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ANALYSIS OF THE VIEWS OF LIC AGENTS

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ANALYSIS OF THE VIEWS OF LIC AGENTS INTRODUCTION Marketing of life insurance is ridden with several problems and it calls for extraordinary skills. This consequently renders the Agent an indispensable
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ANALYSIS OF THE VIEWS OF LIC AGENTS INTRODUCTION Marketing of life insurance is ridden with several problems and it calls for extraordinary skills. This consequently renders the Agent an indispensable link between the existing or potential insurance customers and the Life Insurance Corporation of India. The competence of the agent then constitutes a critical element in the promotion of insurance business. This crucial role of the agent will, in the final analysis, contribute to the realization of the laudable objective of the LIC of India of providing financial security extensively to diverse population groups in urban and rural areas, in different segments and in all income levels, especially as envisaged in the Marketing Policy of the Corporation. As the life insurance agent is the central figure in the insurance marketing process, the success of insurance company is highly dependent on the army of agents. The job of a life insurance agent is to convert a suspect into prospect and the prospect into a policyholder (customer). To be successful in the profession, the agent is required to possess good knowledge about various life insurance products/plans/schemes, products of competitors, provisions of the Income-tax law, capital market conditions, etc. The entire individual policies of the Corporation were sold through individual agents up to the year Even after the emergence of alternative marketing channels like banacassurance and corporate agents, 98 per cent of premium received by LIC of India was through the business underwritten by individual agents. Since the alternative marketing channels emerged in India only in the year 2003 and about 98 percent of the premium received was through the individual agents business, only 236 individual agents were considered for the survey. A total of 200 agents from all the ten branches in Kannur and Kasargod districts were selected for the study. The data was collected using a structured questionnaire which is given in the appendix. The information collected was tabulated and presented in the following pages. PROFILE OF THE RESPONDENTS Gender-wise classification of the agents Table 6.1 shows the sex-wise distribution of the respondents. Of the total respondents, majority - 62 percent- belong to male category. Females were 38 percent only. This shows that life insurance agency business is dominated by males. Table 6.1 Sex-wise Classification of Respondents Sex Number Percent Male Female Age-wise Classification Age is an influential factor in selecting a job. As per rules, to obtain licence under the regulation, a person should attain at least 18 years of age. Table 6.2 Age-wise Classification of Respondents Age (in Years) Number Percent 237 Table 6.2 reveals that 52.5 percent of the respondents belong to the age group of 30 to 40 years and 28.5 percent to 40 to 50 years. Only 11.5 percent of the respondents fall in the group of 20 to 30 years, and 7.5 percent are in the group of 50 to 60 years. The mean age of an agent is 38.2 years (S.D. 7.73). This is a clear indication that majority of the people select the job of an LIC agent after the age of 30. Marital Status Marital status is another factor influencing the agency business. Some of the development officers, while in the discussion expressed that female agents, in many cases leave the job of life insurance agency after they get married. Table 6.3 depicts that as high as 85 percent of the respondents were married, 9 percent were single, and just 6 percent fall under other categories such as divorced, widowed and the like. Table 6.3 Marital Status of Respondents Marital Status Number Percent Single Married Other categories Education Qualification of the Agents Educational qualification is another factor influencing the insurance agency profession. Table 6.4 reveals that majority of the respondents (47.50 percent) were under graduates, 5.5 percent were post-graduates, 24 percent passed Pre-Degree/Plus two, and 23 percent were SSLC holders 238 The mean number of years of education of the respondents is (S.D. 2.24). At the same time, no professionally qualified person has been attracted to the profession of life insurance agency business. Table 6.4 Educational Qualification of Respondents Education Number Percent SSLC Plus Two/Pre-Degree Graduate Post-graduate Occupational Status of Respondents Table 6.5 reveals that only percent respondents are full time agents. The remaining percent are in the category of retired employees (7.50 percent), self-employed/daily wage earners (14 percent), and businessman (15 percent). Table 6.5 Occupational Status of Respondents Occupation Number Percent Full time LIC Agent Retired Employees Self employed / Daily wage earners Business 239 Family Structure of the Respondents Family structure is another factor influencing agency business. Family structure of the respondents is given in Table 6.6. The table reveals that percent of the respondents belong to nuclear family, percent to extended family and only 10 percent to from joint family. From the above, it can be presumed that life insurance agents prefer nuclear family. Table 6.6 Family Structure of Respondents Structure Number Percent Nuclear Extended Joint Family Size Family size of the respondents is given in Table 6.7. Analysis of the table reveals that percent of the respondents have family members 3 to 5, 35 percent have 6 to 8 members, 5 percent have more than 8 members, and 2.5 percent have a maximum of 2 members in their family. The mean number of members in the family of respondents is 6 (S.D. 1.88). Table 6.7 Family Size of Respondents No. of Members Number Percent Below and above 240 Employment Status of Spouse of the Respondents Table 6.8 discloses that percent of the respondents spouses are employed. Total of the respondents do not add 200 because 18 respondents were unmarried and 12 were either widow/widower/divorcees. Table 6.8 Employment Status of Spouse of Respondents Status Number Percent Employed Not Employed Self-employed/Business Total Earning Members in the Family As high as 63 percent of the respondents have two earning members in their family, percent have more than two, and in the case of percent of the respondents, respondent himself is the only earning member in their family. The mean number of earning members is two with a S.D. of Table 6.9 shows the earning members in the family of the respondents. Table 6.9 Number of Earning Members in the Family of Respondents Earning Members Number Percent One Two Three 241 Monthly Income of the Agent The monthly income of the agents is tabulated and given in Table It can be seen from Table 6.10 that the monthly income of agents ranges from below Rs.5,000 to above Rs.25,000. The mean monthly income of the respondents is Rs.10,325 per month (S.D. 5,513). At the same time percent of the respondents monthly income ranges from Rs.10,000 to 15,000, 8.50 percent have income ranging from Rs.15,000 to 20,000, 4.50 percent have income between Rs.20,000 and Rs.25,000, and only 1.5 percent of the respondents monthly income is above Rs.25,000. It is to be noted that 48 percent of the respondents monthly income is less than the average monthly income of the respondents, whereas 52 percent of the agents are in a better financial position. Table 6.10 Monthly Income of Respondents Income Number Percent Below Rs.5, Rs.5,000-10, Rs.10, Rs.15, Rs.20, Rs.25,000 and above Family Income Analysis of the family income of the respondents reveals that 50 percent of the respondents family income ranges from Rs.10,000 to 20,000 per month, while 3.5 percent of the respondents monthly family income is 242 above Rs.40,000. The average family income of the respondents is Rs.17,500 per month (S.D. Rs.9,937). Table 6.11 Family Income of Respondents Monthly Family Income Number Percent Below Rs. 10, Rs. 10,000 20, Rs. 20,000 30, Rs. 30,000 40, Rs.40,000and above On the basis of monthly income depicted in Table 6.11, it can be concluded that percent of the respondents belong to financially sound families. Category of Agents There are two types of individual agents attached to branch offices: (i) Rural Career Agents (RCAs), and (ii) Ordinary Agents (Direct Agents). Urban Career Agents (UCAs) are recruited at the Career Agents Branch at the Divisional Office. Table 6.12 reveals that 50 percent of the respondents belong to the category of ordinary Agents and the remaining 50 percent to the category of Rural Career Agents. Table 6.12 Agency Category of Respondents Category of Agents Number Percent Ordinary Agent Rural Career Agent 243 Major Reasons for Taking Life Insurance Agency Profession In India till recently, the profession of life insurance agency was not considered as a permanent job. Therefore, a good number of agents considered it as temporary means of livelihood. As and when they fully occupies with other profession or job, they quit the job of insurance agency. In the case of lady agents, many leave the job after getting married. Yet there are others who take it as a part- time job. Table 6.13 shows the major reasons that prompt the agents to take up the agency profession. Table 6.13 Major Reasons Prompt the Agents to Take up Life Insurance Agency Reasons Number Percent As a means of livelihood To supplement personal / family income As a kind of social service Pressure from friends / relatives Analysis of the table indicates that only 51 percent of the respondents selected the agency business as a means of livelihood. The rest 49 percent selected this job due to various other reasons like supplementing personal income (29.50 percent), as a kind of social service (10 percent), pressure from friends or relatives and the like (9.5 percent). Service Period of Agents It is a fact that business performance of agents, to a certain extent