PROJECT REPORT ON Study of Recruitment and Retention strategies adopted by different life insurance companies for their Agents

/ Financial Consultants / Agent Advisors

PREPARED BY RUCHA ARU !"#H$

STUDENT OF %&!&S& '%ACH$("R "F !A A#$!$ ) S)U*+$S, -../0-.1.

SUBMITED TO U +2$RS+)3 "F !U!%A+ 4 B. H. BAING COLLEGE, SHIPOSHI

Declaratio
+ hereby declare that the 5or6 embodied in this pro7ect titled Study of Recruitment and Retention Strategies adopted by different (ife +nsurance Companies for their Agents / Financial Consultants/ Agent Advisors is my o5n contribution to pro7ect 5or6 carried out under the guidance of !rs& S& S& 2aidya& )his pro7ect 5or6 has not been submitted for any other degree& 8here ever reference have been made it is has been clearly indicated as such and included in references and bibliography&

*ate0

9lace0

Signature

Ac! o"le#$e%e t
+t is 5orth5hile to enclose my sincerest than6s to all the persons 5ho have helped me directly or indirectly during completion of the 9ro7ect Report in successful manner& Firstly: + e;press my sincere gratitude to !r& !& 2& )ha6urdesai for granting me permission to do this pro7ect& )hen: + am very much than6ful to our course co0coordinator: 9rof& 2& & Athalye for his encouragement and full fledge support in the completion of this pro7ect& + also e;press my sincere than6s and sense of gratitude to my pro7ect guide 9rof& S& S& 2aidya for her valuable guidance and suggestions at every stage right from choosing the topic to the completion of pro7ect& + e;press my sincere than6s and deep sense of gratitude to !r& #aurav *alvi for arranging our live pro7ect at H*FC Standards (ife +nsurance Company: 2ashi branch& + also e;press my sincere gratitude to the management of H*FC Standard (ife +nsurance company for the 6ind permission to undergo on implant visit in their company '2ashi branch,& Finally: + also e;press my sincere than6s to !r& Fayya< Ahmad Sales *evelopment !anager 'S*!, of H*FC Standard (ife +nsurance Company: 2ashi branch for helping me in completion of this pro7ect 5or6&

E&ec'ti(e S'%%ar)
+nsurance sector in +ndia is booming but not to level comparative 5ith the developed economics such as =apan: Singapore etc& Also liberali<ation of insurance sector has provided huge self employment opportunities& 8hile doing a live pro7ect at H*FC Standards (ife +nsurance Company: 2ashi branch + observed that sales *evelopment !anagers 5ere facing some serious problems regarding retention of their financial consultants& )he H*FC Standards (ife +nsurance Company as 5ell as other life insurance companies are facing this problem& )o find the reasons: the main ob7ective of the study is 6ept as: to analyses the actual recruitment and retention process in (ife +nsurance Companies and ho5 far this process confirm to the purpose underlying the operational aspect of the industry& +nade>uate information regarding the 5or6 of Agents/ Financial consultants / Agent Advisors by recruitment consultant is the main reason for high rate of attrition in insurance industry& )he study is proposed to find out a process that 5ill help insurance companies to 6eep its attrition rate minimum& +n this study: + analy<ed recruitment process of three different companies vi<& (ife +nsurance Corporation of +ndia: H*FC Standards (ife +nsurance Company and !a; e5 3or6 (ife +nsurance Company& After analysis + came to the conclusion that some defects in recruitment process are the reason of high attrition& )his pro7ect 5or6 is a sincere attempt to collect the information stating the various reasons for attrition and suggests the useful measures for retention&

I #e&

Sr. No. 1 ? @ A B C D / 1. 11 1-

Co te t* +ntroduction +ndustry Analysis Company Analysis Research ob7ectives Research !ethodology *ata collection and )abulation Analysis of data and Finding Conclusions and recommendation Appendi; %ibliography

Pa$e o.

?&1 (ife +nsurance Corporation of +ndia ?&- H*FC Standard (ife +nsurance Company ?&? !a; e5 3or6 (ife +nsurance Company

Recruitment @&1 Retention and Attrition strategies of life +nsurance corporation of +ndia @&- H*FC Standard (ife +nsurance Company @&? !a; e5 3or6 (ife +nsurance company

I tro#'ctio
)he +nsurance sector in +ndia has come a full circle from being an open mar6et to nationali<ation and bac6 to liberali<ed mar6et again& )rac6ing the development in +ndian +nsurance Sector revels ?B. degree turn 5itnessed over a period of almost t5o centuries& $ver since the liberali<ation of life insurance sector is done private companies are facing many problems to create their firm e;istence in the mar6et& 9rivate companies find it difficult to compete against the dominant (+C of +ndia& %ut the common problem of (+C as 5ell as private life insurance companies is to retain their Agents/FCs/AAs& Agents/FCs/AAs have the potential to create a good as 5ell as bad image of the company& Agents/FCs/AAs 5ho enthusiastically spurred by dreams of 5or6ing at ones o5n hours: getting full re5ard for the hard 5or6 and other such motivational spiel meet reality soon enough& )he industry is facing a serious problem regarding the shifting of 7obs at top level management as 5ell as at agency force of company& Special attaint ion needs to be given for their retention in their respective companies&

I #'*tr) A al)*i*
+nsurance can be defined as: assurance for uncertainty& +nsurance is about something going 5rong& +t is often about things going right& "ne of the 5onders of human nature is that 5e never believe anything can actually go 5rong& As 5e 6no5 +ndian +nsurance sector 5as an open competitive mar6et& *ue to several frauds in late 1D th century sullied insurance business in +ndia as a result one nationali<ed company vi<& E(+CF came into e;istence& And after the liberali<ation of +ndian economy the (ife +nsurance mar6et has no5 opened for private players& )he business of life insurance in its e;isting form started in +ndia in the year 1D1D 5ith the establishment of "riental (ife +nsurance Company in Calcutta& Some of the important milestones in the life insurance business in +ndia are& 1DC. G %ombay !utual (ife +nsurance Society the first +ndian (ife +nsurance Company started its business& 1/1- G )he +ndian (ife +nsurance Act enacted as first statue to regulate the life insurance business& 1/-DG )he +ndian +nsurance Companies Act enacted to enable government to collect statistical information about life and non life insurance business& 1/?DG $arlier legislation 5ere consolidated and amended to the insurance Act 5ith the ob7ective of protecting the interests of the insuring public& 1/AB G -@A +ndian and foreign insurance and provident societies 5ere too6 over by the central government and nationali<ed (+C 5as formed by an act of parliament vi<& (+C Act: 1/AB 5ith a capital contribution of Rs& A crore from the government of +ndia&

I *'ra ce Re$'lator) a # De(elo+%e t A't,orit) -IRDA.

