“A PRELIMINARY STUDY ON THE PENETRATION OF PRIVATE INSURANCE COMPANIES IN CHENNAI CITY TOWARDS MIDDLE INCOME GROUP (WITH SPECIAL REFERENCE TO STRIVERS AS PER NACER’S NOMENCLATURE)”

1. School of Continuing Education, Department of Economics, Tamil Nadu Open University, Chennai, Tamil Nadu, India. 2. Professor and Director, School of Continuing Education, Department of Economics, Tamil Nadu Open University, Chennai, Tamil Nadu, India. 3. Assistant Professor,School of Continuing Education,Department of Economics,Tamil Nadu Open University,Chennai, Tamil Nadu, India. ...................................................................................................................... Manuscript Info Abstract ......................... ........................................................................ Manuscript History Received: 20 August 2020 Final Accepted: 24 September 2020 Published: October 2020 The present empirical study has been conducted to understand how the middle income group (strivers) mitigate their risks by taking insurance policies from private sector insurance companies. What made them to choose private sector insurance companies? Whether the Private Sector insurance companies provide better service that made them to choose the private sector insurance companies.

The present empirical study has been conducted to understand how the middle income group (strivers) mitigate their risks by taking insurance policies from private sector insurance companies. What made them to choose private sector insurance companies? Whether the Private Sector insurance companies provide better service that made them to choose the private sector insurance companies.

…………………………………………………………………………………………………….... Introduction:-
As per the latest statistics released by the Insurance Regulatory and Development Authority (IRDA), the life insurance industry collected total new business premium income of Rs 900 billion in the 11-month period April 2011 to February 2012 (1).Weighted premium collections (measured as 10% of single premiums plus100% of regular premium) were Rs 549.6 billion for April 2011 to February 2012. LIC is the largest, with at least Rs.13 trillion in assets, which has at least 300 million policies in force and about 250 million people, are covered by LIC in a nation of 1.2 billion people. According to HDFC Life, quarter ended report, March2012, it had 13% increase in total premium to`102 bn (2).
Dr. Ganesh Dash and TulikaSood (3) opines that the penetration rates of health and other non-life insurances in India is also well below the international level. These facts, on the positive note indicate growth potential of the insurance sector. With more and more private companies coming in to the market, it is expected that the situation may change. They predict that India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34 per cent annually. They also state, that it is the perception of majority of people in India that life insurance products are meant for death; and they do not perceive insurance scheme as an investment and the same would lead to mitigate risk or these savings would result in positive investment in infrastructural creation in the economy.With this back ground the present study has been undertaken with the premise that customers are induced to take insurance policies when they approach the financial institutions for loan facility for their multi-various needs.

What constitute middle income group:
Before we go in to the sum and substance of the research it is imperative to understand what constitute the income of the middle income group? 703 Technical Note prepared by Christian Meyer, Nancy Birdsall of Center for Global Development gives New Estimates of India's Middle Class states that"India's middle class has been the subject of much debate. With rapid economic growth over the last decade, the income of the average household in urban India has grown by about a third between 1993/1994 and 2009/2010 (4).
In this period, economic growth not only lifted millions of households out of poverty, but also gave rise to an emerging middle class -with new consumption patterns and, potentially, a strong interest in sound and stable political and economic institutions".They raise the following question:

Who constitutes this middle class in India?
India's National Council of Applied Economic Research (NCAER) has been at the forefront of shaping this debate. NCAER's current definition identifies the middle class as comprising of two sub-groups: "seekers" with annual household income between Rs.200,000 and Rs.500,000, and "strivers" with annual household income between Rs. 500,000 and Rs. 1 million at 2001/2002 prices. Assuming an average household size of fivepeople and converting into constant 2005 purchasing power parity (PPP) dollar, these numbers would be about $8 to $20 per capita per day for seekers, and $20 to $40 per capita per day for strivers.
Keeping the above as the bench mark the researcher had taken the "seekers" who comes under the income band between Rs.2.00 lakhs and Rs.5.00 lakhs and the previous chapter was devoted to deal in detail about how these income group mitigate their risks in what is known as induced risk coverage. The present study relates to strivers whose annual income is more than Rs.5.00 lakhs.
We have conducted a survey to understand how professionals like doctors, engineers, lawyers and those who work in the corporate sector plan and mitigate their risks by taking different kinds of insurance schemes offered by the private insurance companies.

Objective of the Study:-
1. The present empirical study has been conducted to understand how the middle income group (strivers) mitigate their risks by taking insurance policies from private sector insurance companies. 2. What made them to choose private sector insurance companies?Whether the Private Sector insurance companies provide better service that made them to choose the private sector insurance companies.

