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. Contents Page no.

1 Introduction

2 Industry Analysis

3 Company Analysis

4 Research objectives

5 Research Methodology

6 Data collection and Tabulation

7 Analysis of data and Finding

8 Conclusions and recommendation

9 Appendix

10 Bibliography

11

12
3 3.1 Life Insurance Corporation of India
3.2 HDFC Standard Life Insurance
Company
3.3 Max New York Life Insurance
Company

4 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 18 th 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
India’s largest housing finance provider- HDFC Ltd. and Europe’s 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

LIC
ICICI Prudential
Bajaj Allainz
Birla Sun Life
Reliance Life
Max New York Life
OM Kotak
AVIVA
TATA AIG
Other

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 PFI’s 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 Europe’s 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.
 Europe’s 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 Moody’s and Standard and Poor’s .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 India’s 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 2000

Address 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 to influence change in the
organization-
 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.
 For the Recruitment
Start of agents the target is given to the Recruitment

Consultants (RCs) and Sales Development Managers (SDMs).

List of prospective candidates

These people follow the steps shown in the figure. The list of prospective
Contacting
candidates may include nature market of people who personally contact RCs
and SDMs to become an agent relatives and references collected from them.
NO
Interested?
End
After contacting all prospective candidates those who are interested to
YES by Sales Development Managers and
become an agent undergo initial screening
selected candidates undergo
Interview a training
with SDM programme of 50 hours as compelled by
IRDA.
Short listing

Once the training is over the candidates undergo IC-33 examination

Interested? NO
conducted by IRDA, clearance at this examination leads candidates to make a
End
contract with the sponsoring company.
YES

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

NOT CLEARED
But Max New York Life Insurance Company follows a complex process
IC-33in? the figure
of recruitment as shown Reappear
Exam
CLEARED

Contract with company End

 Start

Name Gathering in P200

Short listing

Contacting

NO
Interested?
End

YES

Initial Screening

NAT

Career Seminar & P200

Interested? NO

End

YES

Career interview

FCS

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 1 point
Graduate 1 point
Married 1 point
Lived in city more than 5 years 1 point
NAT Score 1 point (if passed)

5. 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.
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 1 point
Graduate 1 point
Married 1 point
Lived in city more than 5 years 1 point
NAT Score 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 Monetary benefits Non-monetary benefits

1) Silver club Rs.1.5 Lacks Pen set, Diary
2) Silver plus club Rs. 3.5 Lacks 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 children’s
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 company’s 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
company’s 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 one’s 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 world’s employees would love their jobs, like their co-
workers 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 company’s
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 company’s 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 company’s 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. To decide the objective of the study

Step 2. To design research design
Step 3. To determine the source of data.
Step 4. To design data collection form (questionnaire).
Step 5. To determine sample size and sample design.
Step 6. To organize and conduct fieldwork.
Step 7. To process and analyze the collected data.
Step 8. 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 project’s 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 card,
insurance etc? If yes, of how many years?
Ans : (a) Yes ( ) (b) No ( )

Q.11) What do you think? In today’s 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
Yes No
Respondents
Professionals 9 5
Working employees 12 12
House wives 42 24
Students 37 21
Post office agents 11 4
Investment consultants 14 6
Total 125 75
 Total Respondentes

38%

Yes
No
63%

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
- No
64.28%

Professionals
 Professionals

36%

Yes
No

64%

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
55.55% - Yes
- No
44.44%

Working Employees.
 Working Employees

44%
Yes
56% No

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
- No
63.63%
 36%

Yes
No

64%

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.

Index
36.20% - Yes
- No

63.79%

Student’s
 Students

36%

Yes
No

64%

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
- No
73.33%

Post office agents

 Post office agents

27%

Yes
No

73%

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
- No
70%

Investment consultants
 Investment Consultant

30%

Yes
No

70%

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 didn’t prefer to become an agent of a life
insurance company.
 Demographical classification
Response Yes No Total

Respondents
Male 68 27 95
Female 57 48 105
Total 125 75 200

28.42% Index
- Yes
- No
71.57%

Male

male

28%

Yes
No

72%

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.
 Index
45.71% - Yes
- No
54.28%

Female

46%
Yes
54% 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 Yes No

Respondents
Thane (50 respondents) 35 15
Vasai (100 respondents) 67 33
Ratnagiri (50 respondents) 23 27

30% Index
- Yes
- No
70%

Thane

Thane

30%

Yes
No

70%

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
- No
67%

Vasai

Vasai

33%

Yes
No

67%

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
- Yes
54% 46% - No
 Ratnagiri

Ratnagiri

46%
Yes
54% No

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 didn’t 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. SDM – Sales Development Manager

2. LIC - Life Insurance Corporation of India

3. FCs – Financial Consultants

4. AAs – Agent Advisors

5. MNYL - Max New York Life

6. HDFC – Housing Development Financial

Corporation

7. SL – Standard Life.

8. FPS – Five Point System

9. NAT – Numbering Ability Test

10. FCS – Fundamental career Seminar

11. IRDA – Insurance Regulatory and Development

Authority.
Bibliography
And
Webliography
 Bibliography

1. IC 33. –

2. Human Resource Management – By Kale and Ahmad.

Webliography

1. www.irda.com

2. www.lic.com

3. www.hdfcltd.com

4. www.mnyl.com