article by prof kshitij patukale

7/30/2019 Article by Prof Kshitij Patukale

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opportunities like IT, BPO, ITES, Engineering, Automobile, Management, Finance, Medical,Health Care, Accounts, Law, Company affairs, etc, nobody is talking about insurance sector forcareer development. People believe that insurance is a small part of finance sector and it need notbe cared beyond mere selling of insurance products. Unfortunately I have to state that workingemployees, students, parents, media, academicians, colleges, universities, top executives ofinsurance sector and society as a whole are not aware about the exact potential and scope of careerenhancement in Insurance Sector. Working in insurance sector is always a secondary thought andsociety hesitate to honour career in insurance sector. Association in insurance activity is alwayspresumed as below status career. This prejudice attitude towards insurance sector is a great harmfor new entrants and career growth of current workforce. This is ironical that due to this negativeattitude, the new generation is neglecting and under estimating a golden opportunity of developinggorgeous career in insurance sector. It is more unfortunate that after more than 100 years ofcommencement of insurance business activity in our country, the academicians, regulators and topexecutives in Insurance Sector have ignored the need and importance of improving the brandimage of insurance sector.

Growth Potential in Insurance Sector in India

*Insurance is one of the fastest growing sector in India. Hardly 6 % of the population of the

country has covered by life Insurance. The penetration is as low as 0.9 % in general insurance.Health Insurance has reached to merely 3 % of the population. In country like USA, where thepopulation is @ 35 Crores, there are more than 6000 companies are engaged in insurance business.In India, population is more than 110 crores and hardly 52 companies are working in InsuranceSector. If we assume that only 50% population is insurable, still we need 10,000 companies tocater the need of 55 Crore people. Only Life Insurance sector has grown to certain extent andpeople say that I wish to purchase LIC policy for my car or LIC policy for stocks in my factory.Only compulsory policies of general insurance sector have been sold like motor policies and fireand industrial policies. Large number of general insurance products are not even known to theemployees of general insurance companies. Thanks to electro mechanical equipments, scientific

development and commercialization of medical profession, health insurance penetration hasreached to 3 % of population. Still this number is very poor comparing to developed countries.Central Government has targeted Life Insurance Penetration to 40 %, Health Insurance at 30 % andGeneral Insurance at 15 % of the population by 2030. This will create very huge potential fordevelopment in insurance Sector. The insurance business was merely 12 Billion US $ by 2000which has reached to approximately 100 Billion US $ by 2012 and is now expected to grow 1000Billion US $ by 2020 and 5000 Billion US $ by 2030.

* Approval of Bill of 49% FDI in Insurance sector is long awaited. Once it is enacted, the numberof insurance companies may rise to @ 150 to 200 in next 7-8 years. There is immense potential forinsurance industry to grow. At present there are 24 Life, 27 Non Life and 1 Reinsurance, thus total52 Insurance companies are in insurance business. Out of this, 4 companies are working

exclusively as Health Insurance Companies. 334 insurance broking companies, 800+ corporateagents and thousands of banks have entered in insurance business. Third Party Administer (TPAs)Companies in Health Sector are 29 and TPAs growing in Automobile and Legal Sector. Thespecialized functions in insurance sector are slowly outsourced and lot many new companies willenter in this area. International insurance surveyors, loss assessors, adjuster, underwriters, claimsettlers, have already entered in India and expanding their business activities. Even the worldinsurance and finance giants like Warren Buffet, Lloyds, Munich Re, Swiss Re, have entered inIndia.


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* Health insurance is developing as separate branch of Insurance. It is expected that the number ofhealth insurance companies will be equal to the number of life insurance companies in near future.Bancassurance is also developing as Separate branch of Insurance. People is India have more faithin banks than insurance agents. Many banks have already entered into insurance business and lotmore in pipeline. Banks find insurance as growth vehicle. At present only GIC of India is thereinsurance company in the country. But government is now thinking over allowing many moreinternational reinsurance companies in India. In few years, we may find 5 independent branches of

insurance in India as Life, General, Health, Bancassurance & Reinsurance.

