ANALYSIS OF THE VIEWS OF LIC AGENTS

Transcription

1 ANALYSIS OF THE VIEWS OF LIC AGENTS INTRODUCTION Marketing of life insurance is ridden with several problems and it calls for extraordinary skills. This consequently renders the Agent an indispensable link between the existing or potential insurance customers and the Life Insurance Corporation of India. The competence of the agent then constitutes a critical element in the promotion of insurance business. This crucial role of the agent will, in the final analysis, contribute to the realization of the laudable objective of the LIC of India of providing financial security extensively to diverse population groups in urban and rural areas, in different segments and in all income levels, especially as envisaged in the Marketing Policy of the Corporation. As the life insurance agent is the central figure in the insurance marketing process, the success of insurance company is highly dependent on the army of agents. The job of a life insurance agent is to convert a suspect into prospect and the prospect into a policyholder (customer). To be successful in the profession, the agent is required to possess good knowledge about various life insurance products/plans/schemes, products of competitors, provisions of the Income-tax law, capital market conditions, etc. The entire individual policies of the Corporation were sold through individual agents up to the year Even after the emergence of alternative marketing channels like banacassurance and corporate agents, 98 per cent of premium received by LIC of India was through the business underwritten by individual agents. Since the alternative marketing channels emerged in India only in the year 2003 and about 98 percent of the premium received was through the individual agents business, only

2 236 individual agents were considered for the survey. A total of 200 agents from all the ten branches in Kannur and Kasargod districts were selected for the study. The data was collected using a structured questionnaire which is given in the appendix. The information collected was tabulated and presented in the following pages. PROFILE OF THE RESPONDENTS Gender-wise classification of the agents Table 6.1 shows the sex-wise distribution of the respondents. Of the total respondents, majority - 62 percent- belong to male category. Females were 38 percent only. This shows that life insurance agency business is dominated by males. Table 6.1 Sex-wise Classification of Respondents Sex Number Percent Male Female Age-wise Classification Age is an influential factor in selecting a job. As per rules, to obtain licence under the regulation, a person should attain at least 18 years of age. Table 6.2 Age-wise Classification of Respondents Age (in Years) Number Percent

3 237 Table 6.2 reveals that 52.5 percent of the respondents belong to the age group of 30 to 40 years and 28.5 percent to 40 to 50 years. Only 11.5 percent of the respondents fall in the group of 20 to 30 years, and 7.5 percent are in the group of 50 to 60 years. The mean age of an agent is 38.2 years (S.D. 7.73). This is a clear indication that majority of the people select the job of an LIC agent after the age of 30. Marital Status Marital status is another factor influencing the agency business. Some of the development officers, while in the discussion expressed that female agents, in many cases leave the job of life insurance agency after they get married. Table 6.3 depicts that as high as 85 percent of the respondents were married, 9 percent were single, and just 6 percent fall under other categories such as divorced, widowed and the like. Table 6.3 Marital Status of Respondents Marital Status Number Percent Single Married Other categories Education Qualification of the Agents Educational qualification is another factor influencing the insurance agency profession. Table 6.4 reveals that majority of the respondents (47.50 percent) were under graduates, 5.5 percent were post-graduates, 24 percent passed Pre-Degree/Plus two, and 23 percent were SSLC holders

4 238 The mean number of years of education of the respondents is (S.D. 2.24). At the same time, no professionally qualified person has been attracted to the profession of life insurance agency business. Table 6.4 Educational Qualification of Respondents Education Number Percent SSLC Plus Two/Pre-Degree Graduate Post-graduate Occupational Status of Respondents Table 6.5 reveals that only percent respondents are full time agents. The remaining percent are in the category of retired employees (7.50 percent), self-employed/daily wage earners (14 percent), and businessman (15 percent). Table 6.5 Occupational Status of Respondents Occupation Number Percent Full time LIC Agent Retired Employees Self employed / Daily wage earners Business

5 239 Family Structure of the Respondents Family structure is another factor influencing agency business. Family structure of the respondents is given in Table 6.6. The table reveals that percent of the respondents belong to nuclear family, percent to extended family and only 10 percent to from joint family. From the above, it can be presumed that life insurance agents prefer nuclear family. Table 6.6 Family Structure of Respondents Structure Number Percent Nuclear Extended Joint Family Size Family size of the respondents is given in Table 6.7. Analysis of the table reveals that percent of the respondents have family members 3 to 5, 35 percent have 6 to 8 members, 5 percent have more than 8 members, and 2.5 percent have a maximum of 2 members in their family. The mean number of members in the family of respondents is 6 (S.D. 1.88). Table 6.7 Family Size of Respondents No. of Members Number Percent Below and above

