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A Study on Social Obligation of Enterprises Engaged in General

Insurance Business

Introduction

Insurance company has corporate social responsibility towards improving the


environment, but at the same time, the company has to garner good premium as
ultimately the insurer has to earn profits for its shareholders & stakeholders. The
company can earn profits only when there are less early death claims and more maturity
claims. When the insurer starts insuring the poor slum dwellers as per the directives of
IRDA, it becomes its concern to improve the conditions. In metropolis, we have the
spectacle of both plenty and poverty living together-a sky scraper adjoined by a dirty
slum full of unsanitary conditions and filth. All the four companies are government
companies registered under the Act. The New India Assurance Company Ltd, The United
India Insurance Company Ltd, The National Insurance Company Ltd, The Oriental
Insurance Company Ltd.

Statutory Obligations of General Insurance Company

The following are the statutory obligations of general insurance companies.

New India Assurance Company Limited


• To develop general insurance business in the best interest of the
community.
• To provide financial security to individuals, trade, commerce and all other
segments of the society by offering insurance products and services of
high quality at affordable cost.
• Highest priority to customer needs.
• High standards of public conduct.
• Transparency in operation.

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United India Insurance Company Limited

• To provide Insurance protection to all.


• To ensure customer satisfaction.
• To function on sound business principles.
• To help minimize national waste and to help develop the Indian economy.

National Insurance Company Limited

• To optimize the accessibility of Indian business and carry on reinsurance


policies and foreign operations.
• To establish Risk Management Technologies and minimize the losses.
• To act as strong and active non-life insurer.

The Oriental Insurance Company Limited

• To keep the focus on customer and serve their insurance requirements.


• To offer high quality service by being customer friendly.
• To invest funds for optimum grant and engage in profitable business.

The following are the statutory obligations of private general insurance companies
(Bajaj Allianz, Tata AIG, Royal Sundaram, etc.,)

• To be the first choice insurer for customers.


• To be the preferred employer for staff in the insurance industry.
• To be the number one insurer for creating shareholder value.
• As a responsible, customer focused market leader, strive to understand the
insurance need of the consumers and translate it into affordable products
that deliver value for money.

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Business Focus of General Insurance Companies

• To position them as a leading corporate and retail insurance company


catering to the needs of their customers.
• Their guiding principles are customer service and client satisfaction. All
their efforts are directed towards understanding the culture, social
environment an individual insurance requirement of their customers so
that they can cater to their varied needs.
• Working closely with leading intermediaries including corporate agents,
motor dealers, agents, banks, associations and other intermediaries to
focus on the corporate and retail business.
• To leverage the customer base and expertise.
• To be technology driven and will strive to setup world class technological
infrastructure. This will include a renowned insurance software;
networking of all offices and intermediaries as well as the ability to
interface with customers via all media.

Duties of General Insurance Companies

The insurance company has a duty to handle your claim promptly, reasonably and
in "good faith and fair dealing". The duty of "good faith and fair dealing" basically means
that your insurance company must

• Adjust the claim (either pay it or deny it) within a reasonably prompt time.
• Must cooperate with the customer regarding the claims.
• Must tell in writing precisely why it is denying the claim specifying each
contract term or provision upon which it relies.
• Must attempt to find a basis to pay the claim rather than find reasons to
deny it.
• Must "play fair" with the clients.

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IRDA Guidelines for Private Insurance Sector

IRDA’s guidelines mandate that for private sector players, rural business should
account for 7 per cent of the total Gross Written Premium (GWP), after the first eight
years of operations. For new players, this cap is relaxed and varies between 2-7 per cent.
The cap increases every year. Public players had to underwrite rural business amounting
to 6 per cent of GWP in 2007-08, which was increased to 7 per cent in 2008-09. To meet
their social obligation, private players have to cover 5,000 BPL lives in the first financial
year and increase it to 55,000 lives in the tenth financial year. Public players have to
cover 5.5 lakhs lives or the average of the number of lives covered by the insurer in the
social sector from 2002-03 to 2004-05, whichever is higher.

“The rural sector has immense business potential as 70 per cent of the Indian
population resides in these areas. We are tying up with NGOs and third party
administrators to increase our reach. We have also set up rural insurance units within our
branches. We are also issuing biometric cards for RSBY,” said Mr. Gaurav Garg,
Managing Director and Chief Executive Officer, Tata AIG General Insurance. Tata AIG
is also looking at using embedding technology for cattle insurance, as one of the steps to
make its rural segment profitable.

