A SUMMER TRAINING REPORT

ON

“DESIGNING A STRATEGY FOR SERVICING

CUSTOMERS”

ICICI Prudential Life Insurance Company

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF
BACHELOR OF BUSINESS ADMINISTRATION (CAM),
IDEAL INSTITUTE OF MANAGEMENT & TECHNOLOGY
DELHI

TRAINING SUPERVISOR SUBMITTED BY:

Ms. AMARJEET KAUR AMAN BHATT
ENROLLMENT No. 02721001909

IDEAL INSTITUTE OF MANAGEMENT & TECHNOLOGY

DELHI
ACKNOWLEDGEMENT

The project was a great source of learning a good experience as it made aware of
professional culture and conduct that exit in an organization.

Through at the onset of any ambitious project one always encounter certain
difficulties, completing the project as well as making it a success greatly depends on
the encouragement, inspiration and help given by other staff members. For
completion of this project various people have put their lots of efforts.

I would like to thanks Mr. ……(…… of ICICI prudential life insurance) for giving us
an opportunity to do project of ICICI prudential life insurance. My sincere thanks to
all the member of ICICI prudential insurance for giving me and providing me all the
necessary help require for the project

AMAN BHATT

2
 EXECUTIVE SUMMARY

Insurance companies are increasingly facing the problem of high employee turnover
in their sales force. The situation is especially grave because insurance being a push
product, when an agent/advisor leaves the organization, he takes with him the point of
contact between the company and its customer. This leads to the customers not being
serviced properly and repeat sales being affected.
The customers whose advisors either resign or are terminated, and hence are no longer
available to provide service to their customers, The study aims to assess the needs of
such customers of ICICI Prudential Life Insurance and the problems that they might
be encountering. It also tries to check for any differences that might exist in the same
across different cities and product types. A primary survey has been conducted across
two cities, along with the study of the call histories of such customers in Goldmine (a
database for all complaints logged by the customers). There emerges a marked trend
in a few areas of service, especially those regarding premium payment and fund
management, implying that there do exist service gaps in the present system for
servicing customers.

3
 TABLE OF CONTENTS

1. INTRODUCTION
• About the company
• Market presence
• Range of products and services
• Company policies
• SWOT Analysis

2. COMPANY PROFILE
3. RESEARCH METHODOLOGY
• Research objectives
• Research design
• Data sources
• Questionnaire design formulation
• Sample design
• Limitations of the research

4. DATA ANALYSIS AND INTERPRETATION

5. CONCLUSION/FINDINGS
6. RECOMMENDATIONS
7. ANNEXURES
8. BIBLIOGRAPHY/REFRENCES

4
CHAPTER-1

5
 LIST OF TERMS & ABBREVIATIONS USED

ULIPs: Unit Linked Products, products which are market linked

IRDA: Insurance Regulatory & Development Authority of India

BIU: Business Intelligence Unit (a strategic unit, having all market and company
data)

Goldmine: A company software used to record customer complaints and requests

6
7
 INDUSTRY

The insurance sector was opened up in the year 1999 facilitating the entry of private
players into the industry. With an annual growth rate of 24.31 per cent and the largest
number of life insurance policies in force, the potential of the Indian insurance
industry is huge. The year 1999 saw a revolution in the Indian insurance sector, as
major structural changes took place with the ending of government monopoly and the
passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting
entry restrictions for private players and allowing foreign players to enter the market
with some limits on direct foreign ownership.

According to CSO, the insurance and banking services’ contribution to the country’s
GDP is 7.1 per cent out of which the gross premium collection forms a significant
part. Life insurance penetration in India was less than 1 per cent till 1990-91. During
the ‘90s, it was between 1 and 2 per cent and from 2001 it was over 2 per cent. In
2003-04 it was 2.4 per cent (Annexure II).The impetus for increase is due to the active
role played by IRDA in licensing private players and taking positive steps in
increasing the insurance awareness among the people. Besides, the insurance
companies in general and private insurance companies in particular, are reaching to so
far untapped potential in rural areas with aggressive campaign by offering suitable
products.

In all, there are fourteen companies operating in the life insurance Industry, the latest
entrant being Sahara Life Insurance Company Ltd. LIC is the market leader in life
insurance with more than 80 % of the market share. ICICI Prudential is the market
leader amongst the private players. Most of the private insurance companies have
formed joint venture partnering well with recognized foreign players across the globe.

8
Table 1

Source: IRDA

The Indian Insurance market accounts only for 0.59 per cent of USD 2,627 billion
global insurance market. In the recent years, with private players entering the market,
consumer awareness has improved. Competition has brought more products and better
customer servicing. It has had a positive impact on the economy in terms of income
generation and employment growth.