6 240 Employment Status of Spouse of the Respondents Table 6.8 discloses that percent of the respondents spouses are employed. Total of the respondents do not add 200 because 18 respondents were unmarried and 12 were either widow/widower/divorcees. Table 6.8 Employment Status of Spouse of Respondents Status Number Percent Employed Not Employed Self-employed/Business Total Earning Members in the Family As high as 63 percent of the respondents have two earning members in their family, percent have more than two, and in the case of percent of the respondents, respondent himself is the only earning member in their family. The mean number of earning members is two with a S.D. of Table 6.9 shows the earning members in the family of the respondents. Table 6.9 Number of Earning Members in the Family of Respondents Earning Members Number Percent One Two Three

7 241 Monthly Income of the Agent The monthly income of the agents is tabulated and given in Table It can be seen from Table 6.10 that the monthly income of agents ranges from below Rs.5,000 to above Rs.25,000. The mean monthly income of the respondents is Rs.10,325 per month (S.D. 5,513). At the same time percent of the respondents monthly income ranges from Rs.10,000 to 15,000, 8.50 percent have income ranging from Rs.15,000 to 20,000, 4.50 percent have income between Rs.20,000 and Rs.25,000, and only 1.5 percent of the respondents monthly income is above Rs.25,000. It is to be noted that 48 percent of the respondents monthly income is less than the average monthly income of the respondents, whereas 52 percent of the agents are in a better financial position. Table 6.10 Monthly Income of Respondents Income Number Percent Below Rs.5, Rs.5,000-10, Rs.10, Rs.15, Rs.20, Rs.25,000 and above Family Income Analysis of the family income of the respondents reveals that 50 percent of the respondents family income ranges from Rs.10,000 to 20,000 per month, while 3.5 percent of the respondents monthly family income is

8 242 above Rs.40,000. The average family income of the respondents is Rs.17,500 per month (S.D. Rs.9,937). Table 6.11 Family Income of Respondents Monthly Family Income Number Percent Below Rs. 10, Rs. 10,000 20, Rs. 20,000 30, Rs. 30,000 40, Rs.40,000and above On the basis of monthly income depicted in Table 6.11, it can be concluded that percent of the respondents belong to financially sound families. Category of Agents There are two types of individual agents attached to branch offices: (i) Rural Career Agents (RCAs), and (ii) Ordinary Agents (Direct Agents). Urban Career Agents (UCAs) are recruited at the Career Agents Branch at the Divisional Office. Table 6.12 reveals that 50 percent of the respondents belong to the category of ordinary Agents and the remaining 50 percent to the category of Rural Career Agents. Table 6.12 Agency Category of Respondents Category of Agents Number Percent Ordinary Agent Rural Career Agent

9 243 Major Reasons for Taking Life Insurance Agency Profession In India till recently, the profession of life insurance agency was not considered as a permanent job. Therefore, a good number of agents considered it as temporary means of livelihood. As and when they fully occupies with other profession or job, they quit the job of insurance agency. In the case of lady agents, many leave the job after getting married. Yet there are others who take it as a part- time job. Table 6.13 shows the major reasons that prompt the agents to take up the agency profession. Table 6.13 Major Reasons Prompt the Agents to Take up Life Insurance Agency Reasons Number Percent As a means of livelihood To supplement personal / family income As a kind of social service Pressure from friends / relatives Analysis of the table indicates that only 51 percent of the respondents selected the agency business as a means of livelihood. The rest 49 percent selected this job due to various other reasons like supplementing personal income (29.50 percent), as a kind of social service (10 percent), pressure from friends or relatives and the like (9.5 percent). Service Period of Agents It is a fact that business performance of agents, to a certain extent depends up on their experience in the field. Table 6.14 depicts the service

10 244 period of the respondents in number of years. Respondents selected have service experience ranging from five to twenty five years. About percent of the respondents have experience ranging from 5 to 10 years, percent have up to five years experience only, and 18.5 percent have experience between 10 and 15 years. About 9 percent of the respondents have 15 to 20 years of service and a very few (1.5 percent) have experience above 20 years. Table 6.14 Service Period of Respondents Period in Years Number Percent Up to Above The average length of service of the respondents is 8.3 years with S.D years. The above data reveals that more than 75 percent of the agents have sufficient experience in the field. Time Spent in the Field and LIC office Life insurance agent is expected to devote a definite time in the field to canvas prospect and to meet existing customers. At the same time, the agent should be in the branch office to meet the development officer or the branch manager and to render customer services like premium remittance, obtaining loan quotations, claim settlement, etc. A professional agent is required to keep the work schedule.

