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OVERVIEW OF THE INDUSTRY
Life is very fragile and death is a certainty. We cannot control the uncertainties of life. But, we can cover the risks surrounding us. Life insurance, simply put, is the cover for the risks that we run during our lives. It protects us from the contingencies that could affect us.
Life insurance is not for the person who passes away, it for those who survive. It is the responsibility of every bread earner to guard against the events that could affect the family in the unfortunate circumstance of his / her demise. Thus, having a life insurance policy is very vital. Before going for a life insurance policy it is imperative that you know about various types of life insurance policies. Life insurance is an essential part of financial planning. The main purpose of purchasing life insurance is to ensure that your dependents are financially protected in the event of death. Life insurance is a way to plan for the future so you need to be sure that the coverage you purchase fits your needs. There are many options available to you when purchasing life insurance. Some policies provide coverage for your lifetime and others provide coverage for a specific number of years. With certain policies, you are able to combine different kinds of insurance and even build up your cash value. Your choice should be based on your needs and what you can afford. Different Policies Term Life Insurance Term life insurance is an insurance policy that is in effect for a specific period of time. If the insured dies within that timeframe, the beneficiary of the policy receives the death payment. However, if the insured survives that period of time, the beneficiary receives nothing and the policy is closed. Term life also provides the ability to convert to a 1
permanent kind of coverage at a later time. The main reasons people buy term life insurance include:
Coverage for a specific amount of time until they are able to build up their assets. Coverage for the amount of time the mortgage is for so in the event of an Coverage for those that cannot afford a permanent policy, especially newlyweds
untimely death, the mortgage is taken care of.
and new parents. Permanent Life Insurance
Permanent life insurance covers a longer period of time than term life or for the entire life of the insured. This kind of insurance combines death benefits with a savings component. The amount of money that is not used to cover the amount of the insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy's cash value by taking a policy loan. If you don't pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die or from the cash value if you stop paying premiums and take out the remaining cash value. The cash may also be used to increase your retirement income or to help pay for needs such as a child's tuition without canceling the policy. However, to build up this cash, you'll pay higher premiums. There are several types of permanent life insurance, including whole, universal, variable universal, and survivorship universal. Whole Life Insurance A whole life insurance policy remains in full force and effect for the life of the insured, with premium payments being made for the same period. Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period of time. Universal Life Insurance The premiums of a universal life insurance policy are split in two ways. The premium 2
you pay goes toward covering the cost of the insurance policy and the remaining balance is invested and earns interest on a tax deferred basis. With this type of life insurance you also receive a guaranteed minimum interest rate on the balance that is invested. Variable Iife Insurance Variable life insurance is an investment-oriented whole life insurance policy that provides a return linked to an underlying portfolio of securities. The portfolio is a group of mutual funds including common stocks, bond funds, and money market funds. This type of life insurance offers fixed premiums and a minimum death benefit. The better the total return on the investment portfolio, the higher the death benefit or value of the variable life policy. Variable Universal Life Insurance Variable universal life insurance is a combination of universal life insurance and variable life insurance in that excess interest credited to the cash value account depends on investment results of separate accounts (equities, bonds, real estate, etc.). You have a choice as to how the cash value is invested -- stock and bond mutual funds. However, there is no guaranteed minimum interest rate with a universal life insurance policy. SURVIVORSHIP UNIVERSAL LIFE INSURANCE Survivorship universal life insurance provides a policy in which two people are covered on one policy. The death benefit is paid upon the second death. The premiums for this joint life policy are significantly lower than a regular policy. Many people take this type of life insurance to help pay estate taxes after the deaths of both a husband and wife. A BRIEF HISTORY OF THE INSURANCE INDUSTRY
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 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 breadth of the country. 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 the effect from 1st January 1973. it was after this that 107 insures amalgamated and grouped into four companies viz. the National Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company. LIFE INSURANCE BASICS We buy life insurance because we want to make sure that our loved ones, especially dependents, remain financially secure after we die. Income replacement is the number1 reason why people buy life insurance. Non-working caregivers also have an important, and oft overlooked economic value that should be covered by life insurance. Life insurance is also purchased by those interested in achieving specific business or estate transfer goals. There are several choices when it comes to buying life insurance and there are huge pricing differences in the market among different companies offering identical coverage. Policies are now available from more than 1,500 life insurance companies in the United States. Most financial planners recommend that each family income provider carry no less than ten times their annual income in life insurance.
Here’s an orderly way to go about shopping for life insurance: 1) assess your life insurance needs, 2) decide on the most appropriate policy type, 3) set high standards for the financial stability ratings of your insurance company and, then 4) shop until you drop to find the best price. Life insurance is a long-term proposition, which means that you should pay particular attention, at time of purchase and throughout the life of the policy, to the financial stability ratings of your life insurance company. While the average U. S. adult shops for life insurance once every seven years, it’s not uncommon for people to keep life policies in force for decades.
ASSESSING YOUR LIFE INSURANCE NEEDS
The first step in life insurance planning is to analyze your life insurance needs or, rather, the economic needs of the dependents left behind:
Before purchasing a life insurance policy, you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors. For example, who will be responsible for your final medical bills and funeral costs? Would your family have to relocate or otherwise change their standard of living? The assumption of immediate death is necessary to determine the current life insurance needs for the family or individual.
Beyond the initial readjustment period, consideration has to be given to the longer term financial needs of the remaining family members. Items of consideration should include dependency period income for children, income for the surviving spouse, mortgage and other debt payoffs, college education funds and an additional emergency fund. Because life insurance needs change over time, your life insurance program
should be reevaluated periodically. We recommend a review at least once every five years or whenever you experience a major life event such as change income or assets,
marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business. The Illinois Department of Insurance points out the reasons you might buy life insurance will vary, depending on your age, financial situation and other factors. Listed below are some examples: Single person with no dependents: Funeral expenses; medical bills; debts, such as credit cards or student loans; elderly parents who may be dependent upon you for support. Note: Buying life insurance at a young age is cheaper. As you get older or possibly incur a serious health condition, it will be more expensive or difficult to buy a policy.
Single person with dependents: Funeral expenses; medical bills; outstanding debts; caretaker expenses for your surviving dependents; education costs for surviving children.
Couple with no children: Funeral expenses; medical bills; outstanding debts, especially mortgage or car payments.
Couple with children: Funeral expenses; medical bills; outstanding debts, especially mortgage payments; child-rearing expenses; education costs. Note: Even if one partner does not work outside the home, you may want to consider life insurance to help pay for childcare or other services performed by that partner.
Older couple: Funeral expenses; medical bills; impact on spendable income; outstanding debts, such as a new home, second vacation home, or recreational vehicle; impact on assets you may want to leave for children or grandchildren
In theory, you should have a declining need for life insurance as you age because fewer people remain dependent upon you for income support. Exception to this rule would be for circumstances in which you want to protect a business entity or pay estate taxes for
heirs. If the purpose of buying life insurance is to pay estate taxes, then you’ll only want coverage that is guaranteed for the remainder of your life and that of your spouse as well.
