Professional Documents
Culture Documents
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PREFACE
In its broadest sense summer training project report is necessary to make the
students of business school familiar with the industrial environment prevailing in
the world. To be competitive and work aggressive, students need to know the
policies, procedures and the trends going on in the present industrial world.
All organization face changes in their environment with resultant changes in their
markets and in the ability to satisfy their markets. Each organization is faced with
new marketing problems and opportunities in their existing and potential market.
Marketing decision makers cope with these challenges in a variety of ways. The
marketer’s is being required to forecast, forecast the risk and uncertainness in
their own way, supported by market research.
Man on earth can entirely eliminate knows no method but scientific method can
minimize the element of uncertainties that can result from lack of information
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without orientation. Market research is a process of collecting information about
who, why, and how of actual and potential consumers in a particular market. The
main purpose of market research is the ability to continually foresee both in the
long and short term. This report is the outcome of summer training report at MAX
NEW YORK LIFE INSURANCE COMPANY LTD.
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ACKNOWLEDGEMENT
At the onset I must bow down in reverence to the almighty that blessed us with the
understanding & prevalence that is needed in this kind of project report.
With great pleasure I express my heartiest thanks toDr. Meenu Gupta ( Director –
RATM,) Mr. Vikas Jain (PC – M.B.A. Deptt.). I would like to extend my sincere
thanks to Name of Report Guide [Lecturer – Deptt. of Management Studies],
without whose unrelated support and guidance, this project would just not have
been possible. I am very thankful for his invaluable guidance, support, and affable
& friendly nature. He/She guided me at each and every stage of project.
At last I would like to extend my sincere thanks to all the respondents to whom I
visited for giving their support and valuable information, which helps me in
completing my project work.
VINOD KUMAR
M.B.A. III Sem
Roll No0817370101
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STUDENT’S DECLARATION
I, VINOD KUMAR, hereby declare that this work entitled “Max New York
Life,Insurance” is the result of summer training under taken. The findings and
conclusions expressed in this report are genuine, authentic and are for academic
purpose. Any resemblance to earlier research work is purely coincidental.
VINOD KUMAR
M.B.A III Sem
Roll No. 0817370101
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CERTIFICATATE OF ORIGIN
This is to certify that Mr. VINOD KUMAR S\O SHRI GYANCHAND a student of
Master of Business Administration (2008-2010),RAJIV ACADEMY FOR
TECHNOLOGY & MANAGEMENT MATHURA has worked in the Max New York
Life Insurance Company Ltd., under the able guidance and supervision of
Mr.Shikhar, MANAGER SALES, Max New York Life and Mr. Jitender Kumar ,
Manager, Max New York Life.
The period for which he was on training was for 8 weeks, starting from 1 June of
July to 31.
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TO WHOMSOEVER IT MAY CONCERN
Date :
Place : Mathura Director
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TABLE OF CONTENTS
Preface………………………………………………………………………
… i
Acknowledgement……………………………………………… ii
Student’s Declaration……………..……………………………………
iii
Certificate …………………….………………………………………………
iv
8.0 Findings…………………………………………………………………….. 00
10.0 Conclusion…...…………………………………………………………… 00
10.1 Limitations of the Study……………………………………………..…… 00
10.2 Scope for further research………………………………………………. 00
Bibliography…………………………………………………………………...... i
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Appendix [Questionnaire]……………………………………………………... iii
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LIST OF TABLES
LIST OF CHARTS
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INTRODUCTION
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3.1 OBJECTIVE OF STUDY
To understand how to develop a channel of people who will work for selling
of products of company.
To understand the procedure of selection and recruitment of insurance
advisors/agents.
To find the suitable person for the recruitment as an insurance advisor.
To know about life insurance, its benefits and need.
To find out possible advantages of insurance advisors in MNYL.
INDUSTRIAL PROFILE
We live in a risky world. Forces, largely outside our control, that threaten our
financial well being, constantly surround us. Thus, every one among us will
experience different types of risks
Risk is defined as uncertainty concerning the occurrence of a loss. We measure
the presence or absence of risk by assigning probability values as p=1 or p=0.
Where there is no risk, probability of risk p=0 and vise versa.
Risk is a burden not only to the individual but to society as well. Thus, methods for
meeting the problem of risk are developed and insurance is one the method. Now
a question arises – what do you mean by insurance?
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INSURANCE
Insurance is a contract between two 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 protection against a financial loss arising on the happening of an
unexpected event. Insurance Companies collect premium to provide for this
protection. A loss is paid of this premium collected from the insuring public. The
insurance companies act as a trustee to the amount collected through premium.The
business of insurance is related to the protection of the economic value of assets. The
asset would have been created through the efforts of the owner, in the expectation
that, either through the income generated there from or some other output, some of
his needs would be met. However, if the asset gets lost earlier, being destroyed or
made non-functional, through an accident or other unfortunate event, the owner and
those deriving benefits there from suffer. Insurance is a mechanism that helps to
reduce such adverse consequence.The business of insurance done by insurance
companies (called insurers) is to bring together persons with common interests
(sharing the same risks) collecting the share or contribution (called premium) from all
of them, and paying out compensations (called claims) to those who suffer
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TYPE OF INSURANCE
Life insurance
Non-life insurance or General insurance
The IRDA Act, 1999 amending the Insurance Act, 1938 in Section 2 sub-section
7(a) state:
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b) Checking up and specifying the terms of acceptance called Understanding;
The history of life insurance in India dates back to 1818 when it was conceived as
a means to provide for English Widows. Interestingly in those days a higher
premium was charged for Indian lives than the non-Indian lives as Indian lives
were considered more risky for coverage.
The Bombay Mutual Life Insurance Society started its business in 1870. It was the
first company to charge same premium for both Indian and non-Indian lives. The
Oriental Assurance Company was established in 1880. The General insurance
business in India, on the other hand, can trace its roots to the Triton (Tital)
Insurance Company Limited, the first general insurance company established in
the year 1850 in Calcutta by the British. Till the end of nineteenth century
insurance business was almost entirely in the hands of overseas companies.
Insurance regulation formally began in India with the passing of the Life Insurance
Companies Act of 1912 and the provident fund Act of 1912. Several frauds during
20's and 30's sullied insurance business in India. By 1938 there were 176
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insurance companies. The first comprehensive legislation was introduced with the
Insurance Act of 1938 that provided strict State Control over insurance business.
The insurance business grew at a faster pace after independence. Indian
companies strengthened their hold on this business but despite the growth that
was witnessed, insurance remained an urban phenomenon. The Government of
India in 1956, brought together over 240 private life insurers and provident
societies under one nationalized monopoly corporation and Life Insurance
Corporation (LIC) was born. Nationalization was justified on the grounds that it
would create much needed funds for rapid industrialization. This was in conformity
with the Government's chosen path of State lead planning and development.
The (non-life) insurance business continued to thrive with the private sector till
1972. Their operations were restricted to organized trade and industry in large
cities. The general insurance industry was nationalized in 1972. With this, nearly
107 insurers were amalgamated and grouped into four companies- National
Insurance Company, New India Assurance Company, Oriental Insurance
Company and United India Insurance Company.
These were subsidiaries of the General Insurance Company (GIC).
Life insurance business in India was nationalized with effect from 1 st September,
1958. From this date, the life insurance business transacted by 154 Indian life
insurers, the Indian business of 16 foreign insurers and 75 provident societies was
taken over by Government of India Act, 1956, passed by the Parliament on 18-6-
56. The Life Insurance Corporation of India (LIC) which had been established
w.e.f. 19-5-1956 as a body corporate having perpetual succession and common
seal with power to acquire, hold and dispose property and to sue and be sued in
its name.Under Section 30 of the Act, from the appointment date i.e. 1-9-56, LIC
acquired the exclusive privilege of carrying on life insurance business in India and
the certificate of registration granted to any insurer under the Insurance Act, 1938
ceased to have effect from the said date.
Now the above, provision of section 30 have been altered by insertion of Section
30A consequent to the enactment of the IRDA Act, 1999. As a result the exclusive
privilege given to the LIC has been withdrawn.
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The Government of India liberalized the insurance sector in March 2000 with the
passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting
all entry restrictions for private players and allowing foreign players to enter the
market with some limits on direct foreign ownership. Under the current guidelines,
there is a 26 percent equity capital for foreign partners in an insurance company.
There is a proposal to increase this limit to 49 percent.
The opening up of the sector is likely to lead to greater spread and deepening of
insurance in India and this may also include restructuring and revitalizing of the
public sector companies. In the private sector 14 life insurance companies have
been registered. A host of private Insurance companies operating in both life and
non-life segments have started selling their insurance policies since 2001.
Reforms have marked the entry of the many of the global majors into the Indian
market in the forms of joint venture with Indian companies. Some of the key
names are OLD MUTUAL, AIG, NEWYORK LIFE, ALLIANZ, PRUDENTIAL,
STANDARD LIFE, SUN LIFE. The entry of new private players has rejuvenated
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the erstwhile monopoly player LIC, which has respondent to the competition in an
admirable fashion by launching new products and improving service standards.
There has been an overall expansion in the market. This has been possible due to
improved awareness levels thanks to the large number of advertising campaigns
launched by all the players. The scope of expansion is still unlimited as virtually all
the players are concentrating on large cities and towns-except by LIC to an extent
there was no significant attempt to tap the rural markets but the private companies
are also targeting the untapped rural market.