11 245 Table 6.15 shows that 52.5 percent of the respondents spent 2 to 4 hours per day in the field, 38.5 percent spent 4 to 6 hours; only 4.5 percent spent above 6 hours per day. It is amazing to find that 4.50 percent of the respondents spent less than two hours per day. Average time spent by the respondents in the field was 3.86 hours per day with S.D. of 1.3 years. This shows that agents do not keep a fixed time schedule for field work. Table 6.15 Number of hours spent in the field Per Day Hours No. Percent Below Above Table 6.16 exhibits that 62 percent of the respondents spent on an average one hour per day in the attached branch office of the LIC. About 35 percent spent two hours per day and a very low percentage i.e., 3 percent spent three hours per day. Average time spent by the agents in the branch office is hours per day i.e., about less than one and half hours per day with S.D. of 0.54 hours. Table 6.16 Hours spent per day in LIC office Hours Number Percent One Two Three

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13 247 Business under Salary Savings Scheme It is comparatively easy to catch the prospects in the employees segment of the house hold sector. Generally, people in this category regularly save certain percentage of their income. They buy life insurance policies without much compulsion, mainly to take advantage of the income tax benefits. Table 6.17 reveals that the proportion of business of the agents under the Salary Savings Scheme (SSS) ranges from below 20 percent to above 60 percent. Majority of the respondents (44.5%) have less than 20 percent of their business under SSS and 2.5 percent have above 60 percent of their business under this category. The average business of agents under Salary Savings Scheme is 24.1 percent with S.D Table 6.17 Proportion of Agents Business under Salary Saving Scheme Proportion Number Percent Below Above Occupational Status of Customers of LIC Agents The customers were classified into six groups such as: a) Daily wage earners, b) Salaried employees, c) Professionals, d) Agriculturists, e) Business/Self employed, and f) NRIs. Salaried employees include clerks, teachers, and officers/executives. Table 6.8 shows the occupational status of customers of the respondents.

14 248 Analysis of table 6.18 reveals that majority of the agents concentrate on salaried income, NRI and business segment of the market for life insurance marketing. There were agents who could cover even more than 50 percent of the above category of clients in their business list. At the same time, wage earners and agriculturists are not given that much importance for insurance coverage. The main reason for this is agents are afraid of more surrenders and lapse from this segment. Many agents gave more importance to NRIs because they were able to procure major chunk of their business from this category. At the same time, history of lapse due to overselling can be traced more among this category. Table 6.18 Occupational Status of Customers of Respondents Proportion Occupations A B C D E F Below (15.19) 1 (0.50) 47 (24.74) 67 (48.91) 3 (1.53) 5 (2.86) (60.76) 20 (10.00) 88 (46.32) 57 (41.61) 60 (30.61) 48 (27.43) (20.25) 83 (41.50) 47 (24.74) 9 (6.57) 100 (51.02) 53 (30.29) (3.80) 51 (25.50) 6 (3.16) 2 (1.46) 24 (12.24) 51 (29.14) (11.50) 1 (0.53) 2 (1.46) 8 (4.08) 9 (5.14) (6.00) 1 (0.53) - 1 (0.51) 6 (3.43) (4.00) (0.57) Above 70-2 (1.00) (1.14) Total Note: 1) A=Wage earners; B=Salaried employees; C=Professionals; D=Agriculturists; E = Business/Self employed; F= NRIs 2) Figures in parenthesis indicate percentage to total.

15 249 Other Agencies maintained by LIC Agents As per the LIC of India (Agents) Rules 1972 and the IRDA (Licensing of Agents) Regulations, 2000, each person aspiring to be an agent has to undergo practical training of 100 hours in life or general insurance, as the case may be. In case of composite agent, he/she should have completed at least 150 hours of practical training in life and general insurance business combined. Table 6.19 Other Agency Business of Respondents Type of Agency Number Percent General insurance Institutional deposit Post office deposit UTI and stock exchange Others None Note. Others include agent for Kerala State Financial Enterprises (KSFE). Table 6.19 reveals that 21.5 percent respondents also act as general insurance agent, 7.5 percent respondents act as institutional deposit agents, 6 percent Post Office deposit agents, 8.5 percent UTI and Stock Exchange agents, another 14 percent took other agency like KSFE and the like. The data in Table 6.19 reveals that 57.5 percent of the LIC agents maintain other agency business. This again reveals that agents time is divided between life insurance and other agency businesses.

16 250 Club Membership of Agents Six clubs, viz., Corporate, Chairman, Zonal Manager, Divisional Manager, Branch Manager and Distinguished Agents are formed to recognize agents who perform consistently year after year. The club members enjoy certain privileges and are vested with authority to attest certain documents etc. Details of club membership of respondents are given in Table Analysis of table 6.20 reveals that only percent respondents are members in various clubs and the remaining percent of the respondents could not perform consistently. Table 6.20 Club Membership of Respondents Name of Club Number Percent Chairman Zonal Manager Divisional Manager Branch Manager Distinguished Agents Club None Figure 6.1 depicts the club membership of the respondents