PROFILE OF THE ORGANIZATION
Max New York Life Insurance Company Ltd. is a joint venture between New York Life, a fortune 100 companies and Max India Ltd. one of India’s leading multi-business corporations. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business. In line with its values of financial responsibility, Max New York Life has adopted prudent financial practices to ensure safety of policy holder’s funds. The company’s paid up capital is Rs. 587 crore, which is more than the norm laid by IRDA. Max New York Life has identified individual agents as its primary channel of distribution. The company places a lot of emphasis on its selection process, which comprises of four stages – screening, psychometric test, career seminar and final interview. The agent advisors are trained in-house to ensure optical control on quality of training. 201 agent’s advisors have qualified for the Million Dollar Round Table (MDRT) MEMBERSHIP IN 2005. MDRT is an exclusive congregation of the world’s top selling insurance agents and is internationally recognized as the standard of excellence in the life insurance business. Having set a best in class agency distribution model in place, the company is spearheading a major trust into additional distributions channels to further grow its business. The company is using a five –pronged strategy to pursue alternative channels of distribution. These include the franchisee model, rural business, direct sales force involving group insurance and telemarketing opportunities, banacassurance and corporate alliances.
Max New York Life offers a suite of flexible products. It now has 22 life insurance products and 8 riders that can be customized to over 400 combinations enabling customers to choose the policy that best fits their need.
DIFFERENT INSURANCE PLAN
Individual Insurance Plan Group Insurance Plan Others INDIVIDUAL INSURANCE PLAN
Protection • Whole Life Participating Policy • Life Protector Policy • Life Protector Plus Policy • Life Partner Plus Plan Savings • Life Gain Endowment Policy • Life Pay Money Back Plan(Participating) Policy • Life Gain Endowment(Participating) Policy • 20 year Endowment(Participating) Policy Unit Linked Plan
• Life Maker Children • Children Endowment Policy 18 & 24 • Stepping Stones Child Money Back Plan(Participating) Policy
Retirement Easy Life Retirement Plan(Participating) Policy Riders
GROUP INSURANCE PLAN
Group Term Life Employee Deposit Linked Insurance Group Gratuity Credit Shield Unit Linked Group Gratuity
Rural • Max Suraksha Policy • Easy Term Policy • Max Mangal Endowment(Participating) Policy Bancassurance Amsure Amsure Bonus Builder Policy
Amsure Business Builder Policy Amsure Family Money Back Policy Amsure Future Builder Policy
MAX New York Life is the first insurance company in india to be awarded the ISO 9001: 2000 certification. Max New York Life was among the top 25 companies to work with in India, according to 2003 Business World magazine, “Great Workplaces in India”, Max New York Life was ranked at the 20th position. This survey is the local version of the “Great Places to Work” survey carried out every year in 22 countries. With 201 agents becoming members of the MDRT in 2005, Max New York Life has moved up in the top 50 MDRT global list. VISION AND MISSION Vision – To become the most trusted and reliable life insurance company in India. Mission – Become one of the top quartile life insurance companies in India. Be a national player Be the brand of first choice Be the employer of choice Become principal of choice for agents
The company donates a part of the total money collected on all policies sold, to SOS Children's Villages of India at the end of the year.
MNYL employees at a painting competition at SOS Village Max New York Life employee visits to SOS Villages are organized regularly to generate a sense of ownership and involvement among employees. Anuroop 'Tony' Singh, making an annual commitment to SOS Max New York Life has also instituted the David Allen trophy for the Most Socially Responsible Student at SOS Children's Villages. David Allen, an employee of New York Life, has donated Rs. 50,000 towards the rolling trophy, which will be awarded to a student, of the Herman Gmeiner (SOS) School at Faridabad, who displays and shows caring and a social responsibility towards his/her schoolmates or on a larger stage. Shortly after inception, Max New York Life saw Gujarat being devastated by a ruinous earthquake. The Max India Family and New York Life International contributed Rs.86.25 lakh towards the permanent care of children affected by the earthquakes in Gujarat. Tsunami More recently, in March 2005, New York Life made a donation of Rs. 17 lakh to SOS Children’s Villages of India for the long-term rehabilitation of survivors of the Tsunami disaster in Tamil Nadu. The funds will be used by SOS Children’s Villages of India for the reconstruction of permanent dwellings for fishing communities severely
affected by the Tsunami waves in December 2004. A few weeks earlier, New York Life joined its joint venture partner Max India in making a donation of Rs. 75 lakh to the Prime Minister’s National Relief Fund. The Chairman of Max New York Life, Analjit Singh, met Prime Minister Manmohan Singh to personally hand over the cheque. Shortly after inception, Max New York Life saw Gujarat being devastated by a ruinous earthquake. The Max India Family and New York Life International contributed Rs.86.25 lakh towards the permanent care of children affected by the earthquakes in Gujarat.
BOARD OF DIRECTORS – MAX INDIA LIMITED
Dr. Bhai Mohan Singh Mr. Analjit Singh Dr. S S Baijal Mr. N C Singhal Mr. N Ranagachary Mr. Nitin Sibal Mr. Piyush Mankad Mr. Ashwani Windlass Mr. Bharat Sahgal Mr. B Anantharaman Lifetime Chairman Emeritus, Max India Chairman, Max India Former Chairman, ICI Ltd. Former Vice Chairman & MD, SCICI Former Chairman, IRDA Vice President, Warburg Pincus India Pvt. Ltd. Former Secy., Ministry of Finance, Govt. of India Former Managing Director, Hutchison Max Telecom Ltd. Managing Director, Warburg Pincus India Pvt. Ltd. Jt. Managing Director, Max India
NEW YORK LIFE INSURANCE COMPANY
A Fortune 100 company founded in 1845 is the largest mutual life insurance company in the United States and one of the largest insurers in the world. Headquarter in New York City, New York Life’s Family of companies offer Life Insurance, annuities and long – term care insurance. New York Life Investment Management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds. The mission of New York Life is to maintain its superior ‘financial strength’, adhere to the highest standards of ‘integrity’ and demonstrate ‘humanity’ by treating its customers, agents and employees with compassion, consideration and respect. New York Life is one of the largest and strongest life insurance companies in the world with more than USD$215 billion assets under management and has received among the highest ratings got financial strength from the Life Insurance industry’s principle rating agencies: A.M. Best (AA+). Standard & Poor’s (AA+), Moody’s (Aa1), Fitch (AAA). According to Moody’s, “New York Life’s rating reflects the company’s good quality investment portfolio, ample liquidity, and sound capitalization, as well as the good growth potential of its international business.” As a leader in the insurance industry, New York Life continues to bring to its operations new management concepts, advanced technologies, new distribution and training systems and innovative insurance products.
Max New York Life aims to be a quality player selling true life insurance products in a market where people are grossly under – insured and where life insurance has traditionally been viewed as an investment and tax saving device. 96 % of the company’s business portfolio is made up of Whole Life and long – term endowments. The average
tenure of policies is over 30 years and the average age of people insured is around 28 years.
THE YEAR AHEAD
In 2005 – 2006, Max New York Life will further consolidate its market presence by extending its reach to more cities and aggressively grow its agency operations and diversify into alternative distribution channels. The company will continue top play a thought leadership role in focusing attention on key industry issues. Max New York Life will continue to espouse the cause of Indian Life insurers to move towards a maturity level where self – regulation becomes possible. This, the company believes, will come if all companies come together on a common platform to adopt best business practices where the customer’s interest is paramount. The company will also continue to focus on pensions, which are an extension of the financial relationship life insurance companies have with customers. Max New York Life will further build on its present strengths and will continue to map its progress according to stakeholder expectations. That is the way to grow and continue the company’s journey towards becoming India’s most admired life insurance company.
