37203464 Project on Insurance Sector

8/8/2019 37203464 Project on Insurance Sector

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PROJECT REPORT

ON

Study of Recruitment and Retention strategies adopted by different

life insurance companies for their Agents / Financial Consultants /

Agent Advisors

PREPARED BY

RUCHA ARUN MOGHE

STUDENT OF

B.M.S. (BACHELOR OF MANAGEMENT STUDIES)

2009-2010

SUBMITED TO

UNIVERSITY OF MUMBAI

&

B. H. BAING COLLEGE, SHIPOSHI


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Declaration

I hereby declare that the work embodied in this project titled Study of

Recruitment and Retention Strategies adopted by different Life InsuranceCompanies for their Agents / Financial Consultants/ Agent Advisors is my

own contribution to project work carried out under the guidance of Mrs. S. S.

Vaidya.

This project work has not been submitted for any other degree. Where

ever reference have been made it is has been clearly indicated as such and

included in references and bibliography.

Date-

Place- Signature


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Acknowledgement

It is worthwhile to enclose my sincerest thanks to all the persons who

have helped me directly or indirectly during c ompletion of the Project Report insuccessful manner.

Firstly, I express my sincere gratitude to Mr. M. V. Thakurdesai for

granting me permission to do this project. Then, I am very much thankful to our

course co-coordinator, Prof. V. N. Athalye for his encouragement and full

fledge support in the completion of this project.

I also express my sincere thanks and sense of gratitude to my project

guide Prof. S. S. Vaidya for her valuable guidance and suggestions at every

stage right from choosing the topic to the completion of project.

I express my sincere thanks and deep sense of gratitude to Mr. Gaurav

Dalvi for arranging our live project at HDFC Standards Life Insurance

Company, Vashi branch.

I also express my sincere gratitude to the management of HDFC Stan dard

Life Insurance company for the kind permission to undergo on implant visit in

their company (Vashi branch).

Finally, I also express my sincere thanks to Mr. Fayyaz Ahmad Sales

Development Manager (SDM) of HDFC Standard Life Insurance Company,

Vashi branch for helping me in completion of this project work.


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Executive Summary

Insurance sector in India is booming but not to level comparative with the

developed economics such as Japan, Singapore etc. Also liberalization ofinsurance sector has provided huge self employment opportunities.

While doing a live project at HDFC Standards Life Insurance Company,

Vashi branch I observed that sales Development Managers were facing some

serious problems regarding retention of their financial consultants. T he HDFC

Standards Life Insurance Company as well as other life insurance companies are

facing this problem. To find the reasons, the main objective of the study is kept

as, to analyses the actual recruitment and retention process in Life Insurance

Companies and how far this process confirm to the purpose underlying the

operational aspect of the industry.

Inadequate information regarding the work of Agents/ Financial

consultants / Agent Advisors by recruitment consultant is the main reason for

high rate of attrition in insurance industry.

The study is proposed to find out a process that will help insurance

companies to keep its attrition rate minimum. In this study, I analyzed

recruitment process of three different companies viz. Life Insurance

Corporation of India, HDFC Standards Life Insurance Company and Max New

York Life Insurance Company. After analysis I came to the conclusion that

some defects in recruitment process are the reason of high attrition.

This project work is a sincere attempt to collect the information stating

the various reasons for attrition and suggests the useful measures for retention.


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Index

Sr. No. Contents Page no.

1 Introduction

2 Industry Analysis

3 Company Analysis

4 Research objectives

5 Research Methodology

6 Data collection and Tabulation

7 Analysis of data and Finding

8 Conclusions and recommendation

9 Appendix

10 Bibliography

11

12


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3 3.1 Life Insurance Corporation of India

3.2 HDFC Standard Life InsuranceCompany

3.3 Max New York Life Insurance

Company

4 Recruitment

4.1 Retention and Attrition

strategies of life Insurance corporation

of India

4.2 HDFC Standard Life Insurance

Company

4.3 Max New York Life Insurance

company


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Introduction

The Insurance sector in India has come a full circle from being an open

market to nationalization and back to liberalized market again. Tracking the

development in Indian Insurance Sector revels 360 degree turn witnessed over a

period of almost two centuries.

Ever since the liberalization of life insurance sector is done private

companies are facing many problems to create their firm existence in the

market.

Private companies find it difficult to compete against the dominant LIC

of India. But the common problem of LIC as well as private life insurance

companies is to retain their Agents/FCs/AAs.

Agents/FCs/AAs have the potential to create a good as well as bad image

of the company. Agents/FCs/AAs who enthusiastically spurred by dreams of

working at ones own hours, getting full reward for the hard work and other such

motivational spiel meet reality soon enough.

The industry is facing a serious problem regarding the shifting of jobs at

top level management as well as at agency force of company. Special attaint ion

needs to be given for their retention in their respective companies.


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Industry Analysis

Insurance can be defined as, assurance for uncertainty. Insurance is

about something going wrong. It is often about things going right. One of the

wonders of human nature is that we never believe anything can actually go

wrong.

As we know Indian Insurance sector was an open competitive market.

Due to several frauds in late 18th

century sullied insurance business in India as a

result one nationalized company viz. LIC came into existence. And after the

liberalization of Indian economy the Life Insurance market has now opened for

private players.The business of life insurance in its existing form started in India in the

year 1818 with the establishment of Oriental Life Insurance Company in

Calcutta.