17 251 Figure 6.1 Club Membership of Agents Percentage Chairman Zonal Manager Divisional Manager Branch Manager Distinguished Agents Club None Club Criteria Adopted by Agents for Recommending Life Insurance Products The agents are supposed to analyse the needs and desires of his/her client while recommending life insurance protection. A true professional agent should be a counselor as well as a financial advisor to the client. There are three standard ways of estimating the amount of life insurance to own. They are: (i) Human Life Value Approach (HLV), (ii) Needs Approach, and (iii) Capital Retention Approach. An insurance agent is expected to match the needs of the prospect with the products available. In order to provide total coverage assessed on the basis of any of the three approaches mentioned above, mixing of LIC s products can be done. Six different criteria usually used by agents were identified and the respondents were asked to rank them from I to VI. The criteria used by respondents are arranged in the order of rank from I to VI (Table 6.21).

18 252 Table 6.21 Criteria Used by Respondents for Recommending Life Insurance Products (N = 200) Criteria Frequency and score I II III IV V VI Average Weight Rank Rates of commission for agent I Needs and desires of customer II Wealth and income of customer III Age/Education/Marriage requirements of customer Social and occupational status of customer IV V Family background of customer VI Table 6.21 reveals that 43 percent of the respondents give preference to their commission, other aspects such as needs and desires of the customer, wealth and income position of the customer are only secondary to them. At the same time, 39 percent of the respondents recommend products on the basis of needs and desires of the customer. The different criteria used by respondents can be arranged in the order of mean weight as follows: Commission for agent (5.07), needs and desires (4.74), wealth and income (3.08), age/education/marriage requirements (2.96), social and occupational status (2.95), and family background of customer (2.2). Rate of commission for agent is the main criteria used by majority of agents for recommending life insurance to their clients. Figure 6.2 shows the criteria used by agents for recommending life insurance products to clients, on the basis of mean score.

19 253 Figure 6.2 Criteria Used by Agents for Recommending Life Insurance Products Rates of commission for agent Needs and desires of customer Wealth and income of customer Age/Education/Mar ri-age requirements of customer Social and occupational status of customer Family background of customer Mean Score Methods Used to Canvas Clients Unlike the case of other commodities, insurance customers do not normally go in search of Salesman / Agent or the product. The agent has to find out people, meet them, discuss with them and convert them to customers. Apart from understanding the criteria, it is also interesting to find out the methods commonly followed by the agents to canvas a prospect. Six different methods commonly used by the agents were given as choice and the respondents were asked to rank them. The methods followed are arranged in the order of rank from I to VI (Table 6.22).

20 254 Table 6.22 Methods Used by Respondents to Canvas Prospect. (N = 200) Methods Frequency and score I II III IV V VI Average Weight Rank Direct Meeting I By Offering to pay initial premium Through offering personal help Contacting through friends and relatives Regular visit to the organization Contacting through social club II III IV V VI It is evident from Table 6.22 that direct meeting with the prospect is the method most commonly followed by 39.5 percent of the respondents with an overall first rank score of At the same time, about 23.5 percent of the respondents canvas prospects by offering to pay the initial premium on policy, even though it is prohibited by statute (3.65). Other methods followed in the order of rank score are: through offering personal help (3.50), contacting through friends and relatives (3.25), regular visit to the organization (3.08), and contacting through social club (2.81). Figure 6.3 depicts the methods in the order of rank score.

21 255 Figure 6.3 Methods Used by Agents to Canvas Prospect Mean Score Direct Meeting By Offering to pay initial premium Through offering personal help Contacting through friends and relatives Regular visit to the organization Contacting through social club q Trend in Income from LIC Agency The respondents were asked to mention the trend in their income from life insurance agency business over the last 3 to 5 years. The increase or decrease in income of the agents will throw light on whether agents are active or dormant in their business.

22 256 Table 6.23 Trend in Income from LIC Agency Trend Number Percent Increased Decreased Constant Table 6.23 shows that income from LIC agency increased in the case of 59 percent of the respondents, while income of 23 percent remained constant and the income decreased In the case of 18 percent of the respondents during the last three to five years. This reveals that only 59 percent of the agents were active in their profession during the last three to five years and the business of 41 percent of the agents either went down or remained constant. Status of Maintaining Office for LIC Agency Business An insurance agent should have a decent office where a recognized prospect can come and spend time and gain more knowledge on various aspects of insurance and other livelihood affairs and go with satisfaction after signing a proposal for insurance. It will be convenient for the customers too to contact the agent for policy servicing. Club member agents are entitled to get allowances for maintaining an office for life insurance agency business. Table 6.24 Status of Maintaining Office for LIC Agency Status Number Percent Maintain Do not maintain

