Scribd Logo
Upload

Welcome to Scribd!

  • Adobe Scan 09-Jun-2022 PDF

    Uploaded by

    Sasi Kumar
    10 views26 pages

    Original Title

    Adobe Scan 09-Jun-2022.pdf

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    10 views26 pages

    Adobe Scan 09-Jun-2022 PDF

    Uploaded by

    Sasi Kumar

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 26
    AGEMENT Insurance Mat / a 122 © Risk AND he concept in this manner Privatization is the ip or operation of the state owned on en of the company. It covers “con, ity all or part of y igement contracts, leases or Tra arc, * 0 rivate purchase Thus, the term refers 10 PI gement through manda, out’ and the privatization of manag arrangemenls. OUND OF PRIVATIZATION has gathered momentum sin f economic reforms sweeping tized in over 80 counties 1 of ownership and/or management of an enterprise from the mie Iso means the withdrawal of the state from an industry or Sie e from dogmatism to pragmatism and amounts ea ACKGR' ° ce around the 1980s has become the hal across the world. More than 8500 state between 1980 and 1992. Privatization, W hicl a of the new wave 0! Neg enterprises have been prival Privatization means transfet sector to the private sector. Ital partially or fully. Privatization marks a chang reversal of policy. The trend towards privat in market-oriented and socialist, systems. ‘The fundamental reason for the reversal of policy from nationalization to privatization is the growing disappointment with the functioning of the public sector undertakings and state owned enterprises. In 1960, there was a trend towards nationalization in Britain. But since 1970, this trend has been reversed and privatization gathered ground by selling state ow ned enterprises. Besides UK, countries which announced the policy of privatization include: Argeutina, Bangladesh, Braz, Germany, France, Italy, Japan, Mexico, Nigeria, Spain, Turkey etc., A number Of other counts including India have deregulated or liberalized the industrial’ sector in varying degrees. In lat 1970s, China also started privatization and it spread to other communist countries like the former USSR, East European countries and Cuba. ization has been observed in developed and developing econonics including communist countries and cuts across socio-cultury PERFORMANCE OF PUBLIC SECTOR Contribution of the public sector in India towards economic development has been spectaculat. To mention a few: 1. Public sector has paved the way for building an industrial base in the country. 2. It has opened doors for tremendous employment potential. 3. It facilitated the achievement of national objectives like checking concentration of ecom0™* Power, poverty alleviation and redistribution of wealth. 4. It has helped in capital formation and resource mobilization. 5. Ithas facilitated tec! ice [oe hnological development, research and development as well as @ Ithas i made substantial contribution towards India’s exports and import substitution. 7. Public sector’s contribution towards the develo ment of b: wy and larg ee ¢ seal F Sect " pment of basic, heavy Pavarzaront or hisurance Buswess © 123 8. _Ithas facilitated the build up of sound infrastructural facilities in India 9, It safeguards social interests of the various sections of the population. 10, Itprovides essential services including transport, communication, educational and medical services. [1 It helps to check monopoly and restrictive trade practices in India, 12, Ithas a dominant place in critical areas like steel, coal, copper, zinc, chemicals, fertilizers, heavy machinery and so on, 13. Ithelps in developing ancillary industries in India 14, Ithelps in removing regional disparities DEFECTS OR CRITICISM OF PUBLIC SECTOR Public sector plays a pivotal role, but itis not beyond criticism. The performance of public enterprises or state owned enterprises was far from satisfactory in several countries including India. 1. Economic inefficiency in the production activities of the public sector, with high cost of production, inability to innovate and delays in delivery of the goods produced. Capacity utilization is very low in the public sector. In India, over 23 percent of the public enterprises could utilize only 50-75 percent of the installed capacity. 3. Ineffectiveness in provision of goods and services, such as failure to meet intended objectives, diversion of benefits to elite groups etc. 4. Labour indiscipline, idle time, inefficient management and mismanagement leads to ineffective utilization of resources. 5. Political interference and inappropriate controls also adversely affect the efficiency of these units though they enjoy budgetary support. 6. Restricting the development of market mechanism which adversely affected undisturbed growth of the economy 7. Rapid expansion of bureaucracy, severely straining the public budget, causing problems in labour relations within the public sector and adverse effects on the whole economy. 8. Lack of autonomy as well as political interference affected the functions of public enterprises adversely. 