBY is a replacement scheme of NAIS/MNAIS, and hence exempted from service taxliability of all the services involved in theimplementation of the scheme.

Estimated Coverage of The Scheme:At present,only 23 per. Cent of cropped areas in India haveaccess to insurance. Pradhan Mantri Fasal BimaYojana Scheme envisages covering 50 per. Centof the area.

Observations:It can be observed that this new scheme is differentfrom earlier schemes on the account of followingand it will give some advantages as compared toexisting schemes.

Ø It is open to all farmers but NOTmandatory to anyone. It is optional forloanee as well as non-loanee farmers.

Ø It has so far lowest premium. The existingpremium rates vary between 2.5 per. Centand 3.5 per. Cent for Kharif crops and 1.5per. Cent for Rabi crops—but the coveragewas capped, meaning farmers could, atbest; recover a fraction of their losses. Thefarmers’ premium has been kept at amaximum of 2 per cent for food grains andup to 5 per cent for annual commercialhorticulture crops. For Rabi crops, it is 1.5per. Cent. The balance premium will bepaid by the government to provide fullinsured amount to the farmers. Since thereis no upper cap on government subsidy,even if the balance premium is 90 per. Centthe government will bear it.

Ø This scheme provides full coverage ofinsurance. While NAIS had full coverage,it was capped in the modified-NAISscheme.

Ø It also covers the localized risks such ashailstorm, landslide, inundation etc. Earlierschemes did not cover inundation.

Ø It provides post-harvest coverage. TheNAIS did not cover while the modifiedNAIS covered only coastal regions.

Critical appraisal:Thus, new crop insurance scheme has the potentialto deal with the vagaries of nature on Indianfarming. The premium to be paid by the farmersis kept low when compared with earlier cropinsurance schemes. However, the scheme willincrease the financial burden on the governmentand necessary budget allocations should be made.Some states like Punjab may face financialconstraints in encouraging famers to take up cropinsurance. The scheme does not cover risks facedby Northern farmers such as pest attacks and farmprice fluctuations. The scheme also does notaddress the demand of famers to cover the risksand losses inflicted by wild animals like elephantsand wild boars. The wild animals pose risks tofarmers in peripheral areas of national parks andwild life sanctuaries. Besides, losses from nuclearrisks, riots, malicious damage, theft, and act ofenmity, are all categorized under ‘exclusions’ inthe new scheme.

Challenges in Implementationof PradhanMantri Fasal Bima Yojana Insurance Scheme:It can be observed that the Success of anygovernment scheme depends on its sincereimplementation. The key problems such as poorland records, flawed land titles, corruption etc. arecommon challenges any crop insurance schemein India faces. Further, the success of the schemedepends on how sincerely it is implemented bythe insurance companies. Further, we need to waitand watch as to how the scheme is monitored andsupervised.

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Conclusion:

Before this scheme many schemes are there butthey were failing in claim settlement and coverageof the insured number of farmers. We hope thatfinally even this scheme will be going to coverthe more number of farmers in agricultureinsurance. As well as we hope it will give financialsupport to the farmers. Its success completelydepends up on the banks and district levelcommittees. Also they were how effetely using thetechnology for calculating the crop loss on time.Finally nearly 60 per. Cent of India’spopulationsdepend upon the agriculture andagriculture allied industries so we have to securethe agriculture sector. For that purposeimplementing various schemes to save and securethe Indian agriculture.

REFERENCE:1. Government of India, Report of the Working

Group on Risk Management in Agriculture forEleventh Five Year Plan (2007-12), PlanningCommission, New Delhi

2. India Development Gateway, Varsha Bima -2005, www.indg.in/agricultutre

3. Government of India, Crop Insurance,www.indiaagronet.com

4. India Development Gateway, Weather BasedCrop Insurance Scheme (WBCIS),www.indg.in/agriculture

5. Lille or, Helene Bie et. Al., Weather Insurancein Semi-Arid India, March 23, 2005,www.rff.dk

6. Venkatesh. G, Crop Insurance in India – AStudy, Mumbai

7. Government of India, State-wise Progress ofCCIS from Kharif ’85 to Kharif 1999

8. Lfft, Jennifer, Government vs. Weather: TheTrue Story of Crop Insurance in India,Research Internship Papers 2001, Centre forCivil Society, www.cci.in

9. Sinha, Sidharath, Agriculture Insurance inIndia: Scope for Participation of PrivateInsurers, Economic and Political Weekly, June19, 2004, P 2605-2612

10. IRDA annual reports 2015 and 2016.

11. Ministry of agriculture annual reports 2015and 2016

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CUSTOMER RELATIONSHIP MANAGEMENT (CRM)PRACTICES IN BANKING SECTOR – A STUDY OF SELECT

COMMERCIAL BANKS IN HYDERABAD CITY

Prof. H. Venkateshwarlu M. PANDYANAYAKDept of Commerce Senior Research FollowsOsmania University Dept of Commerce, Osmania UniversityHyderabad-500007 Hyderabad- 500007Email: [email protected] Email: [email protected]

ABSTRACT

The lack of understanding on Customer Relationship Management (CRM) is always a concern amongthe service providers especially banks. Banks have their own way of managing their relationships withthe customers. However, the perception of customers on CRM practices among banks should also betaken into consideration. The Indian banking sector is trying to survive this dynamic challenge of winningmore and more customers and retaining them by giving customized services. Now, more and more banksare increasingly getting customer-focused by implementation of Customer Relationship Management(CRM). This paper presents a research study on status of the adoption and use of CRM in banking sectoras a comparative study in Hyderabad city. For this a sample of 400 (100 each from select private andpublic sector banks) were considered in this study to understand the multi-dimensional setup of customerrelationships and its effects in competitive banking environment.

Keywords: Customer Relationship Management, Banking Sector, Banking Competition.

INTRODUCTIONBusinesses have always been customer centric andmore and more efforts were made in all times toachieve the customer satisfaction for betterbusiness outcomes. The Customer RelationshipManagement (CRM) has emerged as a keybusiness strategy in the current competitiveenvironment. This is the philosophy under whichthe businesses identify and target their most loyaland profitable customers. CRM involves new andadvanced marketing strategies, which not onlyretain the existing customers but also acquire newones. The strategy was discovered as a uniquetechnique capable of generating more business tothe companies. CRM in banks starts right fromthe understanding and properly defining thedifficult customer expectations to avoid theirdissatisfaction and eventually losing them. Hence,considering the customer expectations regardingproduct quality and the overall support and serviceis essential for establishing a long term banker-customer relationship.

Thus, CRM is a managerial philosophy that seeksto build long term relationships with customers.CRM can be defined as the development andmaintenance of mutually beneficial long-termrelationships with strategically significantcustomers (Bhaduri, 2005). It is the establishment,development, maintenance and optimisation oflong term mutually valuable relationships betweenconsumers and the banks. A perfect CRM strategyfocuses on understanding the needs andexpectations of the customers and is implementedby placing these needs at the core of the businessby incorporating them in the bank’s overallstrategy, staff culture, technology and businessprocesses.

CRM in Banking SectorOver the last few decades, technical evolution hashighly affected the banking industry. For more than200 years, banks were using branch basedoperations.

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Since the 1980s, things have been really changingwith the advent of multiple technologies andapplications.

