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PROJECT REPORT ON Study of Recruitment and Retention strategies adopted by different life insurance companies for their Agents

/ Financial Consultants / Agent Advisors

PREPARED BY RUCHA ARUN MOGHE

STUDENT OF B.M.S. (BACHELOR OF MANAGEMENT STUDIES) 2009-2010

SUBMITED TO UNIVERSITY OF MUMBAI & B. H. BAING COLLEGE, SHIPOSHI

Declaration
I hereby declare that the work embodied in this project titled Study of Recruitment and Retention Strategies adopted by different Life Insurance Companies for their Agents / Financial Consultants/ Agent Advisors is my own contribution to project work carried out under the guidance of Mrs. S. S. Vaidya. This project work has not been submitted for any other degree. Where ever reference have been made it is has been clearly indicated as such and included in references and bibliography.

Date-

Place-

Signature

Acknowledgement
It is worthwhile to enclose my sincerest thanks to all the persons who have helped me directly or indirectly during completion of the Project Report in successful manner. Firstly, I express my sincere gratitude to Mr. M. V. Thakurdesai for granting me permission to do this project. Then, I am very much thankful to our course co-coordinator, Prof. V. N. Athalye for his encouragement and full fledge support in the completion of this project. I also express my sincere thanks and sense of gratitude to my project guide Prof. S. S. Vaidya for her valuable guidance and suggestions at every stage right from choosing the topic to the completion of project. I express my sincere thanks and deep sense of gratitude to Mr. Gaurav Dalvi for arranging our live project at HDFC Standards Life Insurance Company, Vashi branch. I also express my sincere gratitude to the management of HDFC Standard Life Insurance company for the kind permission to undergo on implant visit in their company (Vashi branch). Finally, I also express my sincere thanks to Mr. Fayyaz Ahmad Sales Development Manager (SDM) of HDFC Standard Life Insurance Company, Vashi branch for helping me in completion of this project work.

Executive Summary
Insurance sector in India is booming but not to level comparative with the developed economics such as Japan, Singapore etc. Also liberalization of insurance sector has provided huge self employment opportunities. While doing a live project at HDFC Standards Life Insurance Company, Vashi branch I observed that sales Development Managers were facing some serious problems regarding retention of their financial consultants. The HDFC Standards Life Insurance Company as well as other life insurance companies are facing this problem. To find the reasons, the main objective of the study is kept as, to analyses the actual recruitment and retention process in Life Insurance Companies and how far this process confirm to the purpose underlying the operational aspect of the industry. Inadequate information regarding the work of Agents/ Financial consultants / Agent Advisors by recruitment consultant is the main reason for high rate of attrition in insurance industry. The study is proposed to find out a process that will help insurance companies to keep its attrition rate minimum. In this study, I analyzed recruitment process of three different companies viz. Life Insurance Corporation of India, HDFC Standards Life Insurance Company and Max New York Life Insurance Company. After analysis I came to the conclusion that some defects in recruitment process are the reason of high attrition. This project work is a sincere attempt to collect the information stating the various reasons for attrition and suggests the useful measures for retention.

Index

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12

Contents Introduction Industry Analysis Company Analysis Research objectives Research Methodology Data collection and Tabulation Analysis of data and Finding Conclusions and recommendation Appendix Bibliography

Page no.

3.1 Life Insurance Corporation of India 3.2 HDFC Standard Life Insurance Company 3.3 Max New York Life Insurance Company

Recruitment 4.1 Retention and Attrition strategies of life Insurance corporation of India 4.2 HDFC Standard Life Insurance Company 4.3 Max New York Life Insurance company

Introduction
The Insurance sector in India has come a full circle from being an open market to nationalization and back to liberalized market again. Tracking the development in Indian Insurance Sector revels 360 degree turn witnessed over a period of almost two centuries. Ever since the liberalization of life insurance sector is done private companies are facing many problems to create their firm existence in the market. Private companies find it difficult to compete against the dominant LIC of India. But the common problem of LIC as well as private life insurance companies is to retain their Agents/FCs/AAs. Agents/FCs/AAs have the potential to create a good as well as bad image of the company. Agents/FCs/AAs who enthusiastically spurred by dreams of working at ones own hours, getting full reward for the hard work and other such motivational spiel meet reality soon enough. The industry is facing a serious problem regarding the shifting of jobs at top level management as well as at agency force of company. Special attaint ion needs to be given for their retention in their respective companies.

