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Recruitment and selection process reliance life insurance

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  • 1. A SUMMER TRAINING REPORT ON RECRUITMENT AND SELECTION PROCESS AT Reliance Life Insurance SUBMITTED IN PARTIAL FULFILMENT FOR THE REQUIREMENT OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION TO MAHARSHI DAYANAND UNIVERSITY ROHTAK SUBMITTED BY: RITESH SAINI Roll No-2839 MBA (3rd sem) AMITY BUSINESS SCHOOL MANESAR, GURGAON 2008-10 DECLARATION 1
  • 2. I, Ritesh Saini, Roll No.2839, M.B.A (3rd Semester) of the Amity Business School, Manesar, hereby declare that Summer Training Report entitled, “Recruitment and Selection Process at Reliance Life Insurance ”, is an original work and the same has not been submitted to any other institute for the award of any other degree. A seminar presentation of the Training Report was made on 09.10.09 and the suggestions by the faculty were duly incorporated. Presentation Incharge Signature of the Candidate (Faculty) Countersigned Director of the Institute For Life Advisors 1. What is your qualification? QUALIFICATION RESPONDENTS FREQUENCY 12th 10% 2 Graduation 60% 12 Post graduation 20% 4 professional course 10% 2 any other 0% 0 2
  • 3. Interpretation According to survey qualification of most of the Life Advisor are graduation. 2. Marital status Marital status response Married 40% Unmarried 60% 3
  • 4. Interpretation More than half the number of employees out of sample are unmarried. 3. How much time you living in Gorakhpur? Living status Respondents below 5yrs 20% 5-10yrs 30% 10-15yrs 20% 4
  • 5. 15-20yrs 20% above 20yrs 10% Interpretation Maximum 30% respondents are living in Gorakhpur since 5-10 years. 5. Are you satisfied with training sessions provided by company? SATISFACTION LEVEL %AGE strongly agree 0% 0% 5% 10% 15% 20% 25% 30% 35% below 5yrs 5-10yrs 10-15yrs 15-20yrs above 20yrs Series1 5
  • 6. Agree 60% Neutral 10% Disagree 30% strongly disagree 0% Interpretation There are more respondents satisfied with the training sessions provided by company in comparison to others. 6. Are you satisfied with commission of Life Advisor? RESPONDENTS %AGE strongly agree 0 Agree 25% Neutral 0 6
  • 7. Disagree 75% strongly disagree 0 Interpretation Most of the respondents are dissatisfied with commission of Life Advisor 8. Are you doing this job as part time or full time? JOB %AGE part time 10% full time 90% 7
  • 8. Interpretation Most of them does full time job ACKNOWLEDGEMENT This report has been made possible due to invaluable support of a number of people to whom I own my heartfelt gratitude and without whose help I may not have been able to complete this report. I would like to thank Prof (Dr) R C Sharma, Advisor, Amity Business School, Manesar, for extending full help in my project. His consistent support and cooperation showed the way towards the successful completion of the project. 8
  • 9. I would like to acknowledge the support of my faculty guide, Ms Poonam Sharma, Lecturer, Amity Business School, Manesar, for her constant guidance in this project and for providing me the necessary information whenever required. A heartfelt thanks to other faculty members of Amity Business School, Manesar, for their support and co- operation. I am very grateful to my project guide Mr Himanshu, Agency Manager, for providing me constant support and inspiration during the summer training. My overriding debts continue to be to the management and all employees of Reliance Life Insurance for their co-operation and guidance, which made my summer training project possible. Finally I would like to give special thanks to my family and my friends who make it all happen and make it worth while. Ritesh Saini TABLE OF CONTENTS Certificate Declaration Acknowledgement Chapter I • Introduction 2 • Significance of the study 3 • Conceptualization 4 • Focus of the study 20 • Objectives of the study 21 9
  • 10. • Limitations of the study 22 Chapter II • Industry Profile 24 • Company Profile 29 Chapter III • Review of Existing Literature 40 • Research Methodology 42 Chapter IV • Analysis and Interpretation 44 Chapter V • Findings 63 • Recommendations 64 • Conclusions 65 Bibliography Annexure Organization’s Structure RELIANCE LIFE INSURANCE REGIONAL OFFICE 10
  • 11. REGIONAL MANAGER BRANCHMANAGER BRANCH OPERATION BRANCH OPERATION BRANCH OPERATION 11
  • 12. Chapter-1 12
  • 13. INTRODUCTION The insurance sector has gone through a number of phases and changes. Since 1999, when the government opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%, the insurance sector has been a booming market. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta by Anita Bhavsar. Despite the fact that general insurance business has been growing at a healthy rate of 16 per cent annually between 2004-05 and 2008-09, its penetration level is just 0.60 per cent of India’s GDP against world average of 2.14 per cent. India ranks 136th on penetration levels and Life Advisors behind China(106), ThaiLife Advisornd (87), Russia(86), Brazil(85), Japan(61), and the US(9). The penetration of general insurance in india remains low on account of low consumer preference, Life Advisorrgely untapped rural markets and constrained distribution channels (Crisil & Assocham). Recruitment and selection is the process of identifying the need for a job, defining the requirements of the position and the job holder, advertising the position and choosing the 13
  • 14. most appropriate person for the job.Human Resource Management includes all activities used to attract & retain employees and to ensure they perform at a high level in meeting organizational goals. It means employing people, developing their resources, utilizing, maintaining and compensating their services in tune with the job and organizational requirements. SIGNIFICANCE OF THE STUDY A research has its own importance in any business organization. It is a systematic and scientific investigation of any idea either precise or abstract from continuous basis of learning. As we know in present times, the modern world is progressing at a very high pace. Due to high competition and increased expectations, every organization needs effective recruitment and selection process. By this study new segments of recruitment and selection has been discovered. This will help to enhance the capability of Reliance Life Insurance in using the recruitment and selection process more effectively. This project would be significant for researcher because this is the opportunity for putting theortical knowledge into practical application. This project would be significant for the readers as it is providing them knowledge about recruitment and selection process. 14
  • 15. CONCEPTUALIZATION Recruitment Recruitment is defined as, “a process to discover the sources of manpower to meet the requirements of the staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient workforce.” Edwin B. Flippo defined recruitment as “the process of searching for prospective employees and stimulate them to apply for jobs in the organization.” Recruitment is a ‘linking function’-joining together those with jobs to fill and those seeking jobs. It is a ‘joining process’ in that it tries to bring together job seekers and employer with a view to encourage the former to apply for a job with the Life Advisor. In order to attract people for the jobs, the organization must communicate the position in such a way that job seekers respond. To be cost effective, the recruitment process should attract qualified applicants and provide enough information for unqualified persons to self-select themselves out. Recruitment is distinct from Employment and Selection. Once the required number and kind of human resources are determined, the management has to find the potential Life Advisors where the required human resources are/will be available and also find the means of attracting them towards the organization before selecting suitable candidates for jobs. All this process is generally known as recruitment. Some people use the term “Recruitment” for employment. These two are not one and the same. Recruitment is only one of the steps in the entire employment process. Some others use the term recruitment for selection. These are not the same either. Technically speaking, the function of 15
