A STUDY ON CUSTOMER RELATIONSHIP MANAGEMENT IN THE LIFE INSURANCE INDUSTRY IN VIRUDHUNAGAR DISTRICT

Introduction

Life Insurance is critical for the development of Indian economy. Apart from a brief dip in the year 2009 due to downturn, the industry has grown around 20 per cent per annum.

 

In the first decade of privatisation the insurance penetration has doubled, which has all going for it to only rise significantly in a country of 1.2 billion people. Post the global financial crisis financial capital infusion by foreign partners has considerably slowed down; from Rs 8,170 core in 2008-09 to less than Rs 2,300 crore in 2010-11.

 

For a capital intensive business like life insurance, the trickling down of capital severely impacts growth and also changes the strategy that the company adopts with its business. The fabled increase in the insurance FDI limit from 26% to 49% (consistent with banks sector) is on hold currently till the next parliamentary session.

 

However, the Indian life insurance industry’s biggest advantage is the country’s favorable demographics. Market penetration will be guided by the rise in income levels. From 80 per cent policy renewals in early 2000s, today only about 65 per cent policies come up for renewal after the first year.

 

The working population (25-60 years) is expected to increase from 675.8 million to 795.5 million by 2025 with the projected per capita GDP expected to increase to Rs 100,680 in 2025, which is indicative of rising disposable incomes. Life Insurance Corporation of India was the only company prior to liberalization and the monopoly of LIC breaks with the entry of private companies in life insurance business. The Indian insurance industry was opened for private insurers in the year 1999, with the enforcement and establishment of industrial regulatory and development authority act.

 

Insurance sector in India is one of the booming sectors of the economy and presently growing at the rate of 35-40% per cent annually with a total insurable population of less than forty percent. Huge untapped population provides unlimited scope to life insurance companies for market expansion and penetration.

 

There was a remarkable improvement in the Indian insurance industry soon after the Indian economic reform 1991 which is characterized by three important elements i.e. Liberalization, privatization, and globalization (LPG). In the post liberalization period, the life insurance industry of India witnessed a remarkable growth and it is being forced to face a lot of healthy competition from many domestic as well as international private insurance players.

 

The share of a country’s GDP in life insurance has a strong positive correlation to income levels. India, with its huge middle class households, exhibits untapped potential for the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. Thus India continues to be an attractive market for most insurance players both domestic and foreign.

 

CRM in life insurance industry
A goal of CRM is to create an opportunity for re-purchase by a customer through an improvement in the communication process to the customer, providing the right offer, relating to product and price, through the right channel, at the right time. This will lead the customer to perceive that the organisation is concerned with the customer’s needs, and this in turn may lead to greater satisfaction towards the organisation.

 

When the customer has additional experiences with the organisation in which the customer’s needs were satisfied, the customer may develop a sense of loyalty to the organization. How conflict is handled between the organisation and the customer will either ensure loyalty, or the customer will leave the company and go to a competitor . Long-term relationships with customers can successfully be created, reinforced and retained by communicating with the customers in a timely, reliable and pro-active fashion and handling conflicts between the organisation and the customers effectively.

 

Review of literature
C. Barathi, C. D. Balaji and Ch. Ibohal Meithei (2011), in the research paper title”Innovative Strategies To Catalyse Growth Of Indian Life Insurance Sector-An Analytical Review” have clearly discussed about the impact of global recession on the fastest growing Indian insurance market. He find the entry of many private companies has created a paradigm shift in insurance marketing in India in terms of products, tariffs; customer service etc.

 

Paramita Chatterjee (2009) in her article titled “Private insurers command majority share of life Insurance market”. She evidently said private insurers recorded 62% growth rate in April December 2008 against 45% in the same period of last fiscal. ICICI Prudential, HDFC Standard, SBI Life and Bajaj Allianz are the dominant players of the life Insurance sector. LIC a market leader recorded a decline of 28% and experts said the Industry has witnessed a reasonable growth despite the tight financial conditions.

 

Rastogi. S and Sarkar.R (2006), in the research paper deals with enhancing competitiveness: The case of the Indian life insurance industry identifies the causes and the objectives with which the sector was reformed in 2000. Despite oh huge population and abundance growth opportunity, India was one of the least insured countries compared to the other developed nations. In view to increase market penetration, the life insurance sector was opened for private entry in the year 2000. Opening of the sector to private firms was aimed at fostering competition and innovation through a greater variety of products.

