report on recruitment of life advisors bharti axa

8/3/2019 Report on Recruitment of Life Advisors Bharti AXA

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SUMMER TRAINING PROJECT REPORT

Submitted in partial fulfillment of the requirement ofBachelors of Business Administration (MBA)

Guru Jambheshwar University, Hisar

RECRUITMENT & LICENSING OG LIFE ADVISORSOF BHARTI AXA LIFE INSURANCE

Training Supervisor: Submitted By:

Name Name

Designation Batch

University Enrollment No.

SESSION 2006 2009

GURU JAMBHESHWAR UNIVERSITY

HISAR 125001


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PREFACE

Why is insurance necessary? The question contains the answer within itself. After all,

life is fraught with tensions and apprehensions regarding the future and what it holdsfor the individual. Despite all the planning and preparation one might make, no one

can accurately guarantee or predict how or when death might result and the

circumstances that might ensue in its aftermath. None of us know what is going to

happen to us in the future but what we do know is that accidents happen. This is the

simple idea that the insurance industry is founded on.

Insurance is vital to a free enterprise economy. It protects society from the

consequences of financial loss from death, accidents, sicknesses, damage to property,

and injury caused to others. The person seeking to transfer risk, the insured

(policyholder), pays a relatively small amount, the premium, to an insurance

company, the insurer, which issues an insurance policy in which the insurer agrees to

reimburse the insured for any losses covered by the policy. Insurance is the process of

spreading the risk of economic loss among as many as possible subject to the same

kind of risk and is based on the laws of probability (chance of a given outcome

happening) and large numbers (enables the laws of probability to work).There are

many perils (causes of loss) that society faces, some natural (e.g., earthquakes,

hurricanes, tornados, flood, drought), some human (e.g., arson, theft, fraud,

vandalism, contamination, pollution, terrorism), and some economic(e.g.,

expropriation, inflation, obsolescence, depressions/recessions). Insurers are able to

provide coverage for virtually any predictable loss.

This project "Recruitment & Licensing of Life Advisors" aims to know about the

recruitment practices adopted by the Bharti AXA Life Insurance for Life Advisors

and the satisfaction level of the Life Advisors. For these near about 160 persons from

Delhi were being interviewed using structured and a detailed questionnaire.

Responses received from persons were analyzed to come to a set of conclusions &

suggestions. Implementation of Six Sigma in the Insurance sector also discussed.


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ACKNOWLEDGEMENT

During the course of studies one has to undergo the training, which is considered to be

the stepping-stone on a move made towards ones Professional career.

I wish to express my gratitude to the following professionals of Bharti Life AXA Life

Insurance who were instrumental in providing me this training related to Recruitment

& Licensing of Life Advisors at Bharti AXA Life Insurance.

My special thanks to Mr. _________________(Manager Sales) for his invaluable

support and guidance during training period and supervising my work very earnestly.

Also, I would also like to thank all the life advisors and staff of the branch who helped

me by providing assistance in making my project.

NAME

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TABLE OF CONTENTS

Preface ii

Acknowledgment iii

Chapter 1: Introduction 1-18

1.1 Overview of the Industry 1

1.2 Profile of the Organisation 7

1.3 Problems of the Organization 14

1.4 Competition Information 14

1.5 S.W.O.T. Analysis of the Organization 17

Chapter 2: Objective & Methodology 19-22

2.1 Significance 19

2.2 Managerial usefulness of the study 20

2.3 Objectives 20

2.4 Scope of the Study 22

2.5 Methodology 21

Chapter 3: Conceptual Discussion 23-54

Chapter 4: Data Analysis 55-59

Chapter 5: Findings & Recommendations 60-61

Conclusion 62

Annexure 63-71

Bibliography 72


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Chapter 1.0

INTRODUCTION

1.1 OVERVIEW OF INDUSTRY

With largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. It's a business growing at the rate of 15-20

per cent annually and presently is of the order of Rs 450 billion. Together with

banking services, it adds about 7 per cent to the country's GDP. Gross premium

collection is nearly 2 per cent of GDP and funds available with LIC for investments

are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while

health insurance and non-life insurance continues to be below international standards.

And this part of the population is also subject to weak social security and pension

systems with hardly any old age income security. This it is an indicator that growth

potential for the insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic development

as it provides long term funds for infrastructure development and at the same time

strengthens the risk taking ability. It is estimated that over the next ten years India

would require investments of the order of one trillion US dollar. The Insurance sector,

to some extent, can enable investments in infrastructure development to sustain

economic growth of the country. Insurance is a federal subject in India. There are two

legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999.

In India, insurance is generally considered as a tax-saving device instead of its other

implied long term financial benefits. Indian people are prone to investing in properties

and gold followed by bank deposits. They selectively invest in shares also but the

percentage is very small. Even to this day, Life Insurance Corporation of India

dominates Indian insurance sector. With the entry of private sector players backed by

foreign expertise, Indian insurance market has become more vibrant.

Historical Perspective

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The history of life insurance in India dates back to 1818 when it was conceived as a

means to provide for English Widows. Interestingly in those days a higher premium

was charged for Indian lives than the non-Indian lives as Indian lives were considered

more riskier for coverage.

The Bombay Mutual Life Insurance Society started its business in 1870. It was the

first company to charge same premium for both Indian and non-Indian lives. The

Oriental Assurance Company was established in 1880. The General insurance

business in India, on the other hand, can trace its roots to the Triton (Tital) Insurance

Company Limited, the first general insurance company established in the year 1850 in

Calcutta by the British. Till the end of nineteenth century insurance business was

almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance

Companies Act of 1912 and the provident fund Act of 1912. Several frauds during

20's and 30's sullied insurance business in India. By 1938 there were 176 insurance

companies. The first comprehensive legislation was introduced with the Insurance Act

of 1938 that provided strict State Control over insurance business. The insurance

business grew at a faster pace after independence. Indian companies strengthened

their hold on this business but despite the growth that was witnessed, insurance

remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and

provident societies under one nationalized monopoly corporation and Life Insurance

Corporation (LIC) was born. Nationalization was justified on the grounds that it

would create much needed funds for rapid industrialization. This was in conformity

with the Government's chosen path of State lead planning and development.

The (non-life) insurance business continued to thrive with the private sector till 1972.

Their operations were restricted to organized trade and industry in large cities. The

general insurance industry was nationalized in 1972. With this, nearly 107 insurers

were amalgamated and grouped into four companies- National Insurance Company,

New India Assurance Company, Oriental Insurance Company and United India

Insurance Company. These were subsidiaries of the General Insurance Company

(GIC).


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Indian federal government considers insurance as one of major sources of funds for

infrastructure development. The government has identified the following as major

thrust areas:

Timely and reliable statistical data and information about policies and markets

to instill a degree of credibility;

A code of good practices based on international best practices to raise the

standard of Indian insurance sector;

Strengthening of supervision and regulation;

Market participation in decision-making;

High solvency standard' and Developing alternative channels.

Till end of 1999-2000 fiscal years, two state-run insurance companies, namely, Life

Insurance Corporation (LIC) and General Insurance Corporation (GIC) were the

monopoly insurance (both life and non-life) providers in India. Under GIC there were

four subsidiaries-- National Insurance Company Ltd, Oriental Insurance Company

Ltd, New India Assurance Company Ltd, and United India Assurance Company Ltd.

In fiscal 2000-01, the Indian federal government lifted all entry restrictions for private

sector investors. Foreign investment insurance market was also allowed with 26

percent cap. GIC was converted into India's national reinsure from December, 2000

and all the subsidiaries working under the GIC umbrella were restructured as

independent insurance companies.