PROBLEMS OF THE ORGANIZATION
The biggest challenge faced by the Government today is that of a regulator with the prospect of about 30 or 40 players, each represented by thousands of agents, brokers and intermediaries. To evolve a free and fair method of assessing the companies, to ensure fair play between the competitors and to safeguard the interests of the largely uninformed customers are the main tasks ahead. The other and equally serious aspect is to ensure that the vast amounts collected by the insurance and pension funds are utilised for the welfare of the people. Though the Government itself would not be the guarantor of the policy monies, nevertheless, it is accountable through its regulatory mechanism, to put in place prudential norms of investment and accounting, revenue recognition, fair valuation of assets and liabilities, determining necessary margins towards any contingencies and proper reserves for shrinkage of investments will have to be made. Nevertheless, care has to be taken to see that there is not too much of control and regulation. A certain degree of autonomy in the functioning of insurance companies has to be allowed so that they get necessary freedom and space to perform and excel. The IRDA, along with the advisory committee constituted recently, is eminently qualified to undertake these tasks. In addition, a proposal has also been mooted to constitute a federation of insurance companies analogous to the Indian Banks’ Association. Such an institution will provide guiding principles, lay down a code of insurance ethics and generally act as a facilitator for both the life and non-life industry. As for the existing player, the public sector giant, the Life Insurance Corporation of India, the challenge is one of sustaining the huge growths it has shown in the recent times. It has to face competition for the first time in its history, particularly in the urban centres. It has to manage its huge operations more efficiently than at any other time in the past. It has to think of equipping its personnel (staff and agents) to face competitors and it may have to think of diversifying its activities to achieve economies in some areas.
As far as the prospective entrants are concerned, the greatest challenge is to establish their presence in the minds of the public. Insurance, particularly life insurance, it is said, is never bought but sold. To convince a large population, which is comparatively not well informed about the intangible benefits of life insurance is indeed an onerous task. On top of that, to establish the brand equity of a new name in a new field is quite a challenge. The second most important challenge facing a new entrant is that of setting up infrastructure and to reach out to as many areas as possible, since life insurance is based on probability and the wider the spread, the greater are the chances of success in maintaining the expense ratios at a reasonable level. Modern life perhaps offers challenges that will be common to all the above. Improvements in health and longevity, the recent breakthroughs in the mapping of the human genome and the frequent changes in the economy may have far-reaching effects on life and health insurance. Devising products that match the changing needs of the people and managing the funds in a volatile scenario are two problems that will have to be tackled by every player in the days to come.
Insurance Companies in India
Before insurance sector was opened to the private sector Life Insurance Corporation (LIC) was the only insurance company in India. After the opening up of Insurance sector in India there has been a glut of insurance companies in India. These companies have come up with innovative and flexible insurance policies to cater to varying needs of the individual. Opening up of the Insurance sector has also forced the Lic to tighten up its belt and deliver better service. All in all it has been a bonanza for the consumer. Major Life insurance Companies other than LIC in India are: • • • • • • • • • • Max New York Life Insurance Bajaj Allianz Aviva Life Insurance Birla S un Life Insurance HDFC Standard Life Insurance ICICI Prudential ING Vysya Kotak Mahindra Metlife India Insurance Max Life Insurance
Bajaj Allianz General Insurance Company Limited
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Auto holds 74% and the remaining 26% is held by Allianz, AG, Germany. In its first year of operations, the company has acquired the No. 1 status among the private non-life insurers. As on 31st March 2003, Bajaj Allianz General Insurance maintained its leadership position by garnering a premium income of Rs.300 Crores. Bajaj Allianz also became one of the few companies to make a profit in its first full year of operations. Bajaj Allianz made a profit after tax of Rs.9.6 crores.
Aviva Life Insurance,India
Aviva Life Insurance Company India Pvt. Ltd. is a joint venture between Aviva of UK and Dabur, one of India's leading producers of traditional healthcare products. Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share. Aviva is UK's largest and the world's sixth largest insurance Group. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. Aviva pioneered the concept of Banc assurance in India. Currently, Aviva has Banc assurance tie-ups with ABN Amro Bank, American Express Bank, Canara Bank, Centurion Bank of Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, 11 22
Co-operative Banks in Gujarat, Rajasthan, Jammu & Kashmir and Maharashtra and one regional Bank in Sikkim. Aviva has 40 Branches in India (including rural branches) supporting its distribution network. Through its Banc assurance partner locations, Aviva products are available in 378 towns and cities across India. Aviva Life Insurance has also launched two individual products – Pension Plus and Secure Life. Aviva is the fifth private insurance player to introduce a pension product.
Birla Sun Life Insurance
Birla Sun Life Insurance Company Limited is a joint venture between Aditya Birla Group and Sun Life Financial of Canada. Aditya Birla Group is an Indian multinational conglomerate with presence in India, Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia and China. Sun Life Assurance, Sun Life Financial's primary insurance business, is one of the leading insurance companies of the world and ranks amongst the largest international financial services organizations in the world. The Group has presence in several countries such as Canada, United States, Philippines, Japan, Indonesia, India and Bermuda.
HDFC Standard Life Insurance
HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard Life plc, leading providers of financial services in the United Kingdom. Both the
promoters are well known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry – all important factors to consider when choosing your insurer
ICICI Prudential Life Insurance
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI was established in 1955 to lend money for industrial development. Today, it has diversified into retail banking and is the largest private bank in the country. Prudential plc was established in 1848 and is presently the largest life insurance company in the UK. ICICI Prudential is currently the No. 1 private life insurer in the country. For the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies. ICICI Prudential has launched the unit-linked variant of its regular policy for children, Smart Kid. It provides three scheme options: Maximiser, which has a skew towards equities; Protector, which is biased towards debt; and Balancer, a blend of the Maximiser and Protector. Withdrawals can be made after five policy years; a total of five withdrawals can be made over the policy term. On the death of the parent, the sum assured is paid out immediately; payment of all future premiums is waived and the policy benefits remain in force. ICICI Bank has decided to offer `Life Time Pension Triple Advantage' exclusively designed life insurance product from ICICI Prudential Life Insurance to its high networth credit cardholders across the country. The product is a flexible unit-linked pension plan gives the customers the advantage of reducing their tax burden along with
safeguarding their post-retirement years. Besides the tax advantage, the product also offers to provide the cardholders regular pension, guaranteed for life.
ING Vysya Life Insurance
ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and ING Group of Holland, the world's 4th largest financial services group, with presence across 50 countries, and a heritage of over 150 years. ING Vysya Life Insurance Company Private Limited entered the private life insurance industry in India in September 2001. With in a short span of time ING Vysya Life Insurance has registered an impressive growth. The company currently has over 10,000 active advisors working from 75 branches (in 30 cities) across the country and over 2300 employees. ING Vysya Life has launched "conquering life critical illness plan", a total protection plan combining a term life cover and a unique critical illness benefit. It plan covers the basic need for protection and also provides for cover against 10 major critical illnesses.
Kotak Mahindra Old Mutual Life Insurance Limited
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd. (KMBL), and Old Mutual plc. Kotak Mahindra is one of India's leading financial institutions and offers a range of financial services such as commercial banking, stock broking, mutual funds, life insurance, and investment banking. Old Mutual was established more than 150 years ago and offers a diverse range of financial services in South Africa, the United States and the United Kingdom. The company is listed on the London Stock Exchange with a market capitalization and has its headquarters in London.
OM Kotak Mahindra Life has launched an investment-cum-protection plan - the Kotak Safe Investment Plan -- that offers safety of capital while permitting the policyholder to benefit from investment opportunities in the equity, debt and money markets. This unitlinked insurance plan is unique in that the various funds give the policyholder access to growth markets while the plan guarantees the sum assured – on maturity or death — regardless of the performance of the funds.