Different organization’s got affected from thisrevolution; the banking industry is one of it. Inthis technology revolution, technology basedremote access delivery channels and paymentsystems surfaced. ATM displaced cashier tellers,telephone represented by call centers replaced thebank branch, internet replaced the mail, creditcards and electronic cash replaced traditional cashtransactions, and interactive television will replaceface-to-face transactions. In recent years, bankshave moved towards marketing orientation and theadoption of relationship banking principles. Thekey motivators for embracing marketing principleswere the competitive pressure that arose from thederegulation of the financial services marketparticularly in India. This essentially exposedclearing banks and the retail banking market toincreased competition and led to a blurring ofboundaries in many traditional product markets(Day, 2000).

The bank would need a complete view of itscustomers across the various systems that containtheir data. If the bank could track customerbehavior, executives can have a betterunderstanding, a predicative future behavior andcustomer preferences. The data and applicationscan help the bank to manage its customerrelationship to continue to grow and evolve.According to Stone et al. (2002) most sectors ofthe financial services industry are trying to useCRM techniques to achieve a variety of outcomes.In the area of strategy, they are trying to: (i) Createconsumer-centric culture and organization; (ii)Secure customer relationships; (iii) Maximizecustomer profitability; (iv) Integratecommunications and supplier – customerinteractions across channels; (v) Identify salesprospects and opportunities; (vi) Support cross andup-selling initiatives; (vii) Manage customer valueby developing propositions aimed at differentcustomer segments; and (viii) Support channelmanagement, pricing and migration.

CRM is a sound business strategy to identify thebank’s most profitable customers and prospects,and devotes time and attention to expandingaccount relationship with those customers throughindividualized marketing, reprising, discretionarydecision making, and customized service throughthe various sales channels that the bank uses. Anyfinancial institution seeking to adopt a customerrelationship model should consider six keybusiness requirements (Chary & Ramesh, 2012),they are: (i) Create a customer-focusedorganization and infrastructure; (ii) Gainingaccurate picture of customer categories; (iii)Assess the lifetime value of customers; (iv)Maximise the profitability of each customerrelationship; (v) Understand how to attract andkeep the best customers and (vi) Maximize rate ofreturn on marketing campaigns.

CRM is developing into a major element ofcorporate strategy for many organization’s(Rangarajan, 2010). In the present scenario ofintensifying competition, declining market share,deregulations, smarter and more demandingcustomers; a greater focus on CRM is the onlyway the banking industry can safeguard its marketshare and boost growth. Also, CRM is the mosttrusted way to withstand the competition betweenthe banks to attain a competitive advantage overone another or for sustaining the survival incompetition. In current scenario of Indian bankingsector, the falling interest rates and toughcompetition among banks has made Indian bankersto realize that the purpose of their business is tocreate and retain a customer and to achieve thatthe whole business process has to be customeroriented. In India, the financial services are ingetting through a structural change wherein thecompetition and customer demands are increasing.

REVIEW OF LITERATUREAtul Parvatiyar et al. (2001)explored that CRMimplementation challenges as well as CRM’spotential to become a distinct discipline ofmarketing. Our belief is that it certainly has thepotential, and we wish that it would happenbecause marketing will benefit enormously fromit. Lau et al., (2003) Explored that the challenge

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before the banks is not only to obtain updatedinformation for each customer, but also to use theinformation to determine the best time to offer themost relevant products. Sachdev et al., (2004)Thearticle attempted that in today’s competitivebanking industry, customers have to make a choiceamong various service providers by making atrade-off between relationships and economies,trust and products, or service and efficiency.

Lambert, (2010) Examined CRM as one of thestrategies to manage customer as it focuses onunderstanding customers as individuals instead ofas part of a group. TanakornLimsarun et al., (2010)explored that CRM system utilization andorganization’s CRM mindset are the mostimportant factors to the success of the CRMpractice. Ganesamurthy et al., (2011) theyconclude that CRM perceives as a technique ofbanking companies in order to explore, retain andalso increase the loyal customers in the competitivebusiness era. Jitesh et al. (2011)explored theassociation between deployment of CRM bestpractices and loyalty of profitable customers inIndian retail banking sector. Lin Shandong andKeXue (2011) Explored CRM practice in anemerging economy. While still in its infancy andwith many deficiencies, China mobile adapted itsCRM practice to China market successfully. It doesfocus on key customers, but never gives upunprofitable customers. Shibu, (2011) Concludedthat CRM is intensifying competition, decliningmarket share, deregulations, smarter and moredemanding customers, there is competitionbetween the banks to attain a competitiveadvantage over one another or for sustaining thesurvival in competition.

Malla Reddy, G and Suresh, A (2012) Exploredthat customer relationship management (CRM)practices provides interactive, personalized andrelevant communication with customers to developand maintain relationships. Sanjay Kanti Das(2012)reveals thatthe lack of understanding onCRM is always a concern among the serviceproviders especially banks. Banks have their ownway of managing their relationships with thecustomers. Anu Putney and Puney (2013)

Concluded that customer relationship management(CRM) Practices with each and every interactionwith customer can give opportunity to build alifelong relationship. RameezaEjaz, et al (2013)the study reveals that customer experience alsohas a direct impact on customer satisfaction.Although, CRM don’t have direct impact on Wordof Mouth (WOM), it is a very influentialcontributor in convincing the satisfied and loyalcustomers to guarantee.

Yatish Joshi et al. (2013) focussed on the basicconcepts, strategies used in managing customerrelationship by using the branch service, ATMs,electronic banking, call centers, etc. Phone bankingand other customer touch points.Balakrishnan&Krishnaveni(2014) The studyreveals that the proper CRM practices willincreases the customer satisfaction and buildsrelationship with present and prospectivecustomers by managing information and improvesperformance of delivering products and servicesat a great speed that facilitates customer creationand retention. Mayur Kumar. A (2014) stated thatCRM involves shopping malls enabled businessprocesses that identify, develop, integrate andfocus a business’ competencies on forging valuablelong-term relationships that deliver superior valueto its customers. Ruchi (2014) explores theadvantage of the model of CRM in getting, keeping& growing strategy. However, there is atremendous amount of confusion regarding itsdomain and meaning.

SIGNIFICANCE OF THE STUDYThe banking sector is entering a new world andexisting developments are changing the face ofbanking. The globalization of banking operationsalong with high competition, continuingderegulation and technological advancements hassignificantly altered the face and scope of banking.The process of economic liberalization andfinancial sector reforms has brought the issue ofcustomer focus to the forefront. Therefore thereexists a strong need for maintaining CRM in thebanks to understand the customers and to meettheir expectations.

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OBJECTIVES OF THE STUDYThe objectives of the study are:

1. To present the importance of CRM incommercial banks in India;

2. To analyze the perception of customers onCRM as a tool of commercial banks forretention of customers in select private andpublic sector banks in Hyderabad city.

HYPOTHESES

• CRM Plays an important role selectcommercial banks in increasing bankingbusiness.

• CRM implementation in private and publicsector banks do not find any difference.

METHODOLOGYThe present study is a comparative and analyticalone through the perceptions of the customers ofthe select commercial banks which include SBIAnd Andhra Bank (from Public Sector) and HDFCAnd ICICI private bank. Primary data werecollected through a well structured qualitativequestionnaire from the selected banks. A sample

of 100 customers of the select banks (100 each),from Hyderabad city of Telangana, were selectedfor the purpose of the study. Data so collected wereprocessed, tabulated and analyzed by using simplepercentages and Chi-square a non-parametric testhas been used to validate the results.