Indian Parliament has cleared a Bill on July 30, 2002 de-linking the four subsidiaries

from GIC. A separate Bill has been approved by Parliament to allow brokers,

cooperatives and intermediaries in the sector. Currently insurance companies- both

private and public-- have to cede 20 percent of its reinsurance with GIC. GIC is

planning to increase re-insurance premium by 20 percent which works out at Rs 3000

cr. GIC is actively considering entry into overseas markets including West Asia,

South-east Asia and SAARC region.

Insurance Sector Reforms

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In 1993, Malhotra Committee- headed by former Finance Secretary and RBI

Governor R.N. Malhotra- was formed to evaluate the Indian insurance industry and

recommend its future direction. The Malhotra committee was set up with the

objective of complementing the reforms initiated in the financial sector. The reforms

were aimed at creating a more efficient and competitive financial system suitable for

the requirements of the economy keeping in mind the structural changes currently

underway and recognizing that insurance is an important part of the overall financial

system where it was necessary to address the need for similar reforms. In 1994, the

committee submitted the report and some of the key recommendations included:

i) Structure

Government should take over the holdings of GIC and its subsidiaries so that these

subsidiaries can act as independent corporations. All the insurance companies should

be given greater freedom to operate.

ii) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to

enter the sector. No Company should deal in both Life and General Insurance through

a single entity. Foreign companies may be allowed to enter the industry in

collaboration with the domestic companies.

Postal Life Insurance should be allowed to operate in the rural market. Only one State

Level Life Insurance Company should be allowed to operate in each state.

iii) Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set

up. Controller of Insurance- a part of the Finance Ministry- should be made

independent

iv) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from

75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company

(there current holdings to be brought down to this level over a period of time)


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v) Customer Service

LIC should pay interest on delays in payments beyond 30 days. Insurance companies

must be encouraged to set up unit linked pension plans. Computerization of

operations and updating of technology to be carried out in the insurance industry

The committee emphasized that in order to improve the customer services and

increase the coverage of insurance policies, industry should be opened up to

competition. But at the same time, the committee felt the need to exercise caution as

any failure on the part of new players could ruin the public confidence in the industry.

The committee felt the need to provide greater autonomy to insurance companies in

order to improve their performance and enable them to act as independent companies

with economic motives. For this purpose, it had proposed setting up an independent

regulatory body- The Insurance Regulatory and Development Authority.

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body

in April 2000 has fastidiously stuck to its schedule of framing regulations and

registering the private sector insurance companies. Since being set up as an

independent statutory body the IRDA has put in a framework of globally compatible

regulations. The other decision taken simultaneously to provide the supporting

systems to the insurance sector and in particular the life insurance companies was the

launch of the IRDA online service for issue and renewal of licenses to agents. The

approval of institutions for imparting training to agents has also ensured that the

insurance companies would have a trained workforce of insurance agents in place to

sell their products.

Present Scenario

The Government of India liberalized the insurance sector in March 2000 with the

passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting

all entry restrictions for private players and allowing foreign players to enter the

market with some limits on direct foreign ownership. Under the current guidelines,

there is a 26 percent equity cap for foreign partners in an insurance company. There is

a proposal to increase this limit to 49 percent.

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The opening up of the sector is likely to lead to greater spread and deepening of

insurance in India and this may also include restructuring and revitalizing of the

public sector companies. In the private sector 12 life insurance and 8 general

insurance companies have been registered. A host of private Insurance companies

operating in both life and non-life segments have started selling their insurance

policies since 2001.

Non-Life Insurance Market

In December 2000, the GIC subsidiaries were restructured as independent insurance

companies. At the same time, GIC was converted into a national re-insurer. In July

2002, Parliament passed a bill, de-linking the four subsidiaries from GIC.

Presently there are 12 general insurance companies with 4 public sector companies

and 8 private insurers. Although the public sector companies still dominate the

general insurance business, the private players are slowly gaining a foothold.

According to estimates, private insurance companies have a 10 percent share of the

market, up from 4 percent in 2001. In the first half of 2002, the private companies

booked premiums worth Rs 6.34 billion. Most of the new entrants reported losses in

the first year of their operation in 2001.

Insurance, like project finance, is extended by a consortium. Normally one insurer

takes the lead, shouldering about 40-50 per cent of the risk and receiving a

proportionate percentage of the premium. The other companies share the remaining

risk and premium. The policies are renewed usually on an annual basis through the

invitation of bids.

Of late, with IPP projects fizzling out, the insurance companies are turning once again

to old hands such as NTPC, NHPC and BSES for business.

Re-insurance Business

The balance risk is re-insured with other insurers. In effect, therefore, re-insurance is

insurer's insurance. It forms the backbone of the insurance business. It helps to

provide a better spread of risk in the international market, allows primary insurers to

accept risks beyond their capacity settle accumulated losses arising from catastrophic


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events and still maintain their financial stability.

Life Insurance Market

The Life Insurance market in India is an underdeveloped market that was only tappedby the state owned LIC till the entry of private insurers. The penetration of life

insurance products was 19 percent of the total 400 million of the insurable population.

The state owned LIC sold insurance as a tax instrument, not as a product giving

protection. Most customers were under- insured with no flexibility or transparency in

the products. With the entry of the private insurers the rules of the game have

changed.

The growing popularity of the private insurers shows in other ways. They are coining

money in new niches that they have introduced. The state owned companies still

dominate segments like endowments and money back policies. But in the annuity or

pension products business, the private insurers have already wrested over 33 percent

of the market. And in the popular unit-linked insurance schemes they have a virtual

monopoly, with over 90 percent of the customers.

With an annual growth rate of 15-20% and the largest number of life insurance

policies in force, the potential of the Indian insurance industry is huge. Total value of

the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion).

According to government sources, the insurance and banking services' contribution to

the country's gross domestic product (GDP) is 7% out of which the gross premium

collection forms a significant part. The funds available with the state-owned Life

Insurance Corporation (LIC) for investments are 8% of GDP.

The year 1999 saw a revolution in the Indian insurance sector, as major structural

changes took place with the ending of government monopoly and the passage of the

Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry

restrictions for private players and allowing foreign players to enter the market with

some limits on direct foreign ownership.

Though the focus of this market research report is on the potential growth on the

Indian Insurance Sector, it also talks about the market size, market segmentation, and

key developments in the market after 1999. The report gives an instant overview of

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the Indian non-life insurance market, and covers fire, marine, and other non-life

insurance. The data is supplied in both graphical and tabular format for ease of

interpretation and analysis. This report also provides company profiles of the major

private insurance companies.

1.2 PROFILE OF THE ORGANIZATION

Bharti AXA Life Insurance is a joint venture between Bharti, one of Indias leading

business groups with interests in telecom, agri business and retail, and AXA, world

leader in financial protection and wealth management. The joint venture company has

a 74% stake from Bharti and 26% stake of AXA.

The company launched national operations in December 2006. Today, Bharti AXA

Life Insurance have over 5200 employees across over 12 states in the country. Bharti

AXA Life Insurance business philosophy is built around the promise of making

people "Life Confident".

As the company expand their presence across the country to cater to customers /

clients insurance and wealth management needs with their product and service

offerings, Bharti AXA Life Insurance continue to bring 'life confidence' to customersspread across India. Whatever your plans in life, you can be confident that Bharti

AXA Life will offer the right financial solutions to help you achieve them.

