CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES IN INSURANCE SECTOR A STUDY ON LIC OF INDIA IN TIRUCHENDUR AREA. Researchjournali s Journal of Management

Transcription

1 1 CUSTOMER RELATIOHIP MANAGEMENT PRACTICES IN IURANCE SECTOR A STUDY ON LIC OF INDIA IN TIRUCHENDUR AREA Mrs.C.Pappeswari Assistant Professor of commerce, Govindammal Aditanar college for women,tiruchendur,thoothukodi District,Tamilnadu Mrs.S.Rajalakshmi Assistant Professor of commerce, Govindammal Aditanar college for women,tiruchendur,thoothukodi District,Tamilnadu

2 2 Abstract Customer relationship management is an old concept. It s all about how you treat your customer after the sale. Businesses that handle well succeed referrals and repeat sales are the lifeblood of business. They are also a direct result of effective customer relationship management. Customer relationship management (CRM) is a practice that puts the customer at the center of the equation. Over the years myriad software applications have sprung up to simplify and streamline this process. In simple terms CRM involves organizing and tracking all contacts with prospective and existing customer and in a simple scenario it involves: 1. Recording all customers and interactions details in an organized manner into a database. 2. Providing the tools to view selected customer or prospect data in a desired manner. 3. Generating alerts for pending actions such as follow ups, service calls and marketing contacts. Keywords: CRM, level of, CRM in future 1. Introduction Today, many business such as bank, insurance companies and other service providers realize the importance of Customer Relationship Management (CRM) and its potential to help them acquire new customers retain existing ones and maximize their lifetime value. At this point, close relationship with customers will require a strong coordination between it and marketing departments to provide long term retention of selected customers. CRM is a sound business strategy to identify a company s most profitable customers and prospects and devotes time and attention to expanding account relationships with those customers through individualized marketing, reprising, discretionary, decision making and customized service delivered through the various sales channels that the company uses. The definition of consequently, IT and marketing departments must work closely to implement CRM efficient. Further it was also emphasized that customer relationship management based on social exchange and significantly assists the firm in developing collaborative, co-operative and profitable long term relations. The ideas of CRM are that it helps businesses use technology and human resource gain insight into the behavior of customers and the values of those customers. If it works as hopes, a business can provide better customer service, make all centers more efficient cross sell products more efficiently, help sales staff close deals faster, simplify marketing and sales processes, discover new customers and increase customer revenues. System interfaces have been modified in order to track the customers under promotion, as well as to enable sales people in the branch office to complete the sales on promoted customers as well as to record the fact that the sales was a consequence of the promotion. The present study is an attempt to assess the customer relationship practices followed by insurance sectors in life insurance companies in particular.

3 3 2. Statement Of The Problem The current scenario in the Insurance Industry is a complex and competitive environment tinged with little stability. The major hassle the industry faces is obtaining clients. This is due to the fact that the big fish in the insurance industry dominates the sector. It has become increasingly difficult for this particular sector to gain profits while curtaining costs, acquisitions, mergers have all contributed to the difficulty insurance agents and other professionals from this industry face. Long considered a job only restricted to insurance companies, selling insurance policies has now become an option for banks as well. This has resulted in a lot of increased as well as unwelcome competition customers tend to lose out as they are not buying from the right provider. In addition to this the internet has increased the pressure for insurance companies in capturing the market. All this has succeeded in making the insurance world more complicated. What is required is as comprehensive database of information about customers who hold insurance policies choosing a customer centric strategy can go a long way in achieving this CRM helps the insurance companies to ensure that the customer is understood better. Right now insurers can achieve excellent policy administration, good billing systems and the like but fall short on the customer front. However this alone is insufficient to survive on. Insurers have now realized that CRM is essential if they want to deliver high quality services since it satisfies current customers and gains new ones. This is because policies get sold only it relationship are built. CRM solves these problems with its use friendly web based CRM tools that increase sales opportunities. 3. Review Of Literature 1 Neelam C. Gulati (2007) in his book on principles of insurance managements gives an insight into the basics of insurance, types of insurance,claims management, role of technology in the insurance sector and also the history and future expectations of Indian life insurance industry. 2 Phani,B.V.R.D.(2008) in this dissertation on changes in in insurance sector (a study on public awareness ) concentrates his emphasis mostly on the opinions satisfaction of investors about life insurance on the basis of their socio-ecomomic background. 3 Gupta, P.K.(2008) in his book on insurance and risk management analys es the different aspect of insurance and also the related risk management components. The comparative cost-benefit analysis of insurance is also depicted comprehensively in the book. 1 Neelam C. Gulati principles of insurance managements, excel book, new delhi, P hani,b.v.r.d.(2008) changes in in insurance sector (a study on public awareness ) M.phil. dissertation submitted to the department of commerce and busness administration, acharya nagarijuna university, nagarjuna nagar, Guntur, Gupta, P.K.(2008) insurance and risk management,himalya publishing house, 2008.