MetLife India Insurance
MetLife India Insurance Co. Pvt Ltd is a joint venture between MetLife Group and its Indian partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu. Met Life Group has presence in America and Asia and has an experience of over 137 years in providing financial services. The MetLife companies are the number one life insurer in the U.S. with approximately US $2.8 trillion of life insurance in force. MetLife serves 88 of the top one hundred FORTUNE 500 companies. MetLife entered Indian insurance sector in 2001.
1.5 S.W.O.T. ANALYSIS
Both Strengths and Weaknesses are inherent with the company while Opportunities and Threats are usually outside factors, which affect the existence of the company at large. Let us make the SWOT Analysis for Max New York Life Insurance Company:
Max New York Life is a young vibrant Max New York Life: Limited Pay company proud of the excellent track Endowment Plan record it has created for itself in a relatively short period of time. MNYL has today MAX New York Life's new endowment become one of the most aggressive players policy allows you to pay premiums for a in the Insurance services domain. A key limited term and enjoy risk cover for the factor in our success has been our ability to entire term. Moreover, it comes with a attract some of the most talented people in built-in double risk cover and a guaranteed any industry. Excellence addition of 10 per cent of the sum assured on maturity, besides the regular nonreversionary bonuses. You can choose a "In every aspect of work. Ranging from the policy term of 20 or 25 years. The premium in-house training institute to the detailed payment depends on the term chosen. Personal Insurance Plan. Max New York Though premiums are paid for a limited Life is focused on achieving the highest term, bonuses accrue for the full period. standards of quality in every aspect of their business". Honesty "Is the heart of the Life Insurance business. Max New York believes that above all, Life Insurance is based on trust. Transparency, Dependability and Integrity 27
will form the cornerstones of the Max New York Life experience." Knowledge "Is what makes experts. Max New York Life is focused on the Life Insurance business. Perfectly combining global expertise with local knowledge, Max New York Life is the Indian Life Insurance specialist." Caring "For the customer. Max New York Life is redefining the Life Insurance paradigm to focus on the needs of the customers. The Max New York service process humane is and responsive, empathetic." personalized,
Recent experience has shown that wherever an industry has been thrown open to competition, the size of the market has grown and the existing players have retained nearly 80% of the market share. The size of the insurable population in India is indeed vast and the existing player has managed to cover about one-fourth of it. The opportunities before the players are therefore aplenty in terms of target
• • Main threat is from LIC As the number of agents are considerably huge, efficient management of all the field force need greater strain and effort • More and more companies are coming into the field and the existing ones have to struggle hard to keep the customers loyal and to get more customers
audience. The falling interest rates, the collapse of many small-time financial institutions, the scope for entering related areas like banking and pensions in a bid for synergy and the promise of e-commerce are some of the other opportunities knocking at the doors of the insurance majors. There is a probability of a spurt in employment opportunities. A number of web-sites are coming up on insurance, a few financial magazines exclusively devoted to insurance and also a few training institutes being set up hurriedly. Many of the universities and management institutes have already started or are contemplating new courses in insurance. It also augurs well for greater development of professionalism of the trade and expansion of opportunities for everyone concerned. The pension market, which perhaps has not been very vibrant in the country, is also likely to witness a sea change with huge expansion in terms of premium and number of policies. Health insurance, which is still in its infancy, is also likely to get a major boost, ultimately leading to improvement in the quality of medical treatment and
Now as India is on the brim of emerging out as an economic power center, stringent laws can be expected in the coming future.
facilities in the country. The opening of the insurance sector will throw open a huge array of opportunities, many of which will be in unrelated fields and may give a bigger push to the development of the national economy as a whole. Life insurance has today become a mainstay of any market economy since it offers plenty of scope for garnering large sums of money for long periods of time. A well-regulated life insurance industry which moves with the times by offering its customers tailor-made products to satisfy their financial needs is, therefore, essential if we desire to progress towards a worryfree future. (PIB Features)
OBJECTIVE & METHODOLOGY
The Max Life Insurance site is historically significant: It is the location of what may be the first reported archaeological site in Indian, and it is certainly the site of the first excavation in the state to collect archaeological materials. Moreover, the site is archaeologically significant for the information it can yield about one of the four main villages of the Caborn-Welborn culture, and about how inter-community relationships may have changed over time. For the long-range goal of understanding the development and decline of the CabornWelborn culture, it is essential to know the site-specific characteristics of each of the remaining main communities. Because the archaeological deposits at Max Life Insurance sites retain integrity on both the ridge crest and in the buried midden deposits along the swale and slough, we can recover some of the kinds of materials and associations needed to characterize this community. The key questions for Max Life Insurance are: What practices distinguished the Bone Bank villagers from their contemporaries; did they decorate their pottery, or weave their fabrics, in a distinctive manner, compared other villages? Or were the techniques, motifs and embellishments common among most communities? What is the evidence for long distance trade? Was Bone Bank a fortified village, as would be indicated if a stockade wall is present around the remaining southeast village segment on the ridge crest?
2.2 MANAGERIAL USEFULNESS OF THE STUDY
• • • • • Helps to have sale experience Helps to deal with different customers Helps to overcome the objections of the customers Helps to understand the problems of agents in a broader prospect It provides a platform where managerial role can be played effectively and efficiently
The summer internship program was carried with two prime objectives in mind. The entire internship program was divided into two parts, The recruitment of the insurance advisors A survey conducted on the agent advisors of Max New York Life. The recruitment of agent advisors is the most important responsibility of a sales manager in any insurance organization. If the manager is able to recruit quality agent advisors half of his work is done then and there. During this internship program I was involved in the recruitment of insurance agent and the advisors under the supervision of the sales manager. This enabled me to get a first hand experience and learning of this important function which will be very helpful in my future. The survey was conducted on the agent advisors of Max New York Life. The main objective behind the survey was to find out the factors which motivated the advisors to perform their maximum potential. The survey also aimed at finding the factors within the organization which would help them work more efficiently.
SCOPE OF THE STUDY
1) To study the present recruitment and selection process in the organization at various levels, 2) To find the awareness level of employees vis-à-vis recruitment and selection policy and 3) To compare the company’s recruitment and selection policy with the best HR practices in recruitment and selection process.
THE RECRUITMENT FUNNEL
Names 60 Screening Interview 20 NAT/ARIF 16 Career seminar 8 P200 & market survey 6 Career interview 4 Agents 2
It is the first interaction of the recruiter with the prospect agent and the first step towards the entire interview process. There are primarily two objectives of the initial screening. First: to literally screen the candidate and to determine whether to go ahead with the other recruitment processes. If the candidate fits in the scheme of the things then the second objective is to be achieved Second: to inspire and motivate the candidate to consider this as a career option. Here care has to be taken to maintain the interest of the candidate with the presentation. It is important to maintain a right degree of professionalism and be well prepared for the interview.
The Interview Structure
The meeting has three phases 1) The Introduction: this should be no more than 15 minutes and here the manager should give the candidate enough opportunity to tell about himself. 2) Describe the opportunity: One the manger has enough information about the candidates background he/she should briefly describe the opportunity. 3) Have the candidate complete the company profile.
The Introduction And Screening Question:
Here the manager should start by briefly describing the structure of the meeting, the purpose of the interview and the process that would be followed and the payoff for both the candidate and the company. Then the manager should ask general questions about the candidate and listen to him carefully. This dialogue provides important information about 34
the candidate to the manager. The manager should use a structured series of questions and record the answers in the candidates recruitment file. Discussing The Career Opportunity: The manager should take approximately 10 minutes to explain the career opportunity to the candidate. And the manager should use the “push – pull” technique here. One should avoid selling too much. Quality candidates will become suspicious about the standards if the manager seems to hire the candidate on the spot. The manager should also stat that it is an outstanding opportunity and the selection process is a challenge that most candidate do not successfully complete. This way the manager can make his/her presentation more attractive with the push pull technique. Also this will help you avoid the following problem . if you have wasted too much time selling the career and then the candidate fails the numerical ability test , you have wasted a lot of your time. So during the initial screening interview, be professional, minimize distractions, and use the push pull technique.
