Indian Journal of Development Research and Social Action 2011 Volume 7 v Numbers 1-2, Jan.-Dec., 2011 v pp. 157-172 Recruitment of Quality Advisor Among the Private Life Insurance Companies in India Shailendra Kumar Chaturvedi * ABSTRACT Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event. Life insurers are striving to design imaginative products so as to ensure long-term commitment from the policyholders. In the process there is a need for the insurance advisors to play a key role in identifying the needs of the prospect and sell insurance so that long-term retention of customers is established. Introduction As the economy is developing, the mind set of the people is changing at a very fast pace. Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event. Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. With the help of Insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. Insurance is a tool by which fatalities of a small number are compensated out of funds collected from plenteous. Gradually as competition increased benefits given by industry to its customers increased by leaps and bounds. Insurance is a basic form of risk management which provides protection against possible loss to life or physical assets. Person who seeks protection against such loss is termed as insured, and company that promises to honor claim, in case such loss is actually incurred by insured, is termed as Insurer. In order to get insurance, insured is required to pay to insurance company a certain amount called premium. Premium is collected by insurance companies which acts as trustee to pool created through contributions made by persons * Professor & Director, Sherwood College of Management, Lucknow (U.P.) India.
158 Shailendra Kumar Chaturvedi seeking to protect themselves from common risk. Any loss to the insured in case of happening of an uncertain event is paid out of this pool. Insurance is a service sector wherein social as well as commercial aspects are involved. Insurance sector in India has emerged as one of the best promising sector in terms of employment. The life insurance sector is also buzz with activities. Private insurance companies are making inroads in the insurance market with aggressive marketing through new distribution channels. Literature Review Insurance is a form of contract or agreement under which one party agrees in return for a consideration to pay an agreed amount of money to another party to good for a loss, damage, or injury, to something of value in which the insured has a pecuniary interest as a result of some uncertain event Sahoo and Das (2009). Insurance advisors play an important role in widening the insurance market. Advisors are supposed to be the first person to meet the prospective buyers of insurance, need to be well trained and fully equipped with the knowledge about the product. Every insurance advisor shall: Identify himself and the insurance company of whom he/she is an advisor. Disclose his license to the prospect on demand. Disseminate the requisite information in respect to insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific plan. It has been observed that insurance advisors should constantly monitor the level of satisfaction among his/her customer to keep themselves close to the customers for fulfilling their needs. Perceived services quality has a significant effect on the attitude towards obtaining insurance. Moreover, the degree of success in the implementation of enterprise mobilization in the life insurance industry is positively correlated to the management performance of external aspects like providing increased customer satisfaction (Arora and Stoner, 1996). Customer satisfaction and the salespersons relation orientation significantly influences the future business opportunities and as the salesperson s relation orientation significantly influences the future business opportunities and as the salespersons are able to enhance their relationships with the clients, clients are more satisfied and are more willing to trust, and thus secure the long-term demand for the services (Tam and Wong, 2001). Stafford et al. and Wells (1998) in a study on auto-casualty industry proved that reliability is consistently the most important determinant of both
Recruitment of Quality Advisor Among the Private Life Insurance 159 perceived service quality and feelings of satisfaction among customers engaged in auto-insurance claims. A study done by Xumei Zhang at. el. (2007) has found that worrying about future, economical conditions, cognition about life insurance and adventure activities preference have significant positive effect on the intention of purchasing life insurance. An economical condition also has significant positive effect on the premium of purchasing life insurance; health status has significant negative effect on the premium of purchasing life insurance. Truett and Truett (1990) studied the impact of education on insurance. He found out that an increase in the number of educated people in a country may be associated directly with a greater recognition of various types of products offered by life insurance companies, leading to higher level of demand. Browne and Kim (1993) studied the positive influence of education on life insurance demand through its effect on the period of dependency. He concluded that individuals educated over longer period forgo the opportunity of full-time employment, and extend their reliance on the income stream of other working members of the family, increasing the demand for policies. It can also be proposed that these effects are exacerbated by the income effect of education. Beck and Webb (2003) also studied the positive impact of education on life insurance. He concluded that a better understanding of the benefits of risk-management and long-term savings may encourage risk aversion. Hwang and Gao (2003) studied several reasons to explain why life insurance consumption should rise with income. Firstly, there is no reason to believe that insurance is anything other than a normal good, in the sense that consumption is rising in income. Life Insurance Market The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 per cent of the total 400 million of the insurable population. The state owned LIC sold insurance as a tax instrument, not as a product giving protection. With the entry of the private insurers the rules of the game have changed. This has resulted in a sharp growth in the life insurance market, which still has huge untapped potential. Also, with economic advancement, India is moving from a static to a dynamic situation in which several changes are taking place in industry, social life, political situation etc. which gives birth to new categories of risk which have to be covered. The total life insurance premium gained by the public and private sector organizations from 2004-05 to 2008-09 are given below in the Table 1.
