recruitment of quality advisor among the private life...

* Professor & Director, Sherwood College of Management, Lucknow (U.P.) India.

Recruitment of Quality Advisor Among thePrivate Life Insurance Companies in India

Shailendra Kumar Chaturvedi *

ABSTRACT

Insurance is a contract between two parties whereby one party called insurerundertakes in exchange for a fixed sum called premiums, to pay the other partycalled insured a fixed amount of money on the happening of a certain event. Lifeinsurers are striving to design imaginative products so as to ensure long-termcommitment from the policyholders. In the process there is a need for the insuranceadvisors to play a key role in identifying the needs of the prospect and sell insuranceso that long-term retention of customers is established.

IntroductionAs the economy is developing, the mind set of the people is changing at avery fast pace. “Insurance is a contract between two parties whereby oneparty called insurer undertakes in exchange for a fixed sum called premiums,to pay the other party called insured a fixed amount of money on thehappening of a certain event.” Insurance may be described as a social deviceto reduce or eliminate risk of life and property. Under the plan of insurance,a large number of people associate themselves by sharing risk, attached toindividual. With the help of Insurance, large number of people exposed to asimilar risk makes contributions to a common fund out of which the lossessuffered by the unfortunate few, due to accidental events, are made good.

Insurance is a tool by which fatalities of a small number are compensatedout of funds collected from plenteous. Gradually as competition increasedbenefits given by industry to its customers increased by leaps and bounds.Insurance is a basic form of risk management which provides protectionagainst possible loss to life or physical assets. Person who seeks protectionagainst such loss is termed as insured, and company that promises to honorclaim, in case such loss is actually incurred by insured, is termed as Insurer.In order to get insurance, insured is required to pay to insurance company acertain amount called premium. Premium is collected by insurance companieswhich acts as trustee to pool created through contributions made by persons

Volume 7 v Numbers 1-2,Jan.-Dec. , 2011 v pp. 157-172Indian Journal of Development Research and Social Action 2011

158 • Shailendra Kumar Chaturvedi

seeking to protect themselves from common risk. Any loss to the insured incase of happening of an uncertain event is paid out of this pool. Insurance isa service sector wherein social as well as commercial aspects are involved.Insurance sector in India has emerged as one of the best promising sector interms of employment. The life insurance sector is also buzz with activities.Private insurance companies are making inroads in the insurance market withaggressive marketing through new distribution channels.

Literature ReviewInsurance is a form of contract or agreement under which one party agrees inreturn for a consideration to pay an agreed amount of money to another partyto good for a loss, damage, or injury, to something of value in which theinsured has a pecuniary interest as a result of some uncertain event Sahooand Das (2009). Insurance advisors play an important role in widening theinsurance market. Advisors are supposed to be the first person to meet theprospective buyers of insurance, need to be well trained and fully equippedwith the knowledge about the product. Every insurance advisor shall:

• Identify himself and the insurance company of whom he/she is anadvisor.

• Disclose his license to the prospect on demand.

• Disseminate the requisite information in respect to insurance productsoffered for sale by his insurer and take into account the needs of theprospect while recommending a specific plan.

It has been observed that insurance advisors should constantly monitorthe level of satisfaction among his/her customer to keep themselves close tothe customers for fulfilling their needs. Perceived services quality has asignificant effect on the attitude towards obtaining insurance. Moreover, thedegree of success in the implementation of enterprise mobilization in the lifeinsurance industry is positively correlated to the management performanceof external aspects like providing increased customer satisfaction (Arora andStoner, 1996).

Customer satisfaction and the salespersons relation orientationsignificantly influences the future business opportunities and as thesalesperson’s relation orientation significantly influences the future businessopportunities and as the salespersons are able to enhance their relationshipswith the clients, clients are more satisfied and are more willing to trust, andthus secure the long-term demand for the services (Tam and Wong, 2001).Stafford et al. and Wells (1998) in a study on auto-casualty industry provedthat reliability is consistently the most important determinant of both

Recruitment of Quality Advisor Among the Private Life Insurance… • 159

perceived service quality and feelings of satisfaction among customersengaged in auto-insurance claims.

A study done by Xumei Zhang at. el. (2007) has found that worrying aboutfuture, economical conditions, cognition about life insurance and adventureactivities preference have significant positive effect on the intention ofpurchasing life insurance. An economical condition also has significantpositive effect on the premium of purchasing life insurance; health status hassignificant negative effect on the premium of purchasing life insurance.