4 4 4 Jagendra Kumar (2008) in his articles on product doesn t matter service does advocates that the CRM technology can help improve customer service and customer contact. More companies are moving towards supplying self-service to customers to replace face-to-face contract. 5 Chandarana harish kumar muljibhai (2008) in his thesis on performance evaluation of life insurance corporation of india explains the different facets of the performance management of the entry of new insurers into the LIC of india.the impact of liberalization and the entry of new insurers into the industry on the performance of the public sector insurer are also discussed elaborately in the thesis. 6 Srivastava O.C. and Srivastava, S.(2001) in their book on Indian Insurance Industry transition and prospects discuss analytically the financial significance of insurance industry. Its contribution to Indian economic and also the transitory prospects and challenges of insurance industry due to liberalization and the opening up to the secret to private players. 7 Geneshan.G (2004) in his articles on customer care with a CRM observes that companies are to-day opting for a CRM to help them serve their customers in the best possible way and to provide for customer needs even before these are voices. This alone will help them to retain their customers loyalty. 8 Sathish S.V.(2009) in his article entitled life insurance marketing- A phenomenon contends that insurance marketing requires intriguing creativeness of the insurers implying updating knowledge on the markets with global perspective which calls for availability of enough right data or information at the operating offices. 9 Inderjit singh et.al (2009) in their book on insurance and risk management analyzs the different facets of the privatization of indian insurance sector. The different approaches of managing risk based capital are discussed. 4 Jagendra Kumar product doesn t matter service does, the journal of insurance institute of india, January-june, 2008, p.34 5 Chandarana harish kumar muljibhai performance evaluation of life insurance corporation of india southern economist February 15, Srivastava O.C. and Srivastava Indian Insurance Industry transition and prospects the journal of risk & Insurance, the LCFAI university press, vol.vi.no2, APRIL, Geneshan.G customer care with a CRM the journal of risk &insurance October Sathish S.V. life insurance marketing- A phenomenon, southern economist, February 15,2009,p37 9 Inderiji singh,rakesh kalyal,surjit kaur and sanjay arora, insurance and risk management, kalyani publishers, Ludhiana, 2009

5 5 4. Scope Of The Study The study has been undertaken mainly to highlight the customer relationship management with insurance in Tiruchendur.The kinds of policyholders like self employed, businessman, agriculture, government employees, private sector employee s people have included in the study. This study includes the customer relationship in life insurance sector and their levels of only individual life customer have been taken and other are excluded from the study. This study is made to analysis the policyholder with customer relationship management in life insurance The investment habit of the people from Tiruchendur in the life insurance corporation has been tested with the help of the number of polices taken and other factor insured amount and the period insurance excluded. 5. Objectives Of The Study 1. To know the policyholder and expectation with CRM in life insurance of India. 2. To find out satisfactory level of policyholders with CRM in life insurance. 3. To identify the main factor influencing and expectation of policyholders about insurance. 4. To find out the main problems faced by policyholders with customer relationship management in life insurance 5. To analyze the gap between the expected performance by the customer and actual performance by the company 6. Methodologies This section describes the methodology which include collection of data, construction of questionnaire, F-test,, Karl Pearson s co-efficient, gap model, spearman rank correlation, field work and frame work of analysis 6.1 Collection Of Data The study is based on both the primary and secondary data. The primary data were collected from respondents directly with the help of structured questionnaire. Secondary data were collected from books, journals and websites. 6.2 Construction Of Questionnaire The questionnaire is constructed by the researchers themselves. The variables to be included are identified by the researcher in the pilot study. The variable identified is converted into appropriate question and they are included in the questionnaire. It is circulated among few academicians and research scholars in the light of recommendation from them the questionnaire was modified.