Industry Analysis
Insurance can be defined as, assurance for uncertainty. Insurance is about something going wrong. It is often about things going right. One of the wonders of human nature is that we never believe anything can actually go wrong. As we know Indian Insurance sector was an open competitive market. Due to several frauds in late 18th century sullied insurance business in India as a result one nationalized company viz. LIC came into existence. And after the liberalization of Indian economy the Life Insurance market has now opened for private players. The business of life insurance in its existing form started in India in the year 1818 with the establishment of Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are. 1870 : Bombay Mutual Life Insurance Society the first Indian Life Insurance Company started its business. 1912 : The Indian Life Insurance Act enacted as first statue to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable government to collect statistical information about life and non life insurance business. 1938: Earlier legislation were consolidated and amended to the insurance Act with the objective of protecting the interests of the insuring public. 1956 : 245 Indian and foreign insurance and provident societies were took over by the central government and nationalized LIC was formed by an act of parliament viz. LIC Act, 1956 with a capital contribution of Rs. 5 crore from the government of India.

Insurance Regulatory and Development Authority (IRDA)


Reforms in the insurance sector were initiated with the passing of the IRDA Bill in parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously such to its schedule of framing regulations and registering private sector Insurance companies. The other decisions taken simultaneously to provide supporting systems to the insurance sector in particular the life insurance companies were the launch of the IRDA online service for issue and renewal of license of agents.

Bottlenecks / Government Regulation The IRDA Bill proposes tough solvency margins for private insurance firms, a 26% capital on foreign equity and a minimum capital of 100 crores for life and general insurance and Rs. 200 crores for reinsurance firms. Section 27A of Insurance Act Stipulates that life insurance companies required to invest 75% of its accretions through a controlled fund in mandated government securities. Life Insurance Company may invest the remaining 25% in private corporate sector, construction and acquisitioning of immovable assets besides sanctioning of loans to policy holders. This stipulations imposed on the insurance companies had resulted in lack of flexibility in the optimization of risk and portfolio.

Major private players in India

1) ICICI Prudential : ICICI prudential Life Insurance company is a joint venture between ICICI bank a premier financial powerhouse and Prudential, a leading international financial service group head quarter in the United Kingdom. ICICI prudential was amongst the first private sector insurance company that came into existence in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA) ICICI Prudential equity base 74% and 26% stake respectively. The company has a network of over 50,000 advisors as well as 7 bank assurance tie ups. Today ICICI Prudential has emerged as No.1 private life insurer in the country with a wide range of flexible products that meet the needs of the customer at every step in life.

2) Bajaj Allianz : A house hold name in India teams up with a global conglomerate. Bajaj Auto Ltd. The flagship company of Rs. 8000 crores. Bajaj Group is the largest manufactures of two wheelers and three wheelers in India and one of the largest in the world. Bajaj Auto has a strong brand image and locality synonymous with quality and customer focus with over 15,000 employees. It has joined hands with Allianz to provide the Indian consumer with a different option in terms of Life Insurance products.

3) HDFC Standard Life :

HDFC Standard Life Insurance Company is a joint venture between Indias largest housing finance provider- HDFC Ltd. and Europes largest mutual life insurance company The Standard Life Assurance Company (U.K.) HDFC standard life insurance company limited is the first private sector life insurance company to be granted a license by IRDA. 4) Birla Sun Life Insurance Company Limited: Birla Sun life Insurance is the joint venture of Aditya Birla group and Sun Life Financial of Canada to enter in Indian Insurance sector. The Aditya Birla group multinational conglomerate has over 75 business units in India and overseas with operations in Canada, USA, UK, Thailand, Indonesia, Philippines, Malaysia and Egypt to name a few. Today the Sun Life Financial Group of companies and partners are represented globally in Canada, The United States, The Philippines, Japan, Indonesia, India and Bermuda

Market Share of Different Players

Even after liberalization and entry of private player in insurance sector, the majority of market is shared by LIC of India. The No.1 private life

insurance is ICICI prudential with 13.7% of total market share. Bajaj Allianz contributes to 10.3% of total share where as HDFC SLIC has managed to earn only 4.1%. From the above chart, one can say that private companies are still struggling to capture maximum market share. Birla, Sunlife, Reliance life, and MNYL have 3.4%, 3.4% and 2.4% of market share respectively. The top 5 life insurance companies in India control 85% of market share while the remaining dozen are still struggling to set up their operation.

New Entrant in the Industry


DLF Pramerica Life Insurance co. Ltd. Kapil Mehta is the MD & CEO of DLF Pramerica life insurance Ltd. Kapil has been associated with this venture since 2006. Before joining DPLI Kapil was senior vice president of Business development and strategic planning at another life insurance company. It is a joint venture between DLF Ltd. and prudential International Insurance holdings Ltd. The combination at the strength of DLF brand and PFIs insurance expertise provide the strangest possible foundation for DPLI to succeed in the rapidly growing Indian life Insurance market.

Vision :

At DLF Prameria, our vision is to ensure that every life we touch, feels secure and enriched.

Mission :

We shall be a guide and a mentor to people so that they are able to make the most informed insurance decision to meet their life goal.

Company Analysis

Life Insurance Corporation of India.


The parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956 and the life insurance corporation of India was created on 1 st September, 1956 with much the objective of spreading life insurance more widely and in particular to the rural areas with a view to reach all insurable persons in the country providing them adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate offices in the year 1956.