The career presentation should cover five areas.
A brief discussion of the insurance industry The benefits of being associated with Max New York Life. The general benefits of a career in life insurance business, explaining the opportunity of becoming sales managers or agency associates. The benefits of being associated with that particular General Office. The selection process. Provide an overview of the steps of the process and clearly stat that our objective is to encourage and promote only candidate with a strong probability of success.
The primary objective is to study, understand and analyze various aspects related to recruitment and selection procedure at Max Life Insurance.
Hypothesis and Research
A research Methodology defines the purpose of the research, how it proceeds, how to measure progress and what constitute success with respect to the objectives determined for carrying out the research study. The appropriate research design formulated is detailed below. Exploratory research: this kind of research has the primary objective of development of insights into the problem. It studies the main area where the problem lies and also tries to evaluate some appropriate courses of action. The research methodology for the present study has been adopted to reflect these realties and help reach the logical conclusion in an objective and scientific manner. The present study contemplated an exploratory research The methodology adopted in concluding this study was quite simple. First there was collection of data from various sources including business and personal interview. Then after scanning and properly and analyzing and interpretation the information available on hand, a final report was prepared.
Sources of data
Data is collected from Primary as well as secondary source. For primary data customers were personally intervened and for secondary data, journals, Internet and books.
PRIMARY DATA: Primary data was collected from the sample by a selfadministered questionnaire in presence of the interviewer.
SECONDARY DATA: The chief sources of secondary data were magazines, newspapers, journals etc.
The survey is conducted among 100 respondents.
3.1 THE RECRUITMENT PROCESS The insurance industry grows on the shoulders of the insurance agents and advisors. It is because of this reason that recruitment of quality agent advisors becomes a prime job of a sales manager which is the only possible means to ensure success on both personal level and for the organization as a whole. Max New York Life says managers are very important for company. As a manager they will play a critical role in managerial corporate by means of recruiting quality agent advisors and developing them to do their job effectively.
A key MAX New York Life objective is profitable growth at a competitive cost. To achieve that goal the managers must continually select and develop high quality new advisors while building, nurturing and supervision an established sales force. Success in field management therefore requires an unusual blend of sills and talents –some of ethic one may already have, and some which one will need to develop.
Initial screening interview Purpose : Does he meet the initial target Outcome : fill in interview file .sell the career
Purpose: To build steady pipeline Outcome : rule of 31
Purpose : Testing the conviction & sustainability of a career Outcome: short listing
NAT & reference check
Purpose : screen the candidate and to fit him to the closest successful profile
Recruitment Process Map
Outcome : I want to do it (higher conversion ration)
Purpose : evangelize insurance and sell it as a career
Purpose : get him to feel his initial market Outcome: list of probable buyers
Outcome : profile of the candidate and list of probes
Evaluate P200/market survey
Purpose : candidate to assess his market and get referred leads Outcome : readiness to accept this career
Purpose : review of all which has been done and check on motivation, dream & longevity Outcome: candidate ready to join
What is a sales managers job.
As Max New York sales manager one will have to be an effective leader. This is a challenging work. They find that recruiting is much more than selling a career opportunity, it is a commitment to help new agents make good transition, new meeting etc from the previous career to the profession of sales. Throughout their work they will always lead by example .They cannot expect their agents to meet high standards if they do not demand the same standards of themselves. Max New York life expects that they will develop the knowledge and habits that had made them successful in the past, and dwell upon the enhancement of the personal development of the agent advisors with a personal dedication to self discipline and high standards of ethics. They must ensure that the agent advisors realize that to succeed they must have a passion for helping others, and an unwavering commitment to developing a winning team. This commitment will help them persevere in difficult circumstances and do the right thing when tough decisions are required as a steward of the M N Y L, there will be an obligation to generation of agents past, present and future. There are tremendous and varied rewards to this work- emotional, financial and professional. As a MNYL manager, the opportunities for emotional and financial rewards are similar, but they will come from different sources for example they may derive enjoyment as a manager from –
Leading and teaching :
Being a role model and a source of guidance for the people with whom you work. This often includes helping people who are “under employed” reach their full potential by your coaching and encouragement.
Team building :
Bringing together a group of individuals and molding them into a cohesive team that provides mutual encouragements, support and achievements.
The sales manager’s role
There are two basic roles that need to be effectively full filled by a sales manager, viz, recruitment of quality agent advisors and their development. While the recruitment activity would be explained in greater detail in the later articles, the development part is beyond the scope of this project.
It is because of the importance of this activity that a well defined process has been laid down by the company. It is said that “Becoming an outstanding recruiter won’t guarantee your success but not being able to recruit for whatever reason will definitely guarantee failure.”
The fundamentals of recruiting involves having A philosophy of consistent and continual recruitment. An ideal candidate profile. A recruiting process Clearly defined goals
A sales manager’s primary objective is to master the art of prospecting new agents. Here arises the question as to who are the quality agents. With years of experience and expertise in the business the company has laid down that a quality agent advisor is one who has A history of success pattern
A well defined natural market An income history at a level equal to executive council or higher Work habits that indicate high energy and leadership potential Good self esteem and a competitive nature Adequate personal financial reserves. Some demographic factors which must be considered while recruiting an insurance agent advisor are Time in area Income history Education level Leadership experience Sales background Community involvement Employment background Professional background Keeping in mind the above mentioned factors there are certain laid down by the company which the sales manager has to abide by while recruiting an insurance advisor? The prospect should be above the age of 25 The prospect should be a graduate The prospect should be living in the area for more than 5 year The prospect should be married
To be successful in his primary job a sales manager should follow the recruitment process that has been laid down. Strict adherence to the process will definitely guarantee greater success. The recruitment process is as follows. Name gathering Initial screening Test and reference check Career seminar/ administering P-200 Evaluation of P-200 and survey Career interview Additional interview day 12 day 3 day 6 day 10 day 11 ------day 1
The importance of this activity cannot be said too often “prospecting is the single most important skill required a manager’s future success”. If a manager is able to generate enough quality candidate names, he/she will be able to select and hire top quality candidates. Industry studies have proven the importance of prospecting. Studies of high retention and high productivity agencies have found only one major discriminator between these agencies and those with poor retention and productivity. That the discriminator is simply that good offices interview more candidates per hire. “On an average these agencies conduct 20 screening interview and administer 15 numerical ability test for each agents hired. Conversely the low productivity and retention agencies conduct only 12 screening interviews and administer 7 numerical tests per hire. Clearly effective prospecting is the answer. A manager will be better able to select out unsuitable candidate and to let go of agents who are not performing to standards. Without confidence in his/her prospecting skills he/she will be inclined to appoint candidates who are significantly less than ideal and to hang on to poor performers long after they should have resigned.
EFFECTIVE SOURCES OF NAME GATHERING
The sources of name gathering can be broadly divided into two categories a) primary sources Agent referrals Centre of Influences Nominators Personal Observations Policy Holders Friends and Family b) supplement sources
Newspaper Advertising Direct mail/ Pre-Approach Letters Employment news Seminars Campus Recruitments Personnel Directors.