There has been a plethora of new and innovative products offered by the new
players, mainly from the stable of their international partners. Customers have
tremendous choice from a large variety of products from pure term (risk) insurance
to unit-linked investment products. Customers are offered unbundled products with
a variety of benefits as riders from which they can choose. More customers are
buying products and services based on the true needs and not just traditional
money-back policies, which is not considered very appropriate for long-term
protection and savings. However, there are still some key new products yet to be
introduced.
CUSTOMER SERVICE:
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Not unexpectedly, this was one area that witnessed the most significant change
with the entry of new players. There is an attempt to bring in international best
practice in service and operational efficiency through use of latest technologies.
CHANNELS OF DISTRIBUTION:
Till two years back, the only mode of distribution of life insurance products was
through Agents. While agents continue to be the predominant distribution channel,
today a number of innovative alternative channels are being offered to consumers.
Some of them are banc assurance, brokers, Internet and direct marketing. Though
it is too early to predict, the wide spread of bank branch network in India could
lead to banc assurance emerging as a significant distribution mechanism.
If any one analyses the history of the growth of insurance since reforms, it is
marked by all- round growth of all players. More or less all players (including the
market leader LIC) have aggressively recruited and trained advisors, appointed
agents, launched new products, improved customer service standards and
revamped/expanded their distribution networks. If at all there are major difference
between players it was only in time lag in launching of service. Every player will
like the customers to believe that its service standards are the best or that its
agents are the most informed and ethical, but it is debatable whether there are any
significant differences. In other words, each company is trying to be “everything to
everybody”.
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Our argument is that the strategy of being everything to everybody is risky. Some
players justify the above strategy on the basis that the Indian market is huge and it
can accommodate everybody. Still, in a market where it is difficult to distinguish
one self sufficiently on services or on any other parameter to be able to change a
premium, it will lead to unmitigated price competition to the detriment of all players.
One may achieve sales turnover, but margins and profitability will suffer severely.
In the insurance industry where large amounts of capital are required, this is risky.
While there is room for a few scale players with a finger in every pie, it is profitable
for other players to focus on different segments to survive and thrive in a multi-firm
open environment. While each company has to choose its own unique positioning
on its unique strengths, the below-mentioned generic positioning alternatives
appear worth considering. Needless to say the positioning choices discussed here
are not mutually exclusive and can be overlapping.
STRATEGIC ALTERNATIVES
If any one analyses the history of the growth of insurance since reforms, it is
marked by all- round growth of all players. More or less all players (including the
market leader LIC) have aggressively recruited and trained advisors, appointed
agents, launched new products, improved customer service standards and
revamped/expanded their distribution networks. If at all there are major difference
between players it was only in time lag in launching of service. Every player will
like the customers to believe that its service standards are the best or that its
agents are the most informed and ethical, but it is debatable whether there are any
significant differences. In other words, each company is trying to be “everything to
everybody”.
Our argument is that the strategy of being everything to everybody is risky. Some
players justify the above strategy on the basis that the Indian market is huge and it
can accommodate everybody. Still, in a market where it is difficult to distinguish
one self sufficiently on services or on any other parameter to be able to change a
premium, it will lead to unmitigated price competition to the detriment of all players.
One may achieve sales turnover, but margins and profitability will suffer severely.
In the insurance industry where large amounts of capital are required, this is risky.
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While there is room for a few scale players with a finger in every pie, it is profitable
for other players to focus on different segments to survive and thrive in a multi-firm
open environment. While each company has to choose its own unique positioning
on its unique strengths, the below-mentioned generic positioning alternatives
appear worth considering. Needless to say the positioning choices discussed here
are not mutually exclusive and can be overlapping.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services rather than
customer segments. It is a sensible strategy for those companies who have
distinctive advantages or strengths in offering certain products and services. In the
insurance industry too, it is possible to achieve a unique position by focusing on
certain category of products. Through its superior fund management capabilities,
the insurance company can deliver better returns in investment-linked products
and thereby carve for itself a leadership position in this segment.
Then there is the entire category of pension products, which is widely touted to
have immense growth potential in India due to imminent pension reforms. It is
possible to achieve a profitable positioning by focusing and excelling in only
pension products
NEED-BASED POSITIONING
This is the most commonly understood positioning and is based on the differing
needs of different groups of consumers. This can be done successfully if a
company has a unique strength to serve a group of customer needs than others.
The insurance needs of customers vary significantly for different groups of
customers. The insurance needs of young family with small children will be quite
different from that of a family in which the income-earner is close to retirement.
However, in India most of the life insurance companies have a wide variety of
products tailored for different customer needs and there is no company focusing
on a particular customer need. An example would be a life insurance company
that focuses only on High Net-worth Individuals (HNIs). The needs of HNIs would
be quite different from those of general consumer and would require an entirely
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different mix right from the type of products offered and the way they are
distributed, to the promotion methods emplo
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is
different group of customers may be accessible in different ways even through
they may have similar needs. Access is typically a function of customer geography
or customer scale. There is excellent opportunity in the insurance industry to
employ access-based
positioning by targeting the rural insurance sector. The rural market for life
insurance is very different from the urban sector in term of needs, income level
and distribution, penetration of media and so on. Contrary to common perception it
is a big opportunity as emphasized repeatedly by such eminent strategists like
C.K.Prahlad. Rural market can be highly profitable position if one is able to
carefully plan and tailor an entire set of low-cost activities of advertising,
distribution and product design etc. to successfully exploit the potential.
NEED FOR LIFE INSURANCE
As life insurance became more established, it was realized what a useful tool it
was for a number of situations, including –
a) Temporary needs/ threat
The original purpose of life insurance remains an important element, namely
providing for replacement of income on death etc. Typically the case of the
breadwinner dying an early death.
b) Regular Saving
Providing for ones family and oneself, as a medium to long-term exercise (through
a series of regular payment of premiums). This has become more relevant in
recent times as people seek financial independence from their family.
c) Investment
Put simply, the building up of savings while safeguarding it from the
ravages of inflation. Unlike regular saving products, investment products are
traditionally lump sum investment, where the individual makes a one-time
payment.
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d) Retirement
Provision for one’s own later years becomes increasingly necessary,
especially in a changing cultural and social environment. One can buy a suitable
insurance policy, which will provide periodical payments in one’s old age.
Generally identified as the problem of living too long.
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(4) IT HELPS TO ACHIEVE THE PURPOSE OF THE LIFE ASSURED
If someone receives a large sum of money, it is possible that they may
spend the money unwisely or in a speculative way. To overcome this, the
person taking the policy can instruct the insurer that the claim amount is
given in installments.
(5) IT CAN BE ENCASHED AND FACILITATES QUICK BORROWING:
Some contracts may allow the policy to be surrendered for a cash amount,
if a policyholder is not in a position to pay the premium. A loan, from certain
policies, can be taken for a temporary period to tide over the difficult. Some
lending institutions will accept a life insurance policy as collateral for a
personal or commercial loan.
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LIFE INSURANCE PRODUCTS
1. TERM INSURANCE
Such a policy plan cover per a specified period or term only, and may also be
describe as temporary insurance .the policy benefit is only payable if:
a. The insured person died during the specified period, or term; and time
b. The policy is valid (in force) at the time of death
This form of cover us an exception to the general rule that a life insurance always
results in a claim. Indeed, in the great maturity of the cases, term insurance runs
their course without a claim. For this reason, it is the cheapest form of cover
available (but, of course, it limitation must be understood)
In theory, the term could be for any period of time, even a few hours to cover an
aircraft flight, for example. In practice it is rare to find a term insurance for a period
of less then one year. A term insurance policy is therefore a pure risk cover for a
specified period of time. This means the sum assured is payable only is the policy
holder dies with the policy term for instance, if a person buys Rs. 2 lacks policy for
fifteen year, his family is entitled to the money if he dies within the fifteen year
period.
This policy plan is perhaps the most popular term insurance. It involves a level
(unchanging) premium and benefit through out the policy period. In the event of
death during the terms, the sum assured of the policy is payable. If the term is for
more than one year, the renewal premium is the same each year.
Popular largely because of its simplicity, this is as useful answer to all temporary
need which neither increases nor decreases to any significant extent over the
period of tine involved (perhaps a loan which is not being repaid by installments).
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RENEWABLE/CONVERTIBLE TERM INSURANCE
RENEWABLE TERM INSURANCE: The key point in this type of term insurance is
that the right to renew the policy without submitting fresh evidence of insurability
(health) and the premium for the further period is increase to reflect the increase
age of the life insured. (The new premium is based on the attained age)
As there is no under writing when the plans is renewed, the risk to the insurer will
increase as and when policies are renewed. Because of this, most insurers apply
certain limitations on the policy, such as
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TERM ASSURANCE WITH RETURN OF PREMIUMS
Under term assurance plan, um assured is payable in the event of death of the life
assured during the selected term and the premiums collected are not refunded.
However, a variation of this plan can be devised by refunding all the premiums
collected if the life assured survives the term.
2. ENDOWMENT POLICY
benefits The most popular plan of life insurance, which is a very fine combination
of term assurance and endowment in equal amounts, is the endowment policy. An
endowment plans provide for the payment of the sum assured at the end of a
specified term or earlier death. Should the insured person survive the term, the
policy is said to mature. Thus, a claim may arise under such a plan either by death
or by maturity. A pure endowment is policy is therefore a form of financial saving,
whereby the person covered remains alive beyond the tenure of the policy, he gets
back the sum assured with some other investments
In addition to the basic policy, insurers offer various benefits such as double
endowment and marriage\education endowment plans. The cost of such policy is
slightly higher but worth its value.
