INTRODUCTION TO INDIAN INSURANCE INDUSTRY

Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual.

The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.

Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event.

Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.

With the help of Insurance, large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.

The domestic insurance industry in India is estimated to be around US$ 60.5 billion by 2010, of which US$ 35 billion will come from rural and semi-urban areas. While the life insurance market is expected to grow to US$ 35 billion, non-life insurance market will touch an estimated US$ 25 billion. With the largest number of life insurance policies in force in the world, Indias insurance sector accounted for 4.1 per cent of GDP in 2006-07, up from 1.2 per cent in 1999-2000, far ahead of China where insurance accounts for just 1.7 per cent of the GDP and even the US where insurance penetration stands at 4 per cent of the GDP. One area that 1

continues to cause concern is the number of customer grievances in insurance, especially in a few specific classes. This calls for more transparency in designing the contract wording and on insisting that the applicant is sufficiently informed about the coverage and more particularly the exclusions. In addition, the legislation itself requires to be transformed to meet the needs of the emerging markets. The Law Commission of India which has gone extensively into the various insurance laws has submitted its report. The demand for health insurance covers has seen a healthy increase, and today the sector is the fastest growing segment in the non-life insurance industry in India, which grew at over 40% last year. It is also emerging as an increasingly significant line of business for life insurance companies. During the last five years, the premium from health insurance products in non-life companies has grown from 675 crores in 2001-02 to Rs 3200 crores in 2006-07, almost 5 times its level 5 years back. While this rate of growth appears to be very healthy, it is on a low base, and health insurance penetration in the country continues to be low. Only about 25 million persons are presently covered for health through commercial insurance, in a country of over 1.1 billion people. Overall, the Indian health sector is still characterized by the near absence of any significant risk protection against major health-related expenditure, as insurance and other organized forms of payment for health services, including ESIS, CGHS and other such schemes barely constitute a tenth of all health expenditure in the country. Almost four-fifths of the health spending in the country is private, out-of-pocket expenditure. In the absence of such protection, the financial impact of hospitalization can be very pronounced, and indeed is reported as one of the leading causes of impoverishment in the country. Indian insurance companies recorded a 19.9 per cent growth in premium in dollar terms (adjusted for inflation) in 2006-07, compared to the world market growth rate of 2.9 per cent. This rate of growth of the industry looks particularly impressive when seen against the fact that the combined penetration of both life and non-life is less than 2 per cent of the GDP compared to world average of 7.52 per cent. Clearly, the scope for growth is enormous. Led by the Life Insurance Corporation (LIC), the life insurance industry registered a growth of 110 per cent in fiscal 2006-07, taking the total business to US$ 19.2 billion

from the previous years US$ 9.1 billion. The life insurance market has grown rapidly over the past six years, with new business premiums growing at over 40 per cent per year owing to the entry of a host of new players with significant growth aspirations and capital commitments. The total life insurance market premiums is likely to more than double from the current US$ 40 billion to US$ 80-US$100 billion by 2012, says a study by McKinsey. The study titled India Insurance 2012: Fortune Favours the Bold, expects a rise in premiums between 5.1 and 6.2 per cent of the GDP in 2012 from the current 4.1 per cent driven by greater insurance intensity per capita as the average per capita income increases and rise in penetration in urban and rural areas. The life insurance premium contributions per capita have jumped from a little over US$ 7 in 1999-2000 (pre-liberalization) to US$ 38.5 in 2006-07. Life insurance penetration in India - which was less than 1 per cent till 1990-91 increased to 2.53 per cent in 2005, and to 3 per cent in 2006-07. While the impetus for growth has come from both public and private insurers, the number of players in this segment have also increased to 16 (15 in private sector), with Life Insurance Corporation (LIC) being the dominant player (market share of over 74 per cent). The general insurance industry grew 11.6 per cent between April and November in 200708 with robust performances by private players. The 13 non-life insurers collected US$ 4.7 billion in premium against US$ 4.2 billion in the same period last year. While the public sector could increase its premiums by just 3.57 per cent, 9 private sector players clocked premium growth of 26.49 per cent. Private sector players market share has grown to about 40 per cent in FY08 as compared to the public sectors 60 per cent.

INSURANCE SECTOR POLICY BY GOVERNMENT

Foreign direct investment up to 26 per cent is permitted under the automatic route subject to obtaining a license from the IRDA.

 IRDA has removed administered pricing mechanism, i.e. de-tariffing in respect of fire and engineering along with motor insurance of general insurance for premium, effective from 1 January, 2007. The control rates on fire, engineering and workmens compensation insurance classes have been removed from 1 September, 2007. Some state governments have also taken a dynamic role in this sector. The Government of Andhra Pradesh after piloting the Arogya Sri health insurance scheme in three districts plans to issue health cards to 18 million BPL (below the poverty line) families. As a result, about 60 million of the States 80 million people will have insurance cover. The Karnataka Government has partnered with the private sector to provide coverage at a low cost in the Yeshaswini Insurance scheme. Launched in 2002, the scheme provides coverage for major surgical operations, including those pertaining to pre-existing conditions, to Indian farmers who previously had no access to insurance. With less than 10 per cent of the population having some sort of health insurance, the potential market for health insurance is huge. A McKinsey-CII report estimates the number of potential insurable lives at 315 million. In 2006-07, the fast-growing Indian health insurance business grew 40 per cent to US$ 812 million. The sector is projected to grow to US$ 5.75 billion by 2010. Some Developments in The Indian Insurance Industry follows: Society Generale has entered into a joint venture with India Bulls Financial Services for a life insurance joint venture in India through its French life insurance company Sogecap. Tata have formed a joint venture with US based American Int. Group (AIG) Max India has formed a joint venture with US based life insurance company, New York Life. Indian Farmers Fertilizer Cooperative (IFFCO) has formed a joint venture with Tokio Marine and Fire of Japan to form IFFCO Tokio General Insurance Company.

