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30 Amity Global Business Review February

Quality Advisors: Their Recruitment among the Private Life Insurance Sector in India

Gaurav Singh & Ajai Prakash

In India, life insurance is considered to be the push sale product. The high degree of sales push is evident from the fact that in most cases it is the insurers employees or agents, who approach the customer to sell the product. Life insurers are striving to design imaginative products so as to ensure long-term commitment from the policyholders. In the process there is a need for the insurance advisors to play a key role in identifying the needs of the prospect and sell insurance so that long-term retention of customers is established.

Key Words: Life Insurance and Quality Advisors

IntroductionIn todays rapidly changing business environment, organizations have to respond quickly against the requirements of people. In the competitive scenario it has become a challenge for each company to adopt practices that would help the organizations to stand in the market. The competitiveness of an organization is measured through the quality of products & services offered to the customers that are unique from others. Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event. Insurance may be described as a social device to reduce or eliminate risk of life and property.

Insurance is a basic form of risk management which provides protection against possible loss to life or physical assets. Person who seeks protection against such loss is termed as insured, and company that promises to honor claim, in case such loss is actually incurred by insured, is termed as Insurer. Life insurance is an intangible product and hence it is important for the agent to be able to provide comfort with pre and post sales services. A quality financial advice can help customers in many ways. The agents gives advice to the customers based on:

Understanding the life stage needs of the customers.

A realistic picture of the customers financial future or risk.

Information on how to manage the risk.

Information that will help the customers to consider the financial options.

Life Insurance Market in India: The Life Insurance market in India is an underdeveloped market that was only tapped by 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. With the entry of the private insurers the rules of the game have changed.

This has resulted in a sharp growth in the life insurance market, which still has huge untapped potential. Also, with economic advancement, India is moving from a static to a dynamic situation in which several 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 total life insurance premium gained by the public and private sector organizations from April 2006-07 to April 2010-11 are given below in the Table 1.1:

Table 1.1: Total Life Insurance Premium(Figures in Crore)

Insurer 2006-07 2007-08 2008-09 2009-10 2010-11

PUBLIC (LIC) 127822.84 149789.99 157288.04 186077.31 203473.40

ING VYSYA 707.20 1158.87 1442.28 1642.65 1708.95

HDFC STANDARD 2855.87 4858.56 5564.69 7005.10 9004.17

BIRLA SUNLIFE 1776.71 3272.19 4577.59 5505.66 5677.07

ICICI PRUDENTIAL 7912.99 13561.06 15356.22 16528.75 17880.63

2012 31Gaurav Singh & Ajai Prakash

KOTAK MAHINDRA 971.51 1691.14 2343.19 2868.05 2975.51

TATA AIG 1367.18 2046.35 2747.50 3493.78 3985.22

SBI LIFE 2928.49 5622.14 7212.10 10104.03 12911.64

BAJAJ ALLIANZ 4302.74 9725.31 10624.52 11419.71 9609.95

MAX NEWYORK 1500.28 2714.60 3857.26 4860.54 5812.63

MET LIFE 492.71 1159.54 1996.64 2536.01 2508.17

RELIANCE 1004.66 3225.44 4932.54 6604.90 6571.15

AVIVA 1147.23 1891.88 1992.87 2378.01 2345.17

SAHARA 51.00 143.49 206.47 250.59 243.41

SHRIRAM LIFE 181.17 358.05 436.17 611.27 821.52

BHARTI AXA 7.78 118.41 360.41 669.73 792.02

FUTURE GERNERALI - 2.49 152.60 541.51 726.16

IDBI FORTIS - 11.9049 318.97 571.12 811.00

CANARA HSBC - - 296.41 842.45 1531.86

AEGON RELIGARE - - 3.37 165.65 388.61

DLF PRAMERICA - - 31.21 38.44 95.04

STAR UNION DAI-ICHI - - 50.19 530.37 933.31

INDIA FIRST - - - 201.60 798.43

PRIVATE SECTOR (TOTAL) 28253.00 51561.42 64497.43 79369.94 88131.60

GRAND TOTAL 156075.84 201351.41 221785.47 265447.25 291604.99

* Source: IRDA Annual Report April 2006-07 to 2010-11.