Reforms in the insurance sector 5ere initiated 5ith the passing of the +R*A %ill in parliament in *ecember 1///& )he +R*A since its incorporation as a statutory body in April -... has fastidiously such to its schedule of framing regulations and registering private sector +nsurance companies& )he other decisions ta6en simultaneously to provide supporting systems to the insurance sector in particular the life insurance companies 5ere the launch of the +R*A online service for issue and rene5al of license of agents& Bottle ec!* / Go(er %e t Re$'latio )he +R*A %ill proposes tough solvency margins for private insurance firms: a -BH capital on foreign e>uity and a minimum capital of 1.. crores for life and general insurance and Rs& -.. crores for reinsurance firms& Section -CA of +nsurance Act Stipulates that life insurance companies re>uired to invest CAH of its accretions through a controlled fund in mandated government securities& (ife +nsurance Company may invest the remaining -AH in private corporate sector: construction and ac>uisitioning of immovable assets besides sanctioning of loans to policy holders& )his stipulations imposed on the insurance companies had resulted in lac6 of fle;ibility in the optimi<ation of ris6 and portfolio&

Ma0or +ri(ate +la)er* i I #ia

1. ICICI Pr'#e tial 2 +C+C+ prudential (ife +nsurance company is a 7oint venture bet5een +C+C+ ban6 a premier financial po5erhouse and 9rudential: a leading international financial service group head >uarter in the United Iingdom& +C+C+ prudential 5as amongst the first private sector insurance company that came into e;istence in *ecember -... after receiving approval from +nsurance Regulatory *evelopment Authority '+R*A, +C+C+ 9rudential e>uity base C@H and -BH sta6e respectively& )he company has a net5or6 of over A.:... advisors as 5ell as C ban6 assurance tie ups& )oday +C+C+ 9rudential has emerged as of the customer at every step in life& o&1 private life insurer in the country 5ith a 5ide range of fle;ible products that meet the needs

3. Ba0a0 Allia 4 2 A house hold name in +ndia teams up 5ith a global conglomerate& %a7a7 Auto (td& )he flagship company of Rs& D... crores& %a7a7 #roup is the largest manufactures of t5o 5heelers and three 5heelers in +ndia and one of the largest in the 5orld& %a7a7 Auto has a strong brand image and locality synonymous 5ith >uality and customer focus 5ith over 1A:... employees& +t has 7oined hands 5ith Allian< to provide the +ndian consumer 5ith a different option in terms of (ife +nsurance products& 5. HDFC Sta #ar# Li6e 2

H*FC Standard (ife +nsurance Company is a 7oint venture bet5een +ndiaFs largest housing finance provider0 H*FC (td& and $uropeFs largest mutual life insurance company )he Standard (ife Assurance Company 'U&I&, H*FC standard life insurance company limited is the first private sector life insurance company to be granted a license by +R*A& 7. Birla S' Li6e I *'ra ce Co%+a ) Li%ite#2 %irla Sun life +nsurance is the 7oint venture of Aditya %irla group and Sun (ife Financial of Canada to enter in +ndian +nsurance sector& )he Aditya %irla group multinational conglomerate has over CA business units in +ndia and overseas 5ith operations in Canada: USA: UI: )hailand: +ndonesia: 9hilippines: !alaysia and $gypt to name a fe5& )oday the Sun (ife Financial #roup of companies and partners are represented globally in Canada: )he United States: )he 9hilippines: =apan: +ndonesia: +ndia and %ermuda

Mar!et S,are o6 Di66ere t Pla)er*

$ven after liberali<ation and entry of private player in insurance sector: the ma7ority of mar6et is shared by (+C of +ndia& )he o&1 private life insurance is +C+C+ prudential 5ith 1?&CH of total mar6et share& %a7a7 Allian< contributes to 1.&?H of total share 5here as H*FC S(+C has managed to earn only @&1H& From the above chart: one can say that private companies are still struggling to capture ma;imum mar6et share& %irla: Sunlife: Reliance life: and ! 3( have ?&@H: ?&@H and -&@H of mar6et share respectively& )he top A life insurance companies in +ndia control DAH of mar6et share 5hile the remaining do<en are still struggling to set up their operation&

Ne" E tra t i t,e I #'*tr)

DLF Pra%erica Li6e I *'ra ce co. Lt#. Iapil !ehta is the !* 4 C$" of *(F 9ramerica life insurance (td& Iapil has been associated 5ith this venture since -..B& %efore 7oining *9(+ Iapil 5as senior vice president of %usiness development and strategic planning at another life insurance company& +t is a 7oint venture bet5een *(F (td& and prudential +nternational +nsurance holdings (td& )he combination at the strength of *(F brand and 9F+Fs insurance e;pertise provide the strangest possible foundation for *9(+ to succeed in the rapidly gro5ing +ndian life +nsurance mar6et& 8i*io 2 At *(F 9rameria: our vision is to ensure that every life 5e touch: feels secure and enriched& Mi**io 2 8e shall be a guide and a mentor to people so that they are able to ma6e the most informed insurance decision to meet their life goal&

