marketing of carrier in hdfc

8/6/2019 Marketing of Carrier in Hdfc

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DEEPAK KAUSHAL

GRAPHIC ERA INSTITUTE OF TECHNOLOGY

SUMMER PROJECT

ON

MARKETING OF CARRIER IN HDFC

BY

NIKHIL BHAT

BBA (2007-2010)


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INDUSTRY PROFILE

INSURANCE:

Insurance can be defined as assurance for uncertainty. Insurance is about something

going wrong. Its often about things going right.; One of the Wonders of human nature is

that we never believe anything can actually go wrong.

The insurance sector in India has come a full circle from being an open competitive

market to nationalization and back to liberalized market again. Tracking the development

in Indian insurance sector reveals the 360 degree turn witnessed over a period of almost

two centuries. EF

The business of life insurance in Indian 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 life insurance business in India are.

1912: The Indian Life insurance Companies Act enacted as first statue to regulate the life

insurance business.

1928: The Indian Insurance Compan9es Act enacted to enable the government to collect

statistical information about life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the insurance Act with the

objective of protecting the interests of the insuring public

5: 245 Indian and foreign insurers and provident societies take over by the central

government and nationalized. LIC formed by an act of parliament viz. LIC. Act . 1956,

with a capital contribution of Rs. 5 Crore from the government of India.


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INSURANCE REGULATORYAND DEVELOPMENT AUTHORITY

Reforms in the Insurance sector were initiated with the passes 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 the

private sector insurance companies.

The other d4ecisoin taken simultaneously to provide the supporting systems to theinsurance sector and in particular the life insurance companies was the launch of theIRDA online service for issue and renewal of licenses to agents


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COMPANY PROFILE

HDFC Standard Life Insurance Company Ltd.

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has sinceemerged as the largest residential mortgage finance institution in the country Thecorporation has had a series of share issues raising its capital to Rs. 119 crores. The grosspremium income for the year ending March 31, 2007 stood at Rs. 2, 856 crores and newbusiness premium income at Rs. 1,624 crores. The company has covered over 8,77,000lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate

head quarters in Mumbai, India. HDFC also has an 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.

VISION STATEMENT

The most successful and admired life insurance company, which

means that we are the most trusted company, the easiest to deal with, offer the

vest values for money, and easiest the standards in the industry, In short,

Them most obvious choice for all.


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VALUES

Integrity

Innovation

Customer centric.

People care.

Team work.

Joy and Simplicity.


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SNAPSHOT-I

Incorporated in 1977 as the first specialized mortgage company in India.

Almost 90% of initial shareholding in the hands of domestic intuitions and retail

investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial

conglomerate with holdings In:

HDFC Standard Life insurance Company- HDFC holds 78.07 %.

HDFC Asset Management Company HDFC holds 50.1%

HDFC Bank- HDFC holds 22.25%.

Intelenet Global (Business Process Outsourcing) HDFC holds 50%.

HDFC Chubb General Insurance Company HDFC holds 74%.

SNAPSHOT-II

Loan Approvals Rs. 805 billion.

(up to Dec 2004) (US $ 18.30 bn.)

Loan Disbursements Rs.669 billion

(up to Dec. 2004) (US $ 15.20 bn)

Housing Units Financed 2.5 million.

Distribution

Offices 181

Outreach Programs 90


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KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive

Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He

joined HDFC Limited in a senior management position in 1978. He was inducted as a

whole-time director of HDFC Limited in 1985 and was appointed as its Executive

Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. MR.Parekh is a

Fellow of the Institute of Chartered Accountants (England & Wales)

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since

1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian

Institute of Technology, Bombay and a Masters Degree in Business Administration from

The American University, Washington DC.

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.


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Intelent Global : BOP services for international customers.

CIBIL: Credit information services bureau.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

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 is 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 businesses.

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 generation for last 179 years.

Currently over 5 m. Policy holders benefiting from the services offered.

Europes largest mutual life insurer.


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JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be

granted license by the IRDA to operate in life insurance sector. Reach of the JV player is

highly rated and been conferred with many awards. HDFC is rated AAA by both

CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and

Standard and Poors. These reflect the efficiency with which HDFC and Standard Life

manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. Respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.

HDFC is the majority stakeholder in the insurance JV with 81.4 %stale and Standard :of

as a staple pf 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life

Insurance Companies., which offers a range of individual and group insurance solutions.

It is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.) Indias leading housing finance institution and the Standard Life Assurance

Company, a leading provider of financial services from the United Kingdom. Both the

promoters are will known for their ethical dealings and financial strength and are thuscommitted to being a long-term player in the life insurance industry- all important factors

to consider when choosing your insurer.