9
Table 2

Source: IRDA

In the first half of the year 2005-06, the life insurers underwrote a premium of Rs.
11323.13 crore during the six months in the current financial year as against Rs.
8425.06 crore in the comparable period of last year recording a growth of 34.4
percent. Of the total premium underwritten LIC accounted for Rs.8409.09 crore and
the private insurers with Rs. 2914.03 crore. The premium underwritten by the LIC and
the new insurers grew by 23.08 per cent and 82.94 per cent, respectively, over the
corresponding six months period in the previous year.
Table 3

Source: IRDA

10
The number of policies written at the industry level increased by 21.48 per cent. As
against this increase, the number of policies written by LIC increased by 17.69 per
cent whereas in the case of private insurers the increase was 60.52 per cent. Of the
total premium underwritten, individual premium accounted for Rs. 9849.41 crore
(growth of 47.07 per cent) and another Rs.1473.72 crore from the group business (a
decline of 14.70 per cent). In respect of LIC the growth in individual and group
business was 17.69 per cent and 9.70 per cent respectively. However, in the case of
private insurers the individual and group business increased by 94.73 per cent and
18.03 per cent respectively. The market share of LIC in terms of premium collection
was 74.26 per cent while in the case of number of policies underwritten it was 88.32
per cent respectively. In the corresponding period of the last year these shares were
81.09 per cent and 91.16 per cent respectively. The number of lives covered under the
group scheme was 41.87 lakh recording a growth of 34.87 per cent over the previous
period. Of the total lives covered under the group scheme LIC accounted for 28.17
lakh and for private insurers it was 13.70 lakh. The life insurers covered 8.46 lakh
lives in the social sector with a premium of Rs.11.89 crore. In the rural sector the
insurers underwrote 29.49 lakh policies with a premium of Rs. 995.96 crore.

ICICI Prudential Life Insurance Company- The leading private life

insurance company
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse and Prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was amongst
the first private sector insurance companies to begin operations in December 2000
after receiving approval from Insurance Regulatory Development Authority (IRDA).
ICICI Prudential's equity base stands at Rs. 11.85 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. In the financial year ended
March 31, 2005, the company garnered Rs 1584 crore of new business premium for a
total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies. The company
has a network of about 56,000 advisors; as well as 7 bancassurance and 150 corporate
agent tie-ups. For the past four years, ICICI Prudential has retained its position as the

11
No. 1 private life insurer in the country, with a wide range of flexible products that
meet the needs of the Indian customer at every step in life.

Major Competitors
LIC remains to be the biggest competitor of ICICI Prudential Life Insurance. It
has been India No. 1 Private Life Insurance Player for the last 5 years (3 times its
nearest competitor in terms of size of business done). However, the No. 2 & No.
3 Position keeps changing. For 2004-05 No.2 was Birla Sunlife while No.3 was
Allianz Bajaj and at the present Allianz Bajaj & HDFC Standard Life have No.2
& No.3 position respectively. Other major competitors amongst private players
would be SBI Life, Tata AIG, ING Vysya, Max New York Life Insurance,
MetLife, etc.
Figure 1

100% 4%
2% 5% 9%
11%
90% 9%
17%
80% 23%
70%

60%

50%
94%
87%
40%
75%
66%
30%

20%

10%

0%
2002-03 2003-04 2004-05 2005-06*

LIC Private Others ICICI Pru

Source: ICICI Prudential Life Insurance

12
Servicing Customer: A Major Challenge
Customer service is turning out to be a major differentiating factor, allowing
companies to break through the clutter. This is especially true considering the surge in
the expectations of customers in terms of service delivery. Life insurance being a long
term investment, relationship building with the customer is becoming increasingly
important. If the customer is not taken good care of, he starts feeling cheated and
trapped in a bad deal. On the other hand, a satisfied customer, not only spreads good
word of mouth, but also brings about repeat sales- a major source of income in
insurance biz.
The main channels of distribution- as well as servicing- in life insurance business are
tied agents (advisors), banks, and corporate agents. Tied agency brings about the
major chunk of life insurance business. In ICICI Prudential alone, there is an agency
workforce of more than 68, 000. The turnover of this workforce is high, especially
because of the immense opportunities available in the market. These agents are the
face of the company to the customer and provide customer service to them. When
these agents leave the company, the link between the company and the customer is
broken and customer service is affected. The companies are beginning to worry about
this loss of touch with their customer and believe that this might be the reason for lots
of orphan customers defaulting on their premium payments leading to policy
lapsation. An easy way out would have been assigning these orphan customers to
other advisors of the company. However, this is not possible in view of the IRDA
guidelines which do not allow such transfer of customers, without certain conditions.
These conditions include non transference of commissions accruing from the orphan
policies to the new advisor. This implies that there is no incentive for the other
advisor to service the orphan customers, except probably sourcing new business.
Keeping all this is mind, almost all insurance companies are working towards finding
an optimal way of servicing their customers. This study was designed mainly to cater
to this problem.

13
Study of Products and Processes
In order to relate to the needs of the orphan customers, the understanding of the
customer service operations of the organization was a prerequisite. Having the
information on products, on processes and on customer service in general, was
imperative for undertaking the primary research. Thus, the first ten days of the project
time was spent on front desk and with operations department. During the same time,
advisors, unit managers, and area managers were approached to get a holistic view of
interactions with customers. A few orphan customers, who had walked into the
branch, were also very helpful in giving insights to the issue at hand. The IRDA
guidelines were studied and so was the company policy for dealing with orphan
customers.