9. « Uneconomic project implementation and high project cost makes the public sector projects sick at its very birth These problems lead many governments to undertake program's of public sector reform, and Pushed by a need to curb public expenditure to revaluate the possibilities for shitting publicly Managed activities into the private sector. WAYS OF PRIVATIZATION There are several ways of achieving privatization and each country adopted its own method. In Britain, the staff of the privatized company had the priority in buying shares and were entitled to a Aiscount. For instance, 96 % of British telecom employees took a share in their company in defiance | ~ Bo os SEMENT 124 © Risk AND Insurance MANAGEMENT ate! them at a higher rate, they qe. ition. Although some of them later aoa Saarecinsaee Privacy stig of the trade union ae igh privatization. One of the PO In counties where tong certain benefits financially of wwnership, through the sale of ri ian In industrial ere ate divestiture or privatization kets, this entails selling. stock to the p en Count wee tectnans Caer teak mainly through divestiture of governm hie nO aca Privatization hed taken place mainly ome of the examples of this method. Act ; ‘ Ord |, Peru and Sudan are c i . Eile Be ravenna os become so common in Western Europe that hardly a Week or my to Elliot Berg, dives s i 1 tern Eure new evidence of sale of state enterprise by such Wes mn i ‘pean County, M s nm , the i goes by a ae fen, the Federal Republic of Germany and, of course. AMBION instr as France, Italy, Sweden, privatizer, Britain. amend osunther et pivatieaton It takes the form Of denationalization or Fe-Privatization ae $ were denationalized in Pakistan, Bangladesh and Chile. Franchising ip, eee eng aats In this, certain services are designated in certain peograpie) one of the ee by private companies. This is common in tility services ay transpon aes ial — in public works, where suppliers complete work for Contract and When ae : aa of scale, contracting is efficient, But there is scope for. Corruption in aoe eee contracts tend to encourage monopolistic tendencies in private companies Privatization may also take the form of Privatization of management, using leases and management contracts. A public enterprise while retaining ownership may lease Out to @ private bidder for a specific period for use. Contribution of Private Sector Private sector has played a great role in the Indian economy. It includes: 5 3 Promotion of economic growth b. Contribution to national exchequer ©. Working to solve the problem of unemployment ¢. Contribution to global business ©. Promoting research and development £. Contribution to ancillary development 8. Concern for rural industrialization h. Export development i Acting as complementary and Providing patronage to small scale and medium sectors, J Stimulating the over alt economic activity in India, k. Motivating capital formation and Stimulating resource Mobilization Pawvazarion oF Insurance Business @ 125 Role of Government in Promoting Private Sector 1. Providing financial assistance to Developing infrastructural facitit Industrial area development Private entrepreneurs 2 3 4. Promoting raw materials, particularly scarce raw imatrials 5. 6 ies Developing a market, batticularly export market Tax incentives are provided for new units areas Providing assistance for the revival of sick units Government's liberalization Process is envisaged to encourage Private sector Appropriate industrial policy resolution and regulatory measures are adopted 10. Providing incentives for industrial and business development, particularly to unemployed youth, women, technicians, 11. Rationalization of the tax structure 12, Providing assistance to entrepreneurs and industrialists through District Industrial Centers and Industrial Development Ceniers 13, Providing special incentives and assistance for smal scale, Sick units and units in industrially backward village and tiny industries Liberalization required for Privatization Liberalization is an essential pre-requisite for successful privatization, In the absence of liberalized rules and regulations, the private sector will not be willing to venture, due to several restrictions which would hinder the independent growth of the private sector institutions. The Government under former Prime Minister Narashima Rao and former Finance Minister Dr. Manmohan Singh chose the path of liberalization. immediate factors which backed this policy change include Global change, Position of Indian Economy and Trade deficit. As part of liberalization, a new industrial policy was announced by Government o India in two parts on July 24, 1991 and August 6, 1991 respectively. This liberalization has iremendously expanded the scope of the private industries in India. As a result of liberalization, @ new international economic relationship has emerged which has three aspects, viz, a multilateral business approach, regionalism and unilateralism, resulting in an international business philosophy. Even if the industries were open to private sector, several regulations like industrial licensing. clearance from MRTP Act and Foreign Exchange restrictions liberalization policy were required. Later these restrictions were removed. Liberalization also facilitates unilateral trade and business relationships. Further, as outcome of liberalization, automatic approval of foreign investment upto 51% and foreign technology agreement are permitted for Priority sectors. Effect of Globalization The’ term Globalization has been widely used in modern discussion of industrial policies and tational economic policies, besides business circles. The term Globalization refers to the deepening "elationships and broadening interdependence among people trom different countries, Globalization implies that the entire world is reckoned as one entity, one people and one market. Considering MENT Risk AND INSURANCE MANAGE! ine’ takes place in one part e business which one . aan et’ norm, the busin kes place in on . the emergence of the ‘one eal business which is always highly ce : pat ein : na _ ji , eC is. Liberat g i can also be See ierliaton are inter-related geen ha got = dc Globalization and lil y consists of relaxing re: 4 n ; 7 om lie aca eae guiding resource allocation (ii) External Sector liberalin te and increasing the role of ma F prving! ; i tions on international flow of goods and services, technology and capt rictions oa i sector liberalization. Ghana is identified with external sector Lib et, i ent, production process, technology upg, Se neg calla pital sisi are Rear aa globalization, Wit companies and ruutinationals