CHAPTER II
REVIEW OF LITERATURE
2.1 INTRODUCTION
Research on General Insurance worldwide is much popular on certain forms of
general Insurance and the researchers neglected few forms. So for especially on
livestock insurance but an attempt is made in this research. These earlier studies have
no direct bearing on the subject of research, the methodology and findings of these
works have been found to be quite useful for the purpose of this study. This will show
how for this research work will differ from others and show the uniqueness of this
research work.
2.2 DOMESTIC STUDIES
Bashir Ahmad Joo (2013) made a study entitled, “Analysis of Financial
Stability of Indian Non Life Insurance Companies”, reports that World over after
liberalization insurance sector has undergone significant transformation. This is also
true with Indian insurance market, where insurance penetration and density is very low
compared to other countries. Therefore, many foreign insurance companies were lured
to make entry in Indian insurance in order to insulate positive spread from large
untapped insurance market, mainly by entering into joint venture with local partners.
Thus Indian insurance market after liberalization was assaulted by the pressure of
globalization, competition from multinational insurance companies and lavish
underwriting chase which are seen as threats as well as opportunities for insurance
companies. However, entry of new players has resulted into heavy underwriting losses
for Indian public and private insurers. But heavy underwriting losses had reverse
impact on their solvency margins. In present study, the Insurance Solvency
International Ltd. (ISI) predictors have been employed in this study to study the
solvency position of Indian non life insurers. Further, study highlights the extent of
relationship between various factors and solvency of non life insurers in India by using
multiple regression analysis. The result of the study has shown that claim ratio and firm
size have greater impact on solvency position of insurance companies9.
Bindiya Kunal Soni and Jigna Trivedi, (2013) “Crop Insurance: An
Empirical Study on Awareness and Perceptions”, universally agriculture is perceived
to be synonymous with risk and uncertainty. Crop insurance is one alternative to
manage risk in yield loss by the farmers. It helps in stabilization of farm production and
income of the farming community. As such it is a risk management alternative where
production risk is transferred to another party at a cost called premium. The ongoing
National Agricultural Insurance Scheme is a good step forward to insure risk of
millions of farmers whose livelihood depends on the pattern and distribution of
monsoon rain in India. However, the penetration of crop insurance is found to be very
less. This study is an attempt to understand the existing scenario of crop insurance in
India with a special reference to Gujarat. The study empirically checks upon the
awareness level of farmers in Anand district towards this product. The paper further
examines the perception of those who have availed or not availed crop insurance in
various villages of Anand district. The study concludes with various suggestions for
increasing the awareness level of the farmers for ensuring better penetration of crop
insurance in Anand district10
.
������������������������������������������������������������9 Bashir Ahmad Joo, “Analysis of Financial Stability of Indian Non Life Insurance Companies”, Asian
Journal of Finance & Accounting, Vol. 5, No. 1, 2013, pp.23-27. 10 Bindiya Kunal Soni and Jigna Trivedi, “Crop Insurance: An Empirical Study on Awareness and
Perceptions”, Gian Jyoti E-Journal, Volume 3, Issue 2, Apr-Jun 2013, pp.81-93.
Goudappa, S.B. Reddy, B. S. and Chandrashekhar, S.M., (2012) “Farmers
Perception and Awareness about Crop Insurance in Karnataka”, the study on farmers
perception and awareness of crop insurance was conducted in North Eastern parts of
Karnataka because region receives very less rainfall compared to other part of
Karnataka and people of this region always suffering from drought, they continue to
suffer. The study revealed that average size of family among borrowers and non
borrowers was seven. Most of them (44%) are illiterate and 25% were education up to
primary level. Level of education, family size and experience in farming did not show
any significant difference between among the district selected for study. However, farm
size and crop income, which generally corresponds to farm size, were significantly
higher in Gulbarga district compared to Koppal and Raichur districts. Though NAIS
crop insurance scheme is operating since 2002-03 in the study area majority of
respondent (>80%) are not aware that who is implementing agency and who pay’s
compensation. Almost all respondents are in the wrong perception that banks will pay
compensation and are the implementing agency. More than three fourth of the
insurance beneficiaries mentioned that bank compulsion was the motivation for opting
insurance. Financial security, good experience from others was the region for opting
crop insurance. Further more than 80% of respondents are not aware of extent of
coverage premium paid, last date, procedure for insuring crops and method of loss
determination and compensation worked out by agriculture insurance company.
Respondent farmers were suggested for improving existing scheme and they want
quick settlement of claims which is usually taking more than one year. Around three
fourth of the beneficiaries suggested to consider adverse weather condition prevailed
during flowering and pod formation stage. National Agriculture Insurance Scheme
(NAIS) in operation needs to be continued with modification and simplification of
modalities of indemnity, loss assessment, settlement of compensation and disbursement
procedure11
.
Kavitha, Latha, and Jamuna., (2012) made a study titled, “Customers’
Attitude towards General Insurance - A Factor Analysis Approach”, explains that with
over a billion people, India is fast becoming a global economic power. With a relatively
youthful population, India will become an attractive insurance market over the next
decades. This study examines the customer attitude towards the General Insurance. A
study has been conducted at Erode district with the sample of 750 respondents to find
out the influencing factor of the policy holders in the study area. In this context, the
respondents’ opinion on the various related statements were collected with a 5 point
scaling. Factor analysis, an important multivariate technique has used to reduce the
large number of factors in a small group of factors. 25 factors which are considered to
be the different type of policy holders conscious. This study helps to find out the
various customers which are having different expectation from the General Insurance
Companies in the study area12
.
Jas Bahadur Gurung, (2011) “Insurance and Its Business in Nepal”, this
study aims mainly to analyze the performance of insurance business in Nepal. The data
used in this study is mainly quantitative and analysis has been carried out by using
simple percentage and correlation coefficient. The study reveals that there are
altogether 25 insurance companies viz. 8 life insurance and 16 non-life insurance and
one offer both life and non-life services. They have altogether 340 branch offices in
Nepal. The growth of insurance policies for both life and non-life insurance companies
has been increasing and significant during the study period. Similarly, the progressive
������������������������������������������������������������11 Goudappa, S.B. Reddy, B. S. and Chandrashekhar, S.M., “Farmers Perception and Awareness about
Crop Insurance in Karnataka”, Indian Research Journal of Extension Education, Special Issue (Volume
II), 2012, pp.218-222. 12 Kavitha, Latha, and Jamuna., “Customers’ Attitude towards General Insurance - A Factor Analysis
Approach”, IOSR Journal of Business and Management, Volume.3, Issue.1, 2012, pp.30-36.
trend of premium collection reached to 48 percent for non-life and 37.06 percent for
life insurance in FY 2066/67 and contributed 1.70 percent in GDP of the economy.
Moreover, the investment of insurance companies has been positive but fluctuating
over the period under study. However, the correlation coefficient between total
premium collection and total investment is positive with r=0.97 and significant as its
PE is only 0.0163. These facts reveal that the performance of insurance business in
Nepal is satisfactory13
.
Altaf Ahmad Dar, (2011) made a study titled, “Awareness of Life Insurance-
A Study of Jammu and Kashmir State”, explains that to find out the awareness of life
insurance in the population of Jammu and Kashmir state, a community-based cross-
sectional study was carried out. A total number of 242 respondents from 242
households were interviewed by using a pretested questionnaire after obtaining
informed consent from the participants. The awareness of life insurance was found to
be 64.0 per cent. Around 45.0 per cent of the respondents came to know about life
insurance from the media which played an important role in the dissemination of
information. The mean premium amount agreeable to be paid by the respondents for
life insurance was found to be Rs 1804.00; even the low socio-economic group of
people was also willing to part with a reasonable amount of Rs. 697.00 annually for life
insurance. The middle and low socio-economic groups favored government life
insurance compared to private life insurance as they have more faith on Government
Company. The findings indicate that government should come out with a policy, where
������������������������������������������������������������13 Jas Bahadur Gurung, “Insurance and Its Business in Nepal”, The Journal of Nepalese Business Studies,
Vol. VII, No. 1, 2011, pp.70-79.
the public can be made to contribute to a life insurance scheme to ensure unnecessary
events and also better utilization of life insurance facilities14
.
Suresh Kumara, Barahb, Ranganathana, Venkatrama, Gurunathana and
Thirumoorthya, (2011) “An Analysis of Farmers’ Perception and Awareness towards
Crop Insurance as a Tool for Risk Management in Tamil Nadu”, To insulate farmers
against risks in agriculture, government has launched several schemes such as National
Agricultural Insurance Scheme and weather index based crop insurance schemes. But
their coverage seems to be limited among the farmers primarily due to lack of full
information. This paper has reported the results of a survey of 600 farmers conducted to
assess their perception about various facets of crop insurance schemes. The Probit and
Tobit models have been employed to analyse the factors affecting awareness among the
farmers. Crop diversification index has also been used to examine the farmers’
adjustment mechanism against risks. The survey has revealed that most farmers (65%)
are aware of risk mitigation measures of the government. But, only half of the farmers
have been found aware about the crop insurance schemes/products. This implies that
there is need to disseminate information about insurance schemes across the target
groups. Further, it has been shown that factors such as gross cropped area, income from
other than agricultural sources, presence of risk in farming, number of workers in the
farm family, satisfaction with the premium rate and affordability of the insurance
premium amount significantly and positively influence the adoption of insurance and
premium paid by the farmers. The study has clearly brought out the urgency of
developing more innovative products, having minimum human interventions15
.
������������������������������������������������������������14 Altaf Ahmad Dar, “Awareness of Life Insurance- A Study of Jammu and Kashmir State”, Shiv Shakti,
International Journal in Multidisciplinary and Academic Research (SSIJMAR), Vol. 1, No. 3,
September-October 2011, pp.14-19. 15 Suresh Kumara, Barahb, Ranganathana, Venkatrama, Gurunathana and Thirumoorthya, “An Analysis
of Farmers’ Perception and Awareness towards Crop Insurance as a Tool for Risk Management in Tamil
Nadu”, Agricultural Economics Research Review, Vol. 24, January-June 2011, pp 37-46
Sundar and Lalitha Ramakrishnan, (2010) “A Study on Farmers’
Awareness, Perception and Willing to Join and Pay for Crop Insurance”, This paper
discusses the findings of the study in the area of crop insurance. Firstly it measures the
awareness level and source of awareness, secondly examines the farmers’ perception,
finally identify the farmers willingness in paying for crop insurance. The study was
conducted in Kunichampet village, Puducherry District, India and 140 convenient
respondents were chosen and been carried out in June and July, 2012. From the
analysis farmers awareness level about crop insurance was low. Most of the farmers
were not willing to pay for crop insurance because of instable income, premium rate, no
or low compensation, problems with distribution channel and lack of financial
knowledge16
.
