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SBI LIFE INSURANCE
Sa byasachi Chakraborty
INTRODUCTION TO THE INDUSTRY
1.1 Introduction The insurance sector was opened up in the year 1999 facilitating the entry of private players into the industry. With an annual growth rate of 24.31 percent and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of Government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. According to the CSO, the insurance and banking services’ contribution to the country’s GDP is 7.1 percent out of which the gross premium collection forms a significant part. Life insurance penetration in India was less than 1 percent till 1990-91. During the ‘90s, it was between 1 and 2 percent and from 2001 it was over 2 percent. In 2003-04 it was 2.4 percent. In 2007-08 it was 14percent. The impetus for increase is due to the active role played by IRDA in licensing private players and taking positive steps in increasing the insurance awareness among the people. Besides, the insurance companies in general and private insurance companies in particular, are reaching out to untapped potential in rural areas with aggressive campaigns.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Life insurance is viewed as a tax saving device. People are now turning to the private sector for providing them with new products and greater variety for their choice. The improvement in FDI flows reflected the impact of recent initiatives aimed at creating an enabling environment for FDI and for encouraging infusion of new technologies and management practices. The Government’s proposal to increase the FDI cap in the insurance sector from the present 26 percent to 49 percent has raised expectations among the international insurance companies. 1.1.1 Definition “Insurance is a contract in which sum of money is paid to the assured in
consideration of insurer’s incurring risk of paying a large sum upon a given contingency.” --- Justice Tindall
“Insurance is a contract by which one party for a compensation called in the premium assumes particular risks of the other party and promises to pay to him or his nominee a certain sum of money on a specified contingency.” --- E.W.Fitterson “Insurance may be described as social device whereby a large group of individuals, through a system of equitable contribution, may reduce certain measurable risk of economic loss common to all members of the group.” --- Encyclopedia Britannica The above definitions clearly shows that insurance is a cooperative device to spread the loss caused by a particular risk over a member of persons who are exposed to
it and who agree to insure themselves against risk. Insurance does not eliminate risk but only reduces the financial burden, which may be very heavy.
Evolution of Insurance In the days of yore insurance was in its crude form and was cooperative and
voluntary in nature. When, where and how it originated is still a matter of research in one way or the other was prevalent in olden days. We can trace its history from the evolution society from hunting stage to the modern industrial age. A word “YAGCHHEM” occurs in the world’s most ancient Hindu Scripture Rig Veda. The word “YAGCHHEM” means insurance. It clearly indicated that about four thousand years ago insurance was prevalent in its crude form. It was cooperative and voluntary in nature. People formed different groups of organizations to share the loss among themselves incase of a particular risk. Each member contributed some amount to a common fund to meet the unforeseen losses. Sometimes they also contributed equally to compensate person as and when he suffered a loss. Traces of insurance in the ancient world are also found in the form of marino trade loans or carriers contracts which included an element of insurance. Evidence is on records that arrangements embodying the idea of insurance were made in Babylonia and India at quite an early period. References were made to the concept of insurance in Manu’s code “Manu Smrity”. It was akin to “Yagakshemo” of Rigveda in which the well being and security of the community was aimed at. However, there is no evidence that insurance in its present farm was practiced prior to twelfth century.
Nature of Insurance The insurance has the following characteristics which are observed in cases of
life, marine, fire and general insurance. 1. Sharing of risks: Insurance is a cooperative device to share the financial losses which might befall on an individual or his facility on the occurrence of specified event such as sudden death of the bread winner, marine perils in marine insurance, fire in the fire insurance and theft insurance etc. in the case of general insurance. 2. Cooperative device: A large number of persons agree to share the loss arising sue to a particular risk. Thus, insurance is a cooperative device. 3. Value of risk: The risk is evaluated before insuring to charge the amount of share called premium. 4. Payment made at contingency: The payment is made at a certain contingency insured. The Contingency may be death, fire, marine perils etc. 5. Amount of payment: The amount of payment depends upon policy insured.
Functions of Insurance A) Primary Functions1) Insurance provides certainty: Insurance provides certainty of payments at the uncertainty of losses. The element of uncertainty is reduced by better planning and administration. 2) Insurance provides protection: The risk will occur or not, when will occur and how much loss will be there. There are uncertainties of happening of 6
time and amount of losses. The main function of the insurance is to provide protection against the losses. 3) Risk sharing: Risk is uncertain and therefore, the loss arising from the risk is also uncertain. All business concern faces the problem of the risk and if the concern is big enough the handling of risk becomes a specialized function. Insurance, as a device is the outcome of the existence of various risks in our day to day life. It spreads the whole losses over a large number of persons who are exposed by a particular risk.
A) Secondary Functions1) Prevention of loss: Prevention is always better than cure. Prevention is by far the best solution to the problem of risk. It is more effective and cheapest method to avoid the unfortunate consequence. But sometimes prevention is not always possible and Effective. 2) Provides capital: It provides the capital to the society. For plan development of country there is a great need for huge amount of capital. Now days, the insurance companies are rendering positive help in the development of trade, commerce and industry of the country. 3) Improves efficiency: Achievement of goals, it improves not only his efficiency of the masses is also advanced. The insurance eliminates worries and miseries of losses as death and destruction of property care free person can devote his energies for better. 4) Ensures the welfare of society: “Insurance is a saga of service and security” to thee society. Security of the life and property given by 7
insurance bring peace of mind to the insured. The investment in LIC in welfare schemes like electricity, housing, water supply, agro industry estates are able to solve many problems in India. 5) Helps in economic progress: Insurance provides an initiative to work hard for the betterment of the masses. Life insurance involves the element of saving investment through small savings. And which has been growing in recent years at an annual rate of about Rs. 400 crs. Life insurance is not a mere business organization; it has nobler welfare responsibilities in the development of the economy.
1.1.1 Introduction With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs.450 billion (US$10 billion). According to government sources, the insurance and banking services’ contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP. Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the of immense growth potential of the insurance sector.
The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and 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. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. RNCOS’s report, “Indian Insurance Industry: New Avenues for Growth 2012”, finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year (20042005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent. There are presently 12 general insurance companies with four public sector companies and eight private insurers. According to estimates, private insurance companies collectively have a 10% share of the non-life insurance market. Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and tabular format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies.