BUSINESS GROWTH

Track Record so far

The gross premium income of HDFC, for the year ending March 31, 2007 stood at

Rs. 2, 856 crores and new business premium income at Rs. 1,624 crores.


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The company has covered over 8,77,000 lives year ending March 31, 2007. Company

also declared our 5th consecutive bonus in as many years for our with profit

policyholders.

KEY STRENGTH

117.32

99.51

152.16

126.97

197.15

162.07

0.00

50.00

100.00

150.00

200.00

250.00

FY 03 FY 04 FY 05

LOANS APPROVED LOANS DISBUR

LOAN APPROVALS AND DISBURSEMENTS

TotalTotal

Growth FY 05Growth FY 05

ApprovalsApprovals30%30%

DisbursementsDisbursements28%28%


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KEY STRENGTHS

HDFC Standard Life believes that establishing a strong and ethical foundation is an

essential prerequisite for long-term sustainable growth. To ensure this, we haveconcentrated our focus on expansion of branch network, organising an efficient and welltrained sales force, and setting up appropriate systems and processes with optimum use oftechnology. As all these areas form the basic infrastructure for establishing the highestpossible customer service standards.

Our core values are drilled down to all levels of employees, as these are inviolable. Wecontinue to promote high integrity in business practices and shun short cuts and unethicalpractices, as we wish to be perceived as an institution with high moral standing. Since ourinception in 2000, when the Indian insurance space was opened for private participation,we have consistently focused on setting benchmarks in all aspect on insurance business.Being the first private player to be registered with the IRDA and the first to issue a policyon December 12, 2000, our differentiators are:

STRONG PROMOTER

HDFC Standard Life is a strong, financially secure business supported by two strong andsecure promoters HDFC Ltd and Standard Life. HDFC Ltds excellent brand strengthemerges from its unrelenting focus on corporate governance, high standards of ethics andclarity of vision. Standard Life is a strong, financially secure business and a market leaderin the UK Life & Pensions sector.

PREFERRED AND TRUSTED BRAND

Our brand has managed to set a new standard in the Indian life insurance communicationspace. We were the first private life insurer to break the ice using the idea of self-respectinstead of death to convey our brand proposition (Sar Utha Ke Jiyo). Today, we are oneof the few brands that customers recognize, like and prefer to do business. Moreover, ourbrand thought, Sar Utha Ke Jiyo, is the most recalled campaign in its category.

PHILOSOPHY INVESTMENT

We follow a conservative investment management philosophy to ensure that ourcustomers money is looked after well. The investment policies and actions are regularlymonitored by a formal Investment Committee comprising non-executive directors and thePrincipal Officer & Executive Director.

As a life insurance company, we understand that customers have invested their savingswith us for the long term, with specific objectives in mind. Thus, our investment focus is


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based on the primary objective of protecting and generating good, consistent, and stableinvestment returns to match the investors long-term objective and return expectations,irrespective of the market condition.

NEED BASED SELLING APPROACH

Despite the criticality of life insurance, sales in the industry have been characterized byover reliance on tax benefits and limited advice-based selling. Our eight-step structuredsales process Disha however, helps customers understand their latent needs at the firstinstance itself without focusing on product features or tax benefits. Need-based sellingprocess, 'Disha', the first of its kinds in the industry, looks at the whole financial picture.Customers see a plan not piecemeal product selling.

RISK CONTROL FRAMEWORK

HDFC Standard Life has fully implemented a risk control framework to ensure that alltypes of risks (not just financial) are identified and measured. These are regularlyreported to the board and this ensures that the company management and board membersare fully aware of any risks and the actions taken to ensure they are mitigated

FOCUS ON TRAINING

Training is an integral part of our business strategy. Almost all employees have

undergone training to enhance their technical skills or the softer behavioural skills to beable to deliver the service standards that our company has set for itself. Besides themandatory training that Financial Consultants have to undergo prior to being licensed, wehave developed and implemented various training modules covering various aspectsincluding product knowledge, selling skills, objection handling skills and so on.

FOCUS ON LONG TERM VALUE

HDFC Standard Life do not focus in the business of ramping up the topline only, but tocreate maximisation of stakeholder's value. Today, we are extremely satisfied with the

base that we have created for the long-term success of this company.

TRANSPARENT DEALING

We are one of the few companies whose product details, pricing, clauses are clearlycommunicated to help customers take the right decision.


