INDUSTRIAL TRAINING PROJECTREPORT

UNDER TAKEN

@

ON

DYNAMIC OF AGENCY RECRUITMENT

(Bharti AXA Life Insurance)

Prepared by:

MBA - 3rd SEM.

Roll no. 8 Seat no.

Name of the Institution

DECLARATION

I Undersigned the student of MBA – 3rd SEM by declare that the project report is my own work and has carried out under the guidance and supervision of Prof.ABHAY RAJA and other Prof. of T.N.Rao College, RAJKOT. Further I declare that it has not been submitted to any other university of examination.

Date:Sign. Of Student

PREFACE

In this age of neck to neck competition, there is much importance given to practical knowledge. The theorical knowledge is not sufficient to understand the boundless field of business management.

Today every person wants to be a master in the field they are in. The practical training is a life of management student. In modern world the importance of management is increasing day by day. Industrial training provide a student sufficient knowledge to develop an education to connect theory and practical.

So to fulfill our purpose I have done training at “BHARTI AXA LIFE INSURANCE”

ACKNOWLEDGEMENT

It is my great pleasure to present this report before you. I sincerely would like to show my gratitude towards all those persons who have helped me throughout my project work

I am heartily thankful to Mr. Samson Pinto, Company guide, Bharti Axa Life lnsurance Ltd., Ahmedabad for giving me his valuable guidance for preparing this report. He has been an exceptional mentor during these two months of SIP. It has been a great learning experience of being a trainee under him.

I would like to express my special thanks to all the another official who has helped me a lot during this SIP. Their critical advices helped me to make this report more effective.

Moreover, I thanks to prof. ABHAY RAJA who guided me before and after the industrial training. He gave me great support to prepare this project, too.And allwho directly or indirectly helped me in preparing this report.

INDEX

  1. Sector’s Profile
  2. Company Profile
  3. Executive Training
  4. Introduction to IRDA ACT
  5. Introduction Insurance Advisor
  6. Executive Task Assigned & Achieved
  7. Methodology
  8. Analysis of performance v/s Target
  9. SWOT Analysis
  10. Suggestion
  11. Limitation
  12. Questionnaire
  13. Conclusion
  14. Bibliography

Sector’s

Profile
INDEX

  1. Introduction Insurance Sector
  2. Brief History
  3. Insurance Sector in India
  4. Scenario Insurance Industry in India
  5. Contribution to GDP
  6. Status of Insurance Industry
  7. Insurance Sector Before Privatization
  8. Insurance Sector After Privatization
  9. Future of Insurance Sector
  10. Life Insurance

INTRODUCTION TO INSURANCE SECTOR

In India, the concept of insurance was never given a serious thought, as compared to other countries. Life insurance premium to Gross Domestic Product (GDP) ratio is a mere 1.4% as compared to a healthier rate of 8% amongst other developing countries. The reason being lack of awareness and opportunities combined with poor state of services provided.

Presently in India, the insurance sector is nationalized; Life Insurance Corporation of India (LIC) and General Insurance Company (GIC) render services along with its 4 subsidiaries. While LIC provides life insurance, GIC is concerned with non life insurance like - motor, marine, fire, health and personal accident insurance.

LIC has been one of the pioneering organizations in India, which ushered in the use of information technology in their business on a very large scale to deliver more value and satisfaction to the policyholders. LIC has fully computerized most of its branches all over India. Metropolitan Area Network (MAN) has enabled policyholders to pay premiums or to get their status report, surrender value quotation and loan quotation online. The Zonal Offices and MAN centers are connected through a Wide Area Network (WAN). Interactive Voice Response Systems have been made functional in a number of centers all over the country.

