Research Journal of Recent Sciences _________________________________________________ ISSN 2277-2502 Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 87 A Study on the Behaviour of Micro (Life) Insurance Policy Holders’ with Reference to Coimbatore, India D. Geetha and S. Vijayalakshmi Department of Commerce, Avinashilingam Institute of home science and higher education for women, Coimbatore, Tamilnadu, INDIA Available online at: www.isca.in, www.isca.me Received 30th December 2013, revised 7th January 2014, accepted 5th February 2014 AbstractInsurance Regulatory and Development Authority (IRDA) has created a special category of insurance policies called micro-insurance(MI) policies to promote insurance coverage among economically vulnerable sections of society. Micro insurance contributes significantly to alleviate poverty and to raise the living standard of the people of the country. Hence it is imperative to conduct a research study on the performance of MI and find out the relevant problems. The research study was conducted in Coimbatore during 2013 with a sample of 100 MI(life) Policy holders. The objectives are i. To identify socio-economic determinants of MI(life) demand in Coimbatore. ii. To ensure the level of satisfaction of MI(life) holders. iii. To identify specific problems relating to MI(life). To achieve these objectives a research methodology was framed. The research design is both descriptive and analytical. Both primary (questionnaire) and secondary data were used. The data collected was analyzed with relevant statistical tools like percentage, mean score, Kruskal Wallis H-Test, factor analysis and Likert scale technique. From the analyzed data results were derived. Findings were summarized and presented in the research study. The study shows the growing popularity of MI(life) policy and the awareness among the public. Micro Insurance can play a crucial role as a comprehensive tool to reduce poverty, inequality and vulnerability, particularly where public social protection measures are inadequate and unevenly distributed. Keywords: Poverty, risk, social security, micro-insurance policy, policy holder behavior. Introduction Micro insurance is a form of life, health or property insurance which offers protection to the policy holder at a low contribution (hence called premium). It is aimed at low income population and designed to help them cover themselves collectively against risk (hence insurance).It is a tool for increasing economic growth and development by providing small scale, low premium insurance policies to members of the poorest strata of society in the developing world. In India, it is often assumed that a Micro Insurance policy is simply a low-premium insurance policy. The micro insurance regulation of 2005 was a pioneering approach by the Insurance Regulatory Development Authority (IRDA). India is among the few countries to draft and implement specific micro insurance regulations. In 2002 IRDA developed rural and social sector obligation norms that mandated every insurance company to achieve certain percentage of polices to be sold in rural areas and number of lives to be covered in the social sector. MI is generally for individuals who are ignored by traditional commercial and social insurance schemes. Those individuals have typically low-income, work in the informal economy and have irregular cash flows. Social Security through Micro Insurance: Social protection measure is often related with Micro Insurance for the poor and low income groups. Micro Insurance can play an important role as a comprehensive tool to reduce poverty, inequality and vulnerability, particularly where public social protection measures are inadequate and unevenly distributed. More than fifty percentages of the poor around the globe do not benefit by any kind of social security measure. Among the total workforce in most of the developing countries like India, informal labour is substantial. The casual nature of labour force shows considerably raising trend. Indian informal sector labour force is very poor and they essentially require a common social protection measure. Social security measures prevailing at present in India covers disability, health, old age and economic risks. The implementation of the schemes and its working procedures are cumbersome. In Indian federal finance system, social security measure is a concurrent subject and has its own political economy. Micro Insurance is an inevitable poverty alleviation measure due to lack of any other social protection measure. Need and Importance of the study: Micro insurance is specifically designed for the protection of low income people, with affordable insurance products to help them cope with and recover from common risks. It is a market based mechanism that promises to support sustainable livelihoods by empowering people to adapt and withstand stress. An attempt to analyze the growth and performance of micro insurance to achieve long-term Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 88 economic