It has a network of over 2000 (2048) branches and more than 9 lakhs agents.

Over 53 years, LIC has become a household name for providing security for a life time and is synonymous to life insurance in India.

LIC ranks no. 1 in the list of top 500 companies on the basis of net worth (Rs. 15,47,951 million) as well as Net profit 2,66,277 million Dun Bradstreet (India 500). LIC has crossed the milestone of issuing 1,01,32,955 new policies by 15 th Oct, 2005 posting healthy growth rate of 16.67% over the corresponding period of the previous year.

From then to now LIC has crossed many milestones and set unprecedented performance records in various aspects at life insurance business.

Key members to the corporation


1. Shri T.S. Vigayan. (chairman) 2. Shri DK 3. Mehrotra (MD LIC) 4. Shri. Thomos Mathew ( MD - LIC) 5. Shri A. K. Dasgupta (MD LIC) 6. Shri. G. S. Chaturvedi (additional secretary department of financial services, Ministry of finance Govt. of India.) 7. Shri. Yogesh Lohiya (chairmen MD , LIC of India) 8. Shri. T. C. Venkatsubrameniann (chairman & MD Export Import Bank of India) 9. Dr. Soornad Ragashekheran 10.Shri Monis R. Kidwai.

HDFC Standard Life Insurance Company LTD.


HDFC was incorporated in 1977 with a share capital at Rs. 10 crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issue raising its capital to Rs. 19 crores The gross premium income for the year ending March 3, 2007 stood Rs. 2,856 crores and new business premium income at Rs 1,624 crores The company has covered over 8,77,000 lives year ending March 31,2007 HDFC operates through 450 locations through out the country with its corporate head quarters in Mumbai India HDFC also has on International office in Dubai UAE with service associates in Kuwait, Oman and Qatar HDFC is the largest housing company in India for the last 27 years. Key players : Mr. Deepak S. Parikh is the chairman of the company. He is also the executive chairmen of Housing Development Finance Corporation Ltd. (HDFC Ltd.). He joined HDFC Ltd in a senior management position in 1978. He was inducted as a whole time director of HDFC Ltd. In 1985 and was appointed as its executive chairmen in 1993. He is a fellow of institute of Chartered Accountants (England and Wales). Mr. Deepak M. Satawalekar is the managing director and CEO at the HDFC SLIC since November 2000 prior to this he was the MD of HDFC Ltd. Since 1993 Mr. Satawalekar obtained a bachelor degree in Technology from the Indian Institute of Technology (IIT) Bombay and a master degree in Business Administration from the American University Washington DC.

Standard Life : Standard Life is Europes largest mutual life assurance company. Standard Life which has been in the life insurance business for the past 175 years in a modern company surviving quite a few changes since selling its first policy in 1825, the company expanded in the 19th century from Kits Original Edinburgh premises opening offices in other towns and acquitting other similar business. Standard Life currently has assets exceeding over 70 billion under its management and has the distinction of being accorded AAA rating consequently for the six years by Standard and Poor.

SNAPSHOT : Founded in 1875, company supporting generations for last 179 years. Currently over 5 million policy holders benefiting from the service offered. Europes largest mutual life insurer.

Joint Venture : HDFC Standard Life Insurance Company Ltd. was one of the first companies to be granted license by IRDA to operate in life insurance sector. Reach of the players is highly rated and been conferred with many awards. HDFC is rated AAA by booth CRICIL and ICRA similarly standard is rated AAA both by Moodys and Standard and Poors .This reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 crore and Rs.600,000 crocre respectively. HDFC Standard Life Insurance Company Ltd. was incorporated on 14th August 2000 HDFC is the majority stakeholder in the insurance joint venture with 81.4% stake and Standard Life of as a stake of 18.6 %. Mr. Deepak Satawalekar is the MD and CEO of the Venture.

Max New York Life Insurance


Max New York Life Insurance Company Ltd. is a joint centre between Max India Limited, one of Indias leading multi business corporation and New York Life International, international arm of New York Life a fortune 100 company has positioned itself on the quality platform. In line with is vision to be the most admired Life insurance Company in India, it has a strong corporate governance model based on the core values of excellence honesty, knowledge, learning, integrity and team work incorporated in 2000. Max New York started commercial operation in 2001. In line with its values of financial responsibility Max New York life has multi channel distribution spread across the country. Agency distribution is the primary channel complemented by partnership, distribution, bank assurance, alliance marketing and dedicated distribution for emerging markets.

The company currently has around 93,000 Agent Advisors and more than 800 own employed sales force at 712 offices across 389 cities. The company also has 36 referred tie ups with banks, 24 partnership distributions and alliance marketing relationships each. The company has 133 offices dedicated to rural areas. Max New York invests significantly in its training programme and each agent is trained for around 100 hours as opposed to the mandatory 50 hours stipulated by the IRDA before beginning to sell in the market place. Training is a continuous process for Agents at Max New York Life and ensures development of skills and knowledge through a structured programme spread over 400 hours in two years. This focus on continuous quality training has resulted in the company having amongst the highest agent pass rate in IRDA examination and the agents have highest productivity among private life insurance companies.

