Recruitment and selection of Insurance Companies

PREFACE

People are a company’s most important assets. They can make or break the fortunes of a

business. In today’s highly competitive business environment placing the right people in the right

position is very critical for the success of any organization.

The recruitment and selection decision is of prime importance as it is the vehicle for obtaining

the best possible person-to-job fit that will, contribute significantly towards the Company's

effectiveness. It is also becoming increasingly important, as the Company evolves and changes,

that new recruits show a willingness to learn, adaptability and ability to work as part of a team.

The Recruitment & Selection procedure ensures that these criteria are addressed  

In this project I have studied Recruitment and Selection process of HDFC Life Insurance and

attempted to provide some ways so as to make recruitment more effective and to reduce the cost

of hiring an employee.

I am privileged to be one of the students who got an opportunity to do my training with  HDFC

Life Insurance. My involvement in the project has been very challenging and has provided me a

platform to leverage my potential in the most constructive way.

HDFC Life insurance is one of India's leading financial institutions offering complete financial

solutions that encompass every sphere of life. In a short span of time. HDFC Life has set an

example by having a steady and confident journey to growth and success.

During the training period I have studied deeply the process of hiring in HDFC Life insurance

and did a SWOT analysis of HDFC Life Insurance to find out the existing shortcomings and

potential threats and thereby recommended suggestions.

This project however is an attempt to share as best as possible my experience in corporate world

with all my colleagues and my faculty. I would be delighted to receive reader’s comments which

maybe valuable lessons for my future projects.

EXECUTIVE SUMMARY

In today’s rapidly changing business environment, organizations have to respond quickly to

requirements for people. The Financial market has been witnessing growth which is manifold for

last few years. Many private players have entered the economy thereby increasing the level of

competition. In the competitive scenario it has become a challenge for each company to adopt

practices that would help the organization stand out in the market. The competitiveness of a

company of an organization is measured through the quality of products and services offered to

customers that are unique from others. Thus the best services offered to the consumers are result

of the genius brains working behind them. Human Resource in this regard has become an

important function in any organization. All practices of marketing and finances can be easily

emulated but the capability, the skills and talent of a person cannot be emulated. Hence, it is

important to have a well-defined recruitment policy in place, which can be executed effectively

to get the best fits for the vacant positions. Selecting the wrong candidate or rejecting the right

candidate could turn out to be costly mistakes for the organization. Therefore a recruitment

practice in an organization must be effective and efficient in attracting the best manpower.

Coverage –The extent and limitation

With largest number of life insurance policies in force in the world, insurance happens to

be a mega opportunity in India. Its business is growing at 15-20% annually and presently is of

the order of Rs. 450m. Together with banking sector it adds about 7% to the GDP.

Like in the case of BPO’s, Insurance sector too faces the problem of attrition. Thus,

recruitment is an ongoing process carried throughout the year. The project is based on the study

of recruitment process. The various recommendations suggested have been the result of the

study. The idea is to generate ways of dealing with high attrition and making hiring process

manageable and efficient.

Data Used

There were mainly two sources of data collection

Primary data:

Survey method Personal interview with candidates In depth conversation with the placement agency

Secondary data:

Study of recruitment policy Websites Published articles

Research methodology used

     Study of recruitment and selection at ICICI Prudential Life Insurance by the manual provided by the HR department;

Web sites Journals Magazines Books

 

Findings

    Recruitment is done throughout the year more during the months of May-June and Oct-Nov;

   Huge investment of time;

     Huge recruitment cost;

To pursue these, I would be going through the recruitment policies of the company. By active

participation in the recruitment process, the areas where improvement can be bought about can

be identified.

Thus the whole research would be done under the guidance of external guide. It will also involve

recruitment and selection processes, reading the material provide internally by the organization,

information from the new employees.

Chapter 1

Topic Information

RECRUITMENT AND SELECTION

1.1 introductions

 “The art of choosing men is not nearly so difficult as the art of

enabling those one has chosen to attain their full worth”.

Recruitment is the process by which organizations locate and attract

individuals to fill job vacancies. Most organizations have a continuing need to

recruit new employees to replace those who leave or are promoted in order

to acquire new skills and promote organizational growth.

1

Definition of Recruitment: Finding and Attracting Applications

“Recruitment is the Process of finding and attracting capable applicants for employment. The

Process begins when new recruits are sought and ends when their applications are submitted. The

result is a pool of application from which new employees are selected.”

MEANING OF RECRUITMENT:

“Recruitment is understood as the process of searching for and obtaining applicants for jobs,

from among them the right people can be selected. Though theoretically recruitment process is

said to end with the receipt of applications, in practice the activity extends to the screening of

applications so as to eliminate those who are not qualified for the job.”

Recruitment follows HR planning and goes hand in hand with selection

process by which organizations evaluate the suitability of candidates. With

successful recruiting to create a sizeable pool of candidates, even the most

accurate selection system is of little use. The recruitment process is done on

the basis manpower available in source.