Some of the important milestones in the life insurance business in India are.

1870 : Bombay Mutual Life Insurance Society the first Indian Life

Insurance Company started its business.

1912 : The Indian Life Insurance Act enacted as first statue to regulate the

life insurance business.

1928: The Indian Insurance Companies Act enacted to enable government

to collect statistical information about life and non life insurance

business.

1938: Earlier legislation were consolidated and amended to the insurance Act

with the objective of protecting the interests of the insuring public.

1956 : 245 Indian and foreign insurance and provident societies were took

over by the central government and nationalized LIC was formed by

an act of parliament viz. LIC Act, 1956 with a capital contribution of Rs.

5 crore from the government of India.


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Insurance Regulatory and Development Authority (IRDA)

Reforms in the insurance sector were initiated with the passing of the

IRDA Bill in parliament in December 1999. The IRDA since its incorporation

as a statutory body in April 2000 has fastidiously such to its schedule of framin g

regulations and registering private sector Insurance companies.

The other decisions taken simultaneously to provide supporting systems

to the insurance sector in particular the life insurance companies were the

launch of the IRDA online service for issue and renewal of license of agents.

Bottlenecks / Government Regulation

The IRDA Bill proposes tough solvency margins for private insurance

firms, a 26% capital on foreign equity and a minimum capital of 100 crores for

life and general insurance and Rs. 200 crores for reinsurance firms. Section 27A

of Insurance Act Stipulates that life insurance companies required to invest 75%

of its accretions through a controlled fund in mandated government securities.

Life Insurance Company may invest the remainin g 25% in private corporate

sector, construction and acquisitioning of immovable assets besides sanctioning

of loans to policy holders. This stipulations imposed on the insurance

companies had resulted in lack of flexibility in the optimization of risk and

portfolio.


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Major private players in India

1) ICICI Prudential :

ICICI prudential Life Insurance company is a joint venture between

ICICI bank a premier financial powerhouse and Prudential, a leading

international financial service group head quarter in the United Kingdom. ICICI

prudential was amongst the first private sector insurance company that came

into existence in December 2000 after receiving approval from Insurance

Regulatory Development Authority (IRDA)

ICICI Prudential equity base 74% and 26% stake respectively.

The company has a network of over 50,000 advisors as well as 7 bank

assurance tie ups. Today ICICI Prudential has emerged as No.1 private life

insurer in the country with a wide range of flexible products that meet the needs

of the customer at every step in life.

2) Bajaj Allianz :

A house hold name in India teams up with a global conglomerate. BajajAuto Ltd. The flagship company of Rs. 8000 crores. Bajaj Group is the largest

manufactures of two wheelers and three wheelers in India and one of the largest

in the world.

Bajaj Auto has a strong brand image and locality synonymous with

quality and customer focus with over 15,000 employees. It has joined hands

with Allianz to provide the Indian consumer with a different option in terms of

Life Insurance products.

3) HDFC Standard Life :


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HDFC Standard Life Insurance Company is a joint venture between

Indias largest housing finance provider- HDFC Ltd. and Europes largest

mutual life insurance company The Standard Life Assurance Company (U.K.)

HDFC standard life insurance company limited is the firs t private sector

life insurance company to be granted a license by IRDA.

4) Birla Sun Life Insurance Company Limited:

Birla Sun life Insurance is the joint venture of Aditya Birla group and

Sun Life Financial of Canada to enter in Indian Insurance sector. The Aditya

Birla group multinational conglomerate has over 75 business units in India and

overseas with operations in Canada, USA, UK, Thailand, Indonesia,Philippines, Malaysia and Egypt to name a few. Today the Sun Life Financial

Group of companies and partners are represented globally in Canada, The

United States, The Philippines, Japan, Indonesia, India and Bermuda


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Market Share of Different Players

Even after li erali ati n and entry of private player in insurance sector,

t e majority of market is shared by LIC of India. The No.1 private life

insurance is ICICI prudential with 13.7% of total market share. Bajaj Allianz

contributes to 10.3% of total share where as HDFC SLIC has managed to earn

only 4.1%. From the above chart, one can say that private companies are still

struggling to capture maximum market share. Birla, Sunlife, Reliance life, and

MNYL have 3.4%, 3.4% and 2.4% of market share respectively.

The top 5 life insurance companies in India control 85% of market share

while the remaining dozen are still struggling to set up their operation.

LIC

ICICI Prudential

Bajaj Allainz

Birla Sun Life

Reliance Life

Max New York Life

OM Kotak

AVIVA

TATA AIG

Other


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New Entrant in the Industry

DLF Pramerica Life Insurance co. Ltd.

Kapil Mehta is the MD & CEO of DLF Pramerica life insurance Ltd.Kapil has been associated with this venture since 2006. Before joining DPLI

Kapil was senior vice president of Business development and strategic planning

at another life insurance company.

It is a joint venture between DLF Ltd. and prudential International

Insurance holdings Ltd.

The combination at the strength of DLF brand and PFIs insurance

expertise provide the strangest possible foundation for DPLI to succeed in the

rapidly growing Indian life Insurance market.

Vision : At DLF Prameria, our vision is to ensure that every life we

touch, feels secure and enriched.

Mission : We shall be a guide and a mentor to people so that they are

able to make the most informed insurance decision to meet

their life goal.