6 6 6.3 Sampling Design The sample was selected from Tiruchendur which was considered to be rural area, urban, semi urban area. The sample size was selected as 125. They were selected at random by applying convenience sampling. 6.4 Field Work And Data Collection The researcher carried out her field work for the study during the period from June 2013 to Oct The required information is collected through questionnaire 6.5 Framework Of Analysis A master table was prepared for entering responses for each respondents and small cross tables were made from the master table for analysis in order to determine the customers towards CRM in insurance sector. Likert scaling technique was used. The numerical weight given to the alternative responses were given below. Numerical Weights Given To Alternative Responses Statements Strongly Agree Agree No Disagree Strongly Opinion Disagree Positive statement Negative statement Tools For Analysis Data were analyzed with the help of table and percentage., Karl Pearson s co-efficient were also used to rank the factors that influenced to go for that particular policy regarding the attitude of customer relationship management towards LIC from their most importance to least importance. F-test was used to analyzed the relationship between the level of of customer relationship management and socio-economic profile of the respondents like age, gender, marital status, educational qualification, nature of family, size of family, occupational status, annual income and place of living. 7. Hypothesis The following hypotheses were formulated 1. There exists no significant relationship between age of the respondents and their level of 2. There exists no significant relationship between gender of the respondents and their level of 3. There exists no significant relationship between marital status of the respondents and their level of

7 7 4. There exists no significant relationship between educational qualification of the respondents and their level of 5. There exists significant relationship between occupational status of the respondents and their level of 6. There exists no significant relationship between place of living of the respondents and their level of 7. There exists no significant relationship between family type of the respondents and their level of 8. There exists no significant relationship between family size of the respondents and their level of 9. There exists no significant relationship between income level of the respondents and their level of 10. There exists significant relationship between marital status of the respondents and their level of 11. There exists significant relationship between place of living of the respondents and their level of 8. Limitations Of The Study 1. This study covers only four types of policies well known to the people in the study area. This is the major limitation of this study 2. Another limitation of this study is that it is restricted to Tiruchendur only. 3. The needs, wants and other motives of respondents vary at different occasions 4. Numbers of the respondents are relatively small. 9. Profiles Of The Respondents Age-27(22percent) respondents were in the age group between years, 23(19percent) respondents were in the age group between years, 20 (16percent) respondents were in the age group of between 35-40years, 19(15percent) respondents were in the age group of below 25 years, 18 (14percent) respondents were in the age group between years, 18 (14percent) respondents were in the age group of above 45 years. Gender-68(54percent) respondents were female and 57(46percent) respondents were male. Marital Status-74(59percent) respondents were married and 51(41percent) respondents were Unmarried.

8 8 Educational Qualification-24(19percent) respondents have completed Graduation, 22 (18percent) respondents have completed post Graduation, 21(17percent) respondents were illiterates, 21(17percent) respondents have completed diploma, 19(15percent ) respondents have completed professional, 18(14percent ) respondents have completed up to HSC. Occupational Status-34(27percent)respondents were working Private sector employees, 28(22percent) respondents were working Government employees, 21(17percent) respondents were doing business, 20(16percent)respondents were Self employed,16(13percent) respondents were doing Agriculture activities, 6(5percent) respondents were any other. Place Of Living-58(46percent) respondents were living in urban area, 35(28percent) respondents were living in rural area, 32(26percent) respondents were living in semi-urban area. Type Of Family-69(55percent) respondents were living in nuclear families, 56(45percent) respondents were living in joint families. Family Size-54(43 percent) respondents having a family members between4-6 members, 41(33 percent) respondents having a up to 3 members in their family and the remaining 30(24 percent) respondents having a more than 6 members in their family. Annual Income-41(33percent) respondents having a annual income level between One two lakhs,32(25percent) respondents having a annual income level between two-three lakhs,31(25percent) respondents having a annual income level of less than one lakh rupee,21(17percent) respondents having a annual income level of above three lakhs. 10. Data Analysis And Interpretation Table 1, it was found that the gap score for the customer relationship management Dimension like employees attitude and service was very low, that indicating the high fulfillment of the expectations of the respondents as compared to other customer relationship management dimensions like service through technology, settlement of claims, post sale services and customer approach. The gap score for the customer relationship management dimension, like customer loyalty was very high, that indicating less fulfillment of the expectations of the respondents as compared to other customer relationship management dimensions like working hours, customer follow up, customer care and customer service.