  • 16. recruitment precedes the selection function and it includes only finding, developing the sources of prospective employees and attracting them to apply for jobs in an organization, whereas the selection is the process of finding out the most suitable candidate to the job out of the candidates attracted (i.e., recruited).Formal definition of recruitment would give clear cut idea about the function of recruitment. PURPOSES AND IMPORTANCE OF RECRUITMENT The general purpose of recruitment is to provide a pool of potentially qualified job candidates. Specifically, the purposes are to: • Increase the pool of job candidates at minimum cost. • Help increase the success rate of the selection process by reducing the number of visibly, under qualified or overqualified job applicants. • Help reduce the probability that job applicants, once recruited and selected, will leave the organization only after a short period of time. • Begin identifying and preparing potential job applicants who will be appropriate candidates. • Induct outsiders with a new perspective to lead the company. • Infuse fresh blood at all levels of the organization. • Develop an organizational culture that attracts competent people to the company. • Search or head hunt/head pouch people whose skills fit the company’s values. • Devise methodologies for assessing psychological traits. • Search for talent globally and not just within the company. • Design entry pay that competes on quality but not on quantum. • Anticipate and find people for positions that do not exist yet. • Increase organizational and individual effectiveness in the short term and long term. 16
  • 17. • Evaluate the effectiveness of various recruiting techniques and sources for all types of job applicants. Recruitment represents the first contact that a company makes with potential employees. It is through recruitment that many individuals will come to know a company, and eventually decide whether they wish to work for it. A well-planned and well-managed recruiting effort will result in high-quality applicants, whereas, a haphazard and piecemeal effort will result in mediocre ones. High-quality employees cannot be selected when better candidates do not know of job openings, are not interested in working for the company and do not apply. The recruitment process should inform qualified individuals about employment opportunities, create a positive image of the company, provide enough information about the jobs so that applicants can make comparisons with their qualifications and interests, and generate enthusiasm among the best candidates so that they will apply for the vacant positions. The negative consequences of a poor recruitment process speak volumes about its role in an organization. The failure to generate an adequate number of reasonably qualified applicants can prove costly in several ways. It can greatly complicate the selection process and may result in lowering of selection standards. The poor quality of selection means extra cost on training and supervision. Furthermore, when recruitment fails to meet the organizational needs for talent, a typical response is to raise entry-level pay scales. This can distort traditional wage and salary relationships in the organization, resulting in avoidable consequences. Thus, the effectiveness of a recruitment process can play a major role in determining the resources that must be expended on other HR activities and their ultimate success SOURCES OF RECRUITMENT Every organisation has the option of choosing the candidates for its recruitment processes from two kinds of sources: internal and external sources. The sources within the organisation itself (like transfer of employees from one department to other, promotions) to fill a position are known as the internal sources of recruitment. Recruitment candidates 17
  • 18. from all the other sources (like outsourcing agencies etc.) are known as the external sources of recruitment. SOURCES OF RECRUITMENT FACTORS AFFECTING RECRUITMENT Potential advantages Internal 18
  • 19.  Worker morale and motivation is enhanced  Organization has a better opportunity to assess knowledge & skills of the candidate  Candidate has existing knowledge about the organization  Less orientation may be needed  May generate unhealthy competitiveness for promotions  Additional training may be required  Pool of candidates may be restricted  Those not selected may feel rejected and discontented External • New ideas and insight • New knowledge and experience • Larger pool of talent to recruit from • Recruiting and selecting may be more time-consuming • Longer adjustment period may be needed • Induction costs may be higher • Less opportunity to assess knowledge & skills Please note that these pros and cons may or may not apply when recruiting for all positions. Weigh up possible pros and cons for each recruitment situation before making your decision regarding sources Undesirable consequences of poor recruitment: Poor recruitment choices (i.e., poor person-job fit t) can have a range of undesirable consequences for the organization and the worker including: • Higher rates of turnover • Reduced performance effectiveness • Lowered job satisfaction • Reduced work motivation. 19
  • 20. .Challenges to recruitment of effective staff include:  Lack of qualified applicants  Inadequate salary packages  Lack of resources (including funds)  Limited scope for advancement and promotion  Lack of job security  Remoteness of services  Stigma attached to working in the AOD field. Strategies for successful recruitment Recruitment and selection is not only about choosing the most suitable candidate. The recruitment and selection experience can also impact on the likelihood that a candidate will accept a job offer and on their commitment to remaining with the organization. Committing time and resources to develop a comprehensive recruitment strategy is a worthwhile investment. Poor recruitment choices (i.e., poor person-job fit) can have a range of undesirable consequences for the organization and the worker including:  Higher rates of turnover  Reduced performance effectiveness  Lowered job satisfaction  Reduced work motivation. Effective recruitment process: Step 1: Ensure an up-to-date job description Step 2: Develop an effective recruitment strategy 20
  • 21. Step 3: Evaluate the recruitment strategy. A clear, accurate and up-to-date job description is crucial to ensuring a good person-job fit. It is worthwhile spending some time making sure that the job description matches the everyday reality of the job. A job description contains two types of information:  Specific tasks and activities required for a particular job (e.g., conduct counseling sessions, write client reports)  The knowledge, skills and abilities required for effective performance by the job incumbent (e.g., good communication skills, capacity to establish good client rapport). Most positions within the AOD field are complex, characterized by challenging work, multiple roles and changing work demands. In these circumstances, the best person-job fit t may be achieved by focusing on the tasks and activities as well as the knowledge, skills and abilities of an effective performer. The accuracy of a job description is likely to be improved by gathering information from different sources. Different perspectives on the knowledge, skills, responsibilities, challenges and demands of a position are likely to be provided by supervisors and workers in the same or similar roles. Useful information to gather from supervisors and coworkers includes:  What knowledge, skills, abilities and other personal characteristics (KSAOs) are necessary for the position?  What KSAOs can be practically and reasonably expected? 21
  • 22.  What KSAOs are essential for effective job performance?  What KSAOs distinguish between good and poor performers on the job?  It may also be useful to consider whether the organization is willing to take on less experienced workers and provide professional development activities (in- house or external) to build up their knowledge and skills. Step 2: Develop an effective recruitment strategy Two important issues to consider when developing a recruitment strategy are: • The source of recruitment (i.e., advertisements, personal referrals, employment agencies, direct applications) • The recruiter (i.e., the “personal face” of the organization). The source of recruitment A range of strategies (e.g., newspaper advertisements, personal networks) can be used to recruit new workers. There is evidence that hiring new staff through referrals from existing staff or direct (unsolicited) applications is likely to result in lower turnover rates and higher job satisfaction compared to more traditional avenues of recruiting (e.g., newspaper advertisements.) MODERN TECHNIQUES: Walk-in: - As per this technique, the potential candidates are required to attend for an interview directly and without a prior application on a specified date, time and at a specified place. Consult-in: - The busy and dynamic companies encourage the potential job seekers to approach them personally and consult them regarding the jobs. 22