Vision of the Bharti AXA Life Insurance

To be a leader and the preferred company for financial protection and wealth

management in India

Values of the Bharti AXA Life Insurance

Professionalism

Innovation

Team Spirit

Pragmatism


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Integrity

Strategy of the Bharti AXA Life Insurance

To achieve a top 5 market position in India through a multi-distribution, multi-

product platform.

To adapt AXA's best practice blueprints as a sound platform for profitable

growth.

To leverage Bharti's local knowledge, infrastructure and customer base.

To deliver high levels of shareholder return.

To build long term value with our business partners by enhancing the

proposition to their customers.

To be the employer of choice to attract and retain the best talent in India.

To be recognised as being close and qualified by our customers.

Strategic differentiators of Bharti AXA Life Insurance

Strong partner Bharti - provides access to customer base of more than 20

million.

Multi channel execution capability.

Current Asia product range which is a strong match to products sold to the

mass and mass affluent.

Global scale providing cost effective and speedy re-use of systems, products

and business capability.

Strong AXA and Bharti brands which can be leveraged to attract and retain a

high quality management team.

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Promoters of Bharti AXA Life Insurance

Bharti Enterprises

Bharti Enterprises is one of Indias leading business groups with interests in telecom,agri business, insurance and retail. Bharti has been a pioneering force in the telecom

sector with many firsts and innovations to its credit. Bharti Airtel Limited, a group

company, is one of Indias leading private sector providers of telecommunications

services with an aggregate of 60 million customers, spanning mobile, fixed line,

broadband and enterprise services. Bharti Airtel was ranked amongst the best

performing companies in the world in the BusinessWeek IT 100 list 2007. Bharti

Teletech is the countrys largest manufacturer and exporter of telephone terminals.

Bharti has a joint venture with ELRo Holdings India Ltd. FieldFresh Foods Pvt.

Ltd - for global distribution of fresh fruits and vegetables. Bharti also has a joint

venture - Bharti AXA Life Insurance Company Ltd. - with AXA, world leader in

financial protection and wealth management. Bharti has recently forayed into the

retail business under a company called Bharti Retail Pvt. Ltd. It also has a joint

venture Bharti Wal-Mart Private Limited with Wal-Mart, for wholesale cash-

and-carry and back-end supply chain management operations.

AXA

AXA Group is a worldwide leader in Financial Protection. AXA's operations are

diverse geographically, with major operations in Western Europe, North America and

the Asia/Pacific area. AXA had Euro 1,315 billion in assets under management as of

December 31, 2006. For full year 2006, IFRS revenues amounted to Euro 79 billion,

IFRS underlying earnings amounted to Euro 4,010 million and IFRS adjusted

earnings to Euro 5,140 million.

The AXA ordinary share is listed and trades under the symbol AXA on the Paris

Stock Exchange. The AXA American Depository Share is also listed on the NYSE

under the ticker symbol AXA.

AXA Asia Pacific Holdings

AXA Asia Pacific Holdings Ltd (AXA APH) is listed on the Australian stock


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exchange and is 52.3% owned by AXA SA. AXA APH is responsible for AXA SAs

life insurance and wealth management businesses in the Asia-Pacific region. It has

operations in Australia, New Zealand, Hong Kong, Singapore, Indonesia, Philippines,

Thailand, China, India and Malaysia. AXA APH had A$106.4 billion in total funds

under management and administration at 30 June 2007 and reported a profit after tax

before non-recurring items of A$374.0 million for the six months ended 30 June

2007.

Product From Bharti AXA Life Insurance

The Customer would like to live their life and prepare for the future with complete

confidence at Bharti AXA Life Insurance, design solutions that will protect them and

their family and help customer realise their dreams. Bharti AXA Life Insurance

endeavour is to bring to customer products and services that help customer lead a

confident life.

Individual Plans

Bharti AXA Dream Life Pension

A Unit Linked Pension Product

Dream Life Pension, Bharti AXA Life Insurances unique pension product ensures

that your retirement life is your Dream Life.

Live your Dreams! Be Life Confident.!

Bharti AXA Life AspireLife

Unit Linked Endowment Product.

Aspire Life helps you create a pool of wealth to meet your long-term needs, while

also providing you adequate protection in case the need arises.

Bharti AXA Life InvestConfident

Unit Linked Single Premium Product.

You have always strived hard to achieve the best for you and your loved ones, so

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when it comes to making an investment decision, we know that you would expect the

best from it too.

Bharti AXA Life WealthConfident

A unit-linked investment cum protection policy.

Your wealth, your status ensures that you get preferential status wherever you go. So

why shouldn't your money get the same?

Bharti AXA Life FutureConfident

A unit-linked policy which offers comprehensive protection along with wealth

creation in the long term.

Bharti AXA Life FutureConfident II

A unit-linked product which offers enhanced protection along with wealth creation in

the long term.

Bharti AXA Life SaveConfident

Traditional money back insurance product for long term savings.

Your changing lifestages decide your financial milestone planning. When you foresee

intermittent financial requirements in the years to come, like regular expenses related

to your childs education, liquidity becomes a key aspect of your planning along with

long term savings, and protection for your family.

Bharti AXA Life SecureConfident

A Long Term Life Insurance.

All of us desire to maximise the happiness for our family at all times, irrespective of

the circumstances. The thought of unfortunate events befalling us may cause us

anxiety about providing a secured happiness to our loved ones.


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Group Plans:

Bharti AXA Life Mortgage Credit Shield

Mortgage Credit Shield is a Group Product that provides coverage to people who have

availed of a Mortgage\ Home loan\ Home equity loan from an Institution/Bank.

Bharti AXA Life Credit Shield

Credit Shield is a Group Product that provides coverage to people who have availed

of a loan for 1 to 5 years from Group Policyholder.

Career at Bharti AXA Life Insurance

The vision of Bharti AXA Life Insurance Company Limited is to become the

preferred life insurance company in India. This vision extends to our recruitment

philosophy as well. Both the Bharti Group in India and AXA globally enjoy the status

of being a very employee focused organization.

At Bharti AXA Life Insurance, they are determined to achieve their vision through

talent who are empowered, focused on customer service, and champions of strategic

and operational excellence.

The guiding Human Resources principles at Bharti AXA are:

Clearly define scope of responsibilities and empower people to deliver.

Provide people with the means to develop their competencies.

Consider individual training and development a priority investment.

Build organizations that are conducive to teamwork and that involve everyone.

Promote ongoing dialogue between managers and the people who report to

them.

Make cultural difference a key source of strength.

Bharti AXA Values

Team Spirit

Integrity

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Innovation

Pragmatism

Professionalism

What makes Bharti AXA a good place to work of Life Advisors

Career Bandwidth

As a Life Advisor at Bharti AXA, there is only one way to grow. And that's by

meeting and exceeding your targets.

As a good performer, you stand to get promoted from Bronze to Diamond

Club and enjoy special remuneration benefits.

As a Life Advisor, you can get appointed as an Agency Manager within a span

of just 9 months to 1 year.

As a Life Advisor, you also get to participate in various business related

projects and committees.

Compensation

As a Life Advisor, you have the opportunity to create attractive earnings for

the first year and for the long term through payouts on renewals collection.

Higher the business you generate in the first year, higher the income you stand

to earn year after year. You need to of course make sure that the policy is live.

Get rewarded through Best in Class Rewards and Recognition programs

including overseas conventions.

Support

All Bharti AXA branches have HR services for support on all matters related

to compensation and career so you can redress your concerns immediately.

State-of-the-art Distribution Training support.

Comprehensive marketing support in terms of brochures, illustrations etc.


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Best in Class Sales Management Support for on the job training and business

closure.

Infrastructure & Technology support through dedicated Life Advisor's bay

equipped with telephones, computers and internet at Bharti AXA premises.