Co%+a ) A al)*i*
Li6e I *'ra ce Cor+oratio o6 I #ia.
)he parliament of +ndia passed the (ife +nsurance Corporation Act on the 1/th of =une 1/AB and the life insurance corporation of +ndia 5as created on 1 st September: 1/AB 5ith much the ob7ective of spreading life insurance more 5idely and in particular to the rural areas 5ith a vie5 to reach all insurable persons in the country providing them ade>uate financial cover at a reasonable cost& (+C had A <onal offices: ?? divisional offices and -1- branch offices: apart from its corporate offices in the year 1/AB& +t has a net5or6 of over -... '-.@D, branches and more than / la6hs agents& "ver A? years: (+C has become a household name for providing security for a life time and is synonymous to life insurance in +ndia& (+C ran6s no& 1 in the list of top A.. companies on the basis of net 5orth 'Rs& 1A:@C:/A1 million, as 5ell as '+ndia A..,& (+C has crossed the milestone of issuing 1:.1:?-:/AA ne5 policies by 1A th "ct: -..A posting healthy gro5th rate of 1B&BCH over the corresponding period of the previous year& et profit -:BB:-CC million *un %radstreet

From then to no5 (+C has crossed many milestones and set unprecedented performance records in various aspects at life insurance business&

9e) %e%:er* to t,e cor+oratio

1& Shri )&S& 2igayan& 'chairman, -& Shri *I ?& !ehrotra '!* (+C, @& Shri& )homos !athe5 ' !* 0 (+C, A& Shri A& I& *asgupta '!* (+C, B& Shri& #& S& Chaturvedi 'additional secretary department of financial services: !inistry of finance #ovt& of +ndia&, C& Shri& 3ogesh (ohiya 'chairmen !* : (+C of +ndia, D& Shri& )& C& 2en6atsubrameniann 'chairman 4 !* $;port +mport %an6 of +ndia, /& *r& Soornad Ragashe6heran 1.&Shri !onis R& Iid5ai&

HDFC Sta #ar# Li6e I *'ra ce Co%+a ) LTD.

H*FC 5as incorporated in 1/CC 5ith a share capital at Rs& 1. crores: H*FC has since emerged as the largest residential mortgage finance institution in the country& )he corporation has had a series of share issue raising its capital to Rs& 1/ crores )he gross premium income for the year ending !arch ?: -..C stood Rs& -:DAB crores and ne5 business premium income at Rs 1:B-@ crores )he company has covered over D:CC:... lives year ending !arch ?1:-..C H*FC operates through @A. locations through out the country 5ith its corporate head >uarters in !umbai +ndia H*FC also has on +nternational office in *ubai UA$ 5ith service associates in Iu5ait: "man and Jatar H*FC is the largest housing company in +ndia for the last -C years& 9e) +la)er* 2 !r& *eepa6 S& 9ari6h is the chairman of the company& He is also the e;ecutive chairmen of Housing *evelopment Finance Corporation (td& 'H*FC (td&,& He 7oined H*FC (td in a senior management position in 1/CD& He 5as inducted as a 5hole time director of H*FC (td& +n 1/DA and 5as appointed as its e;ecutive chairmen in 1//?& He is a fello5 of institute of Chartered Accountants '$ngland and 8ales,& !r& *eepa6 !& Sata5ale6ar is the managing director and C$" at the H*FC S(+C since ovember -... prior to this he 5as the !* of H*FC (td& Since 1//? !r& Sata5ale6ar obtained a bachelor degree in )echnology from the +ndian +nstitute of )echnology '++), %ombay and a master degree in %usiness Administration from the American University 8ashington *C&

Sta #ar# Li6e 2 Standard (ife is $uropeFs largest mutual life assurance company& Standard (ife 5hich has been in the life insurance business for the past 1CA years in a modern company surviving >uite a fe5 changes since selling its first policy in 1D-A: the company e;panded in the 1/th century from Iits "riginal $dinburgh premises opening offices in other to5ns and ac>uitting other similar business& Standard (ife currently has assets e;ceeding over C. billion under its management and has the distinction of being accorded AAA rating conse>uently for the si; years by Standard and 9oor& SNAPSHOT 2 Founded in 1DCA: company supporting generations for last 1C/ years& Currently over A million policy holders benefiting from the service offered& $uropeFs largest mutual life insurer& Joi t 8e t're 2 H*FC Standard (ife +nsurance Company (td& 5as one of the first companies to be granted license by +R*A to operate in life insurance sector& Reach of the players is highly rated and been conferred 5ith many a5ards& H*FC is rated EAAAF by booth ECR+C+(F and E+CRAF similarly standard is rated EAAAF both by !oodyFs and Standard and 9oorFs &)his reflect the efficiency 5ith 5hich H*FC and Standard (ife manage their asset base of Rs& 1A:... crore and Rs&B..:... crocre respectively& H*FC Standard (ife +nsurance Company (td& 5as incorporated on 1@ th August -... H*FC is the ma7ority sta6eholder in the insurance 7oint venture 5ith D1&@H sta6e and Standard (ife of as a sta6e of 1D&B H& !r& *eepa6 Sata5ale6ar is the !* and C$" of the 2enture&

Ma& Ne" Yor! Li6e I *'ra ce

!a; e5 3or6 (ife +nsurance Company (td& is a 7oint centre bet5een e5 e5 3or6 (ife a fortune 1..

