CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES IN LIFE INSURANCE COMPANIES IN CHENNAI CITY

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1 CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES IN LIFE INSURANCE COMPANIES IN CHENNAI CITY Dr.K.KRISHNAMURTHY, Assistant Professor and Research Supervisor, PG & Research Department of Commerce, Periyar Govt. Arts College, Cuddalore K.KARTHIKEYAN Part time (E) Research Scholar, Arignar Anna Government Arts College Cheyyar , Tiruvannamalai District, Tamil Nadu ABSTRACT The Insurance companies would benefit through tailoring their offering to high value customers that is high net investors and the telecom companies have been suggested to develop churn prediction models by using tools like data mining. The present study can serve as a platform for future work on the subject and this will naturally stimulate new ideas and also further research on the subject. This article highlights the customer relationship management practices in life insurance companies in Chennai city KEYWORDS: Customer Relationship Management (CRM), Customer and Employees, Life Insurance Companies, LIC of India, SBI life Insurance, Birla Sun life Insurance, ICICI Prudential life insurance and Bajaj Allianz life Insurance INTRODUCTION At present, the customer relationship management (CRM) is the latest idea of managing and propagating insurance business more successfully. It is a tool that helps to design insurance products which match with the customer expectations. It also helps to build customer trust and develops loyalty of the customer. The main strategy of CRM is to pay attention to customer needs, innovative marketing channels, uniform quality outlets and identification of target market and also customer groups. The new generation companies claim to grow by customer services by tuning up technology, training staff and tackling existing markets. Private players are picking up market share from competitors. With better prospects offered in the technology sector, the capacities and capabilities of the life insurance sector to retain and improve customer base is strengthened. The timely and efficient policy towards customer service makes this possible and acceptable to the insurers. The quality of customer relationship is often the differentiator. It is more so for life insurance business because the insurers are in the business of improving the quality of life of the customers. The understanding that a life insurance business is essentially one of partnership in helping customers and meets their lives, opportunities and adversities will go a long way in aligning the functional arms in the business. This study includes the analysis of customers view in maintaining CRM practices, their opinions on requirement of CRM practices by the service providers and their intensions regarding satisfaction, retention, repurchase and in referring to new customers and the enhancement which can be made through good relationship management practices. Added to it the opinions of people who are likely to have close contact with customers like dealers and employees with customer contacts are analyzed. Analysis of demographics and their effects are also made. CUSTOMER RELATIONSHIP MANAGEMENT CRM has been defined by many people in different ways. According to Len Tiu Wright et.al, (2002) CRM is an attitude that pervades the company, but it needs a solid foundation of knowledge of customers. Lior Arussy (2005) defined CRM as the process of separating a firm s high value and low-value customers for the purpose of providing them differential levels of service. As per Armstrong and Kotler (2003) CRM is one of the most promising marketing developments and it can give tremendous Page 64

2 effect when it is used right. It evolved from concepts like relationship marketing and the increased emphasis on improved customer retention through the effective management of customer relationships. Customer expectations should be monitored and set against satisfaction levels at the early stage in the relationship. Customer evaluation in relation to initial expectations is a crucial factor in customer retention. Retaining customers in today s competitive atmosphere is a challenge for the firm s survival. CONCEPT OF THE STUDY Life Insurance is a contract for payment of a sum of money to the person assured or failing him/her, to the person entitled to receive the same on the happening of the event insured against. Generally the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death, if it occurs earlier. The contract also provides for the payment of premium periodically to the Corporation by the assured. Life insurance is universally acknowledged to be an institution which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner. Life insurance is considered as civilization s partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person: that of dying prematurely leaving a dependent family to survive for itself and that of living to old age without visible means of support. STATEMENT OF THE PROBLEM The insurance sector in India has contributing the development of economy through generation of employment opportunities, acceleration of industrial growth and so on. The Life insurance companies of India has its own significance and place in the economy, it is not free from problems. Policyholders satisfaction is the true differentiator for the success of any business and is more so in insurance, where the products are perceived to be intangible. In this aspect the present study is an attempt to study the main aspects namely assesses the CRM practices of the life insurance companies, customer perception regarding CRM practices, satisfaction on facilities provided by insurance companies and employee perception towards the CRM practices. Further, the present study is also look in to the aspects of service quality regarding CRM practices in insurance sector. The CRM practices of insurance companies and problems faced by them in implementing the customer relationship management strategies and measures needed to solve these problems, come under the purview of this study. The main focus is on the service quality of performance of insurance sector, regarding customer relationship management in the area of reliability, responsiveness, assurance and empathy. It is believed that the result of the study gives sidelights for insurers in order to mobilize resources in creating