Truett and Truett (1990) studied the impact of education on insurance.He found out that an increase in the number of educated people in a countrymay be associated directly with a greater recognition of various types ofproducts offered by life insurance companies, leading to higher level ofdemand. Browne and Kim (1993) studied the positive influence of educationon life insurance demand through its effect on the period of dependency. Heconcluded that individuals educated over longer period forgo the opportunityof full-time employment, and extend their reliance on the income stream ofother working members of the family, increasing the demand for policies. Itcan also be proposed that these effects are exacerbated by the income effect ofeducation.

Beck and Webb (2003) also studied the positive impact of education onlife insurance. He concluded that a better understanding of the benefits ofrisk-management and long-term savings may encourage risk aversion. Hwangand Gao (2003) studied several reasons to explain why life insuranceconsumption should rise with income. Firstly, there is no reason to believethat insurance is anything other than a normal good, in the sense thatconsumption is rising in income.

Life Insurance MarketThe Life Insurance market in India is an underdeveloped market that was onlytapped by the state owned LIC till the entry of private insurers. The penetrationof life insurance products was 19 per cent of the total 400 million of the insurablepopulation. The state owned LIC sold insurance as a tax instrument, not as aproduct giving protection. With the entry of the private insurers the rules ofthe game have changed. This has resulted in a sharp growth in the life insurancemarket, which still has huge untapped potential. Also, with economicadvancement, India is moving from a static to a dynamic situation in whichseveral changes are taking place in industry, social life, political situation etc.which gives birth to new categories of risk which have to be covered. The totallife insurance premium gained by the public and private sector organizationsfrom 2004-05 to 2008-09 are given below in the Table 1.


Table 1Total Life Insurance Premium

Insurer 2004-05 2005-06 2006-07 2007-08 2008-09PUBLIC (LIC) 75127.29 90792.22 127822.84 149789.99 157288.04ING VYSYA 338.86 425.38 707.20 1158.87 1442.28HDFC STANDARD 686.63 1569.91 2855.87 4858.56 5564.69BIRLA SUNLIFE 915.47 1259.68 1776.71 3272.19 4577.59ICICI PRUDENTIAL 2363.82 4261.05 7912.99 13561.06 15356.22KOTAK MAHINDRA 466.16 621.85 971.51 1691.14 2343.19TATA AIG 497.04 880.19 1367.18 2046.35 2747.50SBI LIFE 601.18 1075.32 2928.49 5622.14 7212.10BAJAJ ALLIANZ 1001.68 3133.58 4302.74 9725.31 10624.52MAX NEWYORK 413.43 788.13 1500.28 2714.60 3857.26MET LIFE 81.53 205.99 492.71 1159.54 1996.64RELIANCE 106.55 224.21 1004.66 3225.44 4932.54AVIVA 253.42 600.27 1147.23 1891.88 1992.87SAHARA 1.74 27.66 51.00 143.49 206.47SHRIRAM LIFE - 10.33 181.17 358.05 436.17BHARTI AXA - - 7.78 118.41 360.41FUTURE GERNERALI - - - 2.49 152.60IDBI FORTIS - - - 11.9049 318.97CANARA HSBC - - - - 296.41DFL PRAMERICA - - - - 3.37AEGON RELIGARE - - - - 31.21STAR UNION DAI-ICHI - - - - 50.19PRIVATE SECTOR (TOTAL) 7727.51 15083.54 28253.00 51561.42 64503.22GRAND TOTAL 82854.80 105875.76 156075.84 201351.41 221791.26* Source: IRDA Annual Report April 2004-05 to 2008-09.

Research Objectives• To identify the segment of people for insurance advisors recruitment.

• Find out the different ways to find the prospects for insurance advisorsrecruitment.

• To find the reason behind individual decisions in joining life insurancecompany as an agent or advisor.

Research MethodologyThe data for the study was collected from the respondents who were engagedin different occupations, which includes Housewives, Students, Teachers,Private Service employees, Businessmen and Doctors. Respondents wereapproached with a structured questionnaire with a request to participate inthe study. The questionnaire contains a set of attributes, which is to be


measured using Yes or No or May Be options & also by Open/Close endedquestions by which we can know about the Need and Preferences forsupplementary income of an individual, from which we can find out thesegment of people to whom company should target for recruitment. As thepopulation to be covered for the study was very large, a representative sampleof 90 respondents belonging to Lucknow (U.P) was taken.