Legendary Kumar (2009) made a study titled, “Significant developments in
health insurance sector”, this research refers to development of health insurance sector.
The healthcare in India is in a state of enormous transition. Increased income for the
middles class, health consciousness among the majority of the classes price
liberalization, reduction in bureaucracy, and the introduction of private health care
financing have all made a world of difference. It’s aim agents of both life and general
insurance sectors to sell health covers, for life insures and non-life insurers to continue
to write health covers as now. Claims under the health insurance are settled by the
third party. Administrator but the experience with the agency has so for not been
satisfying to the policyholders. The record of private sector companies relating to
individual policyholders and small businessman and traders holding new positive and
not much different from that prevailing in public sector companies. The Indian
healthcare industry is expected to grow significantly and its contribution to the
������������������������������������������������������������16 Sundar and Lalitha Ramakrishnan, “A Study on Farmers’ Awareness, Perception and Willing To Join
and Pay for Crop Insurance”, International Journal of Business and Management Invention, Vol.13,
Issue.1, 2010, pp. 21-41.
country’s GDP will increase from 5.2% at present to 8.5% over the next to years. This
is because the expenditure on health cares more than double by the year. The private
participation is also helping bridge the wide interregional disparities on the health front.
Already the sector has innovated with healthcare delivery. Such astele medicine that
delivers specialized advise to patients in remote location using information
communication technology. Indian insurance industry has completed five years of
liberalization, without many hiccups. The next big boom in the health care business is
expected to be fuelled see one are later when health insurance takes off in a big way.
Currently more than three fifth of the population spend for health from their pocket.
The rest accounts for various healthcare schemes offered by corporate and government
in addition to medi-claim policies17
.
Santhana Vadivu. N. (2008) in his study on, “Insurance industry and its role
in Indian economy”, the present distribution channels of insurance industry and the
awareness of insurance among the Dubai and rural population and the comparative
reach of different advertising the promotional media as being used by the insurance
selling companied the insurance product awareness and the insurance agents
performance in different areas the relative faith of the private and public insurance
players in the rural mass and the urban population. The findings of the study were
measured to compare insurance in India activities in insurance companies and their
products among the respondents18
.
Raju, S. and Chand, R. (2008) “Agricultural Insurance in India: Problems
and Prospects”. Crop insurance not only stabilizes the farm income but also helps the
farmers to initiate production activity after a bad agricultural year. It cushions the shock
������������������������������������������������������������17 Legendary Kumar, “Significant Development in Health Insurance Sector”, The insurance Times,
Volume. XXIV, No.33 to 36, 2009, p.277. 18 Sauthana vidivu.N. Insurance Industry and its Role in Indian Economy”, the state level seminar
leveraging insurance for development 2008.
of crop losses by providing farmers with a minimum amount of protection. In a
working paper of National Centre for Agricultural Economics and Policy Research
(Indian Council of Agricultural Research), Raju and Chand (2008) discussed and
explored the problems and prospects of agriculture insurance in the country. They also
empirically examined the perceptions of the farmers in Andhra Pradesh regarding the
Agricultural insurance. Those who availed crop insurance mentioned financial security
as the most important factor for getting their crop insured and wanted quick settlement
of claims. The non loanee farmers mentioned lack of awareness as the major reason for
not availing such insurance19
.
Narsimha Rao. A.V (2007) in his study on, “Law of motor vehicle insurance
an analysis of insurance’s liability”, explains that the insurance companies face
complex problems is addition to the financial liabilities after marketing of insurance
policies against the risks of motor vehicles. The Motor Vehicles Act, 1988 is a
comprehensive piece of legislation defining various aspects of administration and ‘use
of’ motor vehicles. Chapter 10 of the Act provides for mandatory insurance of motor
vehicles. It specifically deals with the liabilities arising out of the ‘use of’ vehicles in
public places. The owners of the vehicles are liable to pay for the damages suffered by
the individual. The insurance companies protect the owners by covering their liability
towards the third party and also for the damage of the vehicle. The insurance
companies face various types of liabilities defined in the Act such as the third party
liability, liability for the owner, driver and occupants of the vehicle, no fault livability
and liability under the hit and run accidents. But, in the process of honoring claims,
������������������������������������������������������������19 Raju, S. and Chand, R. (2008) Agricultural Insurance in India: Problems and Prospects. NCAP
Working Paper No. 8. Retrieved December 12, 2012 from
http://www.ncap.res.in/upload_files/others/oth_15.pdf
they suffer financial losses. They are also locked up in prolonged litigations many a
time. This article brings out some of the issues faced by the insurance companies20
.17
Ram Pratap Sinha (2007) in his study entitled, “Productivity and efficiency of
Indian general insurance industry” The deregulation of general insurance industry in
India is having far-reaching consequences in terms of market size, structure and
operational practices. The penetration level of general insurance in India is quite low
compared to the international standards and, therefore, has tremendous potential for
growth. The present paper compares the performance of 12 general insurance
companies in respect of technical and scale efficiency and total factor productivity in a
three-output three-input framework, for the years 2003-04 and 2004-05, by using Data
Envelopment Analysis and Malmquist Total Factor productivity Index. The public
sector insurers dominate the private sector insurers in terms of mean technical
efficiency in constant returns to scale, while the private sector insurers have a slightly
higher mean technical efficiency than the public sector insurers in variable return to
scale. A further comparison of total factor productivity and gross income is also made
in respect of both public and private sector insurance companies21
.
Chinnadorai, Kalpana and Sadhana (2007) has studied about the
“Motivational factors and level of satisfaction of agents development officers of LIC of
India”, with the aim to study the performance of agents & development officers in
team building, and the training methods used by the development officers to train their
agents and the level of satisfaction of agents on various aspects and identify the factors
that motivates the agents. This study was conducted in the city of Coimbatore. Primary
data has been used which was collected from a sample of 50 agents and 50
������������������������������������������������������������20 Narsimha Rao.A.V, “Law of Motor Vehicle Insurance-An Analysis of Insurance’s Liability”, The
ICFAI Journal of Insurance Law, Volume No.2. Issue.1, 2007, pp.12-17. 21 Ram pratap sinha “Productivity and Efficiency of Indian General Insurance Industry”, The ICFAI
Journal of Risk & Insurance, Volume. IV, Issue. No.2, 2007, pp.21-24.
development officers through interview schedule. The study was conducted to know the
performance-oriented team building aspects of agents in LIC of India in the context of
the competitive environment created by the private players of the insurance industry.
The development officers motivate agents and guide them to perform better as a team.
From this study, it can be inferred that the team building can be enhanced by increasing
commission of the agents, co-operation and co-ordination between the development
officers and the agents, adopting innovative training techniques and motivating through
personal approach. The study was concluded that the agents and the development
officers play a vital role in performance - oriented team building activity in the
insurance business and thus give a personal touch in the insurance business. Hence the
management of the life insurance corporation of India should take good care of their
agents and development officers22
.
Nancy B. Kurland, (2007) has studied about “Sales Agents and Clients: Ethics,
Incentives, and a Modified Theory of Planned Behavior”, the study was highlighted
that the commission is popularly believed to engender unethical intentions, although
little research has directly examined this relationship. This paper directly examines the
influence commission, along with experience, income, professional accreditation, and a
modified theory of planned behavior, has on agents' ethical intentions toward
clients.
The study sample was systematically drawn from a national group of financial service
industry professionals. Only a modified theory of planned behavior significantly
predicted agents' ethical intentions. Implications and limitations are discussed. Thus, so
far there may not be systematic attempt made to study the problem relating to live stock
insurance. Hence, the study has been undertaken with this specific aim in mind to cater
������������������������������������������������������������22Chinnadorai, K.M., Kalpana. B. and Sadhana, B., “Motivational Factors and Level of Satisfaction of
Agents Development Officers of LIC of India ”, ICFAI journal of Service Marketing, Vol. V, No. 1,
2007, pp. 44-53.
the needs of local & rural based community to insists and makes awareness among
rural population on live stock insurance23
.
Rajesham. C.H and Rajender. K (2005) made a study on, “Changing
scenario of India Insurance Sector”, reports that this research is highlighted historical
based of insurance, insurance penetration and density. This research concluded
insurance companies of India are required to come up with multi-benefit policies
including tax benefits with quality based timely customer services and need to focus on
health insurance, which is one of the untapped areas of insurance including services
through innovative products, smart marketing and aggressive distribution with internet
facility, with much individual attention, transparency and flexibility to increase the
quality and volume of insurance business24
.
Reddy, A. (2004) “Agricultural Insurance in India: A Perspective”.
Agricultural production is an outcome of biological activity which is highly sensitive to
changes in weather. The erratic and uneven distribution of monsoon rains perpetuated
yield/price volatility and hence increased farmer’s exposure to risk and uncertainty. In
this scenario of high risk and uncertainty of rain fed agriculture, allocating risk is an
important aspect of decision making to farmers25
.
Singh, S. (2004) “Crop Insurance in India-A Brief Review”. The risk burden of
the farmers can be reduced through crop insurance, which is primarily a way of
protecting farmers against the element of chance in crop production. Crop insurance
������������������������������������������������������������23 Nancy B. Kurland, “Sales Agents and Clients: Ethics, Incentives, and a Modified Theory of Planned
Behavior’, Department of Management and Organization, University of Southern California, School of
Business Administration, Los Angeles, California 24 Rajesham.C.H. & Rajender.K., “Changing scenario of India Insurance Sector”, Indian Journal of
Marketing, Vol.5, Issue.3, 2005, pp.12-14.
