It is commonsensical that savings are the lynchpin of a nation’s investment program. Most of the economic development noticed in the western world is certainly an outcome of the phenomenon of savings of its citizens and their investment in industrial production. As a natural corollary, these countries could also attract foreign capital for investment in their economic pursuits. Cumulatively, these countries could raise their GDP and in turn savings, which are again ploughed back into investments. And thus continues the cycle of investment in any country.

India is no exception to this phenomenon. Our national savings are indeed higher than many of the western countries. But their flow into industrial investment might not be to the full extent, for the government’s demand for capital to meet its own fiscal deficit is often found to crowd out others from the market. Again, within industrial investment, public sector and private sector are in competition with each other to attract investments. Secondly, national savings that are in the form of insurance and provident fund are not freely investable, particularly through capital markets, whereas in the western world, it is the insurance and provident fund that constitute major chunk of investments.

Of course, with the advent of economic liberalization and the resultant opening up of insurance for private participation, things have changed for the better. The rate of national savings has also gained momentum—penetration of insurance is slowly improving. Against this backdrop, the authors Joseph Anbarasu D, Clifford Paul S and Annette B of the first paper— “An Empirical Study on Some Demographic Characteristics of Investors and Its Impact on Pattern of Their Savings and Risk Coverage Through Insurance Schemes”—have made an attempt to evaluate the demographic patterns in the country and its impact on the savings behavior of citizens with specific reference to investments under insurance. The study revealed that people are aware of the importance of saving but are not aware of the investment opportunities. Nevertheless, it was found that educational level, total number of earning members in the family, the quantum of earnings are critical for creating awareness about the investment and its opportunities. The authors have also concluded that monthly investment plans are the most sought after by this group of people. In the light of their study, the authors have also offered suggestions for improving the savings pattern.

Prior to opening up of insurance industry for private investment, Life Insurance Corporation (LIC) of India, was the sole provider of insurance coverage in India. In this whole exercise, Development Officers (DOs) of LIC played a critical role—being responsible to select the right people as agents of the company to sell the products, train the selected people and also re-train the agents from time to time to understand the changing dynamics of the market as also the features of new products launched and how they would suit the individual needs of the insurance seekers, guiding and supervising the day-to-day activities of the agents—in spreading the awareness about insurance among the public as also to market their products ultimately. Against this backdrop, the authors, J Arulsuresh and S Rajamohan, of the next paper, “LIC Development Officers’ Disposition Towards Marketing: Its Impact on Business Development”, have studied the role of DOs in marketing the products of the company. Their study revealed that a segment of DOs, are not aware of the different products launched by the company and are thus found to be inadequate to guide the agents, based on which they have also offered some recommendations.

As financial intermediaries, life insurance companies tap savings of the public in the form of premium collections against the insurance cover offered. The servicing of insurers obviously depends on the efficient functioning of the insurers. Intriguingly, collection of premiums is a regular phenomenon, while servicing of a customer might spread over years. In this context, sustained efficient functioning of the insurance companies is a must for winning the confidence of the insurers, besides building credibility that could attract fresh insurance seekers into its hold. As a result, insurance companies are to observe prudence of great order in managing their financial affairs. Against this backdrop, the author, K Alamelu of the next paper, “Evaluation of Financial Soundness of Life Insurance Companies in India”, assessed the financial soundness of life insurance companies and presented her data, concluding that in terms of capital adequacy, asset quality, liquidity and solvency ratios, etc., insurance companies are operating on a sound footing.

In the next paper, “LIC Agents: Their Regional Preference and Its Impact on Business Prospects ”, its authors, M P Pandikumar, V Manickavasagm and Sekkizhar, assessed the regional preferences of the LIC agents in selling the policies, to enlist the reasons for such regional preferences and the demographic influence of the agents on the factors of preferences towards regions and presented their findings. The statistical interpretation of the collected data revealed that in urban agglomerations, male agents are more influential in securing business than female agents, similar differences were also noticed between age-groups of agents and similarly agents with more years of experience could garner more business.

To conclude, we have a research note, “Attitude Towards Insurance Cover”, from Sarita Aggarwal and Monika Rani, which assessed the attitude of consumers towards five different insurance companies and presented the findings that private insurance companies offer very attractive policies to the public, but the public still prefer insurance policies from public sector undertakings and many of the insurers seek insurance coverage to gain tax rebate.

-- GRK Murty
Consulting Editor