SNAPSHOT
Date of Establishment Address 2000 Max New York Life Insurance Company Ltd. Max House 3rd Floor 1 Dr. Jha Marg, Okhla, New Delhi- 110020, India

Key persons

Analgit Singh Chairman ,Max India ltd Gary R. Bannett- MD And CEO Max New York Life Insurance Co. Ltd. Anuroop Tony Singh- VC MNYLIC Ltd. Theodore A Maths President & COO Max New York Life Insurance Company

Overview

It is an ISO 9001: 2000 certified Company The company has recently partnered Symbiosis Institute of Business Management to launch Post Graduate Diploma in Business Management with Specialization in Life Insurance. It promises an atmosphere of run Career growth and earning opportunities for its employees. It Believes in enhancing the potential of its employees organizationto influence change in the

Recruitment and Retention strategies of 1. LIC of India. 2. HDFC Standard life. 3. Max New York Life Insurance Company.

Recruitment

Recruitment means to estimate the available vacancies and to make suitable arrangements for their selection and appointment. In the recruitment process; the available vacancies are given wide publicity and suitable candidates are encouraged to submit application; in order to have a pool of eligible candidates for scientific selection.

In recruitment process ; information is collected from interested candidate for different sources of recruitment such as news paper advertisement, employment exchanges internal promotion etc. are used. In the recruitment process a pool of eligible and interested candidates is created for the selection of most suitable candidates. Recruitment represents the first contact that a company makes with potential employees. An Agent is not an employee of the company but their recruitment should be given equal importance as that of employees of a company.

Who can be an Agent of Life Insurance Company? Section 42 (4) of the amended Insurance Act, 1938 states an agent is one who is not A minor Found to be unsound mind by a Court of Jurisdiction Found guilty of criminal background An urban Agent must be 12th standard passed and rural agent must be 10 th standard passed.

in ordinary procedure for recruiting candidates is described in following diagram.


Start

List of prospective candidates Contacting

NO Interested? YES Interview with SDM Short listing End

Interested?

NO End YES

Training programme

NOT CLEARED IC-33 ? Exam CLEARED Contract with company Reappear

End

For the Recruitment of agents the target is given to the Recruitment Consultants (RCs) and Sales Development Managers (SDMs).

These people follow the steps shown in the figure. The list of prospective candidates may include nature market of people who personally contact RCs and SDMs to become an agent relatives and references collected from them.

After contacting all prospective candidates those who are interested to become an agent undergo initial screening by Sales Development Managers and selected candidates undergo a training programme of 50 hours as compelled by IRDA.

Once the training is over the candidates undergo IC-33 examination conducted by IRDA, clearance at this examination leads candidates to make a contract with the sponsoring company.

HDFC as well as LIC follows the same process for the recruitment of Financial Consultants/ Agents.

But Max New York Life Insurance Company follows a complex process of recruitment as shown in the figure

Start Name Gathering in P200 Short listing Contacting NO Interested? YES Initial Screening NAT Career Seminar & P200 NO Interested? End YES Career interview FCS End

IC-33 ?

NOT CLEARD Reappear CLEARD

Contract with MNYL

End

1. Name gathering in P 200 Name gathering in P 200 consists of people who you know from natural market and references from their sources. As a management trainee were given a task to gather 200 names. 2. Short listing Candidates are short listed from the P 200 as per the eligibility criteria drawn by the company. Only eligible candidates are considered for the next process. 3. Contacting Candidates are called either as nominator or prospective Agents and meeting is fixed with them according to the convenience of both party. Here script plays very important role in fixing appointment with the prospect. 4. Initial Screening Initial screening is taken if candidates are found eligible to 4 points model. In initial screening, a sales manager first gives introduction about the company. Then several questions such as his family background his natural market, traits for a sales person and his present and past experience of his job are questioned. Every candidates is required to get at least 3 point in eligibility model of the company. The eligibility standard for Agent Advisor selection grouped as follows. In case of score less than 3 special zonal head approval is required. Five point system Age 25 and over Graduate Married Lived in city more than 5 years 1 point 1 point 1 point 1 point

NAT Score 5. Name gathering in P 200

1 point (if passed)

Name gathering in P 200 consists of people who you know from natural market and references from their sources. As a management trainee were given a task to gather 200 names. 6. Short listing Candidates are short listed from the P 200 as per the eligibility criteria drawn by the company. Only eligible candidates are considered for the next process. 7. Contacting Candidates are called either as nominator or prospective Agents and meeting is fixed with them according to the convenience of both party. Here script plays very important role in fixing appointment with the prospect. 8. Initial Screening Initial screening is taken if candidates are found eligible to 4 points model. In initial screening, a sales manager first gives introduction about the company. Then several questions such as his family background his natural market, traits for a sales person and his present and past experience of his job are questioned. Every candidates is required to get at least 3 point in eligibility model of the company. The eligibility standard for Agent Advisor selection grouped as follows. In case of score less than 3 special zonal head approval is required. Five point system Age 25 and over Graduate Married 1 point 1 point 1 point

Lived in city more than 5 years NAT Score

1 point 1 point (if passed)

9. NAT Numbering Ability Test is taken. Passing score is 50%

10.Career Interview P200 is evaluated in career interview. It candidates market is found worth, he is selected to attend Training and development programmed.