25 Reddy, A. (2004) Agricultural Insurance in India: A Perspective. Retrieved December 12, 2012 from
http://www.actuariesindia.org/downloads/gcadata/6th%0GCA/pdf/agricul-tural%20
Insurance%20In%20India%20_A%20Perspective.pdf
spreads the crop losses over space and time, provides social security to the farmers,
helps in maintaining their dignity, offers self-help, encourages large investments in
agriculture for improving crop yield and increasing agricultural production26
.
Malliga (2002) studied the “Marketing performance of LIC agents in Tirunelveli
Division”, the study aims at to analyze the marketing performance of the LIC in
Tirunelveli Division, to study the marketing practices of the agents and the marketing
performance to examine the impact of socio economic factors on the marketing
performance of the agents. To evaluate the role of attitude of the agents on the
marketing performance and to assess the relationship between the personality traits of
the agents and marketing performance. The study was undertaken in Tirunelveli
Division. Both the primary and secondary data were used. Double staged sampling
technique was used. Questionnaire is used to collect the data from the agents. The
Major suggestions in the form of refresher course can be planned to strengthen the
relationship between the organization and the agents the organization and the
professional status. Agents must be encouraged to become members of the professional
club like Rotary, Lion, Arima Sangh and welfare groups which will facilitate the direct
penetration among the members of the clubs with higher income strata and directly to
the people at large by participating in social welfare activities. The LIC has still to be
innovative in product development to offer cost effective policies to cover even the
irregular and low income group of people. Besides, the commission rates on different
policies should be modified suitably so as to make the agents concentrate uniformly on
all the kinds of policies. This study was concluded that in this regulated life insurance
������������������������������������������������������������26 Singh, S. (2004). Crop Insurance in India-A Brief Review. Journal of the Indian Society of
Agricultural Statistics, 57 (special Issue), pp 217-225. Retrieved December 10, 2012 from
http://www.isas.org.in/jsp/volume/vol57/Shivtar%20Singh.pdf
business, the personality of the LIC agents may have an impact on the marketing
performance27
.
Punithvathy Pandian (2001) in her study entitled, “Impact of Liberalization on
the productivity of LIC agents”, assessed the productivity trend of the LIC agents
before and after the economic liberalization. Based on the secondary data, productivity
of agents in terms of the number of policies sold (coverage productivity) and the sum
assured (sum amount productivity) for a period of 1981-2000 has been analyzed. The
linear and the compound growth rates along with the t-test between the compound
growth rates of the productivity of the agents in both the performance categories were
higher during the period after the economic liberalization when compared to earlier
period. The difference between compound growth rates at the number of policies sold
between the pre and post Liberalization period was not significantly. But that of the
sum assured was significant statistically at 5% level 28
.
Selvarani (May 2000), studied the “Attitude of Policy holders towards Career
Agents” with the aim to study the various life insurance schemes, to measure the
attitude of policy holders towards rural career agents, to make suggestions based on the
study. She used both the primary & secondary data. The primary data were collected by
using interview schedule. There are 150 samples were chosen to do the study. It is
suggested that the agents may pay attention to the loan requirements of policy holders
and assist them in getting loan with least difficulty29
.
������������������������������������������������������������27Malliga, “The Study of Marketing Performance of LIC Agents in Tirunelveli Division”, Department of
Commerce, Madurai Kamarajar University, Madurai. 28 Punithvathy Pandian, “Impact of Liberalization on the Productivity of LIC Agents”, Journal of
Bombay Productivity Council, Vol. XXVIII, No.4, April – June 2001, pp. 12-15. 29T.Selva Rani (2000), “Attitude of Policy holders towards Career Agents”, Sri Parasakthi College for
women, Courtallam.
Sonnentag S.; Kleine B. M.( 2000) has studied about ‘Deliberate practice at
work: A study with insurance agents’ with the aim to study about the concept of
deliberate practice (Ericsson, Krampe, & Tesch-Romer, 1993) to work settings.
Deliberate practice comprises regularly performed activities which aim at competence
improvement. It is hypothesized that the amount of deliberate practice is positively
related to work performance. Results of a study with 100 insurance agents provided
evidence for the occurrence of deliberate practice activities in work contexts. The
amount of current time spent on deliberate practice was significantly related to
supervisory ratings of insurance agents’ work performance. Accumulated amount of
time spent on deliberate practice in the past was not related to work performance30
.
Malliga (2000) studied on “Marketing of LIC policies - A study on agents of
Tirunelveli Division” attempted to analyze the impact of marketing strategies, socio-
economic factors, personality traits and attitude of LIC agents in Tirunelveli Division
was chosen at random. The study revealed that there was a significant association
between the socio-economic factors and the performance of both the number of policies
sold and the sum assured marketing strategies followed by the agents had significantly
influenced the performance. Among personality traits empathy, introversion, need
achievement and dominance - were - found to have no association with performance.
The correlation co-efficient between the attitude of the agents and the performance was
not significant at 5% percent level. It was found that the performance of the agents was
dependent on the nature of the agency (part time & full time) and not on the type (direct
and attached) of agency31
.
������������������������������������������������������������30Sonnentag S.; Kleine B. M., “Deliberate Practice at Work: A Study with Insurance Agents”, Journal of
Occupational and Organizational Psychology, Volume.73, Number.1, March 2000, pp. 87-102. 31 Malliga, “Marketing of LIC Policies - A Study on Agents of Tirunelveli Division”, Indian Journal of
Marketing, August –October 2000, pp. 6-9.
Parks, Charles Alan (1999) has studied about the “Personality and the
prediction of turnover of insurance sales agent”, with the aim to examine the
relationships between certain personality dimensions, performance and turnover of a
sample of insurance sales agents. The personality variables used in this research were
Emotional Intensity, Assertiveness and Recognition Motivation. Performance was
defined in terms of average weekly sales commissions. The sample of 470 insurance
agents was used to determine if the personality and performance variables
discriminated between individuals who remained actively employed beyond one year
and those who voluntarily terminated within a one year period. The sample was split
into a classification sample of 237 agents and a holdout sample of 233 agents.
Discriminant functions analysis was used to determine if the combination of predictor
variable could effectively classify agents into the active or terminated groups. The
performance, Emotional Intensity and Assertiveness variables contributed to effective
classification of agents as actively employed or voluntarily terminated. Agents who
demonstrated higher levels of performance in terms of commissions and higher levels
of Assertiveness and Emotional Intensity were more likely to remain actively
employed. Among the Agents who voluntarily terminated employment, those who
were in the top half in terms of performance demonstrated a higher need for recognition
than agents in the lower half32
.
Rao (1997) in a case study, “Drop outs in life insurance selling” analyzed the
drop outs in relation to age; education, experience and area of operation. The study was
limited to a branch for a period of one year. He found that a large number of agents got
terminated every year. Majority of them were in first year of their agency. Number of
termination got reduced over the years. Eighty two percent of the agents, terminated
������������������������������������������������������������32Parks, Charles Alan D.B.A., (1999) “Personality and the Prediction of Turnover of Insurance Sales
Agent”, University of Sarasota, 115.
were below 35 years. Though more and more qualified youth were had studied up to
PUC or less were the main stay33
.
Balammal, M. (1996) in her research entitled, “Job satisfaction of LIC
employees - Tenkasi Branch”, has studied the major factors which effect satisfaction of
LIC employees, and level of job satisfaction among employees of LIC in Tenkasi
Branch, and study how the factors affect the individuals satisfaction regarding their job.
The primary data were used for the study and collected through questionnaire and
convenience sampling method has been adopted to frame the sample. It was concluded
that the training methodology must be appropriate to the subject taught and it should be
participative nature and also it must increase the number of training weeks. For higher
satisfaction and productivity, it is extremely important to give the employees
participation in management34
.
Arora and Singh (1995) has studied about “Growth and Performance of Life
Insurance Corporation of India - A study on Jalandhar Division”, with the aim to
appraise the Performance of LIC Agents in his paper. It covered a period of 10 years
from 1980-81 to 1989-90. The result showed that the LIC and made manifold progress
in terms of its business activities at national as well as divisional levels. The individual
business - in - force and the new business had shown positive growth rates during the
study period. However the higher growth rate was observed in the urban than the rural
area35
.
������������������������������������������������������������33Sathyanarayana Rao. R., “Life Insurance Selling- A Case Study of Dropouts”, The Insurance Times,
November 1997, pp. 11-13. 34 Balammal. M. (1996) “Job Satisfaction of LIC Employees - Tenkasi Branch”, Sri Parasakthi College
for Women, Courtallam. 35 Radha shorn Arora and Raghbir singh, “Growth and Performance of Life Insurance Corporation of
India - A Study on Jalandhar Division”, The Insurance Times, Vol.15, November 1995, pp. 16-18 and
December 1995, pp. 10-12.
Nagapandy (1994) in his research entitled, “Performance evaluation of the life
insurance corporation - Madurai division”, has studied the potential tapped from the
insurable population (coverage performance) and the performance-oriented perception
of the agents. Both primary & secondary data were used F-test and chi-square test
along with percentage analysis were applied. It was found that high potential is
management group and low potential in agricultural group were tapped in Madurai
division. One way analysis of variance showed that the potential tapped in the insurable
population differs significantly among the different segments. Further the agents were
found to give priority to the policies - Endowment, money back and new Jana Raksha
at the time of canvassing36
.
Thanulingam and Muthupandi (1989) in the research titled, “Working career
agency scheme in LIC”, highlighted the working of the career agency scheme in Life
Insurance Corporation of India in general and in Madurai city in particular. The data
were collected from the publications and bulletins published by the LIC of India. It was
conducted that there was a direct relationship between the performance of the LIC &
the number of career agents. They suggested that instead of spending much money on
advertisements it was advisable to recruit more number of career agents and give them
good training and motivation37
.
Josephine. A (1989) made a study on, “Role of New India Assurance Company
in providing rural insurance schemes in Tirunelveli Kattabomman District”, this
research is highlighted the study of overall growth of New India Assurance Company,
determine the level of utilization of rural insurance schemes by the weaker section
based on quota sampling and convenience sampling technique in 250 policyholders. It
������������������������������������������������������������36 Nagapandy “Performance Evaluation of the Life Insurance Corporation - Madurai Division”,
Unpublished thesis, Department of Commerce, N.M.S.S. Vellaichami Nadar College, Madurai, 1994. 37 Thanulingam and Muthupandi, “Working Career Agency Scheme in LIC”, The insurance Times,
Vol.19, February 1989, p.3.
was concluded would be appropriate for the consideration of the company for the
benefit of its future business operations38
.