Data Collection
A questionnaire was designed covering as many issues confronting the orphan
customers as possible. Efforts were made to capture all types of information-
qualitative as well as quantitative. So as to be able to conclude whether customer
needs are different across cities (metro as against non metro) and across plan type
(traditional as against unit linked products), the questionnaire was designed
accordingly. It was ratified by a senior operations manager before being administered
to the customers, so that all sensitivities are taken care of. A detachable slip was
attached to the questionnaire in order to record any complaint or request that the
customer would wish to make and that could be submitted directly at the front desk.
The primary research was undertaken for two cities- Delhi, representing the
metropolitan city, and Dehradun, the non-metropolitan. The data of the orphan
customers that was used for contacting them was provided by the Business
Intelligence Unit (BIU). Care was taken to study only those orphan customers who
have had the policies for at least more than 18 months.
Simultaneously, Goldmine was mined for data using the call histories of the orphan
customers. In all, 60 people were personally interviewed and a random sample of
similar size was picked up from the Goldmine for comparison in each category.

14
The mode of first contact was telephone whereby the appointments were sought from
the customers. A minuscule percentage of the customers were telephonically
interviewed because of non availability of customers for personal interviews. Emails
were tried towards the end, but were not fruitful. The emails were tried only for
customers who were not otherwise contactable. A format was sent to help the
customers update their new phone numbers and addresses. Some were sent the
questionnaire directly because it was not possible to interview them personally
because of their locations (some were situated in Dehradun and could not be covered
during the survey there). The failure of the communication over the email can be
mainly attributed to the lack of a proper email id. The customer would have been
obviously reluctant to open a mail/ attachment from an unknown personal id of
iciciprulife.com.

Statistical Examination
Once all the data was available, all the data was collated and re-segregated into
various categories as per requirements. The samples were tested to see whether there
existed any significant difference in the different samples for the following sets of
categories:
 Metro and Non- metro
 Traditional products and Unit Linked products
 Goldmine and personally interviewed customers

The statistical software SPSS was used to run a two sample Kolmogorov- Smirnov
non-parametric test for each of the aforementioned sets of samples. This test
examines whether the distributions of the two samples are the same and hence
whether they belong to the same population. The K-S test is more reliable than other
tests like Mann-Whitney U test and two sample median test because it takes into
account all differences between the two distributions, including the median,
dispersion, and skewness. The non parametric test is chosen because the variables are
measured on ordinal scales.

15
Problems Faced
The major problems faced in data collection were as follows:

 Low contactability of customers because of outdated customer records.

 Lack of availability of a proper (non personal) email id, as mentioned above,
to communicate with the customers.
 Unwillingness of customers to give appointments

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SWOT ANALYSIS

SWOT Analysis of the organization:

Business firms undertake Swot analysis to understand the external and internal
environment. SWOT, which is the acronym for Strength, Weakness, Opportunities
and Threats, is also known as WOT-UP Analysi. Through such an analysis strength
and weakness existing within an organization can be matched with the opportunities
and threats operating the environment so that an effective strategy can be formulated.
An effective organization strategy, therefore, is one that is capitalized on the
opportunities and through the use of strengths and neutralizes the threats maximizing
the impact of weakness.

STRENGTH:

- Has sold 5 lakh policies, being maximum in the private sector.

- Brand power.
- Strong assets and infrastructure.
- Market share of 32.5%.
- Number I the private sector.
- ……

WEAKNESS:

- Industry in nascent stage.

- Awareness about private life insurance companies is very less.
- Still not very popular in rural market.
- Very few branches in the country.
- L…. of operational activities.

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OPPORTUNITY:
- Liberalization of Indian economy.
- Life Insurance sector opening up.
- Very small percentage of population insured in India One of best products
in the market.
- Global market opportunity.

THREAT:

- Lack of proper technical knowledge among the mass.

- Apprehension towards ICICI Prudential being a private life insurance
company.
- LIC: very big player.
- Change in government policy may affect the growth and expansion of the
Insurance sector and the company.

18
CHAPTER-3

19
 Demographics

The average age of a customer in the sample comes out to be approximately 43 years
with a range of 40 years.
Statistics
AGE
N Valid 60
Missing 0
Mean 42.71
Median 42.00
Range 40

A majority of customers in the sample falls in the income group of 2-5 lakhs and have
their occupation as business or service. Very few are homemakers or self employed.

Psychographics
On being asked the primary reason for purchase of their insurance product, more than
half of the customers opted for coverage of risks. This indicates that the majority of
customers still think of insurance as mainly an instrument for covering risks and not
as an investment. Only 23 % ranked investment as their prime motive while one fifth
of the customers regarded insurance as an option for garnering tax benefits.

Purchase motive

6% 23%
20% Investment
Coverage of risks
Tax Benefits

51%
Others
Figure 8

Behvioural
characteristics

20
Looking at the behavioural characteristics of the customers , one can observe that
almost 68% customers use credit cards, 42% have a demat account, almost 98% own
or use a cellular phone, 88% have access to landline phone, and approximately 67%
customers either own a personal computer or a laptop.
However, mere owning or having access to all these items does not imply that the
customers would be utilizing them for interacting with ICICI Prudential. In fact, the
figures for the usage of these items are quite surprising. More than 69% of the
customers use internet (most of them almost daily), but only less than 7% of them use
internet for dealing with us. Similarly, almost all of the customers have a landline or a
cellular phone but less than 9 % of them use our call centre helplines:

Landline
Internet Cellular phone Credit card
phone
Capability (%) 69 88 98 68
Usage (%) 6.8 8.5 8.5 2

Moreover, 70% of the customers are aware of at least more than one alternate option
of premium payment (i.e. other than branch) but only 10% of them use any of them.
Approximately 70% of the customers need to walk in to a branch for premium
payments. A mere 12% use drop boxes and only less than one tenth of them have ever
used the helplines of the company (Figure 9).