Customer Service and operations support.

1.3 PROBLEMS OF THE ORGANIZATION

Bharti AXA Life Insurance faces tough competition from LIC, ICICI, Reliance Life

Insurance, Aviva Life Insurance, Birla Sunlife, and other leaders in the industry. The

organization needs to work hard in order to stay competitive.

1.4 COMPETITORS INFORMATION

Life Insurance Corporation of India

Life Insurance Corporation of India was created on 1stSeptember, 1956, with the objective of spreading lifeinsurance much more widely and in particular to the ruralareas with a view to reach all insurable persons in thecountry, providing them adequate financial cover at a

reasonable cost.

LIC became so popular in India that common people understand insurance means

LIC. The Central office of LIC is at Mumbai and seven zonal offices at Mumbai,

Delhi, Kolkata, Chennai, Hyderabad, Kanpur and Bhopal. There are 100 divisional

offices in important cities and 2,048 branches offices . More than 5.59 Lakh at active

agents spread over the country. It has also offices at abroad in Fiji, Mauritius and

United Kingdom for business transaction. LIC is associated with joint ventures abroad

with several companies in the field of insurance.

Aviva Life Insurance

Aviva plc was launched in 1st July 2002 as a newname for CGNU plc. A world leader in financialservices, the group has 300-year pedigree. Aviva

brings together 50 trading names and enables thegroup to harness the benefits of its size and

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international capabilities as the seventh largest insurer in the world. Its main activitiesare long-term savings, fund management and general insurance. The group has 56,000employees serving 30 million customers worldwide.

HDFC - Standard Life Insurance

HDFC Standard Life Insurance Company is a jointventure between India's largest housing finance

provider, HDFC and Europe's largest mutual lifeassurance company .The Standard Life Assurance

Company (U. K). Standard Life, UK, founded in 1825, has been at the forefront of theUK insurance industry for 175 years by combining sound financial judgment withintegrity and reliability. It is the Largest Mutual Life company in Europe and has totalassets of Rs. 5, 50,000 crore. Depends on the product, like on savings 20-40% Ist year

premium. on investment 2%

on pension 7.5%

Birla Sun Life Insurance

Birla Sun Life Insurance is the coming together of theAditya Birla group and Sun Life Financial of Canadato enter the Indian insurance sector. The Aditya BirlaGroup, a multinational conglomerate has over 75

business units in India and overseas with operations inCanada, USA, UK, Thailand, Indonesia, Philippines,Malaysia and Egypt to name a few.Foreign Partner: Sun Life Assurance, Sun LifeFinancials primary insurance business, has excellent

ratings with the world's top rating agencies.ICICI Prudential Life Insurance

ICICI Prudential Life Insurance is a joint venture

between the ICICI Group and Prudential PLC, of

the UK. ICICI started off its operations in 1955 with

providing finance for industrial development, and since then it has diversified into

housing finance, consumer finance, mutual funds to being a Virtual Universal Bank

and its latest venture Life Insurance.

Bajaj Allianz Life Insurance

Bajaj Allianz Life Insurance Company Limited is ajoint venture between Bajaj Auto Limited and AllianzAG of Germany. Both enjoy a reputation of expertise,

stability and strength.ING Vysya Life Insurance

ING, the worlds second largest life insurancecompany together with Vysya Bank, one of Indias

leading private sector banks, forms ING Vysya LifeInsurance. ING Vysya Life Insurance Company


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Limited, a part of the ING Group the worlds largest financial services provider*entered the private life insurance industry in India in September 2001. Headquarteredat Bangalore, ING Vysya Life is currently present in over 232 cities and has anetwork of more than 265 branches, 369 sales teams, staffed by over 7,696 employeesand over 56,333 advisors, serving more than 676,086 customers.

MetLife IndiaThe Metropolitan Life Insurance Company is thenumber one insurer in the U.S. It is helping buildfinancial independence for its customers. MetLifeIndia Insurance Company Limited (MetLife) is an

affiliate of MetLife, Inc. and was incorporated as a joint venture between MetLifeInternational Holdings, Inc., The Jammu and Kashmir Bank, M. Pallonji and Co.Private Limited and other private investors. MetLife is one of the fastest growing lifeinsurance companies in the country. It serves its customers by offering a range ofinnovative products to individuals and group customers at more than 600 locationsthrough its bank partners and company-owned offices.

Tata AIG Life Insurance

Tata AIG Life Insurance Company Limited and Tata AIG

General Insurance Company Limited (collectively 'Tata

AIG') are joint ventures of the Tata Group and American

International Group, Inc. (AIG). Tata AIG combines the

strength and integrity of the Tata Group with AIG's

international expertise and financial strength.

Reliance Life Insurance

Reliance Life Insurance is anassociate company of RelianceCapital Ltd., a part of Reliance -Anil Dhirubhai Ambani Group.

Reliance Capital is one of Indias leading private sector financial services companies,and ranks among the top 3 private sector financial services and banking companies, interms of net worth. Reliance Capital has interests in asset management and mutualfunds, stock broking, life and general insurance, proprietary investments, private

equity and other activities in financial services.

1.5 S.W.O.T. ANALYSIS OF THE ORGANIZATION:

Strengths

Bharti AXA Life Insurance provides world-class training for Life Advisor.

Availability of various products for different segments of the society.

Motivation is also given to Life Advisor for attending the training.

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Co-operative Sales Manager to whom the Life Advisor can consult anytime.

Motivation of Life Advisor by distributing gifts and giving awards and

recognitions

Work and culture in Bharti AXA Life Insurance is very friendly.

Weaknesses

Bharti AXA Life Insurance does not have any provision for online training

like HDFC & KOTAK.

Training period consists of 100 hours, which is too long and thus difficult forsome people to attend regularly. The company has no alternative as it is ruled

framed by IRDA.

Opportunity

Huge market is literally untapped, out of estimated 320 millions insurable

markets only 20% of the population is insured.

Insurance penetration significantly below international standards

Health insurance and pension schemes, an estimated market potential of

approximately $15 billion.

Well developed banking system enabling banc assurance.

An acceptance of unit-linked products on the back of a well developed mutual

fund market.

Health insurance is relatively limited. There has been a lack of

interest in this area and the IRDA is keen to stimulate this.


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Threats

Players like Bajaj Allianz and Birla Sun life with low premium for the similar

plans.

Entry of many other private companies with equally strong experience and

financial strength of foreign partners making the competition difficult and

saturating the urban markets.

Current Govt. policies do not encourage gross domestic savings. If the tax

liability of the service class rises, the customer will have little money to invest.

LIC networking

Tax relief is long term a big question mark.

Equity boom luring investors to invest in stock market.

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Chapter 2.0

OBJECTIVE & METHODOLOGY

2.1 SIGNIFICANCE

The Indian life insurance industry is rapidly evolving and has emerged as one of the

fastest developing emerging markets for life insurance in the world. The industry has

become fiercely competitive with the entry of the private sector companies, including

major multinational insurers, after sector deregulation. It has opened up a range of

untapped opportunities for the new entrants into the industry, as the potential market

for buyers is high since India has a low insurance penetration and high growth rates.

Also, India has traditionally been a high savings oriented country with a large middle

class that can afford to buy life, health, and disability insurance as well as pension

plan products. Just the middle-income segment of the population is estimated at 31.2

crores (312 million). The following are other key features of the industry in India:

In 2005-06, the life insurance sector grew by 41%, while in terms of new

business premium income the sector recorded a growth of 35%.