 State Bank of India has formed a joint venture with Cardiff SA of France (the insurance arm of BNP Paribas Bank) as SBICardiff Life. ICICI has joined hands with UK based Prudential- ICICI Prudential Life Insurance.

The rapid growth of insurance industry, especially in the life segment has brought to the fore a number of issues which is a vital link between the insured and insurer. In order to spread the message of insurance to the far corners of the country, the IRDA had enlarged the scope of the intermediaries structure from the traditional tied agents to the corporate agent, micro insurance agent, the Banc assurance mode and the referral system. Insurers have also adopted other channels of sales to suit e-selling such as computer points at convenient locations, on-line insurance purchase etc. These systems have been in place for some time now, some of them for the last eight years. Some of the practices that have crept into the system in terms of remuneration or reimbursement of expenses or incentive schemes and so on require a detailed examination to ascertain whether they are in conformity with the provision of the Insurance Act and their impact on the acquisition cost.

Nature of industry

Goods and services: The insurance industry provides protection against financial
losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death.

Industry organization: The insurance industry consists mainly of insurance carriers

(or insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. 5

Insurance agencies and brokerages sell insurance policies for the carriers. While some of these establishments are directly affiliated with a particular insurer and sell only that carriers policies, many are independent and are thus free to market the policies of a variety of insurance carriers. In addition to supporting these two primary components, the insurance industry includes establishments that provide other insurance-related services, such as claims adjustment or third-party administration of insurance and pension funds. These other insurance industry establishments also include a number of independent organizations that provide a wide array of insurance-related services to carriers and their clients. One such service is the processing of claims forms for medical practitioners. Other services include loss prevention and risk management. Also, insurance companies sometimes hire independent claims adjusters to investigate accidents and claims for property damage and to assign a dollar estimate to the claim. Some insurance policies cover groups of people, ranging from a few to thousands of individuals. These policies usually are issued to employers for the benefit of their employees or to unions, professional associations, or other membership organizations for the benefit of their members. Among the most common policies of this nature are group life and health plans. Insurance carriers also underwrite a variety of specialized types of insurance, such as real-estate title insurance, employee surety and fidelity bonding, and medical malpractice insurance. Other organizations in the industry are formed by groups of insurance companies, to perform functions that would result in a duplication of effort if each company carried them out individually. For example, service organizations are supported by insurance companies to provide loss statistics, which the companies use to set their rates.

Recent developments: Congressional legislation now allows insurance carriers and

other financial institutions, such as banks and securities firms, to sell one anothers products. More insurance carriers now sell financial products such as securities, mutual funds, and various retirement plans. This approach is most common in life insurance companies that already sold annuities, but property and casualty companies also are increasingly selling a wider range of financial products. In order to expand into one 6

anothers markets, insurance carriers, banks, and securities firms have engaged in numerous mergers, allowing the merging companies access to each other's client base and geographical markets. Insurance carriers have discovered that the Internet can be a powerful tool for reaching potential and existing customers. Most carriers use the Internet simply to post company information, such as sales brochures and product information, financial statements, and a list of local agents. However, an increasing number of carriers are starting to expand their Web sites to enable customers to access online account and billing information, and some carriers even allow claims to be submitted online. Many carriers also provide insurance quotes online based on the information submitted by customers on their Internet sites. In fact, some carriers will allow customers to purchase policies through the Internet without ever speaking to a live agent.

Working conditions/Hours: Many workers in the insurance industryespecially

those in administrative support positionswork a 5-day, 40-hour week. Those in executive and managerial occupations often put in more than 40 Hours. There are several occupations in the insurance industry where workers may work irregular hours outside of office settings. Those working in sales jobs need to be available for their clients at all times. This accommodation may result in these individuals working 50 to 60 hours per week. Also, call centers operate 24 hours a day, 7 days a week, so some of their employees must work evening and weekend shifts. The irregular business hours in the insurance industry provide some workers with the opportunity for part-time work. Part-time employees make up 8 percent of the workforce.

Employment
The insurance industry had about 2.3 million wage and salary jobs in 2006. Insurance carriers accounted for 62 percent of jobs, while insurance agencies, brokerages, and providers of other insurance-related services accounted for 38 percent of jobs. The majority of establishments in the insurance industry were small; however, a few large establishments accounted for many of the jobs in this industry. Insurance carriers 7

tend to be large establishments, often employing 250 or more workers, whereas agencies and brokerages tend to be much smaller, frequently employing fewer than 20 workers.

Many insurance carriers home and regional offices are situated near large urban centers. Insurance workers who deal directly with the public are located throughout the country. Almost all of those working in sales work out of local company offices or independent agencies. Many others in the industry work for independent firms in small cities and towns throughout the country.

Significant Points
Job growth in this large industry will be limited by corporate downsizing, new

technology, and increasing direct mail, telephone, and Internet sales, but numerous job openings will arise from the need to replace workers who leave or retire. Growing areas of the insurance industry are medical services and health insurance, and its expansion into other financial services, such as securities and mutual funds.