* India is becoming Insurance Hub of the world. Giant insurance companies from across the globeare outsourcing core insurance functions to India. IT infrastructure in the country and newgeneration Indian Talent are attracting world insurance business for core functions for costeffective solutions. Indian software companies are leading in this race. Even BPO in InsuranceSector is growing very fast. All this require technical and domain skills sets of Insurance functions.This IT, ITES and BPO business in Insurance Sector from outside India is expected to rise to 1000Billion US $ by 2025

It is believed that next boom is in insurance sector. Insurance will play key role in boosting

economy further. In India, next 25 years will be dominated by Insurance Sector. The growth isexpected at horizontal as well as vertical levels. It will be from inside the country and from outsidethe country.

Changing Scenario in Insurance Business in India

* Insurance was strictly dominated by Agents and Development officers till 2000. But IRDA hasopened up new distribution channels such as Corporate Agent, Insurance Broker, Bancassurance,Mallasurance, Online Sale of Insurance, Direct Sale, etc. These new channels are growth enginesof the insurance industry. One interesting aspect of this growth is that Insurance Sector is headingtowards SERVICING from merely Selling. The mantra of Sell it and Forget it is now

converting as Service & Retain Client. This requires Core insurance knowledge and not merelySelling Expertise.

* The commission rates of insurance agents are slowly getting downward trend. The servicing ofclient is now taken care by customer servicing department. The Technology has now key role inpolicyholders servicing and provides better knowledge and expertise than agents. Companies arenow offering new gate ways for renewal commissions like through internet banking, ATMs, ECS,Mobile banking, etc. It has reduced the dependency of policyholders on agents for timely renewalof existing policies.

* Government is slowly removing the Income Tax rebates from insurance policies. It has alreadysignaled the same and introduced few provisions in current budget by restricting the percentage of

amount of premium with the sum assured of any policy.

* Product Development and new innovative policies has changed the olden rules of the sellinggame. Merely begging for insurance or forcing a policy will not exist anymore. The 35 %commissioned policy selling dominance will be eroded. .

* Insurance is Risk Cover or Investment is a matter of debate but common policyholder is nowdiverting to PURE Insurance products such as Term Insurance. The ULIP Story between IRDAand SEBI has focused on a need of domain insurance talent.


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* There is certainly reasonable improvement in policyholders awareness and knowledge aboutinsurance. Government, IRDA and NGOs like FIBLI, insurance companies and related stakeholders are concentrating on customer education, literacy and awareness about insurance productsand services through advertisements, seminars, workshops, comics, e-literature, animated films,etc.

* As Insurance need is vertical as well as horizontal, the insurance business is spreading across the

country. Insurance companies are focusing and spreading network in rural markets as it has hugepotential. Technological development is helping this drive of rural expansion.

* Health Insurance and Bancassurance sectors will grow drastically. General Insurance Sector willalso develop. In life Insurance Sector, Term Insurance Business will dominate.

* In future, Online Insurance will have a key role in new business.

* It will be difficult to get insurance claims in future. There will be huge scope for Claimconsultants who will help people to get insurance claims.

* Insurance sector will slowly dominate the economy and there will be overall developments ininsurance sector. There will huge revenue generation form insurance business in India as well as

outsourced insurance business from outside India.

Employability Potential in Insurance SectorAs insurance sector is growing with 20% rate, there will be a huge requirement of Insuranceprofessionals in the country.

* NSDC Report National Skill Development Corporation has estimated the job creations of 2Million persons in insurance and banking sector by 2021 in its latest report.

* CII Report - The recent survey of Confederation of Indian Industries estimated that there is aneed of@ 21 lakhs insurance educated employees by 2025.