1.1.2 • • • • • • • • • • • •
Report Highlights Gains of liberalization in Indian insurance sector Indian insurance market segmentation by products Size of the market and market share of life insurers, in INR (crore) Market share of non-life insurers Forecast of life insurance growth up to 2012 Forecast of non-life insurance growth up to 2012 Market revenue of both public and private insurers Policies and measures taken by IRDA to develop the insurance market Research and development activities Regulation of insurance and reinsurance companies Major challenges that Indian insurance sector is facing Profiles of the major players
1.3.1 Definition “The life insurance contract embodies an agreement in which broadly stated, the insurer undertakes to pay a stipulated sum upon the death of the insurer to a designated beneficiary.” --- J.H.MAGEE
“Life insurance contract may be defined whereby the insurer, in consideration of premium paid either installment, undertakes to pay an annuity on the death of the insured of a certain number of years.” --- R.S.SHARMA
“A contract of life assurance is that in which one party agrees to pay a given sum on the happening of a particular event contingent upon the duration of human life in 11
consideration of immediate payment of a smaller sum by another.” --- BUNYON’S LAW
Advantages of life insurance
1. It is superior to an ordinary saving plan: this is so because unlike other saving plans, it offers full protection against risk of death. 2. Insurance encourages and enforces thrift : many people may not have the will power to continue a long term saving plan which they may formulate regular payments in face of money other uses to which their limited income could be put. 3. Easy installments and protections against creditors: the proceeds of a life insurance policy can be protected against the claims of the creditors of life assured by affection a valid assignment of the policies. 4. Tax relief: the income tax act exempts from tax that part of an individual’s income which is devoted to payment of life insurance premium. 5. Estate duty: life insurance is the most practicable way to ensure definite payment on one’s death without having resort to conversion of realizable asset at a loss.
Why Life Insurance
Life Insurance has come a long way from the earlier days when it was originally conceived as a risk covering medium for short periods of time, covering temporary risk situations, such as sea voyages. As life insurance became more established, it was realized what a useful tool it was for a number of situations, including –
1. Temporary needs / threats: The original purpose of life insurance remains an important element, namely providing for replacement of income on death etc. 2. Regular Savings: Providing for one's 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 for their family. 3. 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 investments, where the individual makes a one off payment. 4. Retirement: Provision for 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.
Let us take an example to understand the need for insurance: Mr. Pranay is 45 years of age and self-employed. His wife Nandini, who is a
housewife, looks after their two children aged 3 and 7 years. They stay in a rented accommodation, where the rent is 15,000 rupees per month. Mr. Atul has taken up a loan of Rs. 2 lakh. His monthly earnings on average are 40,000 rupees. Mr. Atul passes away in an unfortunate road accident. What are some of the financial implications of his death on his family? There may be several financial implications on his family. Some of these are: a) The monthly income, previously provided by Mr. Atul would stop. b) His wife and children may have to seek financial assistance from other relatives. 13
c) His wife may not have enough money to pay back the loan of Rs. 2 lakhs. d) The family may have to move into a cheaper accommodation. e) His widow may have to take up work to earn money. f) The education of his children may suffer. This simple example illustrates the impact premature death can have on a family, where the main earner has no life cover. Had Mr. Atul taken life cover, his family would not have faced such hardships in the event of his unfortunate death. A simple life insurance policy could have provided Mr. Atul's family with a lump sum that could have been invested to provide an income equal to all or part of his income. In simple words, insurance protects against untimely losses. Insurance has been found useful in the lives of persons both in the short term and long term. Short term needs like sudden medical costs and long term needs like marriage expenses etc can be met with using life insurance.
1.4 Life Insurance in India With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 percent to the country’s GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation “Malhotra Committee” was constituted by the 14
government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. 1.4.1 History The origin of insurance is very old .The time when we were not even born; man has sought some sort of protection from the unpredictable calamities of the nature. The basic urge in man to secure himself against any form of risk and uncertainty led to the origin of insurance. The insurance came to India from UK; with the establishment of the Oriental Life insurance Corporation in 1818. The Indian life insurance company act 1912 was the first statutory body that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were been established in India. Then the central government took over these companies and as a result the LIC was formed. Since then LIC has worked towards spreading life insurance and building a wide network across the length and the breath of the country. After the liberalization the entrance of foreign players has added to the competition in the market. 15
The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. In 1957 General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. In 1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. It was after this that 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Present Scenario The government of India liberalized the insurance sector in March 2000 with the
passage of the Insurance Regulatory and Development Authority (IRDA) bill. Policies come under the purview of the government appointed Tariff Agenty Committee. The opening up of the sector is likely to lead to greater spread and deepening of insurance in India and this may also restructuring and revitalizing of the public sector companies. A host of private insurance companies operating in both life and non life segments have started selling their insurance policies since 2001. Non life insurance market, In December 2000, the GIC subsidiaries were restructured as independent insurance companies. At the same time, GIC was converted into national re-insurer. In July2002, Parliament passed a bill, delinking the four subsidiaries from GIC. 16
Presently there are 12 general insurance companies with 4 public sector companies and 8 private insurers. Although the public sector companies still dominate the general insurance business, the private insurance companies have a 10 percent share of the market, up from 4 percent in 2001. In the first half of 2002, the private companies booked premium worth 6.34 billion. Most of the new entrants reported losses in first yr of their operation in 2001. Insurance costs constitute roughly around 1.2 – 2 % of the total project costs. Under the existing norms, insurance premium payments are treated as part of the fixed costs. Consequently they are treated as pass through costs for tariff calculations. For projects costing up to Rs.1 billion, the tariff Agent committee sets the premium rates, for projects between 1 billion and 15 billion, the rates are set in keeping with committee’s guidelines; and projects above 15 billion are subjected to reinsurance pricing. It is the last segment that has a number of additional products and competitive pricing. Insurance, like project finance, is extended by a consortium. Normally one insurer takes the lead, shouldering about 40-50% of the risk and receiving proportionate percentage of the premium.
INTRODUCTION TO THE ORGANIZATION
SBI Life Insurance
SBI Life Insurance Company Limited is a joint venture between the State Bank of
India and BNP Paribas Assurance. SBI Life Insurance is registered with an authorized capital of Rs 2000 crores and a Paid-up capital of Rs 1000 Crores. SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across the country, arguably the largest in the world. BNP Paribas Assurance is the life and property & casualty insurance unit of BNP Paribas - Euro Zone’s leading Bank. BNP Paribas, part of the world’s top 6 group of banks by market value and a European leader in global banking and financial services, is one of the oldest foreign banks with a presence in India dating back to 1860. BNP Paribas Assurance is the fourth largest life insurance company in France, and a worldwide leader in Creditor insurance products offering protection to over 50 million clients. BNP Paribas Assurance operates in 41 countries mainly through the banc assurance and partnership model. SBI Life has a unique multi-distribution model encompassing Banc assurance, Agency and Group Corporate. SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBI access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country ensuring true financial inclusion.
SBI Life extensively leverages the State Bank Group relationship as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans.
Mission “To emerge as the leading company offering a comprehensive range of life
insurance and pension products at competitive prices, ensuring high standards of customer satisfaction and world class operating efficiency, and become a model life insurance company in India in the post liberalization period.”