Scope and limitations of the study: This studyCRM in commercial banks is confined to selectprivate and public sector banks from Hyderabadcity only. It is pertaining to SBI And Andhra bankfrom Public Sector and HDFC and ICICI privatebank operating their business in Hyderabad city.These two banks were considered because mostneglected one by earlier studies on CRM. Thefindings of this study cannot be generalized to theentire sector and with a sample of 100 respondentsand most of them are male customers. Hence, theperceptions of female customers of these banksare another limitation to this study.

Profile of Bank CustomersThe distribution of the respondent on the basis ofGender group, marital status, Age group andEducational status.


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Table 3.1 presents the distribution of respondents(Bank Customers) by Gender group and a majorityof the respondents (customers) are males (67.8%)whereas 32.2 Percent of them are female’scustomers out of a total 400. Regarding maritalstatus of the customers’ it is observed that themajority of the respondents are married whichaccounted for 59.5 Percent. While 40.5 Percentare unmarried. The profile of the respondentsbrought out by the study indicates that highestrespondent’s i.e., 51.3 Percent belongs to the agegroup of 29-39 years followed by 36.5 Percent ofrespondents belongs to age group of 18-28 years.Further it is also found that 6.2 per cent are belongsto 40-50 years group and 5.5 per cent are belongsto 50-60 years. While the lowest number ofrespondents i.e. 5 per cent belongs to the age groupof 60 years and above.

It is also apparent from the table 3.1 that highestPercent of respondents (53.6%) are Post Graduatesas their educational background, followed by 31.5per cent of respondents are graduates, 7.3 per centof respondents belongs to other category whichincludes professionals like Chartered Accounts,Doctors, etc. Further, it is also found that there are4.8 per cent of respondents are with intermediateand equallent level, and only 2.8 per cent arebelongs to SSC as their educational status.

RESULTS AND DISSCUSSIONCRM has become the most adopted businessstrategy by the profit oriented organization’s in themarket today. Under this philosophy, companiesgo all out identifying and targeting their potentiallymost profitable customers. CRM deploys new andadvanced marketing strategies aimed at retainingthe existing customers and also at attracting thenew ones. It has been found as a special techniquewhich can bring sizeable gains in overall business

of companies. Through the literature survey anddata analysis, it is observed that under CRM, bankstry to study the customers’ perceptions and designstrategies so as to win their commitment andloyalty by giving them satisfaction. Earlier, thecustomers used to mainly select their banks closerto their homes or offices but with the introductionof new technologies in the business of banking,such as internet banking and ATM’s, nowcustomers freely choose banks based on theproducts and facilities available. Further,customers are not interested in knowing theownership of bank for their financial transactionbut look for their commitment to serve andcredibility. As banks continue to seek a unifiedunderstanding of customer relationships throughdifferent channels, the importance and penetrationof CRM is expected to grow like anything. Theopinions of the selected private and public sectorbank customers on various aspects of CRM areshown in Table-1 which presents the perceptionof customers from both private and public sectorbanks chosen for this study reveals the following:Majority of the respondents (50% and 71%) haveagreed that the CRM implementation found goodin both select banks an average inferenceaccounted for 63 percent in case of Public sectorand 80 percent in case of private sector banks. Itindicates the level of customer perception towardstheir services in terms of CRM. Whereas 73percent in case of public sector bank and 86 percentof them are belong to private sector bank have beensuccessful in implementing CRM in the study area.Hence, it can be concluded that private sectorbanks are far ahead of public sector banks ineffective implementation of CRM in order toimprove banking business and enhance customerloyalty and satisfaction.

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From the table 2 ; There are eleven factors aswell as hypotheses were tested and results revealsthat except 2 all other factors have been acceptedand concluded that CRM implementation issuccessful and helpful to banking business throughcustomer acceptance. However, CRM in publicsector banks is slow when compared to privatesector banks. It is also observed that 67% ofrespondents opined that the public sector banksthemselves not interested in CRM activities. CRMobjective is not only to increase banker-customer

relationship but also enhances customer bankingexperience and loyalty for sustainable bankingbusiness.

FINDINGSSome of the important findings of the aboveinformation provided by the selected bankcustomers are:

1. It is observed that as per the customers’perception of private sector, their banks takethe CRM as an alternative to marketing


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seriously, whereas less number of public sectorcustomers found their banks treating CRM asan alternative of marketing.

2. Customer retention is getting to be a bigchallenge to Banks as per the opinions ofcustomers of public sector banks whereas theprivate sector customers were seemed wellsupporting their banks in this regard. A similartrend was found in case of CRM enforcing thedesigning of products and services as percustomer needs.

3. Under CRM, the products and services,designed as per the customer needs, achievethe banks customers’ loyalty and a strong bank-customer relationship naturally establishes.The private sector bank customers feel thattheir banks have achieved quite well in thisregards, whereas the public sector customersrated their banks a little less for these practices.

4. Regarding customer awareness and framingcustomer database through CRM, thecustomers of public sector bank seemed lessconvinced with the CRM strategy, whereas asprivate sector bank customers were foundhighly satisfied. As, these activities aregenerally deployed to find and attract newcustomers, the respondents were of the sameviews for this CRM activity of their banks.

5. The more and more private sector bankcustomers were of the view that their banksseemed to be self motivated to implementCRM, whereas less number of the public sectorbank customers had this view about their banksin this regard. A similar was expressed by thecustomers with regard to the implementationof CRM on demand.

6. The greater number of private sector bankcustomers had the view that with the effectiveimplementation of CRM in their banks wouldincrease the productivity and performance ofthe banks and boost up the confidence of thecustomers. Also, most of them were of theopinion that an effective implementation ofCRM creates a friendly environment in thebank.

SUGGESTIONS

This study suggests that the banks still have a longway to go to develop a CRM strategy very well insynchronization with their overall strategy ofmarketing the product and services. The banksneed to reconsider their overall marketing strategydesign to place CRM at the core and for this thefollowing suggestions can be adopted:

1. The Indian Banking Sector has so manydifferent banks of almost the same kind. In sucha competitive environment, the Banks shouldadopt suitable marketing skills rather thandepending on the trading skills. Hence, newservices should be constantly introduced toensure the growth of the Banks and to becompetitive in the market and to keep up theenthusiasm of the employees and customersetc.

2. Implement a Customer Centric Process in alltypes including commercial Banks. There hasto be a good Employee RelationshipManagement within the banks before they goin for implementing CRM.

3. Increase customer’s online experience bydeveloping modern, user-friendly websites.The bank’s website need be so comprehensiveand detailed that all the customer queries mustbe answered there only. The portal might haveonline interactive customer support utility(online chat) so that the customer can clear allhis doubts sitting at home or office only.

4. The customer information collected fromdifferent channels must be integrated for bestknowledge about the customer expectationsand for an effective CRM. Proper trainingshould be given to the bank personnelregarding how to behave with the customersbefore they come and work in the field.

5. A modern, well-designed and user-friendlyonline transaction portal has to be in place fore-commerce and mobile banking. It should berealised that customer relationship cannot bebuilt overnight. CRM should be considered asContinuous practice and strategy.

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6. Complaints lodged by the customers should begiven proper value and utilise them as animportant issue. Decision making authorityshould be extended to field force and someresources should be given for fasterimplementation.