Double endowment plans provide for double the sum assured, on survival and an
amount equal to sum assured on death.
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MONEY BACK PLAN:
It is a combination of whole life and endowment type plans. Money back plans are
of special interest to proposers who want periodical payments in which a
percentage of sum assured is paid to the life assured as a survival benefit on
surviving 5yrs, 10yrs, 15yrs or 20yrs depending on the term initially chosen. In the
event of death, within the term full sum assured is paid without deducting survival
benefit already paid. However no loans are granted under this plan. The money
back plan is a typical example of an interest sensitive product where a lump sum is
paid periodically without affecting the amount of insurance cover.
The premiums under this plan are payable from the date of commencement to
death of the date of the life assured, and the sum assured is payable by the
insurer on death. There are, however, minor variation of this product where
insurers accept premiums only upto the age of 80 to 85
And in certain other cases the premiums are payable for a selected terms (limited
payment whole life policy)
This is basically Whole Life Policy with limited period of payment of premiums. The
policyholder has a option to convert the into an endowment assurance generally
on expiry of five years. It is useful to a person:
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ANNUITIES
Annuities start where life insurance ends. It is called the reverse of life insurance.
In annuity contracts, a person agrees to pay to the insurer a specified capital
amount in lump sum or in installments in returns for a promise from the insurer to
make a series of payment to him so long as he lives. Theoretically, under a life
insurance contract, the insurer starts paying upon the death of the insured and
under an annuity contract, the insurer stops paying upon death of the annuitant.
In actual practice however, there are many variation of the annuity contribution.
The risk that is sought to be covered under annuity contracts is of living too long.
Annuity fall into three category- Immediate Annuity, Annuity Due and Deferred
Annuity:
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4. UNIT LINKED PLAN
Unit Linked Plans are fundamentally different from with or without profit plans.
The value of the plans (the amount paid on death or maturity) is directly link
with the value of the fund. A unit could be define as a function of the fund,
which the unit holder joints. It has face value, say Rs. 10 per unit.
Max New York Life offers a range of innovative, customer-centric products that
meet the needs of customers at every life stage. Its 27 products can be enhanced
with up to 6 riders, to create a customized solution for each policyholder.
SAVINGS SOLUTIONS
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• LIFELINK II is a single premium Market Linked Insurance Plan which
combines life insurance cover with the opportunity to stay invested in the
stock market.
• PREMIER LIFE is a limited premium paying plan that offers customers life
insurance cover till the age of 75.
• PROTECTION SOLUTIONS
• LIFEGUARD is a protection plan, which offers life cover at very low cost. It
is available in three options.
© Single premium.
CHILD PLANS
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RETIREMENT SOLUTIONS
Max New York Life also offers Group Insurance Solutions for companies seeking
to enhance benefits to their employees.
• MAX NEW YORK LIFE GRATUITY PLAN: Max New York Life gratuity plan
helps employers fund their statutory gratuity obligation in a scientific
manner. The plan can also be customized to structure schemes that can
provide benefits beyond the statutory obligations.
• MAX NEW YORK LIFE SUPERANNUATION PLAN: Max New York Life
offers a flexible defined contribution superannuation scheme to provide a
retirement kitty
for each member of the group. Employees have the option of choosing from
various annuity options or opting for a partial commutation of the annuity at the
time of retirement.
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• MAX NEW YORK LIFE TERM PLAN: Max New York Life flexible group
term solution helps provide affordable cover to members of a group. The
cover could be uniform or based on designation/rank or a multiple of salary.
The benefit under the policy is paid to the beneficiary nominated by the
member on his/her death.
Max New York Life offers flexible riders, which can be added to the basic policy at
a marginal cost, depending on the specific needs of the customer.
• ACCIDENT BENEFIT: This rider option pays the sum assured under the
rider on death due to accident.
• INCOME BENEFIT: This rider pays the 10% of the sum assured to the
nominee every year, till maturity, in the event of the death of the life
assured. It is available on SmarKid, SecurePlus and CashPlus
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ROLE OF INSURANCE IN DEVELOPMENT OF THE ECONOMY
Every rupee invested in life insurance contributes in three ways to the
development of the economy.
Firstly, it relieves those insuring from the worry and anxiety they may have about
how they or their family would meet the cost of certain events, such as the
marriage of the children, the premature death of the main income provider or
maintaining a regular income in their retirement. If an individual is free from these
worries he can perform better in his job.
i. Secondly, it directs people’s savings. The insurer invests these funds in
various business enterprises, government bonds, loans to public and private
projects including infrastructure and socially orientated projects. Thus the
insurance premium provides the much needed funds for the development of
the nation’s economy
ii. Thirdly, these savings act as an anti inflationary force in the nation’s financial
structure. Inflation happens when prices of good go up. One of the causes is
when a lot of buying takes place, due to the spending of a major portion of
income by people. Savings in insurance reduce buying, as people will have
less money to spend.
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BACKGROUND
A faster development and wider impact of the insurance industry were to be
achieved through a process of insurance reforms resulting in the liberalization of
the market and in the passage of the Insurance Regulatory and Development
Authority (IRDA) Act, 1999. The reforms procedures recognized simultaneously
the need for development of the sector in addition to the traditional concept of
regulation and thus conferred on the Authority the obligation to develop the sector
as well.
MISSION STATEMENT
THE IRDA MAIN MISSION WAS STATED AS FOLLOWS:
To protect the interest of and secure fair treatment to policyholders:
• To bring about speedy and orderly growth of the insurance industry, for the
benefit of the common man, and to provide long terms funds for accelerating
growth of the economy;
• To set, promote, monitor and enforce high standards of integrity, financial
soundness, fair dealing and competence of those it regulates:
• To ensure that insurance customers receive precise, clear and correct
information about products and services and make them aware of their
responsibilities and duties in this regard;
• To ensure speedy settlement of genuine claims, to prevent insurance frauds
and other malpractices and put in place effective grievances redressal
machinery;
• To promote fairness, transparency and orderly conduct in financial markets
dealing with insurance and build a reliable management information system to
enforce high standards of financial soundness amongst market players;
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Subject to the provisions of IRDA Act (1990), IRDA will: regulate, promote and
ensure orderly growth of the insurance business and re-insurance business, which
will include the following main functions (excerpts):
Issue to the applicant a certificate of registration, renew, modify, withdraw,
suspend or cancel such registration;
• Protection of the interest of the policy holders in matters concerning
assigning off policy, nomination by policy holders, insurable interest,
settlement of insurance claim, surrender value of policy and others terms
and conditions of contracts of insurance;
• Specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents.
• Promoting and regulation professional organizations connected with the
insurance and re-insurance business;
• rLevying fees and other charges for carrying out the purposes of the Act;
• Calling for information from, undertaking inspection of, conducting enquiries
and investigations including audit of the insurers, intermediaries, insurance
intermediaries and other organizations connected with the insurance
business;
• Specifying the percentage of life insurance and general insurance business
to be undertaken by the insurer in the rural or social secto.
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• It is a technical product that has a lot of legal jargon and with numerous
legal principles peculiar to it making it difficult to comprehend.
• It is a contingent financial promise made by the security provider and its
benefit can be realized only after fulfilling a number of stipulations, often,
unexplained at the time of commencement of contract.
• It is a product or service that has to be resold annually to the same buyer
and hence personal relationship and mutual trust are essential.
• As with all service products it has limitations, whose import is highlighted
only after the event. The fine print in the policy assumes a big role in the
event of a claim.
• Both the contractual parties have passive roles unless an unfortunate claim
event of a claim.
• There is no emotional or psychological satisfaction in the purchase of
insurance. It is a sense of relief.
• Since claim amounts vary substantially both the contractual parties are
wary of each other’s interest , motives and actions.
• Experience of each customer is highly individualized with no standards to
judge the performance and reputation of an insurer.
• Moral hazard on either side plays an important role in claim negotiation
• Product innovations to keep abreast of changes in technology, political,
economic, and social spheres provide a far wider market.
In other trades and business , unlike in insurance, the benefits of purchase
are immediately realized and often the products are tangible and sensoraly
experienced.
IMPACT OF LIBERALIZATION
The introduction of private players in the industry has added to the colors in the
dull industry. The initiatives taken by the private players are very competitive and
have given immense competition to the on time monopoly of the market LIC. Since
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the advent of the private players in the market the industry has seen new and
innovative steps taken by the players in this sector. The new players have
improved the service quality of the insurance. As a result LIC down the years have
seen the declining phase in its career.
The life insurance industry grew by 52 per cent year-on-year till February as top
three players Life Insurance Corporation, ICICI Prudential and Bajaj Allianz
continued with their robust performance in premium income reported Economic
Times. (10-04-06)
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The debut of Sriram Life saw the number of players going up to 15, who together
collected Rs 26,286 crore in premium in the first 11-months of 2005-06, according
to data compiled by Insurance Regulatory and Development Authority.
LIC continued with its recent high growth rate of over 40 per cent to mop up Rs
18,834 crore in first year premium by selling 2.09 crore policies in April-February of
last fiscal. Though, country's largest life insurer LIC was expanding business
handsomely, its market share fell slightly to 71.65 per cent from 72.2 per cent a
month back as most of the private players are going at a faster rate.