The insurance industry in our country is on the threshold of a new era of rapid expansion. A more competitive environment is expected to emerge with new private participants being allowed to enter the insurance industry. The need for private sector participation in this sector is justified on the basis of enhancing the efficiency of operations, achieving a greater density and penetration of life insurance in the country and for a greater mobilization of long-term savings for long gestation infrastructure projects. In the wake of emerging competition, LIC, with its more than four decades of experience and wide reach, is equipped to face the challenges emanating from the entry of new players. Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is:

Insurance Act, 1938, Insurance Regulatory & Development Authority Act, Composition of Authority under IRDA Act, 1999

BRIEF HISTORY

The origin of insurance is very old .The time when we were not even born; man has sought some sort of protection from the unpredictable calamities of the nature. The basic urge in man to secure himself against any form of risk and uncertainty led to the origin of insurance.

The insurance came to India from UK; with the establishment of the Oriental Life insurance Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were been established in India. Then the central government took over these companies and as a result the LIC was formed. Since then LIC has worked towards spreading life insurance and building a wide network across the length and the breath of the country. After the liberalization the entrance of foreign players has added to the competition in the market.

Insurance Sector in India

The insurance sector in India has witnessed almost a 360-degree turn over a period of almost two centuries. It has come a full circle from being an open competitive market to nationalization and back to a liberalized market again.

development of insurance in India

The business of life insurance in India started in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable thegovernment to collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. Despite all these the insurance market is currently underdeveloped in India. This is mainly because of the following reasons.

The large-scale of operations, public sector bureaucracies and cumbersome procedures.

The highest paid employees of the nationalized insurance companies are characterized by abysmal productivity, utter ignorance of the basic principles of the insurance business, endemic corruption, gross indiscipline and sheer laziness.

Dominating the inevitably weak management of the nationalized insurance companies, the militant and strongly unionized employees of the nationalized monopoly insurance companies have transformed Indian insurance from volume-driven into class-based business.

Scenario of Insurance industry in India

India with its large population does provide an immense potential for the insurance industry to flourish. Below given are some of the statistics pertaining to Indian insurance Industry.

India at a glance:

Population: 1 Billion

Economy: 5th largest in the world in terms of Purchasing

Power Parity (PPP)

GDP growth Rate: Over 6% per year on an average for the

last decade

Savings Rate: Around 26% of GDP

Estimated middle class population: 300 Million

Insured population: 70 million only

Estimated business (2008): $6.6 Billion

This characteristic of their business makes insurance companies the biggest investors in long-gestation infrastructure development projects in all developed and aspiring nations.

The insurance sector in India has come up a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries.

By any yardstick, India, with about 200 million middle class households, presents a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The following table reflects the low percentage and per capita penetration of insurance in India compared to other developed and developing countries. With the per capita income in India expected to grow at over 6% for the next 10 years and with improvement in awareness levels, the demand for insurance is expected to grow at an attractive rate in India.

CONTRIBUTION TO GDP

Insurance sector’scontribution to GDP of different countries are as follow:,

Countries / Contribution to GDP
(Premium as % of GDP)
UK / 12.71
Japan / 8.70
US / 4,48
South Africa / 14.04
Australia / 6.04
South Korea / 9.89
India / 1.77
China / 1.12
Malaysia / 2.13
Indonesia / 0.54
Brazil / 0.36

Status of Indian Insurance Sector

The insurance industry in India is estimated to be of US $ 66-70 million & is expected to grow to US $ 377 million by 2005. With the opening of this sector it was felt that LIC would lose its hold on the Indian market. But LIC still continues to dominate the market with its strong 800,000 task force. Its incremental market where is 97% & is growing at a pace of 13%. In fact, some of its agents are the members of MDRT (Million Dollar Round Table). The growth of LIC can also be attributed to its presence in the US, UK where it functions as a corporate agent. Amongst private life insurers ICICI Prudential topped the list & in non-life insurers TATA-AIG has emerged stronger followed by Reliance General.

Insurance in India before 2000 meant only LIC (Life Insurance Corporation) & GIC (General Insurance Corporation). These two players signified the entire insurance sector in India. No doubt they were an amalgamation of as many as 351 private insurance companies i.e. LIC was formed by nationalizing 245 private insurance firms in 1956 & GIC by nationalizing 106 firms in 1970.