goals was made. Micro Insurance is an excellent to alleviate poverty and to raise the living standard of the people. Hence it is imperative to conduct a research study on the performance of micro insurance and find out the relevant problems. Review of Literature: A Study and Fostering Rural Growth Through MicroInsurance.The study was conducted in India, Tamilnadu state at Vellore district. This study made an attempt to understand the policyholder’s interest in the Micro insurance product and its contribution to rural women development. Insurance companies have to offer commercially viable Micro insurance products foster the needs of clients through proper delivery channels. Thankom Arun, Mirko Bendig, and Shoba Arun, this three authors studied the thesis under the topic of “Bequest Motives And Determinants Of Micro life Insurance In Srilanka” . This paper emphasizes bequest motives by evaluating participation patterns in micro life insurance against insurance demand and supply side factors. Based on household survey data from Sri Lanka, it presents evidence on the determinants of micro life insurance participation of low-income households, using probit and tobit models. The results provide evidence that micro life insurance is positively correlated with measures of bequest motives such as the number of children or dependents. Better off households are also included like their poorer counterparts in micro (life) insurance markets. The study finds a convincing need for the micro insurance sector to be more responsive to the needs of the poor, with a key role in providing financial education to understand the need for micro insurance. Objectives of the Study: i.To identify socio-economic determinants of Micro (life) Insurance demand in Coimbatore. ii. To ensure the level of satisfaction of Micro (life) Insurance policy holders. iii. To identify specific problems relating to Micro (life) Insurance. Research Methodology To achieve these objectives a research methodology was framed. Research Design: In this study both descriptive and analytical research design has been used and the period of the study is, 2012-13 Sources of Data: Both primary (through questionnaire) and secondary data were used. Size of Sample: The Sample Size is 100 Micro insurance policy holders of self help group members through NGO’s located in Coimbatore. Secondary data : Theoretical back ground of the present study was collected from various sources which include books, Magazines, Journals website and other related research work. Area of Study: The study covers the area within the Coimbatore corporation limits such as Singanallur, Ondipudur, Peelamedu and Ramanathapuram. Tools Used: The following statistical tools were applied to analyze and interpret the data. Simple Percentage Analysis, Mean Score Analysis, H-Test, Factor analysis and Likert scale techniqueResults and Discussion Analysis: The data collected was analyzed and presented in four sections: i. Socio Economic profile I and II, ii. Determinants of Micro insurance demand in Coimbatore: a. Family type, size and earning capacity, b. Source and level of awareness – Institution, types of policies, c. Type of policy preference, sum assured, pattern, mode and assurance of payment, d. Factors influencing the potential demand for Micro(life) Insurance, preference for Micro(life) Insurance and knowledge of the policy holders on the policy features. iii. Level of satisfaction of policy holders. iv. Problems and suggestionsTable-1 Socio Economic Profile-I S.No Criteria No. of Respondents Percentage of respondents I GENDER Male Female20 80 20 80 II AGE 18-30 years 31-40 years 40-50 years 50-60 years Above 60 years 11 48 16 24 1 11 48 16 24 1 III EDUCATION Illiterate Primary Secondary Graduate Post graduate Professional 9 20 12 46 8 5 9 20 12 46 8 5 IV Marital statusMarried Unmarried 71 29 71 29 Total 100 100 Source: field survey, 2013. The majority of the policy holders are women. They (48%) hails from the age group 31-40, they are graduates (46%) and married (71%). Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 89 Table-2 Socio Economic Profile-II S.No Criteria No. of Respondents Percentage of respondents I OCCUPATION 11 13 05 18 53 11 13 05 18 53 Agriculture Business Professional Government service Private sector II ANNUAL FAMILY INCOME Upto Rs.50,000 Rs.50,000 - Rs.1,00,000 Rs.1,00,000 - Rs.1,50,000 Rs.1,50,000 - Rs.2,00,000 Rs.2,00,000 - Rs.5,00,000 Above Rs.5,00,000 14 42 24 10 08 02 14 42 24 10 08 02 Total 100 100 Source: field survey, 2013. Figure-1 b. Determinants of micro (life) insurance demand in coimbatore: i. Family type, size and earning capacity Table-3 Type of Family, Size and Earning Capacity S. No Criteria No. of Respondents Percentage of respondents I Type of family : Joint Nuclear 39 6139 61 II F amily size : 2 3 4 and above 13 40 47 13 40 47 III Earning members : 1 2 3 4 and above18 28 34 20 18 28 34 20 Total 100 100 Source: field survey, 2013. In table 2 shows that 42% of the sample live in a meagre income between Rs.50,000 – Rs.1,50,000 per annum. They are the important target group live in poverty to be covered by micro insurance and they get the benefit of micro insurance. In table 3 shows that 61% of the sample are from nuclear family system, their family size of 4 and above with three earning members. Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 90 It shows in table 4, micro insurance authorities have to spread the message of micro insurance through Self Help Group agents and Micro insurance Institutions. More efforts must be taken to do effective advertisements and to motivate Non Governmental Organisation. The levels of awareness of varieties of policies by the respondents are determined on the basis of mean score of all the statements of respondents, which came out to be 3.8., The results indicate (table 5) that, the respondents are fully aware of ‘endowment policy’, ‘group insurance’, ‘joint life’ and special plans’, as all these statements have mean score 3.8 and above 3.8. This result shows (table 6), major players in life insurance sector are LIC, SBI, Bajaj Allianz life insurance, Birla sun life insurance, ICICI prudential life insurance Co Limited, Kotak Mahindra old mutual life insurance Limited, ING Vysya life insurance Co Limited and Met life insurance Co Private Limited. More than 50% of the insuring sample population has knowledge of these institutions. Table-4 Source of Awareness and Joining Reason S.No Criteria No. of Respondents Percentage of respondents I Mode of Awareness Self help group 32 32 Micro insurance agent 08 08 Non government organization 33 33 Micro finance institutions 26 26 Advertisement 01 01 II Reason Compulsory product 16 16 Benefit me in future 49 49 Benefit someone 35 35 Total 100 100 Source: field survey, 2013. Table-5 Level of Awareness of Policies by the Respondents-Mean Score S.No Policies Fully not aware Not aware Neutral Aware Fully aware Score 1 Term insurance 20 25 - 25 30 3.2 2 Endowment 8 17 - 37 38 3.8 3 Group insurance 3 10 - 36 50 4.2 4 Joint life 6 12 - 31 50 4.1 5 Special plans 8 15 - 45 33 3.8 Mean score 3.8 Source: field survey, 2013. Table-6 Awareness of Micro Insurance Companies S. No Micro insurance companies No. of respondents Percentage of respondents 1 Bajaj Allianz life insurance 93 93 2 Birla sun life insurance 88 88 3 HDFC standard life insurance Co Limited 54 54 4 ICICI prudential life insurance Co Limited 87 87 5 ING Vysya life insurance Co Limited 68 68 6 Kotak Mahindra old mutual life insurance 73 73 7 Life insurance corporation of India 100 100 8 Met life insurance Co Private Limited 55 55 9 Royal sundaram alliance insurance 45 45 10 SBI life insurance 99 99 11 Tata AIG life insurance Co Limited 54 54 Source: field survey, 2013. Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 91 Table-7 Type of Policies Taken by the Respondents S. No Policies Micro insurance products No. of respondents Percentage of respondents 1 Term insurance 34 34 2 Endowment 07 07 3 Group insurance 55 55 4 Others 04 04 Total 100 100 Source: field survey, 2013. Most of the sample respondents (55%) taken group insurance policy, 34% percent had term insurance, 7 percent had endowment policies. Only 4 percent have taken other micro(life) policy. This shows group, Term policies are popular among the micro (life) insurance respondents. Table-8 Sum Assured Amount in Micro (LIFE) of the Respondents S.No Sum assured Amount No. of respondents Percentage of respondents 1 Rs.10,000 38 38 2 Rs. 10,000 to Rs. 20,000 30 30 3 Rs. 20,001 to Rs. 30,000 23 23 4 �Rs. 30,001 09 09 Total 100 100 Source: field survey, 2013. For majority of the policy holders (38%) sum assured comes under less than Rs.10,000 category. Policy holders’ occupation and sum assured: : There was no significant difference in the sum assured by the respondents in different occupations. H: There were significant differences. The calculated H values are given in the following table. Table-9 Kruskal Wallis H-Test – Sum Assured Amount of RespondentsVariable H values Degrees of freedom 2 0.05 Inference Sum assured amount 10.428 1 3.84 Reject H Source: Estimation based on field survey, 2013. The calculated value being greater than the theoretical value of 0.05implies that there was significant difference in the sum assured amount of the respondents in different occupations. Different occupation has influence over the sum assured by the policy holders. Table-10 Pattern and mode of Payment of Premium S.No Criteria No. of Respondents Percentage of respondents I PAYMENT Lump sum Quarterly Half yearly42 13 4542 13 45 II MODE NGOs SHGs Others 45 42 13 45 42 13 100 100 Source: field survey, 2013. Popular pattern of payment is lump sum or half yearly. The popular mode of payment preferred is NGO’s and SHG’s. Factors influencing the potential demand, preference and knowledge of the policy holders about the policy features: The major influential factor for selection of micro insurance were maturity tenure (47) percent and its premium amount (27) percent. Table-11 Factors influencing