Mishra (1988) in his study on, “Appraisal of Marketing Strategies of the Life
Insurance Corporation of India”, the researcher found that the personal attitudes and
expertise of the chairman had influenced the business. The existing strength of the
corporation (marketing field force) was not properly utilized, trained and motivated. He
further found that in Indian situation, sex composition was a significant factor to
determine the market potential. Age, residence and occupational pattern of the
population had influenced the potential tapped in the life insurance market. According
to him, the LIC had not given much weightage to customer satisfaction39
.
National Insurance Academy (1988) studied, “The continuation of agencies
(Survival) and business performance of the agents”, reports that data were collected
from three Divisions of LIC of India namely Jamshedpur, Jaipur, Nasik for the period
1965-1986. It was concluded that monetary performance of the agents was low at the
younger agent; it reached the peak level in the age group of 30 to 40 years and
thereafter, it declined. During the 1st year of agency, the coverage performance
(number of lives covered) was quite high reflecting the number of contacts already
available with the persons taking up the agency ; it decreased slightly during the next
year or two & again it would increase for a duration of 15 to 20 years. The personality
of the recruiting development officer affected the performance of agents. Full time and
part time, direct and attached and education were other three important variables that
������������������������������������������������������������38 Josephine . A (1989) “Role of New India Assurance company in providing rural insurance schemes in
Tiurnelveli Kattabomman District”, Madurai Kamaraj University 39M.N.Mishra, (1998), Appraisal of Marketing Strategies of Life Insurance Corporation of India”, The
insurance Times, Vol. 8, October 1988, pp. 3-8.
affected the average monetary performance and growth rates of performance. General
was found to influence the performance significantly40
.
Meena. K (1986) in her study on, “Utilization of Oriental Insurance Company
Ltd. by policy holders in Madurai City- An Empirical Study”, reports that a sample of
200 policy holders was taken on the basis of stratified sampling has portrayed the
attitude of policy holders towards the services provided by oriental Insurance Company
Ltd in Madurai41
.
Chandrasekhar. S (1986) made a study entitled, “Customer service in United
India Insurance Company ltd”, tells that the growth of united India Insurance Company
Ltd. to evaluate the beneficial attitude towards the services of the united India
Insurance Company ltd. He has examined the degree of customer satisfaction among
the policyholders of united Insurance Company limited42
.
Padmanaban. V (1985) in his study titled, “Crop Insurance in Chengalpet
District”, with the aim to know to crop insurance and these policies to the people
determine the level of utilization of crop insurance in rural area. The researcher has
highlighted the significance of crop insurance stating that crop insurance is not only
business proposition but also a source of security indispensable for the well being of
India agriculturists43
.
Dnyanajothi, National insurance academy (1985), in this survey on the
“opinion of the life insurance agents” examined the performance using stratified
������������������������������������������������������������40 National Insurance Academy, “The Continuation of Agencies (Survival) and Business Performance of
the Agents- A Study, Vol.5, No-2, December 1988. 41 Meena.K (1986) “Utilization of Oriental Insurance Company Ltd. by policy holders in Madurai city-
An Empirical Study”, Madurai Kamaraj University.
42Chandrasekar.S (1986) “Customer service in United India insurance Company Ltd”, Madurai Kamaraj
University.
43 Padmanaban .V (1985) “Crop Insurance in Chengalpet District”. Madurai Kamaraj University
sampling methods, the strata being club members and non-club members. Altogether a
sample of 3,905 agents who had been on the LIC’s roll for more than three years had
been selected. Agent’s profile revealed that majority of the agents was male, middle
aged (between 30 & 49 years) married and had education up to SSLC and experience of
more than 10 years. They found that agent secured and average sum assured of Rs. 15
lakhs through 50 policies in a year. Agent spent less than five hours a day on the
agency work. The conclusion drawn were that the agent had confirmed that the plans
and terms clients were selected by them rather than by the clients themselves. Their
choices were mostly in favor of endowment or money back covers. On the whole the
agent’s morale was high and that they were satisfied with their profession. They were
highly confident about their personal image in the society as insurance agents. Agents
perception about their perception about their organization44
.
2.3 INTERNATIONAL STUDIES
Bashir Ahmad Joo, (2013) in his study on, “Analysis of Financial Stability of
Indian Non Life Insurance Companies”, World over after liberalization insurance
sector has undergone significant transformation. This is also true with Indian insurance
market, where insurance penetration and density is very low compared to other
countries. Therefore, many foreign insurance companies were lured to make entry in
Indian insurance in order to insulate positive spread from large untapped insurance
market, mainly by entering into joint venture with local partners. Thus Indian insurance
market after liberalization was assaulted by the pressure of globalization, competition
from multinational insurance companies and lavish underwriting chase which are seen
as threats as well as opportunities for insurance companies. However, entry of new
players has resulted into heavy underwriting losses for Indian public and private
������������������������������������������������������������44Dnyanajothi, “Opinion of Life Insurance Agents”, National insurance academy ,Vol-2, June 1985, pp.
41-45
insurers. But heavy underwriting losses had reverse impact on their solvency margins.
In present paper, the Insurance Solvency International Ltd. (ISI) predictors have been
employed in this paper to study the solvency position of Indian non life insurers.
Further, study highlights the extent of relationship between various factors and
solvency of non life insurers in India by using multiple regression analysis. The result
of the study has shown that claim ratio and firm size have greater impact on solvency
position of insurance companies45
.
Reaz Fallah, Mohammad Armin and Mohammad Tajabadi (2012) in their
study entitled, “A Study of Attitudes and Determinant Factors in Insurance
Development for Strategic Agricultural Products”, The objectives of this study were to
evaluate the factors involved in the development of strategic agricultural crop insurance
among farmers for increase efficiency and improve the agricultural insurance services.
To achieve these objectives, data were collected from 100 out of 139 selected farmers
from Neyshabur which had insurance contract for at least one of their crops during
2010. The present survey was applied and conducted using a descriptive correlation
method. Data were collected from growers using a face-to-face questionnaire. To
determine the validity of the questionnaire suggestions and recommendations from
teachers, specialists and graduate students of agricultural extension were used. To
evaluate reliability of the questionnaire, 30 copies of the questionnaires were completed
and a preliminary survey using SPSS and Cronbach's alpha was done. Cronbach's alpha
was 79 and internal consistency described acceptable. Results of Pearson Correlation
Coefficient revealed that there is positive and significant correlation among level of
education, cultivation of non-irrigated wheat, the amount of frost and cold damage and
������������������������������������������������������������45 Bashir Ahmad Joo, in his study on, “Analysis of Financial Stability of Indian Non Life Insurance
Companies”, Asian Journal of Finance & Accounting, Vol. 5, No. 1, 2013, pp.306-319.
cultivated area versus the dependent variable of strategic crops insurance development
at 95% level of probability, while statistically negative significant correlation have been
found to exist among number of crops and awareness of premiums versus the
dependent variable of strategic crops insurance development. Results of Spearman rank
correlation indicated that there was positive and significant correlation among the rate
of referrals to other farmers (technical issues), confidence the experts of Agricultural
Jihad, satisfaction with the visit rate of compensation insurance experts and contact
with experts of the Agricultural Jihad versus the dependent variable of strategic crops
insurance development at 95% level of probability, while a negative and significant
correlation was observed among advertising role and farmers tend to the insurance46
.
Charles Ackah and Adobea Owusu, (2012) made a study on, “Assessing the
Knowledge of and Attitude towards Insurance in Ghana”, the majority of people living
in Africa have to bear the financial burden of catastrophes themselves, without access
to insurance or government assistance. In Ghana, access to insurance is low: 4.1 percent
(excluding public health insurance) in 2010. A previous study suggested that lack of
knowledge about insurance products, and to an extent misunderstanding of the concept
of insurance accounts for the low uptake of insurance among the low-income
population in Ghana. This study therefore seeks to determine the level of insurance
awareness in Ghana, where awareness is defined with respect to people‘s knowledge of
and attitude towards insurance. An Insurance Awareness Index was computed to give a
quantifiable measure of a person‘s knowledge of and attitude towards insurance.
Knowledge of Insurance was measured using multiple choice and true/false questions,
whilst attitude was tested using a Likert scale. Index scores were obtained for
knowledge and attitude, based on the sum of correct / favorable responses respectively.
������������������������������������������������������������46 Reaz Fallah, Mohammad Armin and Mohammad Tajabadi “A Study of Attitudes and Determinant
Factors in Insurance Development for Strategic Agricultural Products”, Technical Journal of Engineering
and Applied Sciences, Vol.2, Issue.2, 2012, pp.44-50.
A main finding from the qualitative investigation is that most Ghanaians, especially
those in the informal sector, do not take-up insurance as a way of preparing towards
future unforeseen misfortunes. This could be because of the perception among some
individuals that planning ahead for a possible misfortune is like inviting evil. Other
reasons given for low insurance uptake were the general lack of insurance knowledge
amongst the populace, low income levels and the reliance on God‘s protection to
prevent calamities. With regards to attitude towards insurance, the study confirmed the
general impression that insurance companies will eventually renege on their promises.
It is recommended that education on insurance is increased, government‘s supervision
of insurance operations is strengthened, and that insurance companies improve their
client orientation so as to redeem their public negative image47
.
Ragnar Norberg and Bjorn Sundt (2012) made a study titled, “System for
Solvency Control in Non-Life Insurance”, explains that an outline is given of a
proposed system for solvency control in non-life insurance that has recently been
discussed within a Working Party appointed by the Norwegian supervisory authorities.
According to this system the factual technical reserves must at any time be sufficient to
meet, with high probability, all future liabilities stipulated by insurance contracts that
have either expired or are currently in force. The system is applied to a provisional,
simple model that has been fitted to claims data assembled from Norwegian non-life
companies. The numerical examples illustrate, inter alia, how the required reserve
depends on the volume of the business, the portfolio mix, and the reinsurance cover48
.