* ASSOCHEM Report on Insurance Sector It has pointed out on employability potential inInsurance Sector in its latest report. The report has estimated manpower requirement to be 30Lakhs by 2030.The job creation in insurance sector will be across the country as insurance business is spreadingacross the country. The innovative distribution channels will play a vital role in insurancepenetration and of course, technology will be a great supportive tool for this development. Themanpower is required across the country. Insurance companies, banks and financial servicesproviders are focusing and spreading network in rural markets as it has huge potential. It willgenerate huge employability not only at Metro and urban areas but at semi urban and rural levels,too.

At present there are 52 companies, 334 brokers, 1200 + banks, 29 TPAs, 2000 IT, ITES & BPOcompanies, 400 surveyor and other insurance services provider companies are working in India.The number will rise to double or triple in next 8 to 10 years. These companies will have officesacross the country and will generate jobs across the country.

Career Development Path in Insurance SectorTill IRDA, insurance career was dominated by selling activity. It is the assumed misconceptionthat any career in insurance sector will have to be connected with selling of insurance products.The Insurance Agents and Development Officers community in the country has coloured insurancepolicy selling with either begging of insurance or forcing for insurance. The rebating in insurance


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premium has eroded insurance profession as under privileged one. After IRDA and entry ofcorporate insurance companies, the face of insurance career was always compared with the face ofpoor insurance agent. Career in Insurance was always neglected one and approach towards it wasone of the ridiculous one.But the situation is now changing drastically. Career in Insurance is not merely a selling activity.Insurance Sector require domain technical knowledge. The employees with core insurancecompetency can only grow henceforth. After a decade of privatization, corporate companies haveunderstood that insurance is not a FMCG product and one must possess technical skills andfundamental knowledge to exist & grow in this market. Servicing will be key for growth and forthis, one require domain expertise.For new entrants, any graduation with specialized diploma in insurance domain like underwriting,claims, motor insurance, health insurance, bancassurance, reinsurance, liability insurance, aviationinsurance, engineering insurance, agricultural insurance, marine insurance, etc will be helpful toenter in insurance sector. One has to improve his academic qualification and scope of skills byadding various diplomas from various streams of insurance. As one grows with experience, thisacademic excellence and expansion will improve his employibilty and scope of promotions andgrowth.For existing employees, one has to improve his academic position along with experience. Mereexperience will not help beyond certain limit. As we expect 49 % FDI and steep increase in

number of insurance companies, the existing employees will have clear advantage to grow. But forthis, they must obtain domains skills and competency through academic enhancement. The presentemployee in insurance sector should focus on overall and multi dimensional development in hiscapacities, skill sets and academic qualifications. The candidate with multifaceted core skills willhave better opportunities over general candidate. He should not limit himself only to underwritingor claims. He should always seek for more and more knowledge. One can select a sector ofinsurance like Life or general or health for developing his career path but he should be equippedwith qualifications and skills of other sectors also. It will widen the scope of opportunitiesavailable to him.

Salary Packages In Insurance SectorAs per the present scenario in Insurance Sector, one may join insurance company at entry levelwith a annual package of @ Rs.1.2 lakh to 1.5 Lakh. He may be designated as Associate orAssistant. In 3-4 years, he may grow to higher position with a scale of Rs. 3 to 4 Lakhs if he hasacademic qualifications with experience. After 6-8 years after joining insurance, one may easilygrow to annual package of 7 to 10 Lakhs. After 12 to 15 years, one may dream to annual packageof Rs.15 to 20 Lakhs. Of course, this needs academic up gradation and continuous improvement ofdomain skills. This trend may continue for next 20 years as there is long term and inside outsidecountry potential. The speed of career growth and expansion is smooth and fast in insurance sectorthan perhaps any other sector in the country. But it needs hard work, academic excellence andaggressive approach towards opportunities. I will share one practical example here. The employeeswho joined insurance sector in the newly entrant companies like Bajaj Allianz, HDFC, ICICI etc

between 2001 to 2003 were drawing annual salary package of 1.5 to 2.5 lakhs. They are nowgrown to key positions in new companies after 8 to 10 years with annual packages of Rs.20 to 25Lakhs. Some of them have even clinched packages of 40 to 50 Lakhs per annum.