In the private space competition has further intensified after entry of Chennai-
based Sriram Life, which collected Rs 18.76 lakh premium in its first month of
operation. The 14 private players increased their market share to 28.35 per cent
from 27.8 per cent a month ago by collecting Rs 7,451 crore in premium till
February. ICICI Prudential regained its number one position among private
insurers by logging 69 per cent growth to collect Rs 1,956 crore in premium and a
market pie of 7.44 per cent.
Bajaj Allianz Life Insurance was close behind ICICI Prudential, by clocking 292 per
cent growth in business at Rs 1,940 crore and a market share of 7.38 per cent.
HDFC Standard collected Rs 778 crore in premium income, followed by SBI Life
(Rs 512 crore), Birla Sunlife (Rs 478 crore), Tata AIG (Rs 405 crore), Max New
York Life (363 crore), Aviva (Rs 309 crore). Kotak Mahindra Old Mutual collected
Rs 234 crore, ING Vysya Rs 200 crore, Reliance Life Rs 150 crore, Met Life Rs
107 crore and Sahara Life Rs 15 crore.
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CHARACTERISTICS AND COMPOSITION- MAJOR PLAYERS
MARKET
The traditional Market- Life Insurance Corporation of India Ltd (LIC)Life Insurance
Corporation of India (LIC) was formed in September, 1956 by an Act ofParliament,
viz., Life Insurance Corporation Act, 1956, with capital contribution from
theGovernment of India. The then Finance Minister, Shri C.D. Deshmukh, while
piloting thebill, outlined the objectives of LIC thus: to conduct the business with the
utmost economy, in a spirit of trusteeship; to charge premium no higher than to
policy holders, thereby making insurance widely popular. Apart from the above
mentioned factors there was a different reason warranted by strict actuarial
considerations; to invest the funds for obtaining maximum yield for the policy
holders consistent with safety of the capital; to render prompt and efficient service
to form the LIC of India. Prior to its formation, there were around 245 life insurance
companies flourishing in India, each with its own work culture and policies. Often
there were complaints from the investors of fraud and non compliance of the
claims. In order to provide a uniform level of services, the government of India
formed the LIC. Since nationalisation, LIC has built up a vast network of 2,048
branches, 100 divisions and 7 zonal offices spread over the country. The Life
Insurance Corporation of India also transacts business abroad and has offices in
Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in
the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi;
United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance
Corporation (International) E.C. Bahrain. The Corporation has registered a joint
venture company in 26th December, 2000 in Kathmandu, Nepal by the name of
Life Insurance Corporation (Nepal) Limited in
collaboration with Vishal Group Limited, a local industrial Group. An off-shore
company
L.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the African
insurance market. The highest growth in premiums in the recent years has been in
the liability, personal accident, health and aviation segments.
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POTENTIAL
There is a vast untapped potential for providing insurance cover in the housing
sector. The insurance penetration in India has measured by the ratio of premium
paid.Our GDPhas gone up from 2.71% in 2001 to 2.88% in 2003 whereas the
global average was7.83% and 8.06% respectively. In developed countries like the
United States thepenetration rate was as high as 9.61% and in Japan 10.81%.
The penetration of life insurance in India was 2.26% in 2003 against the global
averageof 4.59% and the 8.61% level attained in Japan and the 4.38% achieved in
the UnitedStates.
The non-life insurance penetration in India was only 0.62% in 2003 while it
averaged3.48 % globally. It was 2.20% in Japan and 5.23 % in the United States.
Similarly the insurance density -- ratio of premium paid to total population -- was
only16.4% in India while the global average was 496.6%. In Japan, insurance
density was 3770.9% and in the United States 3637.7%.
MERGERS AND ACQUISITIONS
This is an era of mergers and acquisitions. Private companies including MNC’s
areamalgamating the world over to get more competitive edge. Currently, the
generalinsurance industry has been opened up. The question here is that for over
two years, eight private companies have operated and has the size of the cake
expanded. We here find that this is not true. The insurers are doing enough to
raise the level of risk awareness or are they merely content to compete in the
markets organized and established. However sooner or later the private sector
players will have to put in place strategies aimed not at winning the existing
accounts of the public players but at diversifying markets penetration as a whole.
The private players in the future would have to turn their attention to working in the
unorganized and under served markets. What is likely to happen is that the private
players would continue to skim the profitable segments of the already organized
business in the urban areas? The time has already come for the government of
India to evaluate the performance of private companies’ visà-vis their declared
objective of opening up the industry. However it is high time for the government to
realize that importance of merging the public sector general insurance companies
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into single entity. The resent scenario calls for a better performance from part of
each of the public sector insurance companies against each other; or in other
words a competition to be the best. The result what we see is the undercutting of
premium to retain or wrest business and quoting an uneconomical rate of
premium. While this allows one of the Public Sectors Company to win a business
form another in this manner. The others suffer a loss and the resultant effect is a
cannibalization with a fall in the average premium of the public sector itself. This at
many times brings advantage to the private players who grab the business
because of the unethical competition among the public players.
The purpose of having four companies all subsidiaries of General Insurance
Corporation of India (GIC)– National Insurance Company, New India Assurance
Company, Oriental Insurance Company, And The United India Insurance
Company; at the time of nationalization was to have competition among
themselves –in service and products at the same price. The service provided by
them was also equally good or bad depending on the experience of the customers.
Now with real competition coming in with most of the global insurance players
setting footprints here, it is felt that the time for merger has come and to enjoy the
benefits if the size. It is to be sated that size does matter in insurance business. All
over the world’s mergers and acquisitions in the risk-underwriting sector is
common. The benefits if the four insurance companies merge will be enormous.
The merged entity will enjoy higher underwriting and risk retention capacity;
increase in premium, reduction in reinsurance outflow, healthy solvency margins,
setting right the asset –liability mismatch and reduction in cost. The insurance
market thus becomes a gambling place. Had the public sector companies made
into a single entity, perhaps the total premium of the four public sector companies
in the year 2003-04 would have gone up but 25 percent. But the 21 public sector
alone is forced to underwrite the loss making motor third party liability(TPL)
insurance. The public insurance companies insured a loss of Rs 1943 crore on this
portfolio on just one year (03-04). The cumulative loss under this portfolio is
astronomical. The loss of profitable business in view of undeserved competition
among the public sector companies is hampering the subsidization of social
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insurance including the motor TPL. It is thus clear that it is good for the public
sector companies to merge immediately when they are still strong, lest a merger
becomes inevitable later after the independent public sector companies fail one
after another. This does not bid well for the public sector, nor fort he insuring
public and not for the economic development either. For a progress me require
merger of strong public sector companies. Else it would render public sector
companies weak and destroy them.
MAJOR MARKET PLAYERS
Currently there are 23 Life insurance companies in the country. There is only one
public sector company LIC and the rest 22 are private sector. Although LIC has
been dominating the life Insurance business since past few years the private
players have now started to build up momentum.
MAJOR MARKET PLAYERS
PUBLIC SECTOR
Life Corporation of India
PRIVATE SECTOR
Birla Sun Life Insurance Company
HDFC- Standard Life Insurance
ICICI Prudential Life Insurance
Kotak Mahindra Old Mutual Life Insurance
Max New York Life Insurance
Aviva Life Insurance India
ING Vysya Life Insurance
MetLife India
Bajaj Allianz Life Insurance Co.
SBI Life Insurance Company Ltd.
The TATA AIG Group
Sahara India Life Insurance Company Ltd.
Shriram Life Insurance Company Ltd.
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Reliance Life Insurance
FY 2009-10
28%
28%
LIC
Private Players
LIC
72% Private Players
72%
Fig. 1
TRENDS:
This graph clearly demonstrates the present trend in the insurance sector in India. Entry of
private players is showing only one-way to go, up. LIC’s market share has dipped from
94% in FY 2006-07 to 72% in FY 2009-10.
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LIC
BAJAJ ALLIANZ
ICICI PRU
SBI LIFE
TATA AIG
MAX NEWYORK
LIFE
AVIVA
KOTAK
ING VYASA
RELIANCE
Fig -2
TRENDS:
This graph clearly demonstrates the present trend in the insurance sector in India. Entry of
private players is showing only one-way to go, up. LIC’s market share has different
companies which moves slow down on the next era.
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Fig. 3
TRENDS:
This graph clearly demonstrates the present trend in the insurance sector in India.
Entry of private players is showing only one-way to go, up. LIC’s market share has
dipped from 94% in FY 2006-07 to 71.44% in FY 2009-10. On the other hand
market share of private players has rose from 6% in FY 2006-07 to 28.56% in FY
2009-10 and it is still growing. This is quite a healthy trend because the
competition will ensure better product and quality for the investors. And with the
proposal of increasing the limit of FDI the battle is going to intensify.
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Market Share of Private Players
2% 2%
0%
3%
3%
4%
25%
5%
6%
6%
7%
26%
11%
TRENDS:
Market Share of Private Life Insurance Players on the basis of first year premium
underwritten for the period ended January 2010:
This pie chart illustrates the market share of the major private players in the life
insurance sector. The biggest among them is ICICI followed by Bajaj Allianz and
others. The share of Max New York is about 5% and is growing at the rate of more
than 100% per year.
COMPANY PROFILE
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MAX INDIA LTD.