������������������������������������������������������������47 Charles Ackah and Adobea Owusu, “Assessing the Knowledge of and Attitude towards Insurance in
Ghana”, Institute of Statistical, Social and Economic Research (ISSER), Vol.6, Issue.5, 2012, pp.529-68. 48 Ragnar Norberg and Bjorn Sundt, “System for Solvency Control in Non-Life Insurance”, Astin
Bulletin, Vol.15, No 2, 2012, pp.25-32.
Sojung Carol Park and Jean Lemaire, (2012) in their study entitled, “The
Impact of Culture on the Demand for Non-Life Insurance”, explains that regression
techniques are applied to an unbalanced panel data that includes 82 countries observed
over a ten-year period, to explore the factors that affect non-life insurance demand
across nations. While previous literature has discovered several significant economic,
demographic, and institutional variables, little attention has been devoted to cultural
dimensions. We find that non-life insurance consumption is adversely impacted in
countries where a large fraction of the population has Islamic beliefs. Also highly
significant are three of the cultural scores developed by Hofstede in a celebrated study:
Power Distance, Individualism, and Uncertainty Avoidance. A conjecture that culture
impacts non-life insurance more in affluent countries receives ample statistical support,
with an adjusted R-square coefficient increasing by 20%. These results have
implications for multinational insurers seeking to enter a new market. Ceteris Paribus,
these insurers should target countries, and population segments within these countries,
that exhibit low Power Distance, and high Individualism and Uncertainty Avoidance
scores49
.
Sommarat Chantarat, Andrew G. Mude, Christopher B. Barrett and
Michael R. Carter, (2012) in their study entitled, “Designing Index Based Livestock
Insurance For Managing Asset Risk In Northern Kenya”, This paper describes a novel
index-based livestock insurance product now being piloted for pastoralists in the arid
and semi-arid lands of northern Kenya, where insurance markets are effectively absent
and uninsured risk exposure is a main cause of poverty. We describe in detail the
methodology used to design the contract and its underlying index of predicted area-
average livestock mortality. The underlying statistical model uses longitudinal
������������������������������������������������������������49Sojung Carol Park and Jean Lemaire, “The Impact of Culture on the Demand for Non-Life Insurance”,
Insurance and Risk Management Working Paper Insurance and Risk Management, Vol.15, Issue.60,
2012, pp.1-21.
observations of household-level herd mortality, fit to high quality, objectively
verifiable, remotely sensed vegetation data not manipulable by either party to the
contract and available at low cost and in near-real time. The resulting index performs
very well out of sample, both when tested against other complementing household-
level herd mortality data from the same region and period and when compared
qualitatively with community level drought experiences over the past 27 years.
Household-level performance analysis based on simulated data also reviews that IBLI
is most effective in protecting household from catastrophic covariate risks, currently
uninsurable by existing means. We describe contract pricing and the potential risk
exposure of the underwriter and establish that IBLI should be readily reinsurable on
international markets. Finally, implementation opportunities and challenges are
discussed50
.
Nicola Ranger and Andrew Williamson (2011) in their study on,
“Forecasting Non-Life Insurance Demand in the BRICS economies: a preliminary
evaluation of the impacts of income and climate change”, Insurance demand is driven
by many factors, but for the emerging economies, one of the most significant historical
drivers of growth has been income per capita. Based on a simple forecasting approach,
we project that insurance penetration in the BRICS economies could increase at a rate
of between 1.6 and 4.2% per year over the coming decade, depending on the country,
due to rising per capita income. When other factors are included, this broadens to
between 0.1 and 4.3% per year. This equates to a rate of increase in gross premium
volumes of between 5.4 and 12.3% per year. The largest growth in insurance
penetration and premium volumes is expected in China, closely followed by India and
������������������������������������������������������������50Sommarat Chantarat, Andrew G. Mude, Christopher B. Barrett and Michael R. Carter, “Designing
Index Based Livestock Insurance For Managing Asset Risk In Northern Kenya”, American Journal of
Agricultural Economics, Vol.79, 2012, pp.1024-34.
Russia. A concern for (re)insurers is how climate change may impact these growth
paths. Based on current projections, we expect the impact on growth mediated through
income to be small; less than a 0.4% adjustment in the annual growth rate in premium
volumes to 203051
.
Aranee Treerattanapun (2011) made a study titled, “The Impact of Culture on
Non2life Insurance Consumption”, this study investigates the impact of culture on
non�life insurance consumption. Various economic, institutional, and cultural variables
regarding 82 countries across a 10�year period are considered when building up the best
and most parsimonious regression model. Employing blocking and bootstrapping
techniques, we find that nations with a low degree of Power Distance, a high level of
Individualism, and a high degree of Uncertainty Avoidance tend to have a high level of
non�life insurance consumption. The empirical results suggest that consumers may
respond to insurance solicitations according to their cultural belief, not only economic
rationality52
.
Fazelbeigi & Yavari (2010) in their study entitled, “An Analysis of Challenges
Faced by Crop Insurance Fund in Iran”, found the most significant drawbacks in
insurance fund to be lack of compliance with economic frameworks and business
principles, issues in statistics system, lack of competition in service sector, and lack of
constant evaluation and monitoring. In addition, they found several threats faced by
insurance fund: improper structure of production entities, disintegrated lands, lack of
������������������������������������������������������������51 Nicola Ranger and Andrew Williamson “Forecasting Non-Life Insurance Demand in the BRICS
economies: a preliminary evaluation of the impacts of income and climate change”, Grantham Research
Institute on Climate Change and the Environment and the Centre for Climate Change Economics and
Policy, London School of Economics and Political Science, September 2011.
52 Aranee Treerattanapun “The Impact of Culture on Non2life Insurance Consumption”, Wharton
Research Scholars Project Submitted, May 13, 2011
production standards, and poor living and operation systems. In examining effective
constructs in attitudes of the insured toward private agents53
.
Nwosu, Oguoma; Lemchi; Ben–Chendo; Henri-Ukoha; Onyeagocha;
Ibeawuchi, (2010) in their study on, “Output Performance Of Food-Crop Farmers
Under The Nigerian Agricultural Insurance Scheme In Imo State, South East, Nigeria”,
The Nigerian Agricultural Insurance Scheme was established in 1984 by the Federal
Government with the promotion of agricultural production as one of its specific
objectives. This study was conducted to evaluate the output performance of the food-
crop farmers who have embraced the scheme. The study also analysed the influence of
socio-economic characteristics on the farmers output. Primary data and secondary
information sources were used in the study. The primary data were obtained from 77
food-crop farmers selected through simple random sampling from a list of 145 food
crop farmers under the scheme in Imo State. Data analyses were done using both
descriptive and inferential statistics. The descriptive statistics such as mean, frequency
were used to analyse the socio-economic characteristics of the farmers while inferential
statistics (Z - test and multiple regression model) were used to determine the impact
and influence of socio-economic characteristics like age, farming experience,
educational background etc on the farmers’ output respectively. The Z – test analysis of
the impact of the scheme on the farmers’ output showed that there was a positive and
significant change in the farmers’ output after insurance. The results of the analyses of
the socio-economic characteristics of the respondent farmers showed that majority
(66.23%) of the sampled farmers are males. It also showed that majority (46.75%) of
the sampled farmers were within the age bracket of 41-50 years. Also, over 70% of the
insured farmers had secondary school education and above. The Z – test analysis
������������������������������������������������������������53 Fazelbeigi M M, Yavari G R, “An Analysis of Challenges Faced by Crop Insurance Fund in Iran”,
Rural Areas & Development, Vol.13, Issue.1, 2010, pp.21-41.
showed that there was an increase in farm output of the farmers after embracing the
scheme. The average farm output was 16.01 metric tones before insurance but rose to
21.66 metric tones after insurance. The multiple regression analysis on the influence of
socio-economic characteristics on the farm output after insurance showed that
educational level, farming experience, farm size and number of technologies used in the
farm are significant variables. While age, sex and household size are insignificant
variables. The study therefore recommends that more effort should be put in to creating
awareness of the laudable objectives of the insurance scheme to food-crop farmers
(especially in the enhancing the nation’s quest for food security54
.
Barroso and Maria (2010) made a study titled, “Critical analysis of the
European Union solvency model for "non-life" insurance companies: the Portuguese
case”, this study presents a critical analysis of the current solvency system of the
European Union for non-life insurance undertakings and, in particular, the Portuguese
case. This model, based on some ratios, presents some weaknesses such as: to modify
the obtained result, the insurance companies can lower the solvency margin
requirements by changing the numerator or the denominator of the “solvency margin
ratio”. This paper deals with the manipulation of the denominator, namely through
processes of under-rating or under-reserving. This paper discusses some techniques
that, theoretically, could be used and put in risk the most important objective of the
financial guaranties: the protection of policyholders55
.
Mohammad Chizari, Ahmad Yaghoubi and James R. Lindner, (2010) in
their study entitled, “Perceptions of Rural Livestock Insurance among Livestock
������������������������������������������������������������54 Nwosu, Oguoma; Lemchi; Ben–Chendo; Henri-Ukoha; Onyeagocha; Ibeawuchi, “Output Performance
of Food-Crop Farmers Under The Nigerian Agricultural Insurance Scheme In Imo State, South East,
Nigeria”, Academia Arena, Vol.2, Issue.6, 2010, pp.12-16. 55 Barroso and Maria “Critical analysis of the European Union solvency model for "non-life" insurance
companies: the Portuguese case”, Economy of Agriculture & Development, Vol.1, Issue.1, 2010, pp.17-
34.
Producers and Insurance Specialists in Isfahan Province, Iran”, The purpose of this
descriptive and correlational study was to describe the perceptions of livestock
producers and insurance specialists regarding livestock insurance in Isfahan Province,
Iran. Using cluster sampling techniques, 236 livestock producers and 22 insurance
specialists were chosen to participate in the study. Results show that livestock
producers perceived that agriculture and livestock producers are continuously faced
with risks and dangers and that livestock insurance is beneficial to farmers. Livestock
producers indicated that over the past five years, diseases, wild animal attacks, drought,
and theft were primarily responsible for damage and loss in their operations. Of
livestock producers adopting insurance, most indicated the attitude that insurance
specialists and insurance costs were good. Major obstacles hampering the development
of rural livestock insurance as perceived by insurance specialists includes lack of
equipment and facilities for personnel at the agriculture bank branches and lack of
knowledge by livestock producers of the benefits of livestock insurance56
.