Scope of the Research:
The sole research question (to be answered) in this study is to understand the respondents plan in the insurance activities to mitigate risk by availing the services of the private insurance companies.
In the research world of literature, research is controlled through inquiries concerning certain events with the purpose of furthering or verifying knowledge that will help the researcher to achieve the objectives. The heartthrob of any research activity is the research procedure adopted by the investigator.After selecting the problem, framing the objectives and reviewing the related literature, the next important step in research is to explain the details of the various steps followed to formulate the methodology

Methodology:-
The factors already discussed above were developed from the reviews of related literatures (wherever available) / were introduced by the researchers. These elements were put through the following statements (as the items in the questionnaire): I bought this life insurance product, because: A1: The scheme provided by the company was attractive and comes within my budgetary constraints A2: By opting to the insurance scheme I mitigate risk entailing myself and my family A3: By opting to the insurance scheme I also save tax A4: I thereby lead a life of security 704

Formulating Null Hypotheses
As per the objectives set above, the following hypotheses were formulated to be tested in this study: 1. H01: Marital status has no significant impact on the customer preferring particular insurance scheme 2. H02: Level of education has no significant effect on the customers' perceptions on the various insurance schemes offered by the insurance companies.

H03:
Income level does play a significant role in determining the type of insurance schemes opted by the respondents. 4. H04: Type of occupation has no significant impact on the insurance schemes opted by the respondents.
Further, based on these set hypotheses, the respective sub-hypotheses were developed for each demographic variables and their specific relationship with the various aspects involved with a life insurance product from the customers' point of view during the period of survey to elicit appropriate information for clarity and reliability of service.

Research Design:
This study was focused more on descriptive type of research. Further, we have chosen survey strategy because it seeks the opinion of a set of population who prefer to join insurance schemes offered by private insurance companies like Bajaj Alliance, Sri Ram, ICICI Prudential, HDFC, Sundaram Finance etc.
In this type of method, in which the opinions of the sample or population is sought by the researcher, usually with a more objective research instrument, say a structured questionnaire. The Universe for this study includes the following professionals and those works in the corporate sector. Government sector has not been included as the Government servants are compulsorily covered with one or the other kind of insurance schemes and are mostly covered with gratuity cum pension schemes and thereby assured to lead a secured life while on employment and after retirement: Doctors; Engineers; Lawyers; Managers; Executives; Sr.Manager; Jr.Manager A simple random sampling technique was used to select the respondents for the following reasons: 1. First the respondents who are mostly professionals and are scattered all over Chennai city, which makes it very difficult to contact everyone. 2. The number of sample size was restricted to 25 of each category which will adequately represent the group. 3. Again, it is difficult to get the exact number of professionals based at Chennai. 4. Third, the researchers are working within the demands of an academic schedule so very limited time and resources are there to conduct the study.
The study focuses on the above group of professionals and those who work in the private sector who maximizes their satisfaction and mitigates their risks by taking popular insurance schemes offered by the privateinsurance companies such as Bajaj Alliance, Sri Ram,ICICI Prudential, HDFC and Sundaram Finance operating in Chennaiwho attracts customers by providing flexible insurance schemes.As a result of limited data on the total population, cost and time constraints, a convenient sample size of atleast 25 from each groupwas planned. The data that was collected through primary sources, through a Structured Questionnaire and Interview method was adopted to collect primary data. The questions were modified to suit the context, and sought the respondents' opinions on the various aspects of insurance products sold by the private insurance companies.

Reliability and Validity:
Churchill (1979) has recommended coefficient α to check the internal consistency of items placed under a given factor with Heir et al (2006) suggesting the α value to be 0.6.Again, all the items under the scale were found to be having a loading of more than 0.6.The details of the sample and demographic characteristics are explained in detail in the Table-1 A questionnaire has been specially prepared for this purpose and about 15 questions were designed to elicit information from the target respondents.The respondents are Doctors, Engineers, Lawyers, Managers, Executives, Sr.Managers and Jr.Managers.It has been decided to meet atleast 25 respondents of each category that would make the population of the study 175 and it would be representative of the samples reflecting Chennai city of the targeted study group.Chennai city is the hub of industries and IT corridor and meeting the respondents will not be a problem.The data so collected are tabulated below:     1  4  0  0  0  0  ICICI Prudential  3  12  0  0  0  0  HDFC  3  12  0  0  10  40  AVIVA  5  20  0  0  2  8  Cholamandalam  3  12  0  0  0

Interpretation:
Managers in the income group from Rs.20,000 to 30,000 have taken policy under JeevanSuraksha, in almost all the companies listed above and they had taken Money back scheme and Health insurance only with Star Health, HDFC and KotekMahendra. This shows the tendency of the respondents in selecting the insurance products as they are well informed about the product they want to buy.JeevanSuraksha is life cover and money back is a financial plan and Health Insurance implies for treatment of ailment this group belong to Managers plan well and mitigating their risks with health insurance but they have left fire and burglary insurance and thereby are not mitigating their risks in this regard.However,all the respondents from this group opined positively about the services rendered by the Private insurance companies.