Max India Limited is a multi-business corporate, driven by the spirit of enterprise,
focused on Knowledge, People and Service oriented businesses of Healthcare
and Life Insurance. Max also maintains interests in Clinical Research, IT and
Telecom Services, and Specialty Plastic Products businesses
Healthcare
Life Insurance
Clinical Research
IT & Telecom Services
Specialty Plastic Products
Healthcare, at present, is our local business, centered in and around Delhi. Life
Insurance has a national reach. Information Technology and Clinical Studies are
international in scope. Taken together, they are the 'flags' of Max:
LOCAL
-Max Healthcare
-Max Ateev
NATIONAL
-Max New York Life
INTERNATIONAL
-Neeman Medical International
-Max Ateev
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tremendous growth in various fields and has been ranked among the "Top Two
Hundred Most Valuable Indian Companies" by Business India (October 2000).
Max's deep understanding of Indian consumer combined with a large pool of
professionals and an enterprising spirit have helped complement its relationship
with industry leaders of global stature like New York Life International LLC. of
U.S.A. With a unique experience of growing through the 'JV route' Max is proud of
the excellent relations it has with each of its partners. Max India already has
successful and enduring partnerships with some of the most respected specialist
organizations in the world, some of which are Gist Brocades of the Netherlands,
Atotech Deutschland GMBH, Germany, and Hutchinson Telecommunications Ltd.,
Hong Kong, Singapore General Hospital, Harvard Medical International Inc., USA.,
Lockheed Martin Global Telecommunications.
VISION
MISION
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The mission of New York Life is to maintain its superior 'financial strength', adhere
to the highest standards of 'integrity' and demonstrate 'humanity' by treating its
customers, agents and employees with compassion, consideration and respect.
New York Life Insurance Company has been among the highest rated companies
by leading independent rating agencies including - A.M. Best Company (A++),
Fitch (formerly Duff & Phelps) (AAA), Moody's Investors Service (Aa1) and
Standard & Poor's (AA+) The company has its headquarters in New York City and
has operations in the United States, Argentina, Hong Kong, SAR, India, Indonesia,
Mexico, The Philippines, South Korea, Thailand and Taiwan. The company
maintains representative offices in the People's Republic of China and Vietnam.
For the last 47 years, New York Life has had the highest number of agents
who qualify as members.
As a leader in the insurance industry, New York Life continues to bring to its
operations new management concepts, advanced technologies, new distribution
and training systems and innovative insurance products of the 'Million-Dollar
Round Table'. The MDRT is the world's most prestigious organization of insurance
sales professionals.
Max New York Life Insurance Company Ltd is a Joint Venture between New York
Life, a Fortune 100 company and Max India Limited, one of India's leading multi-
business corporations. Through its wide network of highly competent life insurance
Agent Advisors and flexible products and solutions, Max New York Life is
committed to creating a partnership for life with its customers in India.
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In line with its values of financial responsibility, Max New York Life has adopted
prudent financial practices to ensure safety of policyholder's funds. It invests only
in debt instruments and meets both Indian and international disclosure norms. The
Company's paid up capital is Rs.527crore, which makes it among the highest
capitalized life insurer in India.
Max New York Life has identified Individual agents as its primary channel of
distribution. The Company places a lot of emphasis on its selection process, which
comprises four stages - screening, psychometric test, career seminar and final
interview. The agents are trained in-house to ensure optimal control on quality of
training. Max New York Life invests significantly in its training programme and
each agent is trained for 152 hours as opposed to the mandatory 100 hrs
stipulated by the IRDA before beginning to sell in the marketplace. Training is a
continuous process for agents at Max New York Life and ensures development of
skills and knowledge through a structured programme spread over 500 hours in
two years. This focus on continuous quality training has resulted in the company
having amongst the highest agent pass rate in IRDA examinations and over 126 of
its agents becoming MDRT members in 2005, which is among the highest among
the private life insurers in the country.
Max New York Life offers a suite of flexible products. It now has 22 life insurance
products and 9 options & 8 riders that can be customized to over 400 product
combinations enabling customers to choose the policy that best fits their need.
The 22 products are - Life Maker™ - Investment Plan, Life Maker™ - Pension
Plan, Whole Life Par, Level Term, Term Renewable and Convertible, Super saver
bond, Life Gain Endowment Plan, Life Pay Money Back Plan, 20 years
Endowment Plan, Life Partner Plus (Participation) Policy, Easy Life™ - Retirement
Plan, Endowment to age 60 Plan, Life Maker™ - Pension Plan, Immediate
Annuity, Children's endowment 18 & 24, Stepping Stones™ - A Child Money Back
Plan, Amsure Bonus Builder, Amsure Future Builder, Amsure Business Builder,
Amsure Future Builder, Max Mangal Endowment plan and Max Vriksha Money
Back.
Tailoring a policy to best-suit individual requirements, even before a policy is sold,
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a Personal Insurance Plan™ gives complete details of a policy with a year-on-year
summary of the
premiums to be paid, as well as the likely benefits that may accrue. Also all
policies come with a 'policy review period' offer that allows unconditional return of
the policy within 15 days from date of receipt.
The 9 Options & Riders are - Option to Participate in Progressive Bonus,
Guaranteed Insurability Option, Waiver of Premiums, Spouse Insurance, Personal
Accident Benefit, Dread Disease, Payor Benefit, Term Rider, 5 Year Term
Renewable & Convertible Rider
MISSION
Become one of the top 3 new life insurance companies
Become a national player – dominant in north India
Be the brand of first choice among all stake holders
Become the employer of choice.
Be the principal of choice for agents.
Max New York Life is a young vibrant company proud of the excellent track record
it has created for itself in a relatively short period of time. MNYL has today become
one of the most aggressive players in the Insurance services domain. A key factor
in our success has been our ability to attract some of the most talented people in
any industry.
MNYL in many ways is a lens to India. We represent rich diversity in our workforce
and this is reflected in our open work environment. Within this diversity we have
successfully created a strong emotional bond, which threads everyone together
irrespective of his or her function, location, seniority or background. This
identification with one organization and one purpose draws its strength from our
simple and powerful Vision statement, which is to become the "Most Admired Life
Insurance Company in India".
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By developing structure, systems and a workplace culture that provides
challenging jobs, rewards performance and delivers opportunities continuously,
MNYL is striving to get the best out of its most valuable asset — its people.
Our "in house culture recipe" has some of the finest ingredients going into its
making. Some of the more prominent aspects of our culture are stated
belowCustomer comes first
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way we serve our clients and engage with all our stakeholders. MNYL recognizes
the need for appreciation for demonstrating our core values thru behaviors. We
provide a platform in the form of Cultural Ambassador to recognize employees
demonstrating our values of Caring, Honesty, Excellence, Knowledge, Integrity,
and Teamwork.
Possibly then the best way to explain the MNYL culture would be to share our
MNYL Values and Beliefs.
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MAX NEW YORK LIFE VALUES AND BELIEFS
KNOWLEDGE
Knowledge constitutes expertise and our expertise is in helping people
protect themselves. Perfectly combining global expertise with local
knowledge, we are the Indian life insurance specialists. Max New York Life
believes that for knowledge to be of value it must be focused, current,
tested and shared.
CARING
Max New York Life is redefining the life insurance paradigm to focus on the
needs of customers. The service process is responsive, personalized,
humane and
empathetic. Every individual who represents the company is for us our
brand champion
HONESTY
Max New York Life is redefining the life insurance paradigm to focus on the
needs of customers. The service process is responsive, personalized,
humane and empathetic. Every individual who represents the company is
for us our brand champion.
EXCELLENCE
Excellence at Max New York Life implies the ability to perform at a
consistently high level. Focused on the value of continuous improvement in
people, processes and the organization, the company strives for the highest
standards of quality in every aspect of its business.
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MAX NEW YORK LIFE- GROWING PRESENCE:
No. of cities 37
No. of Offices 57
No. of Agents 13000 +
No. of Policies 8, 00,000 +
Sum assured 23,500 cr. +
Fig. 5
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ACHIEVEMENTS
MNYL is the first life insurance company in India to be awarded the ISO
9001: 2000 certification.
MNYL was among the top 25 companies to work with in India, according to
2003 Business World Magazine, “Great Workplaces In India”, MNYL was
ranked at the 20th
position. This survey is the local version of the “Great Places to Work”
survey carried out every year in 22 countries.
We were among top five most respected private life insurance companies in
India according to 2004' Business World Most Respected survey. It makes
it more special as that year insurance as a category was included for the
first time.
MDRT (MILLION DOLLAR ROUND TABLE)
The MDRT was founded by a group of dedicated agent leaders. In a sense, it may
be said that the field force of the business, despairing of company management’s
sales centric approaches in agent education and training, turned to self-organised
efforts in promoting self-education philosophy and concepts. Thinking field men
foresaw misfortune to the industry itself if the faults of the agency system were
continued. They also recognised that their plans must permeate the whole industry
to become effective and it would be necessary, therefore, to enlist the help of
home offices.
MDRT is a world wide organization of the top producers of life insurance sales. 74
nations and territories participate in it. New York Life is the no.1 in MDRT
membership 50 years in a row.
Max New York Life leads the MDRT among Indian private insurers. Max New
York Life is in top 100 MDRT global list – ranked at the 49th position. 201 Max New
York Life agent advisors have qualified 2006 MDRT for the meeting to be held in
San Diego.
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CHANNEL DEVELOPMENT
A distribution channel is the route by which the product(or offer) prepare by which
the producer reaches the ultimate consumer. The distance between the producer
and the consumer is bridged by a channel called distribution channel.