!a; +ndia (imited: one of +ndiaFs leading multi business corporation and 3or6 (ife +nternational: international arm of

company has positioned itself on the >uality platform& +n line 5ith is vision to be the most admired (ife insurance Company in +ndia: it has a strong corporate governance model based on the core values of e;cellence honesty: 6no5ledge: learning: integrity and team 5or6 incorporated in -...& !a; !a; e5 3or6 started commercial operation in -..1& +n line 5ith its values of financial responsibility e5 3or6 life has multi channel distribution spread across the country& Agency distribution is the primary channel complemented by partnership: distribution: ban6 assurance: alliance mar6eting and dedicated distribution for emerging mar6ets& )he company currently has around /?:... Agent Advisors and more than D.. o5n employed sales force at C1- offices across ?D/ cities& )he company also has ?B referred tie ups 5ith ban6s: -@ partnership distributions and alliance mar6eting relationships each& )he company has 1?? offices dedicated to rural areas& !a; e5 3or6 invests significantly in its training programme and each agent is trained for around 1.. hours as opposed to the mandatory A. hours stipulated by the +R*A before beginning to sell in the mar6et place& )raining is a continuous process for Agents at !a; e5 3or6 (ife and ensures development of s6ills and 6no5ledge through a structured programme spread over @.. hours in t5o years& )his focus on continuous >uality training has resulted in the company having amongst the highest agent pass rate in +R*A e;amination and the agents have highest productivity among private life insurance companies&

SNAPSHOT
*ate of $stablishment Address -... !a; e5 3or6 (ife +nsurance Company (td& !a; House ?rd Floor 1 *r& =ha !arg: "6hla: e5 *elhi0 11..-.: +ndia Iey persons Analgit Singh Chairman :!a; +ndia ltd #ary R& %annett0 !* And C$" !a; e5 3or6 (ife +nsurance Co& (td& Anuroop E)onyF Singh0 2C ! 3(+C (td& )heodore A !aths 9resident 4 C"" !a; e5 3or6 (ife +nsurance Company "vervie5 +t is an +S" /..1G -... certified Company )he company has recently partnered Symbiosis +nstitute of %usiness !anagement to launch 9ost #raduate *iploma in %usiness !anagement 5ith Speciali<ation in (ife +nsurance& +t promises an atmosphere of run Career gro5th and earning opportunities for its employees& +t %elieves in enhancing the potential of its employees organi<ation0 to influence change in the

Recr'it%e t a # Rete tio *trate$ie* o6 1.LIC o6 I #ia. 3.HDFC Sta #ar# li6e. 5.Ma& Ne" Yor! Li6e I *'ra ce Co%+a ).

Recr'it%e t
Recruitment means to estimate the available vacancies and to ma6e suitable arrangements for their selection and appointment& +n the recruitment processK the available vacancies are given 5ide publicity and suitable candidates are encouraged to submit applicationK in order to have a pool of eligible candidates for scientific selection& +n recruitment process K information is collected from interested candidate for different sources of recruitment such as ne5s paper advertisement: employment e;changes internal promotion etc& are used& +n the recruitment process a pool of eligible and interested candidates is created for the selection of most suitable candidates& Recruitment represents the first contact that a company ma6es 5ith potential employees& An Agent is not an employee of the company but their recruitment should be given e>ual importance as that of employees of a company& ;,o ca :e a A$e t o6 Li6e I *'ra ce Co%+a )< Section @- '@, of the amended +nsurance Act: 1/?D states an agent is one 5ho is not0 A minor Found to be unsound mind by a Court of =urisdiction Found guilty of criminal bac6ground An urban Agent must be 1-th standard passed and rural agent must be 1. th standard passed&

in ordinary procedure for recruiting candidates is described in follo5ing diagram&

Start

(ist of prospective candidates Contacting

" +nterestedL 3$S +ntervie5 5ith S*! Short listing $nd

+nterestedL

" $nd 3$S

)raining programme

") C($AR$* +C0?? L $;am C($AR$* Contract 5ith company $nd Reappear

For the Recruitment of agents the target is given to the Recruitment Consultants 'RCs, and Sales *evelopment !anagers 'S*!s,& )hese people follo5 the steps sho5n in the figure& )he list of prospective candidates may include nature mar6et of people 5ho personally contact RCs and S*!s to become an agent relatives and references collected from them& After contacting all prospective candidates those 5ho are interested to become an agent undergo initial screening by Sales *evelopment !anagers and selected candidates undergo a training programme of A. hours as compelled by +R*A& "nce the training is over the candidates undergo +C0?? e;amination conducted by +R*A: clearance at this e;amination leads candidates to ma6e a contract 5ith the sponsoring company& H*FC as 5ell as (+C follo5s the same process for the recruitment of Financial Consultants/ Agents& %ut !a; e5 3or6 (ife +nsurance Company follo5s a comple; process

of recruitment as sho5n in the figure

Start ame #athering in 9-.. Short listing Contacting " +nterestedL 3$S +nitial Screening A) Career Seminar 4 9-.. " +nterestedL 3$S Career intervie5 FCS $nd $nd

+C0?? L

") C($AR* Reappear C($AR*

Contract 5ith ! 3(

$nd

1&

Na%e $at,eri $ i P 3== ame gathering in 9 -.. consists of people 5ho you 6no5 from natural mar6et and references from their sources& As a management trainee 5ere given a tas6 to gather -.. names&

3. S,ort li*ti $ Candidates are short listed from the 9 -.. as per the eligibility criteria dra5n by the company& "nly eligible candidates are considered for the ne;t process& 5. Co tacti $ Candidates are called either as nominator or prospective Agents and meeting is fi;ed 5ith them according to the convenience of both party& Here script plays very important role in fi;ing appointment 5ith the prospect& 7. I itial Scree i $ +nitial screening is ta6en if candidates are found eligible to @ points model& +n initial screening: a sales manager first gives introduction about the company& )hen several >uestions such as his family bac6ground his natural mar6et: traits for a sales person and his present and past e;perience of his 7ob are >uestioned& $very candidates is re>uired to get at least ? point in eligibility model of the company& )he eligibility standard for Agent Advisor selection grouped as follo5s& +n case of score less than ? special <onal head approval is re>uired& Fi(e +oi t *)*te% Age -A and over #raduate !arried (ived in city more than A years A) Score >. Na%e $at,eri $ i P 3== 1 point 1 point 1 point 1 point 1 point 'if passed,

ame gathering in 9 -.. consists of people 5ho you 6no5 from natural mar6et and references from their sources& As a management trainee 5ere given a tas6 to gather -.. names& ?. S,ort li*ti $ Candidates are short listed from the 9 -.. as per the eligibility criteria dra5n by the company& "nly eligible candidates are considered for the ne;t process& @. Co tacti $ Candidates are called either as nominator or prospective Agents and meeting is fi;ed 5ith them according to the convenience of both party& Here script plays very important role in fi;ing appointment 5ith the prospect& A. I itial Scree i $ +nitial screening is ta6en if candidates are found eligible to @ points model& +n initial screening: a sales manager first gives introduction about the company& )hen several >uestions such as his family bac6ground his natural mar6et: traits for a sales person and his present and past e;perience of his 7ob are >uestioned& $very candidates is re>uired to get at least ? point in eligibility model of the company& )he eligibility standard for Agent Advisor selection grouped as follo5s& +n case of score less than ? special <onal head approval is re>uired& Fi(e +oi t *)*te% Age -A and over #raduate !arried (ived in city more than A years A) Score 1 point 1 point 1 point 1 point 1 point 'if passed,