Based on the analysis, it is very clear that in almostall CRM aspects, the working performance ofPrivate Sector Banks is better than that of thePublic Sector Banks. The Public Sector banks needto seriously incorporate the above recommendedtips in their CRM strategy and their overallbusiness strategy to compete with their privatecounterparts and benefit the customers whileimproving their own earnings.

REFERENCES

1. Anu Putney and M MPuney. 2013. A Study onthe Role of CustomerRelationshipManagement (CRM) in the Indianbanking Sector, IJMBS Vol. 3 (2), Pp.88-92.

2. Atul Parvatiyar, &Jagdish N. Sheth (2001).Customer Relationship Management EmergingPractice, Process, and Discipline: Journal ofEconomic and Social Research 3(2) 2001,Preliminary Issue, Pp. 1-34.

3. Balakrishnan, H &Krishnaveni, R. 2014. AStudy on Customer RelationshipManagementPractices in Selected Private Sector Banks withReference to Coimbatore District. The SIJTransactions on Industrial, Financial &Business Management (IFBM), Vol. 2(1)Pp.15-20.

4. Bhaduri, S. 2005. CRM in banks–Servethycustomer, Business Line InternetEdition,Financial Daily from the Hindu groupof publications.

5. Chary T. SatyaNarayana& Ramesh, R. 2012.Customer Relationship Management inBanking Sector - A Comparative Study,KKIMRC IJRHRM, 1 (2), pp.20-29.

6. Day, G.S. 2000. Managing MarketRelationships, Journal of the AcademyofMarketing Science, 28(1): pp.24-30.

7. Ganesamurthy, K .,Amilan, S & M Jothi. 2011.The Customer’s Attitude on CRM Practices ofCommercial Banks in India: An EmpiricalStudy (With Special Reference to Sivagangai,Tamilnadu), Global Management Review,Vol.6 (1).

8. Jitesh P, Kallol D, Vijaykumar, S. 2011. CRMbest practices and customer loyalty. Euro. J.Soc. Sci., 11: Pp. 61-85.

9. Lambert, D., M. 2010. Customer relationshipmanagement as a business process, TheJournalof Business & Industrial Marketing,25(1), 4.

10. Lambert, D., M. 2010. Customer relationshipmanagement as a business process. The Journalof Business & Industrial Marketing, 25(1), 4.

11. Lau K, Wong S, Ma M and Liu C. 2003. Nextproduct to offer for Bank Marketers. Journalof Database Marketing, 10(4), Pp. 353-368.

12. Lin Shengdong and KeXue. 2011. CRMpractice in an emerging market the case ofChinaMobile: African Journal of BusinessManagement Vol. 5(16), Pp. 6957-6963.

13. Malla Reddy M.,andSuresh,A. 2012. SBICustomers Perceptions on CRM: A Study AsiaPacific Journal of Marketing & ManagementReview Vol.1 (3), Pp.133-143.

14. Mayur Kumar, A. 2014. Study of CustomerRelationship Management (CRM) Practices inorganized retail shopping Malls at Bengalurucity in India, International Journal on GlobalBusiness Management and Research, Vol. 2(2),Pp.11-20.

15. RameezaEjaz, et al. 2013. Impact of CRMPractices on Customers’Behaviors,International Journal of Businessand Management Invention,Vol. 2, PP.79-88.

16. Rangarajan. 2010. Effective Role of CustomerRelationship Management in Banking Sector,Global Research Review, New Delhi

17. Ruchi. 2014. Customer RelationshipManagement: A Customer Retention Strategy,International Journal of Management Research& Review, Vol. 4(5), Pp.624-631.


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FACTORS AFFECTING EMPLOYEE MOTIVATION:(WITH REFERENCE TO ACC CEMENTS, WADI)

TABASSUM FATIMADepartment of CommerceGulbarga UniversityGulbarga

ABSTRACT

Motivated employees will retain a high level of innovation while producing higher quality work efficiencyEmployee motivation is one of the major issues faced by every organization. Motivation is the process ofattempting to influence others to do their work through the possibility of gain or reward. The presentpaper aims at highlighting the effect of monetary and non-monetary benefits provided by the organizationon the employee’s performance and also to learn the employee’s satisfaction on the interpersonalrelationship exists in the organization. The study aims to provide empirical evidence about the variablesaffecting employee motivation. The direct variable of the study is the employee motivation. Indirectvariable are the incentives, interpersonal relations, career development opportunities & performanceappraisal system. Statistical test Chi-square used for testing hypotheses. Descriptive survey design isused. The present study is contribution to the current application of motivational factors in ACC Limited.On the basis of the findings, employers will be continually challenged to develop pay policies andprocedures that will enable them to attract, motivate, retain and satisfy their employees. In view of this,study attempts to identify the impact that motivation has on employee performance in order to addressproblems arising from motivational approaches in organizational settings.

Keywords: Motivation, interpersonal, career development and performance appraisal.

IntroductionManagement’s basic job is the effective utilizationof human resources for achievements oforganisational objectives. The personnelmanagement is concerned with organizing humanresources in such a way to get maximum output tothe enterprise and to develop the talent of peopleat work to the fullest satisfaction. Motivationimplies that one person, in organization context amanager, includes another, say an employee, toengage in action by ensuring that a channel tosatisfy those needs and aspirations becomesavailable to the person. In addition to this, thestrong needs in a direction that is satisfying to thetalent needs in employees and harness them in amanner that would be functional for theorganization.

Employee motivation is one of the major issuesfaced by every organization. It is the major task ofevery manager to motivate his subordinates or to

create the ‘will to work’ among the subordinates.It should also be remembered that a worker maybe immensely capable of doing same work;nothing can be achieved if he is not willing to work.

A manager has to make appropriate use ofmotivation to enthuse the employees to followthem. Hence this studies also focusing on theemployee motivation among the employees ofACC Limited.

The data needed for the study has been collectedfrom the employees through questionnaires andthrough direct interviews. Analysis andinterpretation has been done by using the statisticaltools and data is presented through tables andcharts.

Definition: According to EDWIN.B.FLIPPO,“motivation is the process of attempting toinfluence others to do their work through thepossibility of gain or reward.’’

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RESEARCH PROBLEMThe research problem here in this study isassociated with the motivation of employees ofACC Limited. There are a variety of factors thatcan influence a person’s level of motivation; someof these factors include:

1. The level of pay and benefits,

2. The perceived fairness of promotion systemwithin a company.

3. Quality of the working conditions,

4. Leadership and social relationships,

5. Employee recognition.

6. Job security

7. Career development opportunities etc.

An attempt has been made to understand thosewhich are influencing employee’s motivation inACC Limited

OBJECTIVES OF THE STUDY:

1. To study the important factors which areneeded to motivate the employees.

2. To study the effect of monetary and non-monetary benefits provided by theorganization on the employee’s performance.

3. To study the effect of job promotions onemployees.

4. To learn the employee’s satisfaction on theinterpersonal relationship exists in theorganization.

5. To provide the practical suggestions for theimprovement of organization’s performance.

RESEARCH HYPOTHESIS:A hypothesis is a tentative explanation or postulateby the researcher of what the researcher considersthe outcome of an investigation will be. It is aninformed or educated guess. It indicates theexpectations of the researcher regarding certainvariables. It is the most specific way in which ananswer to a problem can be stated.