  • 23. Head-hunting: - These are also known as search consultants. The companies request the professional organizations to search for the best candidates particularly for the senior executive positions. Body Shopping: - Professional organizations and the hi-tech training institutes develop the pool of human resources for the possible employment. The prospective employers contact these organizations to recruit the candidates. These professional and training institutions are called body shoppers and these activities are known as body shopping. Business Alliances: - Business alliances like acquisitions, mergers and take-over help in getting human resources. The company with surplus human resources offers the services of their employees to other needy organizations. Tele-Recruitment: - This technique involves the use of the Internet, to advertise job vacancies and also for the candidates to apply online. Overview of selection techniques Evidence-based best practice for three of the most commonly used selection techniques is outlined below. 1. Curriculum vitas / résumés and written applications A curriculum vitae (CV) / résumé provides valuable information relating to a person’s professional Qualifications and experience. All information in the CV should be verified where appropriate (e.g., asking applicants to explain gaps in employment history). Requesting job applicants to address specific c selection criteria (i.e., essential and desirable) can improve the efficiency of reviewing CVs. 2. Conducting interviews 23
  • 24. Structured interviews are recommended. A structured interview involves asking each candidate the same set of questions and assessing their responses on the basis of pre- determined criteria. Questions and assessment criteria should be based on accurate, updated job descriptions. It is also helpful to develop criteria to categories responses (e.g., as excellent, good, average and unsatisfactory). An interview panel consisting of a representative selection of people may also be helpful. Two common types of structured interview questions are: • Situational questions which ask candidates about hypothetical scenarios that may be encountered in the job and how they would respond in that situation • Experienced-based questions which focus on specific examples of the candidate’s prior work experiences and their responses to past situations that are relevant to the job in question. 3. Reference checks Referees are useful for identifying past employment problems and clarifying the accuracy of information presented in an interview or CV. Only a small percentage of all reference checks are negative, therefore, it is often difficult to differentiate between candidates on the basis of reference checks alone. Induction and orientation of new workers An effective induction helps new workers understand their role and where they “fit” within the organization. It also equips them with the tools they need to perform their work role. Two useful induction tools are: 1. Induction manual / kits which may contain: 24
  • 25. • An induction checklist • Organizational philosophy / ethics / history • Strategic values of the organization • An organizational chart / structure • An employment manual on policies and procedures • An orientation to the workplace (including parking and safety issues) • Information about episodes of care, the duty system, supervision, staff meetings, etc. 2. Mentoring / “buddy” system New workers can be paired with experienced workers from a similar area to “show them the ropes”. Alternatively, a more formal / structured mentoring system can be a useful induction strategy in Which new workers are paired with a mentor who can assist them with their ongoing professional development? Best practice in selection techniques A wide selection of techniques are available which range from intensive (and expensive) activities (e.g., multi-day assessment centers), to the more commonly used interviews and reference checks. Based on the evidence alone, best practice in selection requires a comprehensive program that, Includes realistic tests of work practice and the use of validated psychometric instruments. This is clearly an unrealistic expectation for most AOD organizations. The next section describes evidence-based best practice for three of the most commonly used selection techniques:  Curriculum vitaes / résumés and written applications  Conducting interviews  Selection tests. 25
  • 26. Curriculum vitaes / résumés and written applications Information about a person’s professional qualifications and experience can be obtained from their curriculum vitae (CV) / résumé and their written applications. This information needs to be verified as far as possible before the person is hired. When reviewing the CV / résumé and written application, look for items that may need further clarification such as:  Unexplained gaps in employment history  Ambiguous wording  Unanswered or partly answered questions  Inconsistent information  Frequent job changes. Consider requesting job applicants to address specific selection criteria (i.e., essential and desirable) for the job position. The onus is then on the applicant to summarise their work experience and qualifications and present it in an accessible manner. This makes for a more efficient and time-saving process to find relevant information about each applicant that matches the criteria for the job. Conducting interviews In order to obtain the best person-job fit (i.e., matching the right person for the right job), a Structured interview format is recommended. A structured interview involves asking each candidate the same set of questions and assessing their responses on the basis of pre- determined criteria. The questions and assessment criteria are based on an accurate, updated job description. The more common types of structured interview questions are situational and experience-based. Situational questions 26
  • 27. Situational questions ask candidates about hypothetical scenarios that may be encountered in the job and how they would respond in that situation.The questions directly tap into the work related experience and problem-solving style of the candidate. For example, situational interview questions may include:  Your case load has increased to the point of being unmanageable - how would you address this?  What would you do if a client did not attend an appointment?  You are the team leader and two team members have had an argument with one another about the way the work tasks should be assigned. How would you handle this?  If you disagreed with the work practices of a coworker or team member, how would you deal with this situation?  A client arrives to a session intoxicated. How would you manage this?  A client complains to you that another staff member has acted inappropriately. What would you do?  During a counselling session, it becomes apparent that a client has problems to manage that are beyond your skill level (e.g., mental health issues or abuse). How would you handle this? Experience-based questions Experience-based questions focus on specific c examples of the candidate’s prior work experiences and their responses to past situations that are relevant to the job in question. One advantage of experience-based questions is the opportunity to tap into actual behavior and feelings rather than hypothetical ones. Examples of experience-based questions include: 27
  • 28. • Please describe a situation where you had to deal with an aggressive client and outline how you dealt with this. What were some of the strengths and weaknesses in your approach? • Can you give an example of when you had to manage a complex project and describe the strategies you used to do this? Developing criteria to assess candidates’ responses To effectively distinguish between candidates, it is recommended that structured questions are accompanied by a pre-determined scoring key. The scoring key should contain examples of excellent, good, average, and unsatisfactory answers against which candidates’ answers can be compared. Advantages of pre-determined scoring criteria include: • Reduced reliance on interviewers’ memory or written notes • Increased cLife Advisorrity regarding the criteria against which candidates are assessed (i.e., what is a “good” answer?) • Consistency of assessment across candidates and between interviewers (if a panel is used). Interview panels It is recommended that an interview panel, rather than a single interviewer, is used. Using a panel of interviewers can help to minimize potential biases, as well as provide the opportunity to compare evaluations of the candidate before a final decision is made.29 Where appropriate, the panel should be representative of gender and professions. Representation on an interview panel can provide frontline workers / team members with an opportunity to participate in the recruitment and selection process. 28