Insurance has been always a matter of solicitation even though many people would like to believe that it is a matter of persuasion. The life insurance market in India is undergoing a lot of changes that may eventually lead to how consumers will purchase life insurance. Low financial literacy and poor access to financial services in India pose a problem in penetration of the right kind of life insurance products- more in terms of the right mix of savings and protection. This is combined with the fact that consumers lack understanding of the true purpose of the life insurance. Consumers are not clued in about their life stage needs, and the product solutions suitable for such needs. The merits of agent advisors are as follows:

They usually enjoy personal credibility with custom-ers.

They provide various pre-sales and post-sales ser-vices to customers.

Due to personal contact, agents can provide valuable feedback about the need and expectations of consum-ers. This help insurer to develop new products.

However, there cannot be a one package that suits all. Each customer will have different needs, even if they have some common factors. Hence, each parameter, such as Age, Dependents, Background

and Family has to be measured before giving any advice to the customers. Insurers can develop tools that can be used to measure a customer profile by feeding in some basic data. This will enable the agent advisor to understand and offer products that will fit the customers. The number of insurance agents working among the public and private sector are as follows, which is shown in Table 1.2:

Table 1.2: Details of Insurance Agents of Life Insurers as at June, 2011.

Insurer As on 1st April 2011

As on 30th June 2011

Aegon Religare 10861 9197

Aviva 23219 23024

Bajaj Allianz 189667 158935

Bharti Axa 15210 15195

Birla Sunlife 144573 140839

Canara HSBC 0 0


DLF Pramerica 5199 5691

Edelweiss 0 28

Future Generali 52666 56051

HDFC Std. 136009 135531

ICICI Pru. 190407 131580

IDBI Federal 7882 7979

India First 296 517

ING Vysya 34957 35545

Kotak Mahindra 38269 27767

Max NewYork 43542 40521

Metlife 28840 31130

Reliance Life 189433 177747

Sahara 14180 14234

SBI Life 79628 79636

Shriram 10139 9932

Star Union 128 313

Tata AIG 87223 72113

Private Total 1302328 1173505

LIC 1337064 1306185

Industry Total 2639392 2479690

* Reference: IRDA journal/September 2011.

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

Identify himself and the insurance company of whom he/she is an advisor.

Disclose his license to the prospect on demand.

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

It has been observed that insurance advisors should constantly monitor the level of satisfaction among his/her customer to keep themselves close to the

customers for fulfilling their needs. Perceived services quality has a significant effect on the attitude towards obtaining insurance. Moreover, the degree of success in the implementation of enterprise mobilization in the life insurance industry is positively correlated to the management performance of external aspects like providing increased customer satisfaction (Arora and Stoner, 1996).

Customer satisfaction and the salespersons relation orientation significantly influences the future business opportunities and as the salespersons relation orientation significantly influences the future business opportunities and as the salespersons are able to enhance their relationships with the clients, clients are more satisfied and are more willing to trust, and thus secure the long-term demand for the services (Tam and Wong, 2001).

A study done by Xumei Zhang at. el. (2007) has found that worrying about future, economical conditions, cognition about life insurance and adventure activities preference have significant positive effect on the intention of purchasing life insurance. An economical condition also has significant positive effect on the premium of purchasing life insurance; health status has significant 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 country may be associated directly with a greater recognition of various types of products offered by life insurance companies, leading to higher level of demand. Browne and Kim (1993) studied the positive influence of education on life insurance demand through its effect on the period of dependency. He concluded that individuals educated over longer period forgo the opportunity of full-time employment, and extend their reliance on the income stream of other working members of the family, increasing the demand for policies. It can also be proposed that these effects are exacerbated by the income effect of education.

Beck and Webb (2003) also studied the positive impact of education on life insurance. He concluded that a better understanding of the benefits of risk-management and long-term savings may encourage risk aversion. Hwang and Gao (2003) studied several reasons to explain why life insurance consumption

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should rise with income. Firstly, there is no reason to believe that insurance is anything other than a normal good, in the sense that consumption is rising in income.