the selection of micro insurance S.No Payment No. of respondents Percentage of respondents 1 Premium amount 24 24 2 Mode of payment 12 12 3 Returns offered at the time of maturity 17 17 4 Maturity tenure 47 47 Total 100 100 Source: field survey, 2013, Figure-3 Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 92 Table-12 Preference for Micro (Life) Insurance in Future S.No Micro insurance companies No. of respondents Percentage of respondents 1 Bajaj Allianz life insurance 2 2 2 Birla sun life insurance -- -- 3 HDFC standard life insurance Co 3 3 4 ICICI prudential life insurance Co 11 11 5 ING Vysya life insurance Co 5 5 6 Kotak Mahindra old mutual life insurance - - 7 Life insurance corporation of India 74 74 8 Met life insurance Co Private - - 9 Royal sundaram alliance insurance - - 10 SBI life insurance 4 4 11 Tata AIG life insurance Co 1 1 Total 100 100 Source: field survey, 2013. Majority of the respondents (74) percent prefer Life Insurance Corporation of India for investment in future. Figure-4 Table-13 Knowledge of the policy holders about the policy features S. no Features No. of respondents Percentage 1 Premium Rate 82 82 2 Bonus Percentage 74 74 3 Loan Facility 80 80 4 Maturity Value 65 65 5 Accident Benefits 68 68 6 Mode of Payment 73 73 Source: field survey, 2013. The results show that majority (65%) of the respondents are aware of all important policy features. Table-14 Level of satisfaction of policy holders towards services provided by micro insurance providers- mean score S.No Particulars HS S N DS HDS Score 1 Availability of written material receipts, manuals etc 1 30 4 40 25 2.41 2 Benefits offered under policy 13 23 6 33 25 2.67 3 Risk coverage 24 27 7 17 25 3.06 4 Customer service: calls and queries 21 24 8 37 10 3.09 5 Processing speed the issue of policy 18 24 7 26 25 2.84 6 Premium amount 26 25 9 15 25 3.12 7 Willing to pay extra premium for extra benefit and coverage 10 16 6 43 25 2.43 8 Variety of policies/ products and its benefits 16 18 5 25 36 2.51 9 After sales service 16 19 5 30 30 2.62 10 Intermediaries response 6 8 5 50 31 2.09 11 Revival of policy 15 13 5 37 30 2.45 12 Prompt communication 18 10 5 37 30 2.48 Mean score 2.65 Source: estimates based on field survey, HS- Highly satisfied, S – Satisfied, N – Neutral, DS – Dissatisfied, HDS – Highly dissatisfied. Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 93 The level of satisfaction towards various service provider of micro insurance products are determined on the basis of mean score of all the statements of respondents, which came out to be 2.65 for the sample respondents. The respondents were highly satisfied with premium amount, customer service calls and queries, risk coverage, processing speed in the issue of policy and benefits offered under policy as all their variables had mean score exceeding 2.65 However their perception regarding variables such as after sales service, variety of policies / products and its benefits, prompt communication, revival of policy, willing to pay extra premium for extra benefit and coverage and availability of written material receipts, manual etc had the mean score less than 2.65, which concludes that the satisfaction level of the respondents was less as compared to the previous factors. To find out whether there exist any significant difference in the level of satisfaction towards various services provided by micro insurance providers among the respondents in different occupations; Kruskal Wallis H test was applied. The null hypothesis tested was : There was no significant difference in the level of satisfaction towards various services provided by micro insurance providers among respondents in different occupations. H: Level of satisfaction differed. The calculated Hvalue is given in the table 9Factor analysis: Factor analysis was used in the present study to identify the level of satisfaction towards various services provided by micro insurance providers. To determine the appropriateness of applying factor analysis the KMO and Bartlett’s test measures were computed and the results are presented in table 11. The KMO statistics varies between 0 and 1. A value close to one indicates the patterns of correlations as relatively compact and hence factor analysis should yield distinct and reliable factors. KMO statistics for organised sector and unorganised sector were 0.563 and 0.592 signifying higher than acceptable adequacy of sampling. The Bartlett’s tests of sphericity was also found to be significant at 1 percent level providing evidence of the presence of relationship between variables to apply factor analysis. Table-15 Kruskal Wallis H test- Variability in the Level of Satisfaction S. No Variable H values Degrees of freedom 2 0.05 Inference 1 level of satisfaction towards various services provided by micro insurance providers 15.783 1 3.84 Reject Source: Estimation based on field survey, 2013. The table shows that there was significant difference in the level of satisfaction towards various services provided by micro insurance