Role HRM in Insurance Sector

Submitted to:- Dr.D.N.Venkatesh
VJIM 3/21/2010

Submitted by- R K Krishna Vazrapu Roll no -0409005 PGDM MARKETING

Insurance Sector
The history of Insurance in India started with life insurance in 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered more risky for the coverage. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General Insurance Business in India, on the other hand, can trace its roots to the Triton (Tital) Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of nineteenth century insurance business was almost entirely in the hands of overseas companies. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the provident fund Act of 1912. Several frauds during 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. A very rapidly growing private health market has developed in India. This private sector bridges most of the gaps between what government offers and what people need. However, with proliferation of various health care technologies and general price rise, the cost of care has also become very expensive and unaffordable to large segment of population. The government and people have started exploring various health financing options to manage problems arising out of growing set of complexities of private sector growth, increasing cost of care and changing epidemiological pattern of diseases. The liberalization of insurance sector in India is not a new story as it started way behind in the early 1999 which marks the structural changes in the industry. The population of the

country was at 1 billion and the government dissolved its monopoly which paved way for the private companies to operate in Indian markets. The key development started with the market liberalization set in motion by IRDA (Insurance Regulatory and Development Authority). The entire paper discusses about the specific market changes and how the market evolved since the liberalization efforts began.

EMERGENCE OF INSURANCE BUSINESS IN INDIA

Table 1: Milestone¶s in the Life Insurance Business in India Year Milestones in the life insurance business in India

1912

The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 245 Indian and foreign insurers and provident societies taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

1928

1938

1956

Table 2: Milestone¶s in the General Insurance Business in India Year 1907 Milestones in the general insurance business in India The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 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.

1957

1968

1972

Human Resource Management:³Human resource management (HRM) is planning personnel needs; recruiting, selecting, training, and developing capable employees; placing them in productive work environments; and rewarding their performance. ³

Thus, human resource management refers to a set of programmes, functions and activities designed and carried out to maximize both, employee as well as organizational effectiveness. It is concerned with the people dimensions in the management. Since every organization is made up of people, acquiring their services developing their skills motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. This is true, regardless of the type of organization -government, business, education, health, recreation or social actions.

Human resource is one of the natural resources of any country's economy. It is the wealth of the country. In the context of banking, human resource is of greater importance. The deployment of human resource through proper and efficient selection, training and development, is called Human Resource Management. The success of any bank or organization largely depends on efficient human resource management, apart from operations, marketing and sales, the HR department manages all the efficient people working in operations and marketing divisions in any organization. Thus, HRM refers to a set of programmes, functions and activities designed and carried out in order to maximize both employees as well as organizational effectiveness.

Human resource management is based on four fundamental principles: 1. Human resource are the most important assets important assets an organization has and their effective management is the key to its success.

2. Organizational success is most likely to be achieved if the personnel policies and procedures are closely linked to corporate and strategic plans. 3. Organizational culture, values and climate significantly influence managerial behavior and exert a major influence on the achievement of excellence. Hence, continuous effort starting from the management and acceptance of the culture. 4. Human resource management is concerned with interationgetting all members of the organization involved and working together with a sense of common purpose.

ROLE OF HUMAN RESOURCE MANAGEMENT IN INSURANCE Services sectors like banks and insurance are entirely dependent on the knowledge, expertise, skills, attitudes and quality of human resources for growth and success. Hence effective management of human resources is extremely critical in banks and insurance companies. Human resource management in banking & insurance concentrates on building employee capabilities. Employee capabilities serve as the trigger and create growth opportunities for the organization. As employee capabilities is the key link to success in banks and insurance companies, the HR department becomes a ³strategic capabilities unit.´ Some key functions of the HR department in banks and insurances are: 1. The use of the individual, team and organization learning for serving the customer in a better way. 2. Ensuring that employee¶s knowledge and skills are kept up-to date. 3. Aligning the HR development and learning strategies with the overall strategies of the bank. 4. Devising strategies to motivate the employees by means of a suitable compensation structure.