Research Objectives: The main objectives of the research are as follows:

To identify the effective segment of respondents, which could be recruited as a life insurance agent?

To find the reason behind individual segments deci-sion in joining as agent or advisor of any private life insurance company.

Research MethodologyThe data for the study was collected from the respondents who were engaged in different occupations, which includes Housewives, Students, Teachers, Private Service Employees, Businessmen and Doctors. Respondents were approached with a structured questionnaire and were requested to participate in the study. As the population to be covered for the study was very large, representative samples of 100 respondents belonging to different categories/occupations of Lucknow (U.P) were taken.

Analysis and Findings: The analysis for the research paper has been divided into two different segments. First segment shows the number of the respondents on the basis of i) Occupation, ii) Age Group and iii) Geographic Segmentation. Whereas, the second segment includes the relationship between the demographic profile of the respondents with the different variables such as: i) Not happy with their current job/financial situation, ii) Need for supplementary source of income and iii) Preference for supplementary source of income.

Segment I (Demographic Profile):i) On the basis of Age Group:

Age Group No. of Respondents

18-25 07

26-35 29

36-45 46

46-55 18

Total 100

Interpretation: From the above given data we conclude that majority (46) of the respondents belong to 36-45 years of Age-group, who plays an active role in acting as an insurance advisor or an agent. 29 respondents belong to 26-35 years of Age group, 18 respondents belong to 46-55 years of Age-group and 07 respondents belong to 18-25 years of Age group.

ii) On the basis of Occupation:

Occupation No. of Respondents

Housewives 16

Students 11

Teachers 13

Pvt. Service 21

Businessmen 35

Doctors 04

Total 100

Interpretation: From the above given data we conclude that majority (35) of the respondents belong to businessmen, who plays an active role in acting as an insurance advisor or an agent. 21 out of 100 respondents belong to the Employees working



in the Private sector, 16 were Housewifes, 13 were teachers, 11 were students and 04 were doctors.

iii) On the basis of Geographic Segmentation:

Region No. of Respondents

Urban 86

Semi-Urban 14

Total 100

Interpretation: From the above given data we conclude that majority (86) of the respondents belongs to the Urban area, who plays an active role in acting as an insurance advisor or an agent and remaining 14 respondents belong to the semi-urban area or the rural area.

Segment II:1. Occupation with Happy with current job/financial situation.

Occupation Happy with current job/financial situation.

Total

Yes No

Teachers 4 9 13

Doctors 3 1 04

Pvt.-service 7 14 21

Businessmen 21 14 35

Students 6 5 11

House wife 9 7 16

Total 80 20 100

Fig. 1.4 Happy with their current Job/Financial situation

Interpretation

From the above figures, on the basis of occupation, we conclude that 9 teachers out of 13, 14 employees working in private sector out of 21 and 14 business-men out of 35 says No, which means that they are not happy with their job/financial situation, so they can be recruited as a financial advisor in private life Insurance sector.

On the other hand 3 doctors out of 4, 6 students out of 11 and 9 housewives out of 16 says Yes, which means that they are happy with their job/financial situation, so they can not be recruited as a financial advisor in private life Insurance sector.

2. Occupation with Need for supplementary Income

Occupation Need for supplementary income

Total

Yes May be No

Teachers 11 0 2

100

Doctors 3 0 1 100

Pvt.-service 19 1 1

Businessmen 27 0 8

Students 7 2 2

House wife 10 0 6

TOTAL 77 3 20

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Fig. 1.5 Need for Supplementary Income

3) Occupation with the Preference for Supplementary Income:

Occupation Preference for supplementary income.

Total

A B C D E

Housewives 6 6 4 0 0 16

Students 4 3 1 3 0 11

Teachers 5 3 2 3 0 13

Pvt. Service 12 6 3 0 0 21

Businessmen 21 8 6 0 0 35

Doctors 0 1 2 1 0 4

Total 48 27 18 7 0 100

Where: A= As a life insurance agent, B=Multilevel Marketing, C= Part time business, D= Tuitions, E= Others

Fig. 1.6: Preference for Supplementary Income

Interpretation From the above graph/figures, on the basis of oc-

cupation, we conclude that 11 teachers out of 13, 19 employees working in private sector out of 21, 27 businessmen out of 35 and 10 housewives out of 16 says Yes, which means that they need supplemen-tary source of income, so they can be recruited as a financial advisor/agent in private life insurance sec-tor.