B. NAT

umbering Ability )est is ta6en& 9assing score is A.H 1=.Career I ter(ie" 9-.. is evaluated in career intervie5& +t candidates mar6et is found 5orth: he is selected to attend )raining and development programmed& 11.FCS All the selected candidates are re>uired to attend -- day training session for receiving the license from +R*A to become an Agent Advisor& 13.Co tract All successful candidates having legal license of +R*A are contracted 5ith ! 3( &*ue to such comple; process at Recruitment it is not so easy to become an Agent Advisor at !a; e5 3or6 (ife +nsurance Company& )he ob7ective of such tedious process is to recruit only competent intelligent and loyal Agent Advisors& )his process helps the company to 6eep its attrition rate to minimum&

RETAINTION

Rete tio
+t is very difficult to retain people in sectors li6e %9" '%usiness 9rocess "utsourcing, and +) but it is 5orst in case of +nsurance industry conservatives estimates put the attrition rate of ?AH to @.H in insurance industry& $mployees tend to leave organi<ation for various reasons li6e better salary pac6age 7ob dissatisfaction unhealthy 5or6ing environment& +n case of agency 5or6 force of +nsurance company: agent leave them because their 7ob is commission based and not salary based& 9rivate as 5ell as government life insurance companies emphasi<e on providing better facilities to their agents in order to retain them in the organi<ation& 9lanning and evaluation can be defined as provision of benefit facilities given to employees of the company so that they 5ont leave the company& Rete tio Strate$ie* %ai l) i cl'#e 1, !otivation of policy Companies provide very attractive commission structure for their agents& )he commission rates vary from -.H to @.H on paid premium in the first year of policy& Apart from the commission other motivational efforts play a significant role in retaining agents in the organi<ation& At initial level agents feel motivated by some non0monetary benefits li6e a pen set 5ith companies logo on it: A cup or mug 5ith agents o5n name printed on it: visiting card of his name etc& As the performance of an agent improves he receives some additional benefits li6e certificate of an organi<ation: trophies: additional monetary benefits apart from commission&

 $ven letter heads mobile bill reimbursement facility provision of soft loan and laptops are given to the agents& *ifferent contest are arranged at every branch of the company on monthly: >uarterly and yearly basis so as to motivate agents to perform 5ell& Agent 5hose performance is outstanding gets a membership for that year of different clubs formed by insurance companies for e&g& Category of club 1, Silver club -, Silver plus club !onetary benefits Rs&1&A (ac6s Rs& ?&A (ac6s on0monetary benefits 9en set: *iary Silver club benefits M A.:... accidental ?, gold club @, gold premier club Rs& /&A (ac6s Rs& 1/ (ac6s insurance Silver plus clubM foreign trip #old club benefit M Fees for childrenFs A, 9latinum Club Rs& ?C (ac6s education #old 9remier club M Foreign trip family !embership of such club is a symbol of status for agent and helps companies to retain their agents& -, =ob on companyFs pay roll& )he potential agents are also offered a salary based 7ob in the company& )he 7obs offered are of Sale *evelopment !anager 9ost or Unit !anager 9ost& ?, $stablishing good relation 5ith agents& Sale development !anager ta6e special efforts to inculcate the

companyFs core values into every agents mind& S*! convince agents that the company is one big family and he 'agent, is a part of it& +t helps a company to retain their agents 5ithout much efforts& %ut the retention policies need to be revised continuously in order to maintain its effectiveness& "utdated strategies 5ould not help to retain agents& As the overall life style changes the retention policies must also be changed accordingly&

ATTRITION

Attritio
"ne might have heard of high 7ob attrition of bet5een 1AH and -.H in soft5are sector but even these pale in comparison to the 6ind of turnover that the insurance industry 5itness 5ith its agency force conservative estimates put the attrition rates at ?A to @.H )he opening up of the sector five years ago provided insurance agents 5ith ne5 opportunity and an image ma6eover as life insurance advisors& %ut little has changed in the basic nature of the business insurance still needs to be sold to a reluctant population& !ost Agents or advisors 5ho 7oin insurance company enthusiastically spurred by dreams of 5or6ing at oneFs o5n hours: getting full re5ard for the hard 5or6 and other such motivational spiel meet reality soon enough& "nce the initial list of potential customers such as close relatives: friends and neighbors is e;hausted the climb for an agent is uphill& $ven meeting the minimum re>uirement of bringing in t5o viable insurance proposals every month proves daunting& For some companies the target in terms of sum assured is Rs& 1 la6y for some others it is as lo5 as Rs& 1.:.../0 8hen the re7ection starts and the doors start getting banged in the face ne5 agents confront failure the drop out begin& !r& (alit Iumar *ash $;ecutive *irector 'mar6eting, (+C: Says the attrition rate is about ?AH in the first year of recruitment& )his goes do5n to about 1DH by the @th year& !ost of these 5ho deep out are non0performers& Agrees !r& Rahul Sinha vice 9recident '!ar6eting, of Iota6 !ahindra "ld !utual (ife +nsurance Company and says last year the attrition rate 5as much 5orse than ?.H it has been a cause for 5orry and 5e are trying 5as our best to stem it&