Analysis and Findings: The analysis for the research paper has been dividedinto two different segments. First segment shows the percentage of therespondents on the basis of (i) Not happy with their current job/financialsituation, (ii) Need for supplementary source of income and (iii) Preferencefor supplementary source of income with the (i) Occupation, (ii) Age Groupand (iii) Geographic Segmentation.

Segment I (Demographic Profile)

On the Basis of OccupationOccupation A B C TotalHousewives 8 3 4 15Students 10 2 3 15Teachers 11 3 1 15Pvt. Service 5 6 4 15Businessmen 1 8 6 15Doctors 3 7 5 15Total 38 29 23 90Where: A = Not happy with their current job/financial situation, B= Need for

supplementary source of income. C = Preference for supplementary source ofincome.

Figure 1: Shows the Respondents Occupation


Interpretation: The above given table shows the behavior of the respondentsbelonging to different occupations towards (i) Not happy with their currentjob/financial situation (ii) Need for supplementary source of income and (iii)Preference for supplementary source of income. This reflects that the majorityof the respondents belonging to different occupations are not happy withtheir current job/financial situation, which means they need additionalfinancial support.

On the Basis of Age GroupAge Group A B C Total18-25 7 0 3 9026-35 8 1 436-45 15 4 646-55 19 7 16Total 49 12 29Where: A = Not happy with their current job/financial situation, B = Need for

supplementary source of income. C = Preference for supplementary source ofincome.

Figure 2: Shows the Respondents Age Group

Interpretation: The above given table shows the behavior of all therespondents belonging to different age group towards (i) Not happy withtheir current job/financial situation, (ii) Need for supplementary source ofincome and (iii) Preference for supplementary source of income. This reflectsthat the majority of the respondents belonging to different age group are nothappy with their current job/financial situation, which means they needadditional financial support.


On the Basis of Geographic SegmentationRegion A B C TotalSub-Urban 19 4 5 90Urban 32 14 16Total 51 18 21Where: A=Not happy with their current job/financial situation, B=Need for supplementary

source of income. C=Preference for supplementary source of income.

Figure 3: Shows the Respondents Geographic Segmentation

Interpretation: The above given table shows the behavior of all therespondents belonging to different geographic segmentation towards (i) Nothappy with their current job/financial situation (ii) Need for supplementarysource of income and (iii) Preference for supplementary source of income.This reflects that the majority of the respondents belonging to differentgeographic segmentation are not happy with their current job/financialsituation, which means they need additional financial support.

Segment II Occupation with Happy with Current Job/Financial Situation

Happy with current job/financial situation

Occupation Yes No TotalTeachers 8 7 15Doctors 14 1 15Pvt.-service 7 8 15Businessmen 13 2 15Students 6 9 15House wife 3 12 15Total 51 39 90


• From the above figures, on the basis of occupation, we can see that 14doctors out of 15, 8 teachers out of 15 and 13 businessmen out of 15are happy with their current job/financial situation, so they can notbe a positive segment for recruitment of a financial advisor in privateInsurance sector.

• On the other hand 8 employees of private sector out of 15, 9 studentsout of 15 and 12 housewives out of 15 are not happy with their job/financial situation. Therefore, we can say that they not be a potentialsegment for recruitment of a financial advisor in private Insurancesector.

Occupation with Need for Supplementary Income

Need for supplementary income

Occupation Yes May be No Total

Teachers 7 6 2 15Doctors 1 9 5 15Pvt.-service 5 9 1 15Businessmen 2 11 2 15Students 9 6 0 15House wife 12 2 1 15TOTAL 36 43 11 90

Figure 4: Happy with their Current Job/Financial Situation


• From the above graph we can see that 7 teachers out of 15, 9 studentsout of 15 and 12 housewives says yes for the supplementary source ofincome. This means they can act as a potential segment for recruitingas advisors in the private insurance sector.

• From the above graph we can see that 9 doctors out of 15, 11businessmen out of 15 says may be for the supplementary source ofincome. This means they can be converted to a potential segment forrecruiting as advisors in the private insurance sector.