9 9 Table 2, it was found that the calculated value of R is less than the table value at 5% level of significance for ranking based on marital status. Hence it may be concluded that, there is no significant difference in the ranks given by the respondents. Table 3, it was found that the calculated value of R is less than the table value at 5% level of significance for ranking based on family type. Hence it may be concluded that, there is no significant difference in the ranks given by the respondents. Table 4, it was clear that all the influential factors namely customer service, working hours, settlement of claims, customer follow up, customer approach, Customer care, customer loyalty, post sale service, Employees attitude and service and Services through technology were significantly related both at 1% and 5%level of significance with the towards the statements regarding the CRM practices adopted by LIC of India.Thus the null hypothesis was rejected and concluded that the various influential factors of the CRM practices adopted by LIC of India were significantly related with the overall towards the statements regarding the CRM practices adopted by LIC of India. Table 5, It was clear from the above table 4.1 that out 125 respondents, 42(34percent) respondents come under the category of high level, 43(34percent) respondents come under the category of medium level, 40(32percent) respondents come under the category of low level. Table 6, The preference of the policyholders towards the level of about CRM practices in LIC has no significant association with their personal profiles such as Age, Gender, Marital status, Family type, Family size, Educational qualification, Income level, Place of living. The preference of the policyholders towards the level of about CRM practices in LIC has a significant association with their personal profile such as Occupation. 11. Findings Today insurance has become a part of our life. This project was undertaken to find out whether the policyholders were satisfied with the customer of LIC. As a result of the project, the following were analyzed. 1. Most of the respondents were in the age group between years. 2. In gender wise classification 68 (54%) respondents were female. 3. Regarding marital status, it was found that 74(59%) respondents were married (19%) respondents have completed graduation (27%) respondent were working private employees.

10 (46%) respondents were living in urban area 7. 69(55%) respondents were living in nuclear families. 8. Most of the respondents belong to the family members between 4 6 members (33%) respondents come under the annual income group between one to two lakhs 10. Respondents are classified on the basis of their level of and it was found that 43 percent of the respondents were in the category of medium level, 42 percent of the respondents were in the category of high level and 40 percent of respondents were in the category of low level. 11. Hypotheses were formulated to test the relationship between socio-economic background and level of on testing the hypothesis, it was found that. 12. The level of towards CRM in LIC was independent of age, gender, marital status, educational qualification, place of living,nature of family, family size and annual income, 13. The level of towards CRM in LIC was dependent of occupational status. 12. Suggestions 1. Insurers should innovating new products with unique features having some multipurpose benefits at the same time which could create an appeal to the customer, for example a insurance policy in which products can give benefits to insured person and nominee also and at the same with safety and security and as per their religion as in case of Muslim s customer where they looks for halal investment. 2. In case of premium, premium of products should not be too high 3. Marketer should follow the strategy of good quality products and services in lower premium category for rural customer. 4. Regarding promotion, insurer must build up unique imagery appeal for their insurance products through creative advertisement. 5. More intense research works should be initiated, studying the specific needs and attitude sorted by the rural customer for different kind of product categories. 6. Focus should be given on improvement of services given by the rural agents. 7. Insurer should spread more awareness and relax the product complications to make it easier to understand 8. Charges of the insurance companies should be kept low. 9. More personalized follow up by the companies instead of sending couriers for information because of rural areas about their investment and all updates. 10. More branches should be opened in semi-urban areas or rural areas. 11. Finally the largely underserved rural sector holds great promise for both life and non-life insurers.

11 To unleash this potential, insurance companies will need to show long-term commitment to the sector, design products that are suitable for the rural population and utilize appropriate distribution mechanisms. 13. Insurer will have to pay special attention to the characteristics of the rural lab our force, like the prevalence of irregular income streams and preference for simple products, before they can successfully penetrate this sector. 14. Insurer will have to maintain continuous contract under the concept of CRM 13. Conclusions 1. There is low level of awareness and understanding of life insurance products and more generally of the operation of life insurance companies in rural customers. 2. There is confusion in the minds of customers between life insurance, general insurance, health insurance and some investment products. 3. However the Indian insurance industry Continued to face various problems such as low penetration ( Only 22% of the insurable population were insured) and low premium to GDP ratio of (1.3) 4. Growth was also hampered by the existing customer that life insurance was a tax saving tool. 5. Another problem was that the entry of many players had cluttered up the market. 6. The trend of insurance companies shifting from a product focused view to a customer focused one has been developing recently as insurance products become increasingly hard to differentiate in fiercely competitive markets. 7. Insurance companies in India are consequently directing their strategies towards increasing customer satisfaction and loyalty through improved service quality both for rural or urban markets. 8. It is becoming desirable for insurance companies to develop a customer centric approach for future survival and growth. 9. The awareness has already dawned that prompt, efficient and speedy service alone will tempt the existing customers to continue and induce new customers to try the services of the company and with increasing demands from different customer insurance sector has become competitive. 10. Customer are becoming increasingly aware of their expectations and demand higher standards of services as technology is enabling term to make comparisons quickly and accurately. 14. References Books Gupta P.K., Insurance and Risk Management, Himalya Publishing House, Mumbai, 2008.