Attritio t,e co ce+t +n the best of 5orldFs employees 5ould love their 7obs: li6e their co0 5or6ers 5or6 hard for their employers get paid 5ell for their 5or6 have ample chances for advancement and fle;ible schedules they could attained to personal or family needs 5hen necessary and never leave& %ut then there is a real 5orld and in the real 5orld employees do leave either because they 5ant more money: hate the 5or6ing conditions: hate their co05or6ers: 5ant a change or because their spouse gets a dream 7ob in another state so 5hat does that entire turnover cost L And 5hat employees are li6ely to have highest turnover L 8ho is li6ely to stay the longestL De6i i $ Attritio A reduction in the number of employees ta6es place through retirement: resignation or death etc& De6i i $ attritio rate )he rate of shrin6age in si<e or number& Rea*o * 6or attritio +t is not easy to find out as to 5hat contributes and 5ho has the control on the attrition of employees& 2arious studies conducted indicate that everyone is contributing to the prevailing attrition& Attrition does not happen for one or t5o reasons& )he 5ay the industry is pro7ected and speed at 5hich the companies are e;panding has ma7or part in attrition& )he reasons for attrition are varied in nature& Some common reasons for attrition are0 1. Or$a i4atio al %atter*

)he employees al5ays assesses the management values: 5or6 culture: 5or6 practice and credibility of the organi<ation )he +ndian companies do have difficulty in getting the business and retain it for a long time& )here are al5ays ups and do5ns in the business plans& on availability of the campaigns ma6es people to >uic6ly move out of the organi<ation& 3. ;or!i $ E (iro %e t 8or6ing $nvironment is the most important cause of attrition& $mployees of the organi<ation e;pect a friendly and learning environment& $mployees loo6 for freedom: good treatment from the superiors: good encouragement: friendly approach from one and all and good motivation +n absence of such environment employees leave the organi<ation& 5. Jo: Matter* )he 7ob today brings lot of pressure and stress& )he employees often leave organi<ation due to this reason& Also lac6 of 7ob satisfaction is the reason for resignation of employees& 7. Salar) a # ot,er :e e6it* !oving from one 7ob to another for higher salary: better positions and better benefits are the most important reasons for attrition& Some e;tended reasons for highest attrition rate in insurance industry are given belo5& 1. Lac! o6 I 6or%atio re$ar#i $ t,e 0o: o6 li6e i *'ra ce a$e t* Recruitment Consultants 'RCs, to achieve their target of recruitment contact number of people and recruit them 5ithout giving sufficient information about the 7ob they are supposed to perform for the company&

3. It i* a +art ti%e 0o: Financial Consultants or Agents are not the employees on companyFs payroll& 8hen people are not having a full time 7ob: they 5or6 for the company but after getting a 7ob of full time they tend to ignore their 5or6 as an agent and this finally results into termination of their license& 5. Sat'ratio o6 at'ral Mar!et )he natural mar6et consists of family: friend: colleagues etc& "nce this list is over agents find it difficult to fulfill the companyFs e;pectations& 7. Lac! o6 *'++ort :) Sale* De(elo+%e t Ma a$er -SDM*. Some agents even if they are 5illing to get business for the company due to lac6 of motivation and support by their Sales *evelopment manager cannot meet companyFs e;pectation leading to termination of license by +R*A& >. Per*o al Rea*o * )he personal reasons are many and only fe5 are visible to us& )hey are 5ide from getting married to relocation for health or family reasons& )he ne;t important personal reason is going for higher education& Health is another aspect 5hich contributes for attrition&

Re*earc, O:0ecti(e*

Re*earc, O:0ecti(e*

1,

)he ob7ective of study is to analy<e the recruitment and retention process (ife +nsurance Companies&

-, ?,

)he study is aimed at understanding the 5or6ing of Agents/FCs/AA& )he Study is also meant for providing reasonable solutions to the problem after analysis of the recruitment and retention strategies of different life insurance companies&

Re*earc, Met,o#olo$)

Re*earc, Met,o#olo$)
Research can be defined as a systematic effort to gain 6no5ledge& A research is carried out by different methodology 5hich has their o5n pros and cons& Research !ethodology is a 5ay to solve research problems along 5ith the logistic behind them& )hus 5hen 5e tal6 of the research methodology 5e not only tal6 about research method but also conte;t of our research study and e;plain 5hy 5e are using a particular method or techni>ues and 5hy 5e are not using other so that research results are capable of being evaluated by the researcher himself or by others& Research methodology means the method carried out to study the problem it sho5s the type of the sample design used: its si<e and the procedure used to de5& )he e;tent of precision achieved and the method used for handling any special problems during the course of the study& Re*earc, %et,o#olo$) ,a* 6ollo"i $ *te+* 0 Step 1& Step -& Step ?& Step @& Step A& Step B& Step C& Step D& )o decide the ob7ective of the study )o design research design )o determine the source of data& )o design data collection form '>uestionnaire,& )o determine sample si<e and sample design& )o organi<e and conduct field5or6& )o process and analy<e the collected data& )o prepare research report&

E&+la atio
Ste+ 1. To #eci#e t,e o:0ecti(e o6 t,e *t'#) to :e carrie# o't.
)he ob7ective of the study as stated in the previous chapter 5ere finali<ed so as to initiate the survey for the study&

Ste+ 3. To #eci#e t,e re*earc, #e*i$ .

8hat is research designL Research design is a plan: structure strategy of an investigation conceived so as to obtain ans5ers to research >uestions and control variance& )here are three type of research design system& $;planatory Research *escriptive Research Casual Research& Among the above mentioned types descriptive research design has been chosen& *escriptive research is to find an efficient sales force of Agents / Financial Consultants / Agent Advisors& +n order to study the characteristics and variables: cross sectional analysis 5as conducted by using field survey method in the process of field survey a >uestionnaire 5as developed and circulated among respondents 5hich formed the basis for entire research&

Ste+ 5. To #eter%i e t,e *o'rce* o6 #ata.