11.FCS All the selected candidates are required to attend 22 day training session for receiving the license from IRDA to become an Agent Advisor.

12.Contract All successful candidates having legal license of IRDA are contracted with MNYL .Due to such complex process at Recruitment it is not so easy to become an Agent Advisor at Max New York Life Insurance Company. The objective of such tedious process is to recruit only competent intelligent and loyal Agent Advisors. This process helps the company to keep its attrition rate to minimum.

RETAINTION

Retention
It is very difficult to retain people in sectors like BPO (Business Process Outsourcing) and IT but it is worst in case of Insurance industry conservatives estimates put the attrition rate of 35% to 40% in insurance industry. Employees tend to leave organization for various reasons like better salary package job dissatisfaction unhealthy working environment. In case of agency work force of Insurance company, agent leave them because their job is commission based and not salary based. Private as well as government life insurance companies emphasize on providing better facilities to their agents in order to retain them in the organization. Planning and evaluation can be defined as provision of benefit facilities given to employees of the company so that they wont leave the company.

Retention Strategies mainly include 1) Motivation of policy Companies provide very attractive commission structure for their agents. The commission rates vary from 20% to 40% on paid premium in the first year of policy. Apart from the commission other motivational efforts play a significant role in retaining agents in the organization. At initial level agents feel motivated by some non-monetary benefits like a pen set with companies logo on it, A cup or mug with agents own name printed on it, visiting card of his name etc. As the performance of an agent improves he receives some additional benefits like certificate of an organization, trophies, additional monetary benefits apart from commission.

Even letter heads mobile bill reimbursement facility provision of soft loan and laptops are given to the agents. Different contest are arranged at every branch of the company on monthly, quarterly and yearly basis so as to motivate agents to perform well. Agent whose performance is outstanding gets a membership for that year of different clubs formed by insurance companies for e.g.

Category of club 1) Silver club 2) Silver plus club

Monetary benefits Rs.1.5 Lacks Rs. 3.5 Lacks

Non-monetary benefits Pen set, Diary Silver club benefits + 50,000 accidental insurance

3) gold club

Rs. 9.5 Lacks

Silver plus club+ foreign trip

4) gold premier club

Rs. 19 Lacks

Gold club benefit + Fees for childrens education

5) Platinum Club

Rs. 37 Lacks

Gold Premier club + Foreign trip family

Membership of such club is a symbol of status for agent and helps companies to retain their agents. 2) Job on companys pay roll. The potential agents are also offered a salary based job in the company. The jobs offered are of Sale Development Manager Post or Unit Manager Post. 3) Establishing good relation with agents.

Sale development Manager take special efforts to inculcate the companys core values into every agents mind. SDM convince agents that the company is one big family and he (agent) is a part of it. It helps a company to retain their agents without much efforts. But the retention policies need to be revised continuously in order to maintain its effectiveness. Outdated strategies would not help to retain agents. As the overall life style changes the retention policies must also be changed accordingly.

ATTRITION

Attrition
One might have heard of high job attrition of between 15% and 20% in software sector but even these pale in comparison to the kind of turnover that the insurance industry witness with its agency force conservative estimates put the attrition rates at 35 to 40% The opening up of the sector five years ago provided insurance agents with new opportunity and an image makeover as life insurance advisors. But little has changed in the basic nature of the business insurance still needs to be sold to a reluctant population. Most Agents or advisors who join insurance company enthusiastically spurred by dreams of working at ones own hours, getting full reward for the hard work and other such motivational spiel meet reality soon enough. Once the initial list of potential customers such as close relatives, friends and neighbors is exhausted the climb for an agent is uphill. Even meeting the minimum requirement of bringing in two viable insurance proposals every month proves daunting. For some companies the target in terms of sum assured is Rs. 1 laky for some others it is as low as Rs. 10,000/When the rejection starts and the doors start getting banged in the face new agents confront failure the drop out begin. Mr. Lalit Kumar Dash Executive Director (marketing) LIC, Says the attrition rate is about 35% in the first year of recruitment. This goes down to about 18% by the 4th year. Most of these who deep out are non-performers. Agrees Mr. Rahul Sinha vice Precident (Marketing) of Kotak Mahindra Old Mutual Life Insurance Company and says last year the attrition rate was much worse than 30% it has been a cause for worry and we are trying was our best to stem it.