IFFCO Tokio has launched a pilot project to track the green cover, type of soil
and temperature variations of an area over a period of time. NASA’s satellite imagery is
used to arrive at the Normalized Difference Vegetation Index. This helps the company to
assess whether there has been a crop failure or not and accordingly pay claims, said Mr
N.K. Kedia, Director (Marketing), IFFCO Tokio General Insurance. The company has
also rolled out radio frequency identification technology for cattle insurance to check
fraudulent claims.
Details regarding the general profile of the respondents

Factors Classification No of. Percentage

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Respondent
s
Male 88 73.33%
Sex
Female 32 26.67%
Below 30 Years 15 12.50%
31 – 40 Years 19 15.83%
Age 41 – 50 Years 35 29.17%
51 – 59 Years 23 19.17%
60 Years and Above 28 23.33%
Married 98 81.67%
Marital Status
Unmarried 22 18.33%
Literate 103 85.83%
Literacy
Illiterate 17 14.17%
Primary Education 9 8.74%
Educational Higher Education 15 14.56%
Graduation 41 39.81%
Qualification Post Graduation 26 25.24%
Professional 12 11.65%
Business Man 54 45.00%
Government Employee 17 14.17%
Occupation Private Employee 16 13.33%
Professionalist 9 7.5%
Housewives 24 20.00%
Below Rs. 5,00,000 31 25.83%
Rs. 5,00,001 to
56 46.67%
Rs. 10,00,000
Annual Income
Rs. 10,00,001 to
21 17.50%
Rs. 15,00,000
Above Rs. 15,00,000 12 10.00%
Source: Primary Data

Inference

Regarding personal profile of the respondents, the above table shows that the
male respondents are more, majority of respondents (29.17%) are having the age between
41 – 50, majority (81.67%) of the respondents are married, majority of the respondents
(85.83%) are literates, about 39.81% of them are educated up to graduation level, 45% of
the respondents are business man, majority of the respondents are earning Rs. 5,00,001 to
Rs. 10,00,000.

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Nature of Business

S. No Nature of Business No. of Respondents Percentage


1. Manufacturing 25 46.29
2. Trading 12 22.22
3. Whole selling 9 16.67
4. Service 3 5.56
5. Retailing 5 9.26
Total 54 100
Source: Primary Data

It is noted that 46.29% of the respondents are doing manufacturing business.

Nature of General Insurance Policy

S. No Nature of General Insurance Policy No. of Respondents Percentage


1. Fire 40 33.33
2. Marine 20 16.67
3. Motor 40 33.33
4. Miscellaneous 20 16.67
Total 120 100
Source: Primary Data.

It is inferred that two third of the respondents opted for Fire and Motor insurance.

Percentage of Loss

The researcher has also analyzed the percentage of loss faced by the
policyholders. The following table explains the percentage of loss incurred by the
policyholders.

S. No Percentage of Loss No. of Respondents Percentage


1. Less than 25 Percent 17 34.69
2. 25 – 50 Percent 21 42.86
3. 50 – 75 Percent 7 14.29

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4. 75 – 100 Percent 4 8.16
Total 49 100
Source: Primary Data.
Note: The respondents who have incurred loss.

It is clear from the above table that, out of 49 respondents, 21 respondents


incurred loss between 25 – 50 percent, 17 respondents have incurred the loss less than 25
percent, 7 of them incurred between 50 – 75 percent and the remaining 4 respondents
incurred loss more than 75 percent.

Awareness of Grievance Redressal Cell

Grievance cell is a mechanism in which the grievance of the policyholders can


apply and get the proper reply within a specific authority within the stipulated time. The
policyholders may be satisfied if the reply is genuine. The policyholder’s awareness
about the existence of grievance redressal cell is given in the following table.

S. No Particulars No. of Respondents Percentage


1. Known 94 78.33
2. Not Known 26 21.67
Total 120 100
Source: Primary Data.

It is evident that out of 120 respondents, 72.5 percent of the respondents are aware
of the grievance redressal cell and the rest 27.5 percent of the policyholders are unaware
of the existence grievance redressal cell in general insurance corporation.

It is found that majority of the respondents (72.5 percent) are known about the
grievance redressal cell mechanism in general insurance corporations.

Opinion about Customer Service in GIC

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The expectation of the customer varies from one another. The following table
reveals the expected level of the customer service in GIC.

S. No Opinion No. of Respondents Percentage


1. More than Expectations 10 8.33
2. Less than Expectations 16 13.33
3. Best 34 28.33
4. Satisfied 56 46.67
5. Dissatisfied 4 3.34
Total 120 100
Source: Primary Data.

The inference from the above table that 46.67 percent of the respondents are
satisfied with the customer services offered by the general insurance corporations, 28.33
percent of them said that the customer service is best, 13.33 percent of them expressed
that customer service is less than their expectations, 8.33 percent of them opines that the
services are more than their expectations and 3.34 of them are dissatisfied with the
customer service rendered by GIC.