*ata sources are the collection of fresh hand data to obtain results& )here are types of data sources& Pri%ar) #ata

9rimary data is that 5hich is collected fresh and thus happen to be original in character& Seco #ar) #ata Secondary data is any data 5hich have been gathered earlier for some other purpose& Among the above mentioned types: primary data 5as used for the study and analysis of the ob7ective of this pro7ect& Also the secondary data proved to be helping in framing up the industry scenario and also the relevant topics in the entire pro7ect report& Rea*o * 6or *electi $ +ri%ar) #ata +n terms of primary data structure >uestionnaire 5as prepared to intervie5 the professionals: students: house 5ives: investment consultants: post office agents etc& in )hane: 2asai and Ratnagiri location& Analysis clearly reflected the vie5s and preference regarding the perception of the people to5ards 7oining life insurance companies&

Ste+ 7. To #e*i$ #ata collectio .

)here are t5o types of mode to collect the data& "bservation method Survey method& As far as the data collection method for this pro7ect is concerned: designing the data collection forms or survey form is applicable to the pro7ect& )he method selected 5as survey method& A survey can be conducted by0 9ersonal intervie5 )elephonic intervie5

Amongst the above methods personal intervie5 method 5as selected and conducted to gather information to detail& )his method 5as chosen because along 5ith the study of pro7ectFs primary ob7ective i&e& study of people 5as achieved&

For%'latio o6 C'e*tio

aire

J&1, 8hen you thin6 of insurance 5hich company name comes first to 3our mindL Ans G J&-, 8hich other companies are you a5are of L Ans G J&?, *o you 6no5 about life insurance companiesL Ans G 'a, 3es 'b, o

J&@, *o you 6no5 about the 5or6ing of an agent of any life insurance company L Ans G 'a, 3es 'b, o 'c, +nsufficient +nformation&

J&A, *o you currently have an agency of any life insurance CompanyL Ans G 'a, 3es 'b, o

J&B, 8hat 5ould be the si<e of your social contact base 5ho 6no5 you by your nameL '$&g& G Friend: family: relative: colleagues if any NNN& etc&, '!ention in appropriate numbers&, Ans G

J&C, Ho5 many members of your family are dependent on the income earner of the familyL J&D, *o you have an idea about financial mar6etL Ans G 'a, 3es 'b, o

J&/, *o you have any sales e;perienceL +f yes: of ho5 many yearsL Ans G 'a, 3es 'b, o card:

J&1., *o you have e;perience in selling financial productL $&g& credit insurance etcL +f yes: of ho5 many yearsL Ans G 'a, 3es ' , 'b, o ' ,

J&11, 8hat do you thin6L +n todayFs scenario life insurance is A * *$!A *L Ans G

$$*: 8A )

J&1-, +n 5hich of the financial mar6et you have invested your moneyL Ans G 'a, Share 'b, !utual Fund 'c, +nsurance

J&1?, Are you interested in getting the opportunity of earning some additional income as being Agent of any life insurance companyL 8hyL Ans G 'a, 3es 'b, o

Set+ > 2 To #eter%i e *a%+le #e*i$ , *a%+le *i4e *a%+le *i4e *+eci6icatio D

-.. respondents 5hich include professionals: unemployed students: house 5ives: investment consultants: post office agents& )he distribution of this sample si<e 5as decided to be as 1.. respondents at )hane 'Urban area,: A. respondents at vasai 'semi O urban area, and A. respondents at Ratnagiri 'rural area, in order to compare the difference in these areas&

Fiel# Met,o#olo$) )he methodology adopted in the field to collect the data represented diagrammatically belo5&

Segmentation of people

Filling up >uestionnaire

!eeting 5ith people

Data collectio A # Ta:'latio

DATA COLLECTION AND TABULATION

+n order to determine the 5illingness of respondents to become an Agent: Financial Consultant or Agent Advisor for (+C: H*FC Standard (ife or !a; e5 3or6 (ife +nsurance Company: the data 5as collected from )hane: 2asai and Ratnagiri regions& )his data 5as treated for Analysis and interpretation& All the respondents 5ere classified under parameters li6e professionals: students: house 5ives: investment consultants and post office agents etc& J& Are you interested in getting the opportunity of earring some additional income as being Agent FC/AA of any life insurance company& OCCUPATIONAL CLASSIFICATION Re*+o *e Re*+o #e t* 9rofessionals 8or6ing employees House 5ives Students 9ost office agents +nvestment consultants Total Ye* / 1@?C 11 1@ 13> No A 1-@ -1 @ B @>

From the above pie0chart one can say that about B-&AH of respondents are 5illing to become agent at a life insurance company from remaining ?C&AH at respondents some respondents 5ere already agents of one or the other life insurance company&

?A&C-H B@&-DH

I #e& 0 3es 0 o

Pro6e**io al*

)hese respondents included C&A&: *octors: 9rofessors of 5hich B@&-DH 5ere 5illing to become an agent: mainly because their base of personal contact is good& Amongst these respondents ?A&C-H 5ere not interested in becoming an agent of any life insurance company& AA&AAH @@&@@H I #e& 0 3es 0 o

8or6ing $mployees&

8or6ing employees lac6 desire to become an agent& "ne can say this from their response sho5n in the pie0chart& "nly @@&@@H i&e& 1- respondent out of -C 5or6ing employees 5ere 5illing to become an agent of a life insurance company 5hereas 1A respondents 5ere not interested in such 7ob&

?B&?BH B?&B?H

I #e& 0 3es 0 o

)he a5areness amongst students regarding a 5or6ing at an agent 5as very impressive B?&C/H House 5ives B?&B?H at total house 5ives are 5illing to earn some money of their o5n by becoming an agent of a life insurance company remaining ?B&?BH at house 5ives had very less information about the 5hole insurance sector&

?B&-.H B?&C/H

I #e& 0 3es 0 o

St'#e tE*

)he a5areness amongst students about a 5or6ing of an agent is very good& B/&C/H of student respondents sho5ed their 5illingness& )o become an agents of a life insurance company but ?B&-.H at students 5ere not interest to become an agent of any insurance company&

-B&BBH C?&??H

I #e& 0 3es 0 o

Po*t o66ice a$e t*

)he highest response of C?&??H to become an agents 5as sho5n by post office agents from these percent of 5illing respondents about B.H referred to become an agent of (+C&

?.H C.H

I #e& 0 3es 0 o

I (e*t%e t co *'lta t*

1@ of -. investment consultants 5anted to become an agent and thin6s it as a complementary career to their regular Remaining ?.H of respondents 5ere investment consultancy only and didnFt prefer to become an agent of a life insurance company&

De%o$ra+,ical cla**i6icatio Re*+o *e Re*+o #e t* !ale Female )otal Ye* No Total

BD AC 1-A

-C @D CA

/A 1.A -..