Role of HRD Professionals in Training: This is the era of cutthroat competition and with this changing scenario of business; the role of HR professionals in training has been widened. HR role now is: 1.Active involvement in employee education 2.Rewards for improvement in performance 3.Rewards to be associated with self-esteem and self worth 4.Providing pre-employment market oriented skill development education and post employment support for advanced education and training.

Role of Training

Insurance Job Description

The insurance job description which is generally assigned to people working in the insurance industry is given below.
y

To handle all the affairs of the customer related to the policies or the services offered by the insurance company and to resolve any conflicts arising if any.

y

To work for insurance company or several insurance companies and finding clients in order to create awareness about the insurance policies that the insurance company has to offer.

y

The job responsibility may include finding out if the claim made by the client for insurance cover warrantees insurance or not.

y

To investigate whether all the premiums were paid on time and whether the claim made falls in the particular insurance policy.

y

To meet potential customers and sell them the insurance policies being offered by the insurance company.

Competencies Required for job in insurances
In order to get an Insurance job in a reputed company, any Insurance job seeker must possess the following set of skills:
y

Public Speaking: A good insurance professional should have strong communication as well as public speaking skills.

y

Computer knowledge: Basic knowledge of computers including Microsoft Word, WordPerfect, Outlook, Excel, PowerPoint, Tally etc would prove to be an asset.

y

People skills: An Insurance professional should be able to communicate as well as interact with other working professional including colleagues as well as clients of the company.

y

Organisational skills: As an insurance job includes organizing work it is necessary to have good skills in this department.

Advantages of HRM y HRM is more flexible than personal mangement
y Services and solutions designed to deliver business value from the HR function and aligning it with the decision making role y y y y Professionally managed by leading HR professionals Quick update of current requirements with respect to firms. Good understanding of the firm requirements and increase in efficiency. Ongoing delivery of knowledge in global trends to HR Professionals on associating with Euthenics HRM.

Normal Hierarchy of Job in Insurance sector CHIEF MANAGING DIRECTOR (CMD)

CHIEF AREA OFFICER

CHIEF AREA OFFICER

(PENINSULAR)

(HIMALAYAN)

Sales Head

ZONAL MANAGER

ZONAL MANAGER

ZONAL MANAGER

ZONAL MANAGER

ZONAL MANAGER

ZONAL MANAGER

ZONAL MANAGER

AREA SALES MANAGER

Unit Manager / Area Manager/ Senior Agency Manager

Insurance job salary he salary received by an Insurance professional is pretty good though it may vary from one organisation to another organisation. As and when your experience increases in the organisation or in the industry, your salary will also rise. Beginner (0-1 years of experience) Monthly: Rs. 12,000 to Rs. 18,000 Annual: Rs.1.44 lakhs to Rs.2.16 lakhs Professional ( 2-3 years of experience) : Monthly: Rs. 18,000 to Rs. 25,000 Annual: Rs.2.16 lakhs to Rs. 3.00 lakhs Insurance Manager professional ( 5 and above years of experience) Monthly: Rs. 25,000 to Rs. 50,000 Annual: Rs.3.00 lakhs to Rs. 6.00 lakhs

Scope Of Human Resource Management
Though the future will lead us to automation of everything from birth to death. But, there is still a large scope for HRM in this particular industry. Because it mainly deals with people and it requires people with skill , abilities ,knowledge as some of the major competencies which can achieved by human . There will be a huge increase in developing countries because the awareness of insurance sector is coming into light right now. As it involves a large deployment of human so it has a huge scope , this can be clearly said by the contributions made by insurance sector to the countries GDP.

Conclusion
HRM has a crucial role to play in insurance sector. It acts as backbone for the insurance sector , because it only lays the structure for the organizations operations, functioning and working. Even with the advent of high technology it will have a prominent role to potrayed.

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