23 257 Table 6.24 depicts that only 29 percent of the respondents maintain an office of their own to do the life insurance business, the remaining 71 percent have no office of their own. This reveals that, many times customers will have to go in search of the agents for matters connected with policy servicing. Maintaining Records Pertaining to Customers LIC agent is required to keep record of his customers details regarding the premium paid, nominations, assignment, policy loans, conversion, surrender/lapse, etc. This shall help him/her to have a better customer relationship. In this world of computer, it is rather easy to maintain records of customers. Table 6.25 reveals that majority of the respondents (80 percent) maintain records regarding premium paid only. Only 31.5 percent of the respondents maintain record regarding nomination, very few (13 percent) maintain details of assignment, 17 percent maintain policy loan details of customers. Conversion and maturity details of policy are maintained by 48 percent of the respondents and very high percent (87.5) maintain family particulars of customers. The practice of maintaining surrender/lapse details were followed by 28 percent of the respondents only. Table 6.25 Status of Maintaining Records of Customers Nature of Records Maintain Do not Maintain Total Number Percent Number Percent Premium paid Nominations Assignment Policy Loans

24 258 Conversion/Maturity Family Particulars Surrender/Lapse The above analysis reveals that maintenance of records by LIC agents, except regarding family particulars and premium paid, is not satisfactory. Reading and Understanding Literature Pertaining to Life Insurance The insurance agent in today s situation must be a thoroughly knowledgeable person. He/she should have an in depth knowledge in the life insurance schemes/plans, income-tax law, capital market conditions and the like. The agent should be fully equipped to answer the queries from the clients. Therefore, to equip himself, he/she is required to go through various journals, books and the like and understand the literature pertaining to life insurance business. Table 6.26 reveals the habit of agent reading and understanding literature pertaining to life insurance policies/schemes before meeting customer. It can be noticed that only 15 percent of the respondents always read and understand the literature before meeting their customers, while 27.5 percent read most of the time, 31 percent read some times 20 percent read rarely and the rest 6.5 percent never read and understand the literature. Table 6.26 Habit of Reading Literature Pertaining to Life Insurance Schemes and Rules Frequency Number Percent Always Most of the time Some times

25 259 Rarely Never More than 50 percent of the agents do not read and understand the literature pertaining to life insurance before meeting the prospects. From the above, it can be assumed that the knowledge level of majority of the life insurance agents may not be up to the standard. Place of Meeting It is interesting to note the place where the agents meet the prospects and customers for canvassing business. Table 6.27 shows the places selected by the respondents for meeting their clients. Table 6.27 Place of Meeting Customers Place Numbe r Percent Home Work place LIC office Home and work place Other places Home and LIC office Home and Work place and Other places

26 260 Table 6.27 reveals that meeting customers at their home is followed by 32 percent of the respondents, 13.5 percent directly go to the work place of customers, and a few (2 percent) select the LIC office to canvas business. Home and work place is selected by 47 percent, one percent selected home and LIC office, 1.5 percent selected other places, and 3 percent used home, work place and other places to meet their clients. Other places include social clubs, public meeting places and the like.

27 261 Frequency of Meeting the Customers The basic purpose of an organization is to create customers and retain them. In today s competitive era, where customer is the king, it is a must for the insurers not only to make new clients, but also to maintain the existing customer. In the insurance sector, there is an agent-client relationship and the satisfied client can be the biggest brand ambassador for the company (word of mouth advertising). Building relationship with customers depends on the frequency of contacts and the quality of services provided to them. Table 6.28 Frequency of Meeting Customers Frequency Number Percent Weekly Fortnightly Monthly Half-yearly Yearly Other occasions The duration of agent meeting the customer is given in Table It is pathetic to note that 29.5 percent of the respondents meet their customers only once in a year, while 25 percent meet once in six months, and 23.5 percent find time to meet monthly. A very low percent (6 percent) meet their customers fortnightly and 3.5 percent meet once in a week. About 12.5 percent meet their customers on other occasions like marriage, birth day, and festival days. The above analysis reveals that the duration of agent meeting their customers is not satisfactory.

28 262 Services Rendered to Customers Service marketing is about promises promises made and promises kept to customers. The after-sale services in life insurance marketing include reminding the premium due, collecting the premium from clients, assistance in policy loans, assistance in claim settlement, etc. The role of the agent is very important in these services. To build long lasting relationship and to make the customer repeat purchase, the service promised must be rendered promptly. Delivery gap in service arises when there is difference between the quality standards set for service delivery and the actual quality of the service delivery. Table 6.29 Services Rendered to Customers After-sale Services Number Percent a. Reminding the premium due b. Collecting the premium from customers c. Giving loan quotations d. Assistance in claim settlement e. Housing loan and other policy servicing f. All the above services Table 6.29 reveals that only 15.5 percent of the respondents remind the customers about the premium due, another 5 percent render all services like, reminding the premium due, assistance in claim settlement, collecting premium from customers for remittance, assistance in policy loans and the like. Collecting premium from customers is the main after sales service rendered by 43 percent of the respondents. The data analyses