  • 29. Selection tests Purpose • To judge potential ability/job related problems • To eliminate the possibility of biasness on the part of interviewer • To uncover talents not identifiable by interviewer. Types There are mainly four kind of tests:- 1. achievement test(profeceancy test): to test the skills or knowledge acquired by the candidate due to his training and achievement for example typing test,shorthand test,operating calculators etc. 2. Aptitude test(Potential test): to judge latent ability to learn a new job,in order to judge memory,reasoning,speed of perception,fluency in language,to judge the capacityto learn a particular type of mechanical work etc. 3. Pschometer or skill test: measure to ability to do a specific job 4. Personality test: to judge individual value system,emotional reaction,maturity,confidence,to judge the dominance,selfconfidence,self sufficiancyetc. 29
  • 30. 30
  • 31. FOCUS OF THE PROBLEM The insurance industry is expanding very fast and there is big scope in this sector in future, insurance companies recruit Life Advisors and take work from them on commission bases. The whole growth of company depends upon the capability of Life Advisor.So the main problem is to recruitment and selection of capable candidates for life advisors 31
  • 32. OBJECTIVES OF THE STUDY  To study and understand the process of recruitment and selection of Life Advisor at Reliance Life Insurance  To find out the different sources of recruitment.  To study the effectiveness of Recruitment and Selection process.  To suggest the various profiles for getting capable Life Advisor in Reliance Life Insurance 32
  • 33. LIMITATIONS OF THE STUDY  Time was the biggest limitation. The project requires a thorough study which requires a considerable amount of time.  The study is based on both primary as well as secondary data and has the limitations pertaining to the usage of both kinds of data.  Respondents may be biased while filling the questionnaire. 33
  • 34. Chapter-2 34
  • 35. INDUSTRY PROFILE History of insurance sector in india In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. 35
  • 36. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices. 36
  • 37. In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector.The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein , among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and 37
  • 38. has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002. The insurance sector is a colossal one and is growing at a speedy rate of 15- 20%. Together with banking services, insurance services add about 7% to the country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost 190 years. The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938 - Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 38
  • 39. 1956 - 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Insurance Regulatory and Development Authority(IRDA) The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto." 39
  • 40. Company profile ABOUT RELIANCEGROUP The Reliance Group founded by Dhirubhai H. Ambani (1932-2002) is India's largest business house with total revenues of over Rs 99,000 crore (US$ 22.6 billion). The Group's activities span exploration and production (E&P) of oil and gas, refining and marketing, petrochemicals (polyester, polymers, and intermediates), textiles, financial services and insurance, power, telecom and infocom initiatives. The Group exports its products to more than 100 countries the world over. Reliance emerged as India's Most Admired Business House, for the third successive year in a TNS Mode survey for 2003. Reliance Group revenue is equivalent to about 3.5% of India's GDP. The Group contributes nearly 10% of the country's indirect tax revenues and over 6% of India's exports. Reliance is trusted by an investor family of over 3.1 million - India's largest. One out of every four investors in India is a Reliance shareholder. With globally competitive capital and operating cost positions, Reliance Group dominates the rapidly growing Indian market deriving over 80% of its revenues from the domestic market. 40
  • 41. There was a split in Reliance group in 2005 and it was broken into two separate companies: • Reliance Industries Limited • Reliance Anil Dhirubhai Ambani Group (ADA Group) VISION To build a global enterprise for all our stakeholders, and A great future for our country, To give millions of young Indians the power to shape their destiny, The means to realize their full potential… VALUES 41
  • 42. • Shareholder Interest We value the trust of shareholders, and keep their interests paramount in every business decision we make, every choice we exercise • People Care We possess no greater asset than the quality of our human capital and no greater priority than the retention, growth and well-being of our vast pool of human talent • Consumer Focus We rethink every business process, product and service from the standpoint of the consumer – so as to exceed expectations at every touch point • Excellence in Execution We believe in excellence of execution – in large, complex projects as much as small everyday tasks. If something is worth doing, it is worth doing well. • Team Work The whole is greater than the sum of its parts; in our rapidly-changing knowledge economy, organizations can prosper only by mobilizing diverse competencies, skill sets and expertise; by imbibing the spirit 42
  • 43. of “thinking together” -- integration is the rule, escalation is an exception • Proactive Innovation We nurture innovation by breaking silos, encouraging cross- fertilization of ideas & flexibility of roles and functions. We create an environment of accountability, ownership and problem-solving – based on participative work ethic and leading-edge research • Leadership by Empowerment We believe leadership in the new economy is about consensus building, about giving up control; about enabling and empowering people down the line to take decisions in their areas of operation and competence… • Social Responsibility We believe that organizations, like individuals, depend on the support of the community for their survival and sustenance, and must repay this generosity in the best way they can. • Respect for Competition 43
  • 44. We respect competition – because there’s more than one way of doing things right. We can learn as much from the success of others as from our own failures The Reliance Anil Dhirubhai Ambani Group works in: • Reliance Communication • Reliance Energy • Reliance Capital • Reliance Mutual Fund Reliance Life Insurance • Reliance General Insurance 44
  • 45. • Reliance Health • Reliance Entertainment • Reliance Infrastructure 45
  • 46. RELIANCE – ADA GROUP 46
  • 47. 47
  • 48. • Reliance Capital Reliance Capital is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. The company has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. • Reliance Communications Limited The flagship company of the Reliance – ADA Group, Reliance Communications Limited, is the realization of our founder’s dream of bringing about a digital revolution that will provide every Indian with affordable means of communication and a ready access to information. The company began operations in 1999 and has over 20 million subscribers today. It offers a complete range of integrated telecom services. These include mobile and fixed line telephony; broadband, national and international long distance services, data services and a wide range of value added services and applications aimed at enhancing the productivity of enterprises and individuals. • Reliance Energy Limited Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It 48