Attrition the concept In the best of worlds employees would love their jobs, like their coworkers work hard for their employers get paid well for their work have ample chances for advancement and flexible schedules they could attained to personal or family needs when necessary and never leave. But then there is a real world and in the real world employees do leave either because they want more money, hate the working conditions, hate their co-workers, want a change or because their spouse gets a dream job in another state so what does that entire turnover cost ? And what employees are likely to have highest turnover ? Who is likely to stay the longest?

Defining Attrition A reduction in the number of employees takes place through retirement, resignation or death etc.

Defining attrition rate The rate of shrinkage in size or number.

Reasons for attrition It is not easy to find out as to what contributes and who has the control on the attrition of employees. Various studies conducted indicate that everyone is contributing to the prevailing attrition. Attrition does not happen for one or two reasons. The way the industry is projected and speed at which the companies are expanding has major part in attrition. The reasons for attrition are varied in nature. Some common reasons for attrition are-

1) Organizational matters

The employees always assesses the management values, work culture, work practice and credibility of the organization The Indian companies do have difficulty in getting the business and retain it for a long time. There are always ups and downs in the business plans. Non availability of the campaigns makes people to quickly move out of the organization.

2) Working Environment Working Environment is the most important cause of attrition. Employees of the organization expect a friendly and learning environment. Employees look for freedom, good treatment from the superiors, good encouragement, friendly approach from one and all and good motivation In absence of such environment employees leave the organization.

3) Job Matters The job today brings lot of pressure and stress. The employees often leave organization due to this reason. Also lack of job satisfaction is the reason for resignation of employees.

4) Salary and other benefits Moving from one job to another for higher salary, better positions and better benefits are the most important reasons for attrition. Some extended reasons for highest attrition rate in insurance industry are given below. 1) Lack of Information regarding the job of life insurance agents Recruitment Consultants (RCs) to achieve their target of recruitment contact number of people and recruit them without giving sufficient information about the job they are supposed to perform for the company.

2) It is a part time job Financial Consultants or Agents are not the employees on companys payroll. When people are not having a full time job, they work for the company but after getting a job of full time they tend to ignore their work as an agent and this finally results into termination of their license.

3) Saturation of natural Market The natural market consists of family, friend, colleagues etc. Once this list is over agents find it difficult to fulfill the companys expectations.

4) Lack of support by Sales Development Manager (SDMs) Some agents even if they are willing to get business for the company due to lack of motivation and support by their Sales Development manager cannot meet companys expectation leading to termination of license by IRDA.

5) Personal Reasons The personal reasons are many and only few are visible to us. They are wide from getting married to relocation for health or family reasons. The next important personal reason is going for higher education. Health is another aspect which contributes for attrition.

Research Objectives

Research Objectives

1)

The objective of study is to analyze the recruitment and retention process Life Insurance Companies.

2)

The study is aimed at understanding the working of Agents/FCs/AA.

3)

The Study is also meant for providing reasonable solutions to the problem after analysis of the recruitment and retention strategies of different life insurance companies.

Research Methodology

Research Methodology
Research can be defined as a systematic effort to gain knowledge. A research is carried out by different methodology which has their own pros and cons. Research Methodology is a way to solve research problems along with the logistic behind them. Thus when we talk of the research methodology we not only talk about research method but also context of our research study and explain why we are using a particular method or techniques and why we are not using other so that research results are capable of being evaluated by the researcher himself or by others. Research methodology means the method carried out to study the problem it shows the type of the sample design used, its size and the procedure used to dew. The extent of precision achieved and the method used for handling any special problems during the course of the study.

Research methodology has following steps -

Step 1. Step 2. Step 3. Step 4. Step 5. Step 6. Step 7. Step 8.

To decide the objective of the study To design research design To determine the source of data. To design data collection form (questionnaire). To determine sample size and sample design. To organize and conduct fieldwork. To process and analyze the collected data. To prepare research report.

Explanation
Step 1. To decide the objective of the study to be carried out.
The objective of the study as stated in the previous chapter were finalized so as to initiate the survey for the study.

Step 2. To decide the research design.


What is research design? Research design is a plan, structure strategy of an investigation conceived so as to obtain answers to research questions and control variance. There are three type of research design system. Explanatory Research Descriptive Research Casual Research. Among the above mentioned types descriptive research design has been chosen. Descriptive research is to find an efficient sales force of Agents / Financial Consultants / Agent Advisors. In order to study the characteristics and variables, cross sectional analysis was conducted by using field survey method in the process of field survey a questionnaire was developed and circulated among respondents which formed the basis for entire research.

Step 3. To determine the sources of data.


Data sources are the collection of fresh hand data to obtain results. There are types of data sources.

Primary data

Primary data is that which is collected fresh and thus happen to be original in character.

Secondary data Secondary data is any data which have been gathered earlier for some other purpose. Among the above mentioned types, primary data was used for the study and analysis of the objective of this project. Also the secondary data proved to be helping in framing up the industry scenario and also the relevant topics in the entire project report.