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Company Analysis

Life Insurance Corporation of India.

The parliament of India passed the Life Insurance Corporation Act on the

19th

of June 1956 and the life insurance corporation of India was created on 1st

September, 1956 with much the objective of spreading life insurance more

widely and in particular to the rural areas with a view to reach all insurable

persons in the country providing them adequate financial cover at a reasonable

cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices,

apart from its corporate offices in the year 1956.

It has a network of over 2000 (2048) branches and more than 9 lakhs

agents.

Over 53 years, LIC has become a household name for providing securit y

for a life time and is synonymous to life insurance in India.

LIC ranks no. 1 in the list of top 500 companies on the basis of net worth

(Rs. 15,47,951 million) as well as Net profit 2,66,277 million Dun Bradstreet

(India 500).

LIC has crossed the milestone of issuing 1,01,32,955 new policies by 15 th

Oct, 2005 posting healthy growth rate of 16.67% over the corresponding period

of the previous year.


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From then to now LIC has crossed many milestones and set

unprecedented performance records in various aspects at life insurance business.

Key members to the corporation

1. Shri T.S. Vigayan. (chairman)2. Shri DK3. Mehrotra (MD LIC)4. Shri. Thomos Mathew ( MD - LIC)5. Shri A. K. Dasgupta (MD LIC)6. Shri. G. S. Chaturvedi (additional secretary department of f inancial

services, Ministry of finance Govt. of India.)

7. Shri. Yogesh Lohiya (chairmen MD , LIC of India)8. Shri. T. C. Venkatsubrameniann (chairman & MD Export Import Bank of

India)

9. Dr. Soornad Ragashekheran10.Shri Monis R. Kidwai.


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HDFC Standard Life Insurance Company LTD.HDFC was incorporated in 1977 with a share capital at Rs. 10 crores,

HDFC has since emerged as the largest residential mortgage finance institutionin the country. The corporation has had a series of share issue raising its cap ital

to Rs. 19 crores The gross premium income for the year ending March 3, 2007

stood Rs. 2,856 crores and new business premium income at Rs 1,624 crores

The company has covered over 8,77,000 lives year ending March 31,2007

HDFC operates through 450 locations through out the country with its

corporate head quarters in Mumbai India HDFC also has on International office

in Dubai UAE with service associates in Kuwait, Oman and Qatar HDFC is the

largest housing company in India for the last 27 years.

Key players :

Mr. Deepak S. Parikh is the chairman of the company. He is also the

executive chairmen of Housing Development Finance Corporation Ltd. (HDFC

Ltd.). He joined HDFC Ltd in a senior management position in 1978. He was

inducted as a whole time director of HDFC Ltd. In 1985 and was appointed as

its executive chairmen in 1993. He is a fellow of institute of Chartered

Accountants (England and Wales).

Mr. Deepak M. Satawalekar is the managing director and CEO at the

HDFC SLIC since November 2000 prior to this he was the MD of HDFC Ltd.

Since 1993 Mr. Satawalekar obtained a bachelor degree in Technology from the

Indian Institute of Technology (IIT) Bombay and a master degree in Business

Administration from the American University Washington DC.


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Standard Life :

Standard Life is Europes largest mutual life assurance company. Standard

Life which has been in the life insurance business for the past 175 years in a

modern company surviving quite a few changes since selling its first policy in

1825, the company expanded in the 19th

century from Kits Original Edinburgh

premises opening offices in other towns and acquitting other similar business.

Standard Life currently has assets exceeding over 70 billion under its

management and has the distinction of being accorded AAA rating

consequently for the six years by Standard and Poor.

SNAPSHOT :

Founded in 1875, company supporting generations for last 179 years.Currently over 5 million policy holders benefiting from the service

offered.

Europes largest mutual life insurer.

Joint Venture :

HDFC Standard Life Insurance Company Ltd. was one of the first

companies to be granted license by IRDA to operate in life insurance sector.

Reach of the players is highly rated and been conferred with many awards.

HDFC is rated AAA by booth CRICIL and ICRA similarly standard is

rated AAA both by Moodys and Standard and Poors .This reflect the

efficiency with which HDFC and Standard Life manage their asset base of Rs.

15,000 crore and Rs.600,000 crocre respec tively.

HDFC Standard Life Insurance Company Ltd. was incorporated on 14th

August 2000 HDFC is the majority stakeholder in the insurance joint venture

with 81.4% stake and Standard Life of as a stake of 18.6 %. Mr. Deepak

Satawalekar is the MD and CEO of the Venture.


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Max New York Life Insurance

Max New York Life Insurance Company Ltd. is a joint centre between

Max India Limited, one of Indias leading multi business corporation and NewYork Life International, international arm of New York Life a fortune 100

company has positioned itself on the quality platform. In line with is vision to

be the most admired Life insurance Company in India, it has a strong corporate

governance model based on the core values of excellence honesty, knowledge,

learning, integrity and team work incorporated in 2000. Max New York started

commercial operation in 2001. In line with its values of financial responsibility

Max New York life has multi channel distribution spread across the country.

Agency distribution is the primary channel complemented by partnership,

distribution, bank assurance, alliance marketing and dedicated distribution for

emerging markets.

