19-07-2014, 09:39 AM
DYNAMIC OF AGENCY RECRUITMENT
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INTRODUCTION TO INSURANCE SECTOR
In India, the concept of insurance was never given a serious thought, as compared to other countries. Life insurance premium to Gross Domestic Product (GDP) ratio is a mere 1.4% as compared to a healthier rate of 8% amongst other developing countries. The reason being lack of awareness and opportunities combined with poor state of services provided.
Presently in India, the insurance sector is nationalized; Life Insurance Corporation of India (LIC) and General Insurance Company (GIC) render services along with its 4 subsidiaries. While LIC provides life insurance, GIC is concerned with non life insurance like - motor, marine, fire, health and personal accident insurance.
LIC has been one of the pioneering organizations in India, which ushered in the use of information technology in their business on a very large scale to deliver more value and satisfaction to the policyholders. LIC has fully computerized most of its branches all over India. Metropolitan Area Network (MAN) has enabled policyholders to pay premiums or to get their status report, surrender value quotation and loan quotation online. The Zonal Offices and MAN centers are connected through a Wide Area Network (WAN). Interactive Voice Response Systems have been made functional in a number of centers all over the country.
The insurance industry in our country is on the threshold of a new era of rapid expansion. A more competitive environment is expected to emerge with new private participants being allowed to enter the insurance industry. The need for private sector participation in this sector is justified on the basis of enhancing the efficiency of operations, achieving a greater density and penetration of life insurance in the country and for a greater mobilization of long-term savings for long gestation infrastructure projects. In the wake of emerging competition, LIC, with its more than four decades of experience and wide reach, is equipped to face the challenges emanating from the entry of new players. Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is:
Insurance Act, 1938, Insurance Regulatory & Development Authority Act, Composition of Authority under IRDA Act, 1999
INSURANCE SECTOR IN INDIA
The insurance sector in India has witnessed almost a 360-degree turn over a period of almost two centuries. It has come a full circle from being an open competitive market to nationalization and back to a liberalized market again.
SCENARIO OF INSURANCE INDUSTRY IN INDIA
India with its large population does provide an immense potential for the insurance industry to flourish. Below given are some of the statistics pertaining to Indian insurance Industry.
Status of Indian Insurance Sector
The insurance industry in India is estimated to be of US $ 66-70 million & is expected to grow to US $ 377 million by 2005. With the opening of this sector it was felt that LIC would lose its hold on the Indian market. But LIC still continues to dominate the market with its strong 800,000 task force. Its incremental market where is 97% & is growing at a pace of 13%. In fact, some of its agents are the members of MDRT (Million Dollar Round Table). The growth of LIC can also be attributed to its presence in the US, UK where it functions as a corporate agent. Amongst private life insurers ICICI Prudential topped the list & in non-life insurers TATA-AIG has emerged stronger followed by Reliance General.
Insurance in India before 2000 meant only LIC (Life Insurance Corporation) & GIC (General Insurance Corporation). These two players signified the entire insurance sector in India. No doubt they were an amalgamation of as many as 351 private insurance companies i.e. LIC was formed by nationalizing 245 private insurance firms in 1956 & GIC by nationalizing 106 firms in 1970.
INSURANCE SECTOR BEFORE PRIVATIZATION
The Indian Insurance sector before privatization was based on the following factors:
Simple products.
Lower penetration & more direct business due to lack of intermediaries.
Though the domestic savings in India is 25% only 5 per cent of it is insured. The Gross Insurance Premium in India is as low as 0.3% compared to Japan which is 31%, European Union =25%, Canada = 1.3%. Which is 51st in the world?
But with the Vajpayee government coming to power in 2000 for a brief period, the way for privatization of insurance sector was paved. & lobe hold, now we have as many as 26 private players in this field i.e. 13 life-insurers & 13 non-life insurers. The reinsures function under the umbrella of GIC & are required to reinsure 30% of their business with it. GIC has allowed Indian exporters to secure liability insurance from outside the country, which has facilitated its entry into SAARC.