providers among respondents in different occupations. Hence null hypothesis is rejected. Table-16 KMO and Bartlett’s Test Measures Occupation Measure Organised sector Unorganised sector KMO Measure 0.563 0.592 Bartlett’s test of Sphericity 522.679 793.613 i Approx. Chi-square ii Degrees of Freedom 66 66 iii Significance .000 .000 Table-17 Type of problems faced by policy holders S.No Reason for not taking Policy Next Year No. of respondents Percentage of respondents I Administrative problems 1 Delayed response due to change of address 22 51 2 Delay in the revival of the lapsed policy 21 49 3 Delay in the lengthy process to avail insurance policy 19 44 4 Ambiguity in the terms and conditions of the policy 20 46 5 Benefits of insurance policy is not clear 22 52 6 Inadequate publicity and advertisement 22 51 II Problems in claim process 1 Delay in Preliminary claim process 22 50 2 Delay in settlement of claim account 23 53 3 Slow Final claim formalities 24 57 4 Lack of poor claim facilitators 21 50 Source: field survey, 2013, Research Journal of Recent Sciences ______________________________________________________________ ISSN 2277-2502Vol. 3(ISC-2013), 87-94 (2014) Res. J. Recent. Sci. International Science Congress Association 94 Out of a sample of 100 respondents, 43 faced some administrative problems and problems in their claim process. Other 57% did not put up any complaint. Even though there are some administrative and claim process problems that can be solved properly with intelligent efforts. Findings: The majority of the policy holders 48% hail from the age group 31-40, 46% are graduates and 71% are married. It shows that 42% of the sample live in a meagre income between Rs.50,000 – Rs.1,50,000 per annum. They are the important target group live in poverty to be covered by micro insurance and they get the benefit of micro insurance. It shows that 61% of the sample are from nuclear family system, their family size of 4 and above with three earning members. It shows micro insurance authorities have to spread the message of micro insurance through Self Help Group agents and Micro insurance Institutions. More efforts must be taken to do effective advertisements and to motivate Non Governmental Organisation. The results indicate that, the respondents are fully aware of ‘endowment policy’, ‘group insurance’, ‘joint life’ and special plans’, as all these statement have mean score 3.8 and above 3.8. the result shows major players in Micro (life) insurance sector are LIC, SBI, Bajaj Allianz life insurance. More than 50% of the insuring sample population has knowledge of these institutions. Other players are also known to 45% to 54% of the respondents. This shows group, Term policies are popular among the micro (life) insurance respondents. The majority of respondents 38% sum assured comes under less than Rs.10,000 category. Kruskal wallis H-Test – sum assured amount of respondents: There was significant difference in the sum assured amount of the respondents in different occupations. Popular pattern of payment is lump sum or half yearly. The popular mode of payment preferred is NGO’s and SHG’s. Influential factors for selection of micro insurance were maturity tenure 47 percent and its premium amount 27 percent. Majority of the respondents 74 percent prefer Life Insurance Corporation of India for investment in future. The results show that majority 65% of the respondents are aware of all important policy features. Even though there are some administrative and claim process problems that can be solved properly with intelligent efforts. This shows that insurance companies are receptive in receiving the complaints of policy holders and are interested in solving problems of policy holders. Conclusion This study concludes with some important issues relating to micro (life) insurance policy holder’s perspectives. Major findings of the study reveal that the usage of micro (life) insurance is due to micro credits sanctioned by Micro Finance Institutions. They are playing a significant role in improving the lives of poor households. Linking micro(life) insurance with micro finance makes better sense as it helps in bringing down the cost of lending. From the analysis it is find out that there is a desirable increasing trend in demand for micro (life) insurance. Micro Insurance can play a crucial role as a comprehensive tool to reduce poverty, inequality and vulnerability, particularly where public social protection measures are inadequate and unevenly distributed. Reference 1.Siegel, Paul B., Jeffery Alwang and Sundharshan Canagarajah, Viewing Micro insurance as a social risk management instrument, World Bank Social protection discussion paper,116, (2001)2.Churchill, protecting the poor, A micro insurance compendium. International Labour office, Geneva, (2006) 3.Tinsy Rose and V. Selvam, Global Management Review; 4(2), 7-13, 7, 11 Charts, 3 Graphs) 4.Thankom Arun, Mirko Bendig and Shoba Arun, World Development;40(8), 1700-1711, 12 (2012) 5.websites visited: www.irda.gov.in (2013)