The company currently has around 93,000 Agent Advisors and more than

800 own employed sales force at 712 offices across 389 cities. The company

also has 36 referred tie ups with banks, 24 partnership distributions and alliance

marketing relationships each. The company has 133 offices dedicated to rural

areas. Max New York invests significantly in its training programme and each

agent is trained for around 100 hours as opposed to the mandatory 50 hours

stipulated by the IRDA before beginning to sell in the market place. Training is

a continuous process for Agents at Max New York Life and ensures

development of skills and knowledge through a structured programme spread

over 400 hours in two years. This focus on continuous quality training has

resulted in the company having amongst the highest agent pass rate in IRDA

examination and the agents have highest productivity among pri vate life

insurance companies.


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SNAPSHOT

Date of Establishment 2000

Address Max New York Life Insurance

Company Ltd. Max House 3rd

Floor 1

Dr. Jha Marg, Okhla,

New Delhi- 110020, India

Key persons Analgit Singh Chairman ,Max India ltd

Gary R. Bannett- MD And CEO

Max New York Life Insurance

Co. Ltd. Anuroop Tony Singh- VC

MNYLIC Ltd. Theodore A Maths

President & COO Max New York Life

Insurance Company

Overview It is an ISO 9001: 2000 certified Company

The company has recently partneredSymbiosis Institute of Business

Management to launch Post Graduate Diploma

in Business Management with Specialization in

Life Insurance. It promises an atmosphere of

run Career growth and earning opportunities for

its employees. It

Believes in enhancing the potential of its

employees to influence change in the

organization-


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Recruitment and

Retention strategies of

1.LIC of India.2.HDFC Standard life.3.Max New York Life

Insurance Company.


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Recruitment

Recruitment means to estimate the available vacancies and to make

suitable arrangements for their selection and appointment. In the recruitment

process; the available vacancies are given wide publicity and suitable candidates

are encouraged to submit application; in order to have a pool of eligible

candidates for scientific selection.

In recruitment process ; information is collected from interested candi date

for different sources of recruitment such as news paper advertisement,

employment exchanges internal promotion etc. are used. In the recruitment

process a pool of eligible and interested candidates is created for the selection of

most suitable candidates. Recruitment represents the first contact that a

company makes with potential employees. An Agent is not an employee of the

company but their recruitment should be given equal importance as that of

employees of a company.

Who can be an Agent of Life Insurance Company?

Section 42 (4) of the amended Insurance Act, 1938 states an agent is one

who is not-

y A minory Found to be unsound mind by a Court of Jurisdictiony Found guilty of criminal background

An urban Agent must be 12th

standard passed and rural agent must be 10th

standard passed.


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in ordinary procedure for recruiting candidates is described in following

diagram.

Start

List of ros ective candidates

Contactin

Interested?End

Interview with SDM

Short listing

Interested?

End

Training programme

Contract with company

IC-33 ?

ExamReappear

NOT CLEARED

CLEARED

End

NO

YES

NO

YES


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For the Recruitment of agents the target is given to the Recruitment

Consultants (RCs) and Sales Development Managers (SDMs).

These people follow the steps shown in the figure. The list of prospective

candidates may include nature market of people who personally contact RCs

and SDMs to become an agent relatives and references collected from them.

After contacting all prospective candidates those who are interested to

become an agent undergo initial screening by Sales Development Managers and

selected candidates undergo a training programme of 50 hours as compel led by

IRDA.

Once the training is over the candidates undergo IC-33 examination

conducted by IRDA, clearance at this examination leads candidates to make a

contract with the sponsoring company.

HDFC as well as LIC follows the same process for the recruitment of

Financial Consultants/ Agents.

But Max New York Life Insurance Company follows a complex process

of recruitment as shown in the figure


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YES

Start

Name Gathering in P200

Short listing

Contacting

Interested?End

Initial Screening

NAT

Career Seminar & P200

Interested?End

Career interview

FCS

Contract with MNYL

IC-33 ?Reappear

T LEARD

CLEARD

End

NO

YES


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1. Name gathering in P 200Name gathering in P 200 consists of people who you know from

natural market and references from their sources. As a management

trainee were given a task to gather 200 names.

2. Short listingCandidates are short listed from the P 200 as per the eligibility criteria

drawn by the company. Only eligible candidates are considered for the

next process.

3. ContactingCandidates are called either as nominator or p rospective Agents and

meeting is fixed with them according to the convenience of both party.

Here script plays very important role in fixing appointment with the

prospect.

4. Initial ScreeningInitial screening is taken if candidates are found eligible to 4 points

model. In initial screening, a sales manager first gives introduction about

the company. Then several questions such as his family background his

natural market, traits for a sales person and his present and past

experience of his job are questione d. Every candidates is required to get

at least 3 point in eligibility model of the company. The eligibility

standard for Agent Advisor selection grouped as follows. In case of score

less than 3 special zonal head approval is required.

Five point system

Age 25 and over 1 point

Graduate 1 point

Married 1 point

Lived in city more than 5 years 1 point

NAT Score 1 point (if passed)


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5. Name gathering in P 200Name gathering in P 200 consists of people who you know from

natural market and references from their sources. As a management

trainee were given a task to gather 200 names.

6. Short listingCandidates are short listed from the P 200 as per the eligibility criteria

drawn by the company. Only eligible candidates are considered for the

next process.

7. ContactingCandidates are called either as nominator or prospective Agents and

meeting is fixed with them according to the conven ience of both party.