Being a Sales Manager at means a unique career opportunity which gives the
flexibility of sharpening entrepreneurial skills by selecting and developing your own
unit, coupled with the advantage of providing a lifetime career option to people in
society. Good advisors are people with a successful track record and an insatiable
desire to earn money and recognition. They are the people who follow a
disciplined work pattern. They have a never-say-die attitude coupled with precision
planning and implementation. The key drivers of this business are quality
recruitment and a good start means getting team in shape by recruiting quality of
advisors.
Five concerns that must be constant in Sales Manager’s annual
planning are:
The SEARCH for talent
The EVALUTION of potential advisors
The ATTRACTION of advisors
The RETENTION of advisors
The PRODUCTIVITY of advisors
Any manager who attains satisfying results in these five areas will enjoy:-
Satisfying sales results
Outstanding persistency of business
Superior policy owner service capabilities
An enviable reputation as a agency builder
A momentum which comes from the synergistic benefit of success
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ABOUT LIFE INSURANCE ADVISOR
The foundation of law of agency is expressed in the maxim ‘Qui facit alium, facit
per se’ i.e. one, who act through others, acts to himself. Therefore, contracts
entered into through an agent and obligations arising from acts done by an agent,
may be enforced in the same manner and will have the same legal consequences,
as if the contracts have entered into and the acts done by the principal himself.
Selling has been described as ‘transfer of enthusiasm’. This succinct profile of the
process shows that it transcends the narrow confines of product, product
knowledge, psychology, interpersonal communications, advice and, certainly, the
transaction itself.
It pre-supposes a few things. That the transferor possesses the enthusiasm in the
first place. That the underlying product evokes that enthusiasm in him. That he has
the abilities to transmit them appropriately to a prospective customer. And that he
is part of a system that helps him stay updated and motivated in all ways–
financially, professionally and socially.
In almost all these areas, the insurance agency system in India is, to put it
flatteringly, a work in progress. It is classically over-manned and under-producing.
The massive agency force – a paradigmatic example of the 80-20 rule – is largely
under-motivated and under-guided; training, both in concept, product and the soft
selling skills, is inadequate, if not absent; and most importantly, the remuneration
and evaluation structures are skewered not towards the best and most efficient
productivity or even the best value for the customer. For all this, almost all
personal lines insurances, including of course, life insurance, are sold through the
individual agency force.
Who are life insurance advisors or agents?
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Assuming the insurance business grows at the present double-digit
rate, there will be demand for thousands of agents every year.
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For becoming an insurance advisor/agent, the person should undergo 100 hours
training according to IRDA norms, which is compulsory.
For developing a channel, company need person who will
Identify future clients
Make appointments
Conduct financial review meetings with prospects/clients
Close sale
Get referrals
Provide service to clients
These persons are called insurance advisors/agents. In case of life insurance
business, the agent, as defined in Insurance Act, 1938 as amended by IRDA Act,
1999, is the primary component of this channel. The supervisor, on any other
person, is also important to certain extent because he initiates the process of
spotting, training and motivating of the agent to proceed in the procurement of the
business.
Other intermediaries like brokers and insurance consultants are also part of this
distribution channel.
ELIGIBILITY NORMS PROVIDED BY IRDA FOR BECOMING AN INSURANCE
ADVISOR
Person should be atleast 18 years of age;
Person have completed 10+2;
Person should attained 100 hours training.
OTHER THAN THIS THE PERSON SHOULD POSSESS
Good communication skills
Relationship skills
Confidence
Self motivation
Persuasion
Urge to be financially independent
STRATEGIES INVOLVED IN SEARCHING POTENTIAL ADVISORS
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Your search for prospective advisors must be continuous and systematic – just like
prospective for sales, you must search among several sources on a regular basis
sources are broadly classified as primary source and secondary source.
PERSONAL OBSERVATION
This method is uniquely personal. It permits you to apply your own standards and
exercise your own judgment.
Always be on the alert for prospective advisor in your daily selling activities in
instinctively apprise as prospective advisors those you see, meet or sell. Stay in
circulation and meet a lot of people on a regular basis. Develop these individuals
as friends and clients, and then determine whether or not to recruit them.
PRESENT ADVISOR RECOMMENDATION
No one knows more about the kind of person you seek and the kind of
opportunities you have for the prospective advisor than the present members of
your sales organization. Moreover, they have a selfish interest in wanting their
associates to be type of person who will reflect favorably on their organization.
Many successful advisors have an ability to attract promising prospective advisors
who can and do succeed.
CLIENT REFERRALS
Clients are readily accessible source of prospective advisor and referrals.
It is safe to assume that client who has relied upon your agency to handle their
insurance is pleased with both you and your work. Since you have created a
favorable impression, the can picture themselves or others as having the same
success.
Therefore, it is mostly a matter of helping them to help you by making enquires
and asking questions designed to remind them of names of prospective advisors.
NEWSPAPER ADVERTISEMENT
Newspaper advertising created considerable activity. It is one of the fastest ways
to get name and talk people seeking a change in employment. Consider as a
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“wholesale method” of widening your range of contacts with prospective advisors.
Keep in mind that generally develops “pop-up prospects” that must be screened
carefully.
DIRECT MAIL
Mass mailing is a system if used can be a very successful tool. One system is to
send letters with reply cards on a regular basis especially to “centers of influence.”
Use list from club, church and alumni directories. The standards letter should
briefly describe the rewards of a successful insurance sales career.
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1OO CONTACTS
32 SCREENINGS
8 SELECTED
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MNYL
Cooperative
Banc Alternative
Agency Channel
assurance Channels
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currently, MNYL has a banc assurance relationship with Yes Bank and Thane
Janata Cooperative Bank.
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ALTERNATIVE CHANNELS:
• DIRECT SALES TEAM CHANNEL - In this, the direct sales people are not
recruited as A&As & advisors but as employees of the company and they work
on a fixed and variable income pattern. This channel
• includes telemarketing and an upcoming alliance with Amway called
Amsure in which Amway will be utilizing its distribution channel to sell MNYL’s
policies.
•CORPORATE AGENCY – Corporate agents of Max New York Life
include:
Metro Finance Corporation, Futuristic Consultancies Ltd, Jaydev R. Patel
Insurance Agency Private Limited, Akshay Consultants, Golden Trust Multi
Services etc.
• Another route is the franchisee route opted by MNYL, especially in the East.
MNYL, presently, has 9 franchisees. Max New York Life initially identified
Individual A&As as its primary channel of distribution. But now the company is
focusing on widening its distribution mix by pursuing the franchisee model, banc
assurance, rural business, direct sales force involving group insurance and
telemarketing opportunities and also corporate alliances. This year MNYL has
achieved around 77 per cent of its business from the agency distribution system,
while the alternative distribution network contributed the balance of around 23 per
cent.
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My study involves study of Agency channel as a channel of distribution. It is a
direct channel which makes it the most effective channel. In this while recruiting
you get a chance to recruit people from all walks of life. For e.g.
• Upper Class - IAS officers
Politicians
Celebrities
• Upper middle class – Army Retired people
Civil
• Service class who are looking forward to generate more income.
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RECRUITING SUCCESS FORMULA
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MNYL HAS CREATED A RECRUITMENT FUNNEL:
Max New York Life has identified Individual agents as its primary channel of
distribution. The Company places a lot of emphasis on its selection process, which
comprises four stages - screening, psychometric test, career seminar and final
interview. The agents are trained in-house to ensure optimal control on quality of
training. Max New York Life invests significantly in its training programme and
each agent is trained for 152 hours as opposed to the mandatory 100 hrs
stipulated by the IRDA before beginning to sell in the marketplace. Training is a
continuous process for agents at Max New York Life and ensures development of
skills and knowledge through a structured programme spread over 500 hours in
two years. This focus on continuous quality training has resulted in the company
having amongst the highest agent pass rate in IRDA examinations and over 126 of
its agents becoming MDRT members in 2005, which is among the highest among
the private life insurers in the country. Max New York life is known for it’s in- house
training. They are taught the rule of 10 by 10 and the rule of 53. They are to
regularly maintain their yellow diary and white diary. And it is believed that
if you follow the above rules then the success is all yours. 2-3 professional full time
trainers are there for each office. Training focuses on selling skills, product
knowledge, market engagement, work habits.
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• Personal accident insurance
1
2 105 Hours of training
Product Training
IRDA Exam
Issue of License
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To pass the IRDA exam a minimum of 50% marks is required. On passing the
examination a license is issued. This is a fully commission based job where a Life
Advisor in Max New York Life can earn 40% of the premium.
Financial Advisor
CENTURION
Fig. 8
Financial CAREER SUCCESS AWARD Sales Manager
Consultant
HI-FLIER
REWARD AND RECOGNITIONS
Life Advisor
TEN-A-MONTHER
PREMIUM LEADER
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AVENUES
MNYL also provide career progression to its advisers. There are certain criteria to
be followed and then they can be recruited as:
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• Agency associate
• Associate sales manager
• Sales manager
• Training manager
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Max New York Life has a strong channel of distribution for which it identified
Individual agents. Max New York Life believe in developing a quality model i.e.
they recruit only quality people as their insurance advisors, who work not as an
employee of the company but as a part of the company. The company put lot of
emphasis on selecting quality people. The criteria for selecting quality people is
that:-
Person should be 25 years of age, and
Minimum qualification is 10+2, but as we work on quality model so we
prefer people who have atleast graduate degree.