(a)Internal Recruitment

(b)External recruitment

INTERNAL RECRUITMENT

Advantages Disadvantages

Less CostlyCandidates already oriented towards organizationOrganizations have better knowledge about internal candidates4.Employee morale and motivation is enhanced

Old concept of doing thingsIt abets raidingCandidates current work may be affectedPolitics play greater roles5.Morale problem for those not promoted.

EXTERNAL RECRUITMENT

Advantages Disadvantages

Benefits of new skills and talentsBenefits of new experiences Compliance with reservation policy becomes easy4.Scope for resentment, jealousies, and heartburn are avoided.

Better morale and motivation associated with internal recruiting is deniedIt is costly methodChances of creeping in false positive and false negative errors4.Adjustment of new employees takes longer time. 

Definition of Selection: Process of differentiating

MEANING OF SELECTION:

Selection is the process of picking up individuals (out of the pool of job applicants) with requisite qualifications of differentiating between applicants in order to identify and hire those with a greater likelihood of success in a job.”

DIFFERENCE BETWEEN RECRUITMENT AND SELECTION:

Recruitment Selection

(i) Recruitment refers to the process of identifying and encouraging prospective employees to apply for jobs.

(ii) Recruitment is said to be positive in its approach as it seeks to attract as many candidates as possible.

(i)Selection is concerned with picking up the right candidates from a pool of applicants.

(ii) Selection on the other hand is negative in its application in as much as it seeks to eliminate as many unqualified applicants as possible in order to identify the right candidates. 

1.2 Scope of Insurance

We all know that assets are insured, because they are likely to be destroyed or made nonfunctional before the expected life time, through accident occurrences. Such possible occurrences are called perils. Perils are the events. Risks are the consequential losses or damages. The risk to an owner of a building may be a few lakhs or a few crores of rupees, depending on the cost of building, the contents in it and the extent of damage. The risk only means that there is a possibility of loss or damage. Insurance is done againstthe possibility that the damage may happen. There has to be an uncertainty about the risk. The word “possibility” implies uncertainty. Insurance irrelevant only if there are uncertainties.

Insurance does not protect the asset. It does not prevent its loss due to the peril. The peril cannot be avoided through insurance. The risk can sometimes be avoided, through better safety and damage control measures. It only tries to reduce the impact of the risk on the owner of the asset and those who depend on that asset. They are the ones who benefit from the asset and therefore, would lose, when the asset is damaged. Insurance compensates for the losses- and that too, not fully.In conclusion we can say that the scope of insurance is very broad and specific because it reduces the losses and risk of owner of the assets due to perils. It also gives supports to the person in the period of adverse situation. It insured economic consequences. When a person saves, the amount of funds available at any time is equal to the amount of money set-aside in past, plus interest. Insurance has no substitute and one more thing about the insurance is that this is not similar to a hire purchase scheme. In the event of death, the balance installments are not excused. They have to be paid by the surviving family. There is a tax benefits, both in income tax and in capital gins. Marketability and liquidity are better. Life insurance is not only the best possible way for family protection there is no other way. The term of life is hard but the terms of insurance are easy.

1.3 COMPANY PROFILE

ABOUT HDFC SLIC

HDFCSLIC stands for Housing Development Finance corporation standard life insurance

company. It is incorporated in 1977 as a public limited company with the specialization in

provision of housing finance to individuals’ cooperative societies and the corporate sector. One

significant matter about the HDFC is that it is first private sector retail housing finance company

and it is listed on both BSE and NSE. Its market capitalization in June 2002

Standard life insurance is founded in 1825. Standard life was reincorporated Standard life insurance is founded in 1825. Standard life was reincorporated as a mutual assurance company in 1925. It’s largest mutual life insurance company in Europe.

For the joint venture between HDFC and SLIC, the discussion commenced in January 1995 and the agreement signed in October 1995.Further joint venture agreement renewed in October 1998. In January 2000the life insurance project teem established in Mumbai. At last the company officially incorporated in 14th August 2000. It is the matter of great happiness for HDFCSLIC is that it is the first private sector life insurance company to be granted a certificate of registration in 23rd October, 2000.Today 75% shareholding in the hand of HDFC and Standard life has 25%shareholding in this joint venture. as a mutual assurance company in 1925. It’s largest mutual life insurance company in Europe.

For the joint venture between HDFC and SLIC, the discussion commenced in January 1995 and the agreement signed in October 1995.Further joint venture agreement renewed in October 1998. In January 2000the life insurance project team established in Mumbai. At last the company officially incorporated in 14th August 2000. It is the matter of great happiness for HDFCSLIC is that it is the first private sector life insurance company to be granted a certificate of registration in 23rd October, 2000.Today 75% shareholding in the hand of HDFC and Standard life has 25%shareholding in this joint venture.