Jobs in office and administrative occupations

usually may be entered with a high

school diploma, but employers prefer college graduates for sales, managerial, and professional jobs.

Growth of Indian insurance industry

With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.

Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the of immense growth potential of the insurance sector.

The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. This report, Indian Insurance Industry: New Avenues for Growth 2012, finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.

Though the total volume of LIC's business increased in the last fiscal year (2004-2005) 9

compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent.

There are presently 12 general insurance companies with four public sector companies and eight private insurers. According to estimates, private insurance companies collectively have a 10% share of the non-life insurance market.

10

INSURANCE HISTORY

INDIAN INSURANCE INDUSTRY:

Insurers
Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers:

Life Insurers:

Life Insurance Corporation of India (LIC)

General Insurers:

General Insurance Corporation of India (GIC) (with effect from Dec'2000, a National Reinsurer)

GIC had four subsidary companies, namely ( with effect from Dec'2000, these subsidiaries have been de-linked from the parent company and made as independent insurance companies. 1. The Oriental Insurance Company Limited 2. The New India Assurance Company Limited 3. National Insurance Company Limited 4. United India Insurance Company Limited.

11

Year: 2000-2001: (16 new entrants)

life insurers: S.No. Registration Date of Number 1 2 3 4 5 6 7 8 9 10 11 12 101 104 105 107 109 110 111 114 116 117 133 135 Reg. 23.10.2000 HDFC Standard Life Insurance Company Ltd. 15.11.2000 Max New York Life Insurance Co. Ltd. 24.11.2000 ICICI Prudential Life Insurance Company Ltd. 10.01.2001 Kotak Mahindra Old Mutual Life Insurance Limited 31.01.2001 Birla Sun Life Insurance Company Ltd. 12.02.2001 Tata AIG Life Insurance Company Ltd. 30.03.2001 SBI Life Insurance Company Limited . 02.08.2001 ING Vysya Life Insurance Company Private Limited 03.08.2001 Bajaj Allianz Life Insurance Company Limited 06.08.2001 Metlife India Insurance Company Ltd. 04.09.2007 Future Generali India Life Insurance Company Limited 19.12.2007 IDBI Fortis Life Insurance Company Ltd. Name of the Company

12

General insurers : S.No. Registration Date of Number 1 102 Registration 23.10.2000 Royal Sundaram Alliance Insurance Company Limited 2 103 23.10.2000 Reliance General Insurance Company Limited. Name of the Company

106

04.12.2000

IFFCO Tokio General Insurance Co. Ltd

108

22.01.2001

TATA AIG General Insurance Company Ltd.

113

02.05.2001

Bajaj Allianz General Insurance Company Limited

115

03.08.2001

ICICI Lombard General Insurance Company Limited.

131

03-08-2007

Apollo DKV Insurance Company Limited

132

04-09-2007

Future Generali India Insurance Company Limited

134

16-11-2007

Universal Sompo General Insurance Company Ltd.

13

Year: 2001-2002: (From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5new entrants; namely

Life Insurers:

Sino. Registration Date of Number 1 121 Reg.

Name of the Company

03.01.2002 Reliance Life Insurance Company Limited.

122

14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd.

General Insurers : Sino. Registration Date of Number 1 123 Registration 15.07.2002 Cholamandalam General Insurance Company Ltd. 2. 124 27.08.2002 Export Credit Guarantee Corporation Ltd. 3. 125 27.08.2002 HDFC-Chubb General Insurance Co. Ltd Name of the Company

14

Year: 2003-2004: (From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants

Life Insurers: S.No. Registration Date of Number 1 127 Reg. 06.02.2004 Sahara India Insurance Company Ltd. Name of the Company

Year: 2004-2005:
Insurance Industry in this year, so far has 1new entrants
Life Insurers:

S.No. Registration Date of Number Reg. 1 128

Name of the Company

17.11.2005 Shriram Life Insurance Company Ltd

Year: 2006-2007:
Insurance Industry in this year, had 1new entrants Life Insurers: S.No. RegistrationNumber Date of Reg. 1 130 14.07.2006 Bharti AXA Life Insurance Company Ltd. Name of the Company

15

Year: 2007-2008 :
Insurance Industry in this year, had 2 new entrants S.No Registratio . n Number 1 133 04.09.200 7 2 135 19.12.200 7 Future Generali India Life Insurance Company Limited IDBI Fortis Life Insurance Company Ltd. Date of Reg. Name of the Company

Year: 2008-2009:
Insurance Industry in this year, so far has 3 new entrants in Life and 1 new entry in General Life Insurers: S.N o. Registrati Date of on Number 1 136 08.05.20 Canara HSBC Oriental Bank of Commerce Life Insurance 08 2 138 Company Ltd. Reg. Name of the Company

27.06.20 Aegon Religare Life Insurance Company Ltd. 08

140

27.06.20 DLF Pramerica Life Insurance Company Ltd. 08

16

General Insurers: S.No. Registration Date of Number Reg. 1 139 Name of the Company

27.06.2008 Bharti Axa General Insurance Company Ltd.

17

INTRODUCTION TO HDFC
The first private sector retail Housing Finance Company in India was incorporated in 1977 with almost 90% of the initial share holding in the hands of domestic institution and retail investors and currently 77% of the shares hold by foreign institutional investors and a primary objective of meeting a social needs of the common mass of India as well as promising ownership by providing long term finance to households for their needs. However, the needs were according to National Building Organization. The demand was estimate at 2 million units per year and the total housing shortfall is estimated to be 19.4 million units with the division of 12.6 million for rural and 6.64 million for urban. It is listed on both BSE and NSE and having the market capitalization of Rs 79 billion. It has 118 offices and having the second largest employment generator in India with the staff strength of 1099.