1. HO: There is no significant relationship

between incentives and employee’sperformances,

2. HO: There is no significant relationship

between other benefits and employee’sperformances.

RESEARCH METHODOLOGY:Research is systematic method of finding solutionsto problems. It is essentially an investigation, arecording and an analysis of evidence for thepurpose of gaining knowledge.

SAMPLING DESIGN:A sample design is a finite plan for obtaining asample from a gain population. Simple randomsampling is used for this study.

SAMPLE SIZE:Number of the sampling unit selected from thepopulation is called the size of the sample. Sampleof 50 were obtained from the population.

METHODS OF DATA COLLECTION:The data is collected through primary andsecondary sources.

PRIMARY SOURCEThe primary sources are discussion withemployees and data is collected throughquestionnaire.

SECONDARY SOURCEThe secondary data mainly consists of data andinformation collected from records companywebsites and also discussion with the managementorganisation secondary data collected fromjournals, magazines and books.

VARIABLES OF THE STUDY:The direct variable of the study is the employeemotivation. Indirect variable are the incentives,interpersonal relations, career developmentopportunities & performance appraisal system

PRESENTATION OF DATA:The data are presented through charts and tables.

TOOLS AND TECHNIQUES FORANALYSIS:Chi-square is used to test the hypotheses and drawinfluences.

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ANALYSIS AND INTERPRETATION OFDATA:

DESCRIPTIVE STATISTICS

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CHART 3 : THE TYPE OF INCENTIVES THAT MOTIVATES YOU

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Chi-Square Test Which type of incentives have motivated more to employees Field survey

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Table 8 Promotional Opportunities in Present Job

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Findings

1. There is a harmonious relationship existin the organisation between employees andmanagement.

2. The employees are really motivated by themanagement.

3. The employees are satisfied with thepresent incentive plan of the company.

4. Most of the workers agreed that thecompany is eager in recognizing andacknowledging the work.

5. The study reveals that there is a goodrelationship exists among employees

6. Majority of the employees agreed that therejob security to their present job.

7. The study reveals that increase in the salarywill motivate the employees more.

8. Other benefits influence the performanceof the employees.

Suggestions1. Most of the employees agree that the

performance appraisal activities are helpfulto get motivated. So the company should

try to implement a comprehensiveappraisal system the performance.

2. Non-financial incentives plans should alsobe implemented; it improves theproductivity level of the employees.

3. Skills of the employees should beappreciated.

4. Better career development opportunitiesshould be given to the employees for theirimprovement.

5. Organisation should give importance tocommunication between employees andgain co-ordination through it.

ConclusionThe study concludes that the motivational programin ACC Limited is found effective but not highlyeffective. The study on employee motivationhighlighted so many factors which will help tomotivate the employee. The study was conductedamong 50 employees. The performance appraisalactivities really play a major role in motivatingthe employees of the organisation. It is a majorfactor that makes an employee feels good in hiswork and results in his satisfaction too. The

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organisation can still concentrate on specific areaswhich are evolved from the study in order to makethe motivational programme more effective.

REFERENCES

1 Muogbo us “The impact of employeemotivation in organisation performance (Astudy of some selected firms in anambra stateNigeria), The international journal ofengineering and science, volume2, 2013, ISSN-1813

2 Quratul Ain Manzoor, “Impact of employeesmotivation on organisation effectiveness”,

Europeon journal of business andmanagement, vol 3,No 3, ISSN -2222.

3 Dr.T.V Velnampy, “Factors influencingmotivation : An empirical study of few selectedSri Lankan organisation”

4 K Ashwathappa “Human resource andPersonnel Management”,Tta Mc-Graw-hillEducation, 2005.

5 David A Decenzo “Fundamaentals of HumanResource Management”, wiley Publication,tenth edition,2011. www.acclimted.com

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QUALITY OF WORK LIFE IN BPO SERVICE SECTOR

Challa Madhavi Dr.Bhavannarayana.KFaculty Instructor, ProfessorIIRM, Financial District, Hyderabad. Malla Reddy Engineering College for Women,Research Scholar GITAM University, JNTUH, HyderabadVishakhapatnam. [email protected] AGBA (South India)

Dr.J.Venugopal,Professor,Visweswaraya College of Engineering and Technology,Hyderabad.

ABSTRACT

The study has focused on the concepts related to Quality of Work Life(QWL) and its application intheBusiness Process Outsourcing(BPO) companies. This paper is basically a descriptive in nature withdata analysis. The structured questionnaire has been administrated on QWLin various organizations.The facts identified are mostly related to the motivation related factors like recognition, reward systemaccording to the assessment of performance objectively, which finally results in improvement of theproductivity. The inferences have been stated at the end with suggestions.

Keywords: QWL, BPO, Satisfaction, Performance, Hyderabad. (93 words)

INTRODUCTIONThe main reason any company for the purpose ofoutsourcing is mainly related to cost – benefitanalysis related to that particular activity. Theorganisation experts make a thorough assessmentfor obtaining the maximum output. The cost –benefit analysis reveals that the various types ofcosts involved if the company utilises the internalmanpower sources and the benefits generated arequantitatively measured. In this process, theorganisational experts identify certain core areas,secondary areas and auxiliary areas. Themanagement of the organisation obviously utiliseits own human resources at various levels at allcore areas and also at other secondary areas. Theareas are mostly related to their manufacturingprocesses or key service areas or confidentialrelated areas where the entry for others is strictlylimited. There are many organisations like airlines,which includes both the public sector and alsoprivate sector airlines. In case of the governmentairline, the management of the airline gives top

priority to the passenger safety. Security protectionto the customer goods like cargo. On the other handthe private airlines focuses on certain other aspectslike hospitality, passenger / customer relations,post sale service etc. The basis difference betweenthe government sector airline and private sectorairline could be stated as the social responsibility,safety and security related aspects which are morefor government airline when compared to privateairline. Similarly, the other service orientedorganisations like insurance companies, banks,postal services, Indian Railways, InformationTechnology companies etc., also have identifiedcertain core areas and concentrate more onobtaining the maximum output.The Indian talentis comparatively superior in terms of quality andquantity. The qualified technical know how andalso low category of labour is available in India.Apart from this, the supply of qualified manpoweris unutilized and under utilised. In some casesespecially in software / hardware related fields,there is brain drain due to lack of recognition,lucrative jobs with suitable jobs. Of coursethere

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are certain expectations. The cost of labourincluding the talented technical expertise in Asiancountries is low. The unemployment situation isalso on increasing side. There is no recognitionfor true merit being another reason. Though BPOsector has opened up vast career opportunities foryoung adults, employment in this sector has strongimpact on young people’s lives. For example,several young BPOemployees have to relocate tothe major metros and cities where outsourcing hubsare located and live independently.