  • 49. ranks among India’s top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. It is India’s foremost private sector utility with aggregate estimated revenues of Rs 9,500 crore (US$ 2.1 billion) and total assets of Rs 10,700 crore (US$ 2.4 billion). Reliance Energy Limited distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai, Delhi, Orissa and Goa, across an area that spans 1,24,300 sq. kms. It generates 941 MW of electricity, through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. The company is currently pursuing several gas, coal, wind and hydro-based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of over 12,500 MW. These projects are at various stages of development. Reliance Energy Limited is vigorously participating in emerging opportunities in the areas of trading and transmission of power. It is also engaged in a portfolio of services in the power sector in Engineering, Procurement and Construction (EPC) through a network of regional offices in India. • Reliance Health 49
  • 50. In a country where healthcare is fast becoming a booming industry, Reliance Health is a focused healthcare services company enabling the provision of solution to Indians, at affordable prices. The company aims at providing integrated health services that will compete with the best in the world. It also plans to venture into diversified fields like Insurance Administration, Health care Delivery and Integrated Health, Health Informatics and Information Management and Consumer Health. Reliance Health aims at revolutionizing healthcare in India by enabling a healthcare environment that is both affordable and accessible through partnerships with government and private businesses. • Reliance Media & Entertainment As part of the Reliance - ADA Group, Reliance Entertainment is spearheading the Group’s foray into the media and entertainment space. Reliance Entertainment’s core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms. The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV. Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema. 50
  • 51. Reliance Entertainment has made an entry into FM Radio through Adlabs Radio, having won 45 stations in the recent bidding, which will soon be the Radio station with the largest footprint in India. Reliance Capital Reliance Capital is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. The company has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. • Reliance Communications Limited The flagship company of the Reliance – ADA Group, Reliance Communications Limited, is the realization of our founder’s dream of bringing about a digital revolution that will provide every Indian with affordable means of communication and a ready access to information. The company began operations in 1999 and has over 20 million subscribers today. It offers a complete range of integrated telecom services. These include mobile and fixed line telephony; broadband, national and international long distance services, data services and a wide range of value added services and applications aimed at enhancing the productivity of enterprises and individuals. 51
  • 52. • Reliance Energy Limited Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It ranks among India’s top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. It is India’s foremost private sector utility with aggregate estimated revenues of Rs 9,500 crore (US$ 2.1 billion) and total assets of Rs 10,700 crore (US$ 2.4 billion). Reliance Energy Limited distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai, Delhi, Orissa and Goa, across an area that spans 1,24,300 sq. kms. It generates 941 MW of electricity, through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. The company is currently pursuing several gas, coal, wind and hydro-based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of over 12,500 MW. These projects are at various stages of development. Reliance Energy Limited is vigorously participating in emerging opportunities in the areas of trading and transmission of power. It is also engaged in a portfolio of services in the power sector in Engineering, Procurement and Construction (EPC) through a network of regional offices in India. • Reliance Health 52
  • 53. In a country where healthcare is fast becoming a booming industry, Reliance Health is a focused healthcare services company enabling the provision of solution to Indians, at affordable prices. The company aims at providing integrated health services that will compete with the best in the world. It also plans to venture into diversified fields like Insurance Administration, Health care Delivery and Integrated Health, Health Informatics and Information Management and Consumer Health. Reliance Health aims at revolutionizing healthcare in India by enabling a healthcare environment that is both affordable and accessible through partnerships with government and private businesses. • Reliance Media & Entertainment As part of the Reliance - ADA Group, Reliance Entertainment is spearheading the Group’s foray into the media and entertainment space. Reliance Entertainment’s core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms. The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV. Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema. 53
  • 54. 54
  • 55. PRODUCTS POLICIES Reliance Life Insurancehas a wide array of insurance plans that have been designed with the philosophy that different individuals are bound to have differing insurance needs. The ideal insurance plan is one that addresses the exact insurance needs of the individual that will depend on the age and life stage of the individual apart of the host of other factors. LIFE INSURANCE PLANS: Under Life insurance plans, Reliance Life Insuranceoffers plans under the following major categories:  Education Insurance Plans  Wealth creation Plans  Premium Guarantee Plans  Protection Plans Saving&Investment Plans We all carry dreams in our lives. You can realize these dreams by investing in a plan that works as hard as you. 55
  • 56. • • • 56
  • 57. • • • • In life, you have always given your family whatever they have wanted. Yet, there are some promises you have to fulfil, such as taking your family for a vacation, or buying that dream house. Set aside some money to achieve these specific goals with the help of Reliance Savings & Investment Plans. The plan allows you to experience the joys of life and provide for your family's needs. Enjoy life without worrying about the promises you have made—we are here to fulfil them. Reliance Life Insurance Smart Maturity Benefit Plan Reliance Life Insurance Super Endowment Plan 57
  • 58. Reliance Life Insurance Guaranteed Money Back Plan Reliance Life Insurance Money Multiplier Plan Reliance Cash Flow Plan Reliance Endowment Plan Reliance Super Five Plus Reliance Whole Life Plan Reliance Connect 2 Life Plan RETIREMENT SOLUTIONS: The primary objective of retirement plan is to help you provide for your financial needs in your post retirement years.  Forever Life  Life Time Super Pension  Life Link Super Pension HEALTH PRODUCT SUIT: Under Health Product Suit, Reliance Life Insuranceoffers plans under the following major categories:  Health Assure  Health Assure Plus  Hospital Care 58
  • 59.  Cancer Care  Cancer Care Plus  Diabetes Care  Diabetes Care Plus PRODUCT PORTFOLIO Insurance Solutions for Individuals Reliance Life InsuranceLife Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to create a customized solution for each policyholder. Savings & Wealth Creation Solutions  Save'n'Protect is a traditional endowment savings plan that offers life protection along with adequate returns.  CashBak is an anticipated endowment policy ideal for meeting milestone expenses like a child's marriage, expenses for a child's higher education or purchase of an asset. It is available for terms of 15 and 20 years. 59
  • 60.  LifeTime Gold is a unit-linked plan that offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 7 fund options - Preserver, Protector, Balancer, Flexi Balanced Multiplier, R.I.C.H and Flexi Growth.  LifeStage RP is unit linked plan that provides you with an option of lifecycle- based portfolio strategy that continuously re-distributes your money across various asset classes based on your life stage. This will help you achieve the right Asset Allocation to meet your desired financial goals.  LifeLink Super is a single premium unit linked insurance plan which combines life insurance cover with the opportunity to stay invested in the stock market.  Premier Life Gold is a limited premium paying plan specially structured for long-term wealth creation.  InvestShield Life New is a unit linked plan that provides premium guarantee on the invested premiums and ensures that the customer receives only the benefits of fund appreciation without any of the risks of depreciation. 60