Overall Attitude about Customer Service in General Insurance Corporations


(Relating to Policy)
% of total
Component SA A NN D SD Total
Points
26 12 12
68 2 120
Advice in selection of policy (130 (36 (12 17.09
(272) (4) (454)
) ) )
27 15
70 5 3 120
Policy Condition (135 (45 17.82
(280) (10) (3) (473)
) )
72 6
28 6 8 120
Safety and Security (360 (18 19.20
(112) (12) (8) (510)
) )
Advertisement and Publicity 12 21 19 58 10 120 12.31
(60) (84) (57 (116 (10 (327)

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) ) )
22 15 11
51 21 120
Location of Branch (110 (45 (11 15.51
(204) (42) (412)
) ) )
32 15
72 8 120
Premium Rates (160 (45 – 18.07
(288) (8) (480)
) )
191 310 8 52 720
Total (955 (1240 (24 – (52 (2656 100
) ) ) ) )
Source: Primary Data / Processed Data.
Note: Figures without bracket denotes the number of responses given by the
policyholders.

The above table discloses the fact that there is an agreement in all the views
except the views that, advertisement and publicity has decreased. Out of 120 respondents,
10 respondents are not satisfied with the advertisement and publicity and hence it has the
least accepted view with a mean score of 327 points.

Overall Attitude about Customer Service in General Insurance Corporations


(Relating to Agents Performance)
% of
Component SA A NN D SD Total total
Points
12
27 43 14 24 120
Service of the Agent (12 14.93
(135) (172) (42) (48) (409)
)
Issue of premium demand 66 32 15 7 120
- 18.88
notice (330) (128) (45) (14) (517)
Agents remainder to pay 28 62 10 12 8 120
16.43
premium (140) (248) (30) (24) (8) (450)
24 74 10 12 120
Policy renewal - 17.16
(120) (296) (30) (24) (470)
Function of Offices 26 53 21 12 8 120 15.95

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(130) (212) (63) (24) (8) (437)
32 52 20 12 4 120
Change of Address 16.65
(160) (208) (60) (24) (4) (456)
203 360 90 79 32 720
Total (1015 (1264 (270 (158 (32 (2739 100
) ) ) ) ) )
Source: Primary Data / Processed Data.
Note: Figures without Bracket denotes the number of responses given by the policy
holders.

The table discloses that there is an agreement with all the views except the views
that, service of the agents has decreased. Out of 120 respondents, 12 respondents are not
satisfied with the change of address and hence, it has the least accepted view with a
means score of 409 points.

Overall Attitude about Customer Service in General Insurance Corporations


(Relating to Customer Service)
% of total
Component SA A NN D SD Total
Points
23
64 23 6 4 120
Transfer of policy (115 14.89
(256) (69) (12) (4) (456)
)
10
17 64 14 15 120
Sending Discharge forms (10 13.81
(85) (256) (42) (30) (423)
)
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Performance of the 41 12 13 7 120
(235 15.27
surveyor (164) (36) (26) (7) (466)
)
17 58 22 23 120
Customer Service - 14.00
(85) (232) (66) (46) (429)
23
57 15 17 8 120
Grievance settlement (115 14.03
(228) (45) (34) (8) (430)
)
Settlement of claims 21 51 3 24 21 120 12.63

10
(105 (21
(204) (9) (48) (387)
) )
32
62 15 7 4 120
CRM (160 15.37
(248) (45) (14) (4) (471)
)
180 397 104 105 54 840
Total (900 (1588 (312 (210 (54 (3064 100
) ) ) ) ) )
Source: Primary Data / Processed Data.
Note: Figures without Bracket denotes the number of responses given by the policy
holders.

The table discloses that, there is an agreement with all the views except the views
that, settlement of claims has decreased. Out of 120 respondents, 21 respondents are not
satisfied with the settlement of claims and hence, it has the least accepted view with a
means score of 387 points.

Suggestion

• Communication is the key to success. The GIC should pay more attention
on the communication with the customers on regular basis by means of
customer meet and appraising them with latest schemes. Further the GIC
should take steps to market the new polices by giving advertisement, or to
send through news letters, circulars and the like.
• The GIC should carry out its regular Customer Satisfaction Audit to find
the areas of discrepancies and try to improve customer satisfaction.
• Proper training should be given to the employees of GICs.
• It is advisable to establish Customer Protection wing at the Branch level.
• Better and long term customer relationship can be effectively achieved by
going for customer’s surveys periodically at regular intervals. If there is

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any complaint, such complaint must be redressed immediately to the
satisfaction of the customers.

Conclusion

“Customer is like a child: goes where he is invited, stays where he is well


treated”. Hence it is difficult to acquire and retain the customer. Building customer
centric enterprise is critical for the long term success of insurance industry. Relationship
marketing plays a key role in building customer loyalty. Therefore, to survive in the
competitive market, insurance companies need to follow the statutory obligations. Thus it
results in the ability to measure customer value and improve service. With the help of a
right Customer Protection solution the insurance companies can achieve a great success.
Insurance companies should host Customer Protection a red carpet welcome to sustain in
the market.

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