21
 Use of Alternate Channels

Call Centre
12%
Branches
70%
Drop box
Figure 9
2%
7% ECS
Online channels
9%

However, the fact is that of the 30% customers who use alternate channels for
fulfilling their requirements, not a single one has complained of facing any problems
while dealing with the company.

22
CHAPTER -2

23
 OBJECTIVE OF THE STUDY

The objective of the study is to understand the needs of orphan customers and design
a strategy to service them better.

Scope of the study

For the purpose of the study, orphan customers have been specifically defined as
‘those customers whose advisors have either been terminated, or have resigned from
the organization, or have moved to a different location, and hence are unable to
service their customers.’ It was noticed by the management that orphan customers
lose their original point of contact with the company. As a result, they often face
problems in getting the expected level of service from the company. This is especially
true for customers having unit linked products whose requirements for interaction are
higher than those of traditional products.

In this study, attempt has been made to understand the issues involved in servicing
orphan customers, to collate their needs, (across metropolitan and non metropolitan
cities and across different product types) and the problems they face with the help of a
primary research (survey), and to develop a plan to address the same.

The study becomes more relevant in the light of the IRDA guidelines stipulating that
the orphan customers cannot be allocated to any other advisor, subject to certain
conditions.

24
25
PRIMARY DATA SOURCES USED: -

Appointments with different people who seem to be prospective advisors.

Interview Method (Cold calling): This method involves presentation of oral – verbal
stimuli and reply in terms of oral - verbal responses. This method can be used through
personal interviews and, if possible, through telephone interviews.

SECONDARY DATA: -
Secondary data means data which is already available i.e. we refer to the data which
has already been collected and analyzed by someone else. Secondary data may be
either published data or unpublished data. In this project secondary data collected
from following sources. Usually published data are available:

 Telephone directory, which contains telephone number of all residents of the

area, companies and shops.

 Newspapers, books and magazines.

 Reports and publications of various associations connected with business and

industry.

 Websites and other publications of company.

 Previous reports about ICICI PRUDENTIAL.

26
 Resource Requirements
In order to work upon the recommendations made, following resources would be
required:
1. Only an IT system upgrade is required for extending SMS reminders and
acknowledgement of payment.

2. IT system upgrade for highlighting orphan status.

3. Utilisation of existing resources for sending emails asking for details updation.

4. Training of existing front desk employees, unit managers and present advisors
for spreading awareness of alternate channels of services.

5. Printing of leaflets, danglers and posters encouraging the use of alternate

channels.

6. Manpower resources required to set up a Special Service Cell for orphan

customers. The requirements can be based on the already existing criteria of
assigning ACRs to regions, wherein 15 regions have been chosen on the basis
of certain parameters like total number of orphan policies, WAPI, number of
customers, etc.

7. Training existing employees as special service agents or hiring new service

executives for catering to all orphan customers.

8. Use of courier service instead of Indian Postal Service. A local courier would
charge Rs.5 as against Rs. 15. Therefore, instead of sending all couriers to
orphan customers directly, the couriers may be sent in batches to branches,
which can then send local couriers.

27
9. For phone reminders, the service is being already provided to Super HNIs. It
can be extended to others on the same lines. Even if there are 1 lakh policies, it
would require us to call 548 * 4 customers every day. If the efficiency of one
trained executive is 600 calls per day, with an event time of 30 seconds (as
suggested by a senior call centre manager for operations), it would require
only four extra executives. These executives would cost only Rs. 12000-
15000. Even if we consider the charges of additional infrastructure, the total
commission payable to advisors on these inforce policies that will be saved,
will offset the costs. By more than 30 lakhs. This is after assuming a 50%
contactibility and 80% hit rate only.

28
29
QUESTIONNAIRE

Name

Age

Occupation

1. Do you own any of the following? (Tick all those applicable)

□ Vehicle (two-wheeler / four-wheeler) □ Personal computer/Laptop
□ Landline phone □ Cell phone
□ Demat account □ Credit card

2. How often do you use internet?

□ Daily □ Weekly □ Monthly □ Rarely □ Never

3. Where do you access internet from?

□ Office □ Home □ Cyber café □ Others
….

4. Your annual income is:

□ < 1 lac □ 1-2 lacs □ 2-5 lacs □ > 5 lacs

5. Do you invest in
□ Mutual funds (Broker/ online) □ Stock market

□ NSCs/ Other PO savings instruments □ Others…………..