  • 61.  InvestShield Cashbak is a unit linked plan that provides premium guarantee on the invested premiums along with flexible liquidity options.  LifeStage RP is a unique and powerful wealth creation insurance solution, which combines the benefits of automatic asset allocation and quarterly rebalancing along with increased protection. Protection Solutions  LifeGuard is a protection plan, which offers life cover at low cost. It is available in 3 options - level term assurance, level term assurance with return of premium & single premium.  HomeAssure is a mortgage reducing term assurance plan designed specifically to help customers cover their home loans in a simple and cost- effective manner. Education Solutions  SmartKid New ULRP provides guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The 61
  • 62. policy is designed to provide money at important milestones in the child's life. SmartKid plans are also available in traditional form. Retirement Solutions  ForeverLife is a traditional retirement product that offers guaranteed returns for the first 4 years and then declares bonuses annually.  LifeTime Super Pension is a regular premium unit linked pension plan that helps one accumulate over the long term and offers 5 annuity options (life annuity, life annuity with return of purchase price, joint life last survivor annuity with return of purchase price, life annuity guaranteed for 5, 10 and 15 years & for life thereafter, joint life, last survivor annuity without return of purchase price) at the time of retirement.  LifeStage Pension is a regular premium unit linked pension plan that provides you with a unique lifecycle-based strategy that continuously re- distributes your money across various asset classes based on your life stage, eventually providing you with a customized retirement solution.  LifeLink Super Pension is a single premium unit linked pension plan. 62
  • 63.  Immediate Annuity is a single premium annuity product that guarantees income for life at the time of retirement. It offers the benefit of 5 payout options.  PremierLife Pension is a unique and convenient retirement solution with a limited premium paying term of three or five years, to suit professionals and businessmen, especially those who require more flexibility and customization while planning their finances. Health Solutions  Health Assure Plus: Health Assure is a regular premium plan which provides long term cover against 6 critical illnesses by providing policyholder with financial assistance, irrespective of the actual medical expenses. Health Assure Plus offers the added advantage of an equivalent life insurance cover.  Cancer Care: is a regular premium plan that pays cash benefit on the diagnosis as well as at different stages in the treatment of various cancer conditions. 63
  • 64.  Cancer Care Plus: is a wellness plan that includes all the benefits of Cancer Care and also provides an additional benefit of free periodical cancer screenings.  Diabetes Care: Diabetes Care is a unique critical illness product specially developed for individuals with Type 2 diabetes and pre-diabetes. It makes payments on diagnosis on any of 6 diabetes related critical illnesses, and also offers a coordinated care approach to managing the condition. Diabetes Care Plus also offers life cover.  Diabetes Care Plus: is a unique insurance policy that provides an additional benefit of life cover for Type 2 diabetics and pre-diabetics  Hospital Care: is a fixed benefit plan covering various stages of treatment - hospitalization, ICU, procedures & recuperating allowance. It covers a range of medical conditions (900 surgeries) and has a long term guaranteed coverage upto 20 years.  Crisis Cover: is a 360-degree product that will provide long-term coverage against 35 critical illnesses, total and permanent disability, and death. 64
  • 65. 65
  • 66. Group Insurance Solutions Reliance Life InsuranceLife also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees.  Group Gratuity Plan: Reliance Life InsuranceLife's group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner and also avail of tax benefits as applicable to approved gratuity funds.  Group Superannuation Plan: Reliance Life InsuranceLife offers a flexible market linked scheme that provides substantial benefits to both employers and employees. Both defined contribution (DC) and defined benefit (DB) schemes are offered to optimize returns for members of the trust and rationalize cost. Members have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement.  Group Immediate Annuities: Reliance Life InsuranceLife realizes the importance of prudent retirement planning. With this in mind, we have developed a suite of annuity products that not only give you an income for life but also provide you options to match your needs. In addition to the annuities offered to existing superannuation customers, we offer immediate annuities to superannuation funds not managed by us. 66
  • 67.  Group Term Plan: Reliance Life InsuranceLife's flexible group term solution helps provide an affordable cover to members of a group. The cover could be uniform or based on designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death. 67
  • 68. Flexible Rider Options Reliance Life InsuranceLife offers flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer. 1. Accident & disability benefit: If death occurs as the result of an accident during the term of the policy, the beneficiary receives an additional amount equal to the rider sum assured under the policy. If an accident results in total and permanent disability, 10% of rider sum assured will be paid each year, from the end of the 1st year after the disability date for the remainder of the base policy term or 10 years, whichever is lesser. If the death occurs while traveling in an authorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit. 2. Critical Illness Benefit: protects the insured against financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical expenses prior to death 3. Waiver of Premium: In case of total and permanent disability due to an accident, the future premiums continue to be paid by the company till the time of maturity. This rider is available with SmartKid, LifeTime Plus, LifeTime Super and LifeTime Super Pension. 68
  • 69. 4. Income benefit rider: In case of death of the life assured during the term of the policy, 10% of the sum assured is paid annually to the nominee on each policy anniversary till the maturity of the rider. 69
  • 70. Some plans with detail CASH BAK Who can apply? If you are 16 year old and not older than 55 years, the minimum sum is Rs. 75,000. You have the option of paying yearly, half-yearly and also monthly premium. Death benefit: Sum assured + guaranteed additions (GA @ 3.5% compound annually on SA for the 4 years) + vested bonus (VB) Maturity benefit: 50% of sum assured guaranteed additions for four years + VB ob entire sum assured. Survival benefit: At the end of the year SBAS % of S.S. End of the years SBAS % of S.S. 3 10% 4 10% 6 15% 8 15% 9 20% 12 20% 12 25% 16 25% Maturity 50%+GA+VB Maturity 50%+GA+VB Additional features: 70
  • 71. For protection to your family against unfortunate health, hazards or eventuality, we offer you the followings riders: 1. Critical illness Riders 2. Major surgical Riders 3. Accident & Disability benefit 4. accident benefit Riders General features: Surrender- after 3 policy years, you get certain amount on surrender of the policy. SMART KID Who can apply? If you are a parent’s aged between 20 & 60 years with children in the age group of 0 to 15 years with minimum sum assured Rs. 1,00,000. Death benefit: Nominee get 100% sum assured + profit accrued on the plan till such date + Wavier of premium Survival benefit: This policy pays out money at regular interval coinciding with important Miles tones in child’s life. It has two options for payment. 71
  • 72. Option 1: At the end of Child Age Pay out Term-7 5 years 0% of S.A. Term-5 7 years 5% of S.A. Term-2 0 years 5% of S.A. Term 2 years 0% of S.A.+GA+VB 72
  • 73. Option 2: At the end of Child Age Pay out Term-4 8 years 5% of S.A. Term-3 9 years 20% of S.A. Term-2 0 years 20% of S.A. Terrm-1 1 years 0% of S.A. Term 2 years 0% of S.A. Riders: 1. Income benefit riders 2. Accident & Disability Benefit riders 3. Accident benefit riders General features: Surrender: after three policy years have been completed Tex-benefit: Sec 80(c) on premium payment Sec 10(10) D benefit on death & maturity claim. 73