Within just 5 years of deregulation in the industry, the private life insurers

have been able to garner an impressive 28.6% of the market and in the

process the companies have recorded phenomenal business growth rates.

Indias share of the worlds life insurance business has doubled within 5

years since liberalization, raising Indias global ranking to 17 in 2006 from

20 in 2000.

From 0.5% of the worlds life insurance business in 2000, India today

accounts for 1.02% of the worlds premium reflecting that the insurance

business in India has more than doubled within just 5 years.

In 2003, life insurance density (i.e., premium per capita) was just US$12.9

as against the global density of US$267.1.

An average Indian spends US$22.7 a year on buying life insurance as


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against a world average of US$299.5. Indias ranking in per capita

spending on insurance is 78, a ranking that puts it far behind countries

such as Namibia, Tunisia and Morocco.

Life insurance penetration (i.e., premium as percentage of GDP) in India

was 2.26% as against the global penetration level of 4.59 %.

Nonetheless, insurance as a business is growing faster than Indias gross

domestic product. Life insurance premiums, which accounted for 1.77% of

the countrys GDP in 2000, contributed 2.53% to the GDP for the 2005-06

fiscal year.

An expert group of the Confederation of Indian Industry (CII) has

projected that in the next 10 years by 2016, the size of the Indian insurance

market will grow to Rs 145,000 crores. This translates into an average

annual growth of over 19.6%.

CII expects an exponential growth in the pension business which is

projected to rise at 29% per annum, effectively translating into an

expansion of over 12 times over a period of 10 years by 2016. Thepremium business from pension schemes is projected to grow by 22.5%

within the same period.

2.2 MANAGERIAL USEFULNESS OF THE STUDY

Bharti AXA Life Insurance has made a place for itself in the Insurance sector. The

study of its recruitment & licensing of life advisors will give a crucial idea behind the

success of the company and the facets of marketing that made the success possible.

2.3 OBJECTIVES

The main aim of the project is to study the recruitment & licensing of life advisors at

Bharti AXA Life Insurance

More specifically the objectives of the project are:

To generate leads for Life Advisor recruitment.

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To identify the appropriate target segment to increase company distribution

network.

To get an overview about the Insurance Industry in India.

2.4 SCOPE OF THE STUDY

The study will be limited to Bharti AXA Life Insurance and will be limited to the

Delhi only. The information will be based on the companys website and literature

provided by the company. A study will help me to understand to know about the

recruitment practices adopted by the Bharti AXA Life Insurance for life advisors and

the satisfaction level of the life advisors.

2.5 METHODOLOGY

In order that work is done in a systematic way, the project is carried in accordance

with the proposed methodology.

1. Detailed understanding of the opportunities offered by the Bharti AXA

Life Insurance, this helped to get better of opportunities as a Life

Advisor. This was done through reading and understanding of the

literature provided by the companies search engines, websites,

reference books and course material provided by the institute. This was

an important phase of the project as in depth knowledge of the life

advisor helped in a questionnaire required for the project, as this was

the next step for carrying the project.

2. The detailed market survey conducted through questionnaires provided

by the company Bharti AXA Life Insurance itself. It gives me a deep

insight toward the opportunities, strengths etc. of the recruitment of

agent advisors.

A questionnaire about the rating scale regarding the job as an life advisor:-

1. Flexibility of time


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2. Extra potential income

3. Rewards and recognition

4. Financial security

5. World class training

Tools and techniques for data collection

Tools and techniques for data collection as follows:

Primary data collection:

Primary data was through interview with the persons through detailed questionnaire.

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Secondary source of data collection:

Various Internet sites, magazines were searched in order to find information useful for

completion of this project.

Out of the persons surveyed, one very interesting thing came out that the housewives

and the voluntary retired person are very keen to join this job as Life Advisors

because it offers a lot with no nonsense approach. It can offer them extra potential

income as they can earn more than 1000 on a single policy.

Limitations:

The project study is limited to Delhi alone.

The respondents may be biased. Thus, rational analysis may not be possible.

Scope of the project is limited to only recruitment of the life advisors so very

little exposure to the sales of the products offered by Bharti AXA Life

Insurance.


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Chapter 3.0

CONCEPTUAL DISCUSSION

3.1 HISTORY OF INSURANCE IN INDIA

Insurance in India has its history dating back till 1818, when Oriental Life Insurance

Company was started by Europeans in Kolkata to cater to the needs of European

community. Pre-independent era in India saw discrimination among the life of

foreigners and Indians with higher premiums being charged for the latter. It was only

in the year 1870, Bombay Mutual Life Assurance Society, the first Indian insurance

company covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started mushrooming up.

In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were

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passed to regulate the insurance business. The Life Insurance Companies Act, 1912

made it necessary that the premium rate tables and periodical valuations of companies

should be certified by an actuary

The insurance sector went through a full circle of phases from being unregulated to

completely regulated and then currently being partly deregulated. It is governed by a

number of acts, with the first one being the Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of insurance to

provide strict state control over insurance business.

Life insurance in India was completely nationalized, through the Life Insurance

Corporation Act, 1956. There were 245 insurance companies of both Indian and

foreign origin in 1956. Nationalization was accomplished by the govt. acquisition of

the management of the companies. The Life Insurance Corporation of India was

created on 1st September, 1956. The Govt. of India, then introduced the Insurance

Regulatory and Development Authority Act in 1999, thereby de-regulating the

insurance sector and allowing private companies into the insurance. Further, foreign

investment was also allowed and capped at 26% holding in the Indian insurance

companies

The Indian Life Insurance industry is rapidly evolving and growing. It recorded the

second highest growth in Asia in 2000-01, posting an inflation- adjusted growth rate

of 21.3%. This is more than double the worlds growth rate of 9%. The total Indian

insurance market is currently valued at Rs.67500 crores with the life insurance sector

accounting for 80% of the market at Rs.54000 crores.

The insurance sector in India has gone through a number of phases and changes,

particularly in the recent years when the government of India in 1999 opened up the

insurance sector by allowing pvt. Companies to solicit insurance and also allowing

FDI upto 26%.

The business of life insurance in India in its existing form started in India in the year

1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

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


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1912: The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with

the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the

central government and nationalised. LIC formed by an Act of Parliament, viz. LIC

Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the

Triton Insurance Company Ltd., the first general insurance company established in

the year 1850 in Calcutta by the British.

3.2 INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI

Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and

recommend its future direction. The Malhotra committee was set up with the

objective of complementing the reforms initiated in the financial sector. The reforms

were aimed at creating a more efficient and competitive financial system suitable for

the requirements of the economy keeping in mind the structural changes currently

underway and recognising that insurance is an important part of the overall financial

system where it was necessary to address the need for similar reforms

In 1994, the committee submitted the report and some of the key recommendationsincluded:

i) Structure

Government stake in the insurance Companies to be brought down to 50%.

Government should take over the holdings of GIC and its subsidiaries so that these

subsidiaries can act as independent corporations.

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All the insurance companies should be given greater freedom to operate.

ii) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to

enter the industry.

No Company should deal in both Life and General Insurance through a single

entity.

Foreign companies may be allowed to enter the industry in collaboration with the

domestic companies.

Postal Life Insurance should be allowed to operate in the rural market.

Only one State Level Life Insurance Company should be allowed to operate in each

state.

iii) Regulatory Body

The Insurance Act should be changed.

An Insurance Regulatory body should be set up.

Controller of Insurance (Currently a part from the Finance Ministry) should be made

independent.

iv) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced

from 75% to 50%.

GIC and its subsidiaries are not to hold more than 5% in any company (There current

holdings to be brought down to this level over a period of time).

v) Customer Service

LIC should pay interest on delays in payments beyond 30 days.