 

The study was an effort at studying the trends emerging with in this sector and an attempt has been made to analyze whether the industry has benefited from the governmental reforms. Hence this paper is an endeavor towards analyzing the industry in its present form and comparing it with the pre-liberalized era, thereby understanding the alternate strategies that can facilitate the development of sound policies and practices leading to a globally competitive insurance industry within the country.

 

P.C.James(2009) in his article entitled , “Playing the vital innovation in intermediation” has highlighted the major intermediary benefits that innovations in the domain have taken insurance intermediation to a new plan from where reaching global standards is closer relatively.

 

Statement of the problems
In a service industry like life insurance companies, the quality of Customer Relationship Management strategies hold primary significance, particularly in the context of sustained business growth. Unlike the other industries engaged in the production of tangible goods, life insurance companies are unique in the sense that they produce and deliver the services and Customer Relationship Management instantaneously at the service delivery point at the branches.

 

Customer Relationship Management in the life insurance companies is a continuing issue. In deregulated environmental customers expectation keeps rising, as they look for more convenient and flexible option available to them at competitive rates from many private players operating in the field.

 

Therefore, an attempt has been made by the researcher to examine, evaluate and compare the various types of products, customer services and customer relationship management strategies provided by the public and private sector life insurance companies at the branch level from the point of view of customer(policyholders) agents and employees in Virudhunagar district and also hence, an attempt has been made to study the Customer Relationship Management in life insurance industry in Virudhunagar district.

Objectives of the study:
1. To know the origin and development of CRM and life insurance industry in india.
2. To discuss the customer service and CRM in life insurance industry.
3. Attitude of the policyholders towards the CRM in life insurance industry in virudhunagar district.
4. Attitude of the Agents towards the CRM in life insurance industry in virudhunagar district.
5. Attitude of the employees towards the CRM in life insurance industry in virudhunagar district.
6. To offer suitable suggestions to improve the CRM strategy in life insurance industry based on the findings of the study.

 

Sampling design

 

Sample of the Respondents
S. No	Category	No. of Respondents		Total
		Public sector life insurance company (LIC)	Private sector life insurance companies
1	Policyholders	225	225	450
2	Agents	150	150	300
3	Employees	125	125	250
	Total	500	500	1000

 

Convenient sampling and stratified random sampling were used to select the policyholders, agents and employees from the public and private sector life insurance companies.

 

Statistical tools used:
Statistical tools like averages, percentages, Z- test, mean and standard deviation are used for the analysis of data.

 

Hypotheses:
There is no significant difference between the age, gender, educational qualification, occupation, marital status, type of family of the policyholders, agents and employees and their level of satisfaction towards the Customer Relationship Management in public and private life insurance companies.

Results and discussion
Opinion of the policyholders towards the services and CRM in life insurance industry-Mean value
Opinion of the policyholders towards the services and CRM in life insurance industry in Virudhunagar District

 

S. No	Statements	Mean value for public sector life insurance companies	Mean Value for private sector life insurance  companies
1	Space available at the branch office for the customer is adequate	4.20	4.45
2	The amenities like seating arrangement, fans, drinking water and toilet facilities are available in the branch.	4.13	3.98
3	Parking facility is convenient in the branch	4.00	4.09
4	Life insurance branch office is easy to approach by all the policyholders.	3.80	4.07
5	Life insurance branch office is easy to approach by all the policyholders.	3.61	3.99
6	All the information relating to the policy are displayed on the notice board.	3.94	5.22
7	The branch follows the time norms for all services.	3.60	4.04
8	The branch has maintained complaint/ suggestion box in the office	3.65	3.86
9	Working hours is convenient to the customers.	3.47	3.47
10	Suggestions / complaints are considered without delay.	3.58	4.01
	Over all mean	3.82	4.14

 

In order to analyse the overall opinion of the policyholders towards the customer service and CRM strategy provided by the life insurance industry with the help of mean score, the public sector life insurance branch is easy to approach, agents meet policyholders periodically, the branch has maintain the time forms for all services, the branch has maintained complaint box, working hour is convenient to the customers, suggestions/complaints are considered without delay, these services are to be concentrated more to improve the customer service and CRM strategy provided by the public sector life insurance company.

 

In the case of private sector life insurance industry, overall opinion of the policyholders towards the customer service and CRM strategy provided by the life insurance industry, with the help of mean score, the private sector life insurance companies policyholders feel that the seating arrangement/parking facilities, life insurance branch easy to approach, agent meet policyholders periodically, the branch follows time norms, the branch maintain complaint box, working hours is convenient to the policyholders, suggestions are considered without delay, these services are to be concentrated more to improve the customer service and CRM strategy provided by the private sector life insurance companies.