In various segments of Indian Insurance industry, health care presents a huge potential. The total expenditure on health in India is 6 per cent of the GDP. The government spending is less than 25% compared to 30-40% of developed countries. The health insurance industry in India can be valued at more than 90,000 core rupees. This means that in a population of 1 billion only 2340 million people are insured. It is estimated that this number will grow to 650 million by 2005.
The opening up of this sector has led to heightened activity. To increase penetration both national & private players are now using conventional means.
However, both the private & national players are reluctant to actively participate in the motor insurance segment, as the losses in this sector are more than 100%. Moreover the motor insurance premium is as low as 2.5 per cent of the vehicle cost compared to international standard of 6 per cent.
The privatization of insurance sector in India has encouraged the government to go in for more such moves. The track record of LIC has shown that even national players can function in a competitive environment & still dominate the market.
FUTURE OF INSURANCE SECTOR
Job opportunities are likely to increase manifold. The number of people working in the insurance sector in India is roughly the same as in the UK with a population that is 1/7 India’s; the US with a population ¼ the size of India has nearly 4 times the number. In the emerging markets, the picture is no less encouraging. In South Korea, the number of full time employees more than doubled over a ten-year period. Thailand added 50 per cent more jobs in four years.
The liberalization of the insurance sector promises several new jobs opportunities for those employed in the finance sector that are equipped with degrees in finance. Finance professionals who had witnessed a slump in the job market would be much-relieved lot to hear about the privatization of the insurance sector.
There could be a huge inflow of funds into the country. Given the industry’s huge requirement of start-up capital, the initial years after opening up are bound to see a strong inflow of foreign capital. Moreover, given that the breakeven, typically, come much later than in the case of other sectors, odds are those first remittances of dividend will not happen before a good 10-15 years.
Apart from pure re-insurance activities, which is providing insurance protection, a revolution will come in service related fields like training, seminars, workshop, know how transfer regarding risk assessment & rating, risk inspection, risk management & devising new policy cover, etc. also, with more player in market, there will be significant increase in advertising, brand building, & keep pricing not ridiculous pricing & this will whole lot of ancillary industries.
Substantial shift in the distribution of insurance in India is likely to take place. Many of these changes will echo international trends. Worldwide, insurance product move along a continuum from pure service products to pure commodity products. Initially, insurance is seen as a complex product with high advice & service component. Buyers prefer a face-to-face interaction & place a high premium on brand names & reliability.
LIFE INSURANCE
A small, happy family – husband, wife and two cute kids. One bread winner and four mouth to be fed. Things are doing well, BUT.. What next if something goes wrong with bread winner? Life insurance is a contract payment of some money to the person assured on the happening of the event issued against. Usually the specified date at periodic intervals or on unfortunate death, if any occurs earlier.
The Head or the breadwinner of the family generally supports the family for their basic needs, such as, food, clothing & shelter, by bringing income at a regular interval. So long as he or she lives & the income is received steadily, the family is secure; but untimely death or disability of that person puts the family in a very difficult situation, and sometimes in stark poverty. Uncertainty of death is inherent in human life.
WHY LIFE INSURANCE
In this entire world, people live and people die. No one is immortal. Everybody who borne has to die, it is the rule. We all know it, but human beings do not think much about it, infect we do not want to think about it. Everyone in the world is very optimistic about his life. No one knows when he/she is going to die and fortunately it is right also. We all know our Date-of-birth, but we don’t know our date-of –Death. Here the man is very possessive about his life and wants to live more and more in what so ever condition is. He wants to live till ripe old age. He wants to do very last for his parents and watch his children stand on their feet.
But, what if fate cuts life shorts? Who would pay for his children’s education, their marriage? Ensures life continuity for them? What if sudden disability or illness puts us out of action? Who would pay the mounting household bills? Have we ever thought of it? If these adversities occur, are we equipped to face the situation?
Let us look at the entire concept from a different way. During our life time we are supposed to deal with three probabilities and two priorities as shown next page:
SUPPORT AND BENEFITS
As a Life Advisor with Bharti Axa Life Insurance one would enjoy the following benefits:
1.Enriching training program: An intensive training program before one commences his/her new career. This would equip one with all the information and knowledge about life insurance, its benefits and our products. This would help one to perform his/her job better and meet his/her goals. One would also enjoy the benefits of continuous training and mentoring programs that are designed to update one, apart from enhancing one’s selling skills
2.Mentoring: Training and support from the Company to meet one’s goals. Opportunity to learn from industry professionals.