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STRICT COMPLIANCE WITH REGULATIONS

We have initiated and implemented many new processes, some of which were found

useful by the IRDA and later made mandatory for the entire industry.The agents whosuccessfully completed this training only, were authorized by the company to sell ULIPs.This has now been made compulsory by IRDA for all insurance companies under the newUnit Linked Guidelines.

DIVERSIFIED PRODUCT PORTFOLIO

HDFC Standard Lifes wide and diversified product portfolio help individuals meet theirvarious needs, be it:

Protection: Need for a sound income protection in case of your unfortunatedemise

Investment: Need to ensure long-term real growth of your money

Savings: Save for the milestones and protect your savings too

Pension: Need to save for a comfortable life post retirement

Health: Cover for health related exigencies

FINANCIAL EXPERTISE

As a joint venture of leading financial services groups. HDFC standard Life has the

financial expertise required to manage your long-term investments safely and efficiently.

RANGE OF SOLUTIONS

We have a range of individual and group solutions, which can be easily customized to

specific needs. Our group solutions have been designed to offer you complete flexibility

combined with a low charging structure.


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STRONG ETHICAL VALUES

HDFC is an ethical and Cultural Organization. False selling or false commitment with

the customers is not allowed.

MOST RESPECTED PRIVATE INSURANCE COMPANY

HDFC was awarded No-1 Private Insurance Company In 2004 by the World Class

Magazine Business World. Integrity, Innovation and Customer Care.


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MAJORPLAYERSININSURANCEINDUSTRY

LIFE INSURANCE CORPORATION

Life insurance made its debut in India well ob4er 100 years ago. Its salient features are

not as widely understood in our county, as they ought to be. What follows is an attempt

to acquaint readers with some of the concept of life insurance, with special reference to

LIC. It should, however, be clearly understood that the following narration is by no

means an exhaustive description of terms and conditions of LIC policy or its benefits or

privileges.

For more details, please contact our branch or divisional office. An LIC it will be glad to

help you choose the life insurance plan to meet your needs and render policy servicing.

ICICI PRUDENTIAL

ICICI Prudential life insurance company is a joint venture between ICICI bank, a premier

financial powerhouse and prudential plc. A leading international financial service group

headquartered in the United Kingdom. ICICI prudential was amongst the first private

sector insurance company to being operations in December 2000 after receiving approval

from Insurance Regulatory Development Authority (IRDA) . ICICI Prudential equity

base 74% and 26% stake respectively. In the period April-December 2004, the company

garnered Rs. Billion of new business premium for a total sum assured of over Rs 73.6

billion and wrote nearly 345000 policies.

The company has a network of over 50000 advisor; as well as 7 bank

assurance tie-ups. Today, ICICI Prudential has emerged as the No -1 Private Life insured

in the country. With a wide range of flexible products that meet the needs of the customer

at every step in life.


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BAJAJ ALLIANZ: SHARED VISION

A household name in India teams up with a global conglomerate Bajaj Auto Ltd, the

flagship company of the Rs. 8000 corers Bajaj group is the largest manufactured of two-

wheelers and three-wheelers in Indian and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image and locality

synonymous with quality and customer focus. With over 15000 employees, the company

is a Rs. 4000 crores auto giant. It is the largest 2/3 wheelers manufactured in India and

the 4th in the world .AAA rated by crises, Bajaj auto has in a operation for over 55 years.

It has joined hands with Allianz to provide the Indian consumer with a distance option in

term of life insurance products. As a promoter of Bajaj Allianz Life Insurance Co. Ltd.

Bajaj auto has following to offer-

Financial strength and stability to support the Insurance Business.

A Strong brand-equity.

A good market reputation as a world class organization.

Adequate experience of r4unning a large organization.

A 10 million strong base of retail customers using Bajaj Products.


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Why HDFC is better ?

1. Investment returns: investment returns and business growth provided by HDFC

is validated by bajaj Capital report. HDFC pacify the need of invertors up to

healthy level and make the strong relationship with them.

2. Financial Background and Experience: HDFC existing in the market since

1977. It has a very handsome experience in the field of finance because it

completely involved in finance Sector only where as the others are running in

many other field also like Reliance (Petroleum, Textile, Telecom etc.)

3. Ethics and Values: HDFC is an ethical and cultural organization which prevents

the false selling and prohibit the false commitment to the customer.

4. Sales Force: Properly trend licensed and Educated People are the strength of the

company. So that they could give the best customer service.

5. Huge branch network HDFC is having 450 branches in all over the country.

6. Online accessibility : It makes the process faster and make the customer

delighted.