29 263 reveal that rendering all types of after-sales service was not being practiced by 95 percent of the respondents, which resulted into a delivery gap. Product Preference in the Market The liberalization of the Indian economy has generated new ideas of product development in the insurance sector. New technologies, new inventions and changes in the economic and financial scenario, all have thrown up new insurance needs. Since the agents are in direct contact with the people, they will be able to judge the needs of the people for life insurance products. The respondents were asked to rank the different types of life insurance products on the basis of acceptability among urban and rural people. The preferences for various life insurance products are depicted in Table 6.30 (Urban) and 6.31 (Rural) in the order of rank score obtained. Table 6.30 Life Insurance Product Preference in Urban Area (N = 200) Types of Products Frequency and Rank Total Score Mean Score Money Back Unit Linked Plan Endowment Pension Plans Education/Marriag e Whole life Annuity

30 264 Table 6.31 Life Insurance Product Preference in Rural Area (N= 200) Types of Products Frequency and Rank Total Score Mean Score Money Back Endowment Unit Linked Plan Pension Plans Education/Marriage Whole life Annuity Analysis of Table 6.30and 6.31 reveals that money back policy is the most acceptable product in urban and rural area. It is followed by the new generation product called Unit Linked Life Insurance Product (ULIP). The conventional endowment products, pension plans, special types of policies like marriage and education policies are in the order of third, fourth, and fifth preference. In rural area, the second preference is for conventional endowment products (Table 6.31). The other products in the order of preference are: ULIP, pension plans, and marriage and education policies. Whole life and annuity insurance products got the least preference in both urban and rural areas. The difference in product preference mean values between urban and rural areas is tested by calculating the p value for each type of product in Table 6.32.

31 265 Table 6.32 Analysis of Variance of Product Preference (ANOVA) (N = 200) Type of Product Mean Standard Deviation Urban Rural Urban Rural p value Whole Life Product Endowment Money Back Annuity Pension ULIP Education/Marriag e The p value obtained for whole life, endowment, annuity, and education/marriage products is more than 0.05; hence there is no significant difference in preference for these products between urban and rural customers, as perceived by the agents. At the same time, since the p value for money back, pension and ULIP products is less than 0.05, there is significant difference in product preference for these products between urban and rural customers of LIC, as perceived by the agents. Acceptance of Products Recommended by Agents The insurance agent has to assess the insurance needs and requirements of an individual or family. The Human Life Value (HLV) approach, Needs approach and Capital Retention approaches are the basis for assessing the insurance needs of an individual or family. After assessing the needs, the agent has to recommend a particular product or a

32 266 mix of products. Truly, the insurance agent should be a financial advisor to the customer. If the agent is successful in marketing life insurance, there may be every chance the prospect accepting the plans/schemes recommended by them. Table 6.33 Acceptance of Products Recommended by Agents Frequency Number Percent Always Most of the times Some times Rarely Never Table 6.33 reveals that customer always accept plans and terms recommended by 15 percent of the respondents. But 46 percent are of the opinion that most of the time customers accept, while customers some time accept products recommended by 29.5 percent of the respondents. In the case of 9 percent of the respondents clients rarely accept and in the case of 0.5 percent of the respondent, clients never accept plans/schemes recommended by them. It reveals that about 15 percent of the agents are always successful in marketing life insurance. Lapse and Surrender of Policy The life insurance policy will lapse if the policyholder fails to pay any of the premiums due within the days of grace. If the assured is unable to revive his policy, he can surrender the policy and get cash surrender value. Lapse and surrender of policy mean loss of security to the insured and loss of faith on the insurer. Agents will loose future commission on such

33 267 policies. Table 6.34 shows the percentage of policies lapsed or surrendered in a year. Table 6.34 Percentage of Policies Lapsed or Surrendered in a year Percentage Numbe r Percent Less than Above The study reveals that 10 to 20 percent of the policies sold by 34.5 percent of the respondents are lapsed or surrendered in a year. Policy lapse is 20 to 30 percent in the case of 31.5 percent of the respondents. Less than 10 percent of policies sold are lapsed in the case of 19.5 percent of the respondents. The rate of lapse is very high (30 to 40 percent) in the case of 9 percent, and above 40 percent in the case of 5.5 percent of the respondents. On an average, percent (S.D. 10.7) of the policies sold by the respondents are lapsed or surrendered in a year. Reason for Surrender and Lapse of Policies Lapse and surrender of insurance policies represents loss of faith on the insurer and loss of security to the insured. There are many reasons for surrender and lapse of policies. Seven major reasons for surrender and lapse of policies were identified and the respondents were asked to rank them in the order of importance.