 

The comparison between the public and private sector life insurance companies about the customer service and CRM strategy provided by the life insurance industry with the help of mean score, the private sector life insurance companies should concentrate all the services and CRM strategy because all the services and CRM strategy which have the mean value who is below the overall mean.

 

Over all opinion of the Agents towards the CRM in life insurance industry in Virudhunagar District
The results of Sign Test indicates that according to the overall opinion of the agents towards CRM in life insurance industry, there is no significant difference between the overall mean and the individual mean of the statements with regard to CRM strategy in public sector life insurance company and there is a significant difference between the overall mean and the individual mean of the statements with regard to CRM strategy in private sector life insurance companies.

 

Overall Opinion of the Employees towards the CRM Strategy in Life Insurance Industry – Co-efficient of Variation
The overall opinion of the employees about CRM in the public sector life insurance company differ from that of overall opinion of the employees about the CRM in the private sector life insurance companies regarding certain opinion. According to the level of mean values, the public sector (4.27)life insurance company employees seem to score good opinion such as “Training given to the employees is useful to promote the CRM skill” and followed by “CRM strategy of life insurance industry is useful to the employees” and the least score gained by “CRM policies are maintained by the agents in proper manner”.

 

In the case of private sector life insurance companies good score is found in regarding the “Providing guidance regarding the payment of premium” and followed by “Creating awareness regarding new policies is useful to the policyholders” and the least score was obtained by “The settlement of grievances of the life insurance industry”.

 

According to the level of standard deviation, the opinion of the public sector life insurance company employees about the overall opinion about CRM with regard to “CRM strategy of the life insurance industry is useful to the employees” and the opinion of the private sector life insurance companies employees about the overall opinion about CRM with regard to “providing guidance regarding payment of premium”. Since co-variance is the highest (26.26) with regard to CRM policies are maintained by your agents in proper manner in public sector life insurance companies and the co-variance is the highest (13.57) with regard to Giving legal advice with regard to policy related services is useful to the policyholders in public sector life insurance companies.

 

Suggestions:
1. Every life insurance company branch should form a proper customer grievance cell facility. The cell should work out an effective strategy to clear the complaints of the agents and policyholders. Main work of this cell would be customer feedback, customer satisfaction determination and maintain good customer relationship management strategy.
2. The life insurance companies should provide all physical facilities to the customers in every branch. The life insurance companies should arrange the facilities to the customers like toilet, good drinking water, sitting facilities and so on.
3. The life insurance companies have to initiate steps to educate the customers about new services/new products (policy renewal in online, new policy arrival in online, premium due date in online, e-CRM and the like).
4. Now-a-days, the corporate sector are promoting basic educational and health facilities as part of their social responsibility programmes. The software companies are an example in this respect. Therefore, it is suggested that the life insurance companies should also take up such responsibility besides its profit-making activities, as it is a major service sector in the society.
5. The Life Insurance companies must adopt Customer oriented Plan coverage through advisors , Easy settlement through wide area network by Agents/Officers , arrangement of more number of workshops/seminars for customer orientation, their employees must be instructed to maintain a good linkage with the present customers , Staff should provide prompt service to their customers staff should behave properly and take more attention to customer grievances and the modes of settlements are faster and easier with providing best quality products for its customers through the process of reengineering to sustain in the competitive market.

 

Conclusion:
CRM practices of life insurance companies have seen a dramatic change over the past few years. Most of the insurance companies have very transparent and effective CRM models. However it is evident that the private companies have been the pioneers in initiating the CRM strategies because of service quality perceptions and increased competition in the industry.

 

Customer services in private companies far outweigh the facilities offered in the public sector LIC. It was found that LIC has reinvented its strategies to stay abreast with IRDA regulations and provide varied facilities to its customers. Majority of the respondents were of the opinion that the services provided by private companies have redefined the whole concept of insurance. When LIC was the only insurance company customers were at a disadvantage due to its monopoly position and seller oriented selling of life insurance products.

 

However life insurance products are now need based and customer centric. Customers have shown a clear preference for private life insurance companies due to their persistent efforts to build new clients and retain existing clients. Private companies also made it relatively easy for clients to revalidate lapsed policies and are very effective in quick claim settlements.

 

There is definitely a shift of customers’ preference from public sector LIC to private life insurance companies. This would be even more evident if private companies continue to reinvent themselves, develop customer need based products, eliminate mis-selling and concentrate on customer satisfaction and customer relationship building as its main prerogative.