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Definition of An Agent ( Financial consultant)

The Insurance Act defines an insurance agent as one who is licensed under section of theAct and is paid by way of commission or otherwise , in consideration of his soliciting orprocuring insurance business relating to the continuance ,renewal or revival of policies of

insurance . He is, for all purposes ,an authorized salesman for insurance and needs alicence..

The another on whose behalf the agent acts, is called the Principal. The insurancecompany is the principal in this case .The agent represents the principal and acts on hisbehalf. Some insurers designate their agents as advisors , consultants etc , as if theyare independent persons. It is the nature of the function which determines the relationshipof agency not the designation. An independent advisor or consultant would not beappointed by an insurance company. He would be knowledgeable enough as a person tobe approached for advice or consultation. Since insurance agents may acquire thatstatus.All insurance agents must strive to attain that status.

AGENTS REGULATIONS :

The Insurance act requires that insurance agent must have a licence.The authority toimplement the provisions of the Insurance Act , including matters relating to the issue oflicences to agents ,is the IRDA, constituted by the IRDA Act of 1999.The IRDA hadissued the IRDA Regulations,2000,dealing with the issue of licences and other matterrelating to agents..

The FC is the interface between the customer and insurance company. l The agent

should be able to accomplish the following service.

Assessing and analyzing the clients risk profile.

Finding the best product or products available in the market.

Negotiating the best deal available.

Continuity of service throughout the period of insurance.


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PROCEDURES FOR BECOMING AN AGENT

The Insurance Act, 1938 lays down that an insurance agent must possess a licence underSection 42 of that act .The licence is to be issued by the IRDA . The IRDA hasauthorized designated persons , in each insurance company to issue the licences on behalf

of the IRDA . The fee for the licence , the manner of making an application etc have beenspecified in the regulations issued by the IRDA .

1.In the Terms of Insurance act , a licence will not be given if the person isa. Minor b. Found to be of unsound mindc. Found guilty of criminal misappropriation or criminal breach of trust or cheating

or fogery or an abetment of or attempt to commit any offenced. Found guilty of or knowingly participating in or conniving at any fraud,

dishonesty or misrepresentation against an insureror an insurede. Not possessing the requisite qualifications and specified trainingf. Yet to pass such examinations as are specified by the regulationsg. Found violating the code of conduct as specified in the regulations.

2. The fee for the licence is Rs 250/- for individual as well as corporate agents.A licenceis granted for 3 years .It may be renewed after 3 years .The fee for certification of thespecified persons is Rs 500/- .This is also valid for 3 years.

3. A licence issued by the IRDA may be to act as an agent for the life insurer ,for generalinsurer , or as a composite insurance agent working for life insurer as well as generalinsurer.No agent is allowed to work for more than one life insurer or more than onegeneral insurer.

4. The Qualifications necessary before the licence can be given are that the person must

1. not to be minor

2. Have passed at least the 12th standard or equivalent examination ,if he is to beappointed in place with population of 5000 or more , or 10th standard otherwise(ruralareas)


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3. have undergone practical training for atleast 100 hours in life or general insurancebusiness ,as case may be from an institution , approved and notified by the IRDA. In thecase of a person wanting to be a composite insurance agent , the applicant should nhave completed at least 150 hours practical training in life and general insurancebusiness , which may spread over six to eight weeks.

4. have passed the pre- recruitment examination conducted by the insurance institute ofIndia or any other examination body authorized by the IRDA.

5. In 2007 IRDA has reduced the requirement of training from 100 to 50 Hours and from150 to 75 Hours.

6. The licence once issued can be cancelled whenever the person acquires thedisqualification

7. application for renewal have to be made atleast 30 days before the expiry of thelicence, along with the renewal fee of Rs 250/- . If the application is not made at least 30days before the expiry , but is made before the date of expiry, it would normally berefused.

8. Prior to renewal of the licence the agent should have completed atleast 25 hrs practicaltraining in life or general insurance business or atleast 50 hrs practical training in life andgeneral life insurance business in case of composite insurance agents.

9. Insurers who select agents for appointment , make arrangements ffor training , forappearing in the prescribed examinations and there is little loss of time for any step in theprocess.


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METHODS OF REMUNERATING AGENTS

A life insurance agent works on commission basis. He is paid a percentage of the

premium collected through his agency. Section 40 a (1O) of the Insurance act stipulatesthat the maximum amount which can be paid to the life insurance agent , by the way ofcommission or remuneration in any form , shall be 32% of the first years s premium ,7 % of the second and the third years renewal premium and 5 % of the subsequentrenewal premium.