enter the Indian market, Indian companies should have the opp companies and matin ie successfully. All the efforts for liberalization and Privatization jo Paras ay fora global business efivironment in India, which is expected to PFOBTESS further a the years to come. HISTORICAL BACKGROUND OF INSURANCE The roots of insurance can be traced to Babylonia, where traders were encouraged to assume the tisks of the caravan trade through loans that were Tepaid (with interest) only after the B00dS haj amived safely—a practice resembling bottomry and given legal force in the Code of Hammurahi 2100 B.C.) With the growth of towns and trade in Europe, the medieval guilds undertook to protect their members from loss by fire and shipwreck, and to Provide decent buriat and support in sicknes and poverty. By the middle of the 14! century, evidence of the earliest known insurance contrac (Genoa, 1347), marine insurance, was Practically universal among the maritime nations of Europe. In London, Lloyd’s Coffee House (1688) was a place where merchants, shipowners and underwriters met to transact business. By the end of the 18" Century, Lloyd’s had progressed into One of the first modern insurance Companies. In 1693, the astronomer Edmond Halley constructed the first mortality table, based on the Statistical laws of mortality and compound interest. The table, corrected in the year 1756 by Joseph Dodson, made it po: E ssible to scale the Premium rate to age. Previously the rate had been the same for all ages. and 18" century. Prio the business of writing insurance, policies wer > cach of whom wrote his name and the amount of risk he Was the term underwriter came into existance. THe insurance were chartered in England in 1720 and in 1735and i ies was founded at Charleston, South Caroli il New York City (1787) and in Philadelphia (1799 sifelphia sponsored (1759) the first tine insurance corporation ia ian ministers and their dependents. After 1840, with the gainst the practice, life insurance entered a boom period. In the 8 risks began, Privanzanion oF Insurance Business ©) 127 many companies, was devised to meet *. The Workmen's Compensation Act lal accidents. Public when it attained major the year 1818 with the History of Insurance in India 1818 Europeans stated the Oriental Life insurance Co, in Calcutta 1879 The First Indian Insurance Company - Bombay Mutual Life Insurance 1870 The British Government enacted The Insurance Act 1912 First Indian Insurance Act was passed with an enactment again in 1938 Some of the important milestones in the life insurance business 1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business India are: 1928 The Indian Insurance Companies information about both life and no 1938 Earlier legislation cons protecting the interests 1956 245 Indian and forei Government and nation: ‘with a capital cont acted to enable the Government to collect statistical, insurance businesses ted and amended to by the Insuance Aet with the objective of public novident societies were taken over b Central Act 1956, ‘The General insurance bus Insurance Company Lid., the firs Cateutia by the British, 1907 The Indian Mercantile Insurance Ltd., set-up the first company to transa ‘general insuraice business 1987 General Insurance Cout conduct for ensuring on the other hand, «: insurance company est 0 the Triton shed in the year 1850 in a wing of the Insurance Assox n of India, frames a code of duet and sound business pract 1968 The Insurance Act amended to regulate investments and set mi the Tariff Advisory Committee was n solvency margins and 1972 The General Insurance Business (Ni mn) 1972, nationalised the general insurance business in India with effect from 1* January, 1973. 107 insurers amalgamataed and grouped into four companies, viz., The National Insurance Company Ltd, The New ki Company Ltd., The Oriental Insurance Company Lid., and the United ‘Company Ltd. GIC was incorporated as a company. sEMENT 128 © Risk ano Insurance MANAG INESS PRIVATIZATION OF LIFE INSURANCE BUS! , the wide-ranging economic reforms announced in 1991, industrial potig As part of the wide- Meas, iberalize the and PE ty ted by the Government of India to liberalize the MRTP and FERA FeBUation, were initiated by the most important a MRTP Act was a ed to totally remove pre-entry reste, ¢ ‘Act was amended to blshmen " rae ne hg and expansion of the existing firms. Important cha 5 f ne' ertakil % n " io ; a nade : he reign Exchange Regulation Act (FERA) of 1973 in order to encour it also made in the Fo f f ity hold rteigy in India, FERA companies are allowed to have foreign equity holdings up ¢ sige investment ; compa ranted freedom to operate in India, since Testrictig, reas, FERA companies are : : i S ee have been removed. It means that FERA companies are now treateq alos internal operations ha tment ith the Indian companies. Its a great motivation for foreign corporate giants par with the : in India without fear. As part of the liberalization process, the Government had to review the role of insurance soy 1d Government's investment in it. Accordingly, the Malhotra committee was set-up to study insurance sector, suggested in 1944, in its reports, the privatization of the insurance sector among other things. While praising the work done in achieving many of its objectives, the Committee was 40 ‘ge, unresponsiveness to customers needs, POOF service The Indian insurance sector Was opened for private insurance sector when the government enacted the Insurance Regulatory and Development Authority Act 1999, leading to the establishment of IRDA. The main objective of setting up the IRDA was to protect the interest of the policy holders and to regulate, promote and ensure orderly development of the insurance sectors. It is also aimed at ending the monopoly of the Life Insurance Corporation (LIC) and General Insurance Corporation (GIC) in