160 Shailendra Kumar Chaturvedi Table 1 Total Life Insurance Premium Insurer 2004-05 2005-06 2006-07 2007-08 2008-09 PUBLIC (LIC) 75127.29 90792.22 127822.84 149789.99 157288.04 ING VYSYA 338.86 425.38 707.20 1158.87 1442.28 HDFC STANDARD 686.63 1569.91 2855.87 4858.56 5564.69 BIRLA SUNLIFE 915.47 1259.68 1776.71 3272.19 4577.59 ICICI PRUDENTIAL 2363.82 4261.05 7912.99 13561.06 15356.22 KOTAK MAHINDRA 466.16 621.85 971.51 1691.14 2343.19 TATA AIG 497.04 880.19 1367.18 2046.35 2747.50 SBI LIFE 601.18 1075.32 2928.49 5622.14 7212.10 BAJAJ ALLIANZ 1001.68 3133.58 4302.74 9725.31 10624.52 MAX NEWYORK 413.43 788.13 1500.28 2714.60 3857.26 MET LIFE 81.53 205.99 492.71 1159.54 1996.64 RELIANCE 106.55 224.21 1004.66 3225.44 4932.54 AVIVA 253.42 600.27 1147.23 1891.88 1992.87 SAHARA 1.74 27.66 51.00 143.49 206.47 SHRIRAM LIFE - 10.33 181.17 358.05 436.17 BHARTI AXA - - 7.78 118.41 360.41 FUTURE GERNERALI - - - 2.49 152.60 IDBI FORTIS - - - 11.9049 318.97 CANARA HSBC - - - - 296.41 DFL PRAMERICA - - - - 3.37 AEGON RELIGARE - - - - 31.21 STAR UNION DAI-ICHI - - - - 50.19 PRIVATE SECTOR (TOTAL) 7727.51 15083.54 28253.00 51561.42 64503.22 GRAND TOTAL 82854.80 105875.76 156075.84 201351.41 221791.26 * Source: IRDA Annual Report April 2004-05 to 2008-09. Research Objectives To identify the segment of people for insurance advisors recruitment. Find out the different ways to find the prospects for insurance advisors recruitment. To find the reason behind individual decisions in joining life insurance company as an agent or advisor. Research Methodology The data for the study was collected from the respondents who were engaged in different occupations, which includes Housewives, Students, Teachers, Private Service employees, Businessmen and Doctors. Respondents were approached with a structured questionnaire with a request to participate in the study. The questionnaire contains a set of attributes, which is to be
Recruitment of Quality Advisor Among the Private Life Insurance 161 measured using Yes or No or May Be options & also by Open/Close ended questions by which we can know about the Need and Preferences for supplementary income of an individual, from which we can find out the segment of people to whom company should target for recruitment. As the population to be covered for the study was very large, a representative sample of 90 respondents belonging to Lucknow (U.P) was taken. Analysis and Findings: The analysis for the research paper has been divided into two different segments. First segment shows the percentage of the respondents on the basis of (i) Not happy with their current job/financial situation, (ii) Need for supplementary source of income and (iii) Preference for supplementary source of income with the (i) Occupation, (ii) Age Group and (iii) Geographic Segmentation. Segment I (Demographic Profile) On the Basis of Occupation Occupation A B C Total Housewives 8 3 4 15 Students 10 2 3 15 Teachers 11 3 1 15 Pvt. Service 5 6 4 15 Businessmen 1 8 6 15 Doctors 3 7 5 15 Total 38 29 23 90 Where: A = Not happy with their current job/financial situation, B= Need for supplementary source of income. C = Preference for supplementary source of income. Figure 1: Shows the Respondents Occupation
162 Shailendra Kumar Chaturvedi Interpretation: The above given table shows the behavior of the respondents belonging to different occupations towards (i) Not happy with their current job/financial situation (ii) Need for supplementary source of income and (iii) Preference for supplementary source of income. This reflects that the majority of the respondents belonging to different occupations are not happy with their current job/financial situation, which means they need additional financial support. On the Basis of Age Group Age Group A B C Total 18-25 7 0 3 90 26-35 8 1 4 