12 12 Harrington and Niehans, Risk Management and Insurance, Tata McGraw Hill Publishing House Limited, New Delhi, Krishna Swami G., Principles and Practice of Life Insurance, Excel Books, New Delhi, Neelam C.Gulati, Principles of Insurance Management, Excel Books, New Delhi, Srinivasan, M.N., Principles of Insurance Law, Wadwa & Company, Nagpur, Srivastava, D.C. and Srivastava, S., (Eds.) Indian Insurance Industry Transition and Prospects, New Century Publications, New Delhi, 2001 Nalini Prava Tripathy and Prabir Pal (Eds.), Insurance Theory and Practice,Prentice-Hall of India Private Limited, New Delhi, Mishra, K.C. and Venugopal, R. Life Insurance Underwriting, Cengage Learning India Private Limited, Delhi, Jha, S.M., Services Marketing, Himalaya Publishing House, Mumbai, Journal Amitabh Verma, Retention of Life Insurance Business Need for Improvement,IRDA Journal, August, 2008 Anand Pejawar, Pro-active Customer Service Key to Success in Life Insurance, IRDA Journal, July, Anjana Agarwal, Emphasis on Trust Grievance Management in Insurance,IRDA Journal, October, Anuradha Sharma, Life Insurance Evaluation Current Perspective, IRDA Journal, April, Garg, S.C., Insurance Education: Challenges and Opportunities, The Journal of Insurance Institute of India, Mumbai, July-December, Insurance Industry on Growth Path, The Journal of Insurance Institute of India, Vol. XXXII, July- December, 2006 Websites

13 13 Table 1 FACTOR- WISE ANALYSIS OF GAP SCORE S.NO Statements Expected score Perceived Score Gap score 1 Customer service (VI) 2 Working hours (IX) 3 Settlement of claims (III) 4 Customer follow up (VIII) 5 Customer approach (V) 6 Customer care (VII) 7 Customer Loyalty (X) 8 Post sale services (IV) 9 Employees attitude and service (I) 10 Services through technology (II) Source: primary data Table 2 RELATIOHIP BETWEEN MARITAL STATUS AND THERE VIEWS ABOUT PREFERENCE S.No Statements Marital status Married Unmarried 1 Customer service Working hours Settlement of claim Customer s follow up Customer s meets Customer care Customer loyalty Post sales service Employee s attitudes &services Services through technology 10 9 Source: primary data Spearman s rank correlation Calculated value =0.312 Table value =0.6833

14 14 Table 3 RELATIOHIP BETWEEN FAMILY TYPE AND THERE VIEWS ABOUT PREFERENCE S.No Statements Family type Nuclear Joint 1 Customer service Working hours Settlement of claim Customer s follow up Customer s meets Customer care Customer loyalty Post sales service Employee s attitudes &services Services through technology 1 10 Source: primary data Spearman s rank correlation Calculated value =0.58 Table value = Table 4 PERCEPTION TOWARDS THE CRM PRACTICES ADOPTED BY LIC OF INDIA S.NO Cust ome r servi ce Workin g hours Settlem ent of claims Custo mer follow up Custom er approac h Custom er care Custom er Loyalty Post sale servic es Employe es attitude and service Services through technology Customer service Working hours Settlement of claims 0.11 Customer follow up Customer approach Customer care Customer Loyalty Post sale services Employees attitude and service Services through technology

15 15 Table 5 LEVEL OF PERCEPTION ABOUT CRM IN LIC OF INDIA S. No Level of No. of Respondents Percentage of Total 1 High Medium Low Source: primary data Total Table 6 COOLIDATED RESULTS OF F TEST S.NO Personal factors D.F Calculated value 1 Age r=2 c=5 2 Gender r=2 c=1 3 Marital status r=2 c=1 4 Educational qualification r=2 c=5 5 Occupation r=2 c=5 6 Place of living r=2 c=2 7 Family type r=2 c=1 8 Family size r=2 c=2 9 Income level r=2 c= Table value Association S S S= Significant =Not Significant