Skill Sets Requirements by Insurance SectorAt present, man power requirements are basically skilled based. Employees with academicqualifications are encouraged for promotions. Fresher with academic qualification in insurance arepreferred. At present, Insurance Companies recruit freshers and train them for 6 months or oneyear. But the attrition rate is so high that more than 42 % of new recruits leaves the company.


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Insurance companies are seriously concerned over the expenditure on training and the rate ofturnout. They are looking for employees who have been already trained and having domainacademic qualifications. Insurance Companies have found that domain knowledge will improveselling, servicing, operations and all other functions. New companies prefer persons withexperience and academic qualifications. Skill sets required by the insurance sector areunderwriting skills, claim handling skills, operational skills, servicing skills, risk assessment andclassification skills, insurance product skills, distribution channel operating skills, coordinationskills, IT skills with domain knowledge, insurance accountancy skills, etc.

Development of Insurance as Charted ProfessionInsurance profession was a neglected profession. It is mainly because Professionalism was notcultivated among Insurance Agents. Selling insurance was something like begging for insuranceor chasing for insurance. Rebating in Insurance Premium is the curse to Insurance Profession. Theanalysis of need of insurance was never done. Policyholders are buying insurance for themselvesbut for the sake of agents. But the scenario is changing drastically. Instead of commission basedmodule now finance ministry is planning to introduce Fee Based Module similar to the profession

of Charted Accounts / Cost & Work Accounts /Company Secretary. It will improve and modifyinsurance profession.

Present Academic Scenario in Insurance SectorInsurance is not rocket science. But it is not as easy as one can understand it by just reading.Insurance is very interesting subject. Insurance has technical aspects as well as social attitudes. Ithas relevance with mathematics, mortality, probability, longetivity, psychology, risk evaluation,monitoring, accountancy, medical science, etc. The fundamental principles of insurance are uniqueand needed to be understood thoroughly. Insurance practice needs understanding and evaluation ofvarious aspects at subtle and minute levels. Personal interaction and understanding is necessary toacquire insurance domain skills.

Unfortunately till now only Insurance Institute of India i.e. III was offering insurance education.But it is an examination body and conducts only examinations. There is neither class roomteaching nor practical training. The syllabus is not revised well and old pattern is continued tillnow. III is mostly limited to LIC and GIC employees. The diplomas offered by III does not denotethe level of competency or skill sets. Every year merely 300 to 400 persons across the countryclear Associate and Fellow exam of III. NIA i.e. National Insurance Academy offers mainlyspecialized programs for top executives in insurance sector and MBA in Insurance. There isnothing for new students and working employees. Few other institutes offer MBA in Insurance.The MBA fees of these institutes are very high in the tune of 3 to 4 lakhs per year. These Institutescater a need of merely 500 to 600 Students per year when there is requirement of few lakhstudents. Few other institutes and universities are offering MBA (Banking & Insurance ) or B.Com

with specialization in Banking and Insurance. But the syllabus and courses contain 90 % ofbanking and hardly 10% of insurance. The students are not able to work with insurance companiesabove 6 months as domain skills and core knowledge is not imparted in these courses. Theacademicians in universities and colleges and institutions do not have practical exposure towardsdomain knowledge in insurance sector. Unfortunately in LIC and 4 subsidiaries of GIC also, hardly12 to 15 % of employees have domain and core expertise.