6. Do you make use of any of the following for your bank transactions?
□ ATMs □ Website
□ Drop boxes □ Help lines

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7. What is the primary reason for your buying the insurance products?
□ Coverage of risks/ insurance □ An investment option
□ Tax saving □ Others………

8. Do you use the following for your transactions with ICICI Prudential :

Yes No
Help lines
Website/ email

If No, why?
Helplines Email/ websites
Not aware of the option
Find it inconvenient
Tried but dissatisfied
Not tech savvy (in case of internet)

9. What kind of policies have you taken?

□ Traditional □ Unit linked

10. Are you aware of the following modes of premium payment?

□ Bill Desk □ Bill junction □ Cheque pick up

□ Easy Bill □ Drop boxes □ Credit card
□ I nfinity □ ECS

11. Have you referred ICICI Prudential to anyone in the past? (Yes/No)

12. How will you prefer to be contacted by the company?

□ Phone call □Email

□ Sms □ Snail mail
:How many times have you visited a branch for the following

31
 Generally
use
Never 1-2 times 3-5 times > 5 times cc/online

Didn’t need Used cc /

to online

Premium Payment
Change in payment mode
Change in personal details
Change in nominee
Policy revival
Product information
Buying new product
Surrender / claims
Taking loan against policy

Advice on fund management

Switching funds
Top Up
Withdrawal/prem. redirection

Others

13. How often have you faced problems on the following fronts:
Al
w
ay
Never Rarely Sometimes Frequently s
Premium Payment
Acquiring Product info
Policy revival
Change in payment mode
Change in personal details
Buying new product
Surrender/claims processing
Taking loan against policy

Advice on fund management

Switching funds
Top Up
Withdrawal/prem. Redirection

Others

32
 14. Of all the problems, list three most recurring and dissatisfying problems.
i. ………………………
ii. ………………………
iii. ………………………

15. If these problems are resolved, would you be willing to:

Yes No Maybe

Revive your lapsed policy (if applicable)

Consider ICICI Prudential while buying insurance in future
(If yes)Refer ICICI Prudential to friends and family

If no, why?
………………………………………………………………………………………

Concluded.
Name:
Policy No.
Client id:
Complaint/ request:
Pooja Mittal
Summer Trainee,
Delhi

33
34
 SAMPLING PLAN: The sampling plan calls for three decisions:

 SAMPLING UNIT: Sampling unit is who is to be surveyed? The

target population must be defined that’s to be sampled it is necessary so as o

develop sampling frames so that everyone in the target population has an equal

chance of being sampled. My sample unit was various Branches of different banks

and the account holders in Delhi.

 SAMPLE SIZE: Sample size is how many people have to be

surveyed?

 Generally, large samples give more results than the smaller samples.

The sample refers to the number of respondents from the universe. My sample

size was total 30 Bank branches of various banks in Delhi comprising all areas in

Delhi i.e. south, north, central, west and east Delhi.

 CONTACT METHOD: once the sampling plan has determined, the

question was how the subject should be contacted, i.e. by telephone, mail or

personal interviews. But the single way to contact the subject was personal

interviews.

35
36
The study has several limitations owing to the constraints of time and resource
availability.

1. The size of the sample remains small at 60, which is further subdivided into
smaller samples for comparison. The reason for this small size was mainly the
low contactability of customers as more than 50% of records were outdated.
Even out of those who were contacted, only a handful were willing to give
appointments.

2. Though the data from the Goldmine has also been considered, there are certain
needs of customers that might not have been captured in Goldmine. This is not
to say that Goldmine lacks the capability but that the customers might not be
approaching the company for certain needs. This is especially true for the
psychological and informational needs, like the advice on fund management.

3. The data turned out to be skewed in favour of unit linked products for the
Dehradun sample. This distortion when recognized, could not be corrected for
lack of time. The reason for this distortion is mainly that when Dehradun
branch was set up in 2003, the ULIPs had already caught on and therefore
there exists a healthy proportion of ULIPs in that portfolio.

4. Another significant limitation of the study is that it should have ideally

included a control sample of non orphan customers to contrast the
requirements between the two. However, as mentioned earlier, the time
constraint did not allow for such a scope.

It would be best to consider this research as an exploratory kind, giving direction to a

larger research design, where all the aforementioned limitations can be taken care of.

37
The study has its limitations mainly in the form of the small size of the sample taken.
The reader is requested to discount this limitation in view of the time constraint that
the study was subjected to.

It is also desirable that this study be looked upon as an exploratory research for a
further study of the issues considered. The constraints, if removed, would lead to a
clearer understanding of the needs and problems faced by the orphan customers.

38
CHAPTER-4

39
 QUANTIFICATION OF CUSTOMER RESPONSES

The primary aim of the research was to gain insights into the servicing needs of
orphan customers and that was to form the basis of the approach to data analysis. The
customers were asked about the frequency of their needs for a particular set of
services and were also given an option of ‘others’ to pinpoint some need not covered
in the questionnaire. This frequency was taken as the weight while calculating the
scores. For example, if a customer says that he has been to the branch to deposit his
premium 3-5 times, a weight of 4 was given to his need. It was assumed that people
who visited the branch 5 times would average out those who visited 3 times only. The
same logic was applied at other areas as well. The weights were used in order to
differentiate needs which are less frequent from those more frequent.