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2) PSYCHOMETRIC TEST:-
In this stage the person who come for screening is required to fill P-200 with
details of the persons whom he/she know personally or with the names of
the persons which he/she got from his/her personal contacts. After that if
the data collected by him is good, he will be eligible for final interview.
3) CAREER SEMINAR:-
Some times the person who is interested in becoming insurance advisor,
will be called to attend the seminar so that he/she is able to understand the
whole profile of the job and can solve all his/her queries. After that all the
present members of the seminar are given P-200 for collecting which is
considered as next step in their selection.
4) FINAL INTERVIEW:-
The last stage of recruitment and selection of an insurance advisor is final
interview with Branch Manager. The person is called for final interview if
he/she is successful in fulfilling the booklet called P-200 which will be
his/her target customers. And if he successful in clearing that interview,
he/she will be given 100 hours in-house training on which company spends
from their own side.
MNYL called this method of recruiting and selecting people for becoming an
insurance advisor as GOLD.
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My job at MNYL was to sell a career to people. It means we had to recruit
insurance advisors for our company. The kind of people we were looking forward
for were:
• people above the age of 25 years
• minimum qualification- plus 2, but we prefer people who have a graduate
degree in any field.
And the categories on which focused were:
• Housewives: as they are the home-makers and when they advice you how
to manage your funds then they are highly influential.
• Retired people: these are the people who have seen life therefore their
advice are also liked by people.
• Voluntary retired people
• Self employed people
Activities performed by us for this were:
NAME GATHERING:
Our 1st activity was name gathering. On the first day we were taught a
pen framing exercise for this. This exercise helps you in getting 50
names from one person. We were told about the categories from which
we can gather name. Figure given below depicts the same:
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DATABASE
RELATIVES FRIENDS
NAMES
NEIGHBOURS CUSTOMES
Fig. 10
• Firstly I was to ask to target our family. Every name was entered in the
centre box of the above figure and person’s friends, relatives, neighbor’s
names were asked. Similar exercise was done with friends and relatives.
On the first day when sir asked me to give 5 names of people whom I know
and who fulfill the criteria (as stated above), I found it very difficult but by
the end of the day I was able to collect around 40 names.
• Apart from pen-framing exercise I collected names by going to local market
i.e. Atta market and sector-18 market. There I met shopkeepers and
customers. I tried to get references from them. For this I prepared a simple
questionnaire.
• I went to kitty parties to tap housewives. I prepared a separate
questionnaire for them, to get the references from them.
• I went to AVCC club located in sector – 37. There I met retired people who
come to the library for reading newspapers. I tried to convince them and
invited them to attend the career seminar.
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• I did cold calling also. I got the army directory and we called them, told them
about the career opportunity and tried to invite them for the career seminar.
from that list who are either housewives, retired people, self employed, people
who have taken VRS, CA’s, CS’s, i.e. quality people and after that inviting them.
INVITING:
Our second activity was to invite people to the career seminar. For this I had a
conversation (telephonic) with the people whose references I got from people and
invited them for the career seminar. For the conversation to be effective a script
was given to us stating that what all we have to speak, how to convince them to
meet us and how to get further references from them.
After the career seminar we used to give a project-200 booklet to them which they
were supposed to fill. In this they were asked to fill at least 100 names of the
people whom they know because advisors are asked to tap their natural market
firstly and touch the reference market later on.
INITIAL SCREENING:
I had to keep a follow up with the people who attended career seminar. I
used to call them for initial screening, with their filled P-200’s. In the initial
screening my job was to see the profile they have filled in their P-200. Then I had
to ask certain simple questions like who according to him/her is a successful sales
person. If I find the person suitable then I had to send him/her to my senior for
further screenings.
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FINDING
(a). HOUSEWIVES:
The rationale behind our approaching Housewives for a possible tie-up was their
large presence and interaction with a large number of customers. And MNYL
believes that housewives are the home makers, they manage their finances at
home very well and when they give financial advice to any one then it has a better
impact.
RESPONSE:
The efforts to establish a tie-up in this segment had a mixed response. Most of
them found it interesting and good way of earning money. But few of them were
reluctant as they believed that it would be hectic.
PROBLEMS FACED:
Though there was much interest shown by the housewives, but it was vacation
time and most of them had their vacation plans and because of this they were not
ready to join in the month of June. Some of them said that they would prefer
staying at home and some had a problem of having small kids.
(b). RETIRED PEOPLE:
The main criterion that led us to select this particular segment was that these
people have better understanding of finance and they know how to deal with
people. In this our main target was Army retired people as the past records show
that they do real good in this field. These people find it easy to win the trust of the
customer.
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RESPONSE:
The initial response that we got from this particular sector had been good. The
people in this segment, seemed interested enough about knowing of the business
proposal. The success ratio in this segment was good.
PROBLEMS FACED:
The main selection criterion of this sector was that these people have many good
contacts. They have a better understanding of customer’s behaviors and their
needs. These people try to tap mostly the big corporate clients and they know how
to make long-term relationship with their customers. And also the fact that the
people of this segment are good at dealing customers also on one to one bases
adds to an advantage
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RESPONSE:
The overall response of the entire sector did not seem to be very positive enough.
PROBLEMS FACED:
MNYL provides full time training and these people didn’t had time to spend on full
time training. Some of them found this diversification of their business very difficult.
1. Max New York Life needs to spend more on brand awareness,
because while talking to people we realized that they don’t even
recognize the company.
2. There is a huge opportunity in the rural sector, so Max New York Life
should expand its activities in rural sector.
3. Max New York Life should use the method of newspaper
advertisement as this will help them in tapping the market that has
remained untouched till now.
4. Apart from expanding agency channel, Max New York Life should
expand it other channels also.
5. Max New York Life’s process of picking advisors is very time
consuming. They should try to curtail the time spent on it.
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ANALYSIS
Market Research for the project was conducted in Delhi and Ghaziabad. It is a
descriptive type of research and sampling for responses is simple random
sampling. The sample size for the research is 100 for comparative analysis and
100 for recruiting Life Advisors.
Till date the customers still believe in government sector i.e. LIC but one thing can
also be kept in mind that till 1999 LIC had a 100% market share. From the survey I
have also found out that a very people are insured and the interesting fact is that
the persons who are insured, very few know about the type of policy they have
taken.
Max New York Life has not yet come into terms with the common people. This
may be because Max New York Life is new to the market as compared to other
Insurance companies like ICICI Prudential, Allianz Bajaj etc.
While recruiting Life Advisors one very significant thing I found out that the
persons whose house hold income is in between 2-5 lakhs are or were involved in
insurance business. The persons who are below the age of 25 years were not
keen to join the
insurance sector as compared to those who are in between 25-30 years of age.
Also the persons who are in insurance business have a willingness to join the
private companies.
In the survey I have also found out the persons who are working and the students
were keen in taking on line training as compared to housewives and retired
persons.
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SUGGESTIONS AND RECOMMENDATIONS
The insurance company has to continuously upgrade its products by
continuously assessing the changing needs of the prospects and
clients. There should be a up gradation of the employees by giving
them training from time to time and motivation with the ingredients of
professionalism like ethics, service, compliance and quality.
More products, which give assured returns, should be there for the
investors because most of the investors ask about security part of
the policies especially during the time of slow down of the economy
and to tap the investors who at present investing in Fixed Deposit.
Company should start creating their own database and give it to the
advisors so that the advisors have more option in their hand.
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SWOT ANALYSIS OF MAX NEW YORK LIFE
STRENGTHS
• Relative market potential in not only the rural markets but also the semi-
urban markets.
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87
• Better customer services like utmost promptness in issuance of the
policy, giving cheque pick up facilities and not making customers not
waiting for months.
• Making more loyal customers and attracting other customers with better
service.
THREATS
• LIC because today also people show much faith towards LIC as it is
a public company
• Competitors in the private sector
• With players like SBI Life and ICICI Prudential spending lot in
advertisements, it may take away the market.
• Sometimes more focus on innovative products may affect the main
fruitful products.
• Stiff competitions due to new companies are entering day by day.
14. REASONS WHY YOU SHOULD JOIN US AS AN ADVISOR
REWARDING CAREER
You will help people realize their dreams by fulfilling their financial goals.
ATTRACTIVE REMUNERATION
One of the best remuneration systems in the industry that not only takes care of
your current earnings, but also guarantees an earning for future.
WORLD-CLASS TRAINING
Our multidimensional in-house training programme will make you a specialist in life
insurance sales; in fact, New York life Inaurance University certifies our training
curriculum.
INFRASTRUCTURE SUPPORT
We have created a state of art infrastructure at our branch office Noida. You have
access to the necessary tools, technology and people support.
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FULL RANGE OF PRODUCT AND SERVICES
We have insurance and investment oriented customized products.
A SUCCESSFUL TEAM
You will be a part of country finest team of life insurance advisor. Per advisor
earning is 4times better than industry.
INDEPENDENCE
As an advisor, you will be true entrepreneur.
SALES AND MARKETING SUPPORT.
We help advisors with innovative sales and marketing tools.
COMMITMENT TO CAREER GROWTH.
Opportunity to join management or become business associate.
BRAND NAME
Fortune 69th ranked company having insurance experience of 158 years.