the insurance sector. The first Private life insurance company was registered with IRDA in October 2000 and Started operations shortly thereafter, thereby ending 44 years Of public sector in India and renowned international insurance giants. Today, after nearly fifty years, the insurance Secior is a buyer's market Where the consumer has the choice to select from a variety of insurers The table shows the lists of new Entrants of insurers associated with foreign shareholders to sell Table 14.1 List of Private Life Insurers in India [si Company Foreign Share Major Local Business of Local No. holder Shareholder Shareholder 1. Bajaj Allianz Lite Allianz Bajaj Auto Auto Manufacturer 2. [AMP Sanmar AMP Sanmar Diversified Conglomerate 3._[Birla Sun Life Sun Life of Canada | Birla Global Finance Diversified Conglomerate 4. [Dabur CGNU CGNU Dabur Medicaland Consumer Product PRIvaniZaTion oF Insurance Business @ 129 DFC Standard Life [Standard Lite 5,_|HDFC Si dLife [HDFC 6, ICICI Prudential Life [Prudential (UK) Ticjey 7,_JING Vysya Life [ING __|Vysya Bank 8. |Max New York Life | New York | Max India and [Diversified Conglormerate fo a eerie Kashmir 9, | Met Life India Met Life ~ [Jammu bank” | Bank and Diversified | Okt Pallonii Group [Conglomerate | (10. [OmKorak Mahindra | Old Mutual Carditt Kotak Mahindra [Investment andFinance Bank | it [SoLLite Lite — 7 TATA-AIG Life“ [AIG Trata | ‘| experience, cutting edge technology, new products and had the ‘urrent regulated environment rather than changing over from an oid environment. report brought by Boston Consulting Group in 2003 has given the performance of some of the Private insurers fully operational in the year 2001-2002. The frst year (2001-2002) in 2001-2002, including renewal Premium was = Kindicaes that LIC, the premier life insurer and one of the most stable financial institutions in the country, during the forty six years of its existe mice has been through several trails and tribulations, but has managed to grow and metamorphoss into the giant it is today. PRIVATIZATION OF GENERAL !NSURANCE BUSINESS The performance of the nationalized General Insurance industry was commented upon by the Malhotra committee set up by the government in the year 1994 to examine the insurance sector and suggest reforms required, It recorded in its report that objectives of nationalization had been Substantially achieved. As results of the recommendations made by the committee, a major change 'n the last couple of years has been the dismantling of the monopolistic status of the state-run Sats: The field is no longer confined to them and has heen thrown open to private insurers also. Six of them have commenced commercial operations and a few more are waiting in the wings. All of them have been promoted by major business groups and with one notable exception that they have tie-ups with foreign insurers. The minimum capital requirement of & 100 Crores has resulted tho ny heavy weights of Indian commerce venturing into this area, There is now a restrictny on the foreign holding, the maximum limit being to 26%. This has given a new dimension to the competitive market, While in the previous era, Sompetition was among four organization which were similar in almost culture, capabilities and {alte systems. There is one company promoted by co-operative organizations and five companies by leading business hous > Re-insura NCE AND Douate Insurance Busmess 131 ‘all the insurance companies have to de © 10 deposit 2 10 crores as security deposit before starting pusiness- util years which will strength (RDA), 1 ier Insuran Failure 0 fulfil social obligations would at 7 tract a fine led license would be cancelled. iract a fine of & 25 lakhs, in case the obligation is not ‘Indian promoters can hold more Th Id more than 28 percent of the total equity for a period of 10 ‘rom the date of commencement of busine: ‘nt of business, and the rest by non-promoter Indian share holders. inctode enuity of fore! | not include equity of foreign promoters and share holding of Fils, NRIs and CCBS nening the reform proce Process, Insurance Regulatory and Development Authority Act ‘999 was passed, thereby becomii yy becoming the Second legislation to govern the insurance sector ce Act, 1938. CONDITIONS FOR SUCCESS OF PRIVATE INSURERS se sucess of private insurers primarily depends onthe following conditions: 1 fey . Use inno . Emphasis on the sal . Making their distribution channel . Strong control ov By constantly analyzing the challenges and market opportunities to estimate the targets. New products should be simple and economical and is also expected to give better return. Should provide more new innovative products with very competitive pricing. Should be focused on aggressive advertising. Unique advantages of promotional campai2ns explain considerable success in private insurance companies. Proper training facilities should be provided to the intermediaries in order to enhance their efficiency. Large number of trained and professional agents should be appointed as intermediaries for development and expansion of insurance market. should be provided at the time of process jement of claims. ing of a claim, Better after-sale documentation and claims to be set. Build up a large network of office in order to take insurance cl Different strategies should be adopted to penetrate the market by developing multichannel distribution models. Should be focused on direct selling or using bank network to sell and A target of zero oulsta jose to the insuring public. ance products. insurance products and administering of insur rance business suck vative technology for design le of want-satistying util ities i.€.5 acid-test of insur’ is consumer's satisfaction. cost effective. more productive and er their distribution channel. 