loyal customers in their respective companies. SIGNIFICANCE OF THE STUDY Customer Relationship Management enables the business organization to tailor specific products or services to each individual customer. In the most advanced scenario, CRM may be used to create a personalized, one-to-one experience that will give the individual customer a sense of being cared for, thus opening up new marketing opportunities based on the preferences and history of the customer. Customer relationship management is also a customer focused business strategy that aims to increase satisfaction and loyalty of the customer by way of offering a more responsive and customized service to each customer. CRM is a technology initiatives are most commonly implemented in functional areas such as customer support, service, sales and marketing to optimize profitability and revenue. Customer relationship management is about managing customers for better understanding and to serve them. It is an umbrella concept that places the customers at the centre of an organisation. Customer service is an important component of CRM; however CRM is also concerned with coordinating customer relations across all business functions to retain the customers for long range. Life insurance industry has a pivotal role in the face of the rapid changes such as liberalization, globalization and privatization and also the related technological and market changes. The efforts of the industry are to be distinctly identified and every sphere of activity must be integrated vertically and horizontally to deliver significantly the service of an industry so as to get good business results. Life insurance management, as a distinct discipline, has been playing prominent role and gaining ground slowly and firmly in the present day post-liberalization scenario. The breakthrough achievements can come only from the untiring, sincere and diligent efforts of all the stakeholders. The major change of the life insurance industry in India is the opening up to private and global players. With this, the monopolistic character of the public sector giant i.e. LIC of India, has been replaced by competition subject to the regulatory conditions of the IRDA. Insurance has become a matter of persuasion rather than solicitation. The customer can choose now among industry players, schemes available, nature and types of risks and also the costs involved therein. In today s competitive world, various insurers are entering in insurance business. Even today LIC is at peak than private insurers. So this research will be useful for agents to improve their service and know the level of awareness among the policyholders and public. This study will be helpful for policyholders to know the various facilities and services provided by life insurance companies. This study requests the official members to provide effective service expected by its policyholders. This research will be useful for life insurance companies to enhance its service quality and satisfy the policyholder s up to their expectations and create more awareness among rural and illiterate people. The main objective of the present study is not to try to mold the customer to the company s goals but to listen to the customer and try to create opportunities beneficial to each. It is important to offer customers what they are currently demanding and anticipating and what they are likely to expectations in the future. This can be achieved by providing a variety of existing access channels for customers, such as , telephone and fax and by preparing future access channels such as wireless communication. Offering solutions rather than obstacles is possible when a company empowers its customer service agents. REVIEW OF LITERATURE AND RESEARCH GAP This research has reviewed 60 studies, which include Indian and foreign journals. An analysis of the above mentioned literature indicates that most of the studies were confined mainly to an opinion on awareness and marketing strategies of insurance Page 65

3 products. Further, few studies is to be assessed the satisfaction of the policy holders in the insurance sector from a particular and a very specific dimension. No study seems to have been undertaken so far to customer satisfaction towards service quality of the services offered by insurance companies - A study with reference to Chennai city. Sharma Rajendra Prasad (2006) in his thesis on A Comparative Study of Marketing Strategies of Selected Public and Private Sector Life Insurance Companies finds that there is much innovativeness in the marketing strategies adopted by the private insurance players. The private insurance players are mostly technology-driven and hence they are on the forefront in the area of introducing on-line and mobile marketing strategies. Raj Kumari (2007), in her study, identified the customers attitude towards purchase of insurance products and also their knowledge on the bancassurance formats available through banks. The study concluded that insurance awareness is growing rapidly among the people though many of them are still hesitant to insure due to certain barriers. The people go for insurance only to avoid income tax and have future savings. Bancassurance, the new term in insurance about this concept, the people understanding bancassurance did not have an idea on Centurion Bank providing this facility. The results also indicated that there is very less relation of the bancassurance clients with Centurion Bank accounts like savings, loans etc. Chawla and Singh (2008), in their paper, investigated the service quality factors affecting customer satisfaction levels of the policyholders. The data was collected from 210 policyholders belonging to Northern India through a questionnaire. Factor analysis and reliability analysis were carried out to test the data. The results revealed that the accessibility factor has a higher mean satisfaction as compared to mean satisfaction of reliability and assurance factor. The comparison of overall mean satisfaction based on various factors expected showed that respondents who had purchased insurance policies before privatization had a higher mean score as compared to respondents who took insurance policies after privatization. A study conducted by Keerthi, P. and Vijayalakshmi, R. (2009) A Study on the Expectations and Perceptions of the Services in Private Life Insurance Companies reveals that the policyholders expectations are well