Reasons for selecting primary data In terms of primary data structure questionnaire was prepared to interview the professionals, students, house wives, investment consultants, post office agents etc. in Thane, Vasai and Ratnagiri location. Analysis clearly reflected the views and preference regarding the perception of the people towards joining life insurance companies.

Step 4. To design data collection.


There are two types of mode to collect the data. Observation method Survey method. As far as the data collection method for this project is concerned, designing the data collection forms or survey form is applicable to the project. The method selected was survey method. A survey can be conducted by Personal interview Telephonic interview

Amongst the above methods personal interview method was selected and conducted to gather information to detail. This method was chosen because along with the study of projects primary objective i.e. study of people was achieved.

Formulation of Questionnaire
Q.1) When you think of insurance which company name comes first to Your mind? Ans :

Q.2) Which other companies are you aware of ? Ans :

Q.3) Do you know about life insurance companies? Ans : (a) Yes (b) No

Q.4) Do you know about the working of an agent of any life insurance company ? Ans : (a) Yes (b) No (c) Insufficient Information.

Q.5) Do you currently have an agency of any life insurance Company? Ans : (a) Yes (b) No

Q.6) What would be the size of your social contact base who know you by your name? (E.g. : Friend, family, relative, colleagues if any . etc.) (Mention in appropriate numbers.) Ans :

Q.7) How many members of your family are dependent on the income earner of the family?

Q.8) Do you have an idea about financial market? Ans : (a) Yes (b) No

Q.9) Do you have any sales experience? If yes, of how many years? Ans : (a) Yes (b) No

Q.10) Do you have experience in selling financial product? E.g. credit insurance etc? If yes, of how many years? Ans : (a) Yes ( ) (b) No ( )

card,

Q.11) What do you think? In todays scenario life insurance is NEED, WANT AND DEMAND? Ans :

Q.12) In which of the financial market you have invested your money? Ans : (a) Share (b) Mutual Fund (c) Insurance

Q.13) Are you interested in getting the opportunity of earning some additional income as being Agent of any life insurance company? Why? Ans : (a) Yes (b) No

Setp 5 : To determine sample design, sample size sample size specification-

200 respondents which include professionals, unemployed students, house wives, investment consultants, post office agents. The distribution of this sample size was decided to be as 100 respondents at Thane (Urban area), 50 respondents at vasai (semi urban area) and 50 respondents at Ratnagiri (rural area) in order to compare the difference in these areas.

Field Methodology

The methodology adopted in the field to collect the data represented diagrammatically below.

Segmentation of people

Filling up questionnaire

Meeting with people

Data collection And Tabulation

DATA COLLECTION AND TABULATION


In order to determine the willingness of respondents to become an Agent, Financial Consultant or Agent Advisor for LIC, HDFC Standard Life or Max New York Life Insurance Company, the data was collected from Thane, Vasai and Ratnagiri regions. This data was treated for Analysis and interpretation. All the respondents were classified under parameters like professionals, students, house wives, investment consultants and post office agents etc. Q. Are you interested in getting the opportunity of earring some additional income as being Agent FC/AA of any life insurance company.

OCCUPATIONAL CLASSIFICATION Response Respondents Professionals Working employees House wives Students Post office agents Investment consultants Total Yes 9 12 42 37 11 14 125 No 5 12 24 21 4 6 75

From the above pie-chart one can say that about 62.5% of respondents are willing to become agent at a life insurance company from remaining 37.5% at respondents some respondents were already agents of one or the other life insurance company.

35.72%

Index - Yes 64.28% - No

Professionals

These respondents included C.A., Doctors, Professors of which 64.28% were willing to become an agent, mainly because their base of personal contact is good. Amongst these respondents 35.72% were not interested in becoming an agent of any life insurance company. Index - Yes 44.44% - No

55.55%

Working Employees.

Working employees lack desire to become an agent. One can say this from their response shown in the pie-chart. Only 44.44% i.e. 12 respondent out of 27 working employees were willing to become an agent of a life insurance company whereas 15 respondents were not interested in such job.

36.36%

Index - Yes 63.63% - No

The awareness amongst students regarding a working at an agent was very impressive 63.79% House wives 63.63% at total house wives are willing to earn some money of their own by becoming an agent of a life insurance company remaining 36.36% at house wives had very less information about the whole insurance sector.

36.20%

Index - Yes 63.79% - No

Students

The awareness amongst students about a working of an agent is very good. 69.79% of student respondents showed their willingness. To become an agents of a life insurance company but 36.20% at students were not interest to become an agent of any insurance company.

26.66%

Index - Yes 73.33% - No

Post office agents

The highest response of 73.33% to become an agents was shown by post office agents from these percent of willing respondents about 60% referred to become an agent of LIC.