130 © _ Risk ANo Ivsurance MANAGEMENT REFORMS OF INSURANCE SECTOR AND IRDA The Indian Insurance In« an, aeok Ui than ince Serial foe be «J inadequate application of information techy iy jemand fo ‘ business. ‘The Malhotra Committee headed by Former Finance Secretary and RBI Governor Was in 1993, to evaluate the Insurance Sector and Tecomme ded necessary reforms for ‘The committee submitted its report in 1994, The private partici sector but the same company should not be permitted to perform both life and ge business. The minimum paid up capital for new company should be € 100 crores including mig subscription of 26 percent now exceeding to 49 percent and maximum of 40 percent from promoters. No other equity holders, excluding the promoters of private insurance company, shoud granted egity share exceeding one percent of the total equity. Foreign insurance companies should be permitted to oper: if they perform business by establishing a joint enterprise with Ind: All the associate companies of GIC should be granted p independently and GIC should work only as re-insurance company. jective basis and 1s to perform buses ‘The share capital of GIC to be increased from & 107.5 crore: 50 percent share of the government, the rest should be opened for.the percentage should be reserved for employees of the corporation. The paid up capital for all associate companies of the GIC, presently % 40 crores, shouldbe raised to € 100 crores. 7 ores, Which incaie mneral public and a cera ‘The committee also recommended increasing the paid up capital of the LIC trom @ 5 % 100 crores of which 50 percent should be reserved for the government and rest for the publi: Alll the old and new insurance companies should be regulatéd under similar rules. Controller of insurance should be given all the responsi cpp lisurance Regulatory Authority (IRA) has been established in insurance sector on the lines! SEBI and IRA has been granted complete functional authority. IRA has a permanent source for financing its 8 and for this IRA should be P charge a levy of 0.5 percent on the annu: surance companies. insurance indus under the Insurance Act. New insurance companies entering pre-determined insurance in rural sector ai insurance should be used, Id pertorm a ¢ in rural areas, PO ‘ise system for insurance surveyors and free to reer surveyors of their own, 7 EEE ve basis UtNee ComPanies should be permitted to settle the claim upto € One lakh on primary &" is. > ae Ress URANCE AND Dounie hucuranice Busmess @ 131 |All the insurance companies s have to dey business. € to deposit & 10 crores as security deposit before starting Failure to fulfil social obligat a izations wi ' sted license would be canceled /ould attract a fine of Z 25 lakhs, in case the obligation is not ‘The Indian promoters can h hold more years ore than 28 percent of the total equity for a period of 10 From the date of commenceme ajhich will n0t ae eae pea business, and the rest by non-promoter Indian share holders, aoe nin th y of foreign promoters and share holding of Fils, NRIs and CCBs trengthening the refi ces a appa). 199 ‘wae Suey ies isrtee Regulatory and Development Authority Act fer Insurance Act, 1938, yy ing the Second legislation to govern the insurance sector CONDITIONS FOR SUCCESS OF PRIVATE INSURERS ‘The success of private insurers primarily depends on the following corditions: 1. By constantly analyzing the challenges and market opportunities to estimate the tar ter return. gets. 2, New products should be simple and economical and is also expected to give bett 3, Should provi 4. Should be focused on aggressive advertising. Unigue advantages of promotion surance companies. d to the intermediaries in order to enhance their ide more new innovative products with very competitive pricing. al campaigns explain considerable success in private ins 5, Proper training facilities should be provide efficiency. 6, Large number of trained and professional agents should be appointed as intermediaries for development and expansion of insurance market. should be provided at the time of process! ing of a claim, 7. Better after-sale serv" documentation and settlement of claims. 8. A target of zero outstanding claims to be set. 9, Build up a large network of office in order to take insur: hould be adopted to penetrate the m: Should be focused on direct selling or using bi ance close to the insuring public arket by developing multichannel 10. Different strategies s! ank network to sell distribution models. insurance products for design and administerin; “11. Use innovative technology for of insurance products. 12, Emphasis on the sale of want-satisfying utilities i:e., acid-test of insurance business success is consumer’s satisfaction- 13, Making their distribution channel more prod 14. Strong control over their juctive and cost effective. distribution channel. i % ee el eo ROLE OF DEVELOPMENT OFFICER Cuapter Osuectives a successful Development Officer L * To discuss the duties of Development Officer in insurance business INTRODUCTION The development officer is born, but 1 imade. Itis true toa certain extent. Development officers are seach man! in the modem ever-widening insurance market by making distribstion of insurance frduts easy and smooth. They create time, place and possession utility, development officers sear Bai eit effort on insurance products through agents. He has real concern soa care for the ‘32 He has to improvise a ot and tind his own style of operation, draft he own plans, devise {is own Strategies for the development of the insurance business, The role and importance of the ‘tlopment officer for the growth of insurance business are discussed briefly NPORTANCE OF DEVELOPMENT OFFICER 40 the present day, Diss, The develo Sen era of liberal expands alo Nex factor i ition make the development officer plays an important part in the growth of insurance pment officer is the immediate friend, philosopher and guide to the agent, The