2.1.2 • • • • •
Values Trustworthiness Ambition Innovation Dynamism Excellence
Key Milestones A)Financial Year 08-09: • Bagged the coveted personal finance award-Outlook Money NDTV Profit “best Life Insurer 2008”. • Ranked among global top three in terms of number of Million Dollar Round Table (MDRT) members. 21
CRISIL has reaffirmed its highest financial rating AAA/Stable to SBI Life. In 2007 SBI Life became the first life insurer in India to receive this rating from CRISIL, country’s leading rating agency.
Recently ICRA, has assigned iAAA rating indicating highest claims paying ability to SBI Life Insurance.
Retains ISO 9001:2000 certificate for superior claim settlement process.
B) Financial Year 07-08: • Rated as the ‘The Most Trusted Private Life Insurer’ according to a survey conducted by Brand Equity in association with AC Nielsen ORG-MARG and the Economic Times Intelligence Bureau. • Became first life insurer in India to receive the highest financial rating ‘AAA’ from CRISIL, the country’s best known rating agency in 2007. • Ranked amongst global top five life insurance companies in the number of MDRT members. • Forayed into micro insurance with the launch of ‘Grameen Shakti’ in Bhubaneshwar, Orissa for the economically underprivileged sections of society. • Received ISO 9001: 2000 certification for superior claim settlement process. • Became the only domestic life insurer to achieve CMMI Level 3 certification for IT processes and software development capabilities.
B) Financial Year 06-07: 22
Second consecutive year of profitability. Leads Private Life Insurance Companies in Lives covered : 6.49 Million lives covered.
B) Financial Year 05-06: • Becomes the first Life Insurer to make profits.
2.2.1 Horizon- II SBI Life - Horizon II is a unique, non participating Unit Linked Insurance Plan in Indian Insurance Industry, where you need not to be a financial market expert. This plan offers the flexibility of Unit Linked Plan along with Automatic Asset Allocation which provides relatively higher returns on your money where as increasing death bench. Twin benefit of insurance cover and market linked returns profits provides higher security to Hassle-free investment management of funds from inception to maturity, Automatic Asset Allocation of funds, automatic rebalancing of funds at yearly intervals, free of cost higher protection, to meet your family financial needs. It is a unique, non-participating Unit Linked Insurance Plan. As per the plan and term chosen by you, SBI Life will invest the net premium amount into each of the funds mentioned.
Maha Anand SBI Life - Maha Anand is a simple & convenient unit linked plan, which provides
you insurance cover without any medicals. Life begins afresh when you become a parent and when the child takes that first step towards you, the moment is filled with cheer, enthusiasm never felt before. This moment marks a new beginning in the child’s life and there’s no looking back after that. The child keeps growing and so are his dreams, aspirations which always aim to reach horizon and you want your child achieve his/her dreams. But at the same time as a proud parent you also want to secure their future against rising cost of education and other necessities. 25
Key Features• • • • • • • • Twin benefit of market linked returns and insurance cover Simple Joining Process - No medical examination required Option to pay premium, as low as Rs 500 p.m. Choice of 3 fund options to choose from Flexibility to increase your investments, through Top-up Investment Flexibility through Switching and Redirection Options Liquidity through partial withdrawal’s Attractive Tax benefits under the Income Tax Act, 1961
Unit Plus- II We at SBI Life understand the basic needs for pension plan and give you financial
strength to maintain your life style even after the retirement. SBI Life - Unit Plus II Pension plan makes sure that you have regular income after you retire and also helps you to maintain your standard of living. This is a unit linked pension plan wherein the policyholder chooses an investment period from 5 to 52 years for a vesting age between 50 to 70 years. You can choose to pay either single premium or pay regular premium for the entire policy term. Your contributions are invested into 5 fund options as per your choice.
Unit Plus Child Plan We at SBI LIFE understand you better and hence have developed SBI Life - Unit
Plus Child Plan to suit you and your needs best. This Plan is meant for parents in the age group of 18-57 having a child between the age group of 0-15 years. Key Features• • • • Market related returns to match increasing cost of education Peace of Mind by giving you triple benefits Loyalty units to celebrate your child reaching 18 years New Investment Fund (Equity Optimizer Fund) in addition to existing funds. • • Pay Premium for a limited period and reap benefits over a long time. Flexible plan which adapts to your changing needs as and when you want.
Pension plan We at SBI Life understand the basic needs for pension plan and give you financial
strength to maintain your life style even after the retirement. SBI Life - Unit Plus II Pension plan makes sure that you have regular income after you retire and also helps you to maintain your standard of living. This is a unit linked pension plan wherein the policyholder chooses an investment period from 5 to 52 years for a vesting age between 50 to 70 years. You can choose to pay either single premium or pay regular premium for the entire policy term. Your contributions are invested into 5 fund option.
Key Features• • • • • • • • • • Choice to invest & control four different funds as per your risk appetite Choice to invest & control four different funds as per your risk appetite. Flexibility to choose between two options Pure Pension Pension cum Life Cover No medical required for Pure Pension, automatic acceptance facility Flexibility to increase regular contribution Top up payments: any amount, anytime Customize your plan by adding riders 15 days free look period
Smart ULIP In the current volatile market scenario you need a plan which not only protects
your investment, but also enables you to get market related returns. SBI Life - Smart ULIP is the perfect answer to your need, and will give you not only Guarantee on select NAVs during the first seven years, but also gives you the added attraction of participating in the market upside. Key Features• Guarantee of the highest of select NAVs, during the first seven years on maturity. • • Investment cum Insurance plan giving market related returns Convenience through shorter premium paying term, giving you a choice between two premium paying terms (PPT) • Power of more- Guaranteed Maturity NAV, continues beyond the premium payment term. • • Innovation structured investment fund-‘Flexi protect Fund’ Hassle free plan- we manage your investment, giving you maximum opportunity for growth while protecting your investments against adverse market conditions. • Attractive Tax benefits under the Income Tax Act, 1961
Health Products Financial planning is incomplete without planning health insurance. Due to
today’s hectic lifestyle, improper diet, lack of exercise we are at higher risk of contingencies of untimely serious illnesses. Sudden health problems could have deep hole in your pockets. Medical science has advanced by leaps and bounds in the last few decades. There’s a definite need to cover for health insurance to reduce the financial burden. SBI Life Insurance features both individual and group products like: 1. Unit Linked Products- this is a single non participating product group that meets both the financial as well as insurance needs. 2. Pension Products- these comprehensive plans help to meet your post retirement financial needs. 3. Pure Protection Products- nobody can predict future. So, any time anything can shatter one’s dreams. Pure Protection Products help to keep one safe and secure during these trouble times. SBI Life also offers some protection cum savings products and money back scheme products. SBI also has products for brokers. These products take inspiration from the endeavors of various industries and make your life easy.