KEY PLAYERS
Mr. Deepak S Parekh

is the Chairman of the Company. He is also the Executive Chairman

of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a wholetime director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar

is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of Technology, Bombay and a Masters Degree in Business Administration from The American University, Washington DC.

18

FINANCIAL STRENGTH
Was promoted with an initial share capital of 100 million. Asset Base of more than Rs 21459 cr. AAA (High Security and High Safety) rated for seven consecutive years.

MISSION To be the top new life insurance company in the country. Values

1. SERVICE
Offer a high quality customer service. Trained consultants who would advice the customers in choosing the right product for him.

2. TRUST
Commitment to the Indian market to establish themselves as the most professional Life Insurance Company in India.

3. INNOVATION
Commitment for developing quality products for the specific needs of the Indian customers. Use latest technology.

19

HDFC IS A HIGHLY DIVERSIFIED GROUP. ITS GROUP COMPANIES ARE:

GROUP COMPANIES
HDFC Bank: World Class Indian Bank- among the top private banks in India. HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager. Intelenet Global: BPO services for international customers. CIBIL: Credit Information Bureau India Limited. HDFC Chubb: Upcoming Private companies in the field of General Insurance. HDFC Mutual Fund HDFC reality.com: Helps to search properties in all major cities in India HDFC securities.

i.

HDFC LIMITED:
HDFC was incorporated in1977 with the primary objective of meeting a social need that of promoting home ownership by providing long term finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs. 100.

ii.

HDFC BANK LIMITED:

The Housing Development Finance Corporation Limited (HDFC) was amongst The first to receive approval from the Reserve Bank of India to set up a bank in the private sector. The bank was incorporated in August 1994 the name of HDFC Bank Limited, with its registered office in Mumbai.

20

iii.

HDFC ASSET MANAGEMENT:

HDFC Fund is dominant player in the Indian Mutual Fund space, recognized its high levels of ethical and professional conduct a commitment towards enhancing investor interest.

iv.

HDFC STANDARD LIFE INSURANCE:

HDFC STANDAED LIFE is the name, which is working as one of the best private insurance company in insurance sector. HDFC STANDARD LIFE Insurance company ltd. was incorporated on 14th august 2000. It got the certificate of registration on 23rd October.

INTRODUCTION TO STANDARD LIFE

Standard was incorporated d in 1825. It is mainly a U.K based company having 31 branches in U.K itself and many other branches in all over the world. It is also renounced as the European Largest Mutual Life Insurance Company and recently voted Company do the decade by independent financial advisor U.K.

STANDARD LIFE:

STANDARD HEALTH CARE

STANDARD INVESTMENT 21

SOME FACTS ABOUT THE COMPANY:

1. Founded in 1825 2. Mutual life insurance 3. Largest mutual life insurance company in Europe 4. Assets under management over Rs 707836 cr. Total assets under management Rs 707836 cr. 5. New premium income Rs 76277 cr. 6. AAA rated by Standard & Poors and Moodys.

THE JOINT VENTURE OF HDFC AND STANDARD LIFE:

Be granted license by the IRDA to operate in life insurance sector. Each of the JV HDFC Standard Life Insurance Company Ltd was one of the first companies to who is highly rated and conferred with many awards. HDFC is rated AAA by both CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their assets base of Rs 15000cr and Rs 600,000 Cr respectively.

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow -they will help you get Sar Utha ke Jiyo. At HDFC SLIC, life insurance plans are created keeping in mind the changing needs of family. Its life insurance plans are designed to provide you with flexible options that meet both protection and savings needs. It offers a full range of transparent, flexible and value for money products. HDFC SLIC products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels, indexation and partial withdrawals. 22

RECRUITMENT OF FINANCIAL CONSULTANT

23

INTRODUCTION TO RECRUITMENT
Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization. Recruitment is the activity that links the employers and the job seekers. A few definitions of recruitment are: 1 A process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applications from which new employees are selected. 2 Recruitment of candidates is the function preceding the selection, which helps create a pool of prospective employees for the organisation so that the management can select the right candidate for the right job from this pool. The main objective of the recruitment process is to expedite these election process 3 Recruitment is a continuous process whereby the firm attempts to develop a pool of qualified applicants for the future human resources needs even though specific vacancies do not exist. Usually, the recruitment process starts when a manger initiates an employee requisition for a specific vacancy or an anticipated vacancy.

RECRUITMENT NEEDS ARE OF THREE TYPES

PLANNED i.e. the needs arising from changes in organization and retirement policy.

ANTICIPATED Anticipated needs are those movements in personnel, which an organization can predict by studying trends in internal and external environment.

24

UNEXPECTED Resignation, deaths, accidents, illness give rise to unexpected needs.

Purpose and importance

1. Attract and encourage more and more candidates to apply in the organisation. 2. Create a talent pool of candidates to enable the selection of best candidates for the organization. 3. Determine present and future requirements of the organization in conjunction with its personnel planning and job analysis activities. 4. Recruitment is the process which links the employers with the employees. 5. Increase the pool of job candidates at minimum cost.

6. Help increase the success rate of selection process by decreasing number of visibly under qualified or overqualified job applicants. 7. Help reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. 8. Meet the organizations legal and social obligations regarding the composition of its workforce. 9. Begin identifying and preparing potential job applicants who will be appropriate candidates. 10. Increase organization and individual effectiveness of various recruiting techniques and sources for all types of job applicants.