lisation of insurance business, is one anticipating high demand. The insurance ng with high competition. This makes selling of insurance products difficult and n the face of competition, The expansion of the insurance market and growing the role of a development officer very important. \GEMENT ance MANA‘ . ISK AND INSUF + their specialisation, experience and contract, can ‘ers, by virtue of fonomically and effectively than the insurange =” Pe, ti ec functions more Repu the insurance com Cut and ear for Panies. py ivy is the eye He ip ‘ 236 © R Development offic the insurance marketing UNCUT, The development officer es —— rance : scone _—_ creator of insurance deman' ance market, development officers among ew insur To capture the new sues der t0 achieve the Organization Ob/eCT © the dot pointing agents. tt 5, The development officer has to bear Ae i, ives. appealing of advertising about Various it . et the entire publi ‘ura, alee if f agents a 1s Inc schemes issued ment officer onganizes a team of 28 rd performs the het. eae reason, his role and responsibilities are 7 them. Because of these reasons, ICER F DEVELOPMENT OFFI : ee alled duty, activities that an ingly : individual is ¢ i fc tion or service by an individ z F aly Performance e a oe ‘duties to him, Authority is & right or power required to perform job the bass of guy assigned toa person. The development officer is like an authorised person np : ¢ basis : mpowered to do the assigned job. The various duties of the development officer can be discus, et the ons thay under the following heads: |. Appointing Agents An important duty of a development officer is to find or select suitable persons to work as agen Appointing agents is an art of acknowledging the potentiality in the other and accepting the i that ao one can achieve everything being an island. Thus, the development officer shoud mic arrangements for appointing suitable persons on the basis of their educational qualifications, abies experience, written test and interviews. Il. Training of Agents The training programmes are organised procedures and methods throug: which knowledge as we as skill, for a definite purpose is acquired. By training, an agent can increase knowledge in te insurance field. The agent is not born but can be made effective through training. _ Thus, the development officer should give introductory training or repeated training to ti agents. This is essential to keep the agents with up-to-date knowledge, in respect of new and lates insurance products. Training in a systematic approach gives scope for improvement. Ill. Motivating Agents Agents are the backbone of the insurance business. A g00d agent makes poor selling inswran®* Products into a progressive one. The success or failure of an insurance company depends UX" Fe RY and ination of insurance agents, Thus, the developmen: her ed perform & following duties with regard to motivation of agents, "+ evelopment offcer should help the agent 19 meet his physiological safety and 2. He should arrange conventi, - + ideas a Ae ns and meetings wi for’ excl of ideas 4 opinions Ings with agents for exchange . . : il Development officer should give proper recognition and honour tn his agents. This Breally encourage the agents to do more hard wert 4. He should gi . ‘veal Bive satisfactory solutions *, arrive Satisfactory solutions, NiO"S 10 the agent's problems or discuss them 0 f a should give a favourable report to the p, Seo Oseinen Ome 6. 27 5. Mi erience for promoting his remuneration, mn ich Mi rf necessary, the development officer cae patter. bs he Targets an Managers about the agent's abilities and + Self respect etc mit the it the agent to do his job in his own rixing € i » appointing and training the jjon fo appormane 8 the agents, fixing the ta : si officer. A few of them are ; ‘ng the targets is an important duty of the 92nd out opportunity’ i the Working are for fixing the targets ind out the capabilities of agents according to the t arg agers, d «Estimating the facilities and time allotment tothe agents for det eee : : s termination of targe 4g, Evaluate position and degree of competition prevaiting in the ea) eee insurance markets for fixing ,_ Prospecting or searching for new insurance market for estimating the tar locating agents and fixing the targets eines \_ Duties of Communication He must arrange for the display of new schemes issued by the insurance compan ie mist provide information to the Branch Manager and agents for mae 7 ore Pee to the agents about the insurance company, insurance products, _ He should keep all the records for demonstrations. 5, Arrange for effective advertising and publicity. 6, He must inform the agents regarding day-to-day activities. \ Field Supervision 1. He should know whether the agent is doing his job in the best way. Find out deficiencies of any agent in the field. Make suggestions for further improvement to the agents for development of insurance business. Check the procedure of fixing the targets for agents. To evaluate the performance of the agents. Provide spot motivation to agents. To study and secure maximum coverage of the i He should compare the performance of agents and business opportunity insurance markets. ~ Vl Achieving the Targets He should assist the agents in the sale of in He should handle any complaints from the He should help the agents in planning the market campaign 10 achit He should encourage the agents for sales promotion activites: To achieve the targets, he should continuously work with the agents Selecting the right persons and approaching them as mucti as possible. . He should follow an efficient monitoring mechanism 10F achieving the targets: ge ao surance products (insurance schemes). agents and policy holders. eve the targets MANAGEMENT \ 238 © Risk AND INSURANCE arrioee QUALITIES OF A SUCCESSFUL DEVELOPMENT cer is the sum of