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Recent Developments in Insurance EducationTilak Maharashtra Vidyapeeth Pune (TMV) has recently launched Specialized Courses inInsurance Sector. TMV is a UGC recognized university which is Deemed University. InsuranceAcademy is academic partner of TMV. Now first time in the country, TMV has introducedfollowing PG Diploma Courses1) PG Diploma in Insurance Underwriting 2) PG Diploma in Insurance Claims3) PG Diploma in Health Insurance 4) PG Diploma in Bancassurance

The duration is one year with distance mode and personal contact sessions on every Sunday. TMValso offer e-coaching and e-mentoring facility. These course are designed and developed as per thecurrent and future needs of the insurance sector. The projects and practical in these courses willimprove skill sets of students. These courses are most idle for working insurance employees toexcel their career in fast growing insurance sector.Tilak Maharashtra Vidyapeeth Pune (TMV) has also introduced undergraduate diploma courses1) Diploma in Insurance 2) Diploma in Banking 3) Diploma in Financial ServicesFor More details about these courses click the link belowhttp://www.insuranceacademy.org/GetCriteria.php?Link=Courses

Career Opportunities outside IndiaInsurance professionals with core competency & domain knowledge are in demand not only inIndia but abroad also. Employment opportunities are in Asian countries, Gulf, USA, UK, EuropeanCountries, Australia Newziland, etc. Indian talent and intelligence is appreciated across the world.Any graduate with insurance skill sets can get employment opportunities abroad. The persons withminimum 5 years experience in Insurance with domain skill sets and academic qualification hasgood scope for career development abroad. As India is Youngest Country of the world, Indianshave an edge over other citizens for employment opportunities. One should always look forward toexcel his career in Insurance sector across the globe.

Sub Sectors in Insurance for Employment

Opportunities1. Life Insurance Companies

2. Non-Life Insurance Companies

3. Banks and Financial Institutions selling Insurance

4. Insurance Brokers

5. Insurance Corporate Agents6. Insurance Third Party Administrators ( TPA )

7. Insurance Consultants

8. Mutual Funds

9. Corporate Hospitals

10. Healthcare Management Institutes

11. IT, Software Developing & Testing

12. BPO


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13. International Insurance Surveyors & Adjustors Companies

14. Training Institutes

15. Independent Career Opportunities

16. Travel & Tour Operating Companies

17. Medical Tourism Companies

18. POP's

19. Aggregators

20. Pension Fund Management Companies, etc

For FAQs about Opportunities & Potential For Career Development in Insurance Sector, pl

click the link below

http://www.insuranceacademy.org/AddOn.php?Link=Faqs

Summary Insurance Sector offers enormous career development opportunities. Insurance sector is growing very fast and there is tremendous growth

potential. Insurance Business is changing by New Distribution Channels, Reduction in

Commissions & Product Developments and Pure Insurance Term Insurance

Concepts, reducing IT Rebates India is becoming Insurance Hub of the world. Insurance business has tremendous scope inside India and from outside India. Literacy and awareness about insurance among masses is improving Career in Insurance is technical and domain skill oriented and not merely

selling. The employability potential is huge and 20 lakh jobs will be created by 2030 Jobs creation in Insurance Sector will be across the country till rural India. The job requires academic qualifications, domain skills and core competency. Experience with academic qualification will develop career path in insurance

sector. Long Term Career is available in Insurance for next 25 years Insurance is developing as one of the Charted Profession in the country. One can excel career with high speed in Insurance Sector. Salary Packages in Insurance Sector are lucrative with experience and

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Insurance Subject needs to be learned through personal interaction andpractical projects.

One has to rush to acquire academic qualifications in domain insurance sector.

Article Written By

Prof. Kshitij Patukale Director Insurance Academy PunePhD Scholar in Insurance, Fellow of Insurance Institute of India , MMS, LLB(Spl), Member ofActurial Society, MA(Eco), DBM, DLW, GDC&A, DIE, DED, DNM, AMFI, YITC

Renowned Insurance Professional, Faculty & Academician since last 25 years.

Author of The Books below1) Insurance For Everyone Foreword by IRDA Chairman Translated into 7 Languages Best

Business Book Revolutionary Book in Insurance Sector

2) Mediclaim & Health Insurance3) Retirement Planning4) Medical HelpUnder Print

1) Insurance Stories (Comic)2) Career Opportunities in Insurance Sector

article by prof kshitij patukale

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