25

SOURCES OF RECRUITMENT
Every organisation has the option of choosing the candidates for its recruitment processes from two kinds of sources: internal and external sources. The sources within the organisation itself (like transfer of employees from one department to other, promotions) to fill a position are known as the internal sources of recruitment. Recruitment candidates from all the other sources (like outsourcing agencies etc.) are known as the external sources of recruitment.

SOURCES OF RECRUITMENT

26

FACTORS AFFECTING RECRUITMENT

The recruitment function of the organisations is affected and governed by a mix of various internal and external forces. The internal forces or factors are the factors that can be controlled by the organisation. And the external factors are those factors which cannot be controlled by the organisation. The internal and external forces affecting recruitment function of an organisation are:

FACTORS AFFECTING RECRUITMENT

27

RECRUITMENT PROCESS
The recruitment and selection is the major function of the human resource department and recruitment process is the first step towards creating the competitive strength and the strategic advantage for the organisations. Recruitment process involves a systematic procedure from sourcing the candidates to arranging and conducting the interviews and requires many resources and time. A general recruitment process is as follows:

1. Identify vacancy 2. Prepare job description and person specification 3. Advertising the vacancy 4. Managing the response 5. Short-listing 6. Arrange interviews 7. Conducting interview and decision making

28

FINANCIAL CONSULTANT

Insurance agents
Insurance agents, who may be referred to as insurance sales agents, help clients choose insurance policies that suit their needs. Clients include individuals and families as well as businesses. Captive agents work for an insurance company, and only sell that company's products. Independent insurance agents, or brokers, represent several companies. Types of insurance include property and Casualty, life, health, disability, and long-term care insurance. Many insurance agents also sell mutual funds, variable annuities and other securities.

Nature of the work

Most people have their first contact with an insurance company through an insurance sales agent. These workers help individuals, families, and businesses select insurance policies that provide the best protection for their lives, health, and property. Insurance sales agents, commonly referred to as producers in the insurance industry, sell one or more types of insurance, such as property and casualty, life, health, disability, and long-term care. Property and casualty insurance agents sell policies that protect individuals and businesses from financial loss resulting from automobile accidents, fire, theft, storms, and other events that can damage property. For businesses, property and casualty insurance can also cover injured workers compensation, product liability claims, or medical malpractice claims. Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. Depending on the policyholders circumstances, a cash-value policy can be designed to provide retirement income, funds for the education of children, or other benefits as well. Life insurance agents also sell annuities that promise a retirement income. Health insurance agents sell health insurance policies that cover the costs of 29

medical care and loss of income due to illness or injury. They also may sell dental insurance and short-term and long-term-disability insurance policies. Agents may specialize in any one of these product areas, or function as generalists, providing multiple products to a single customer. An increasing number of insurance sales agents are offering comprehensive financial planning services to their clients. These services include retirement planning, estate planning, and assistance in setting up pension plans for businesses. As a result, many insurance agents are involved in cross-selling or total account development. Besides offering insurance, these agents may become licensed to sell mutual funds, variable annuities, and other securities. This practice is most common with life insurance agents who already sell annuities, but many property and casualty agents also sell financial products. Insurance sales agents also prepare reports, maintain records, and seek out new clients. In the event that policy holders experience a loss, agents help them settle their insurance claims. Increasingly, some agents are also offering their clients financial analysis or advice on how to minimize risk. Insurance sales agents working exclusively for one insurance company are referred to as captive agents. Independent insurance agents, or brokers, represent several companies and match insurance policies for their clients with the company that offers the best rate and coverage. Technology has greatly affected the insurance business, making it much more efficient and giving the agent the ability to take on more clients. Agents computers are now linked directly to insurance carriers via the Internet, making the tasks of obtaining price quotes and processing applications and service requests faster and easier. Computers also allow agents to be better informed about new products that the insurance carriers may be offering. Increasing competition in the insurance industry has spurred carriers and agents to find new ways to keep their clients satisfied. One solution is to increase the use of call centers, which usually are accessible to clients 24 hours a day, 7 days a week. Insurance carriers 30

and sales agents also are hiring customer service representatives to handle routine tasks such as answering questions, making changes in policies, processing claims, and selling more products to clients. The opportunity to cross-sell new products to clients will help agents businesses grow. The use of call centers also allows agents to concentrate their efforts on seeking out new clients and maintaining relationships with old ones.

Work environment.
Insurance sales agents working as captive agents are usually based in small offices, from which they contact clients and provide information on the policies they sell. Independent insurance agents, or brokers, may work in offices of varying sizes, depending on the size of the agency. However, much of their time may be spent outside their offices, traveling locally to meet with clients, close sales, or investigate claims. Agents usually determine their own hours of work and often schedule evening and weekend appointments for the convenience of clients. Some sales agents may meet with clients during business hours and then spend evenings doing paperwork and preparing presentations to prospective clients. Although most agents work a 40-hour week, some work 60 hours a week or longer.

Education and training.