the total impression mage gp, Quality of a ses devon in is the result of many ais that ome i whom he comes i ff wualities which make a development ice! : uccessful, Ty ~ There are a number eer, he must master all the (ats. Qual iyo a successful dye Cua ie following factors, such as personality ofa eve ae officer, owt officer eas a fixing the targets, planning the work, knowledge of the agenis ang! aoa athe follwing are some ofthe important qualities ofa development of, pert formance. a t be alert and quick in action. He has tp f ic jon: A development officer mus ; : 10 fey, 1. Quick oe different temperaments, He must have the mentality to face any situation te ra answer any tye of question, He should not be an absent minded man, He m9 i aaa of answering ‘What to say? how to tell? how to tackle the situation? ete. quick thoug! Wh : : eiving away the agents and policy holders. 2. Imagination: Imagination is the key to success in handling agents and selling insur, products. If one possesses a rich imagination, it is of great help in solving problems. He ms have a creative mind. 3. Self Confidence: A confident man never fails. He has to have the confidence in his Work, capacity and power. Confidence makes him optimistic and enthusiastic. He can meet situation in the insurance product line. He engages or talks with agents, makes them bel and the agents act on his suggestions. Confidence makes him meet any situation with courage Experience and knowledge are the base for confidence. Enthusiasm: It makes the work of a development officer pleasani. Enthusiastic talk is alvas listened to by prospects. It gains the interest and confidence of agents snd in turn more insurin: business, thereby savings and investment enhance, apart from satisfaction of the insur: company and the entire public. Initiative: A development officer must have initiative. He must léarn the tricks of the insura ‘rade and must have the knowledge of various schemes of insurance products. An active initia 's a self starter. His job can be successfully carried out. He must have skill and be able {= and tackle situations intelligently. Observation: A development officer should have a keen observation. He must have ut 1 Knowledge abou different types of insurance producis, assignment, nomination: ste ois, cans in met and regulations, atude of the competitors and govemmmtt: " St information, he can easil es i ce ages a uh es rai ly make suggestions to insurance agents and help 7. Courtesy: i a ce wriey: sing Polite and courteous words, a development officer can turn a prs? : aes sy i dealing with agents, Using pleasing words like ‘thank you's Pe ~ wll win the bears ofthe insurance agents Tactfulness: When f i : Teer: Whe ing ® delicate situation, a tactful development officer deals Wit piles = and in aN appropriate manner, He always tries to avoid ua ness, one can avoid Obstacles, troubles, calamities et- { HelP 9 ne de¥ products: eration: Co-operative attitude Rout oF Devevorment Orricer @ 239° quiness: He must have a helping atitude whene lopment officer must expose the ver agents are in need of information merits a eri and demerits of the topic related to insurance is essential for the sucess ficer. He ratio se instance een _ for the success of a development officer. with the insurance agents, Progress of an insurance company depends : rate a y depends on th 0 co-oP peration of all the employees. nist nual COO ination: A development office germination. development officer must make constant effort and have patience in his 1,00! improve further. His will to suce potession oe re "i ther His ae Succeed, makes him stick to his profession. Practice sakes the mart p aS Practice, as a game, like a player or a professional wrestler, snakes the development officer to come to the top, : ol sincerity: lis an added quality. He must be sincere towards his assigned duties. By sincerity, ‘* pecan wid friends, enroll new customers, retain old ones and win other favours. Dependability is inereased through sincerity. vee , rn Integrity: It denotes honesty, trust and purity. The talks and behaviour of a development officer must be believed, trusted, honoured and agreed by the insurance agents, thus agents and policy holders are satisfied. This is more essential for the progress of the insurance business and for keeping good relations with agents and the public. 4 Courage: This is the quality that enables one to meet danger without giving way to fear. One must have enough bravery or boldness. In insurance business, there arises various situations. sich as happening of tactless deals, unfulfilled promises, errors being committed, carelessness shown etc. In all these situations. a development officer should not fear but must face them courageously and frankly. “4 Self Management: Everyone works to achieve an aimed target of insurance business. A self governed development officer can easily achieve his target through his agents. This is because, be plans his work in advance and works according to the plan. Such a development officer finds enough time and has a feeling of self assurance, REVIEW QUESTIONS : What do you understand by a development office! © Explain the role of a development officer in insurance busine’ of a development officer? ‘a successful development officer? in india. LW . : a are the important duti * Wh A A : lt are the essential characteristics required for “olin the importance of a development officer in insurance bus What , ae are the importance of development officer? ¢ o r 6 4 5 ROLE OF INSURANCE 0 INTERMEDIARIES ase Olt =a =) ( © To understand the meaning of insurance intermediaries | | © To discuss the various kinds of insurance brokers | © To explain role of insurance agents in insurance business [ + To highlight the essential qualities required for a successful agent INTRODUCTION ', the insurance industry has been under