3. Flexibility: Decide one’s own working hours and earning goals.
4. Satisfaction: One will help people manage their assets and plan their financial security, and experience deep satisfaction from making a positive difference in others lives. One acts as a strategist in annuities, business insurance, estate planning and personal investment, providing both short and long term solutions to financial risks.
5. Freedom:Continue with your present job occupation if you so desire and treat this as a parallel source of income. This allows you time to decide if you want to take the job of a Life Advisor as a full time activity.
6. Earnings Entitlement to a percentage of the premium as commission till the time the policies sold by you are in force
METHODLOGY
Strategies applied for achieving the task assigned
Cold Calling:
Cold calling means to approach the customers with out taking prior appointments. I have done lots of cold calling as I visited different shops and malls I got a great experience as I interacted with different kind of peoples. Even I learned lots of things regarding convincing the customers.
Role Plays:
Role play is a kind of play or say drama which is been presented in front of a group of peoples and that is even in rural areas where people don’t understand the face to face interaction or any another explanation. Role play is done basically in local language and we are planning to do the same as our role play is all set to do.
Data Collection:
My third strategy is to collect data as many as possible from different sources. So for this data collection I have visited different colleges and even to different banks to get the data of retired people. I went to colleges to get the data of the graduate students who would the good prospect for our company.
Canopy:
Canopy is the kind of activity in which we do arrange a small Business Opportunity Presentation. We select particular area and in this area we give invitations to the people residing in this area and than we arrange the presentation. We did our canopy in the areas like Navarangpura, Gurukul, Vijay Cross Road and tried to cover as many areas as possible.
OPPORTUNITIES
Focus on high net worth individuals who prefer relationship over price
Continually look for new sales opportunities
High market growth provides opportunity for the company to increase their role in increasing Premium collections.
Large number of prospective customers has provided opportunity for the company to increase their operation to wider customer base.
Higher awareness of insurance products attracts customers to use insurance services and products
Insurance companies are becoming more and more self-regulated operationally.
Because of the large customer based, the company can have the benefit of economies of scale in providing services.
Transformation of people across countries increases efficiency and effectively in the company’s operation.
Speeding up of the technological adoption in insurance companies has provided opportunity for them to provide services to a larger customer base at lower cost.
Collaboration with supplier of back office and front office technological development has increase the quality and effectively of the operation.
Increasing computer literacy and quality of education has increased the efficiency of operation through advanced technology.
The move towards retail customers has access the banks to the rural population.
Tie up with other banks to increase ATM networks has lowered the operational cost of the company.
Higher foreign investment in insurance business has increased the technological development, branch expansion and wider network abilities.
Foreign companies also merge with other banks to increase the networks and customer services within the nation and internationally.
Population is becoming ageing which may hamper the effectively of providing insurance business
CONCLUSION
Entry of Private players in Insurance Industry has changed the entire scenario of the Industry. Industry has shown Revolution of 360* starting from 1956. Private players have challenged the LIC and compelled to face the competition. This cut-throat competition has been a boon for customer. He has been more informed and getting better services. Negligence to the Insurance is decreasing day by day. Thus, total scenario of the Industry has changed from as it was in 1956 – a Monopoly Market.
On account of increased competition, companies have to compete to grab the market. Tied channel is perhaps the best alternative to reach maximum target customers. So to have best results companies are required to have best people, who can work for the efficiently and give best results. So, as a result now a days companies have become more choosy in recruiting agents.
Effective Sales required to be carried out in a way starting from Prospecting and Qualifying to Follow-up and Maintenance. Each step in effective selling process is required to be taken care. In BHARTI AXA, LAs are trained in such a manner that they are able to carry effective sales process. Sales Managers do them lot of help in this context. They use Need-Satisfaction approach (Mostly) and also Formulated approach for this and it works