Inferences
I. Needs of Orphan Customers
From the data following findings came to the forefront:
1. The biggest need of the customer is for premium payments. Premium payment
has a score of 133.5 points as against the next big need of policy revival with a
score of 15 points.
2. Customers also expressed their needs for acquiring product information,
switching funds in ULIPs, getting personal details changed, and even buying
new product.
3. Very few people have expressed a need to interact with the company for
surrender or claims (which might be because most of the policies are yet to
mature) and for advice on fund management.
However, this data has to be studied with caution. The needs of the customers
shown here are only the explicit needs. For example, the low score of need for
advice on fund management does not necessarily mean that the customer does not
require it. It merely means that the customer does not presently use the service.
Further, the data contains both traditional and unit linked products. Here, one must
not forget that some needs are applicable only to ULIPs and hence might be
getting less weightage.

40
 1000

Weighetd Score
100

10

advice

product info
policy revival

new product
switch funds/
premium

personal details

surrendr/claims
prem redirect

Figure 2 Needs of orphan customers

A. Comparison across cities

The customers show a similar pattern of needs across Delhi (metropolitan city)
and Dehradun (non metropolitan city). The biggest need continues to be that of
premium payments for both Delhi and Dehradun, and customers in both the cities
have also expressed a need to visit the branch for reviving their lapsed policies
(Figure 3).
The K-S test that the two samples were subjected to shows that there is no
significant difference in the two samples and that both of them belong to the same
population. [The significance value for all the categories,(Asymp. Sig. (2-tailed))
are greater than 0.05]. Hence, the needs of the customers across the two cities can
be taken as similar

41
(Annexure)

100

80

60

40

20
Value

DEHRADUN

0 DELHI
premium personal details policy revival new product
switch funds/ prem r advice product info surrendr/claims

V1

Figure 3 Comparison of customer needs across cities

B. Comparison across policy types

Customer needs do not vary much across plan types except for the need of policy
revival. Surprisingly, this need crops up only for the customers owning traditional
plans. This difference has also been pointed out in the two sample non parametric
K-S test which says that for the need of policy revival, the two samples do not
seem to be coming from the same population. One of the ways this can be
explained is that traditional plans have been owned by the customers for quite
some time as against the unit linked products.
The needs for seeking advice on fund management and for switching funds are
applicable only to unit linked products and hence can not be compared.

42
 100

80

60

40

20
ULIPS
Value

0 Traditional
premium payment personal details policy revival new product
switch funds/ prem r advice product info surrndr/claims

V1

Figure 4 Comparison of needs across plan types

II. Problem Areas for Servicing Orphan Customers

Customers have pointed out problems mainly in the form of non receipt of
premium payment reminders and premium paid receipts. Quite a few people have
experienced problems in the process of premium payments, be it in the form of
cheques getting misplaced or excessive time taken at the front desk.

A. Comparison across cities

In Delhi, customers usually face problems in areas of premium payment and
complain of not receiving reminders for premium payment at all. Further, non
receipt of reminders was quoted by the customers as one of the main reasons for
lapsation of their policies. Customers in Delhi also face problems in way of
seeking advice for managing their funds. The same problem is most quoted by the
customers in Dehradun. They also report non receipt of account statements for
their ULIP products. One must note at this point that one of the biggest limitations
of this study is that the data for Dehradun customers is slightly skewed in favour
of ULIPs while that for Delhi in favour of traditional products. Therefore, it would
be best to consider the problems in totality than comparing across cities.

43
 Problem Areas For Servicing Orphan Customers

30

25

20
Weighted score 15 Delhi
Dehradun
10

0
a/c reminders advice/ fund product info premium claims details misselling
statement status payment change

Figure 5

B. Comparison across policy types

The difference in needs becomes clearer on comparison on the basis of policy
types. The problem that towers above all is that of seeking advice on fund
management and/or acquiring knowledge of the status of their funds, for the unit
linked products. The customers have complained of not being provided with a
single touch point with the company for the same. The problem of non receipt of
reminders for premium due and receipts for premium paid affects both traditional
and ULIPs almost equally. ULIP customers are also facing problems in acquiring
information about the features of the product they own and have even complained
of being given incomplete/ false information at the time of the sale (administrative
charges not told, returns promised, risks not explained), leading to misselling.

44
 Problem Areas: Comparison across Policy
types

20

15
Weighted
10 Ulip
scores
Traditional
5

0
a/c premium advice/ product details misselling claims premium
staementreminders policy info change payment
status

Figure 6

The two sample K-S test was not applicable because the sample size became
extremely small for calculations. This was mainly because the number of people
having problems was a fraction of an already small sample.

45
46
EFFICACY OF GOLDMINE IN CAPTURING
CUSTOMER NEEDS AND PROBLEMS

The data captured from Goldmine, when compared with that of the customers
interviewed personally, shows similar trends. The two distributions have a marked
similarity in terms of their dispersion. The Kolmogorov- Smirnov non-parametric
test that was run on the samples indicates that the Goldmine is quite successful in
capturing all customer requirements. The only exception is that of the need of
premium payment. The K-S test shows that for this need, the two samples do not
belong to the same population. This can be explained by the fact that whenever a
customer makes a premium payment, the transaction is not entered in the
Goldmine unless there exists a problem.