INSURANCE SECTOR BEFORE PRIVATIZATION

The Indian Insurance sector before privatization was based on the following factors:

Simple products.

Lower penetrationmore direct business due to lack of intermediaries.

Though the domestic savings in India is 25% only 5 per cent of it is insured. The Gross Insurance Premium in India is as low as 0.3% compared to Japan which is 31%, European Union =25%, Canada = 1.3%. Which is 51st in the world?

But with the Vajpayee government coming to power in 2000 for a brief period, the way for privatization of insurance sector was paved. & lobe hold, now we have as many as 26 private players in this field i.e. 13 life-insurers & 13 non-life insurers. The reinsures function under the umbrella of GIC & are required to reinsure 30% of their business with it. GIC has allowed Indian exporters to secure liability insurance from outside the country, which has facilitated its entry into SAARC.

In various segments of Indian Insurance industry, health care presents a huge potential. The total expenditure on health in India is 6 per cent of the GDP. The government spending is less than 25% compared to 30-40% of developed countries. The health insurance industry in India can be valued at more than 90,000 core rupees. This means that in a population of 1 billion only 2340 million people are insured. It is estimated that this number will grow to 650 million by 2005.

The opening up of this sector has led to heightened activity. To increase penetration both national & private players are now using conventional means.

However, both the private & national players are reluctant to actively participate in the motor insurance segment, as the losses in this sector are more than 100%. Moreover the motor insurance premium is as low as 2.5 per cent of the vehicle cost compared to international standard of 6 per cent.

 The privatization of insurance sector in India has encouraged the government to go in for more such moves. The track record of LIC has shown that even national players can function in a competitive environment & still dominate the market.

Why Private Insurance companies came to India?

In India, the laws & practices have changed significantly, since the 1950’s. The amendments made in 1952, to the Insurance Act, 1938, did away with the system of Principal agents, Special agents & chief agents, who were till then permitted to procure proposals from the market for insurance companies. Restrictions were also imposed on managing agencies, as well as on the nature of remunerations that could be paid to agents.

As at the end of 1998, only the following organizations were transacting life insurance business in India.

Life Insurance Corporation of India (L.I.C.)

Postal Life Insurance (P.L.I)

All others who were transacting life insurance business in India were prevented from doing so by the Nationalization Act of 1956, & all their business was taken over by the L.I.C. It is expected that there could be significant changes in the following years; if & when new rules are enacted, enabling more private companies to transact life insurance business in India. LIC came into being on 1st September, 1956 as a result of the nationalization of life insurance business. It transacts business throughout India & also in the U.K., Mauritius, FijiBahrain.

LIC of India was the only player in the market from 1956 & even after 40 years of existence it was not possible for them to cover all the population for life insurance. They were hardly able to cover 10-15% of the population even after having so many branches & employees. So for covering each & every individual under insurance, government allowed private players to get into this business in 1999.

Now in all there are 17 players in Life insurance business including LIC & they are

1. Bajaj Allianz Life Insurance Co. Ltd.

2. Birla Sun Life Insurance Co. Ltd. (BSLI)

3. HDFC Standard Life Insurance Co. Ltd. (HDFC STD LIFE)

4. ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU)

5. ING Vysya Life Insurance Co. Ltd. (ING VYSYA)

6. Max New York Life Insurance Co. Ltd. (MNYL)

7. MetLife India Insurance Co. Pvt. Ltd. (METLIFE)

8. Kotak Mahindra Old Mutual Life Insurance Co. Ltd.

9. SBI Life Insurance Co. Ltd. (SBI LIFE)

10. TATA AIG Life Insurance Co. Ltd. (TATA AIG)

11. Reliance Life Insurance Company Ltd.

12. Aviva Life Insurance Co. Pvt. Ltd. (AVIVA)

13. Sahara India Life Insurance Co. Ltd. (SAHARA LIFE)

14. Shriram Life Insurance Co. Ltd (SHRIRAM LIFE)

15. Bharti AXA Life Insurance Co. Ltd. (BHARTI AXA)

16. Future General India Life Insurance Co. Ltd.

17. IDBI Fortis Life Insurance Company

What were these private players supposed to do?