There are exceptions to this , during the first 10 years of the insurers business , he maypay 40% instead of 35% of first years premium .Under certain circumstancescommission of 6% can be paid on the renewal premium even beyond the third year

.Within these limits the manner of remunerating the agent will be determined by theinsurer . Normally under the term assurance plans, commission rates are less. Similarlyfor shorter duration policies, commission rates are lesser than under longer durationplans. Under single premium plans and pensions/ annuity plans , the rate of commissionis very small.

New agents may be paid a stipend to be adjusted against the commission to be earned asand when the business begins to come in. Brokers are paid on a totally different basis.

The Insurance Act provides ,in Section 44, for payment of commission on renewalpremium even after termination of the agency. The commission will be limited to the ratenot exceeding 4%.To be eligible for this , the agent should have been an agent with theinsurer for at least (1) five years and the policies for at least 50000 are in force one yearbefore the termination of the agency or (2) 10 years. This commission will be payable tothe hiers of the agents after the agents death .This is a unique facility which few otherprofessions enjoy.

FUNCTIONS OF AN AGENT

The agents main function is to solicit and procure life insurance business for the insurer,which has appointed him for the purpose .at the same time he is trusted by the prospect toadvise him suitably , keeping his circumstances and needs in mind.He is thus in theunique role of the person trusted by both the parties to the transaction . His functionswould require him to


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Understand the prospects needs and persuade him to buy aplan of life insurancethat suits his interests best

Complete the formalities (paper work , medical examination) necessary to get thepolicy expeditiously

To keep in touch to ensure that changing circumstances are reflected in thearrangements relating to premium payments ,nomination and other necessaryalterations

Facilitate quick settlement of claims

Be totally honest with both the prospect and the insurer

The regulations framed by the IRDA lays down the code of conduct which incorporatessome of these concepts . The code says interalia that the agent shall

Identify himself and the insurance company of which he is an agent

Disclose the licence to the prospect on demand

Explain all available options to the prospect Recommend a suitable plan taking into account the needs of the prospect

Disclose the scales of commission if asked by the prospect

Explain the nature and importance of the information required in the proposalform

Impress upon the prospect the need to disclose all the information

Make all enquires about the prospect

Inform the insurer about any material facts , including habits, that could adverselyaffect the underwriting decisions

Convey to the prospect about the acceptance or rejection of the proposal

Render necessary assistance to the policyholders or the claimants or beneficiariesin complying with the requirements asked for by the insurer

Not to induce prospects to submit wrong information

Not to interfere with the proposals introduced by the other insurance agents

Not demand or receive from beneficiary , share of proceeds under an insurancecontract

Not cause the termination of an existing policy with the view to effect the newproposal


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PREREQUISITES FOR SUCCESS

As stated earlier the insurance agent is an agent of the prospect as well.He is lookedupon as an knowledgeable person who can be trusted for the right advice .To be able

to match this expectations the agent must be familiar with the benefits and advantagesof the other financial instruments suitable for savings and investment and also thelaws, particularly on taxation matters relevant to these instruments .Some agents whodo not have the necessary knowledge , give answers on the guesswork or hearsay.Others admit that they do not know enough and promise to come back after checkingout the details .The later are respected and trusted more.

An agent is professional. Pofessional hasto study and master a body of specializedknowledge .A professional constantly enhances his knowledge and skills and alsohelps other similarly placed professionals. Such personal development and growth

will be measured in the case of the agent partly by the business that is done and thecommission that is earned. It is also measured by the improvement in the effort thatgets the sale. It is also to be measured by the reputation that the person enjoys in themarket .It is the reputation that helps to collect more and more references from thesatisfied policy holders and thus expand ones circle of contacts.

Product knowledge is the primary requirement .Product knowledge does not end withknowing the board terms and conditions of the various plans of the insurance .Onehas to be aware of the possible drawbacks in the policy, the tax implications , the fitwith the clients needs , the extent to which the client has to precautions so that thebenefits may not be lost and so on. The agent must have all the knowledge of theproducts offered by the insurer for whom he works and not only of the few which aremore frequently sold.

Customers are entitled to full information from those who provide services. Thisrequirements, the right to information , is enshrined in the consumer protection act .The law is only stating a principle which every successful salesman practices and isconsistent with the principle of the utmost good faith in the insurance. In the case oflife insurance the person representing the insurer and having the responsibility toinform the consumer is an agent. Before the agent can inform the consumer he has tobe informed himself . That is why it is repeatedly pointed out that the productknowledge is important .