QWL has different meanings for differentpeoplefew consider it industrial democracy or co-determination with increased employeeparticipation in the decision-making process. Forothers particularly managers and administrators,the term denotes improvements in thepsychological aspects of work to improveproductivity. Trade Unions and workers interpretit as more equitable sharing of profits, job security,healthy and humane working conditions. Othersview it as improving social relationships atworkplace through autonomous workgroups.Finally, some take a broader view of changing theentire organizational climate by humanizing work,individualizing organizations and changing thestructural and managerial systems.India in generaland Hyderabad in particular has become animportant hub for BPO related work culture. Thenext set of challenges deal with the increasingemployability of the workforce. The way in whichthe BPO sector has evolved in India is mainly bydoing low-end work which is rapidly beingthreatened by new entrants. The employmentgenerated by the BPO sector absorbs the majorityof the employable workforce.QWL exercises asignificant influence on productivity of employees.Research has established that good QWL leads tophysically and psychologically make theemployees in the healthiest way. QWL exercisesa significant influence on productivity ofemployees irrespective of gender status. The QWLis not similar in all cases,itcould differ fromorganization to organization. It depends upon theformal and informal cultural practices adopted atvarious organizations, which equally applicable to

the BPO related work force. The positive impactof BPO is much more in case of multinationalcompanies. While employment in the BPM sectorhas meant that young adults are reaching theircareer milestones and financial goals much earlierthan before, surveys and anecdotal evidences showthat employees in the BPO sector experience highlevels of stress as a result of working in closelymonitored environments under the immensepressure to meet ambitious performance targets.

QWL was seen as more of an ideological statementabout the nature of work and the worker’srelationship with the organization. The termsparticipative management and industrialdemocracy were highlighted in this definition.Boisvert (1977) believes that QWL is a set ofbeneficial consequences of working life for theindividual, the organization and society.

However, the late 1970s and early 1980s (1979 to1982) brought along with it a renewed interest inQWL. The 5th definition which emerged duringthis time equals QWL to everything. Thus, allorganizational development initiatives andorganizational effectiveness programs were partand parcel of QWL. Moreover, QWL was seen asa global concept and was frequently perceived asa panacea for all the problems which anorganization could face, including theconfrontation of foreign competition. Carlson(1980) refers to QWL as a goal and an ongoingprocess for achieving that goal. As a goal, QWL isthe commitment of any organization to workimprovement: the creation of more involving,satisfying, and effective jobs, and workenvironments for individuals at all levels of theorganization. As a process, QWL calls for effortsto realize this goal through the active involvementof individuals throughout the organization. Nadlerand Lawler (1983), defines QWL as a way ofthinking about people, work, and organizations.Its distinctive elements are: (1) concern about theimpact of work on people as well as onorganizational effectiveness and (2) the idea ofparticipation in organizational problem-solvingand decision- making. Although this approachadequately integrates the three QWL constituents

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namely, people, work and organizations, its mainweakness lies in attempting to define a complexsubjective construct by means of an equallycomplex and subjective notion, that is, a way ofthinking. According to Skrovan (1983), QWL is aprocess of work organizations, which enables itsmembers at all levels to actively participate inshaping the organization’s environment, methodsand outcome. This value-based process enables theorganization to achieve the twin goals of enhancedeffectiveness of the organization and improvedQWL of employees.

1990’s witnessed a marked shift from the moreobjective nature of QWL to subjective nature, tothe point of making it a concept specific to eachindividual. Though this was more a theoreticalapproach, it took into account the dynamic natureof QWL. Therefore, Kieran and Knuston (1990)define QWL as an individual’s interpretation ofhis/her role in the workplace and the interactionof that role with the expectations of others. As such,QWL is individually determined, designed andevaluated. Hence, the notion of QWL differs witheach individual, and is likely to vary according tothe individual’s age, career stage, and/or positionin the organization. Kerce and Booth-Kewley(1993) add that QWL is a way of thinking aboutpeople, work and the organization.

QWL is highlighted as need fulfillment in thedefinition that emerged during the last decade.Sirgyet al.,(2001), define QWL as employeesatisfaction with variety of needs throughresources, activities, and outcomes stemming fromparticipation in the workplace. This definitionsuggests that thirty years after the concept firstappeared, QWL is still defined in terms ofsatisfaction. Maccoby (2001) defines QWL as acommitment of management and union to supportlocalized activities and experiments to increaseemployee participation in determining how toimprove work. Lau et al., (2001) equated QWL tofavorable working environment that supports andpromotes satisfaction by providing employees withrewards, job security and career growthopportunities. The definition by Serey (2006) ismore conclusive and best meets the contemporary

work environment in BPO industry. The definitionis related to meaningful and satisfying work. Itincludes: (1) an opportunity to exercise one’stalents and capacities, to face challenges andsituations that require independence, initiative andself-direction; (2) an activity thought to beworthwhile by the individuals involved; (3) anactivity in which one understands the role theindividual plays in the achievement of someoverall goals and (4) a sense of taking pride inwhat one is doing and in doing it well.

Rethinam and Ismail (2008) define QWL as theeffectiveness of the work environment thattransforms an organization into a meaningful oneand influences personal needs in shaping the valuesof employees that support and promote betterhealth and well-being, job security, jobsatisfaction, competency development and balancebetween work and non-work life.

The difficulty in defining QWL represents asizeable obstacle to further development ofresearch in this field. Till date, critiques areconcerned primarily about the difficulty ofoperationalizing any definition that represents asignificant theoretical nature. If this criticism isjustified, an examination of recent work on QWLshould confirm the difficulty of creating a linkbetween the state of theoretical knowledge ofQWL and its application in research (Martel &Du Puis, 2006).

The review on the definitions of QWL indicatesthat QWL is a multi- dimensional construct, madeup of a number of interrelated, interdependentfactors that need careful consideration toconceptualize and measure. It is associated withjob satisfaction, job involvement, autonomy,motivation, productivity, health, safety and well-being, job security, competence development andbalance between work and non-work life andrealization of one’s potentials.

The changes in the theoretical concept of QWLover some three decades have followed a fairlylinear trajectory (Markham, 2010). Initially rigidand objective, the construct became progressivelymore subjective, dynamic and systemic. Despite

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all works, many points are still subject to debate,including the need to develop a clear operationaldefinition of the construct, while taking theprogress and consensus achieved to date intoaccount (Martel and Du Puis, 2006). After driftingalong on the prevailing conceptual wave duringthe 1970s, QWL became subject to a certainconsensus during the next decade, based on thework of authors such as Seashore (1975), Nadlerand Lawler (1983), Sashkin and Burke (1987) etal.

To sum up, in the beginning, QWL wassynonymous with employability rate, job security,earnings and benefits (Elizur and Shye, 1990). Thislisting of objective criteria soon gave way to jobsatisfaction as the target assessment criterion.Despite this shift to a more subjective construct,some researchers, such as Lawler (1975), remainedconvinced of the need for objective criteria tomeasure QWL. This contradiction between thetheoretical way of thinking of the construct andthe means to measure it is exacerbated by thedifferent meanings given to QWL based on anindividual (subjective criteria) or organizational(objective criteria) point of view (Walton, 1975).The definitions of QWL, most frequently quotedduring the 1980s, reveal a marked trend towardsaccepting the subjectivity of the construct. In hisdescription of a QWL model as a dynamic process,Carlson (1980) defines QWL as an organizationalgoal, which the business is perpetually striving toachieve. Moreover, from the organizational pointof view, this author considers QWL as a philosophywhich, even though varies with organizations,brings them together under a commondenominator: human dignity. There are alsodifferent models that are related to QWL whichare discussed later.

According to Tripathi, (2003), the scope of QWLconcept originally included only job redesignefforts based on the socio-technical systemsapproach.