Insurance companies must be encouraged to set up unit linked pension plans.


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Computerization of operations and updating of technology to be carried out in the

insurance industry.

The committee emphasized that in order to improve the customer services and

increase the coverage of the insurance industry should be opened up to competition.

But at the same time, the committee felt the need to exercise caution as any failure on

the part of new players could ruin the public confidence in the industry.

Hence, it was decided to allow competition in a limited way by stipulating the

minimum capital requirement of Rs.100 crores. The committee felt the need to

provide greater autonomy to insurance companies in order to improve their

performance and enable them to act as independent companies with economic

motives. For this purpose, it had proposed setting up an independent regulatory body.

3.3 THE INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY (IRDA)

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body

in April 2000 has fastidiously stuck to its schedule of framing regulations and

registering the private sector insurance companies.

The other decisions taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was the launch of the

IRDAs online service for issue and renewal of licenses to agents. The approval of

institutions for imparting training to agents has also ensured that the insurance

companies would have a trained workforce of insurance agents in place to sell their

products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a framework

of globally compatible regulations. In the private sector 16 life insurance and

companies have been registered.

The industry in India has become fiercely competitive with the entry of several new

private companies, including major multinational insurers, after the deregulation of

the sector. It has opened up a range of untapped opportunities for the new entrants

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into the industry, as the potential market for buyers is high since the emerging market

in India has a low insurance penetration and high growth rates.

3.4 IMPORTANCE OF LIFE INSURANCE

Life Insurance is of great importance to individuals, groups, business community and

general public.

Some of the main benefits of life insurance are given below:

Protection Against Untimely Death

Life insurance provides protection to the dependents of the life insured and the family

of the assured in case of his untimely death. The dependents or family members get a

fixed sum of money in case of death of the assured.

Saving For Old Age

After retirement the earning capacity of a person reduces. Life insurance enables a

person to enjoy peace of mind and a sense of security in his/her old age.

Promotion Of Savings

Life insurance encourages people to save money compulsorily. When a life policy is

taken, the assured is to pay premiums regularly to keep the policy in force and he

cannot get back the premiums, only surrender value can be returned to him. In case of

surrender of policy, the policyholder gets the surrendered value only after the expiry

of duration of the policy.

Initiates Investments

Life Insurance Corporation encourages and mobilizes the public savings and

channelises the same in various investments for the economic development of the

country. Life insurance is an important tool for the mobilization and investment of

small savings.

Credit Worthiness

Life insurance policy can be used as a security to raise loans. It improves the credit


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worthiness of business.

Social Security

Life insurance is important for the society as a whole also. Life insurance enables aperson to provide for education and marriage of children and for construction of

house. It helps a person to make financial base for future.

Tax Benefit

Under the Income Tax Act, premium paid is allowed as a deduction from the total

income under section 80C.

3.5 CONSUMER AWARENESS: INSURANCE SECTOR

IRDA's regulatory initiatives have set the stage for a new era in functioning of the

Insurance Companies.

Life insurance always involves two beneficiaries (consumers), namely, those who are

designated to benefit in the event of death of the 'insured', and also, and this is highly

important, the premium payer himself while he is living. The protective influence of

life insurance extends to the insured himself enabling him to live more efficiently and

fully than otherwise be the case.

When Insurance companies start with the 'beneficiary' in the modern life insurance as

the center of thinking, the line of thought moves out in the direction of an ever

widening circle. The thought process gives rise to a host of economic, social,

psychological, legal, actuarial and financial implications of great magnitude.

Only by emphasizing the potential needs of "beneficiaries", by fostering a keen sense

of responsibility on the part of the family heads for the welfare of their dependents, by

developing effective procedures for translating family love and affection into practical

financial plans, and by using motivation techniques built on beneficiary relationships

could the institution of life insurance ever attain the stature and achievement required

to make life insurance a more effective instrument for safeguarding the interest of

beneficiaries.

Legislators and regulators all over have evidenced their concern for the beneficiaries

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and the latter's confidence in life insurance as a practical means of furthering the

social welfare. Courts have evidenced similar beliefs in their numerous decisions.

Every life insurance policy must some day be measured against the job that it must

perform for "beneficiaries". THE trouble is that if it is not measured until it becomes a

claim and then falls short of doing the job, there is nothing that can be done to remedy

the situation. Therefore, the important role of the intermediaries (Agents, Brokers

etc). A skilled and competent intermediary must be able to take men in their

imagination into the future to be able to foresee the risk and by proper planning lessen

the impact of financial consequences. The primary service they offer should be

prescriptive through recommending suitable plans.

3.6 PRODUCT AND SERVICE COMBINED

Because life insurance should be purchased to meet 'beneficiaries' financial needs, it is

essential to look beyond the policy as a product and consider their personal situation.

Service includes selling the right policy to fill the policy owner's need, making sure

the policy owner understands the transaction fully, arranging ownership and

beneficiary designation as required. Thus the product and the service are very much

interwoven. In the light of these factors, it is understandable that a number of life

insurance industry organizations abroad, specially in USA and Canada are

continuously engaged in special research projects with a view to understanding better

the service function. Improvements in the nature and quality of service to

beneficiaries/policy owners should follow when the industry has a clearer

understanding of what services policy owners require and how they are best rendered.

Important as life insurance is today, its real progress is yet to come, largely through

the national education system - collegiate level education as well as public education.

Our time-honoured professions use colleges and universities as allies for the effective

initial preparation of their practitioners and to provide opportunity for continued

study. It has to be so with insurance subject as well which is a relative newcomer on

our socio-economic scene. Insurance and financial counseling as a vocation and

profession could advance and acquire stature and dignity in direct proportion to the

education received and success achieved by those in the business and with the public.


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Also Public education in insurance represents a "great selling / teaching movement" to

spread the beneficial influence of the concept of life insurance into millions of our

homes and business enterprises. Public education should be designed to prepare the

buying public for ready and willing acceptance of the professional service of the

intermediaries. In fact, this should be the first and most important step taken in the

process of developing marketing methodology and marketing orientation.

It is true that the life insurance business has tended to describe as a duality, a

combination of protection and savings account, what is really the unity of permanent

life insurance. Insurance companieshave not communicated with sufficient clarity that

the savings like features of life insurance are a by-product of the reserves necessary

for long term or life time protection, and that without them the protection runs out

when the need might be greatest.

Need for regulatory mechanism is recognized as Insurance is effected with public

interest in view of the large numbers involved. As a contract necessarily embodying a

host of legal details, and specially imbalance of bargaining power of the insured

(Asymmetrical information) insurance invites regulatory oversight to adequately

protect the insurance consuming public. (beneficiaries)

No element of insurance business deals more closely with the insurance consuming

public than insurance intermediaries(Agents, brokers and others)

Most of the major problems and issues confronting the life insurance business are

market oriented. Questionable market conduct and misleading sales practices on a

widespread basis could emerge as a major issue.

Related closely to these issues are :

1. How should industry foster thinking on risk with a view to building up a body

of thinkers and a body of literature, which shall be the beginning of more

adequate recognition of the subject influencing our actions?

2. What kind of men and women should be selected to solicit etc., insurance?

What kind of persons to direct the life insurance marketing programme? It is

true that Insurance companies have not perfected the techniques of selecting

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and recruiting, and managing retention of agents to keep turnover within limits

that would be optimum for the economics of the business and for the

satisfaction of all the individuals involved.

Insurance industry is in transition and passing through an era of discontinuity.