SBI Life Insurance Company has outperformed ICICI Prudential Life Insurance
in terms of new business premium collection this year, according to the data published by the Insurance Regulatory and Development Authority (IRDA). Life Insurance 30
Corporation (LIC) still retains the top rank among all the insurers, with a market share of 61.88 per cent in the first two months (April-May) of the present financial year. SBI Life has taken the second position, with Rs 783.94 crore new business premiums collected in this year, amounting to 9.06 percent of the market share. ICICI Prudential Life Insurance, which still has the largest market share among the private life insurers as per capitalization and number of lives covered, has slipped to the third rank, with a premium collection of Rs 483 crore and a market share of 5.59 per cent up to May. SBI life had collected Rs 546.34 crore in the previous year compared with ICICI Prudential that had gathered Rs 951.76 crore. SBI Life Insurance has a capital of Rs 2,000 crore and a paid-up capital of Rs 1,000 crore. SBI owns 74 per cent of the total capital with BNP Paribas Assurance holding the remaining 26 per cent. According to figures made available by IRDA, LIC was on the top position with a market share of 41 per cent on the new business premium collection in the previous year. LIC was followed by ICICI Prudential, with 12.2 per cent market share and SBI Life, with 8.9 percent. The insurance companies’ ranking is often based on the new business premium coming out of the new policies that are sold, though a large chunk of the money also comes from renewal premium. Other leading life insurance companies, such as Bajaj Allianz Life, Max New York Life and Reliance Life insurance, enjoy a market share of 3 to 4 per cent each. In the previous financial year, when the global financial crisis unfolded, insurance companies saw no growth in business when compared with the previous year. This was primarily because of weak investor confidence and the flight to safety that the investors had adopted after the equity markets came crashing down. "All insurance advertising offers a solution after implicitly raising the fear of death or uncertainty of retirement. There are 14-15 players in the market, all saying more 31
or less the same negative things. So we wondered, is there any other way to reflect what we wanted," says Mr. Muralidharan. On the surface, insurance is about death. But why should one insure? "It's to make sure an individual, and then her or his dependants, live well. So, if insurance is portrayed in this light, we can get a larger number of people to accept it," he adds. The size of the life insurance market is Rs 11,323 crore. SBI Life, which started operations in 2001, has a market share of 1.49 per cent in terms of premium and 8.97 per cent in terms of number of people insured, says Mr. Muralidharan. Old and major player LIC has 67 per cent in terms of lives insured and a market share of 74.26 per cent. Insurance companies also face the challenge of getting younger people to invest. Most people under thirty think they are "indestructible," says Mr. Muralidharan. The ads are "unpalatable" and "determine your death" and definitely discourage a lot of very suave, articulate people from even contemplating insurance, so our campaign aims to "remove the whiff of death" from it and make it a "happiness product", he says.
2.4.1Eligibility For Recruitment of an Insurance Agent Every person who has cleared higher secondary examination can become an agent other than a minor or the person who is convicted in any court for crime or any legal proceedings. Men and women both can work as an Agent. A single person can be associated with other life insurance companies. A training program is there to train a person who wants to become an Agent. There is 100 Hrs. training program which can be done either with the physical appearance in the class room or the interest basis. In the classroom training the trainee 32
has to be physically present in the training session. There are difference sessions of training program. A trainee can attend any session according to his comfort. The training period is of 25 days approx. If the trainee does not have enough time to devote in the classroom training, then there is another option left that is training on Internet. On the basis of Internet the trainee has provided a login number along with the password through which he operated his login and completed his training as convenient. Each and every hour pass on the net under his login head will be count on his account. The test for the training program is also on line. This is only procedure to be an Insurance Agent.
2.4.2Scope of Insurance Agent In the present scenario the living standard is becoming higher and higher every day. Every person who has a family to survive wants to provide his family each and every possible comfortable thing. He wants his children to be a well dressed, to be higher qualified in a well recognized school, colleges, institutes and wants his children to go abroad for higher education. He wants to live a luxury life full of pleasure. To fulfill all of his needs he has to earn more and more. Any person can be on a job at a time or can be on a business can’t fulfill his pleasure requirement. There is a source through which he can make money in a legal way that is insurance sector. Becoming an insurance Agent provides him the legal source by which he can earn money with his current status. It is the business in which you deal with you personal contacts and can gain extra income. This business needs low investment and not of much effort. It’s all depending on your social contacts and your skills to convince people by helping them to suggest the product which suited them the most. 33
As due to critical diseases, growing percentage of accident and fear of financial crisis everyone wants to secure his or her future. Insurance sector plays a vital role in assuring people about their future. As the scope of insurance enhancing, the need of an insurance Agent who can guide the potential customers is growing. Being an insurance agent of SBI Life Insurance provides a legal mean to earn money which protects a person from earning through an illegal source which is harmful for society as well as him. For the youngsters it provides great platform to prove them. On the basis of their performance they can be recruited as unit manager.
2.4.3Recruitment Process The recruitment and selection is the major function of the human resource department and recruitment process is the first step towards creating the competitive strength and the strategic advantage for the organizations. Recruitment process involves a systematic procedure from sourcing the candidates to arranging and conducting the interviews and requires many resources and time. A general recruitment process is as follows: 1. Identifying the vacancy-The recruitment process begins with the human resource department receiving requisitions for recruitment from any department of the company. These contain: • • • • • Posts to be filled Number of persons Duties to be performed Qualifications required Preparing the job description and person specification. 34
Locating and developing the sources of required number and type of employees (Advertising etc).
Short-listing and identifying the prospective employee with required characteristics.
Arranging the interviews with the selected candidates. Conducting the interview and decision making
1. Prepare job description and person specification 2. Advertising the vacancy 3. Managing the response 4. Short-listing 5. Arrange interviews 6. Conducting interview and decision making The recruitment process is immediately followed by the selection process i.e. the final interviews and the decision making, conveying the decision and the appointment formalities.
Fig.2.1 Recruitment process
The recruitment procedure of life insurance is very easy. A person with high educating and well experience can be recruited after a personal interview and group discussion. After the training program is completed the Insurance Agent has to appear for the pre-examination conducted by IRDA. As he clear the exam he provides a license, which is the proof of a legalized insurance Agent, which permits him to deal in his insurance business.
Steps in recruitment of Insurance Agents • • • • Approach to the likely person Appointment as per condition Discuss the topic Give the documents which includes:1. Prospectus of the company 2. Brochure 3. Company’s plan 4. Questionnaire • • • • Collect the document after its completion Forward it to project manager Feed it in the computer as the database Follow up as per conditions
Modes of Contact • • • • Personal Contacts References Phone Calls Guidance as per Unit Manager
E-Recruitment Many big life insurance organizations use Internet as a source of recruitment. ERecruitment is the use of technology to assist the recruitment process. They advertise job vacancies through worldwide web. The job seekers send their applications or curriculum 37
vitae i.e. CV through e mail using the Internet. Alternatively job seekers place their CV’s in worldwide web, which can be drawn by prospective employees depending upon their requirements.