Summary of Literature ReviewThe review of literature clearly shows that theconcept of QWL is explored from different angles

by industrial psychologists, management theoristsand academicians all over the world andvoluminous research work has been taken up.Today QWL is a more sophisticated industrialmanagement tool in the hands of managers to makethe organizations a better place for working,learning and living. It has been realized that forthe successful running of any enterprise, properhandling of the human factor is of key importance.At the same time, it should be noted that this humanaspect of an organization is very often subjective,qualitative and dynamic, with one’s ownaspirations and intentions. The theoreticalbackground of the study given in Chapter I andthe review of related studies given in Chapter IIhave led the researcher to explore certain researchquestions. This further led the researcher to makecertain assumptions and hypotheses. These areincorporated in the chapter on methodology.

Research DesignThe Information Technology (IT) and InformationTechnology enabled Services-Business ProcessOutsourcing (ITeS-BPO) industry in India hasshown robust growth in the last one and a halfdecade, registering a Compound Annual GrowthRate (CAGR) of 26%. According to the statisticsof the Dept of IT, Government of India (annualreport, 2007-08), the number of professionalsworking in IT and ITeS-BPO industry increasedfrom 2,84,000 in 1999–2000 to over 1.6 millionin 2006–07. It is estimated that the addressablemarket for the Indian IT-BPO industry in this sectorwould be approximately US$ 70-80 billion in thecoming 10 years, growing at a CAGR of 14 %. Itis estimated that 70% of the people working in ITand ITeS-BPO are in the age group of 26-35 years.Thus, this industry is a major source ofemployment for young adults of India. Theresearch has evidenced that the scope of BPO hasenlarged very significantly which also includespublic sectors, Govt institutions, educationalinstitutions etc.

MethodologyThe study is basically a descriptiveand analytical. The sample size determined is 50BPO employees. The structured questionnaire isadministrated on the subjects. The responses are

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edited, tabulated. The simple statistical techniqueslike per cent are adopted. The researcher has alsoadopted other techniques like “Observation” of thework force of various companies related to theQWL practices. The Likert Five Point Scale is

adapted for the purpose of the measurement. Theresponse pattern is presented in tabular form. Theinferences in detail have been stated only in thosecases where attention is required.

Inference:The Table No.1 has indicated that therespondents have felt on the identified statementsmostly in a positive way. The low response patternfound only in certain areas like rewards to theemployees according to the performance,opportunities for further growth, creation of stressfree environment, adequate compensation etc.

Suggestions:The management of these organizations may focuson the motivation and reward system according tothe performance which has to be measuredobjectively.

· Adequate Income and Fair Compensation

· Safe and Healthy Working Conditions

· Immediate Opportunity to Use and DevelopHuman Capacities

· Opportunity for Continued Growth andSecurity

· Social Integration in the work organization

· Constitutionalism in the Work Organization

· Work and the Total Life Space

· Social Relevance of Work Life

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References :The IUP journal of Organizational Behavior, VolIX, No.l&2 , Jan & April - IUP Publications.

Vikalpa- The journal for Decision Makers, Vol-35, Jan 8s March, 2010, Pub.by Indian Institute ofManagement, Ahmedabad, India.

The IUP journal of Organizational Behavior, vol -X, Jan 2011- IUP Publications.

Human Capital- Realizing business strategythrough people, Vol- 13, Dec2010.

Human Capital- Realizing business strategythrough people, Vol- 14, Dec2010.

HRM Review- Women at workplace The ICFAIUniversity press, Hyderabad, Sep 2008

HRM Review- Innovative HR Practices, IUPPublications, May 2010.

HRM Review, Managing Knowledge Workers,IUP Publication, Dec 2010

HRM Review, Work life Balance, IUPPublications,Feb 2011.(

HRM Review, Employee Retention, IUPPublications, March 2011

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TOURISM IN INDIA - A STUDYDr. J. Seenaiah.PDF Scholar,Department of Commerce,UCC& BM, Osmania University,Hyderabad. -500007email: [email protected]

ABSTRACTTourism is rapidly evolving industry that has become increasingly competitive in the global arena. It isgaining universal acceptance as a potent engine for inclusive socio economic progress because of thejobs created and infrastructure developed. It has the potential to stimulate other economic factors throughits forward and backward linkages and ability to create more employment due to its multiplier effect onthe economy. The year witnessed a growth of 10.6% in FTAs in India, which is higher than the mediumgrowth rate of 4.7% witnessed in international tourist arrivals, globally. FTAs during 2014 were 77.03lakh as compared to the FTAs IF 69.68 lakh during 2013. The Foreign Exchange Earnings (FEEs) fromtourism in rupee terms during 2014 were Rs.1, 20,083 crore with a growth of 11.5%. This paper mainaim studies the Indian Tourism policies, products and, foreign tourist’s visits in India various States andUTs. It is prepared based on secondary data and is emphirical one.

Key Words: Tourism, FTAs, Tourism Policies, Eco-Tourism, Tourism Policy, 2015

1. INTRODUCTIONIndia can always boast of its rich cultural heritage.Travel and Tourism in India is an integral part ofIndian tradition and culture. In ancient times, travelwas primarily for pilgrimage –as the holy placesdotting the country attracted people from differentparts of the world. People also travelled toparticipate in large scale feasts, fairs and festivalsin different parts of the country. In such abackground, cultural tradition was developedwhere ‘Athithi Devo Bhava’ (the guest is god) and‘Vasudhaiva Kutumbakam’ (the world is onefamily) became bywords of Indian socialbehaviour. Since times immemorial, the rulers indifferent parts of India built luxurious palaces,enchanting gardens, marvellous temples, grandforts, tombs, and memorials. These bear testimonyto the exquisite inheritance of this land, and areexamples of unparalleled craftsmanship of thepeople of the bygone ages. The beauty of India’scultural heritage and the richness of nature’sendowments make India tourists paradise.

Pundit Jawaharlal Nehru often remarked,“Welcome a Tourist and send back a friend”. That

was the essence of India’s approach to tourism inthe post-Independence era. Tourism was seen asan important instrument for national integrationand international understanding.

The dimensions of tourism changed as trade andcommerce developed. The spice trade broughtIndia in contact with the world more than before.The silk route trade also opened up India’simmense cultural heritage and natural beauty tothe world outside. The establishment of the IndianRailways by the British, modernization of theports, development of hill stations- all these addedto the growth of the Indian tourism industry in the19th and early parts of the 20th century. The growthof modern, organized tourism however was slow.Systematic information, even if inadequate, hasbeen available only during the post – Independenceera. It was only after the 80s that tourism as anindustry picked up speed.

2. LITERATURE REVIEW:Negrea, A. (2014)1: In his article Stated on theperformance or success of a Face book campaign,it is important to be talking about one or moremeasurable indicators. The performance of a

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campaign on a Face book page is measured, fromour point of view, by the effects that it has thatmessage outside the social network (number ofclicks, number of sales, the number of newsubscribers to the newsletter, number of uniquevisitors on the website). Coutino Carlos, CretonAdina, JardimGoncales (2014)2: In this article theauthors focused and narrated how cloud computinghad reached a new and a greater scales of adoptionand stabilization in an aerospace environment.These technological changes had about a changein business paradigm from an enterprise-concentricto service- dispersed strategies. These changesbrought in various disturbances. Vincent Wang,XuXun W (2014)3: This article Authors talkedabout adopting cloud computing technology inmanufacturing. This was a new concept andneeded to be fully adopted for reliability and costeffectiveness Here manufacturing capabilities and74 resources were componentized, integrated andoptimized globally. Currently, according toEshetu (2014)4, ecotourism is a kind of travel thatfocuses on local cultures, wilderness, as well asadventures; a tour to destinations who’s thescenery, flora, fauna and cultural heritage that arethe primary attractions. R. AlRoobaea, A. Al-Badi,and P. Mayhew (2013)5: In his article stated thegrowth of the Internet and new technologies hascreated new dynamic websites that are growingrapidly in use and that are having a significantimpact on many businesses. One distinctiveexample of these sites is in the hotel/hospitalityindustry.