For insurance sales agent jobs, many companies and independent agencies prefer to hire college graduatesespecially those who have majored in business or economics. High school graduates may be hired if they have proven sales ability or have been successful in other types of work. Agents learn many of their job duties on the job from other agents. Many employers have their new agents shadow an experienced agent for a period of time. This allows the agent to learn how to conduct their business, how the agency interacts with clients, and how to write policies. Employers also are placing greater emphasis on continuing professional education as the diversity of financial products sold by insurance agents increases. It is important for 31

insurance agents to keep up to date on issues concerning clients. Changes in tax laws, government benefits programs, and other State and Federal regulations can affect the insurance needs of clients and the way in which agents conduct business. Agents can enhance their selling skills and broaden their knowledge of insurance and other financial.

Licensure.
more Insurance sales agents must obtain a license in the States where they plan to work.

Separate licenses are required for agents to sell life and health insurance and property and casualty insurance. In most States, licenses are issued only to applicants who complete specified prelicensing courses and who pass State examinations covering insurance fundamentals and State insurance laws. The insurance industry is increasingly moving toward uniform State licensing standards and reciprocal licensing, allowing agents who earn a license in one State to become licensed in other States more easily. Most State licensing authorities also have mandatory continuing education requirements focusing on insurance laws, consumer protection, ethics, and the technical details of various insurance policies.

Job prospects.
Multilingual agents should have good job prospects because they can serve a wider range of customers. Additionally, insurance language tends to be quite technical, so agents who have a firm understanding of relevant technical and legal terms will also be desirable to employers. Many beginning agents fail to earn enough from commissions to meet their income goals and eventually transfer to other careers. Many job openings are likely to result from the need to replace agents who leave the occupation or retire, as a large number of agents are expected to retire over the next decade. Agents may face increased competition from traditional securities brokers and bankers as they begin to sell insurance policies. Insurance sales agents will need to expand the products and services they offer as consolidation increases among insurance companies, banks, and brokerage firms and as demands increase from clients for comprehensive financial planning.

32

Recruitment process of insurance agent in HDFC standard life insurance

Recruitment process Under the regulation of Insurance Agents Regulatory Act 2000, any person desirous of obtaining an agent''s licence shall have to pass the pre-recruitment examination in life or general insurance business conducted by an examination body duly recognised by the Insurance Regulatory and Development Authority (IRDA).

Step 1: Information gathering/contacts\

Step 2: Evaluation of required qualification

Step 3: Training

Step 4: Irda exam for license procurement.

Information gathering
Gathering data through contacts and many other sources to explore people who will be interested in becoming a financial consultant.

Evaluation of required qualification

Employers prefer to hire insurance agents who have college degrees, particularly in business or economics. They might consider hiring a high school graduate who has proven sales ability. Insurance sales agents should be flexible, enthusiastic, confident, disciplined, hard working, and willing to solve problems. They should communicate effectively and 33

inspire customer confidence. Because they usually work without supervision, sales agents must be able to plan their time well and have the initiative to locate new clients.

TRAINING
Agents can enhance their selling skills and broaden their knowledge of insurance and other financial services by taking training at colleges and universities and by attending institutes, conferences, and seminars sponsored by insurance organizations.

IRDA EXAM FOR LICENSE PROCUREMENT

Every state requires insurance agents to be licensed. They are required to obtain separate licenses to sell life and health insurance or property and casualty insurance. In most states, sales agents, in order to become licensed, must complete pre-licensing courses and pass state examinations.

Be our Certified Financial Consultant

Name:

Sex

Address :

State :

34

Branch:

(Select the place nearest to you)

Email :

Telephone :

Age :

Educational Qualifications :

Do you hold a licence to act as an insurance Agent for Life/ General/Composite Insurance? Yes NO

If 'YES' : Licence No :

Do you hold a Life and/or General Insurance Agency

If 'YES' :Name Of General Insurer :

If 'YES' :Name Of Life Insurer :

IRDA Regulations for becoming an agent : The three pre-requisites laid down by IRDA to qualify as an agent under 35 the licensing regulations are:

Educational Qualification: Possess a minimum educational qualification of 12th standard or equivalent (if population >5000) and 10th standard or equivalent (if population < 5000).

Practical Training: Complete one hundred hours (100) of practical training in life insurance business.

Pre-recruitment Test: Pass the pre-recruitment test, based on an examination conducted by the Insurance Institute of India or another approved body.

The regulations also mention a 'Tied Agency System' wherein an agent can represent only one life insurer or one general insurer or both, at a time. A person having both agencies, life and non-life shall be known as a 'Composite Agent'.

DUTIES,POWER AND FUNCTIONS OF IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..

(1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include

(3) a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.

36

b)protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of

insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.

a) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents.

b) specifying the code of conduct for surveyors and loss assessors c) promoting efficiency in the conduct of insurance business. d) promoting and regulating professional organisations connected with the insurance and re-insurance business. e) levying fees and other charges for carrying out the purposes of this Act; f) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business. g) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938). h) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. i) regulating investment of funds by insurance companies.

37

j)

regulating maintenance of margin of solvency.

adjudication of disputes

between insurers and intermediaries or insurance intermediaries. k) supervising the functioning of the Tariff Advisory Committee. l) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause(f). m) specifying the percentage of life insurance business and general insurance business to n) be undertaken by the insurer in the rural or social sector.

exercising such other powers as may be prescribed

38

RESEARCH METHODOLOGY

Research is defined as a scientific and systematic search for pertinent information on a specific topic. The function of a marketing research is to provide information, which assist marketer in recognizing and reacting to marketing oppurtunities and problems. In essence, researchers mix managers to take the better decision.