met in the case of certain factors reacting to service quality. But in the case of other variables, there exists a significant gap which means that policyholders have experienced low levels of service as against their expectations. If all the players in the Life insurance industry focus on the effective delivery of services, they can win the hearts of customers and anticipate their increased market share. Gupta, P.K. (2010) in his book on Insurance and Risk Management has attempted to give a more in-depth analysis on the functional areas of insurance business, design and development of products, management of claims, pricing and marketing of products and the financial operations of insurance companies. It also elaborates the Asset-Liability Management Aspects of the insurance companies. Shashidharan Kutty, (2010) in his article on Indian Life Insurance -The Millennial Decade elaborates the qualitative development in the Life Insurance Industry during the last decade, both in the global and also in the Indian context. In his empirical analysis, he finds that the dominant paradigm in sales has been to build the sales infrastructure. Somehow, the growth would automatically materialize and the selling competence will also been enhanced. But, the life insurance, as an industry, is mostly built on trust, protection, preservation and long-term opportunity. Rajeswari and Kartheeswari (2011) determined that the customer satisfaction as the perception of customers on the service whether that service has met his needs and expectations. Service quality, personal factors, perception of equity and fairness, price, product quality, situational factors and attributions for service success or failure are the factors that influence the customer satisfaction. However, the perceptions and expectations of the policyholders who have taken the policies from Life Insurance Companies vary from person to person. This study emphasizes the perceptions of the policyholders about the service rendered by the LIC of India and intends to promote a better theoretical understanding and recognition of the complexities to service quality and its measurement with respect to life insurance. Annamalah (2013) determined that in Malaysia, the life insurance industry has grown the strength and plays an important role in the capital market. This study examines the various socioeconomic and demographic factors associated with decisions to life insurance purchasing behaviour and total policies expenditures on life insurance by Malaysian married couples. Primary data from a survey were used in this study. The Logit model was formulated to investigate life insurance purchasing decisions and total expenditure on life insurance policy amongst married couples. Results from the empirical analysis showed income and education level of the household head supports the explanatory variables for life insurance purchasing decisions. In addition, the profile of life insurance policy purchaser is constructed to identify the segment of people and to provide good understanding on the demand for life insurance in Malaysia and would help in the formation of policies for further developing of the insurance industry. Hence, the present study was conducted and it was a systematic attempt to analyze the different dimensions of service quality and satisfaction of services offered by insurance companies as a strategic tool for insurance sector because the policyholder (customer) retention capacity of the organization depends upon the practices for attracting, acquiring, staff and customer relationship and satisfaction of the policy holders. Further, this study also focuses on customer perception regarding the CRM practices and also employee perception on CRM practices and strategies to be followed by the insurance companies to maintain the relationship with the policyholders. OBJECTIVES OF THE STUDY 1. To analyse the customers satisfaction relating to service quality in the life insurance companies in Chennai city. 2. To evaluate employees attitude towards CRM practices adopted by life insurance companies in Chennai city. HYPOTHESIS H 0 :1 There is no significant difference between the demographic profile of the respondents and customer satisfaction towards the service quality of the insurance companies Page 66

4 H 0 2: There is no significant difference between the demographic profile and employees attitude towards CRM practices in the select life insurance companies in Chennai city. METHODOLOGY The study is based on both primary and secondary data. Primary data are collected for understanding the customer relationship management practices of the policyholders in Chennai city. In Chennai city policyholders is mainly concentrated in LIC of India, SBI life insurance, Birla sun life insurance, ICICI Prudential life insurance and Bajaj Allianz life insurance. Hence, the study is based on primary survey, concentrates only on large area of policyholders in Tami Nadu. Primary data were collected from a sample of 952 (680 customers and 272 employees) respondents from Five Insurance Companies in Chennai city. The secondary information has been collected from the reports of the select insurance companies and related agencies. Further books, journals, reports and websites have been referred. SAMPLE DESIGN Everyone in this world is a sales person and a buyer in a way and hence, the communicating population of any area or region under study would constitute the universe for the study. But for the domain of this study is conducted in Chennai city life insurance customer. The sample method is using the convenience sampling method. The sample size of the research is 680 from five branches from the Chennai city. In order to elicit the best feedback from the targeted sample units, information was collected by administering a questionnaire. The samples consists of two categories namely customers (680) and employees (272) total sample size 952. This study is descriptive in nature. STATISTICAL TOOLS AND ANALYSIS The data should be collected through the well structured questionnaire were classified and tabulated for analysis in accordance with the outline laid down for the purpose of justifying the objectives framed at the time of developing research design. To analyse the data and to draw inference the following statistical tools were used and data collected through primary and secondary data are classified and grouped with the help of