As there is no significant difference in the properties of the two samples, they can
be clubbed together for the purpose of the study. This would enable the project to
overcome its limitation of having a small sample size. The figure that follows
(Figure Customer Needs
7) , reaffirms the (Goldmine & Face-to-
earlier findings face)
of the project.
chq pick up
assignment
statement
misc
withdrawal/prem redirection
top up
switching funds
advice on fund mangmnt
loan
surrender
buying new product
product info/enquiry
policy revival
nominee change
mode/ freq of payment
change in details
premium notice/ recpt

0 10 20 30 40 50
Weighted Score
Weighted
Score

Figure 7 Customer needs: Goldmine & Face-to-face

The two samples have been clubbed together only for the purpose of studying
the customer requirements as a whole and not for the problems faced by the

47
customers. This is because for the latter, every piece of information on
Goldmine would need to be classified as a problem or a requirement, which
would entail more time and resources-some of the biggest constraints to the
project.

48
CHAPTER-5

49
Key Findings
The major findings of the study are in the form of needs of orphan customers and the
problems faced by them. The following can be finally inferred:
1. Premium payment turns out to be the biggest need. Maximum problems
related to the same.
2. Non receipt of premium payment reminders and premium paid receipts is the
most quoted problem across the two cities covered and across all policy types.
3. Account statements are not being received either. This makes them totally
unaware of their funds status, one of the biggest problems of ULIPs.
4. Lack of advice for managing their funds makes customers complain that they
have no single touch point within the company for their investment needs.
5. Most customers are wary of using call centres and are not tech savvy enough
to use online avenues.
6. Some ULIP customers even complain of misselling by their advisors who
withheld information on some of the administrative charges, or did not explain
the product features or exit options fully.
7. Customer needs across cities remain more or less the same. It could be
because the alternate facilities of premium payment (where the difference
arises in terms of service options), that are available in metro like ECS and
Bill Junction are not very popular amongst the Delhi sample either.
8. Goldmine has proved quite effective in capturing the requirements and
problems of the orphan customers. No significant difference came out between
the two samples studied except in the case of premium payments, justified by
the fact that Goldmine does not register premium payment by a customer
unless there exists a problem.
9. A marked difference is noticed in the capability of the customers for using
alternate channels of services (other than the branches) and their usage.
10. The reason for not using alternate service options turns out to be mainly
unawareness of the options and reluctance to try something new.

50
 11. Customers have reported having trouble acquiring information about the
features of the products that they own, especially ULIPs.
12. Only a fifth of the customers think of insurance as an investment alternative.
Almost half of them consider it as an instrument to cover risks.

Despite its limitations, the study has been able to achieve its objective of getting a fair
idea of the needs of orphan customers. The needs are highest related to premium
payment for traditional as well as unit linked products with an additional want of
advice for fund management for the latter. The problems are also regarding premium
payment needs in the form of absence of premium reminders and premium paid
receipts. The customer feels the lack of a single touch point with the company. This is
especially true keeping in mind the fact that the customers have not shown great
enthusiasm for using alternate channels of service.

The study also indicates that Goldmine is quite effective in capturing the customer
requirements and hence can be used as a reliable source of information for customer
service initiatives in future, however, with caution. There may be some needs/
requirements of customers that might not be getting captured in Goldmine. This could
be because not all customers approach the company for fulfillment of their needs. If
the company plans to be proactive in its approach to customer service, the data from
Goldmine should be clubbed with some primary information as well.

Further, in order to deal with the problems of non receipt of reminders, the company
can consider sending reminders through SMS to customers, along with running a
check through the present system. Setting up of a special service cell in branches to
take care of orphan customers, especially for providing support in fund management,
along with training the existing front desk executives, advisors and unit managers for
encouraging customers to avail of alternate service channels are some of the
recommendations of the study. The need for action is immediate.

51
CHAPTER-6

52
Recommendations
Looking at the key findings, the recommendations can be divided into actions on two
fronts:
1. Internal processes
a. The current processes for sending premium reminders and payment
receipts should be monitored and the cause for the customers’ not
receiving them figured out. (Looking at the current processes, the most
probable reasons seem to be outdated contact details and incomplete
addresses).
b. The reasons for return should be insisted from Indian Postal Service,
which is currently being used.
c. If the reasons are mainly address related, contact details of the
customers need to be updated. This can be done by calling up such
customers.
d. Courier service can be used for orphan customers instead of postal
service. The reasons for non receipt will become more evident.
e. The orphan status of customers should be flashing (in a highlighted
way; CSEs are not even aware of it occurring as ‘O’, which looks more
like a zero to them) on the contract service screen of Life Asia. It
should be made mandatory for the CSEs to confirm the address of such
customers.
f. The customer should be made aware of all the options available to him
for getting the details updated and should be encouraged to do so.
g. Apart from the snail mail, reminders through SMS can also be sent.
The same is currently used for the advisors and can be extended to the
customers themselves. Our biggest competitor LIC is already pilot
testing it in some locations and is planning to take it to the masses very
soon.
h. Use of call centres to remind the customer over the phone is also
possible. Most of our competition (Aviva, MNYL, etc.) does the same.

53
 i. Special Service Cell is suggested for customer’s requirement of advice
on fund management. It can service customers by:
i. Informing them about all the options available to them
ii. Explaining the pros and cons of each option
iii. Explaining features of their products

This cell can service customers other than orphan as well.

j. ACRs can also help with providing information and fund management
advice.