34 268 Table 6.35 reveals the frequency and rank score obtained for various reasons of surrender and lapse of policies. Table 6.35 Reasons for Surrender and Lapse of Policies (N = 200) Reasons Frequency and Rank Mean Weight Low income Diversion of funds to other investments Lack of service of Agents Diversion of funds to other commitments Lack of conviction Poor service quality of LIC Other reasons The reasons for lapse and surrender in the order of average weight obtained are: low income (6.36), diversion of funds to other investments (5.24), lack of service of agents (4.68), diversion funds to other commitments (4.04), lack of conviction (2.76), poor service quality of LIC (2.3), and other reasons (1.67). Other reasons include over selling, low bonus rate and the like. Figure 6.4 shows the major reasons for lapse and surrender of policies on the basis of mean score.

35 269 Figure 6.4 Reasons for Surrender and Lapse of Policies 7 6 Mean Score Low income Diversion of Lack of service Diversion of Lack of Poor service Other reasons funds to other of Agents funds to other conviction quality of LIC investments commitments Reason Customer Satisfaction perceived by agents The satisfaction of customers perceived by agents with regard to LIC s service quality on certain dimensions like issue of renewal premium notice / receipt, obtaining policy loans, settlement of claims, attention to correspondence of customers, and other Office services were measured on five-point scale.

36 270 Table 6.36 Customer Satisfaction of LIC s Services Perceived by Agents (N = 200) Service Dimensions Degree of satisfaction and frequency A B C D E Total score Mean score Premium notice Policy loan Maturity Claim Death claim Correspondence Other office services Note: A = Highly satisfied, B = Satisfied, C = Neither satisfied nor dissatisfied, D = Dissatisfied, and E = Highly dissatisfied. Table 6.36 reveals that customers are satisfied in the case of payment of maturity claim, death claim and policy loan, as the mean score for these three dimensions are 4.02, 3.93, and 3.63 respectively. Mean score of 3.34 for other office services such as assistance at the office counter, premium remittance timings and the like show that they are moderately satisfied in this regard. They are less moderately satisfied in the case of receiving premium notice, attention to correspondence, as the mean satisfaction score are 3.18 and 3.01 respectively. On the basis of totality of the mean score for all items, it can be assumed that the overall satisfaction of customers perceived by agents is moderate. It is also found that there is no significant difference in the overall satisfaction perceived by customers and the satisfaction of customers perceived by agents, as the level of satisfaction in both cases is moderate.

37 271 Difficulties experienced by the Claimants Settlement of claim is an important after-sales service performed by branch offices. Agents were asked to state the difficulties experienced by the claimants at the time of settlement of claims. Five point Likert scale of frequency of difficulties ranging from 1 (never) to 5 (always) was selected. The score obtained was tabulated and presented in Table The table 6.37 reveals that obtaining death certificate is the most difficult problem experienced by the claimants at the time of settlement of claims, followed by title/transfer/policy missing, and age proof. Table 6.37 Difficulties Experienced by the Claimants (N = 200) Nature of Difficulty Frequency A B C D E Total score Mean Score Age Proof Death Certificate Title/Transfer/Policy Missing Note: A = Always; B = Most of the time; C = Sometimes; D = Rarely; and E = Never Sales Promotion Campaigns As part of the marketing process, LIC conduct sales promotion campaigns for new products launched and in some cases to push sale of existing products. The campaigns shall create more awareness on insurance and various products of LIC. As the marketing intermediary, active participation of agents shall assist the Corporation in achieving the targets. The Divisional Manager, Branch Managers, and many of the

38 272 development officers were of the view that active participation of all agents in sales promotion campaigns was not satisfactory. Table No exhibits the participation of agents in the sales promotion campaigns conducted by LIC. Table 6.38 Participation of Agents in Sales Promotion Campaigns Participation Number Percent Yes No Table No.6.38 reveals that 60.5 percent of the respondents participate in sales promotion campaigns, which means that that more than one third of the agents did not participate actively in the marketing activities of the Corporation. Table No Impact of Sales Promotion Campaigns on Agency Business Impact on business Numbe r Percent Desired level achieved Not achieved Total The impact of sales promotion campaigns on agency business was assessed and the result obtained in Table 6.39 shows that as high as percent of the participants could achieve their targeted business after active participation in the campaign. This suggests that sales promotion campaign need to be conducted frequently and Branch Managers and

39 273 Development officers should ensure the active participation of all the agents in the programme. Training Programme for Agents Training enhances competencies of agents and equips the organization to face the future. In insurance, training is the instrument for converting intangible assets into tangible outcomes. Insurance training imparts novel approaches & ideas, faster problem solving, effective/quicker induction and minimizes reinvention. Continuous professional development ensures better/faster innovation, improved customer service, reducing knowledge loss and productivity performance. In LIC, there are 7 Zonal Training Centres, 101 Divisonal Training Centres and 520 Agents Training Centres for imparting training to agents. LIC also have an on-line training facility for imparting pre-recruitment training to agents. Depending on the training needs, LIC also expose their agents to different External Training Institutes (ETIs) for specialized training. Club member agents are required to attend at least one training programme in a period of two years. Chairman s and Zonal Manager s club agents are required to attend training programme at LIC s Zonal Training Centre once in three years. Table 6.40 Regularity of Attending Training Programme for Agents Attendance Numbe r Percent Regular Not Regular