Here script plays very important role in fixing appointment with the

prospect.

8. Initial ScreeningInitial screening is taken if candidates are found eligible to 4 points

model. In initial screening, a sales manager first gives introduction about

the company. Then several questions such as his family background his

natural market, traits for a sales person and his present and past

experience of his job are questioned. Every candidates is required to get

at least 3 point in eligibility model of the company. The eligibility

standard for Agent Advisor selection grouped as follows. In case of score

less than 3 special zonal head approval is required.

Five point system

Age 25 and over 1 point

Graduate 1 point

Married 1 point

Lived in city more than 5 years 1 point

NAT Score 1 point (if passed)


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9. NATNumbering Ability Test is taken. Passing score is 50%

10.Career InterviewP200 is evaluated in career interview. It candidates market is found

worth, he is selected to attend Training and development programmed.

11.FCSAll the selected candidates are required to attend 22 day training session

for receiving the license from IRDA to become an Agent Advisor.

12.ContractAll successful candidates having legal license of IRDA are cont racted with

MNYL .Due to such complex process at Recruitment it is not so easy to

become an Agent Advisor at Max New York Life Insurance Company.

The objective of such tedious process is to recruit only competent

intelligent and loyal Agent Advisors. Thi s process helps the company to

keep its attrition rate to minimum.


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RETAINTION


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Retention

It is very difficult to retain people in sectors like BPO (Business Process

Outsourcing) and IT but it is worst in case of Insurance industry conservatives

estimates put the attrition rate of 35% to 40% in insurance industry.

Employees tend to leave organization for various reasons like better salary

package job dissatisfaction unhealthy working environment.

In case of agency work force of Insurance company, agent leave them

because their job is commission based and not salary based.

Private as well as government life insurance companies emphasize

on providing better facilities to their agents in order to retain them in the

organization.

Planning and evaluation can be defined as provision of benefit

facilities given to employees of the company so that they wont leave the

company.

Retention Strategies mainly include1) Motivation of policy

Companies provide very attractive commission structure for their agents.

The commission rates vary from 20% to 40% on paid premium in the first

year of policy. Apart from the commission other motivational efforts play

a significant role in retaining agents in the organization.

y At initial level agents feel motivated by some non-monetary benefits likea pen set with companies logo on it, A cup or mug with agents own name

printed on it, visiting card of his name etc.

y As the performance of an agent improves he receives some additionalbenefits like certificate of an organization, trophies, additional monetary

benefits apart from commission.


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y Even letter heads mobile bill reimbursement facility provision of soft loanand laptops are given to the agents.

y Different contest are arranged at every branch of the c ompany onmonthly, quarterly and yearly basis so as to motivate agents to performwell.

y Agent whose performance is outstanding gets a membership for that yearof different clubs formed by insurance companies for e.g.

Category of club Monetary benefits Non-monetary benefits

1) Silver club Rs.1.5 Lacks Pen set, Diary

2) Silver plus club Rs. 3.5 Lacks Silver club benefits +

50,000 accidental

insurance

3) gold club Rs. 9.5 Lacks Silver plus club+

foreign trip

4) gold premier club Rs. 19 Lacks Gold club benefit +

Fees for childrens

education

5) Platinum Club Rs. 37 Lacks Gold Premier club +

Foreign trip family

Membership of such club is a symbol of status for agent and helps

companies to retain their agents.

2)

Job on companys pay roll.The potential agents are also offered a salary based job in the company.

The jobs offered are of Sale Development Manager Post or Unit Manager

Post.

3) Establishing good relation with agents.


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Sale development Manager take special efforts to inculcate the

companys core values into every agents mind. SDM convince agents that the

company is one big family and he (agent) is a part of it. It helps a company to

retain their agents without much efforts.

But the retention policies need to be revised continuously in order to

maintain its effectiveness. Outdated strategies would not help to retain agents.

As the overall life style changes the retention policies must also be changed

accordingly.


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ATTRITION


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Attrition

One might have heard of high job attrition of between 15% and 20% in

software sector but even these pale in comparison to the kind of turnover that

the insurance industry witness with its agency force conservative estimates put

the attrition rates at 35 to 40%

The opening up of the sector five years ago provided insurance agents

with new opportunity and an image makeover as life insurance advisors.

But little has changed in the basic nature of the business insurance still

needs to be sold to a reluctant population.

Most Agents or advisors who join insurance company enthusiastically

spurred by dreams of working at ones own hours, getting full reward for the

hard work and other such motivational spiel meet reality soon enough.

Once the initial list of potential customers such as close relatives, friends

and neighbors is exhausted the climb for an agent is uphill.

Even meeting the minimum requirement of bringing in two viable

insurance proposals every month proves daunting. For some companies the

target in terms of sum assured is Rs. 1 laky for some others it is as low as Rs.

10,000/-

When the rejection starts and the doors start getting banged in the face

new agents confront failure the drop out begin.

Mr. Lalit Kumar Dash Executive Director (marketing) LIC, Says the

attrition rate is about 35% in the first year of recruitment. This goes down to

about 18% by the 4

th

year. Most of these who deep out are non-performers.Agrees Mr. Rahul Sinha vice Precident (Marketing) of Kotak Mahindra

Old Mutual Life Insurance Company and says last year the attrition rate was

much worse than 30% it has been a cause for worry and we are trying was our

best to stem it.