depends up on their experience in the field. Table 6.14 depicts the service 244 period of the respondents in number of years. Respondents selected have service experience ranging from five to twenty five years. About percent of the respondents have experience ranging from 5 to 10 years, percent have up to five years experience only, and 18.5 percent have experience between 10 and 15 years. About 9 percent of the respondents have 15 to 20 years of service and a very few (1.5 percent) have experience above 20 years. Table 6.14 Service Period of Respondents Period in Years Number Percent Up to Above The average length of service of the respondents is 8.3 years with S.D years. The above data reveals that more than 75 percent of the agents have sufficient experience in the field. Time Spent in the Field and LIC office Life insurance agent is expected to devote a definite time in the field to canvas prospect and to meet existing customers. At the same time, the agent should be in the branch office to meet the development officer or the branch manager and to render customer services like premium remittance, obtaining loan quotations, claim settlement, etc. A professional agent is required to keep the work schedule. 245 Table 6.15 shows that 52.5 percent of the respondents spent 2 to 4 hours per day in the field, 38.5 percent spent 4 to 6 hours; only 4.5 percent spent above 6 hours per day. It is amazing to find that 4.50 percent of the respondents spent less than two hours per day. Average time spent by the respondents in the field was 3.86 hours per day with S.D. of 1.3 years. This shows that agents do not keep a fixed time schedule for field work. Table 6.15 Number of hours spent in the field Per Day Hours No. Percent Below Above Table 6.16 exhibits that 62 percent of the respondents spent on an average one hour per day in the attached branch office of the LIC. About 35 percent spent two hours per day and a very low percentage i.e., 3 percent spent three hours per day. Average time spent by the agents in the branch office is hours per day i.e., about less than one and half hours per day with S.D. of 0.54 hours. Table 6.16 Hours spent per day in LIC office Hours Number Percent One Two Three 246 247 Business under Salary Savings Scheme It is comparatively easy to catch the prospects in the employees segment of the house hold sector. Generally, people in this category regularly save certain percentage of their income. They buy life insurance policies without much compulsion, mainly to take advantage of the income tax benefits. Table 6.17 reveals that the proportion of business of the agents under the Salary Savings Scheme (SSS) ranges from below 20 percent to above 60 percent. Majority of the respondents (44.5%) have less than 20 percent of their business under SSS and 2.5 percent have above 60 percent of their business under this category. The average business of agents under Salary Savings Scheme is 24.1 percent with S.D Table 6.17 Proportion of Agents Business under Salary Saving Scheme Proportion Number Percent Below Above Occupational Status of Customers of LIC Agents The customers were classified into six groups such as: a) Daily wage earners, b) Salaried employees, c) Professionals, d) Agriculturists, e) Business/Self employed, and f) NRIs. Salaried employees include clerks, teachers, and officers/executives. Table 6.8 shows the occupational status of customers of the respondents. 248 Analysis of table 6.18 reveals that majority of the agents concentrate on salaried income, NRI and business segment of the market for life insurance marketing. There were agents who could cover even more than 50 percent of the above category of clients in their business list. At the same time, wage earners and agriculturists are not given that much importance for insurance coverage. The main reason for this is agents are afraid of more surrenders and lapse from this segment. Many agents gave more importance to NRIs because they were able to procure major chunk of their business from this category. At the same time, history of lapse due to overselling can be traced more among this category. Table 6.18 Occupational Status of Customers of Respondents Proportion Occupations A B C D E F Below (15.19) 1 (0.50) 47 (24.74) 67 (48.91) 3 (1.53) 5 (2.86) (60.76) 20 (10.00) 88 (46.32) 57 (41.61) 60 (30.61) 48 (27.43) (20.25) 83 (41.50) 47 (24.74) 9 (6.57) 100 (51.02) 53 (30.29) (3.80) 51 (25.50) 6 (3.16) 2 (1.46) 24 (12.24) 51 (29.14) (11.50) 1 (0.53) 2 (1.46) 8 (4.08) 9 (5.14) (6.00) 1 (0.53) - 1 (0.51) 6 (3.43) (4.00) (0.57) Above 70-2 (1.00) (1.14) Total Note: 1) A=Wage earners; B=Salaried employees; C=Professionals; D=Agriculturists; E = Business/Self employed; F= NRIs 2) Figures in parenthesis indicate percentage to total. 