For further query, please feel free to call on 9258048885
15
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Na Ag Marit Male Numb Occup Annu Lo Rece How Vehicl
me e al Or er Of ation + al cali nt Well e
Statu Fem Depe Type Inco ty Chan Kno Owne
s ale ndent Of me + ges wn d If
s(Chil Compa Tel ( Sala To Car,
dren) ny Or ep ry You Mentio
Industr ho Incre ? A. n
y ne ased, Well Name
Nu Prom B.
mb otion, Acq
ers New uain
Hom ted
e, C.
New Cas
Baby) ual
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IDENTIFYING YOUR INITIAL MARKETS- WORKSHEETS
(WORKPLACE)
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IDENTIFYING YOUR INITIAL MARKETS- WORKSHEETS
(NEIGHBOURS)
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IDENTIFYING YOUR INITIAL MARKETS- WORKSHEETS (REFERRALS
OBTAINED)
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IDENTIFYING YOUR INITIAL MARKETS- WORKSHEETS
(RELATIVES)
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RESEARCH METHODOLOGY & LIMITATIONS
RESEARCH DESIGN:
Descriptive Research
Research. Under the head of the Descriptive Research this project is based on
1. Field studies
2. Surveys
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FINDINGS & RECOMMENDATIONS
1. As the people think that insurance is a tool to protect their family & a tax saving device.
They are aware of the fact & realizing its, importance. There is a large potential for
insurance in India.
2. The entrance of private players will increase the competition and it would be a tough
3. Since Max New York Life Insurance is leading with several companies’ policies it
should be easy for them to penetrate into the market and secure a good position if they pay
greater attention to the service part provided to their customer and thereby forming a long
4. As seen from the survey that at present 70% of the customer are having insurance policy
out of which 87.5% of the customer are planning for new investments. So it can be a good
potential for the company and they should make an attempt to trap these customers.
5. As 43% of the customers are even ready to go for insurance if a service provider away
from their city is providing it. But inturn they should provide good products and services.
The company should try to convince these customers and get them in its favor.
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RECOMMENDATIONS
there are still some recommendations from my study point of view is that MAX
NEWYORK LIFE INSURANCE needs to make its network service more stronger
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QUESTIONNAIRE
YES NO
YES NO
a) LIC
b) ICICIPRUDENTIAL
(RANK THEM)
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b) TAX DEDUCTIONS
c) FUTURE INVESTMENT
(RANK THEM)
a) LOW PREMIUM
d) REPUTATION OF COMPANY
(RANK THEM)
a) A SAVING TOOL
b) NOT SATISFIED
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c) NOT RESPONDING
b) NOT SATISFIED
c) NOT RESPONDING
YES
NO
(RANK THEM)
a) FIXED ASSETS
b) BANK DEPOSITS
c) JEWELLERY
e) SHARES
f) INSURANCE
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a) SAVING & RETURNS
b) SECURITY
c) TAX BENIFITS
a) AFTER 25 Yrs
b) AFTER 35 Yrs
c) AFTER 45 Yrs
d) ANYTIME
a) RIGID PLANS
b) NON-USER FRIENDLY
c) UNSATISFATORY SREVICES
d) NON-AGGRESSIVE
e) SATISFACTORY
f) GOOD
g) VERY GOOD
(RANK THEM)
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a) A TRUSTED NAME
c) GOOD PLANS
d) ACCESSIBILITY
a) YES
b) NO
c) UNCERTAIN
Yes No
Housewife
VRS
Self – employed
Vendors or suppliers
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Social person in your city or club
If Yes,
Name:
Address:
No of years living in this city:
Mobile no.:
Qualification:
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TALENT SEARCH
I am responsible for recruitment of bright talented people for Max New York Life. I
need your opinion about some things that will be a big help in my recruitment.
• Some housewife with previous working experience & good social life?
_______________________________________________________________
______
• Any Ex banker/CA/Tax advocate/Bureaucrat?
_______________________________________________________________
______
• Someone who is in direct marketing or an MLM?
• Any aggressive person you met during your last party, function?
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• Someone who is in settled business and wants to expand?
Thank you.
I appreciate the time you spent with me. I would like to talk to several people
unknown to me. Would you give me the names of 3 to 4 people whom I don’t
know, who might complete this same survey?
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Name:_____________________________ Name:_____________________________
Add:______________________________ Add:______________________________
Phone:_____________________________ Phone:_____________________________
Age:______Occupation:_______________ Age:______Occupation:_______________
Marital Status:_______________________ Marital Status:_______________________
No. of dependent/children:_____________ No. of dependent/children:_____________
Name:_____________________________ Name:_____________________________
Add:______________________________ Add:______________________________
Phone:_____________________________ Phone:_____________________________
Age:______Occupation:_______________ Age:______Occupation:_______________
Marital Status:_______________________ Marital Status:_______________________
No. of dependent/children:_____________ No. of dependent/children:_____________
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how you can help me with this talent search, are you able to meet for a few
minutes next Monday morning or would you prefer Tuesday afternoon.
2. In Person Interview With Your C Of I Or Former Co-Worker.
[name] as you may re3member, I am now working for max new york life in the
area of life insurance sales [name] -__________________ max a leading
Indian enterprise has grown very rapidly as the result of some tremendous
success in the areas pf health care and life insurance. And new york life is our
partner. New york life is one of the oldest, largest and finest insurance3
companies in th us. They have had tremendous success in developing the
business in the u.s. and in many other asian countries. We are looking for
bright talented people to help us in t6his effort. The reason I am talking to you
today is that you may know someone who is not entirely happy with his or her
current job and is looking for a new opportunity. May be this is somebody who
is not making enough money or may be he has to be away from home for
long period or may be he has progressed as far as he could in his current job.
Does that remind you of somebody you know? [wait for an answer. If you get
names. Just write them down!! Don’t ask question – yet! If no names, proceed with
script as follows] [name] I am not surprised that you cannot think of anybody,
however, if you let me tell you a bit more about what we are looking for may be
that will help you. I know that the person who is most likely to be successful will
probably be about 25 years of age or older; he will probably be married; most likely
he will be a graduate3 and he should definitely have been
living is his present location for atleast a couple of years. Allow me to suggest
where you might find somebody who could be a good candidate for this wonderful
opport5unity. Let me ask you what your favourite relaxation, pastime or sport is?
What about people you often meet there? Who amongst your neighbors is a very
talented person who might like to earn more money? May be somebody you used
to go to school with;
perhaps somebody you worked with in a prior job? There might be a very good
sales rep who calls on you regularly.
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(On getting names) Great, I really appreciate your help. I am going to call
________________ and then tell him you had some very nice things to say about
him and to invite him to come into meet us and learn more our opportunity. I’ll stay
in touch with you and keep you informed about how things go. In the meantime if
you want to call ____________ and tell him about our conversation that would
great! Thanks again!
If you are still having trouble getting a positive response, then try the following:
________ name_______ let me ask you a question; , ‘what , in your mind makes a
good salesperson? What characteristics do you think someone
needs to have to be successful in sales?’ who do you know who communicates
well? Who is a determined, pleasantly persistent salesman?
Who impresses you as an intelligent and friendly salesperson? Record names first
and then ask for details later.
3. Call to a prospective sales advisor: _____________________ hi my name is
_____________________ we have a mutual friend in
________________________________. I was recently talking to __________
and he had some very nice things to say about you. Did you have a chance to
talk with ____________ about our recent conversation? Well just to inform you,
I am responsible for recruitment for max New York life. We are an exciting joint
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short time and I will be able to tell you much more about our opportunity. Would
it be convenient for you next Tuesday morning or would Wednesday afternoon
will be preferable?
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•
CONCLUSION
Channel development or channel distribution is the process of recruiting potential
advisor for the company through an insurance sector works. Every company
whether it is a LIC, a public sector player or MNYL, ICICI prudential etc, private
sector players which work through them only.
They are the people through which an insurance company get their most of the
work and profits. There are different forms in which a channel can be developed
like:-
Agency
Bancassurance
Alternative channel
But all the insurance companies mainly work through agency model. MNYL is one
of the leading company which also work on all type of models. They concentrate
on quality people who can work for them in a long run and bring fruitful business
for them. They highly concentrate on people like:-
Housewives
Retired people
VRS people
Self employed
CA/CS
Advocates
They think that the people whom you know personally can easly provide help
whether in finding the best people to become advisor or for any business purpose.
Therefore they work only on reference data collected by pen-framing exercise.
Unlike other companies they do not provide on line training, they concentrate only
on in-house training for generating best advisors.
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BIBLIOGRAPHY
• http://www.maxindia.com/history.htm
• http://www.maxindia.com/pdf/MAX-AR%20FINAL.pdf (max report)
• http://www.newyorklife.com/cda/0,3254,15267,00.html (nyl achievement)
• http://www.newyorklife.com/NYL2/pdf/2005_Final_financial.pdf
(international operations)
• http://www.indiainfoline.com/pefi/insr/rep1.html
• http://www.indiainfoline.com/bisc/insu.html
• http://www.indiainfoline.com/bisc/ari/lifi.pdf
• http://www.indiainfoline.com/bisc/ari/liin.pdf
• http://www.capitalmarket.com/Cmedit/story25-0.asp?SNo=108003 (depicts
market share of private players)
• http://www.rncos.com/Report/FM003.htm ( showed data regarding past
trends followed by LIC and private players from 2002-06)
• http://www.maxindia.com/pdf/InvestorReleaseQ2FY06.pdf
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