From the above graph/figures, on the basis of occu-pation, we conclude that 21 businessmen out of 35, 12 employees working in private sector out of 21 and 6 housewives out of 16 shows preference for supple-mentary source of income via becoming insurance agent/advisor, so they can be recruited as a financial advisor/agent in private life insurance sector.

Age group Happy with current job/financial situation.

Total

Yes No

18-25 5 2

26-35 7 22

36-45 11 35 100

46-55 6 12

Total 29 71

4) Age group with Happy with current job/financial situation.

Fig. 1.7: Happy with their Current Job/Financial Position



5) Age Group with Need for Supplementary Income

Age group Need for supplementary Income

Total

Yes May be No

18-25 4 1 2

26-35 20 0 9

36-45 41 1 4 100

46-56 12 2 4

Total 77 4 19

Fig. 1.8: Need for Supplementary Income

Interpretation: From the above given table, on the basis of age

group, we conclude that 35 respondents belonging to 36-45 years age group out of 46 and 22 respondents belonging to 26-35 years age group out of 29 says No, which means that they are not happy with their current job/financial situation, so they can be a posi-tive segment, which can be recruited as a financial advisor/agent in private life insurance sector.

From the above given table, on the basis of age group, we conclude that 41 respondents belonging to 36-45 years age group out of 46 and 20 respondents be-longing to 26-35 years age group out of 29 says Yes, which means that they need supplementary source of income, so they can be recruited as a financial ad-visor/agent in private life insurance sector.

6) Age Group with Preference for Supplementary income:

A g e Group

Preference for supplementary income

Total

A B C D E

18-25 3 1 0 3 0

26-35 17 6 4 2 0

36-45 31 7 8 0 0 100

46-56 11 5 2 0 0

Total 62 19 14 5 0

Where: A= As a life insurance agent, B=Multilevel Marketing,C= Part time business, D= Tuitions, E= Others

Fig. 1.9 Preference for Supplementary Income

Interpretation: From the above given table, on the basis of age

group, we conclude that 31 respondents belonging to 36-45 years age group out of 46, 17 respondents belonging to 26-35 years age group out of 29 and 11 respondents belonging to 46-55 years age group out of 18 shows preference for supplementary source of income via becoming insurance agent/ advisor, so they can be recruited as a financial advisor/agent in private life insurance sector.

7) Geographic Basis with Happy With Current Job/Financial Situation.

Region Happy with current job/financial situation.

Total

Yes No

Sub-Urban 3 11 100

Urban 16 70

Total 19 81

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Fig. 1.10: Happy With Their Current Job/Financial Situation

8) Geographic Basis with Need for supplementary Income

Region Need for supplementary Income

Total

Yes M a y be

No

Sub-Urban 10 2 2 100

Urban 70 10 6

Total 80 12 8

Fig. 1.11: Need for Supplementary Income

9) Geographic Basis with Preference for supplementary income

Region Preference for supplementary income

Total

A B C D E

Sub-Urban 8 3 3 0 0 100

Urban 53 9 21 3 0

Total 61 12 24 3 0

Where: A= As a life insurance agent, B=Multilevel Marketing, C= Part time business, D= Tuitions, E= Others

Fig. 1.12: Preference for Supplementary Income

Interpretation: From the above given three different tables, when

evaluated on the basis of geographic segmentation i.e. Sub-urban and Urban towards: i) Happy with their current job/financial situation, ii) Need for supplementary source of Income and iii) Preference for supplementary source of income, majority of the respondents belonging to Urban area has shown interest in becoming insurance advisor/agent also they had shown interest in earning supplementary income, so they can be motivated and recruited as an advisor/agent among the private insurance sector.

ConclusionIt is believed that it is a tough task to find out a quality prospect for insurance advisors 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 buyers of insurance, need to be well trained and fully equipped with the knowledge about the product.

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