Catherine Bruneau and Selim Mankai (2009) made a study titled, “Economic
Capital and Optimal Investment for Non-Life Insurance Companies”, We propose two
optimization models to jointly solve a capital requirement and a portfolio selection
problem for non-life insurance companies. In a one-period framework, the expected
return on risk-adjusted capital (RORAC) is optimized subject to zero-conditional value
at risk shortfall constraint. Equity capital adjustment to match the global balance sheet
economic capital is assumed to be exclusively allocated in a risk-free asset. A closed
form relationship is derived between optimal economic capital and investment
portfolio. Using a Monte Carlo simulation calibrated to major French non-life
insurance company data, we develop first a curve of efficient portfolios verifying the
������������������������������������������������������������56 Mohammad Chizari, Ahmad Yaghoubi and James R. Lindner, “Perceptions of Rural Livestock
Insurance among Livestock Producers and Insurance Specialists in Isfahan Province, Iran”, Journal of
International Agricultural and Extension Education, Volume 10, Number 1, 2010, pp.37-42.
shortfall constraint. Then, we analyze optimum sensitivity to some factors. It turns out
that, depending on adjustment costs, risk management by equity shift can be more
effective than assets risk management with a fixed capital. Furthermore, optimum
presents a high sensitivity to initial surplus level and dependence structure between
assets and liabilities. The numerical results are robust to the relaxation of the
assumption regarding equity adjustment allocation57
.
Anne Borge Johannesen and Anders Skonhoft (2009) in their study entitled,
“Livestock as insurance and social status Evidence from reindeer herding in Norway”,
The theory of livestock as a buffer stock predicts that agro pastoralists facing
substantial risks typically will use liquid assets, such as livestock, for self-insurance to
smooth consumption. This study examines this hypothesis for reindeer herders in
Norway where the herders, in contrast to pastoralists in, say, Sub-Saharan Africa, face
well functioning credit markets. Using survey data including slaughtering responses to
a hypothetical meat price increase, we test whether keeping reindeer as insurance
against risks affects the slaughter response. Furthermore, we study whether status
motives for keeping large herds affect the harvest response to a changing slaughter
price. As a background for the empirical analysis, a stochastic bio economic model
describing Saami reindeer herding is formulated58
.
Sommarat Chantarat, Andrew G. Mude and Christopher B. Barrett (2009)
made a study titled, “Willingness to Pay for Index Based Livestock Insurance: Results
from a Field Experiment In Northern Kenya”, Index based livestock insurance (IBLI)
is designed for managing livestock asset risk by compensating for location-averaged
������������������������������������������������������������57 Catherine Bruneau and Selim Mankai “Economic Capital and Optimal Investment for Non-Life
Insurance Companies”, American Journal of Agricultural Economics, Vol.5, Issue.6, 2009, pp.2605-
2612.
58 Anne Borge Johannesen and Anders Skonhoft, “Livestock as insurance and social status Evidence
from reindeer herding in Norway”, Department of Economics, Norwegian University of Science and
Technology, 2009.
livestock mortality estimated using remotely sensed measures of vegetative cover on
rangelands. This paper uses a double-bounded contingent valuation technique to elicit
willingness to pay (WTP) for IBLI among pastoralists in five arid and semi-arid
locations in northern Kenya, where the product is scheduled for pilot sale in 2010. A
sequential insurance decision was considered. Pastoralists were first asked to make
decision regarding the proportion of herd they wish to insure. Conditional on their
chosen proportion, they were then asked a sequence of dichotomous WTP questions,
responses of which were used to form bounds for their unobserved WTP. A modified
Heckman’s two-step conditional expectation correction approach is applied to estimate
pastoralists’ insurance demand. Wealth, risk preference, perceived basis risk and
subjective expectation of loss serve as the key WTP determinants, conditional on
understanding of the mechanics and value of IBLI. Households most vulnerable to
falling into poverty trap were also shown to have the highest price elasticity of demand,
despite their potentially highest dynamic welfare gain from the insurance. This is in
contrast to the high and relatively low elasticity of demand found among the poorest,
whose dynamic welfare benefits from insurance were minimal59
.
Chad E. Hart, Bruce A. Babcock, and Dermot J. Hayes (2009) in their study
on, “Livestock Revenue Insurance”, this study outlines several possible structures for
livestock revenue insurance. The policies take the form of an exotic option—an Asian
basket option. The actuarially fair premiums for these policies are equal to the prices of
the options they represent. Due to the complexity of pricing Asian basket options, we
have combined two techniques for pricing options to reach the actuarially fair
premiums. Projected premiums, producer welfare, and program efficiency are evaluated
for the insurance products and existing market tools. Using efficiency ratios and
������������������������������������������������������������59 Sommarat Chantarat, Andrew G. Mude and Christopher B. Barrett, “Willingness to Pay for Index
Based Livestock Insurance: Results from a Field Experiment in Northern Kenya”, Economy of
Agriculture & Development, Vol.11, Issue.41-42, 2009, pp.167-184.
certainty equivalent returns, we compare the insurance policies to strategies involving
existing futures and options60
.
Torkmani (2009) made a study titled, “Impacts of Crop Insurance on
Reduction in Risk and Income Inequality for Operators; Case Study: Farce Province”,
showed how insurance influenced farmers’ attitude toward risk and reduced the level of
risk aversion. In addition, Gini coefficients evaluated in this study revealed positive
effects of agricultural insurance on reducing income inequality among operators61
.
Yazdanpanah et al. (2009) their study entitled, “Farmers’ Satisfaction with
Crop Insurance: an Application of Path Analysis”, attributed farmers’ satisfaction with
crop insurance to several factors. Commitment to bank and quality of services, for
farmers insured previously, and bank image, quality of service, for currently insured
farmers, and finally, bank image, quality of service, and indemnity, for all farmers, are
the most significant factors determining level of satisfaction in farmers62
.
Karami A, Zamani G H, Keshavarz M, (2008) in their study on,
“Determinant Factors in Continuation of Crop Insurance”, examined determinant
factors in continuation of crop insurance for 1,241 farmers and found that satisfaction
with insurance, attitude toward insurance, bank accountability, indemnity, bank image,
and awareness of insurance are the most significant factors influencing continued
insurance63
.
������������������������������������������������������������60 Chad E. Hart, Bruce A. Babcock, and Dermot J. Hayes “Livestock Revenue Insurance”, Center for
Agricultural and Rural Development Iowa State University, Ames, Iowa, 2009.
61 Torkmani J. “Impacts of Crop Insurance on Reduction in Risk and Income Inequality for Operators;
Case Study: Farce Province”, Agricultural Research, Vol.1, Issue.1, 2009, pp.17-34. 62 Yazdanpanah M, Zamani G H, Rezaei Moghaddam K, “Farmers’ Satisfaction with Crop Insurance: an
Application of Path Analysis”, Economy of Agriculture & Development, Vol.17, Issue.66, 2009, pp.139-
164. 63 Karami A, Zamani G H, Keshavarz M, “Determinant Factors in Continuation of Crop Insurance”,
Economy of Agriculture & Development, Vol.16, Issue.62, 2008, pp.53-81.
Mojarradi G R, Zamani G H, Ahmadi H, (2008) made a study titled, “An
Analysis of Determinant Factors in Policyholders’ Attitude toward Private Agencies: a
Path Analysis Approach”, used path analysis to find that policyholders’ expectations
met by insurers, their views on insurance, and access to resources have positive and
significant impact on attitudes. In addition, age and insurance background indirectly
influence attitude toward insurance. They believed that creating and maintaining
optimum attitude toward private agency can be achieved through meeting
policyholders’ expectations, emphasizing training and agricultural extension, and
making optimum use of mass media, in particular radio and TV64
.
Braun Micheal (2008) in his study entitled, “Claims and deductibles for home
owner’s insurance”, this research examines the interplay between claims and
deductibles in home owner’s insurance. The researcher examines the effect of
marketing dues on asymmetric information. Economic Theories of asymmetric
information predict that customers who are more likely to file claims during the
coverage period will choose lower deductibles on their policies, one of the challenges
in testing this theory is that customers may exhibit inertia and net consider their
insurance options for an extended period of time, furthermore, the ultimate “Trigger”
for a deductible charge could be a factor unrelated to that customer’s expected claims
propensity such as a pricing change or marketing activity. Hence the rate at which a
customer files a claim after a deductible change may be related to why to deductible
change was made at all65
.
������������������������������������������������������������64 Mojarradi G R, Zamani G H, Ahmadi H, “An Analysis of Determinant Factors in Policyholders’
Attitude toward Private Agencies: a Path Analysis Approach”, Agriculture Economy (Agriculture &
Economy), Vol.2, Issue.2, 2008, pp.169-197. 65 Braun Micheal “Claims and deductibles for home owner’s insurance”, Braun Michal University of
pennsyluanig International Abstracts, Volume.67, 2008, p.2658.
Rostami et al. (2007) in their study titled, “Determinant Factors in Adopting
Insurance (Case Study: Wheat Farmers in Hersin, Kermanshah)”, showed that several
individual, economic, and social factors influence farmers’ attitude toward agricultural
insurance. The most important factors in this area are education, area of lands used to
produce wheat, diversity in production, risk aversion, and type of ownership66
.
Quaiser. R (2007) made a study entitled, “Claims Management in General
Insurance-Issues and concerns” This topic is metal for claim settlement facilities.
Unlike life Insurance, where all polices necessarily result in claims-either maturity or
death-in General Insurance not all polices result in claims. Approximately around 15%
policies in General Insurance result in claim. He concluded insurer’s procedure for
handling claims are coming under closer secreting by the regulators as well as the
consumers forum or court. If recent judgments are any indication, in so far as retail
customers are concerned in the obscene of any frauds the insures may not be able to
repudiate the claim on the ground of innocent non-disclosure or misrepresentation of
facts and non-causation of breaches of warrantee and get away with it67
.