AGENT REFERRAL PROGRAM ( ARP )
Agent Referral Program (ARP) is a unique tool in sourcing quality new names from successful advisors. It can also act as an additional income opportunity for the advisors. The existing agent advisors in the team are required to give references of prospective names. As they are in the business they know the requirement better and so they are the best source of quality names. In order to get quality names from the agent advisors the sales manager should Ask for references in every Performance review and planning (RPP) Ask after every successful field demonstration
Take Advisors out for dinner and use the opportunity to ask for referrals. But in turn there is a need to reward and encourage the agent advisor so that this becomes an ongoing habit.
Centre of Influence
A centre of influence can be defined as people with whom you already have an established relationship for referrals as an agent. Your centers of influence for recruiting will include friends business and civic contacts and your clients. Because these people respect you as a professional they will want to help you succeed. Ultimately they will most likely be your second most productive source of candidate referrals. Referrals from agents have consistently proven to be the best source for quality names. We begin with Centre Of Influence at this point because you will have few of your own agents to ask. To cultivate your Centers of Influence you will need a well organized presentation of the career opportunity and a description of the type of candidate you seek. Your existing Centre of Influence may be thinking of a very different profile or people that you have in your mind. Therefore your presentation must direct their focus to a different set of qualities and characteristics for agent’s candidate’s referrals.
A prominent people in the community who may be in a position to recommend prospective agents. Development of nominator can be a very useful practice for sales managers as they can also be a very good source of quality names. With constant communication with the nominator he/she can be developed into a Centre of Influence. So this practice if done religiously can be a very good source of quality names. For better
results the companies has laid down certain scripts which a sales manager should use while communicating with the nominator. While talking to a nominator a manager should keep in mind that he/she should always take permission before speaking to the nominator and always insure that by helping hi,/her the nominator would also help other people. Also the sales manager should not forget to maintain regular contact and thank and acknowledge the efforts of the nominator and develop him as a centre of influence.
WHAT SHOULD THE COMPANIES LOOK AT ?
The new companies have attempted appealing only to the middle, upper middle and elite classes. Contrasted with Public sector insurance companies, with their offices across the country, the new companies have miles to go before they reach anywhere. They must overcome the mindset of the customer that life insurance is LIC and general insurance is GIC if they hope to grow in the market. Public Sector Companies Private Sector Companies Identity is well established, but the Have to build their identity in a market perception of “poor service providers" is where the public does not distinguish a stigma. them. Products are not attractive and flexible Remove the perception that anything enough but expensive. that looks good is expensive. To retain their creamy layer clientele Work against the people's mindset that who are the most likely to be wooed by they are not here for the long term. the new companies. Retain and attract good intermediaries. Attract intermediaries especially agents with the requisite qualifications and attributes who can market the company and the product. Match the aura created by the new Run the risk of tapping an already companies in the urban market. insured market for repeat insurance
instead of tapping new virgin pockets in the market. In this process all are targeting the same market --the existing pie is being cut up further, but no attempt is being made to increase the size of the pie. For example, while attempts are made to complete the quota of rural insurance in percentage terms, the rural market potential is yet to be tapped, as the new insurers are not able to attract the right kind of talent into their distribution force to address this. Intelligent segmentation of distribution channels to match the market segmentation is what will help the companies to move in this direction.
NUMERICAL APTITUDE TEST
This test focuses on the comfort level of the agents in simple mathematical calculations and basic finance questions like simple interest , compound interest etc, as they would be generating illustrations while they sell. The numerical ability test has 20 questions each carrying 1 mark , there is negative marking of 0.25 marks for every wrong answer. The time allowed for the test is 30 minutes. The agent has to obtain a minimum of 50% marks which is 10 marks to pass the test. Calculators are not allowed. The test has to be administered and checked by the agency coordinator and the results are published on the same day. The room which is used to conduct the test will also make an impression on the candidate. The managers should make sure that the room in which the test is being conducted should be quite and free from all distractions. Borrowing an office , or putting the candidate in an empty office may send the wrong signal to the potential peak performer.
So far in the recruitment process the manager has tried to access the ability of the candidate. But the candidate should also be given an opportunity to know about the company and the career opportunity; he/she should be able to access for himself/herself the worth of the company and the opportunity given to him/her. In order to help the candidate know about the company and the opportunity the company conducts a career seminar every Friday in the evening. The career seminar is usually conducted by the Partner/ Associate Partner or the Sales Manager. In the seminar a very illustrative presentation is made. The candidates who have been screened by the sales managers over the week are invited to attend the seminar. In the seminar the presentation starts with a general description about the insurance company followed by an introduction to Max New York Life, giving a lot of emphasis on its reputation and credibility. The invitees are then informed about the nature of the work which has been offered to then, the method in which the work has to be carried out etc in great details. Also they are told about how they would earn in this business and are given a brief illustration of how much they can earn in this business. The presentation then has a guest speaker which is usually an exiting successful agent advisor who discusses his success story with the invitees. This illustrative presentation then draws a lot of attention and then the invitees clarify their doubts and ask any kind of question they have. They person who is conducting the seminar is more that happy to answer the question. In this manner the career seminar imprints an image of the organization and the career opportunity in the minds of the prospects and they are now in a better situation to take a decision about this offer.
EVALUATION OF P-200
After attending the career seminar the candidate is given a project called the P-200. in this the candidate is required to write down the names of 200 people that he/she knows along with some of their details. A sample copy of the P-200 is attached in the appendices. Once they have filled the P-200 with the names, then an evaluation is done on those names. This has a two fold benefit. The company would know about the natural market of the candidates which would largely be responsible for his/her initial success. The candidate will have a database and can make an effective use of it. In order to judge the natural market of the candidate , the manager picks up names randomly form the P-200 list and call then. It is expected that the person who has been called recognizes the candidate and give due attention to the call. P-200 also helps a manager to categorize the natural market of the candidate under various parameter like average annual income , age, etc. as insurance is sold as per the needs and the spending ability of any individual, this categorization can help the candidate in streamlining his approach while doing business. The manager can also know if the market base of the candidate shows any tendency towards any particular type of profession. The manager can also ask the candidate to make calls to the names listed in the P-200 to try and sell them the product and evaluate the candidate on this. This will help the manager is knowing the shortcomings which can be eliminated later.
After the completion of the career seminar and the evaluation of P-200, the candidate and the company know about each other and can make a call. Therefore the last part pf the recruitment process is the career interview which is conducted by the Managing Partner/ Partner. The main purpose of this interview is to review all the previous activities of the recruitment process, and top check the motivation level and the dreams and aspirations of the candidate. The Managing Partner/ Partner would also look to know about the expectations of the candidate and his intentions about a association with the company. This ideally is the last past of the recruitment process after which the candidate is finally invited to join the training program. But in case there is any disconnect between the views of the sales manager and the MP/Partner, then there is another interview, the additional interview to take a final call on this. After completion of these rounds of interview and assessment the candidate is finally invited to join the training program for a period of one month, during which he is awarded the license to work with Max New York Life Insurance Company as an agent advisor.
4.1 PERSONAL OBSERVATION
It can be defined as a face to face contact made on an impromptu basis in order to secure an appointment for a recruiting interview.
Effective recruiting requires consistent activity. Personal observation is a method of prospecting that enables you to be always recruiting and taking advantage of every opportunity that arises. These opportunities usually occur when you are in the midst of some other activity or event. You may be having lunch with an agent attending a child’s sporting event, working out in the gym or running errands on the weekends.
As you use personal observation, you will notice more and more the caliber of the individual you meet daily. Ideal candidate are impressive people, and you will want to approach them if you have not been introduced.
These are some of the most effective sources of gathering names. There are other very important sources like newspaper advertisements, seminars, college interns etc. but these sources should be used as supplementary means to the once discussed earlier for greater result and consistency.