• Only 1 out of 15 respondent working in private sector says no, whichreflects that this sector could not act as a potential segment forrecruiting as advisors in the private insurance sector.

Occupation with the Preference for Supplementary IncomePreference for supplementary income

Occupation A B C D E TotalHousewives 1 0 2 12 0 15Students 0 0 0 4 11 15Teachers 0 0 9 5 1 15Pvt. Service 0 0 10 0 5 15Businessmen 3 0 2 10 0 15Doctors 4 0 5 6 0 15Total 8 0 28 37 17 90Where: A = As a life insurance agent, B = Multilevel Marketing, C = Part time business,

D = Tuitions, E = Others

Figure 5: Need for Supplementary Income


• From the above graph we can see that only 1, 3 and 4 respondentsbelonging to housewives, businessmen and doctors had shownpreference towards supplementary income. This means that only thesesegments can act as a potential segment for recruiting as advisors inthe private insurance sector.

Age Group with Happy with Current Job/Financial SituationHappy with current

job/financial situationAge group Yes No Total18-25 6 0 9026-35 10 736-45 19 1146-55 17 20Total 52 38

• From the above given table we can see that the respondents belongingto 18-25 years, says yes, which means they are happy with their currentjob/financial situation. So they cannot be a potential segment forrecruiting as advisors in the private insurance sector.

Figure 6: Preference for Supplementary Income


• Whereas, the respondents belonging to 26-35 years, 36-45 years and46-55 years, says no, which means they are not happy with their currentjob/financial situation. So they can be a potential segment forrecruiting as advisors in the private insurance sector.

Age Group with Need for Supplementary IncomeNeed for supplementary Income

Age group Yes May be No Total18-25 5 3 0 9026-35 9 8 136-45 18 6 146-56 26 9 4 Total58 26 6

Figure 7: Happy with their Current Job/Financial Position



• From the above given table we can see that the respondents belongingto 18-25 years, says no, which means they are not happy with theircurrent job/financial situation. So the respondents belonging to 18-25 years age group, they cannot be a potential segment for recruitingas advisors in the private insurance sector.

• Whereas, the respondents belonging to 26-35 years, 36-45 years and46-55 years, says yes or may be, which means they are happy withtheir current job/financial situation. So they can be a potential segmentfor recruiting as advisors in the private insurance sector.

Age Group with Preference for Supplementary IncomePreference for supplementary income

Age Group A B C D E Total18-25 11 1 2 0 2 9026-35 9 4 1 2 836-45 16 2 3 1 146-56 10 3 6 5 3Total 46 10 12 8 14Where: A = As a life insurance agent, B = Multilevel Marketing, C = Part time business,




From the above graph we can see that 11, 9, 16 and 10 respondentsbelonging to all the different age groups had shown preference towards thesupplementary source of income. This means that all the respondentsbelonging to different segments can act as a potential segment for recruitingas advisors in the private insurance sector.

Geographic Basis with Happy With Current Job/Financial Situation.

Happy with current job/financial situation

Region Yes No Total

Sub-Urban 16 28 90Urban 7 39Total 23 67

Figure 10: Happy with their Current Job/Financial Situation

Geographic Basis with Need for Supplementary Income

Need for supplementary Income

Region Yes May be No Total

Sub-Urban 17 8 4 90Urban 46 13 2Total 63 21 6


Geographic Basis with Preference for Supplementary Income

Preference for supplementary incomeRegion A B C D E TotalSub-Urban 16 10 4 3 2 90Urban 27 18 1 8 1Total 43 28 5 11 3Where: A = As a life insurance agent, B = Multilevel Marketing, C = Part time business,





• From the above given three different tables, when evaluated onthe basis of geographic segmentation i.e. Sub-urban and Urbantowards: (i) Happy with their current job/financial situation, (ii) Needfor supplementary source of Income and (iii) Preference forsupplementary source of income, majority of the respondents hadshown interest towards becoming a insurance agent. So, if they canbe motivated they can act as a potential segment for recruiting asadvisors in the private insurance sector.

ConclusionIt is believed that it is a tough task to find out a quality prospect for insuranceadvisor’s recruitment, as every individual has its limited contact base.Insurance advisors play an important role in widening the insurance market.Advisors are supposed to be the first person to meet the prospective buyersof insurance, need to be well trained and fully equipped with the knowledgeabout the product.

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