tremendous focus throughout the world due to a suber of events, All the divisions of an organization are intricately linked and dependent upon a: another for smooth profitable operations. Today, insurers are chiefly relying on external service jridrs to build up and manage applications that will provide a rapid return on investment lsurance mediators or intermediaries are autonomous populace or firms, who care for both the “sure and the insured and act as the mediator. Some group of intermediaries also act asa distribution ‘wel for bringing the product of the insurance to the customer as in the case of aie “ “swate intermediary acts either on behalf ofthe client or the insurance company. From the ola "view of consumers and marketers, the role of various intermediaries provide service delivery “ork in order to ensure maximum benefits of insurance business. "SURANCE BROKERS tance Bro a endent professional and ane: : eee nts, appraises the risks and ree xpert in insurance matters who assess commends a suitable her ; : agg tle insurance requirements of his clien Cover for the clients. 242 ©) Risk ano Insurance MANAGEMENT e inthe IRDA In India, the insurance intermediaries have been defined it Act 1999 any va, (F) of the Act states that . 7 Intermediaries or Insurance intermediaries includes ee broker, "insane insurance consultants, surveyors and loss assessors. Accor ing e the annua repo i IRDA, brokers are professionals, iki ait eis mn aie needs ee a ( et, recommending wayst0 reduce the paricygy My evaluating the risk on behalf of the client, g nt cathe mast arabe insane poy scr, bringing he ised and ny carrying out preliminary task necessary for insurance contracts and providing ‘administration and performance of such contracts, if needed, particularly when ‘Oger, sitaeg Claims api, Who can become an Insurance Broker? Any person who may be an individual, a partnership firm or a company, formed ang o under the companies Act 1956, can apply for grant of license to be a broker, Types of Insurance Brokers ‘The insurance brokers may be grouped on the basis of insurance cover for the clients 1. Direct General Insurance Brokers: Direct General Insurance brol the companies Act 1956, for grant of license in order to carry out the g other than life insurance to the customers. Kets are reise in, eel insurance pr 2. Direct Life Insurance Brokers: Direct Life Ins Insurance Broker, is registered under the companies behalf of the client or the insurance company. Such share of business in life insurance. surance brokers, who is I Act for grant of license t brokers normally contrit ke a Genery 0 at either bute maxims Re-insurance Brokers: The re-insurance brokers bring the buyers and sellers togeter in ansaction of re-insurance business. In reinsurance transaction, the buyer is the insurer vip has business in excess of its retention and the seller is the insurer which has ‘Spare capacity take the business that is offered to him, 4. Composite Brokers: Comy posite Broker carries out the same function as an ordinary broke but may also handle re-insur: ance transaction. Functions of Insurance Brokers . Insurance brokers have provided valuable services and benefited the Indian insurance indus * Various ways. Some are discussed below: we 1. Introduction of Insurance Products: Insurance brokers help to introduce oe innovative insurance products and services which Will enable them to secure suitable aa conomical insurance cover to the customers, 1 ‘ iv Designing and Obtaining insurance Market: Insurance brokers apply ier 8, in technical skills, products, raining programmers, systems, techn0l0e! managerial techniques for achieving thet farget fixed in insurance market. » Rove oF INsu ting Awareness: _ fae ANCE INTERMEDIARIES ©) 243 TS provide ‘s, increasing market penetra © great servi 3 swarenes: Mtion, promoting ‘vice in creating insurance vie’: Competition and improving customer um er’s Datasheet: Insurance brokers help t s so that this can be explained to an ins tod ona surer el tains all the details of the clients inclu i na sel sites ear records of the client's fT vnerally CO gente Parties. The consumer's datasheet age, education, sex, income ete planning t© Work: Every insurance brok: er shall, before the oper plan for work to achieve before the commencement o the target goals of his business, draw a0 continuous Liaison with Clients: In order to maintain 6 fa insurance broker shall provide services such as insurance Bootiating with insurers on the client's behalf, collecting and assisting in the negotiation of claims, maintaining precise reco; good relationship with clients, Consultaney, risk management, emitting premiums and claims, rds of past claims etc cORPORATE INSURANCE AGENTS as per the regulations issued by the Insurance Regulatory and Development Authority (IRDA), individuals and / or corporate bodies like banks, firms, co-operative societies obtain license to act ss insurance agents. As the name itself suggests, corporate agents, is a corporate body set up with se explicit objectives of selling insurance products. Bancassurance Bancassurance is a word coined in the western world, when banks began to get involved in the rmatketing of insurance business. In India, it means that the insurance coverage is manufactured and ‘oderwritten by a commercial bank's own insurance company and distributed through the bank's distribution channels. Third Party Administrators {Health Services) 4rd party administrator, forthe time being, is icensed by the Authority, and is engaged. for 2 fee or remuneration, by whatever name called as miay be specified in the agreement. insurance company for the provision of health services. ; ee Numerous changes are captivating the consumers 1p the Financial ae ee Sea Funds and Financial Institutions that are increasing their presence in new aie ec ree ‘

    You might also like