40 274 Table 6.40 shows that only percent of the respondents attend training programme regularly. The study reveals that regular participation of good number of agents in the training programme is not satisfactory. The respondents were asked to state the quality of training imparted to agents at various training centres. Agreement statement relevant for this aspect was given on a five point scale ranging from 1 (very poor) to 5 (excellent). The result in Table 6.41 shows that majority of the respondents are not satisfied with the quality of training. Only 9.50 percent of the respondents rated the quality of training as excellent. At the same time, percent of the respondents rated the quality of training as poor and percent rated it as very poor. Table 6.41 Opinion about the Quality of LIC s Training for Agents Opinion Number Percent Excellent Good Average Poor Very poor The mean rate obtained is 3.12, which reveals that respondents judge the quality of training as average. Many agents expressed the view that there is no training manual or schedule. This suggests that LIC should take urgent steps to improve the quality of training.

41 275 Figure 6.5 Opinion about the Quality of LIC s Training for Agents (in percentage) Very Poor (11.5) Excellent (9.5) Poor (16.5) Good (32) Average (30.5) Figure 6.5 shows that only percent of the agents are satisfied, whereas the remaining percent are not at all satisfied in the quality of training given to them. Interaction with Development Officer An agent is supposed to establish regular contact with the development officer under whom he or she is working. Frequent contact with the development officer shall help the agent to know more about products/plans/schemes newly introduced in the market. It also shall assist the agent to make a joint call whenever found necessary. Out of the total 200 agents selected for the study, 158 of them were working under development officers. The frequency of agent meeting their development officers is presented in Table 6.42.

42 276 Table 6.42 Frequency of Agent Meeting Development Officer Frequency Number Percent Daily Weekly Fortnightly Monthly Less frequently Total More than 34 percent of the respondents (55; %) meet their development officer once in a week, percent (46 nos.) meet fortnightly, percent (28 nos.) meet once in a month, and 8.23 percent (13 nos.) meet less frequently. The analysis reveals that frequency of interaction with development officer is not satisfactory in the case of more than 55 percent of the respondents. Agency Commission Life insurance agents get commission for the business performed by them. It includes commission on first premium and renewal commission. The rate of commission is different on single premium and regular premium products. On single premium products it is 2 percent of the premium and on regular premium products it varies from 5 to 25 percent. Table 6.43 reveals the opinion expressed by respondents about the rate of commission offered to them.

43 277 Table 6.43 Opinion about Rate of Agency Commission Opinion Numbe r Percent Satisfied Not satisfied No opinion The data given in Table 6.43 reveals that majority of the respondents (53 percent) are satisfied and percent are not satisfied with the present rate of commission for agents. At the same time, of the respondents expressed no opinion about rate of commission offered to them. Awareness about Products of Private Insurers The establishment of new insurance companies resulted into emergence of new types of products in the market. In addition to conventional products, the market is flooded with unit linked products and products with rider benefits. Insurance agents have to gather knowledge about products of competitors in order to clarify the queries of clients and customers and to highlight add on features of products marketed by them. Table 6.44 Awareness about the Products of Private Insurers Awareness Numbe r Percent Aware Not aware

44 278 Table 6.44 depicts that more than half of the respondents (57 percent) did not try to understand about the products of private insurers. This shows that majority of the agents are not understanding the market in its true sense. AGENTS PERCEPTION ABOUT JOB AND JOB SATISFACTION Life insurance agents have, historically, not had a great image in India. People used to device innovative ways to dodge them because they were seen as people pushing their own agenda for a quick sale and a hefty commission. It is not sufficient to have an army of agents in terms of numbers alone, but to have highly efficient, productive and satisfied agency force. This army of agents needs to have quality insurance salesman. Over the years on account of the trust and the huge network of agents that has been built, LIC has come to occupy a special place in the hearts of its policyholders and especially those in rural areas. The successful life insurance salesperson has to market first the company he represents and its credentials and thereafter himself and the product he has to offer. The agent can acquire knowledge about various products from literature, training classes, and from development officers and other sources. He /she should be able to get accurate picture of the job and job prospects, and support from the organization. At the same time, the agent should have a feeling of job security in his mind. Degree of success in agency profession in turn depends up on the degree of success in prospecting. A satisfied agency force is not only an asset to the organization, but establishes and strengthens relationships with a large number of customers and also enhances the value of the organization over the horizons. The respondents were asked to rate their perceived degree of satisfaction on a three point scale about the various aspects of life