36-45 15 4 6 46-55 19 7 16 Total 49 12 29 Where: A = Not happy with their current job/financial situation, B = Need for supplementary source of income. C = Preference for supplementary source of income. Figure 2: Shows the Respondents Age Group Interpretation: The above given table shows the behavior of all the respondents belonging to different age group towards (i) Not happy with their current job/financial situation, (ii) Need for supplementary source of income and (iii) Preference for supplementary source of income. This reflects that the majority of the respondents belonging to different age group are not happy with their current job/financial situation, which means they need additional financial support.
Recruitment of Quality Advisor Among the Private Life Insurance 163 On the Basis of Geographic Segmentation Region A B C Total Sub-Urban 19 4 5 90 Urban 32 14 16 Total 51 18 21 Where: A=Not happy with their current job/financial situation, B=Need for supplementary source of income. C=Preference for supplementary source of income. Figure 3: Shows the Respondents Geographic Segmentation Interpretation: The above given table shows the behavior of all the respondents belonging to different geographic segmentation towards (i) Not happy with their current job/financial situation (ii) Need for supplementary source of income and (iii) Preference for supplementary source of income. This reflects that the majority of the respondents belonging to different geographic segmentation are not happy with their current job/financial situation, which means they need additional financial support. Segment II Occupation with Happy with Current Job/Financial Situation Happy with current job/ financial situation Occupation Yes No Total Teachers 8 7 15 Doctors 14 1 15 Pvt.-service 7 8 15 Businessmen 13 2 15 Students 6 9 15 House wife 3 12 15 Total 51 39 90
164 Shailendra Kumar Chaturvedi Figure 4: Happy with their Current Job/Financial Situation From the above figures, on the basis of occupation, we can see that 14 doctors out of 15, 8 teachers out of 15 and 13 businessmen out of 15 are happy with their current job/financial situation, so they can not be a positive segment for recruitment of a financial advisor in private Insurance sector. On the other hand 8 employees of private sector out of 15, 9 students out of 15 and 12 housewives out of 15 are not happy with their job/ financial situation. Therefore, we can say that they not be a potential segment for recruitment of a financial advisor in private Insurance sector. Occupation with Need for Supplementary Income Need for supplementary income Occupation Yes May be No Total Teachers 7 6 2 15 Doctors 1 9 5 15 Pvt.-service 5 9 1 15 Businessmen 2 11 2 15 Students 9 6 0 15 House wife 12 2 1 15 TOTAL 36 43 11 90
Recruitment of Quality Advisor Among the Private Life Insurance 165 Figure 5: Need for Supplementary Income From the above graph we can see that 7 teachers out of 15, 9 students out of 15 and 12 housewives says yes for the supplementary source of income. This means they can act as a potential segment for recruiting as advisors in the private insurance sector. From the above graph we can see that 9 doctors out of 15, 11 businessmen out of 15 says may be for the supplementary source of income. This means they can be converted to a potential segment for recruiting as advisors in the private insurance sector. Only 1 out of 15 respondent working in private sector says no, which reflects that this sector could not act as a potential segment for recruiting as advisors in the private insurance sector. Occupation with the Preference for Supplementary Income Preference for supplementary income Occupation A B C D E Total Housewives 1 0 2 12 0 15 Students 0 0 0 4 11 15 Teachers 0 0 9 5 1 15 Pvt. Service 0 0 10 0 5 15 Businessmen 3 0 2 10 0 15 Doctors 4 0 5 6 0 15 Total 8 0 28 37 17 90 Where: A = As a life insurance agent, B = Multilevel Marketing, C = Part time business, D = Tuitions, E = Others
