Project on Insurance Sector

7/29/2019 Project on Insurance Sector

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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 Insurance

Company

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 Company4.3 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 framing 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 remaining 25% in

private corporate sector, construction and acquisitioning of immovable assets besidessanctioning 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. Bajaj Auto 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 :

HDFC Standard Life Insurance Company is a joint venture between Indias largest

housing finance provider- HDFC Ltd. and Europes largest mutual life insurance companyThe Standard Life Assurance Company (U.K.)

HDFC standard life insurance company limited is the first 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,


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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 liberalization and entry of private player in insurance sector, the 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.


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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.

Company Analysis

Life Insurance Corporation of India.


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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 1 st 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 security 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.

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 financial services,

Ministry of finance Govt. of India.)

7. Shri. Yogesh Lohiya (chairmen MD , LIC of India)


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8. Shri. T. C. Venkatsubrameniann (chairman & MD Export Import Bank of India)9. Dr. Soornad Ragashekheran

10.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 institution in the country. The corporation

has had a series of share issue raising its capital 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 ofinstitute 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 19 th

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 respectively.

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 theVenture.


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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 New York 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

private 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 partnered

Symbiosis 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

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 candidate for

different sources of recruitment such as news paper advertisement, employment exchanges

Recruitment and

Retention strategies of

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

Insurance Company.


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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-

A minor Found to be unsound mind by a Court of Jurisdiction 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 ?

Exam

Reappear

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 compelled 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

NOT CLEARD

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 prospective 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 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)

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 listing


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Candidates 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 convenience 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)

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.


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12.ContractAll successful candidates having legal license of IRDA are contracted 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. This 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 include

1) Motivation of policyCompanies 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.

At initial level agents feel motivated by some non-monetary benefits like a pen setwith companies logo on it, A cup or mug with agents own name printed on it, visiting

card of his name etc.

As the performance of an agent improves he receives some additional benefits likecertificate of an organization, trophies, additional monetary benefits apart from

commission.

Even letter heads mobile bill reimbursement facility provision of soft loan and laptopsare given to the agents.

Different contest are arranged at every branch of the company on monthly, quarterlyand yearly basis so as to motivate agents to perform well.

Agent whose performance is outstanding gets a membership for that year of differentclubs formed by insurance companies for e.g.


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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 insurance3) 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.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 mattersThe 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


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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 giving sufficient information about the job they are

supposed to perform for the company.

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


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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.

Research Objectives


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Research Objectives

1) The objective of study is to analyze the recruitment and retention process LifeInsurance 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 the problem afteranalysis of the recruitment and retention strategies of different life insurance

companies.


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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


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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 (questionnaire).

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.

Explanatory Research Descriptive Research Casual Research.

Among the above mentioned types descriptive research design has been chosen.

Descriptive research is to find an efficient sales force of Agents / Financial Consultants /

Agent Advisors. In order to study the characteristics and variables, 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.

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 theindustry scenario and also the relevant topics in the entire project report.


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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.

Observation method 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-

Personal interview Telephonic interview

Amongst the above methods personal interview method was selected and conducted

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


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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?

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?



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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.

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

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

Respondents

Yes No


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Professionals 9 5

Working employees 12 12

House wives 42 24

Students 37 21Post office agents 11 4

Investment consultants 14 6

Total 125 75

From the above pie-chart one can say that about 62.5% of respondents are willing to

become agent at a life insurance company from remaining 37.5% at respondents somerespondents were already agents of one or the other life insurance company.

35.72%

64.28%

Index

- Yes

- No


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Professionals

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. Amongst these

respondents 35.72% were not interested in becoming an agent of any life insurance company.

55.55%

44.44%

Working Employees.

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 not interested in such job.

36.36%

63.63%

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% at total house wives are willing to earn some money of their own by

becoming an agent of a life insurance company remaining 36.36% at house wives had very

less information about the whole insurance sector.

36.20%

63.79%

Students

Index

- Yes

- No


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The awareness amongst students about a working of an agent is 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 not interest to become an agent of any insurance

company.

26.66%

73.33%

Post office agents

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

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.


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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 not interested in the proposal.

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 on jobs like insurance agents. Those

women who were willing to become an agents majority of women were house. House wives

have ample at time to spend for such jobs.

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

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 not interested in

becoming an agent of a life insurance company.

Index

- Yes

- No


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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.

54% 46%

Ratnagiri

Index

- Yes

- No

Index

- Yes

- No


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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 of the respondents were not eligible as prescribed by IRDA


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Findings


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FINDINGS

1. Respondents are less aware of the private insurance companies that exist in themarket.

2. Some respondents ware willing to become an agent of life insurance company, justbecause it is a part time job.

3. Some professionals like CA, Tax planner etc wanted agency rather than to be an agentof 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 itis on commission based remuneration activity. Instead of commission based job,

respondents preferred a salary based job.

6. Educated respondents are now vending towards private insurance companies, due tothe attractive packages and services provided by various new insurance companies.

7. LIC has created a brand in 3-4 decades, due to which, new insurance companies arefacing trouble in capturing market share.

8. Educated respondents prefer HDFC Standard Life insurance company because therecruitment 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.10.House wives, especially well educated house wives are able to give enough 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 private insurancecompany 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 will give 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 company throughadvertisement.

2. Private companies should use traditional ways of promotion in rural locations. Latestcommunication 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 used for creatingawareness of life insurance companies among rural people.

4. The fear in peoples mind should be removed by company; using aggressive methods ofmarketing.

5. Private companies should try to nurture their brand name by providing timely andattractive facilities to the people.

6. Insurance companies should make clear all the details of job of an agent before recruitingthem.

7. Agents feedbackmust be studied scientifically and continuously as their wants and needschange 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 Manager2. LIC - Life Insurance Corporation of India3. FCs Financial Consultants4. AAs Agent Advisors5. MNYL - Max New York Life6. HDFCHousing Development Financial Corporation7.

SLStandard Life.

8. FPSFive Point System9. NATNumbering Ability Test10. FCSFundamental career Seminar11. IRDAInsurance Regulatory and Development Authority.


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Bibliography

1. IC 33.2. Human Resource ManagementBy Kale and Ahmad.

Webliography

1. www.irda.com2. www.lic.com3. www.hdfcltd.com4. www.mnyl.com
http://www.irda.com/http://www.irda.com/http://www.lic.com/http://www.lic.com/http://www.hdfcltd.com/http://www.hdfcltd.com/http://www.mnyl.com/http://www.mnyl.com/http://www.mnyl.com/http://www.hdfcltd.com/http://www.lic.com/http://www.irda.com/

Project on Insurance Sector

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