Guira, R.C. (2006) made a study entitled, “General Insurance de-terrifying-to be
or not to be”, highlighted to ensure survival, to protect policy holders interests, to
protect shareholders interests. In the past 1991 reform era de-traiffing has become a
need but not the option of the people India is shining brilliantly Capital Market, Forex
Market, Commodity Market, Export Market and Insurance Market etc. Insurance
������������������������������������������������������������66 Rostami F, Shabanali H, Movahed Mohammadi H, Irvani H. “Determinant Factors in Adopting
Insurance (Case Study: Wheat Farmers in Hersin, Kermanshah), Economy of Agriculture &
Development, Vol.15, Issue.60, 2007, pp1-21. 67 Quaiser. R.C, “Claims Management in General Insurance-Issues and Concerns”, The Insurance Times,
Volume. XXVI, No.7, 2007, p.255.
market has yet to be more shining with the global standards removing the tariff regime
in non-life sector68
.
Ghosh Roy, H.J., Sanket Vij and Puneet Goswami, (2006) “Claims
Automation in Indian Non-Life Insurance Sector: Gaining A Competitive Edge”, Claim
management and processing which accounts for an estimated 80% of operational cost
for an insurance company. By automating all or some of the elements of the lengthy
claims process, insurers can capture substantial cost savings and gains efficiency by
providing a faster, more transparent, claimant friendly and participative experience.
Key objectives of claim automation includes automating first notification of loss, the
initial customer/claimant touch points reducing manual processes, and streamlining
workflow throughout the process69
.
Thomas Dufhues, Ukelemke, Isabel Fischer (2004) made a study entitled,
“Live stock insurance schemes in Vietnam”, tells that in developing countries,
insurance markets are usually underdeveloped. Nevertheless, if the development path
is supported by strong structures and institution, anonymous markets will over time
replace informal insurance networks, as they are more efficient. In Vietnam, livestock
is an important household income source and has additional non-economic functions in
the households. Rural financial institutes in Vietnam financed for a long time only a
small array of agricultural investments, but frequently including livestock purchase.
The absence of off-farm investment possibilities further promotes the investment into
livestock production. Livestock death is considered to be a main factor contributing to
poverty. Farmers using credit to purchase livestock face two risks at once: (1) loosing
������������������������������������������������������������68 Guira.R.C, “General Insurance de-terrifying to be or not to be”, The Insurance Times, Vol. XXVI,
Issue.No.3, 2006, pp.13-15.
69 Ghosh Roy, H.J., Sanket Vij and Puneet Goswami, “Claims Automation in Indian Non-Life Insurance
Sector: Gaining A Competitive Edge”, The Journal of Computer Science and Information Technology,
Vol. 3, No.1, 2006, pp. 35-39.
the livestock due to disease and subsequently (2) failure of investment. Farmers would
like to reduce the uncertainty. Nevertheless, a formal agricultural insurance market
hardly exists in Vietnam and farm households have to rely mainly on informal mutual
aid schemes. The objective of this paper is to contribute to the discussion on the
general feasibility of a livestock insurance scheme (LIS) in Vietnam. In this context
the supply of LIS is discussed. Qualitative data collection took place mainly between
2003 and 2004. Four different types of insurance providers were selected for analyzing
the supply side: 1. Insurance tied to credit within a state owned company. 2. Insurance
tied to credit within a development project, 3. A state owned insurance company. 4. A
private insurance company. By selection of these different insurance providers the
variance of livestock insurances offered in Vietnam was covered. The main result is
that offering sustainable livestock insurance is mostly hampered by unreliable data on
livestock mortality and by politically low set premiums70
.
Cushing, J. (2004) in his study entitled, “Increasing livelihood security
amongst yak herders through livestock insurance in western Sichuan, P.R. China”, Yak
form the basis of the economy for many communities resident upon the western
Chinese rangelands. However, disease and heavy snow make yak populations
vulnerable to death, and as such the security of those who depend so much on them for
the basis of their economy is threatened. This paper looks at these threats and considers
the feasibility of establishing a community owned insurance scheme through which
herders will be able to insure their livestock against such losses. Unlike similar
commercially run schemes in other countries, the scheme will be run by members of
the community and profits will be invested back into the scheme and the community.
������������������������������������������������������������70Thomas Dufhues, uke lemke, Isabel fischer, “Livestock insurance schemes in Vietnam”, Rural Areas &
Development, Vol.13, Issue.1, 2004, pp.21-41.
The study looks at similar schemes established elsewhere and considers the problems
such a scheme may encounter should it be established in western Sichuan. It concludes,
that such a scheme will, if established, contribute towards increasing livelihood security
amongst herders, and it may provide a platform upon which further community based
projects can work71
.
Jacqueline K. Eastman; A D. Alan Eastman; Kevin L. Eastman, (2002) has
studied about that “Insurance Sales Agents and the Internet: The Relationship Between
Opinion Leadership, Subjective Knowledge, and Internet Attitudes", with the aim to
study about the Internet which offers a number of opportunities and threats for
insurance sales agents. On the one hand, the Internet provides opportunities to
communicate with and reach customers. However, it also introduces the risk of losing
business to insurance providers or competitors. These opportunities and threats create a
need to understand the characteristics that may affect the views of insurance agents
regarding the Internet and its impact on their business. This paper compares insurance
sales agents' scores on an opinion leadership scale (Flynn, Goldsmith, and Eastman
1996) and subjective knowledge scale (Flynn and Goldsmith 1999) with their attitudes
toward the Internet. The results suggest that those insurance sales agents with a higher
level of subjective knowledge about the Internet are more likely to be opinion leaders
about the Internet. Both opinion leaders and those with higher levels of subjective
knowledge have a more positive attitude about the Internet, but only the relationship
with opinion leadership is significant. In addition, those insurance sales agents who are
younger (than the approximate mean age of 46 years old) are more likely to be opinion
leaders and have a higher level of subjective knowledge of the Internet. The results
suggest that perceived knowledge and the willingness to discuss the Internet with
������������������������������������������������������������71 Cushing, J. (“Increasing livelihood security amongst yak herders through livestock insurance in
western Sichuan, P.R. China”, Mountain Research and Development, Vol. 20, Issue.3, 2004, pp.226-231.
others impact one's attitude of it, and that the younger insurance agents will play a
leading role in how the Internet will be used72
.
Choi Byeongyoung (2002) made a study on, “An empirical investigation of
market structure, efficiency, and performance in property-liability insurance”, reports
that the financial services industry is in the midst of consolidation and restructuring
worldwide. Financial service firm consolidation in the U.S. has accelerated because of
technological progress and deregulation (e.g., the Gram-Leach-Bliley Act of 1999).
The recent movement toward consolidation within the insurance industry and across
industry segments is affecting the structure of the insurance market. Consolidation
impacts competition and the economic performance of the industry. Therefore, a public
policy question arises as to the effect of consolidation on consumers and whether or not
government should pursue antitrust policy or other regulatory actions. This research
directly investigates these issues directly. Little research has been conducted on the
structure-performance relationship for the insurance industry, and the research that does
exist contains conflicting results. Moreover, no existing insurance study explicitly
incorporates the effects of efficiency on structure-performance relationship. This paper
tests the structure-performance relationship for the property-liability insurance industry
using explicit measures of X-efficiency and scale efficiency73
.
Martina Eckardt (2002) has studied about “Agent and broker intermediaries
in insurance markets”, with the aim to study about the legal incentives induces
insurance brokers to provide more high quality information and advisory services than
insurance agents. The data used are obtained from a survey among 4,687 self employed
German insurance intermediaries with the help of questionnaire. The major findings
������������������������������������������������������������72 Jacqueline K. Eastman; A D. Alan Eastman; Kevin L. Eastman, “Insurance Sales Agents and
the Internet: The Relationship Between Opinion Leadership, Subjective Knowledge, and Internet
Attitudes”, Journal of Marketing Management, Volume 18, Numbers 3-4, April 2002, pp. 259-285. 73 Choi Byeongyong, “An Empirical Investigation of Market Structure, Efficiency, and Performance in
Property-Liability Insurance”, Temple university, International Abstracts, Volume.57, 2002, p.3132.
are, the institutional incentives set by the legal framework thus seems to induce them to
supply more information and better suited advice. But the influence of different legal
rules are outweighed by structural factors to some extent with respect to the quality
indicators applied. The advisory services of agents degree by firm size and employment
structure as well as by the degree of specialization on private customers. The study was
concluded that the agents and brokers put only small weight on these aspects in their
counseling interviews. This is backed by the statement of 98% of the interviews that the
quality of the advisory services should be improved74
.
Craig Brad Kubin (2001) made a study on, “A study of private passenger
automobile insurance regulation: The effects of regulatory change on the taxes
Insurance Market”, tells that this dissertation develops a theory of private passenger
automobile Insurance regulation and examine the effects or regulatory change on the
PPA insurance market. Specifically, the market impact of the 1991 changes in the rate
regulation of PPA insurance in the state of taxes is studied. The 1991 flexible –rating
“Law enacted in taxes enable rate-regulated insures to see their own rates for PPA
Insurance within a plus-or-minus. Thirty percent band of the “Benchmark” rates
established by the Insurance commissioner. The major empirical findings of the paper
are that flexible rating has led the increased available of PPA Insurance with a
corresponding decline in the number of taxes insured through the “Assigned-risk” plan.
Also, there has been a noticeable improvement in the financial health of insurance as
reflected in the fall of the liability loss rations of PPA insurance75
.
������������������������������������������������������������74Martina Eckardt, “Agent and Broker Intermediaries in Insurance Markets- An Empirical Analysis of
Market Outcomes”, Paper presented at the 6th Annual Meeting of the International Society for New
Institutional Economics, Cambridge, September 27- 29, 2002. 75Craigh Brod Kusin, “A Study of Private Passenger Automobile Insurance Regulation- the Effects of
Regulatory Change on the Taxes Insurance Market”, Taxes A& M University, International Abstracts,
Volume.62, 2001, p.1512.