Competitiveness demands a commitment to truth and willingness to confront brutal

facts of reality. need to cultivate and use "truth tellers" - people on whom Insurance

companies can rely to "call them the way they see them". Insurance companies need

"unfiltered feedback".

3.7 THE POTENTIAL OF THE LIFE INSURANCE INDUSTRY

If we have a glimpse of the global life insurance scenario, we find that while the

growth has either plateaued or turned negative in the developed countries, it has

shown a great potential in the emerging markets. India in particular has revealed a

buoyant market which has grown at a CAGR of 23% since the opening up of the

sector

Global competitiveness presupposes first successfully competing in the local markets

and thereafter expanding into the global markets. The prerequisites of global

competitiveness are, developing world class products that meet the aspirations of the

global customer, delivering service to match his rising expectations and managing

costs to remain competitive and sustain growth. This will require technology and

developing world-class competencies in the workforce.

Insurance contracts are basically long term contracts and succeeding in the long term

requires a rigorous asset/liability management in an uncertain business environmentwhere interest rates are demonstrating tremendous volatility. This demands vast

expertise in risk management and it becomes imperative for an insurance company to

groom and develop a skillful cadre of risk managers. The looming threat of terrorism

which has itself become global, deadly diseases like AIDS and potential ones which

could emerge from the mutation of Avian flu virus demand a paradigm shift in risk

management and a consequent departure from conventional mortality investigations.

Further, natural disasters like the recent earthquake in J&K and earlier tsunami, and

hurricanes like Katarina and Rita pose unending challenges to our actuarial skills.


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In the light of these sensitivities regulation will have to play a significant role and

regulatory issues like the solvency margin will continue to be critical to the growth of

the industry. This will be a continuing challenge for the new players who are on a

growth path and will be one of the important long term considerations.

Market share is a double-edged issue, while a falling market share becomes a survival

concern in a stagnant market, it is not a major concern in a growing market provided a

company manages a sustainable rate of growth. And, let me add, that the potential for

insurance is Vast in India. Today, the total insurance penetration i.e premiums as a

percent of GDP is about 2.88 in India against a world average of 8.06. This shows the

potential for growth of the insurance industry and provides a great opportunity to all

the players in this sector.

In the changing paradigms of business management in the twenty first century,

corporate social responsibility emerging as a major issue and as this subject is debated

globally, it is likely to emerge a guiding principle for corporates in the future. There is

a pressing social need to provide insurance to the poor. IRDA has already imposed

rural and social obligations on all insurance companies and rightly so. However, there

are huge weaker sections who cannot avail of conventional insurance and their need

for security becomes our corporate responsibility. I may add in all humility that LIC

through its managed social security schemes has provided cover to about 1 core such

families. Yet, this is only 20% of the total of 5 crore plus such families. Thus insurers

have to come up with schemes that are socially meaningful and an alternative to state

provided social security schemes. The issues here are many. The insurance companies

have to work in close liaison with the central and state governments so that target

groups are identified and they agree to fund a portion of the premia. Here

implementation is the key and all insurance companies should come together to create

a greater awareness and see it as a means of fulfilling their corporate social

responsibility.

IRDA is already seized of this issue and is already working on regulation for micro-

insurance. The success of micro insurance programmes will depend on creatively

designing demand driven products along with client-friendly collection and delivery

mechanisms. However, the ultimate success of such programmes will depend on the

commitment and passion with which they are implemented.

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It is high time we recognized the rights of the customer and changed out attitude.

Customers will be guided by two important considerations: price and quality of the

service. While a high level of service is required, for the buyers price is extremely

important. Customers are keen to understand what they are buying, why they are

buying and what they are getting for their money. This growth in customer

sophistication poses problems for insurers. The profit margin, if any will be squeezed,

as we shall have to provide services which customers would demand in short all have

to be more efficient.

Information technology is transforming industry more than anything else. It will do so

at an accelerating pace. We can now have access to plenty of information, data and

statistics. But it does not help us unless we know how to analyse it. It is the analytical

power that can lead us to the creation of new products. Our customers can take the

initiative and communicate with various players and with each other. Insurance

business is completely driven by knowledge and technology. The business of selling

insurance products requires assessing the profile of the customer and designing the

right product. The process is facilitated by database and data warehousing. Product

innovation is an ongoing process for us insurers but ultimately it is the customer that

has to be focused upon. Customer centricity has to be the watchword for all of us.

Detariffication is an issue that concerns the non-life insurance industry which is still

much regulated. While it will be in keeping with the spirit of reforms in the insurance

sector by tuning the premia with the actual market price, detariffication may not be

popular. Detariffication, for example, in the area of motor insurance may lead to a

hiking of premium rates, an issue the industry will have to grapple with.

Before I conclude I would like to place emphasis on an issue which is going tobecome very critical for corporates in the future. This is the issue of ethics in

business.

Today's globalized business environment is marked by high-intensity competition

leading to merciless markets. In the face of such competitive pressures there is always

a temptation to take shortcuts to success. A seductive urge to abandon ethics in the

practice of management for shortsighted gains. Yet there are also enough cases, Enron

and WorldCom to quote a few that have demonstrated beyond doubt the dangers of


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straying from ethical business practices.

In fact to quote marketing Guru Philip Kotler, Business success and continually

satisfying customers and stakeholders are intimately tied to adoption and

implementation of high standards of business and marketing conduct. The most

admired companies in the world abide by a code of serving people's interest, not only

their own.

Thus the company's bottom line cannot be the sole criteria of corporate performance.

Ethical issues have to be dealt with in major aspects of its business. This imposes a

heavy responsibility on the CEO to not only be an ethical role-model but also appear

to be seen as one. He has to create the right perceptions in the people's minds through

highly visible acts and deeds that high standards of business propriety are not only

paramount, but the foundation of corporate decision making process. Examples of

integrity at the top get a powerful of gravity and begin to flow down the line

becoming all pervasive in the organisation. Hence, the CEO becomes the fountain-

head of a cultural change leading to the transformation of a business entity into a

mighty ethical organization

Let me once again state that there has been a judicious selection of issues and the

deliberations should see a number of ideas getting generated by the distinguished

panel of speakers. I have only endeavoured to touch upon some of the issues proposed

to be discussed today and tomorrow.

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3.8 ROLE OF LIFE ADVISORS: MORE THAN LINK

BETWEEN CUSTOMER & COMPANY

The year that has gone by was an exceedingly good year for the insurance market.The first year premium underwritten by life insurers in 2006-07 registered a healthy

growth of 30% which is second only to 104% growth recorded in 2001-2002. This

increase comes on a 10% growth registered in 2005-2006. While the growth

registered in 2001-2002 could not be sustained, it would be possible to maintain last

year's growth rate in the current year also. The non life industry recorded a growth of

12% which is at the same level as that registered in 2005-2006. The main driver of

growth in the life segment is the Unit Linked products; In the case of non-life

insurance, the motor and health insurance portfolios have been expanding rapidly.

Inspite of an impressive growth in the life premium, there has been a decline of 8% in

the number of policies issued. The decline is primarily attributable to the drop in the

number of policies issued by the LIC though it registered a 22% increase in premium.

The reasons for this decline in policies require to be examined in detail. In the case of

general insurance, out of a total increase in premium of Rs.l900 crores in 2004-05

over last year, motor and health account for Rs. 1500 crores. In view of the large

increases in these portfolios a proper management of the portfolios is critical to

sustain the level of growth.

The expanding market demands a large agency force. The insurers have, therefore,

been recruiting agency force on a continuous basis. As the end of March 2005, there

are 20 lakh individual agents and 4711 Corporate Agents. A significant development

noticed last year is the arrangements entered into between the insurers and

Commercial Banks for marketing the contracts either as Corporate Agents or onreferral basis providing data base to the insurers.