Once sufficient names have been gathered and after having qualified the names to suit the requirement, the next obvious step is the initial screening. The importance of name gathering can be seen form the recruitment funnel. The funnel says that in order to recruit 2 quality agents the sales manager should have 60 qualified names. Out of those 60 qualified names there should be at least 20 initial screening, and 8 career seminars and 4 career interview. This shows how important getting enough
qualified names is .also since the Max New York Life works on a quality model , therefore it is important to screen good number of well qualified names before recruiting agents. It is because of this reason that M N Y L has a highly respect and efficient agent advisors team amongst all other insurance companies in India
The aim of the survey was to find the out what are the factors that motivate an insurance agent advisor and also to find out how the organization can help the agents in improving their performance. The survey was carried out on a sample size of 30 agents advisors of Max New York Life. It was questionnaire based survey in which I personally sat with each and every sample and discussed the various question. This practice though time consuming help me in bringing out the best results as I could not get the most intriguing answers and also the agents and advisor felt more comfortable in giving their genuine feedback and suggestions. The survey was carried over a period of one month and each say was an enriching experience as each day the agent advisors had some enriching experience to share. During the duration of one month I tried to cover agent advisors from various demographics. For example I tried to cover equal number of tenured agents and the newer once. I also made a point to cover the agents advisors of all age groups and I was happy to observe that different age groups had different view about the various aspects covered in the survey. The survey also gave me an opportunity to interact with a good number of agent and advisors which was a very rewarding experience. In the subsequent pages I will share with u the finding of the survey. This survey revealed some interesting facts about the motivational needs and expectations of the agent advisors. More than 60% of the advisors who work with MNYL currently have their own business or other job and the primary reason why they have joined MNYL is extra money.
Q. 1 Motivating factor which affects agent of Max New York Life Insurance?
12 10 8 6 4 2 0 money recognition association with an organisaation influenced by others success had freet ime
From the graph it is evident that most of the agent advisors working with MNYL are motivated by the kind of money that they can make in the business. The other factors which motivate them are recognition and association with a multi national organization. There are few who motivate themselves by the success of the other agents. A handful of people do not actually have any thing to motivate them, they are working with MNYL to spare time.
Q. 2 What factor should be considered while communicating with potential customers?
The agents and advisors have also given some important feedback about the important characteristics which an MNYL agent’s advisor should possess. The results are shown with the help of a graph below.
30% 25% 20% 15% 10% 5% 0% 1 patience comunication relation building persistence hardworking
The agents feel that communication is the most important characteristics that an advisor should possess, followed by patience and the ability to work hard. Therefore the management of MNYL should give emphasis on developing the communication skills of the agents. Also as an advisor makes most of his appointments over the phone, there should be greater emphasis on soft skill development in the training module. Most of the MNYL agents advisor feel that they are growing with the as rate as which the insurance industry is growing which is a very good sign, how ever there are a few percentage who feel that they are not growing as fast as the industry is and they feel that the reason for not growing is their lack of time devotion and hard work. The feedback of the agent advisors regarding the recruitment interview has been very positive with the majority of the agent advisors saying that they are very pleased with the entire recruitment process.
Q. 3 What percentage of customers are satisfied with the service of Max New York Life Insurance?
comfort with screening interview
80% 60% 40% 20% 0% comfortable not comfortable comfortable not comfortable
Some of the agents felt that the presentation of the managers during the screening interview is very impressive and that the way they project this career is very effective. The fact that the manager had treated them like guests rather than an individual who is seeking a work opportunity left a lasting impression. The advisors also feel that the career seminar had helped in making up their mind to a great extent. However a good Percentage of the agents surveyed had not attended the career seminar which means that a number of prospect do not get an opportunity to attend the seminar and therefore the company might lose a potential top performer.
Q. 4 What percentage of customers are influenced by the agent?
influence of the career seminar
70% 60% 50% 40% 30% 20% 10% 0%
influenced not influenced did not attend
Those there were mixed reaction about other things but a majority of the advisors had a similar opinion about the training program. This can be seen in the graph given below.
Q. 5 What percentage of customers are satisfied by the training programme of the agent?
satisfaction with training program
100% 80% 60% 40% 20% 0% satisfied unsatisfied satisfied unsatisfied
The agent and advisors also feel that the success of the advisor in bringing good business is also due to the world class training program. On a question regarding the product range of MNYL, there was a mixed response from the advisors. Where 60% of the advisors feel that the products are enough while he remaining 40% say that the products are not enough.
FINDINGS AND RECOMMENDATION
The greatest motivating factors for the agents and advisors are money followed by being a part of a Multi national organization. Most of the agent advisors feel that good communication is important to be successful in this business and therefore the company should train them in developing good communication skills. The agents and advisors find that the career seminar is a very important tool in selling the agency as a career and most of them have been influenced by this. The agents and advisors are very satisfied with the training program at MNYL and believe that is it one of the reason for their success. A good number of agents feel that there should be more policies for the children A good number of agents are not satisfied with the facilities provided by the management. They would like the company to increase the number of telephone in the agent area and also make the camp shop more efficient The agent advisors also felt that the y are not given regular updates on the position of the application that they have submitted. The agents are happy with the kind of support they are getting from the management, but some feel that the management should be more supportive towards non productive agents.
The survey has made it evident that the agents and advisors are by and large satisfied with the organization and are happy to be a part of this esteemed company. However there are few areas where the agent advisors feel that there is some scope of improvement. Most of the agents and advisors feel that communication is the most important characteristics that an advisor should possess. And as the agents take most of their appointments over the phone, the training module should contain program which would train them on soft skills and telephone etiquette. Most of the agents and advisors are not satisfied with the working of the camp shop, therefore some measures should be taken to make it more effective and spontaneous. Since money is the most important motivating factor, the company should make regular updates in the reward and recognition program, as many agents and advisors feel that the rewards and recognition system are not enough remuneration for their hard work and commitment. There is a need for refreshment for the clients who visit the office. Unable to do so might leave a bad impression in the minds of the client about the organization.
MAX NEW YORK LIFE INSURANCE Operating cash profit of Rs. 112.31 crore earned in FY 04-05 against Rs. 4.34 crore in FY 03-04. Annualized First Year Premium (AFYP - new sales) value at Rs. 241.51 crore for the year ended March 2005, grows 65% year-on-year. Unit Link in place: contributes 32% of total sales for the company for the period Jan – Apr 2005. Long tenor products and young customer base builds up strong business fundamentals for MNYL. With clear focus on whole life segment the average age of insured as well as the balance tenor of the policy is around 29 years. Average case size per active agent at Rs. 15976 for the quarter ended March 2005, grows 68% from Rs. 9496 for quarter ended March 2004. MAX NEW YORK LIFE INSURANCE MNYL maintains high agent productivity. Ranked No. 1 in annualized first year premium (AFYP) per agent per month and Case Rate per agent. Number of policies sold during the year ended March 2005 increases to 216,671 from 145,582 in the previous year. Number of Individual policies in force increases from 153,995 as of March 2004 to 375,085 as of March 2005. Sum assured in force increases 50% from Rs. 112 billion as of March 2004 to Rs. 167 billion as of March 2005.