frequency tables. The data collected from the customers were analysed through simple percentage, Mean, Standard Deviation (SD), Co-efficient variation (CV), Chi-Square test, One-Way Analysis (ANOVA), T-test, Multivariate test and Factor Analysis. The reliability and validity analysis of the data in this study were analysed using Statistical Package for Social sciences (SPSS Package). PILOT SURVEY The pilot study was conducted among 25 customers and 10 employees from life insurance companies. The reliability of variables in each construct was confirmed through the pilot study. On the basis of the result of pilot study, a certain modifications are too made in the statements or variables and the final questionnaire was prepared for data collection. Accordingly, the questionnaire has been restructured and the final schedule was prepared and approved by the research guide for conducting the field work. PERIOD OF THE STUDY The study on customer relationship management practices in selected life insurance companies in Chennai city is made for the period from one year from January 2015 to December The primary data covered is six month from July 2015 to December This month is normal for the purpose of analysis and evaluation. LIMITATIONS OF THE STUDY The study focuses the customer relationship management towards life insurance companies in Chennai city only. The study considers the personal policies pertaining to life insurance companies. The study is based on the attitude of the customers and is subject to change in the future. The sample customers expressed their views on the current state of affairs of the life insurance companies. The questionnaire is given among customers of the selected life insurance companies in Chennai city. Since it is a perception study, result cannot be generalized. SUGGESTIONS AND RECOMMENDATIONS Based on the above finding the followings suggestions and recommendations are to be made to improve the customer relationship management in the insurance companies. The managements should maintain the relationship and secure loyalty because the customer may become profitable at a later stage through cross- and up-selling. If not, the customer should be dropped. It is suggested that the organizations should empower the CRM operating team members to overcome any difficulties and obstacles that may crop up. In the highly competitive insurance market to survive and have a competitive edge, insurance companies need to implement CRM not only technically but also as part of the culture. The employees should be trained on interpersonal skills so as to provide politeness, comfort, and individual attention to their customers. It observed that the branches have no authority for CRM. So, that the insurance companies should consider CRM department for every branches. Employee engagement needs to be properly designed in order to feed a large number of customers retaining satisfaction at the same time. Page 67

5 The most challenging and crucial task of insurance companies is to design and implement CRM in a truly customer friendly manner to gain maximum positive results out of it. Insurance companies should interact or communicate with the customers consistently and take their feedback with regard to their problems and complaints. Customer Relationship Management is the key to success in the present era and only those organisations can succeed who have been able to build a base of loyal customers, because a loyal customer advocates the companies name and products much better than the organization itself. [ The insurance companies should formulate a sound customer knowledge strategy. It should realize that one time collection of customer data is not enough. Customer knowledge gets built when information is collected systematically over a period of time. This can be done through regular surveys and during customer interactions. Insurance companies must introduce new ways and means that makes its customer highly delighted with its quality of services. CONCLUSION The present article concluded that the managements of all the organizations selected for the study are unanimous in the way they define Customer Relationship Management (CRM) and their understanding of the concept of CRM. However this study has thrown sufficient light on the CRM practices and how these practices differ among the different service sectors and within a service sector. Hence based on these findings this study has made some suggestions that are common to all the service sectors like formulating a sound customer knowledge strategy, categorization of customers on customer value, devising a mechanism to measure CRM progress and internal marketing. Besides this study has also made some important suggestions specific to the selected service like the banking service organizations are recommended to design their offering based on a customer knowledge strategy. The Hotel managements are suggested to implement loyalty programmes which would lead to referrals. The Insurance companies would benefit through tailoring their offering to high value customers that is high net investors and the telecom companies have been suggested to develop churn prediction models by using tools like data mining. The present study can serve as a platform for future work on the subject and this will naturally stimulate new ideas and also further research on the subject. REFERENCES 1. Balachandran, S., Customer Driven Services Management, Response books (A Division of Sage Publications), New Delhi, Charles, P. Jones, Investment Analysis and Management, John Wiley and Sons (Asia) Pvt. Ltd., Singapore, Gupta, P.K.., Insurance and Risk Management, Himalaya Publishing House, Mumbai, Mark S. Dorfman, Introduction to Risk Management and Insurance, Englewood Cliff, N.J., Prentice Hall, New Delhi, Raj Kumari, M. (2007), A Study on Customers Preference Towards Insurance Services and Bancassurance, The ICFAI Journal of Risk and Insurance Vol. IV, No. 2, pp Selvankumar, M. and Vimal Priyan, J., Indian Life Insurance Industry: Prospectus of Private Sector, The Journal of Insurance Institute of India, January-June, 2010, p Shashidharan Kutty, Indian Life Insurance The Millennial Decade, The Journal of Insurance Institute of India, Vol. No. XXXVI, July-December, 2010, pp Vanniarajan, T. and Jeyakumaran, M. (2007), "Service Quality and Customer Satisfaction in Life Insurance Market", Pravartak, Vol.11, Issue 3, April-June, pp Page 68