TITLE
Recruitment of financial consultant

TITLE JUSTIFICATION

Recruitment is the process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applications from which new employees are selected. Insurance agents, who may be referred to as insurance sales agents, help clients choose insurance policies that suit their needs. Clients include individuals and families as well as businesses. Captive agents work for an insurance company, and only sell that company's products. Independent insurance agents, or brokers, represent several companies. Types of insurance include property and Casualty, life, health, disability, and long-term care insurance. It is important to study whether people are interested in becoming a financial consultant. It should be kept in mind while recruiting that motivate people to become a financial consultant , whether it is salary package, job prospects etc according to which people are approached. People can be approached by various ways such as telecalling, personal contacts or any other sources.

39

Objective:
Recruitment of agents:
1. Collection of data 2. Making phone calls 3. Taking of appointments 4. Making the customer understand about the importance of insurance and the benefits of becoming a financial consultant. 5. Providing awareness of the procedure and collection of documents.

Significance of the study

A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure.

RESEARCH DESIGN
A marketing research design maybe described as a series of advance decisions that when taken together comprises a master plan or model for the conduct of the investigation. A marketing research design comprises of three types of research design. They are:

4 5 6

Exploratory Research Descriptive Research Experimentation

Exploratory Research seeks to discover new relationships. It takes insights into the phenomenon or develops understanding. It looks for hypothesis. It works when the 40

problem is not clear or vague or much less general. It aims at pruning down the alternatives.

Descriptive Research aims at producing accurate description of variable relevant to decision making being faced without establishing the cause-effect relationship that exist between the variable.

Experimentation is a research process where the researcher manipulates one or more variable under the permitted conditions with an aim of aim data collection thereby exhibiting cause-effect relationship.

METHODOLOGY
Data can be classified under the two main categories, depending upon the sourcres used for the collection purpose, i.e, Primary data. The validity and accuracy of final judgement is most crucial and depends heavily upon how well the data is gathered in the first place. The methodology adopted for data gathering also affects the conclusion drawn there from.

Primary data: Primary data those data, which are collected by the investigator himself for the purpose of a specific enquiry or study. Such data are original in character and are generated by surveys conducted by individuals or research institutions. Thus and are generated by surveys conducted by individuals of research institutions. Thus we say that is being collected for the first is called primary data. Methods thats can be used for collection of primary data are as follows:

Primary data: Primary data are those data, which are collected by the investigator
himself for the purpose of a specific enquiry or study. Such data are original in character and are generated by surveys conducted by individuals or research institutions. Thus we

41

can say that the data that is being collected for the first time is called primary data. These are: 1.Direct personal observation 2.Telephone survey 3.Indirect personal interview 4.Questionnaire method

Secondary data: When a person uses data, which has already been collected by
someone else, then such data is known as secondary data. Secondary data should be used with extra caution since someone else has collected it for his/her use. Before using such data the investigator must be satisfied with regard to the reliability, accuracy, adequacy and suitability of the data to the given problem under investigation. Methods that can be used for collection of secondary data are as follows: Newspapers and Magazines like Economic Times, Insurance Times etc. Internet

Both Primary data collection methods and Secondary data collection methods have various advantages as well as limitations. Thus it would be prudent to use both these methods to ones advantage.

SAMPLING METHODOLOGY

Sampling Unit

: Individuals

Sampling technique :

Convenient and Judgmental sampling

Sampling area

South Delhi

Sample Size

100
42

LIMITATION OF THE STUDY

The study could not be made that comprehensive due to time constraints. Some customers feel uncomfortable to reveal some personal information relating to income etc. It might have happened that some more essential information could have been collected.

1. Time constraints: Due to time limitation sample was chosen according to convenience. The numbers of respondents were restricted to hundred only as more number of respondent means more time.

2. Biases and non-cooperation of the respondents: There is probability that the respondents didnt give true answers due to different reasons. There may also be a probability that they gave wrong information.

3. Financial constraint: Research work would have been more valuable if it would have covered all the consumers in their respective areas. But due to cost limitation this was not possible.

4. Geographical selectivity in research limiting to Delhi city only.

5. People are not interested in giving personal opinion.

43

FACTS AND FINDINGS

Q1. Do you have adequate knowledge about insurance?

a. Yes b. .No

Reponses
Yes No

No of respondents
46 54

Q2 Have you ever been approached for becoming a financial consultant?

a. Yes b. No

Reponses
Yes No

No of respondents
57 43

44

Q3 If yes , how have you been approached for becoming a financial

consultant?

a. By telecalling b. By existing financial consultant c. By personal contacts d. Others

Reponses
By telecalling By existing financial consultant By personal contacts Others

No of respondents 25 29 34 12

Q4 Are you interested in becoming a financial consultant?

a. Yes b. No

Reponses
Yes No

No of respondents
46 54

45

Q5 What motivates you to become a financial consultant?

a. Salary package b. Reputation of HDFC c. Job prospects d. Working environment

Reponses
Salary package Reputation of HDFC Job prospects Working environment

No of respondents
32 24 32 12

Q6 What are your expectations from HDFC? ( rank them according to the order of preference)
a. Good package b. Cooperative colleagues c. Good working environment d. Career growth opportunity e. Working hours

Reponses
Good package Cooperative colleagues Good working environment Career growth opportunity Working hours 46

No of respondents
22 11 21 32 14

Q7. What extra incentives do you expect from HDFC?

a. Regular bonus b. Trips and picnics c. Promotions d. Gift vouchers

Reponses
Regular bonus Trips and picnics Promotions Gift vouchers

No of respondents
28 18 32 22

Q8 What is the duration you wish to be employed in HDFC for?

a. 0 1 year b. 1 3 year c. 3 5 year d. Above 5 year

Reponses
0 1 year 1 3 year 3 5 year Above 5 year

No of respondents
25 32 23 20

47

DATA ANALYSIS AND INTERPRETATION

Q1. Do you have adequate knowledge about insurance?

a. Yes b. .No

no of respondents

46% 54% yes no

Interpretation
After the survey I found that 54% of respondents dont have adequate knowledge about insurance and 46% percent have.