35% growth in agency force in FY 04-05, 1959 agents added in 12 months and 659 in quarter ended March 2005. MAX NEW YORK LIFE INSURANCE MNYL maintains a persistency rate of around 80% throughout the year, higher than the industry average of around 70%. Geographic coverage increases to 38 offices – future plans to cover 62 offices. Corporate agent coverage extends to an additional 100 towns. Strong Co-operative Bank relationships created during the year, partnership from inception with Yes Bank. MAX NEW YORK LIFE INSURANCE Key Business Driver Unit Quarter Ended Mar-05 Mar-04 76.87 15,976 3.22 7,567 659 76.70 56.85 60.83 15.81 133.49 62,647 16,711 47.28 9,496 3.27 5,608 538 82.10 39.88 22.21 2.28 64.37 54,224 11,162 Year Ended Dec-04 Dec-03 214.40 1,224 2.16 6,908 1,838 82.90 192.40 143.90 16.70 353.00 214,34 7 15,244 111.70 1,185 1.86 5,070 1,916 81.10 95.30 64.30 12.50 172.10 113,287 9,805
a) Sales Value (Annualized first year premium) zx b) Average case size per active agent c) Case rate per active agent per month d) Number of agents e) Net agents added f) Overall persistency rate g) Gross written premium income First year premium Renewal premium Single premium Total h) Number of Policies sold h) Sum insured in force
Rs. crore Rs. No. No. No. % Rs. crore
No. Rs. crore
Max India Limited Investor Release January 2006
MAX SPECIALITY PRODUCTS
Substantial expansion plans approved in December 2005 – Addition of a new BOPP film manufacturing line with a capacity of 20,000 TPA. – Addition of a new thermal lamination film line with a capacity of 120,000 KSM. – Estimated project cost of Rs. 122 Crores – Debt-Equity mix of 1:1. – Maintain leadership position in specialty plastic films segment.
Generates revenue of Rs. 100 Crores, and PBT of Rs. 8 Crores for first nine months ended Dec’05. – MaxFoil achieves revenue growth of 49% year-on-year.
100% capacity utilization – installed capacity 8,800 tons per annum. High production yield. Highest return on capital employed of Rs. 69 Crores – 21%, better than competitors.
MAX SPECIALITY PRODUCTS
Cash Profit of Rs. 157 Crores earned for the year ended Dec’05, grows 60% yearon-year. Annualized First Year Premium (AFYP – new sales) value for the year ended Dec’05 is Rs. 428 Crores, grows 100% year-on-year. Gross premium income of Rs. 635 Crores for the year ended Dec’05, grows 85% year-on-year over previous year’s Rs. 343 Crores. Unit Linked products contribute 45% of total sales of the Company for the year ended Dec’05. – Top quartile investment performance by MNYL’s Unit Linked fund last year.
Sum assured in force as at Dec’05 end over Rs. 235 billion ($ 5.2 billion).
MAX NEW YORK LIFE INSURANCE
607,652 individual policies in force. New policies sold during the year ended Dec’05 at 360,798, grows 68% year-on-year over 214,347 policies sold in the corresponding previous year period.
Overall Persistency rate of 75% as of Dec’05 end against 83% as of Dec’04 end. Persistency rate is 80% for agency sales and 63% for sales through other distribution channels.
Agency force as at Dec’05 end at 12,575 agents grows 82% year-onyear. 5,667 net agents have been added in the year ended Dec’05. Number of agents in Agency channel at 10,753 and in rural channel at 1,822. MAX NEW YORK LIFE INSURANCE
Average case size per agent at Rs. 15699 grows 28% over Rs. 12240 for the corresponding previous year. Average case rate per agent per month is at 1.84 for the year ended Dec’05 against 1.76 for the previous year. MNYL maintains high agent productivity – Breaks into the top 50 global list of MDRT (Million Dollar Round Table). The Company has 126 advisors qualifying for MDRT for 2005. – Ranked No. 1 in annualized first year premium (AFYP) per agent per month and Case Rate per agent.
Geographic coverage increases to 48 offices from 31 offices in Dec’04 – Future plans to cover 52 offices. – Strengthen, build and grow Pan India presence.
MAX NEW YORK LIFE INSURANCE
Key Business Driver Unit Quarter Ended Mar-05 Mar-04 Year Ended Dec-04 YOY Growth
a) Sales Value (Annualized first year premium) b) Average case size per agent c) Case rate per agent per month d) Number of agents e) Net agents added f) Overall persistency rate g) Gross written premium income First year premium Renewal premium Single premium h) Sum insured in force
Rs. Crores Rs. No. No. No. % Rs. Crores
121.04 16,594 2.29 12,575 1,908 75.20
76.22 13,554 2.14 6,908 353 82.90
427.86 15,699 1.84 12,575 5,667 75.20
214.39 12,240 1.76 6,908 1,838 82.90
100% 28% 5% 82%
116.83 85.66 20.66 23,524
72.08 54.24 5.14 15,244
308.56 265.58 60.72 23,524
191.44 134.95 16.84 15,244
61% 97% 261% 54%
MAX NEW YORK LIFE INSURANCE COMPANY LIMITED 12th Floor, DLF Square, Jacaranda Marg, DLF City Phase II, Gurgaon-122002
FINANCIAL QUESTIONNARE (Personal Covers) Proposal no. : Life to be Insured: SECTION A 1 Please state your occupation 2 Are you (tick one) a) Employed b) Self employed c) Share holding director (%of share holding) d) In partnership Insurers Sum Assured yes ( ) , no ( ) yes ( ) , no ( ) yes ( ) , no ( ) yes ( ) , no ( ) Reason for Cover Type/Term of Policy
3 Please give details of any current policies that are with other life insurers
Please give details of Existing Policies in force for Life or Type/Term of Policy Disability Benefits Sum Assured Reason for Cover Type/Term of Policy
Please state Earned Income in the last tax year (for self employed persons, state personal earnings as assessed for income tax after deduction of allowable business expenses.)
3 Please estimate the value of your Personal Assets and Liabilities. Assets Property Investments Unquoted equities Others(please specify) Total 4 Number and Age of Dependents Total Liabilities Mortgages Loans Others(please specify)
8 What is the reason for applying for this policy (Please tick the appropriate one) a) Family Protection b) Personal Protection d) Others (please specify) () () ()
c) Private Residential Loan Cover ( )
SECTION B Please state: 1) Reason for Loan 2) Name of Lender 3) Name(S) of Borrower(S) 4) Amount of Loan 5) Term of Loan 6) Interest Rate 7) Repayment method (e.g. interest only, capital and interest) I hereby declare and agree that the above particulars and answers are complete and true, that I have not held back any relevant facts or details, and that the answers to questionnaire will form part of the application for the desired insurance on my life. Signature of Life to be Insured DATE:
QUESTIONNAIRE OF AGENTS Q. 1 Motivating factor which affects agent of Max New York Life Insurance?
• • • • • Money Recognition Assertion with an organization Influenced by others success Had free time
Q. 2 What factor should be considered while communicating with potential customers?
• • • • • Patience Communication Relation building Persistence Hardworking
Q. 3 What percentage of customers are satisfied with the service of Max New York Life Insurance?
• • Comfortable Note comfortable
Q. 4 What percentage of customers are influenced by the agent?
• • • Influenced Not influenced did not attend
Q. 5 What percentage of customers are satisfied by the training programme of the agent?
• • Satisfied Unsatisfied
1. Books Mishra.M.N ,Modern Concept of Insurance, Year 1999 IC-02, IC-33 Insurance Institute Of India Kothari C.R , Resarch Methodolgy Gupta.S.L, Marketing Service Life Insurance Volume 1 - ICFAI Press 2. Newspapers and magazines: Insurance Chronical by ICFAI, Edn. June-2008 Economic times, Edn. May-2008 Times of India, Edn. 23, June-2008 3. Websites
www.maxnewyorklife.com www.maxindia.com www.newyorklife.com