  • 74. FOREVER LIFE PENSION PLAN Who can apply? If a person age between 20 & 60 year with minimum term 5 years and maximum 30 years. Life cover benefit: Forever life pension plan provides life covers during the deferment phase. In unfortunate event of the death, the spouse has the option to receive the sum assured with guaranteed additions and vested bonuses(if any) as a lump sum or get an annuity that would provide a regular income for life. Maturity benefit: 1. Life Annuity: annuity for life 2. Life annuity with return of purchase price: life annuity for the annuitant with the return of the purchase price. 3. Life annuity guaranteed for 5, 10, 15 years: guaranteed annuity paid for chosen term and after that the annuity as long as the annuitant is alive. 4. Joint life, last survivor with return of purchase price: in this case, the annuity is first paid to annuitant. After the death of annuitant, the spouse starts getting a pension, which is an amount that equal to the annuity paid to the annuitant. After the death of last survivor, the purchase price is return to the beneficiary. 74
  • 75. Chapter-3 75
  • 76. REVIEW OF EXISTING LITRETURE Philip G. Swaroff, Lizabeth A. Barclay, Alan R. Bass(2006) has written in his article relations between recruiting source, employee tenure and productivity were examined for a sample of 618 technical salespersons over a 2-year period. Unlike earlier research, a relation between recruitment source and job tenure was not found, nor was recruiting source found to be related to employee productivity. Explanations for differences between the present findings and earlier research include: characteristics of this particular job; the fact that multiple jobs and levels were not always considered; and the turnover rate of the sample job. Additional findings lent some support to Schwab's (1982) suggestion that recruiting sources may be differentially effective to the extent that they reach different populations. A comparison of research results with text book presentations and practitioner articles is also provided, with a discussion of the gap between research and practice. Charieoliver(2008) has said on her research paper that the key to successful recruitment is to ensure that the criteria of suitability are overt and relevant to the job itself. Once these criteria are agreed and shared it is possible to make more rational decisions about someone's suitability for a job, based on evidence rather than ‘gut feeling’ or instinct. Effective recruitment and selection should not be about the luck of the draw. Systematic planning and preparation will increase the likelihood of taking on the right person. The key to effective recruitment is preparation: knowing the job and what is required of someone to perform it well. The costs of recruiting the wrong person can be significant. The cost of employing someone may be at least twice their salary when factors such as training, expenses and employer's contributions to their pension are added. Rakesh sharma(2008) has written in his book that a company's success begins in the recruitment process during which the screening and vetting procedures shape and convey the company's demands to aspiring candidates. Therefore, it is essential for an organization to construct an explicit and standardized mode by which skills, qualifications and personal attributes are illuminated and used in the decision-making 76
  • 77. process leading to employment. The author discusses a dual interview and supplementary self-evaluation process to be used to fill a new position of print media editor. Robert P. Vecchio(2004) Selection is the process of choosing from a group of applicants the individual best suited for a particular position based on conventional and non- conventional methods . Therefore, the effectiveness of recruitment has a significant impact on the efficiency of the selection process. The selection process should provide as much reliable and valid information as possible about applicants so that their qualifications may be carefully matched with the job requirements. BLife Advisorckman (2002) said in his book interviews are used widely for selection purposes at senior or executive level (Campion, Palmer, & Campion, 1997; Garman, 2005). Research shows that to increase their reliability, validity and feasibility, interviews should be based on a thorough job analysis and selection criteria, they should be semi- structured and scored according to a behaviourally anchored rating scale. Multiple interviews are often favoured over panel interviews, the modality of the interview should be standardised across all candidates, and assessors should be trained . 77
  • 78. RESEARCH METHODOLOGY Research problem:- To get the potential Life Advisors for the sake of company’s benefit. Research Design :- Descriptive and Exploratory Research Design. Study is descriptive because it describes the process of recruitment and selection and study is exploratory because some more new profiles or segments are discovered for recruitment. Universe & Sample size;- Reliance Life Insurance Gurgaon. Agency Managers-20 Life Advisors-50 Sampling Technique;- convenient sampling Data Collection and Sources:- Data is collected through primary and secondary sources where primary data collection was done by structured questionnaire and secondary data was collected from magazines,newspaper,books,etc. Analysis pattern:- pie chart and bar chart were used for analysis. 78
  • 79. Chapter-4 79
  • 80. ANALYSIS AND INTERPRETATION RECRUITMENT PROCESS OF RELIANCE LIFE INSURANCE : Primary Sources • Through Agency Manager References • Cold Calling • Through Interns Kind Of Recruitment Process Basically, it is a 4 rounds procedure: • Initially Candidate has to fill 750/-Rs. NAAF (New Agent Application Form) then Screening is done by Agency Managers. • Business Opportunity Presentation (BOP) is done by ADM (Agency Development Manager). • Then, Branch Manager will Interview the candidate. • After this Training will be provided to Candidate. • And then Candidate has to undergo IRDA Exam. Strategies Followed No Strategies are followed as such. Criteria for becoming Financial Advisor(Life Advisor) Basic criteria is: • Graduate. • Age > 25 • Married Preferred. • Female Preferred • Min. of 5years of Residence in Gurgaon. No. of days allocated for 18-20 days are allocated for Training. 80
  • 81. training In a month,no.of candidates Recruited as Financial Advisors 40-50 candidates are recruited as Life Advisors. Training Reimbursement/Commission No Training Reimbursement is given to Life Advisors. In a year,no.of times Training provided Once in a month. Reliance Life Insurance strictly follows the norms of IRDA so; if anyone is not fulfilling the criteria then he cannot be awarded with any position in the company. Career Path Life Advisors get a good Career Path so they can become Agency Manager as well as Training Manager. How is it Different Basically, Reliance Life Insurance concentrates on : • Professionalism • Pragmatism • Integrity And also they want to become preferred company for financial protection so, they take candidate needs into consideration a lot as they have multi-channel execution capability. For agency managers 81
  • 82. 1. From which segment people come and ready to do the job of LIFE ADVISOR segments Response students 60% 12 Businessman 10% 2 govt. employes 10% 2 Housewives 5% 1 retired person 15% 3 100% 0% 10% 20% 30% 40% 50% 60% students businessman govt. employes housewives retired person response response Interpretation Most of the respondents said that the people come and ready to do the job of LIFE ADVISOR are freshers.. 2. What are the sources of recruitment? 82
  • 83. Sources responses employeement exchange 30% 6 consultancy firm 20% 4 Campus interview 0% 0 calling on random nos. 30% 6 References 20% 4 0% 5% 10% 15% 20% 25% 30% employeement exchange campus interview references Sources Sources Interpretation According to survey the main source of life advisors are from employment exchange and calling on random numbers. 3. Which one of the quality you want to see in your LIFE ADVISOR? 83
  • 84. qualities Responses communication skill 30% 6 Commitment 10% 2 Confidence 30% 6 social circle 30% 6 Punctuality 0% 0 0% 5% 10% 15% 20% 25% 30% communication skill confidence punctuality qualities qualities Interpretation Communication skill,confidence and social circle are the main characteristics of LIFE ADVISOR which agency manager want to see in the LIFE ADVISOR. 4. How many Life Advisor attend regular training sessions organized by company? 84
  • 85. Life Advisor in % Respondents 0-20 0 20-40 10% 40-60 45% 60-80 25% 80-100 20% Respondents 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0-20 20-40 40-60 60-80 80-100 Respondents Interpretation According to survey 40-60% Life Advisor attend the training sessions organized by company. 5. How much time you can retain your active LIFE ADVISOR? 85