The demand for tied agency force has lead to a situation where the resources of the

Institutes providing training have been stretched and a number of irregularities in

imparting training have come to the notice of the Authority. The inspections by the

Authority of these institutes have revealed a number of areas where improvements

were

called for. It was noticed that some of the Institutes did not have the infrastructure to


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conduct classes and the faculty was drawn on an adhoc basis and the courses

conducted in a short span as a result of which many of the agents did not receive

adequate training. It was also noticed that the licensed training institutes allowed

franchisees to conduct training on their behalf which was irregular. The insurers, in

their anxiety to recruit agents, did not pay any attention to the type of training

imparted. The Authority had, during 2004, streamlined the system of training and

impressed on the insurers the need for greater attention being paid to the training of

their agency force. The revised guidelines were issued after extensive consultations

with the stakeholders and it is hoped that this effort would result in improving the

quality of the agency force. The Authority is keen that the agency force should be

properly equipped as the insurance products are no longer simple and the agent should

be able to assess the requirements and advise on the appropriate policy.

The Authority has also been in close contact with the Insurance Institute of India for

streamlining the examination system as instances have been noticed where the

sanctity of the examination process was sought to be compromised by a few interested

parties. The CEOs of the insurance companies were requested to advise their

marketing staff to exercise vigilance and ensure that the examination process was in

no way compromised.

There is no doubt that the Chief Executive Officers of the Insurance Companies are as

much interested in procuring the services of qualified people as advisors as companies

are in ensuring that only trained workforce enter the insurance market for canvassing

sale of policies. Since there is convergence of views on this crucial issue there is no

reason why, together, they cannot improve the training and examination standards for

insurance agents. The time has come for them to make a concerted effort at improving

the quality of the insurance agents.

The institution of corporate agents was a new experiment started by the Authority to

facilitate sale of insurance policies through existing institutions which are in contact

with a large section of the population in the discharge of their normal activities. The

Authority has come across cases where corporate agents have resorted to use of

introducers or finders or sub agents who, in fact, sold the contracts and the corporate

agent passed on varying levels of commission to them. Since insurance contracts are

technical in nature, the Regulations issued by the Authority stipulated that the

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canvassing should be done only by specified persons "who are qualified to be

Agents". With a view to streamlining the system of licensing of corporate agents, the

Authority issued a set of instructions to be followed by the insurers while issuing

licenses to corporate agents. An attempt was also made to remove some of the

aberrations that have crept into the sale of group insurance policies.

The Authority believes that unless appropriate standards are set and followed by the

insurers and the intermediaries, there is distinct possibility of the insurance market

getting distorted which would affect the interests of the insured as well as the insurer.

One would like to see a healthy growth of the market even if it means moderate

growth of the market. No one want the long term interests of the market to be

sacrificed at the altar of immediate gains in premium.

Absence of data has been a hurdle in general insurance for taking any major

initiatives. Companies have been working on collection of data in both motor and

health portfolios for the last two years. The efforts made last year in identifying the

sources of data and the manner in which it is stored and how it could be retrieved has

met with some success. A pilot study undertaken with data collected in a few

Divisional Offices in and around Mumbai has thrown up some interesting

possibilities. It is noticed that data is available in electronic form in various stand

alone computers and it could be accessed by writing a simple programme. But the

data that is available shows that in terms of classification there are inadequacies.

These can be addressed and future records could be built up by removing the existing

imperfections. It is also possible to clean up the data by going to original records in

select cases and build up a representative sample. With a little more effort it should be

possible to build up the whole record by verifying basic records at least in respect of

third party liabilities. It is hoped that in a couple of months authorities should have

credible data on motor insurance for at least two years. A similar exercise was also

conducted on health insurance data by collecting records from the TPAs. The

information in respect of 2 million policies has been collected and it is being checked

for internal consistency. The experiments at data collection in both motor and health

have helped us in understanding the manner in which data is managed at the

operational level and interaction with the public sector insurers indicates that it should

be possible to improve the quality of data with a little effort on the part of the insurers.


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Inspite of the constraints inherent in a tariff regime, economy have witnessed a

significant growth in the number of applicants for grant of broker's license. Insurance

companies have sought to enlarge the opportunities for the brokers to operate in the

market by increasing the threshold limit at which the discount in premium is allowed

for contracts concluded directly with the insurers with out intermediation by brokers.

They also believe that this would facilitate the entry of brokers in general insurance

market so that they gain enough experience to be of assistance to the insured when

complete de-tariffing takes place. The broking community should realize that they

have a major role to play in enlarging the market through innovative packaging and

by creating new products. In the areas where they are already operating they should

ask themselves the question whether they have been able to provide value added

service to their clients.

There has been a persistent demand for freeing the general insurance market from the

rigidities inherent in a regime where tariffs are prescribed by an outside agency. It has

been argued that tariffs and free market do not go together and the insurers should be

able to determine what risks they are prepared to underwrite and the rate at which

they would underwrite the risk. It was also pointed out that the present system of

having tariffs in some risks and free rates for others is leading to distortions in pricingas the insurers are underwriting risks not covered by tariff at throwaway prices in

order to gain access to lucrative fire and engineering covers which are covered by

tariff.

The Authority recognizes that the consumer would normally stand to gain when there

is a free market. They are also convinced that de-tariffing is an essential pre-requisite

for the healthy growth of the market. It has to be, however, recognized that absence of

data and lack of experience in underwriting could upset the market with adverse

consequences for the insurer as well as the insured.

The Authority has, therefore, laid stress on the need for an orderly transition from the

present tariff market to free market. While agreeing with the suggestion of the

insurers for removing the tariff a clear road map to be followed has been given to

make the transition as smooth as possible.

In a market free of tariffs, any responsible insurer should have in place infernal

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capabilities to do underwriting, have rating support and develop policy terms and

conditions which would pass scrutiny by any judicial body. The companies feel that

the function of underwriting and rating of insurance business should be independent

of the business development function. Companies would like to ensure that sound

underwriting principles are not sacrificed for gaining access to business. Just as

actuaries are in short supply, so are people who have specialized in underwriting.

They have to be recruited and properly trained. The road map provides a year's time to

the insurers to identify the right kind of people and place them in appropriate

positions to undertake this work when the tariff regime is replaced by free tariffs on

1st January, 2007.

The Authority has suggested that so far as policy terms and conditions arc concerned,

the insurers may adopt the existing conditions. However, where the insurer wishes to

modify the terms the approval of the Authority would be required. In respect of risks

which are rated on the basis of international market terms, they may continue to be

governed by the terms and conditions acceptable to the insurer.

The General Insurance Council which consists of all the general insurers has

considered the road map and they seem to be convinced that they would be able to

adhere to the road map laid out by the Authority. There was some apprehension about

motor tariff and all the insurers have stressed the need for detariffing motor premium

along with the rest. IRDA see no difficulty in agreeing to this suggestion. However,

they would like to ensure that no vehicle which has a valid registration and has

permission to ply on the road goes without a proper insurance cover. Authorities have,

therefore, suggested creation of a Declined Motor Insurance Pool. It is understood

that the General Insurance Council has created two sub-committees to monitor the

preparedness of insurers to meet the challenges of a detariffed regime and to work out

the modalities for creation of the Declined Motor Insurance Pool.

CII have tried to briefly outline the developments that have taken place in the

insurance market in the last one year. Companies have come a long way in the road to

deepen the insurance market. The ove

report on recruitment of life advisors bharti axa

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