48

Q2 Have you ever been approached for becoming a financial consultant?

a. Yes b. No

No of respondents

43% 57% YES NO

Interpretation
After the survey I found that 57% of respondents have been approached for becoming a financial consultant and 43% are not.

49

Q3 If yes , how have you been approached for becoming a financial consultant?

a. By telecalling b. By existing financial consultant c. By personal contacts d. Others

No of respondents
12% By telecalling By existing fiancial consultant 29% By personal contacts Others

25%

34%

Interpretation
After the survey I found that highest percent of people are approached through personal contacts.

50

Q4 Are you interested in becoming a financial consultant?

a. Yes b. No

No of respondents

46% 54% yes no

Interpretation
After the survey I found that 46% are interested in becoming financial consultant and 54% are not.

51

Q5 What motivates you to become a financial consultant?

a. Salary package b. Reputation of HDFC c. Job prospects d. Working environment

No of respondents No of respondents
12%

32% Salary package Reputation of HDFC 24% Job prospects Working environment

32%

Interpretation

After the survey I found that salary package and job prospects are the highest motivator to people for becoming a financial consultant.

52

Q6 What are your expectations from HDFC? ( rank them according to the order of preference)
a. Good package b. Cooperative colleagues c. Good working environment d. Career growth opportunity e. Working hours

No of respondents
good package 14% 22% 11% 21% cooperative colleagues good working environment career growth opportunity working hours

32%

Interpretation
After the survey I found that 32% of people expects career growth opportunity,22% good package, 21% good working environment,14% working hours and 11% cooperative colleagues.

53

Q7. What extra incentives do you expect from HDFC?

a. Regular bonus b. Trips and picnics c. Promotions d. Gift vouchers

No of respondents
22%

28% Regular bonus Trips and picnics

32%

18%

Promotions Gift vouchers

Interpretation
After the survey I found that highest percent of people expects promotions from HDFC and lowest is gift vouchers.

54

Q8 What is the duration you wish to be employed in HDFC for?

a. 0 1 year b. 1 3 year c. 3 5 year d. Above 5 year

No of respondents
20%

25% 0 - 1 year 1 - 3 year 32% 3 - 5 year Above 5 years

23%

Interpretation
After the survey I found that Highest percent of people like to be in HDFC for 1 to 3 year span of time.

55

RECOMMENDATIONS

1. HDFC Standard Life is having large number of channel partners but is not supporting & taking care of all of them equally which results in increasing discontent among new channel partners. Company should take some positive action against it.

2. Company executives should visit customers on regular basis.

3. They should pay proper attention towards checking of various components of insurance before end user delivery, otherwise it tend towards defaming of brand name in comparison to rivals.

4. Need to expand customer care centers as customer base of HDFC Standard Life is increasing with tremendous updraft.

5. Proper attention should be paid for advertisement planning otherwise it may lead to problem for customer as well as for company

6. Company should come up with some event management company to organize various promotional activities like carnivals, etc

56

CONCLUSION

After making an in depth study about the HDFC Standard Life insurance have come to the conclusion that there has been tremendous changes in the Insurance History. The opening up of Insurance sector has changed the whole look of Insurance Industry. Salary package and job prospects are the highest motivator for becoming a financial consultant. Highest percent of people like to be in HDFC for 1 to 3 year span of time. HDFC Standard Life Insurance Company continues to have one of the widest reaches among new insurance companies. The company doubled the number of offices to 104 across the country.

57

BIBLIOGRAPHY

Books
Insurance management by Karam Pal, B.S Sodhi , M.C Garg . Human resource management by T.N Chabbra

Websites
www.yahoo.com www.google.com www.wikipedia.com www.hdfcslic.com

Brochures
HDFC Brochures

Newspapers

Economic Times

Hindustan Times

58

ANNEXURE
QUESTIONNAIRE Please tick the appropriate box

Name:

Age:

Designation:

Annual household income:

1. upto Rs 2 lakh 3. 5 lakh to 8 lakh

2. Rs 2 lakh to lakh 4. Above 8 lakh

Q1. Do you have adequate knowledge about insurance?

1. YES

2. NO

Q2. Have you ever been approached for becoming a financial consultant?

1. YES

2. NO 59

Q3 If yes ,how have you been approached?

1. By telecalling
2. By existing financial consultant

3 . By personal contacts

4 . Others

Q4.Are you interested in becoming a financial consultant?

1. YES
2. NO

Q5. What motivates you to become a financial consultant?

1. Salary package

2. Reputation of HDFC

3. Job prospects

4. Working environment

60

Q6.What are your expectations from HDFC? (rank them according to the order of preference).

1. Good package 2. Cooperative colleagues 3. Good working environment 4. Career growth opportunity 5. Working hours

Q7. What extra incentives do you expect from HDFC?

1. Regular bonus
2. Trips and picnics

3. Promotions

4.

Gift vouchers

61

Q8. What is the duration you wish to be employed in HDFC for?

1.0 1 year

2. 1 3 year 3.3 5 year

4.Above 5 year

62