All these private players were focusing on two things:

  • Geographical Expansion
  • Capacity Building

Geographical Expansion :

First of all the private players were concentration on the reach. They opened number of branches in the country so that they can compete with the insurance giant LIC. Because insurance is such a cake, more the persons

Capacity Building:

In service sector when we are talking about capacity building we are not talking about procuring sophisticated equipments /machines but about manpower. So in insurance sector the capacity building i.e. recruiting personnel is done in two ways: a) Recruiting employees i.e. Sales Manager /Sales officer b) Recruiting Life Insurance Advisors.

Insurance Industry After Privatization

Reforms have marked the entry of many of the global insurance majors into the Indian market in the form of joint ventures with Indian companies, which have responded to the competition in an admirable fashion by launching new products and improving service standards. In India there are 17 players in insurance sector. One is LIC and others are as below:

Date of Reg. /

Name of the company

1 / 23.10.2000 / HDFC Standard Life Insurance Company Ltd.
2 / 15.11.2000 / Max New York Life Insurance Co. Ltd.
3 / 24.11.2000 / ICICI Prudential Life Insurance Company Ltd.
4 / 10.01.2001 / Kotak Mahindra Old Mutual Life Insurance Ltd.
5 / 31.01.2001 / Birla Sun Life Insurance Company Ltd.
6 / 23.10.2001 / Reliance Life Insurance Company Ltd.
7 / 30.03.2001 / Tata AIG Life Insurance Company Ltd.
8 / 02.08.2001 / ING Vysya Life Insurance Company Ltd.
9 / 03.08.2001 / Bajaj Allianz Life Insurance Company Ltd.
10 / 06.08.2001 / Metlife India Insurance Company Pvt. Ltd.
11 / 14.05.2002 / Aviva Life Insurance Co. India Pvt. Ltd.
12 / 06.02.2004 / Sahara India Insurance Company Ltd.
13 / 30.07.2006 / Bharti AXA Life Insurance Co. Ltd.
14 / 3.01.2002 / Shriram Life Insurance Co. Ltd
15 / 4.09.2007 / Future General India Life Insurance Co. Ltd.
16 / 30.03.2001 / SBI Life Insurance Company Ltd
17 / 19.12.2007 / IDBI Fortis Life Insurance Company

MARKET SHARE OF LIFE INSURANCE PREMIUM COLLECTION

Sr.No. / Company Name / 2006-07 / 2007-08
1 / HDFC Standard Life Insurance Company Ltd / 1220 / 2201
2 / Max New York Life Insurance Co. Ltd. / 752 / 1280
3 / ICICI Prudential Life Insurance Company Ltd. / 3925 / 6643
4 / Kotak Mahindra Old Mutual Life Insurance Ltd / 499 / 943
5 / Birla Sun Life Insurance Company Ltd. / 699 / 1708
6 / Reliance Life Insurance Company Ltd / 689 / 1820
7 / Tata AIG Life Insurance Company Ltd. / 518 / 788
8 / ING Vysya Life Insurance Company Private Ltd. / 418 / 656
9 / Bajaj Allianz Life Insurance Company Ltd. / 3027 / 5568
10 / Aviva Life Insurance Co. India Pvt. Ltd / 656 / 980
11 / Sahara India Insurance company Ltd / 19 / 71
12 / Bharti Axa Life insurance / 8 / 105
13 / Shriram Life Insurance Co. Ltd / 87 / 124
14 / SBI Life insurance / 1198 / 2531
15 / Met life insurance / 302 / 764
16 / Future Generali / 00 / 0.41
17 / IDBI Fortis Life / 00 / 4.36
18 / LIC / 23899 / 23583

Graphical Presentation of this data is as below;