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Attrition the concept

In the best of worlds employees would love their jobs, like their co-

workers work hard for their employers get paid well for their work have ample

chances for advancement and flexible schedules they could attained to personal

or family needs when necessary and never leave.

But then there is a real world and in the real world employees do leave

either because they want more money, hate the working conditions, hate their

co-workers, want a change or because their spouse gets a dream job in another

state so what does that entire turnover cost ? And what employees are likely to

have highest turnover ? Who is likely to stay the longest?

Defining Attrition

A reduction in the number of employees takes place through retirement,

resignation or death etc.

Defining attrition rate

The rate of shrinkage in size or number.

Reasons for attrition

It is not easy to find out as to what contributes and who has the control on

the attrition of employees. Various studies conducted indicate that everyone is

contributing to the prevailing attrition. Attrition does not happen for one or two

reasons. The way the industry is projected and speed at which the companies are

expanding has major part in attrition.

The reasons for attrition are varied in nature. Some common reasons for

attrition are-

1) Organizational matters


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The employees always assesses the management values, work culture,

work practice and credibility of the organization The Indian companies do have

difficulty in getting the business and retain it for a long time. There are always

ups and downs in the business plans. Non availability of the campaigns makes

people to quickly move out of the organization.

2) Working Environment

Working Environment is the most important cause of attrition. Employees

of the organization expect a friendly and learning environment. Employees look

for freedom, good treatment from the superiors, good encouragement, friendly

approach from one and all and good motivation In absence of such environment

employees leave the organization.

3) Job Matters

The job today brings lot of pressure and stress. The employees often leave

organization due to this reason. Also lack of job satisfaction is the reason for

resignation of employees.

4) Salary and other benefits

Moving from one job to another for higher salary, better positions and

better benefits are the most important reasons for attrition.

Some extended reasons for highest attrition rate in insurance industry are

given below.

1) Lack of Information regarding the job of life insurance agents

Recruitment Consultants (RCs) to achieve their target of recruitment

contact number of people and recruit them without giv ing sufficient information

about the job they are supposed to perform for the company.


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2) It is a part time job

Financial Consultants or Agents are not the employees on companys

payroll. When people are not having a full time job, they work for the company

but after getting a job of full time they tend to ignore their work as an agent and

this finally results into termination of their license.

3) Saturation of natural Market

The natural market consists of family, friend, colleagues etc. Once this list

is over agents find it difficult to fulfill the companys expectations.

4) Lack of support by Sales Development Manager (SDMs)

Some agents even if they are willing to get business for the company due

to lack of motivation and support by their Sales Development manager cannot

meet companys expectation leading to termination of license by IRDA.

5) Personal Reasons

The personal reasons are many and only few are visible to us. They are

wide from getting married to relocation for health or family reasons. The next

important personal reason is going for higher education. Health is another

aspect which contributes for attrition.


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Research Objectives


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Research Objectives

1) The objective of study is to analyze the recruitment and retentionprocess Life Insurance Companies.

2) The study is aimed at understanding the working of Agents/FCs/AA.

3) The Study is also meant for providing reasonable solutions to th e problem after analysis of the recruitment and retention strategies of

different life insurance companies.


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Research

Methodology


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Research Methodology

Research can be defined as a systematic effort to gain knowledge. A

research is carried out by different methodology which has their own pros and

cons.

Research Methodology is a way to solve research problems along with

the logistic behind them. Thus when we talk of the research methodology we

not only talk about research method but also context of our research study and

explain why we are using a particular method or techniques and why we are not

using other so that research results are capable of being evaluated by the

researcher himself or by others.

Research methodology means the method carried out to study the

problem it shows the type of the sample design used, its size and the procedure

used to dew. The extent of precision achieved and the method used for handling

any special problems during the course of the study.

Research methodology has following steps -

Step 1. To decide the objective of the study

Step 2. To design research design

Step 3. To determine the source of data.

Step 4. To design data collection form (questionna ire).

Step 5. To determine sample size and sample design.

Step 6. To organize and conduct fieldwork.

Step 7. To process and analyze the collected data.

Step 8. To prepare research report.


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Explanation

Step 1. To decide the objective of the study to be carried out.

The objective of the study as stated in the previous chapter were finalized

so as to initiate the survey for the study.

Step 2. To decide the research design.

What is research design?

Research design is a plan, structure strategy of an investigation conceived

so as to obtain answers to research questions and control variance. There are

three type of research design system.

y Explanatory Researchy Descriptive Researchy Casual Research.

Among the above mentioned types descriptive research desi gn has been

chosen. Descriptive research is to find an efficient sales force of Agents /

Financial Consultants / Agent Advisors. In order to study the characteristics andvariables, cross sectional analysis was conducted by using field survey method

in the process of field survey a questionnaire was developed and circulated

among respondents which formed the basis for entire research.

Step 3. To determine the sources of data.

Data sources are the collection of fresh hand data to obtain results. There

are types of data sources.

Primary data

Primary data is that which is collected fresh and thus happen to be

original in character.


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Secondary data

Secondary data is any data which have been gathered earlier for some

other purpose. Among the above mentioned types, primary data was used for

the study and analysis of the objective of this project. Also the secondary data

proved to be helping in framing up the industry scenario and also the relevant

topics in the entire project report.