Advantages of e-recruitment are: • • • • • Low cost. No intermediaries Reduction in time for recruitment. Recruitment of right type of people. Efficiency of recruitment process.
The buzzword and the latest trends in recruitment is the “E-Recruitment”. Also known as “Online recruitment”, it is the use of technology or the web based tools to assist the recruitment process. The tool can be either a job website like naukri.com, the organization’s corporate web site or its own intranet. Many big and small organizations are using Internet as a source of recruitment. They advertise job vacancies through worldwide web. The job seekers send their applications or curriculum vitae (CV) through an e-mail using the Internet. Alternatively job seekers place their CV’s in worldwide web, which can be drawn by prospective employees depending upon their requirements. The two kinds of e- recruitment that an organization can use is – • Job portals – i.e. posting the position with the job description and the job specification on the job portal and also searching for the suitable resumes posted on the site corresponding to the opening in the organization.
Creating a complete online recruitment/application section in the company’s own website. Companies have added an application system to its website, where the ‘passive’ job seekers can submit their resumes into the database of the organization for consideration in future, as and when the roles become available.
Resume Scanners: Resume scanner is one major benefit provided by the job portals to the organizations. It enables the employees to screen and filter the resumes through pre-defined criteria’s and requirements (skills, qualifications, experience, payroll etc.) of the job.
Job sites provide a 24*7 access to the database of the resumes to the employees facilitating the just-in-time hiring by the organizations. Also, the jobs can be posted on the site almost immediately and is also cheaper than advertising in the employment newspapers. Sometimes companies can get valuable references through the “passers-by” applicants. Online recruitment helps the organizations to automate the recruitment process, save their time and costs on recruitments.
Online recruitment techniques • Giving a detailed job description and job specifications in the job postings to attract candidates with the right skill sets and qualifications at the first stage. • E-recruitment should be incorporated into the overall recruitment strategy of the organization. • A well defined and structured applicant tracking system should be integrated and the system should have a back-end support.
Along with the back-office support a comprehensive website to receive and process job applications (through direct or online advertising) should be developed.
2.4.1Sources of Recruitment Every organization has the option of choosing the candidates for its recruitment processes from two kinds of sources: internal and external sources. The sources within the organization itself (like transfer of employees from one department to other, promotions) to fill a position are known as the internal sources of recruitment. Recruitment candidates from all the other sources (like outsourcing agencies etc.) are known as the external sources of recruitment.
SOURCES OF RECRUITMENT
Internal Sources 1. Transfer: The employees are transferred from one department to another according to their efficiency and experience. 2. Promotions: The employees are promoted from one department to another with more benefits and greater responsibility based on efficiency and experience. 3. Others are Upgrading and Demotion of present employees according to their performance. 4. Retired and Retrenched employees may also be recruited once again in case of shortage of qualified personnel or increase in load of work. Recruitment such people save time and costs of the organizations as the
people are already aware of the organizational culture and the policies and procedures. 5. The dependents and relatives of Deceased employees and Disabled employees are also done by many companies so that the members of the family do not become dependent on the mercy of others.
External Sources 1. Press Advertisements: Advertisements of the vacancy in newspapers and journals are a widely used source of recruitment. The main advantage of this method is that it has a wide reach. 2. Educational Institutes: Various management institutes, engineering colleges, medical Colleges etc. are a good source of recruiting well qualified executives, engineers, medical staff etc. They provide facilities for campus interviews and placements. This source is known as Campus Recruitment. 3. Placement Agencies: Several private consultancy firms perform
recruitment functions on behalf of client companies by charging a fee. These agencies are particularly suitable for recruitment of executives and specialists. It is also known as RPO (Recruitment Process Outsourcing) 4. Employment Exchange: Government establishes public employment exchanges throughout the country. These exchanges provide job information to job seekers and help employers in identifying suitable candidates.
5. Labor Contractors: Manual workers can be recruited through contractors who maintain close contacts with the sources of such workers. This source is used to recruit labor for construction jobs. 6. Unsolicited Applicants: Many job seekers visit the office of well-known companies on their own. Such callers are considered nuisance to the daily work routine of the enterprise. But can help in creating the talent pool or the database of the probable candidates for the organization. 7. Employee Referrals / Recommendations: Many organizations have structured system where the current employees of the organization can refer their friends and relatives for some position in their organization. Also, the office bearers of trade unions are often aware of the suitability of candidates. Management can inquire these leaders for suitable jobs. In some organizations these are formal agreements to give priority in recruitment to the candidates recommended by the trade union. 8. Recruitment at Factory Gate: Unskilled workers may be recruited at the factory gate these may be employed whenever a permanent worker is absent. More efficient among these may be recruited to fill permanent vacancies.
Factors Affecting Recruitment
The recruitment function of the organizations is affected and governed by a mix of various internal and external forces. The internal forces or factors are the factors that can be controlled by the organization. And the external factors are those factors which
cannot be controlled by the organization. The internal and external forces affecting recruitment function of an organization are:
Factors Affecting Recruitment
Internal Factors The internal factors i.e. the factors which can be controlled by the organization are: 1. Recruitment Policy: The recruitment policy of an organization specifies the objectives of recruitment and provides a framework for implementation of recruitment program. It may involve organizational system to be developed for implementing recruitment programs and procedures by filling up vacancies with best qualified people. Factors affecting recruitment policy
• • • • • •
Organizational objectives Personnel policies of the organization and its competitors. Government policies on reservations. Preferred sources of recruitment. Need of the organization. Recruitment costs and financial implications.
1. Human Resource Planning: Effective human resource planning helps in determining the gaps present in the existing manpower of the organization. It also helps in determining the number of employees to be recruited and what qualification they must possess. 2. Size of the Firm: The size of the firm is an important factor in recruitment process. If the organization is planning to increase its operations and expand its business, it will think of hiring more personnel, which will handle its operations. 3. Cost: Recruitment incur cost to the employer, therefore, organizations try to employ that source of recruitment which will bear a lower cost of recruitment to the organization for each candidate. 4. Growth and Expansion: Organization will employ or think of employing more personnel if it is expanding its operations.