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ETHICAL BEHAVIOUR

The insurance agent is in position of trust . on his assurance the policy holders entrusttheir small savings to the insurer , trusting it to look after these funds and look aftertheir dependants in later years. Issues of propriety and ethics are extremely importantin this business of insurance.

Unethical behaviours happen when the benefits of self are considered more importantthan that of others . The code of the ethics spelt out by the IRDA in the agentsregulations and referred to earlier is directed towards ethical behaviour . Things gowrong when the gaent becomes concerned with the commission that he will earn from thepolicy , rather than benefits to the prospect.

Some agents think that they are doing the prospect a good turn , when they do not revealsome vital information in the proposal form , for fear of the underwriter raisingawkward queries . Infact they are doing harm to the prospect because if ther happens tobe an early claim - who can guarantee that this will not happen the claim may berepudiated. The loser at that time is the prospects family .The commission collected bythe agent is not affected. The loser is also the credibility of the entire life insurance industry, both agents and the insurers.Stories will circulate that the insurers do not payclaims . The truth will be unknown.

Some characteristics of good ethical berhaviour are :

Placing the best interests of the client above ones own direct or indirect benefits.

Holding in the strictest confidence and considering as privileged all businessand personal information pertaining to clients affairs.

Making full and adequate disclosure of all the facts to enable clients makeinformed decisions

There could be likelihood of ethics being compromised in the following situations

Having to choose between two plans one giving much less commission than theother

Temptation to recommend discontinuance of an existing policy and taking out anew one

Becoming aware of the circumstances that , if known to the insurer , couldadversely affect the interests of the client or the beneficiaries of the claim.


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PROCESS OF RECRUITMENT OF LIFE INSURANCE AGENTS (FCs)

With the entry of most corporate biggies into the private insurance sector , the market

scenario has undergone a major transformations over the past couple of years . All theprivate players coming into the industry are slowly taking bigger bites from the pie ,which earlier was at the disposal of LIC alone. Companies like HDFC SLIC , BirlaSun LIFE, and ICICI Prudential have already made a foray into the territory of LIc andfundamentally growing , thus posing a great threat to LIC..

To begin with the concept of insurance agency itself has undergoneperceptual change. An agent of today is not a mere insurance salesman , he is aFinancial consultant, a financial planning advisor , even an insurance care consultant..These are not just flashy titles for their profiles but describe their expected jobcontents rightly as well.

In the initial years the private players did not face a major difficulty in recruitingagents as the concept of agents was new and sounded interesting to people who couldleverage on their contacts . but over a period of time , the segment of such people hascontracted owing to the aggressive recruitment measures of so many organizations ,all fighting to attract and retain in common battle field.

In this competitive environment today it has become very difficult to locate and recruitprospective high performing agents .A challenge of equal proportion is to judgewhether a person , who is eligible to be an agent , will actually be an effective performer.

HIRING THE BEST

The insurance industry is highly people centric and while recruiting companies mindpurpose to recruit agents who appear to have potential of bringing business ethically tohelp company grow and lead in long run. To the customers agents are the faces of theorganization and hence the key lies in recruiting people who portray the organization aswhat it stands for and builds credibility for the organization in the highly

competitive market . But the bottomline is business and more more profits to thecompany and hence an agent primarily needs to generate more and more businessthrough whatever channels possible.


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SOURCING TECHNIQUES

Variety of sourcing techniques

Advertisements

Walk-ins

Placement agencies

Referrals by employees

Referrals by clients

Industry seminars

Associations and clubs

Personal network

Centres of Influence

PROFILES

Housewives

Businessmen

Accountants

Sales persons engaged in private/public companies Office bearers of leading clubs associations

Retire people

Teachers


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HDFC SLIC has for example MEMBER GET MEMBER scheme in place.

1. MITRA campaign Financial consultant gets financial consultant ( FC gets FC)

As soon as an FC gets licensed he can be requested to be part of MGM modulewhere he gets rewarded for every FC who he facilitates in recruitment and licensing.

Channel development team has launched MITRA CAMPAIGN as part of MGMmodule for FC recruitment through existing licensed FCs

2. SCOPELicensed FCs with HDFC Std Life in channel development location can

participate in this campaign

3.PAYOUT MODE

Gift card / Direct credit/ Cheque/DD

4. PAYOUT SLABS :

Maqximum number of logins per FC is restricted to 10 to ensure qualityrecruitment . Payout slabs are liable to change from time to time at discretion of HDFCStd Life Insurance Co


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RECRUITMENT PROCESS

In most companies the recruitment process starts with initial interview of the prospectduring which his potential and suitability is gauged. This is basically a screening phase.Later during a BUSINESS OPPURTUNITY PRESENTATION , the prospect is given

brief about the business where he fits in , what is expected out of him, commissionstructure and other he would receive and so on. The personal information of the prospectis gauged through various techniques .