Reasons for selecting primary data

In terms of primary data structure questionnaire was prepared to

interview the professionals, students, house wives, investment consultants, post

office agents etc. in Thane, Vasai and Ratnagiri location. Analysis clearly

reflected the views and preference regarding the perception of the people

towards joining life insurance companies.

Step 4. To design data collection.

There are two types of mode to collect the data.

y Observation methody Survey method.

As far as the data collection method for this project is concerned,

designing the data collection forms or survey form is applicable to the project.

The method selected was survey method.

A survey can be conducted by-

yPersonal interview

y Telephonic interviewAmongst the above methods personal interview method was selected and

conducted to gather information to detail. This method was chosen because


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along with the study of projects primary objective i.e. study of people was

achieved.

Formulation of Questionnaire

Q.1) When you think of insurance which company name comes first to

Your mind?

Ans :

Q.2) Which other companies are you aware of ?

Ans :

Q.3) Do you know about life insurance companies?

Ans : (a) Yes (b) No

Q.4) Do you know about the working of an agent of any life insurance company

?

Ans : (a) Yes (b) No (c) Insufficient Information.

Q.5) Do you currently have an agency of any life insurance Company?


Q.6) What would be the size of your social contact base who know you by your

name?

(E.g. : Friend, family, relative, colleagues if any . etc.)

(Mention in appropriate numbers.)

Ans :

Q.7) How many members of your family are dependent on the income

earner of the family?


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Q.8) Do you have an idea about financial market?


Q.9) Do you have any sales experience? If yes, of how many years?


Q.10) Do you have experience in selling financial product? E.g. credit card,

insurance etc? If yes, of how many years?

Ans : (a) Yes ( ) (b) No ( )

Q.11) What do you think? In todays scenario life insurance is NEED, WANT

AND DEMAND?

Ans :

Q.12) In which of the financial market you have invested your money?

Ans : (a) Share (b) Mutual Fund (c) Insurance

Q.13) Are you interested in getting the opportunity of earning some additional

income as being Agent of any life insurance company? Why?


Setp 5 : To determine sample design, sample size

sample size specification-

200 respondents which include professionals, unemployed students,

house wives, investment consultants, post office agents.


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The distribution of this sample size was decided to be as 100 respondents

at Thane (Urban area), 50 respondents at vasai (semi urban area) and 50

respondents at Ratnagiri (rural area) in order to compare the difference in these

areas.


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Field Methodology

The methodology adopted in the field to collect the data represented

diagrammatically below.

Segmentation of people

Filling up questionnaire

Meeting with people


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Data collection And

Tabulation


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DATA COLLECTION AND TABULATION

In order to determine the willingness of respondents to become an Agent,

Financial Consultant or Agent Advisor for LIC, HDFC Standard Life or Max

New York Life Insurance Company, the data was collected from Thane, Vasai

and Ratnagiri regions. This data was treated for Analysis and interpretation. All

the respondents were classified under parameters like professionals, students,

house wives, investment consultants and post office agents etc.

Q. Are you interested in getting the opportunity of earring some additional

income as being Agent FC/AA of any life insurance company.

OCCUPATIONAL CLASSIFICATION

Response

RespondentsYes No

Professionals 9 5Working employees 12 12

House wives 42 24

Students 37 21

Post office agents 11 4

Investment consultants 14 6

Total 125 75


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From the above pie-chart one can say that about 62.5% of respondents arewilling to become agent at a life insurance company from remaining 37.5% at

respondents some respondents were already agents of one or the other life

insurance company.

35.72%

64.28%

Professionals

62.50%

37.50%

Total Respondentes

Yes

N

Index

- Yes

- No


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These respondents included C.A., Doctors, Professors of which 64.28%

were willing to become an agent, mainly because their base of personal contact

is good. Amongstthese respondents 35.72% were notinterested in becoming an

agent of any life insurance company.

55.55%

44.44%

Working Employees.

64.28%

35.72%

Profe ional

Yes

N

Index

- Yes

- No


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Working employees lack desire to become an agent. One can say this

from their response shown in the pie-chart. Only 44.44% i.e. 12 respondent out

of 27 working employees were willing to become an agent of a life insurance

company whereas 15 respondents were notinterested in suchjob.

36.36%

63.63%

44.44%

55.56%

Working Em loyee

Yes

N

Index

- Yes

- No


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The awareness amongst students regarding a working at an agent was

very impressive 63.79%

House wives

63.63% attotal house wives are willing to earn some money oftheir own

by becoming an agent of a life insurance company remaining 36.36% at house

wives had very less information aboutthe whole insurance sector.

36.20%

63.79%

Students

64.63%

36.37%

Y

N

Index

- Yes

- No


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The awareness amongst students about a working of an agentis very

good. 69.79% of student respondents showed their willingness. To become an

agents of a life insurance company but 36.20% at students were notinterestto

become an agent of any insurance company.

26.66%

73.33%

Post offi e agents

63.80%

36.

0%

Students

Yes

N

Index

- Yes

- No


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The highest response of 73.33% to become an agents was shown by

post office agents from these percent of willing respondents about 60% referred

to become an agent of LIC.

30%

70%

Investment consultants

73.33%

26.67%

Postoffice agents

Yes

N

Index

- Yes

- No


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14 of 20 investment consultants wanted to become an agent and thinks

it as a complementary career to their regular Remaining 30% of respondents

were investment consultancy only and didnt prefer to become an agent of a life

insurance company.