3. OBJECTIVES OF THE STUDY

1. To study the tourism policies and productsin India.

2. To analyse the tourists visited to India fromvarious countries.

4. METHODOLOGYThis is an analytical study based on secondary data.Secondary data have been collected from TourismAnnual Reports, Market Research DivisionMinistry of Tourism, and Government of India.Related Journals and Published Articles.

5. TOURISM POLICIES IN INDIA

i. National Tourism Policy 2002:In order to develop tourism in India in a systematicmanner, position it as a major engine of economicgrowth and to harness its direct and multipliereffects for employment and poverty eradicationin an environmentally sustainable manner, theNational Tourism Policy was formulated in theyear 20021. Broadly, the “Policy” attempts to: -Position tourism as a major engine of economicgrowth; Harness the direct and multiplier effectsof tourism for employment generation, economicdevelopment and providing impetus to ruraltourism; focus on domestic tourism as a majordriver of tourism growth. Position India as a globalbrand to take advantage of the burgeoning globaltravel trade and the vast untapped potential of Indiaas a destination; Acknowledges the critical roleof private sector with government working as apro-active facilitator and catalyst; Create anddevelop integrated tourism circuits based onIndia’s unique civilization, heritage, and culturein partnership with States, private sector and otheragencies; and Ensure that the tourist to India getsphysically invigorated, mentally rejuvenated,culturally enriched, spiritually elevated and “feelIndia from within”.

ii. National Tourism Policy 2015:The Union Ministry of Tourism on May 1, 2015released the Draft National Tourism Policy (NTP)2015 after re-visiting National Tourism Policy(NTP) 2002. The policy is aimed at boostingtourism sector in the country. Its objective is toincrease India’s share in world tourist arrivals fromthe present 0.68% to 1% by 2020 and increase to2% by 2025 and position tourism as a priority onthe National political and economic agenda.

The Draft National Tourism Policy 2015 enshrinesthe vision of developing and positioning India asa ‘Must Experience and Must Revisit’ destinationencompassing the aspects of Swachhta(cleanliness), Suraksha (safety) and Swagat(welcome). It seeks to evolve a framework fortourism development, which is Government-led,private sector- driven and community welfare-

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oriented. Its focus is on Employment Generationand Community Participation in the developmentof tourism industry in a sustainable manner. Theemphasis of the policy will be on skill developmentacross all segments including setting up of adedicated university for tourism and hospitalityeducation and deployment of technology inpromotion of tourism2.

6. TOURISM NEW SCHEMES & PRODUCTSA National Mission on Pilgrimage Rejuvenationand Spiritual Augmentation Drive (PRASAD) hasbeen announced and an amount of Rs.100.00 crorehas been provided for this initiative. This ministryhas formulated the guidelines for implementingthis scheme. Initially twelve heritage/religiouscities have been identified under PRASADScheme. The cities are Amritsar, Ajmeer,Mathura, Gaya, Kanchipuram, Puri, Amravathi,Dwarka, Varanasi, Vellankanni, Kedarnath andKamakhya which have been selected based ontheir heritage and religious tourism importance andgeographical spread. India’s rich cultural,historical, religious and natural heritage providesa huge potential for development of tourism andjob creation. In due recognition of this potential, a

scheme on SWADESH DARSHAN has beeninitiated. It has been decided to crate tourist circuitsaround specific themes. Himalayan, North-Eastern Coastal, Krishna and Buddhist circuitshave been identified to be developed initially.3

Tourism Products in India as well as States

i) Cruise ii) Adventure iii) Medical iv) Wellnessv) Golf vi) Polo Meetings Incentives Conferences& Exhibitions (MICE) vii) Eco-Tourism: viii) FilmTourism: ix) Sustainable Tourism.

7. FOREIGN TOURISTS ARRIVALS TOINDIA & VARIOUS STATES (FTAs)Tourism is an important sector of the economy andcontributes significantly in the country’s GDP aswell as Foreign Exchange Earnings (FEE). Withits backward and forward linkages with othersectors of the economy like transport, constriction,handicrafts, manufacturing, horticulture,agriculture etc, tourism has the potential to not onlybe the economy driver, but also become aneffective tool for poverty alleviation and ensuringgrowth with equity. The following table shows thevarious countries of foreign tourists arrivals inIndia in 2015

Dr. J. Seenaiah

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Dr. J. Seenaiah

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8. CONCLUSION:India can always boast of its rich cultural heritage.Travel and Tourism is an integral part of Indiantradition and culture. In ancient times, travel wasprimarily for pilgrimage –as the holy places dottingthe country attracted people from different partsof the world.

Thus the tourist arrivals France has become largestvisitors’ in the world the tourists arrival around84.5 millions about (7.14%) are visited to Franceout of the top ten countries.

Consequently the tourist’s large number of foreigntourists arrival around 46, 84, 707 millions about(20.1%) are visited to Tamil Nadu.

Therefore the tourist’s large number of domestictourists’ arrival around 33, 34, 59, 047 about(23.3%) are visited to Tamil Nadu.

The growth rate of foreign exchange earnings inthe year 2016 is 14.1% in Rs.crores. The growthrate of foreign exchange earnings in the year 2016is 6.5% in US $ million.

Tamil Nadu is attracting both domestic and foreigntourists because of Tamil Nadu have some of themost remarkable temples, architectures in thecountry, and a living tradition of music, dance, folkarts and fine arts. It renowned for its temple townsand heritage sites, hill stations, waterfalls, nationalparks, local cuisine and the fabulous wildlife andscenic beauty.

9. REFERENCES:

1. Negrea, A. (2014): Marketing incommunicative Facebook. Ghidpentru 2014.Bucharest: www.marketing20.ro

2. Coutino Carlos, Creton Adina,JardimGoncales (2014): Sustainableinteroperability on space mission feasibilitystudies. Computers in Industry, Oct 2014,Volume 64, Issue 8, pages 925-937, 13p,ISSN: 0166-3615.

3. Vincent Wang, XuXun W (2014): Aninteroperable solution for Cloudmanufacturing Robotic and ComputerIntegrated Manufacturing, IBBN 0736-5845,2014, Volume 29, Issue 4, Pages 232- 247.10.1016/j.rcim.2013.01.005.

4. Eshetu, A. (2014). Ecotourism as a viablestrategy for livelihood diversification andsustainable natural resource management inEthiopia from eco-development paradigmpoint of view. Journal of EnvironmentalScience and Water Resources, 3(2), 040 – 052.

5. R. AlRoobaea, A. Al-Badi, and P. Mayhew(2013): “Generating a Domain SpecificInspection Evaluation Method through anAdaptive Framework: A Comparative Studyon Educational Websites”, InternationalJournal of Human Computer Interaction(IJHCI), 4(2), 88, 2013.

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