DIFFERENT APPROACHES TO HIRING

Companies have different approach to hiring. Some invest extra effort by recruitingbasic skills , moulding the agents to the environment and maximizing their potentialfor the business . some prefer the volume game and focus on the number of the agentsthey can get hold to increase their reach manifold . This branching of agencies providesmaximum exposure to the companies with the customers . Expectations from such agentsare not high and main motive is to get the business from the agents ownCatchment Area in the society after which whatever business he gets is considered as abonus. For such companies the fixed cost like training tend to be higher and such agentsmay not benefit them in long run but the result of such an approach does reflect inimmediate sales .

Other companies are very selective about the agents they recruit. The companies layemphasis on quality agents who can be employed fulltime. Agents also go throughtraining programs and continuous mentoring. They generally perform well over the longrun and get business even when their own catchment area is dried up. Companiesfollowing this approach want to secure long term prospective but are doing so at the costof current business potential , which results from aggressive and not very selectiveagent recruitment.


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HDFC Standard Life Insurance APPROACH

This company has adopted a cautious as well as an aggressive strategy at times whilerecruiting its agents. The point where it scores above all the other players is its top classtraining program called DISHA which has helped thousands of agents to double and

triple their monthly income .This company however does not encourage its agents for promotions up the ladderthough many agents do become sales manager as it believes that a successful agent canearn more money as an agent than becoming a sales manager.

WHY INCLUDE A STRUCTURED SALES PROCESS

PROFESSIONAL :

Enhance the Brand

SIMPLE SALES PROCESS :

Easy for customers and advisers to understand

INCREASED CUSTOMER SATISFACTION :

Future sales

REDUCE OBJECTIONS:

Increased productivity

ANALYSING ANDPREPARING

PRESENTING ANDCLOSING

PROSPECTING MEETING PEOPLE

DISH

A


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Parameters for recruitment and selection

No wonder insurance companies prefer people with with good contact base or clienteleas a result their profession , job business or status eg chartered accountant , high rankingofficials .

Strong social contacts and know how of financial products is definitely added advantage .But companies admit that the potential of a prospect is dependant not only on a singlefactor like contacts but mix of many others.

Age is very important factor . Many sales managers at HDFC SLIC prefer to recruitagents above the age of 30 as they feel that such agents are more committed , stable andresponsible.

Other parameters that play a role in making a prospect an effective performer arequalification , profession , salesmanship and motivation or urge to earn.In addition to allthis to be successful agent a prospect has to be proud of his job. He has to understandthat he is not mere salesman but a financial planner for the customer who needs to save orinvest . He is not selling the product , but the concept the concept of insurance andassurance.

The most potent approach while recruiting agents is to follow the middle path in otherwords they need to be aggressive and cautious at the same time , hence creating a balancetradeoff between current and future business. This approach will lead to fundamentallyappropriate step-wise growth.

Thus parameters for recruiting agents :

Strong social contacts

Know how of financial products

Educational qualifications

Profession

Salesmanship

Motivation or urge to earn


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Motivation and recruitmentAttractive commission , Career paths and other benefits

Certain insurance companies have very good career paths for their FCs .Based on theperformance , an FC can graduate to become an associate and have his own team ofagents performing under him.such career progression opportunities act as motivator forthe agents.

To keep the agents motivated , companies keep running contests for the agents wherethey are rewarded over and above commissions , the rewards may vary from recognition

to cash to sponsored trips to cars which is a major motivator

Companies have started providing more and more support to their agents , which may bein terms of infrastructure or sales promotion. They have dedicated areas for their agentsfrom where the agents can operate and facilities like telephone , PCs , printers ,photocopiers are provided.

Sales promotion support may vary from visiting cards to customized mailers to holdingsales promotion campaigns of various kinds which may be on expense sharing basisi orexpense may be totally borne by company. The type and magnitude of support dependson the performance of the agent.

HDFC STD LIFE INSURANCE CO

REWARDS RECOGNITION AND RESPECT

Star on debut club for newcomer FC.

Clubs like bronze , silver , gold , and centurion to enhance earnings.

Monthly contest

Toppers club

Sales conventions at exotic locations

MDRT , COT , TOT eligibility .


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OBJECTIVE

Recruitment of Financial consultant (FCs) of a excellent profile

.