166 Shailendra Kumar Chaturvedi Figure 6: Preference for Supplementary Income From the above graph we can see that only 1, 3 and 4 respondents belonging to housewives, businessmen and doctors had shown preference towards supplementary income. This means that only these segments can act as a potential segment for recruiting as advisors in the private insurance sector. Age Group with Happy with Current Job/Financial Situation Happy with current job/financial situation Age group Yes No Total 18-25 6 0 90 26-35 10 7 36-45 19 11 46-55 17 20 Total 52 38 From the above given table we can see that the respondents belonging to 18-25 years, says yes, which means they are happy with their current job/financial situation. So they cannot be a potential segment for recruiting as advisors in the private insurance sector.
Recruitment of Quality Advisor Among the Private Life Insurance 167 Figure 7: Happy with their Current Job/Financial Position Whereas, the respondents belonging to 26-35 years, 36-45 years and 46-55 years, says no, which means they are not happy with their current job/financial situation. So they can be a potential segment for recruiting as advisors in the private insurance sector. Age Group with Need for Supplementary Income Need for supplementary Income Age group Yes May be No Total 18-25 5 3 0 90 26-35 9 8 1 36-45 18 6 1 46-56 26 9 4 Total 58 26 6 Figure 8: Need for Supplementary Income
168 Shailendra Kumar Chaturvedi From the above given table we can see that the respondents belonging to 18-25 years, says no, which means they are not happy with their current job/financial situation. So the respondents belonging to 18-25 years age group, they cannot be a potential segment for recruiting as advisors in the private insurance sector. Whereas, the respondents belonging to 26-35 years, 36-45 years and 46-55 years, says yes or may be, which means they are happy with their current job/financial situation. So they can be a potential segment for recruiting as advisors in the private insurance sector. Age Group with Preference for Supplementary Income Preference for supplementary income Age Group A B C D E Total 18-25 11 1 2 0 2 90 26-35 9 4 1 2 8 36-45 16 2 3 1 1 46-56 10 3 6 5 3 Total 46 10 12 8 14 Where: A = As a life insurance agent, B = Multilevel Marketing, C = Part time business, D = Tuitions, E = Others Figure 9: Preference for Supplementary Income
Recruitment of Quality Advisor Among the Private Life Insurance 169 From the above graph we can see that 11, 9, 16 and 10 respondents belonging to all the different age groups had shown preference towards the supplementary source of income. This means that all the respondents belonging to different segments can act as a potential segment for recruiting as advisors in the private insurance sector. Geographic Basis with Happy With Current Job/Financial Situation. Happy with current job/financial situation Region Yes No Total Sub-Urban 16 28 90 Urban 7 39 Total 23 67 Figure 10: Happy with their Current Job/Financial Situation Geographic Basis with Need for Supplementary Income Need for supplementary Income Region Yes May be No Total Sub-Urban 17 8 4 90 Urban 46 13 2 Total 63 21 6
170 Shailendra Kumar Chaturvedi Figure 11: Need for Supplementary Income Geographic Basis with Preference for Supplementary Income Preference for supplementary income Region A B C D E Total Sub-Urban 16 10 4 3 2 90 Urban 27 18 1 8 1 Total 43 28 5 11 3 Where: A = As a life insurance agent, B = Multilevel Marketing, C = Part time business, D = Tuitions, E = Others Figure 12: Preference for Supplementary Income
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