70

30

Investment Consultant

Yes


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Demographical classification

Response

Respondents

Yes No Total

Male 68 27 95

Female 57 48 105

Total 125 75 200

28.42%

71.57%

Male

71.57% of male respondents were ready to become an agent of a life

insurance company and only 28.42% of male respondents were notinterested in

the proposal.

71.58%

28.42%

male

Yes

N

Index

- Yes

- No


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45.71%

54.28%

The percentage of willing and unwilling female respondents was almost

equal. This is mainly because working have very less time to spend onjobs like

insurance agents. Those women who were willing to become an agents majority

of women were house. House wives have ample attime to spend for suchjobs.

54.28%

45.72%

F

emale

Yes

No

Index

- Yes

- No


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Geographical Classification

Response

Respondents

Yes No

Thane (50 respondents) 35 15

Vasai (100 respondents) 67 33

Ratnagiri (50 respondents) 23 27

30%

70%

Thane

70%

0%

Thane

Yes

N

Index

- Yes

- No


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Out of 50 respondents at Thane city 70% i.e. 35 respondents showed the

willingness to become an agent at a life insurance company and is respondents

were notinterested in becoming an agent of a life insurance company.

33%

67%

Vasai

Even though there are various options available for earning money in

urban and semi-urban areas, becoming an agent of a life insurance company is

the most preferred one we can say this because out o f100 respondents of vasai

Taluka 67 respondents were willing to become an agent of a life insurance

company.

67%

33%

Vasai

Yes

N

Index

- Yes

- No


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54% 46%

Ratnagiri

People in Ratnagiri are less aware about the working of a life insurance

agent. Only 46%respondents at Ratnagiri district showed their willingness to

become an agent. Majority of respondents have never even heard about any

other life insurance company apart from LIC and most ofthe respondents were

not eligible as prescribed by IRDA

46%

54%

Ratnagiri

Y

N

Index

- Yes

- No


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Findings


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FINDINGS

1. Respondents are less aware of the private insurance companies that existin the market.

2. Some respondents ware willing to become an agent of life insurancecompany, just because it is a part time job.

3. Some professionals like CA, Tax planner etc wanted agency rather thanto be an agent of an insurance company.

4. MNYL is too selective in recruiting AA than to appoint any one like LIC.5. Those respondents who didnt want to become an insurance agent, mainly

because it is on commission based remuneration activity. Instead of

commission based job, respondents preferred a salary based job.

6. Educated respondents are now vending towards private insurancecompanies, due to the attractive packages and services provided by

various new insurance companies.

7. LIC has created a brand in 3-4 decades, due to which, new insurancecompanies are facing trouble in capturing market share.

8. Educated respondents prefer HDFC Standard Life insurance companybecause the recruitment process of HDFC Standard Life is less complex

than MNYL insurance and has better image as FC rather than being an

Agent of LIC.

9. Working women are less interested because at home and office.


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10.House wives, especially well educated house wives are able to giveenough time and therefore they are willing to become an insurance agent.


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Conclusions


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CONCLUSIONS

After collection of data, analysis and interpretation was made, on which

conclusions are drawn.

Those conclusions are:

1. Respondents still prefer government insurance company rather than privateinsurance company due to its reliability.

2. Respondents are more brand oriented rather than product oriented.3. Respondents are less aware about private insurance companies.4. Rural respondents of Ratnagiri are less aware of private insurance companies

and working of their agents than respondents of Thane and Vasai.

Insurance companies are trying to convince customers for a product

which does not have any present relevance i.e. each policy, which the customer

is going to purchase, will have a future set of action and benefits. Due to which

most of the people like to invest in those securities or investments, which willgive them a fruitful return within short period.

The private players are on their way, but they need lot of time investment

for creating a favorable brand image.


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Suggestions


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SUGGESTIONS

1. People should be made aware of the brand name of insurance companythrough advertisement.

2. Private companies should use traditional ways of promotion in rurallocations. Latest communication facilities are lacking in some parts of

Ratnagiri district. Traditional method may include various cultural

programmes like Harikatha or Puppetry shows etc.

3. Melas, which are also called as Jatra in the Maharashtra state can be usedfor creating awareness of life insurance companies among rural people.

4. The fear in peoples mind should be removed by company; using aggressivemethods of marketing.

5. Private companies should try to nurture their brand name by providingtimely and attractive facilities to the people.

6. Insurance companies should make clear all the details of job of an agentbefore recruiting them.

7. Agents feedback must be studied scientifically and continuously as theirwants and needs change continuously, so as to design a viable agent

retention strategy of the company.


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Appendix


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Appendix

Abbreviations

1.

SDM Sales Development Manager

2. LIC - Life Insurance Corporation of India3. FCs Financial Consultants4. AAs Agent Advisors5. MNYL - Max New York Life6. HDFC Housing Development Financial Corporation7. SL Standard Life.8. FPS Five Point System9. NAT Numbering Ability Test10. FCS Fundamental career Seminar11. IRDA Insurance Regulatory and DevelopmentAuthority.


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Bibliography

1. IC 33. 2. Human Resource Management By Kale and Ahmad.

Webliography

1. www.irda.com2. www.lic.com3. www.hdfcltd.com4. www.mnyl.com

37203464 Project on Insurance Sector

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