  • 86. Time Respondents 0-1 year 40% 8 1-2 year 40% 8 2-3 year 10% 2 3-4 year 10% 2 4-5 year 0% 0 retain active LA 0-1 year 1-2 year 2-3 year 3-4 year 4-5 year Interpretation According to survey a company can retain LIFE ADVISOR only 0-2 years,after that they change their company and join some other company of insurance. 6. How much % LIFE ADVISOR got permotion within company? 86
  • 87. promotion Responses 10-20% 40% 8 21-30% 40% 8 31-40% 10% 2 41-50% 10% 2 51-60% 0% 0 promotion 10-20% 21-30% 31-40% 41-50% 51-60% Interpretation There is very small probability of permotion within company,this is only 10-30%. 7. Do you agree Life Advisor are doing good job? 87
  • 88. respondents StronglyAgree 0 Agree 25% Neutral 25% Disagree 50% StronglyDisagree 0 StronglyAgree Agree Neutral Disagree StronglyDisagree Interpretation Most of the agency managers are not satisfied with the performance of Life Advisor. 8. Which segment do you want to give more priority? 88
  • 89. Segments respondents Businessman 15% govt.employee 30% retired person 30% house-wife 10% Fresher 15% respondents 0% 5% 10% 15% 20% 25% 30% 35% businessman govt.employee retired person house-wife fresher respondents Interpretation According to survey managers want to recruit more businessman and retired persons as compared to other options. For Life Advisors 1. What is your qualification? 89
  • 90. Qualification respondents 12th 10% Graduation 60% Postgraduation 20% professional course 10% any other 0% respondents 0% 10% 20% 30% 40% 50% 60% 70% 12th graduation postgraduation professionalcourse any other respondents Interpretation According to survey qualification of most of the Life Advisor are graduation. 2. Marital status Marital status response 90
  • 91. Married 40% Unmarried 60% married unmarried Interpretation More than half the number of employees out of sample are unmarried. 3. How much time you living in gurgaon? 91
  • 92. Living status respondents below 5yrs 20% 5-10yrs 30% 10-15yrs 20% 15-20yrs 20% above 20yrs 10% 0% 5% 10% 15% 20% 25% 30% 35% below 5yrs 5-10yrs 10-15yrs 15-20yrs above 20yrs Series1 Interpretation Maximum 30% respondents are living in Gurgaon since 5-10 years. 4. What is your family annual income? family income(per annum) Below 50000 0 92
  • 93. 50000-100000 10% 100000-200000 20% 200000-300000 30% above 300000 40% 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 below 50000 50000-100000 100000-200000 200000-300000 above 300000 Series1 Interpretation Most of the respondents have more than three Life Advisorkh annual household income. 5. Are you satisfied with training sessions provided by company? 93
  • 94. strongly agree 0 Agree 60% Neutral 10% Disagree 30% strongly disagree 0% strongly agree agree neutral disagree strongly disagree Interpretation There are half respondents satisfied with the training sessions provided by company and one third are dissatisfied with the training sessions. 6. Are you satisfied with commission of Life Advisor? strongly agree 0 94
  • 95. Agree 25% Neutral 0 Disagree 75% strongly disagree 0 strongly agree agree neutral disagree strongly disagree Interpretation Most of the respondents are dissatisfied with commission of Life Advisor 7. Are you satisfied with promotion policy of company? strongly agree 0 95
  • 96. Agree 20% Neutral 0 Disagree 70% strongly disagree 10% strongly agree agree neutral disagree strongly disagree Interpretation Most of the respondents are dissatisfied with the permotion policy of the company. 8. Are you doing this job as part time or full time? part time 10% full time 90% 96
  • 97. part time full time 97
  • 98. Chapter-5 FINDINGS • The agency managers can not retain the Life Advisor in company. • There are very less number of Life Advisor who got promotion within the company. 98
  • 99. • About half number of Life Advisor are not attending the training sessions provided by company. • Most of the Agency Managers are not satisfied with the performance of Life Advisor • Most of the Life Advisor are not satisfied with their commission & promotion policy of company. • Agency managers mainly focus on students or freshers for life advisors . • Reliance Life Insurance is new in insurance sector so people not know much abut the company. RECOMMENDATIONS 1. Company should focus more on profiles of Life Advisor while recruiting them, for example, company should recruit people at the age of 28-32 years, company should prefer married people who have a higher level of responsibility and 99
  • 100. company should give preference to female life advisors such as female entrepreneurs, divorced women. 2. Company should do some amendments in their promotion policy like they should do internal promotion and stress on succession planning. 3. Company try to retain their active Life Advisors by giving some lucrative incentives,quarterly bonus,tours based on their performance. 4. Company should do more interesting training sessions with the help of audio visuals,two way communication,activities,practical training,etc. 5. Company should give more focus on advertisements so that they can lure more people. CONCLUSION 100
  • 101. As we know Recruitment is distinct from Selection. Once the required number and kind of human resources are determined, the management has to find the places where the required human resources are/will be available and also they have to find the means of attracting them towards the organization before selecting suitable candidates for jobs. The present study has been done to analyze the effectiveness of recruitment process at Reliance Life Insurance This study reveals that the company is not able to recruit potential Life Advisors. Also the Life Advisors are dissatisfied with their commission and promotion policy. At the end of the study, we can conclude that though there is satisfactory recruitment process but company have to do some amendments in their recruitment process to get potential Life Advisors like company should choose suitable segment for Life Advisor. BIBLIOGRAPHY Books : 101
  • 102. a) Blackman(2002), Human Resource Management, Tata Mcgraw Hill Publications. b) Kotler Philips(2009),Marketing Management, Dorling Kindersley(India) Pvt.Ltd. c) Kothari, C. R.(2005), Quantitative Technique, Vikas Publishing House Pvt. Limited, New Delhi d) Vecchio P Robert (2008), HRM Review, The Icfai University Press Websites : a) www.bhartiaxalife.com b) www.citehr.com c) www.irda.nic.in d) www.paradize.com Questionnaire Hello sir/madam, 102
  • 103. I am an M B A student and conducting a very prestigious marketing research project on “ Recruitment and Selection of Life Advisor in Reliance Life Insurance .” You are requested to cooperate me by filling this questionnaire. For agency managers NAME ________________________________ GENDER a) Male b) Female AGE a) Less than 25 b) 25-35 d) more than 35 1. From which segment people mostly ready to do the job of life advisor? a) students(Freshers) b) businessman c) govt.employee d) housewife e) retired person 2. What are the sources of recruitment? a) through employment exchange b) through consultancy firm c) through campus interview d) calling on random numbers e) through references. 3. Which one of the following quality you want to see in your LA?(rate 1-5) a) good communication skill b) commitment c) confidence d) social circle e) punctuality 103
  • 104. 4. How many LA’s attending regular training sessions organized by company ?(in %) a) 0-20 b) 20-40 c) 40-60 d) 60-80 e) 80-100 5. How much time you retain your active LA’s?(in yrs) a) 0-1 b) 1-2 c) 2-3 d) 3-4 e) 4-5 6. How much percent LA got permotion within company? a) 0-20 b) 20-40 c) 40-60 d) 60-80 e) 80-100 7. Do you agree agents are doing good job? Strongly Agree Agree Neutral Disagree Strongly Disagree 8. Which segment do you want to give more priority? a) businessman b) govt.employee c) retired person d) house-wife e) fresher 104
  • 105. For Life Advisors NAME ________________________________ GENDER a) Male b) Female 105
  • 106. AGE a) Less than 25 b) 25-35 d) more than 35 1. What is your qualification? a) 12th b) graduation c) postgraduation d) professional course e) any other 2. Are you married? a) yes b) no 3. How much time you living in gurgaon?(in years) a) 0-5 b) 5-10 c) 10-15 d) 15-20 e) above 20 4. What is your family income?(in Rs per annum) a) below 50,000 b) 50,000-1,00,000 c) 1,00,000-2,00,000 d) 2,00,000-3,00,000 e) above 3,00,000 5. Are you satisfied with training sessions provided by company? Strongly Agree Strongly Disagree 1 2 3 4 5 6 .Are you satisfied with commission of LA’s? Strongly Agree Strongly Disagree 106
  • 107. 1 2 3 4 5 7. Are you satisfied with permotion policy of company? Strongly Agree Strongly Disagree 1 2 3 4 5 8. Are you doing this job as part time or full time? 107