(A) What type of people are we looking for ?

1- Committed people who have the drive, determination and ability to become

professional financial consultants.

2- Ability to sell a range of financial products.

(B) What do We Expect from financial Consultant ?

1- Devote a time and energy during training.

2- Sell policies each month once after licensed with company.

3- We look forward to a long term mutually beneficial relationship.

(C) Why should financial consultant choose HDFC standard life ?

Brand value and the reputation of the partners (HDFC Limited) Market leader in

housing finance:

Strategies: Strategies Employed to achieve the target are as follows:-

Telecalling

Contacting the person directly (interview)

Collect references.


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RESEARCH METHODOLOGY

Step: 1 To decide the objective of the study to be carried out.

Step :2 To study about HDFC Standard life.

Step : 3 To find the prospective financial consultant for thee company.

Step: 4 Recruitment

Step: 5 Licensing Process

a. Registration

Documents required for acquiring license

Agency application form

Form VA

Exam form

Agreement copy

Know your consultant addendum

Supporting personal documents :

Passport photos

Age proof

Proof of education

Proof of identity

PAN card

Fees

b. IRDA training

Types of training : Offline and Online training

IRDA refreshers classes are conducted for FC before IRDA exam.

c. IRDA Examination

PRE-Recruitment examination can be done by two modes

Online and offline . Exams are conducted by insurance institute of

India.


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Step :6 Getting licence after passing exam.

Step :7 Business activation.

Step :8 To process and analyze the collected data.

Step: 9 To prepare the research report.

Achievements:

Recruited four financial consultants for company.

Increase in confidence level.

Got the knowledge about, how to differentiate our product from that of LIC.

Made more and more people aware about my companies Products (Policies)


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BENEFITSOFBEINGA FINANCIAL CONSULTANTAREASFOLLOWS:

Financial consultant, the right way to start career:As a financial consultant the role will be to identify prospective customer. You will

makes presentation, as to how you can help analyses their financial needs, provide

customize financial solution to cater to their respective needs and conduct reviews on

regular basis to keep customers on thank.

Easy way to start on career:

Zero investment: There is no start-up capital. Be an own boss with a flexible working

environment, unlimited earning potential and the opportunity to be part of world class

sales team.

Flexible work timings, part time or full time: FCs can work whenever he likes and

from whereeve4r he like, FCs can work full time depending on their convenience its like

no other job however, the time.

Sunrise industry: Life insurance in India has a huge potential for growth Statistics

reveal that only 25% of the insurable population in India is insured and those insured are

in need of still higher insurance cover. The over 100% growth displayed by private life

insurers indicates this hu7ge untapped potential.

A successful team : By joining any successful insurance company he will be part of the

countrys finest team of insurance agents. He can also qualify for MDRT membership

which brings with it recognition and prestige.


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Attractive remuneration :As an agent he will be true entrepreneur . He has the

freedom to be his own boss , work for himself , choose his own clients and make his

own money . all of his , without his having to make any initial capital investment .

World class training : H e is provide with the best in class training systems . Even if

doesnot have previous experience in selling , various multi dimensional programs

conducted by the qualified inhouse personnel , will make him specialist in life insurance

sales .

Infrastructure support : Agents will have access to the necessary tools , technology and

people support that will enable them to build a profitable long run business.

Sales and marketing support: Agents are supported with innovative marketing and

sales tools .The sales , promotions and marketing collaterals that are provided will help

them take their business to new heights.

Financial strength : All the The players are already big business organizations in

various types of business . so the customers are offered unmatched financial strength and

solidity. Paid up capital of many companies is higher than the norms stipulated by the

regulatory authority for insurance in India.


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CHALLENGES OF RECRUITING LIFE INSURANCE AGENTS

NO FIXED RETAINER

As it is known widely, agents are not paid any fixed remuneration but attractive

commission which can go upto 40 % .But generally most people want to work on

commission alone. So many companies have come up with interesting alternatives.

FEAR IN THE MINDS OF PROSPECTIVE AGENTS ABOUT DIFFICULTY OF

THE PROFESSION

As it is very easy to get in to this business , more wrong persons enter this business

than the right ones. Then they can handle the pressure of doing this business and leave it.

One out of every four persons who enter this profession leaves it within a year or

less.Thus people in general feel that it is very difficult to earn in this profession.

SALES PROFESSION GENERALLY LOOKED DOWN BY GENERAL PEOPLE

Its general perception that sales people are not regarded by general public , some

view them to be demanding , unethical . So this makes many people to avoid this

profession in the first place.