External Factors The external forces are the forces which cannot be controlled by the organization. The major external forces are: 1. Supply and Demand: The availability of manpower both within and outside the organization is an important determinant in the recruitment process. If the company has a demand for more professionals and there is limited supply in the market for the professionals demanded by the company, then the company will have to depend upon internal sources by providing them special training and development programs. 2. Labor Market: Employment conditions in the community where the organization is located will influence the recruiting efforts of the organization. If there is surplus of manpower at the time of recruitment, even informal attempts at the time of recruiting like notice boards display of the requisition or announcement in the meeting etc will attract more than enough applicants. 3. Image / Goodwill: Image of the employer can work as a potential constraint for recruitment. An organization with positive image and goodwill as an employer finds it easier to attract and retain employees than an organization with negative image. Image of a company is based on what organization does and affected by industry. For example finance was taken up by fresher BBA’s when many finance companies were coming up. 4. Political-Social- Legal Environment: Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. For example, Government of India has introduced legislation for reservation in employment for scheduled castes, scheduled tribes, physically 46
handicapped etc. Also, trade unions play important role in recruitment. This restricts management freedom to select those individuals who it believes would be the best performers. If the candidate can’t meet criteria stipulated by the union but union regulations can restrict recruitment sources. 5. Unemployment Rate: One of the factors that influence the availability of applicants is the growth of the economy (whether economy is growing or not and its rate). When the company is not creating new jobs, there is often oversupply of qualified labor which in turn leads to unemployment. 6. Competitors: The recruitment policies of the competitors also affect the recruitment function of the organizations. To face the competition, many a times the organizations have to change their recruitment policies according to the policies being followed by the competitors.
INTRODUCTION TO THE TOPIC
INTRODUCTION TO THE TOPIC
Project study report consists of brief description of company SBI LIFE INSURANCE CO. LTD., SIKAR, the special focus on the human resources. My topic was “Recruitment Process in Insurance Company” along with significant findings & suggestions that give idea how many the employees in the company are satisfied and not satisfied with welfare facility of the company. Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization. In the other words recruitment is the activity that links employers and job seekers. Recruitment procedure of SBI Life Insurance is very easy. A person with high educating and well experience can be recruited after a personal interview and group discussion. After the training program is completed the insurance agent has to appear for the pre-examination conducted by IRDA. As he clear the exam he provides a license, which is the proof of a legalized insurance agent, which permits him to deal in his insurance business. Recruitment of candidates is the function preceding the selection, which helps create a pool of prospective employees for the organization so that the management can select the right candidate for the right job from this pool. The main objective of the recruitment process is to expedite the selection process. Recruitment is a continuous process whereby the firm attempts to develop a pool of qualified applicants for the future human resources needs even though specific
vacancies do not exist. Usually, the recruitment process starts when a manger initiates an employee requisition for a specific vacancy or an anticipated vacancy.
3.1Title of the Study
“Recruitment Process in Insurance Company”. The study is showing recruitment process of any candidate in insurance company. This research is done at Sikar. This study also shows why people join insurance sector.
3.2Duration of the Project
In June 2009, I have been assigned a project on recruiting process in insurance company with special reference to SBI Life Insurance as a part of our course curriculum. The duration of the research is approx 30 days.
3.3Objective of Study
The objective of the recruitment process is to obtain the number and quality of employees that can be selected in order to help the organization to achieve its goals and objectives. Following are other objectives of recruitment process1. Support the organization ability to acquire, retain and develop the best talent and skills. 2. Increase the effectiveness of various recruiting techniques
3.1Types of Research
I used a descriptive type of research. It is one which includes surveys and fact finding, enquiries of different kinds. The major purpose of such research is description of the state of affairs, as it exists at present. Methodology or process involving in the research followed during the course of summer training is as follows – Collection of data: This is an important aspect in formulating the objective of research process where the data is collected via two process: (i) Primary Sources and (ii) Secondary sources i. Primary sources- Where the data is collected primarily by interviewing and personal observation and is original in nature and accurate to the considerable extent. ii. Secondary sources- Where the data is obtained from some published and printed sources such as newspaper, magazines, and websites and so on.
3.1Sample Size and Method of Selecting Sample
To ensure complete representation the researcher identified target responded through a stratified random sampling process stratified the population into number of strata and sampling respondent is selected from each stratum. The selection of respondent from each stratum was based on simple random sampling. I have covered 100 employees. 1. Insurance employees a) Unit Manager b) Team Leader 54
c) Agents 1. Businessmen a) Retail shops b) Wholesaler c) Family business 1. Students a) Management students b) Law students 1. Other Professions a) Engineers b) Doctors c) Bankers
Fig.3.1 Sample size
Sampling is a process of obtaining a number of individuals taken a base for the entire population since entire population cannot be asked about the necessary objective upon which a questionnaire is put forth needed for the responses to be derived for the purpose of generation of facts and customer view point regarding their perception of particular product or services. There are two type of samplingi. Random sampling- Random sampling is a process of selecting the sample size randomly and no choice or preference to be made about the selection
of respondents for the market survey and questionnaire to be put forth against him. Here, Random sampling being adopted by me. ii. Systematic sampling- It is a sampling where the limited number of selected respondents is figured out based on some criteria so that only those respondents can be asked for the purpose of filing questionnaire.
3.6 Scope of Study Every research is conducted to fulfill certain objectives and this objective in turn fulfill some purpose and is of significance for one or more then one party. This research is significant for: 3.6.1To the student• This study provides the student a practical insight of various activities and functions of the company. • The will also be able to develop in depth knowledge of Human Research sector. • The study is also required for the partial fulfillment of the requirement for the degree of M.B.A. as per the curriculum.
3.6.1To the company • The study would help SBI to know the Employee`s attitude towards the company. • To know the latest trend of the company.
3.7Limitation of Study
• The research area was restricted only within the Sikar city. This may not reflect the exact position of the total market. • Sample size was also so less, limitation of time means and resource forced for small size. • Questionnaire includes 16 questions, which affects the mentality of respondents that is time consuming.
OBJECTIVES OF THE STUDY
OBJECTIVES OF THE STUDY
• This study provides the student a practical insight of various activities and functions of the company. • The will also be able to develop in depth knowledge of Human Research sector. The study is also required for the partial fulfillment of the requirement for the degree of M.B.A. as per the curriculum • The study would help SBI to know the Employee`s attitude towards the company. • To know the latest trend of the company.
DATA ANALYSIS & INTERPRETATION
DATA ANALYSIS & INTERPRETATION
➢ Category of life insurance:-
60 50 40 30 20 10 0
L IF E IN S U R A N C E IS :
51 38 16
P ro te c tio n o f T a x b e n e fit d e v ic e B o th h u m an a s s e t v a lu e ag a in s t u n c e rta in ty A T E G O R Y C
Fig.4.1 Category of life insurance
➢ Essentiality of life insurance :-
IS LIFE INSURANCE ESSENTIAL?