2. Reaching out to the customers

a. Spreading awareness of the alternate service options at every
opportunity is paramount. The front desk can be trained to educate the
customers for using the alternate channels of service.
b. Even the advisors and unit managers be encouraged to educate their
customers for the same so as to reduce problems in future.
c. Leaflets, cut outs, posters and danglers can be used at the front desk for
the same.
d. Incentives can be given to the customers for using alternate channels
(or disincentives for not doing so) in order to encourage their use.

54
CHAPTER-7

55
Annexure I
IRDA Guidelines

56
Annexure II World Life Insurance Penetration Figures for Year
2004

57
58
Annexure III (a)

Dehradun
Statistics
VAR00014
N Valid 25
Missing 0

Premium payment frequency

Frequency Percent Valid Cumulative
Percent Percent
Valid .00 8 32.0 32.0 32.0
1.50 7 28.0 28.0 60.0
4.00 9 36.0 36.0 96.0
5.00 1 4.0 4.0 100.0
Total 25 100.0 100.0

premium payment frequency

10

4
Frequency

2
Std. Dev = 1.81
Mean = 2.1

0 N = 25.00
0.0 1.0 2.0 3.0 4.0 5.0

VAR00014

Figure 3
Annexure III (b)

Delhi
Statistics

59
VAR00002
N Valid 31
Missing 0

Premium payment frequency

Frequency Percent Valid Cumulative
Percent Percent
Valid .00 10 32.3 32.3 32.3
1.50 9 29.0 29.0 61.3
4.00 6 19.4 19.4 80.6
5.00 6 19.4 19.4 100.0
Total 31 100.0 100.0

Premium payment frequency

12

10

4
Frequency

2 Std. Dev = 1.99

Mean = 2.2

0 N = 31.00
0.0 1.0 2.0 3.0 4.0 5.0

VAR00002

60
 Annexure III (c)

Comparison of needs: Grouping variable- City

Test Statistics : K-S Test

switch
personal policy product new surrendr/cla
PREMIUM funds/ prem ADVICE
details revival info product ims
redirect
Most
Extreme Absolute .167 .074 .167 .056 .093 .111 .037 .037
Differences

Positive .093 .074 .167 .056 .093 .000 .000 .000

Negative -.167 .000 .000 .000 .000 -.111 -.037 -.037

Kolmogor
ov-Smirnov .548 .243 .548 .183 .304 .365 .122 .122
Z
Asymp.
Sig. (2- .925 1.000 .925 1.000 1.000 .999 1.000 1.000
tailed)
a Grouping Variable: CITY (Delhi, Dehradun)

61
 Annexure III (d)

Comparison of needs: Grouping variable- Policy type

Test Statistics: K-S Test

personal policy surrendr/cla

PREMIUM product infonew product
details revival ims

Most
Extreme Absolute .079 .075 .400 .144 .067 .053
Differences

Positive .079 .000 .000 .144 .000 .053

Negative -.053 -.075 -.400 -.033 -.067 .000

Kolmogoro
v-Smirnov .269 .257 1.364 .491 .227 .180
Z

Asymp. Sig.
1.000 1.000 .048 .970 1.000 1.000
(2-tailed)

a Grouping Variable: plan type

62
 Annexure III (e)

Comparison of needs: Grouping variables- Goldmine and non

Goldmine

Test Statistics: K-S Test

premium mode/ product buying

premium change in nominee policy assignme
notice/ freq of info/enqu new surrender statement
payments details change revival nt
receipt payment iry product
Most
Extreme
Absolute .638 .121 .131 .100 .000 .155 .115 .017 .017 .166 .050
Differenc
es

Positive .638 .121 .000 .000 .000 .155 .017 .017 .017 .001 .000

Negative .000 .000 -.131 -.100 .000 .000 -.115 .000 -.016 -.166 -.050

Kolmogo
rov-
3.464 .659 .712 .543 .000 .843 .624 .094 .094 .902 .272
Smirnov
Z
Asymp.
Sig. (2- .000 .779 .692 .930 1.000 .477 .831 1.000 1.000 .390 1.000
tailed)
a Grouping Variable: Goldmine vs. non

advice on
switching withdrawal/prem chq pick
LOAN fund TOP_UP MISC
funds redirection up
mangmnt

Most Extreme
Absolute .017 .086 .035 .000 .033 .063 .083
Differences

Positive .000 .086 .035 .000 .000 .002 .000

63
 Negative -.017 .000 -.017 .000 -.033 -.063 -.083

Kolmogorov-
.091 .468 .190 .000 .181 .343 .453
Smirnov Z

Asymp. Sig.
1.000 .981 1.000 1.000 1.000 1.000 .987
(2-tailed)

64
CHAPTER-8

65
 Bibliography

1. www.iciciprulife.com last accessed on August 21st, 2006

2. Intranet- ICICI Prudential Life Insurance Company, accessed during 10th

April, 2006 – 10th June, 2006

3. www.irdaindia.org last accessed on August 21st, 2006

4. www.avivaindia.org last accessed on June 1st, 2006

5. http://www.bajajallianz.co.in/ last accessed on June 1st, 2006

6. www.licindia.com/ last accessed on June 1st, 2006

7. www.tata-aig.com/ last accessed on June 1st, 2006

66