249 Other Agencies maintained by LIC Agents As per the LIC of India (Agents) Rules 1972 and the IRDA (Licensing of Agents) Regulations, 2000, each person aspiring to be an agent has to undergo practical training of 100 hours in life or general insurance, as the case may be. In case of composite agent, he/she should have completed at least 150 hours of practical training in life and general insurance business combined. Table 6.19 Other Agency Business of Respondents Type of Agency Number Percent General insurance Institutional deposit Post office deposit UTI and stock exchange Others None Note. Others include agent for Kerala State Financial Enterprises (KSFE). Table 6.19 reveals that 21.5 percent respondents also act as general insurance agent, 7.5 percent respondents act as institutional deposit agents, 6 percent Post Office deposit agents, 8.5 percent UTI and Stock Exchange agents, another 14 percent took other agency like KSFE and the like. The data in Table 6.19 reveals that 57.5 percent of the LIC agents maintain other agency business. This again reveals that agents time is divided between life insurance and other agency businesses. 250 Club Membership of Agents Six clubs, viz., Corporate, Chairman, Zonal Manager, Divisional Manager, Branch Manager and Distinguished Agents are formed to recognize agents who perform consistently year after year. The club members enjoy certain privileges and are vested with authority to attest certain documents etc. Details of club membership of respondents are given in Table Analysis of table 6.20 reveals that only percent respondents are members in various clubs and the remaining percent of the respondents could not perform consistently. Table 6.20 Club Membership of Respondents Name of Club Number Percent Chairman Zonal Manager Divisional Manager Branch Manager Distinguished Agents Club None Figure 6.1 depicts the club membership of the respondents 251 Figure 6.1 Club Membership of Agents Percentage Chairman Zonal Manager Divisional Manager Branch Manager Distinguished Agents Club None Club Criteria Adopted by Agents for Recommending Life Insurance Products The agents are supposed to analyse the needs and desires of his/her client while recommending life insurance protection. A true professional agent should be a counselor as well as a financial advisor to the client. There are three standard ways of estimating the amount of life insurance to own. They are: (i) Human Life Value Approach (HLV), (ii) Needs Approach, and (iii) Capital Retention Approach. An insurance agent is expected to match the needs of the prospect with the products available. In order to provide total coverage assessed on the basis of any of the three approaches mentioned above, mixing of LIC s products can be done. Six different criteria usually used by agents were identified and the respondents were asked to rank them from I to VI. The criteria used by respondents are arranged in the order of rank from I to VI (Table 6.21). 252 Table 6.21 Criteria Used by Respondents for Recommending Life Insurance Products (N = 200) Criteria Frequency and score I II III IV V VI Average Weight Rank Rates of commission for agent I Needs and desires of customer II Wealth and income of customer III Age/Education/Marriage requirements of customer Social and occupational status of customer IV V Family background of customer VI Table 6.21 reveals that 43 percent of the respondents give preference to their commission, other aspects such as needs and desires of the customer, wealth and income position of the customer are only secondary to them. At the same time, 39 percent of the respondents recommend products on the basis of needs and desires of the customer. The different criteria used by respondents can be arranged in the order of mean weight as follows: Commission for agent (5.07), needs and desires (4.74), wealth and income (3.08), age/education/marriage requirements (2.96), social and occupational status (2.95), and family background of customer (2.2). Rate of commission for agent is the main criteria used by majority of agents for recommending life insurance to their clients. Figure 6.2 shows the criteria used by agents for recommending life insurance products to clients, on the basis of mean score. 253 Figure 6.2 Criteria Used by Agents for Recommending Life Insurance Products Rates of commission for agent Needs and desires of customer Wealth and income of customer Age/Education/Mar ri-age requirements of customer Social and occupational status of customer Family background of customer Mean Score Methods Used to Canvas Clients Unlike the case of other commodities, insurance customers do not normally go in search of Salesman / Agent or the product. The agent has to find out people, meet them, discuss with them and convert them to customers. Apart from understanding the criteria, it is also interesting to find out the methods commonly followed by the agents to canvas a prospect. Six different methods commonly used by the agents were given as choice and the respondents were asked to rank them. The methods followed are arranged in the order of rank from I to VI (Table 6.22). 254 Table 6.22 Methods Used by Respondents to Canvas Prospect. (N = 200) Methods Frequency and score I II III IV V VI Average Weight Rank Direct Meeting I By Offering to pay initial premium Through offering personal help Contac
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