78 80 70 60 50 40 30 20 10 0
NO. OF RESPONDENTS
Fig.4.2 Essentiality of life insurance
➢ Qualification for life insurance:-
Pos t graduate Graduate Se nior s e condary
Fig.4.3 Qualification for life insurance
➢ Age qualification for life insurance :-
AGE QUALIFICAITON: 6% 20% 39% 18-25 age group 25 – 35 age group 35 – 45 age group Above 45 age group 35%
Fig.4.4 Age qualification for life insurance
➢ Causes of dissatisfaction :-
CAUSES OF DISSATISFACTION 10% 16%
Low employment Low earning / income Low status
Huge capital investment All of the above
Fig.4.5 Causes of dissatisfaction
➢ Career in life insurance :ABOUT CAREER IN LIFE INSURANCE 70 NO. OF RESPONDENTS 60 50 40 30 20 10 0 Yes RESPONSES No 59 46
Fig.4.6 Career in life insurance
➢ Life insurance is noble service or not? :-
IS LIFE IN SUR AN CE A N OB LE SER VICE? 100 NO. OF RESPONDENTS 80 60 40 20 0 Ye s No R ESPON SES 19 86
Fig.4.7 Life insurance is noble service or not?
➢ Life insurance as a career :-
ACCEPT LIFE IN SUR AN CE AS A CAR EER? 50 NO. OF RESPONDENTS 40 30 20 10 0 Ye s R ESPON SES No 18 41
Fig.4.8 Life insurance as a career
➢ Growth of life insurance :IS LIFE IN SUR AN CE IN D USTR Y GR OWIN G? 92 100 RESPONDENTS 80 60 40 20 0 Ye s R ESPON SES No 13
Fig.4.9 Growth of life insurance
➢ Life insurance: public or private :-
80 70 60 50 40 30 20 10 0
AGREE WITH PRIVATISATION OF LIFE INSURANCE? 74
Fig.4.10 Life insurance: public or private
4.1Role of the Development Agency
Due to the nature of the groups covered, SBI Life will be passing certain administrative tasks onto the Development Agency. By passing on these tasks the premium charged can be lower. These tasks would include: • • • • Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: • Payment of premiums 70
Reporting of claims Keeping policy holder information up to date
Analyzing of collected data- The data collected through market survey and published sources are then processed to obtained necessary inferences and findings for the purpose of achieving the objective as well as to derive necessary conclusion. A considerable skill and knowledge is involved in analyzing the data for the purpose of interpreting thereof.
Interpreting of data- It is the significant step where the data collected and analyzed is interpreted in the forms of graphs and figures is depicted in the report called project report.
Summarizing of data- Thereby necessary summary is prepared which is essential in the project report of the summer training being done under an organization.
5.1Market Survey Report
➢ Category of life insurance
Protection of human asset value against uncertainty Tax benefit device Both
51 38 16
From the survey it was drawn that life insurance is more a protection of human asset value against uncertainty (conferred by 51 respondents) where it is a tax saving option (being accepted by 38 respondents). Life insurance is a service involving both these prerequisites as depicted by remaining 16 respondents.
➢ Essentiality of life insurance
It has been observed and applied as a Life insurance is an essential service and should be applicable to every one, as favored by considerable 78 respondents where it is not essential to an extent by 27 respondents from the summer training project survey by putting forth the set questionnaire.
➢ Qualification for life insurance
Post graduate Graduate Senior secondary
35 59 11
When further enquired about the qualification of respondents, it was found that 57% of the respondents were graduates, 33% were post graduates and remaining 10% were of higher secondary out of total 105 respondents.
➢ Age qualification for life insurance 18-25 age group 25 – 35 age group 35 – 45 age group Above 45 age group 41 37 21 6
Further, the age qualification for agency recruitment, it was found that 39% respondents were belonging to 18 – 25 age group, 35% were belonging to 25 – 35 age group where as 20% to 35 - 45 age group and remaining 6% to above 45 age group. ➢ Causes of dissatisfaction Respondents had different views about the dissatisfaction from the present status of working or occupation. Dissatisfaction has been depicted in a table below and graphically above-
Low employment Low status
Low earning All of the above
Huge capital investment
➢ Career in life insurance?
When asked about whether they would like to know about a glorified career in life insurance agency where they can fulfill any and every desire of their life, 59 respondents agreed while 46 respondents said No and will see later sometime in future. It has been 75
depicted that life insurance sector should be promoted at the wide extent as it contribute to the economy as a useful source beneficial for both nation as well as its citizens.
➢ Life insurance is noble service or not?
Indeed Life insurance is a noble business as it provides a needful financial support in the situation of fatal calamity where the family is deprived by the fact to live in future and sustains their living. When surveyed about life insurance as a noble service. 86 respondents agreed and believe that insurance is a bettering service to human life and society as a whole where as 19 respondents show disagreement.
➢ Life insurance as a career?
From the 59 respondents who agreed to know about the life insurance as a career, 18 of them agreed to join HDFC Standard life insurance for agency and come to the company fore more information whereas 41 still took time to think and postponed to some future date. People are highly dissatisfied from the earning, status and living standard they are sustaining at present and would definitely like to make some additional source of earning and for this agency for life insurance would prove a boon.
➢ Is Life insurance industry growing?
From all 105 respondents, 92 agreed that life insurance sector is a growing concern and will grow at a rapid pace in future where as 13 took as a mere stagnant industry. Financial services are growing at a tremendous pace as people are urging to make their investment in lucrative opportunities and therefore life insurance sector is playing a vital role in educating the people to make their investment which could secure their future, needs and living despite some fatal calamity that might or might not occur.
➢ Agree with privatization of life insurance?
Among 74 respondents from 105 respondents favored the privatization of the life insurance and perceive that the people of India will know be more aware and knowledgeable with respect to life insurance than that in the past 50 years with the working of LIC.
5.1Policy Product Queries
1. What are the basic elements of Life Insurance? The two basic elements to all individuals are a. Risk coverage (i.e. Term Insurance) b. Savings for future (i.e. Pure Endowment)
1. What is Term Insurance? Term Insurance covers “Risk” and Risk means “Death”. Here a lump sum amount is payable only if death occurs during a selected period. If the insured survives till the end of the selected period, nothing becomes payable.
2. What is Endowment product? The insurer will receive a lump sum amount either at death during the term or at maturity of the term. 80
3. What is a Whole Life insurance product? Whole life insurance risk covers the death of the insured, whenever it may happen. It means that there is no fixed term under whole life insurance. Most policies provide a dividend to the policy holder which helps with retirement. There are two variations in the whole life insurance productsa. Pure Whole Life Insurance: - where premiums are payable continuously throughout the life of the insured till death. Risk coverage is for the entire duration of life and the life insured amount is paid on the happening of the death of the insured at any time. b. Limited Payment Whole life Insurance: - where premiums are paid for a limited and shorter period and the option of the insured or till death if earlier. Risk coverage is however throughout the life of the insured.