Percy and Allison Marie, (2000) their study entitled, “Community rating and
regulatory reform in health insurance markets”, reports that this research assesses the
impact of community rating laws and other state health insurance market reforms in the
small group and Individuals market on health insurance coverage, including changes in
the overall number of uninsured as well as specific effects on different risk groups. The
primary data source for this research is the current population survey from 1990 to
1996. Data on health insurance regulation by state and by year were obtained from the
national conference on state legislatures. A legit model is applied to the pooled cross.
Sectional data to study the impact of health insurance regulation considered include
guaranteed issue, guaranteed renewal limits on preexisting conditions exclusions, and
various rating rotes ranging from rating bonds to pure community rating. When
individual and small group market reforms are considered separately. Their impact on
small firm employees and the self-employed is difficult to assess. However reforms are
generally implemented as packages. In split sample models weak reforms in the small
group market had a significantly positive impact on the odds of coverage for lower
income low risks a surprising finding for this group. In the absence of mandates to
purchase insurance, policies which pool higher and lower risk group may either
increase or decrease overall coverage as people enter or leave the health insurance
market. The net impact on equity is unclear. Healthy young workers may see their
insurance rates increase and may choose to drop coverage. When crafting any
regulatory reforms in health insurance markets, attention should be focused on the
effect of this legislation on vulnerable groups, such as these with lower incomes76
.
Harounan Kazianga and Christopher Udry, (1999) made a study entitled,
“Consumption Smoothing? Livestock, Insurance and Drought in Rural Burkina Faso”,
������������������������������������������������������������76 Percy Allison Marie, “Community Rating and Regulatory Reform in Health Insurance Markets”,
University of Pennsylvania, Vol.61, No.10, 2000, p.4099.
this paper explores the extent of consumption smoothing between 1981 and 1985 in
rural Burkina Faso. In particular, we examine the extent to which livestock, grain
storage and inter-household transfers are used to smooth consumption against income
risk. The survey coincided with a period of severe drought, so the results provide direct
evidence on the effectiveness of these various insurance mechanisms when they are the
most needed. We find evidence of little consumption smoothing. In particular, there is
almost no risk sharing, and households rely almost exclusively on self-insurance in the
form of adjustments to grain stocks to smooth out consumption. The outcome,
however, is far from complete smoothing. Hence the main risk-coping strategies which
are hypothesized in the literature (risk sharing and the use of assets as buffer stocks)
were not effective during the survey period77
.
Javadian & Shirzad, (1999) made a study on, “A Comparative Study on Crop
Insurance System in the World: an Emphasis on Developing Countries”, Insurance
development is hindered, among other things, by unnecessary regulations and
redundant formalities in policy issuance and indemnification system. If insurance
agents show higher levels of speed, accuracy, and good faith in provision of services,
such as issuing policies, paying compensations, and if inflexible bureaucracies are
eliminated, members of rural communities will have more confidence in crop
insurance. Every year, a large portion of crops is damaged by unfavorable
environmental conditions, resulting in income drops for farmers. This reduction in
income can be compensated through insurance services. However, farmers are often
reluctant to obtain insurance for their production. It is necessary to identify determinant
������������������������������������������������������������77 Harounan Kazianga and Christopher Udry, “Consumption Smoothing? Livestock, Insurance and
Drought in Rural Burkina Faso”, Journal of Agricultural and Resource Economics, Vol.18, 1999, pp.17-
24.
factors in development of insurance for strategic agricultural products. The present
study attempts to fill the gap in this area78
.
Gorvett Richard Wayne (1998) made a study entitled, “Dynamic Financial
analysis of property-liability Insurance Companies”, reports that this research applies
state-of –the-art financial techniques to the dynamic financial modeling of property
Liability (PL) Insurance Companies. Dynamic financial analysis (DFA) a relatively
new concept in the P-L Industry attempts to analyze the underwriting and financial
whole. The objective of this research to provide a framework for current and future
DFA models for the P-L Industry, to use this models to test various Hypotheses
concerning valuation, corporate decision making and optimal regulatory policy. Two
types of DFA models are developed the first is termed “Conventional” since its builds
on existing financial models in the life and P-L Insurance industries. The single period
conventional model developed here incorporates insurance specific factors, in a
stochastic framework and provides probability distribution of outcomes of key financial
variables. The second type of model uses continues-time financial techniques, which
provide a more sophisticated approach to dealing with certain financial parameters.
Parallel development to these two types of models will allow for an evaluation of the
benefit of moving from a conventional the more financially sophisticated alternative
model and will aid in the selection of appropriate parameter for Future Conventional
model79
.
Joseph A. Fields , Dogan Tirtiroglu (1991) has studied about the “Research
Agency-Theory Implications for the Insurance Industry: A Review of the Theoretical
������������������������������������������������������������78 Javadian A., Shirzad H. “A Comparative Study on Crop Insurance System in the World: an Emphasis
on Developing Countries”, Proceedings of the 2nd Nationwide Conference of Crop Insurance Fund, Crop
Insurance Fund Press, 1999. 79 Govett Richared Wayne, “Dynamic Financial Analysis of Property Liability Insurance Companies”,
University of Californla, Berkeley, International Abstracts, Volume.59, 1998, p.3126.
and Empirical”, this study explores the resolution of incentive conflicts in the
insurance industry from an agency-theoretic perspective. It concentrates on the role of
organizational forms in mitigating conflict. The paper reviews the concept of agency
conflicts and resolution, examines agency conflicts and the use of organizational form
in insurance, reviews empirical work that examines the structure of incentive/conflict
resolution in insurance, and synthesizes the implications of the theory and empirical
findings. The diversity of organizational forms in the insurance industry has been a
subject of much inquiry and curiosity. Agency theory has tied many aspects of the
industry's diversity into a unified framework and has provided a common ground for
analysis. This paper reviews the major tenets of the agency theory literature, focusing
on the resolution of agency problems in the insurance sector. This research concentrates
on recent empirical work concerning the resolution of conflict through the various
organizational forms in the insurance sector. Four issues are examined. First, what is
the rationale for the existence of the wide variety of organizational structures in this
industry? Hansmann (1985) observes that stock and mutual insurance companies differ
in a number of respects, such as size and growth patterns. Mutual insurance companies,
a successful part of the industry for more than a century, differ from other financial
mutual. Reciprocal associations and Lloyd's associations also operate in this industry,
but they are generally small in size and appeal to specific niches. Second, insurers
exhibit complex contractual relationships in an attempt to control incentive problems
between contractors. Mayers and Smith focus on contracting from an agency-theoretic
view, demonstrating how organizational structure is a function of interactions and
contracts among participants. Mayers and Smith argue that survival of organizational
structures depends on the amount of managerial discretion required and the cost of
monitoring managers. Third, mutual firms have tended to be most successful in the
financial sectors, such as insurance, banking, and mutual funds. Fama and Jensen argue
that the survival of the mutual form is due to the characteristics80
Hoverstad et al (1990) empirically examined, “The differences in the sales
force turnover of part time & full time insurance sales agents” on a major national
insurance firm. All new hires over three, two year periods 1971-72, 1975-76, 1980-81
were analyzed. According to them, part time agents remained in the job longer than full
time agents although there were some differences in two years survival rates among the
three periods. The insurance industry clearly had a problem in retaining the full-time
agents. The part time agents were likely to remain with the company for a longer time,
but they were not as productive as many full time agents part time agents were more
able to survive a period of low sales, while period of low sales may force a full time
employees to pursue other career opportunities. The attitudes and demographic factors
of the part time employees had played a part in retention, very young full time
employees turned over faster than other part timers. The nature of the job and primary
loyalty could affect the retention of the job for the part timers81
.
Dumm Randy Efugene (1988) made a study on, “Access to capital and the
role of group affiliation in the Insurance Industry: Empiric Evidence”, tell that this
dissertation concerns itself with several closely related objectives. The first is to
investigate the factor that explain the substantial increase in usage of subordinated debt
contracts called surplus notes the second is to examine more fully the role that group
affiliation plays in determining capital retention levels and management of capital.
This research is focus on three closely related issues that are addressed through the
������������������������������������������������������������80 Joseph A. Fields, Dogan Tirtiroglu, “Research Agency-Theory Implications for the Insurance Industry:
A Review of the Theoretical and Empirical”; Quarterly journal of Business and Economics, Vol. 30,
1991. 81Ronald Hoverstad William C. Moncrief III and George .H.Lucas. Jr. “The use of survival analysis to
examine sales force turnover of part time & full time sales employees”, International journal of research
in marketing, vol.7, 1990, pp. 109- 119.
examination of the relation between group affiliation and the level and management of
regulatory capital. The findings of this research show that intra-group capital transfers
occur to financial distressed firms at the highest levels of regulatory scrutiny. This may
indicate that indirect bankruptcy costs to the group exceeded the benefits of limited
liability. This benefit of intra-group capital management may help explain the increase
in insurance groups82
.
Francois et at (1987) had studied about “Job related response of insurance
agents: More evidence on job satisfaction-It is the relationship that count”, concluded
that life insurance agents were in general satisfies with their careers factors found to be
most closely related to job satisfaction were training experience and earnings and the
major source of dissatisfaction was revealed to be the attitude of the public
towards them. They suggested that managers and supervisors must provide agents with
more support and encouragement to enhance their job satisfaction83
.
������������������������������������������������������������82Dumm Randy Engene “Access to Capital and the Role of Group Affiliation in the Insurance Industry”,
University of Georgia International Dissertation Abstracts, Volume.59, 1988, p.1242. 83Francois et al, “Job related response of insurance agents; More evidence on Job Satisfaction. It is the
relationship that count”, Journal of Risk and insurance, Vol.54, 1987, pp. 800-809.
2.4 Research Gap
Thus, so far there may not be systematic attempt made to study the problem
relating to livestock insurance. Hence, the study has been undertaken with this specific
aim in mind to cater the needs of local & rural based community to insists & makes
awareness among rural population on livestock insurance.
Several attempts have been made to assess the awareness of livestock insurance
in India. Some of them are helpful to understand the importance of livestock insurance
and the basic principles of livestock insurance. From the direction of the previous
studies, the present research focuses on the awareness of rural masses towards livestock
insurance and problems faced by the rural masses in Tirunelveli district.