-D&@-H C1&ACH

I #e& 0 3es 0 o

Male

C1&ACH of male respondents 5ere ready to become an agent of a life insurance company and only -D&@-H of male respondents 5ere not interested in the proposal&

@A&C1H A@&-DH

I #e& 0 3es 0 o

)he percentage of 5illing and un5illing female respondents 5as almost e>ual& )his is mainly because 5or6ing have very less time to spend on 7obs li6e insurance agents& )hose 5omen 5ho 5ere 5illing to become an agents ma7ority of 5omen 5ere house& House 5ives have ample at time to spend for such 7obs&

Geo$ra+,ical Cla**i6icatio Response Respondents )hane 'A. respondents, 2asai '1.. respondents, Ratnagiri 'A. respondents, 3es o

?A BC -?

1A ?? -C

?.H C.H

I #e& 0 3es 0 o

T,a e

"ut of A. respondents at )hane city C.H i&e& ?A respondents sho5ed the 5illingness to become an agent at a life insurance company and is respondents 5ere not interested in becoming an agent of a life insurance company&

??H BCH

I #e& 0 3es 0 o

8a*ai

$ven though there are various options available for earning money in urban and semi0urban areas: becoming an agent of a life insurance company is the most preferred one 5e can say this because out o f1.. respondents of vasai )alu6a BC respondents 5ere 5illing to become an agent of a life insurance company&

I #e& A@H @BH 0 3es 0 o

Rat a$iri

9eople in Ratnagiri are less a5are about the 5or6ing of a life insurance agent& "nly @BHrespondents at Ratnagiri district sho5ed their 5illingness to become an agent& !a7ority of respondents have never even heard about any other life insurance company apart from (+C and most of the respondents 5ere not eligible as prescribed by +R*A

Fi #i $*

F+ *+ #S
1& Respondents are less a5are of the private insurance companies that e;ist in the mar6et& -& Some respondents 5are 5illing to become an agent of life insurance company: 7ust because it is a part time 7ob& ?& Some professionals li6e CA: )a; planner etc 5anted agency rather than to be an agent of an insurance company& @& ! 3( is too selective in recruiting AA than to appoint any one li6e (+C& A& )hose respondents 5ho didnFt 5ant to become an insurance agent: mainly because it is on commission based remuneration activity& +nstead of commission based 7ob: respondents preferred a salary based 7ob& B& $ducated respondents are no5 vending to5ards private insurance companies: due to the attractive pac6ages and services provided by various ne5 insurance companies& C& (+C has created a brand in ?0@ decades: due to 5hich: ne5 insurance companies are facing trouble in capturing mar6et share& D& $ducated respondents prefer H*FC Standard (ife insurance company because the recruitment process of H*FC Standard (ife is less comple; than ! 3( insurance and has better image as FC rather than being an Agent of (+C& /& 8or6ing 5omen are less interested because at home and office&

1.&House 5ives: especially 5ell educated house 5ives are able to give enough time and therefore they are 5illing to become an insurance agent&

Co cl'*io *

C" C(US+" S
After collection of data: analysis and interpretation 5as made: on 5hich conclusions are dra5n& )hose conclusions areG 1& Respondents still prefer government insurance company rather than private insurance company due to its reliability& -& ?& @& Respondents are more brand oriented rather than product oriented& Respondents are less a5are about private insurance companies& Rural respondents of Ratnagiri are less a5are of private insurance companies and 5or6ing of their agents than respondents of )hane and 2asai& +nsurance companies are trying to convince customers for a product 5hich does not have any present relevance i&e& each policy: 5hich the customer is going to purchase: 5ill have a future set of action and benefits& *ue to 5hich most of the people li6e to invest in those securities or investments: 5hich 5ill give them a fruitful return 5ithin short period& )he private players are on their 5ay: but they need lot of time investment for creating a favorable brand image&

S'$$e*tio *

SUGGESTIONS
1& 9eople should be made a5are of the brand name of insurance company through advertisement& -& 9rivate companies should use traditional 5ays of promotion in rural locations& (atest communication facilities are lac6ing in some parts of Ratnagiri district& )raditional method may include various cultural programmes li6e EHari6athaF or E9uppetry sho5sF etc& ?& E!elasF: 5hich are also called as E=atraF in the !aharashtra state can be used for creating a5areness of life insurance companies among rural people& @& )he fear in peoplesF mind should be removed by companyK using aggressive methods of mar6eting& A& 9rivate companies should try to nurture their brand name by providing timely and attractive facilities to the people& B& +nsurance companies should ma6e clear all the details of 7ob of an agent before recruiting them& C& AgentsF feedbac6 must be studied scientifically and continuously as their 5ants and needs change continuously: so as to design a viable agent retention strategy of the company&

A++e #i&

Appendi; A::re(iatio * 1& -& ?& @& A& B& S*! O Sales *evelopment !anager (+C 0 FCs O AAs O (ife +nsurance Corporation of +ndia Financial Consultants Agent Advisors

! 3( 0 !a; e5 3or6 (ife H*FC O Housing *evelopment Financial

Corporation C& D& /& 1.& 11& Authority& S( O Standard (ife& F9S O Five 9oint System A) O umbering Ability )est FCS O Fundamental career Seminar +R*A O +nsurance Regulatory and *evelopment

Bi:lio$ra+,) A # ;e:lio$ra+,)

%ibliography 1& -& +C ??& O Human Resource !anagement O %y Iale and Ahmad&

8ebliography
1& -& ?& @&

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