1. What is a Guaranteed Surrender Value? The policy can be surrendered for cash only after the premiums have been paid for at least three years. The minimum surrender value allowed is equal to a certain percentage of the total amount of premiums paid excluding the premiums for the first year and all extra premiums or additional premiums for accident benefits that may have been paid.
Summer training is a best example for a trainee to learn about the company working, corporate culture under which is operating the functions. SBI life insurance company under which I gained a significant knowledge with respect to life insurance, its importance and applicability as well as undertook the task to recruit capable life insurance advisors which is conducive for the company to grow with more prosperity. What I taught in the management institute utilized them fruitfully leading to the best advantage to the company and to the best experience for mine. In all Public Service jurisdictions, new approaches to recruitment are being used. In many territories, the strategies are manual but, as automated methods become more pervasive, those mechanisms that support its use will assume greater popularity. Whatever the strategies selected for use, the objective is to recruit the most qualified, committed individuals into the organizations and ensure that the provision of government services to the public is timely and effective, that the goods are of consistent high quality and that the organizations achieve the objectives for which they have been established. Life insurance is a noble service which is very important for every citizen to learn and realize its importance because this is the only source which can remain the status where one is with the family bread earner and ever when he is not. With the growing financial sector I would like to opt this industry for my future career advancement and as an opportunity to service this industry.
• The research area was restricted only within the Sikar city. This may not reflect the exact position of the total market. • Sample size was also so less, limitation of time means and resource forced for small size. • Questionnaire includes 16 questions, which affects the mentality of respondents that is time consuming.
RECOMMENDATION AND SUGGESTIONS
RecommendationsFollowing are suggestions made for the benefits and augmentation of the sound working of the company –SBI life insurance 1. Need to train and develop life insurance agents with more comprehensive knowledge and skills to counter every queries of the customer. 2. It is suggested that company should not left any stone unturned towards sound advertisement and promotional measures on every section whether it is printed, media or air via radio. 3. It is also suggested that skilled management graduates need to be places on sales and marketing of financial services that can render their best ideas for the accomplishment of the company goals and objectives to the best extent. 4. Also, care need to be taken that every customer’s grievance should be met with delight whether before purchase or after sales. 5. There should be an expansion measure for more offices and location of more centers for offices of the company is established sop that company may grow its network. 6. Life insurance Products should be made flexible so as to suit every section of society.
SuggestionsFollowing are suggestions made for the benefits and augmentation of the sound working of the company –SBI life insurance: 1. Need to train and develop life insurance agents with more comprehensive knowledge and skills to counter every queries of the customer. 2. It is suggested that company should not left any stone unturned towards sound advertisement and promotional measures on every section whether it is printed, media or air via radio. 3. The advisors should be made aware and educated so that they can extend their services not only in terms of collection of premium checks from the customer but also to educate them about the insurance and the latest nontraditional plans. 4. All the company should come out of a unit link product that should aid every selection of the society. 5. It is also suggested that skilled management graduates need to be places on sales and marketing of financial services who can render their best ideas for the accomplishment of the company goals and objectives to the best extent. 6. Also, care need to be taken that every customer’s grievance should be met with delight whether before purchase or after sales.
7. There should be an expansion measure for more offices and location of more centers for offices of the company be established sop that company may grow its network. 8. Life insurance Products should be made flexible so as to suit every section of society.
Q.1. What do you mean by life insurance? a) Protection of human asset value against uncertainty b) A sum received after death c) Both
Q.2. Do you think life insurance is essential for every one? a) Yes b) No
Q.3. What is your qualification? a) Post graduate b) Graduate c) Senior secondary
Q.4. Do you come under: a) 18-25 age group b) 25 – 35 age group c) 35 – 45 age group d) Above 45 age group
Q.5. Would you like to know about a career in life insurance advisor ship where you can fulfill every desire of your life? a) Yes b) No
Q.6. Do you perceive that life insurance business is a noble service oriented business? a) Yes b) No
Q.7. Would you like to become or opt for life insurance advisor under esteemed and prospering organization SBI Life insurance? a) Yes b) No
Q.8. Do you agree that the life insurance business is a growing industry and will grow and rapid pace in future? a) Yes b) No
Q.9. Do you favor the privatization of life insurance by the Government where a significant number of companies now in the market for life insurance to the customers with the alliance of multinationals? a) Yes b) No
SUGGESTION: 1. 2. 3. …………………………………………………………… …………………………………………………………… ……………………………………………………………
PERSONAL INFORMATION: Name: - ……………………………………………………………… Location: - …………………………………………………………… Occupation: - …………………………………………………………
1. Application for insurance: This is the form on where you state information and
answer questions from the insurance company about yourself and your history. This application along with information from a medical examination, if taken, from your physicians, any hospitals you may have visited and investigation are what's used by the insurance company to decide whether or not to offer you life insurance and at what rate. 94
2. Accident Benefit: A rider or an add-on with a life policy. It compensates a policyholder in the event of death or injury by accident. 3. Annuity: An investment option that makes a series of regular payments to an individual in exchange for a premium or a series of premier. 4. Appreciate: To grow in value 5. Asset: Everything owned or due to a person 6. Asset allocation: How your investments are spread across various asset classes 7. Beneficiary: The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured. 8. Bond: It is like an IOU. By buying a bond you loan money to a company, a municipality, state or the Central Government. 9. Bonus: The amount paid as return in a ‘with-profit’ policy. The bonus, expressed as a percentage of the sum assured, is generally declared every year. The amount is linked to the profits earned by the insurer. Depending on the time of withdrawal, there are two kinds of bonuses – reversionary and cash. A reversionary bonus can be encashed only on maturity of the policy; a cash bonus can be withdrawn when declared. 10. Budget: It is a tool used to monitor and control expenditures and purchases.
Following are sources which helped me during my summer training-
• • • • • • • KOTHARI C.R.: Research Methodology Management, 3rd Edition KOTLER PHILIP: Marketing Management” 11th Revised edition, 2002 GUPTA S.P.: Statistical Methods “Thirteen revised edition, 2001 Kotler Philip : Marketing Management, Prentice Hall of India, New Delhi Mathew M.J. : Insurance, RBSA Publishers Jaipur Handa Sunil : Insurance, Sheel Write Well (P) Ltd., Jaipur K. Aswattappa : Human Resource Management
• • • • India Today Business World Business Economics LSE’s Magazine
• Websiteswww.sbiindia.co.in www.sbilife.co.in www.irdaindia.org www.liccouncil.org 97
www.businessconnect.com www.google.co.in www.netpnb.com www.pnbindia.com business.mapsofindia.com finance.indiamart.com www.scribd.com www.nseindia.com www.bseindia.com http://en.wikipedia.org/wiki/consumer_psyche
• • • • • The Economics times The Hindu Times of India Business line D.N.A
IRDA annual report, 2006-07and 2007-08 Manual of Insurance by Bharat Law House
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