30%

Index - Yes 70% - No

Investment consultants

14 of 20 investment consultants wanted to become an agent and thinks it as a complementary career to their regular Remaining 30% of respondents were investment consultancy only and didnt prefer to become an agent of a life insurance company.

Demographical classification Response Respondents Male Female Total Yes No Total

68 57 125

27 48 75

95 105 200

28.42%

Index - Yes 71.57% - No

Male

71.57% of male respondents were ready to become an agent of a life insurance company and only 28.42% of male respondents were not interested in the proposal.

45.71%

Index - Yes 54.28% - No

The percentage of willing and unwilling female respondents was almost equal. This is mainly because working have very less time to spend on jobs like insurance agents. Those women who were willing to become an agents majority of women were house. House wives have ample at time to spend for such jobs.

Geographical Classification Response Respondents Thane (50 respondents) Vasai (100 respondents) Ratnagiri (50 respondents) Yes No

35 67 23

15 33 27

30%

Index - Yes 70% - No

Thane

Out of 50 respondents at Thane city 70% i.e. 35 respondents showed the willingness to become an agent at a life insurance company and is respondents were not interested in becoming an agent of a life insurance company.

33%

Index - Yes 67% - No

Vasai

Even though there are various options available for earning money in urban and semi-urban areas, becoming an agent of a life insurance company is the most preferred one we can say this because out o f100 respondents of vasai Taluka 67 respondents were willing to become an agent of a life insurance company.

Index 54% 46% - Yes - No Ratnagiri

People in Ratnagiri are less aware about the working of a life insurance agent. Only 46%respondents at Ratnagiri district showed their willingness to become an agent. Majority of respondents have never even heard about any other life insurance company apart from LIC and most of the respondents were not eligible as prescribed by IRDA

Findings

FINDINGS
1. Respondents are less aware of the private insurance companies that exist in the market. 2. Some respondents ware willing to become an agent of life insurance company, just because it is a part time job. 3. Some professionals like CA, Tax planner etc wanted agency rather than to be an agent of an insurance company. 4. MNYL is too selective in recruiting AA than to appoint any one like LIC. 5. Those respondents who didnt want to become an insurance agent, mainly because it is on commission based remuneration activity. Instead of commission based job, respondents preferred a salary based job. 6. Educated respondents are now vending towards private insurance companies, due to the attractive packages and services provided by various new insurance companies. 7. LIC has created a brand in 3-4 decades, due to which, new insurance companies are facing trouble in capturing market share. 8. Educated respondents prefer HDFC Standard Life insurance company because the recruitment process of HDFC Standard Life is less complex than MNYL insurance and has better image as FC rather than being an Agent of LIC. 9. Working women are less interested because at home and office.

10.House wives, especially well educated house wives are able to give enough time and therefore they are willing to become an insurance agent.

Conclusions

CONCLUSIONS
After collection of data, analysis and interpretation was made, on which conclusions are drawn. Those conclusions are: 1. Respondents still prefer government insurance company rather than private insurance company due to its reliability. 2. Respondents are more brand oriented rather than product oriented. 3. Respondents are less aware about private insurance companies. 4. Rural respondents of Ratnagiri are less aware of private insurance companies and working of their agents than respondents of Thane and Vasai. Insurance companies are trying to convince customers for a product which does not have any present relevance i.e. each policy, which the customer is going to purchase, will have a future set of action and benefits. Due to which most of the people like to invest in those securities or investments, which will give them a fruitful return within short period. The private players are on their way, but they need lot of time investment for creating a favorable brand image.

Suggestions

SUGGESTIONS
1. People should be made aware of the brand name of insurance company through advertisement. 2. Private companies should use traditional ways of promotion in rural locations. Latest communication facilities are lacking in some parts of Ratnagiri district. Traditional method may include various cultural programmes like Harikatha or Puppetry shows etc. 3. Melas, which are also called as Jatra in the Maharashtra state can be used for creating awareness of life insurance companies among rural people. 4. The fear in peoples mind should be removed by company; using aggressive methods of marketing. 5. Private companies should try to nurture their brand name by providing timely and attractive facilities to the people. 6. Insurance companies should make clear all the details of job of an agent before recruiting them. 7. Agents feedback must be studied scientifically and continuously as their wants and needs change continuously, so as to design a viable agent retention strategy of the company.

Appendix

Appendix Abbreviations 1. 2. 3. 4. 5. 6. 7. 8. 9. SDM Sales Development Manager LIC - Life Insurance Corporation of India FCs AAs Financial Consultants Agent Advisors

MNYL - Max New York Life HDFC Housing Development Financial Corporation SL Standard Life. FPS Five Point System NAT Numbering Ability Test

10. FCS Fundamental career Seminar 11. IRDA Insurance Regulatory and Development Authority.

Bibliography 1. 2. IC 33. Human Resource Management By Kale and Ahmad.

Webliography 1. 2. 3. 4. www.irda.com www.lic.com www.hdfcltd.com www.mnyl.com