HDFC Standard Life Vision and Values

Vision of HDFCSLThe most successful and admired life insurance company, which mean that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry. In short, “The most obvious choice for all”

For retention in the market and highest market share, we need trust of our customer. The customer should trust on our policies, services, employs and they should be friendly with us. It wants to live in the eye and heart of the customer. It wants to give them the easiest deal so that they can be understood the terms and policies. As we know that profit is the main aim of any business but it think not only about his profit but also profit of the customer. It wants to be the choice of all people on the basis of trust of customer, delivering high value to the customer, and deliver of best value of the money.

MISSION OF HDFSLIC

We aim to be the top new life insurance company in the market. This doe’s not just mean beingthe largest or the most productive company in the market, rather it is a combination of several things like-Customer service of the highest orderValue for money for customersProfessionalism in carrying out businessInnovative products to cater to different needs of different customersUse of technology to improve service standardsIncreasing market share

HDFC GROUP COMPANIESHDFC LimitedHDFC BankHDFC Asset Management Co. LimitedHDFC Securities LimitedHDFC Standard Life Insurance CompanyIntel net GlobalCIBIL – Credit Information Bureau Investigation LtdHDFC Chubb General Insurance

PRODUCT OF HDFC SL

As we know that lots of insurance plan are playing in the market of different companies.

HDCFSL has launched various insurance plans which based on unit link plan. It invests the

investment of his consumer in bank deposits, Government securities and Bonds, and Equity. The

percentage of these investments in these plans depends upon the consumer whether he wants to

take more risk and more return or less risk or less return. It has launched

Several insurance plans which are thus in the table

1. Unit link pension plan

2. Unit linked pension plus

3. Unit linked enhanced life protection II

4. Unit linked young star plus II

5. Endowment assurance plan

6. Children plan

7. Money back plan

8. Single premium whole of life plan

9. Personal pension plan

10. Saving assurance plan

11. Assure plan

HDFCSL product plan is a Life Stage Plan

We can see its plan is like a LIFE STAGE Plan. According to it there are four stage of life, young and single stage, Just Married stage, proud parents and Planning and Retirements

.

IRDA (Insurance Regulatory and Development Authority)

The Government of India has enacted the Right to Information Act, 2005which has come into effect from October 13, 2005. The Right to Informationunder this Act is meant to give to the citizens of India access to informationunder control of public authorities to promote transparency andaccountability in these organizations. The Act, under Sections 8 and 9,provides for certain categories of information to be exempt from disclosure.The Insurance Regulatory and Development Authority (IRDA) is a publicauthority as defined in the Right to Information Act, 2005. As such, theInsurance Regulatory and Development Authority is obliged to provideinformation to members of public in accordance with the provisions of the

Said Act.

Access to the Information held by

IRDA

The information published in public domain includes thefollowing:1. Acts/Regulations2. Information relating to Insurers/Reinsures, Agents Training Institutes,Appointed Actuaries.3. Information relating to Surveyors, Third Party Administrators, InsuranceBrokers, Corporate Agents4. Information relating to Insurance Councils, Insurance Ombudsmen

5. Annual Report/IRDA Journal

6. Press Releases..

1.1 Introduction of the Insurance Industry

Overview

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business.  

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 

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.

1956: 245 Indian and foreign insurers and provident societies are 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.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalizations) Act, 1972 nationalized the

General insurance business in India with effect from 1st January 1973.

With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the country’s GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country.

India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

Present Scenario

The Government of India liberalized the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.

The opening up of the sector is likely to lead to greater spread and deepening of insurance in India and this may also include restructuring and revitalizing of the public sector companies. In the private sector 14 life insurance and 8 general insurance companies have been registered. A host of private Insurance companies operating in both life and non-life segments have started selling their insurance policies..

Life Insurance Market

The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 percent of the total 400 million of the insurable population. The state owned LIC sold insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed.

The life insurance sector of India has added up to 4.1% of the GDP in 2009, a considerable growth was recorded since the time the sector was opened for the private companies. The contribution in FDI by the life insurance segment was recorded at US $ 1.3 billion, even though the government is likely to increase the FDI cap limit from 26% to 49%, a bill of which is pending at the Rajya Sabha. 

The year 2009-10 also saw private sector insurance company, Aviva Life Insurance establishing nine unit-linked plans, in line with the recent IRDA guidelines featuring enhanced and higher internal rate of return (IRRs). 

As per the data provided by the IRDA, the businesses of the life insurance companies had a growth of 22% at US$ 12 billion in April-November 2009-10, in comparison to the US$ 9.8 billion during the same period last year. Such a huge sale of single premium policies led the industry to record a raise of 53.25% in November 2009 alone. 

With the registration of India First Life Insurance Company Limited, a joint stake life insurance company encouraged by Bank of Baroda and Andhra Bank of India and Legal & General Middle East Limited, UK, the total number of of life insurers registration with the Insurance Regulatory Development Authority (IRDA) has increased to 23.

According to industry body, Life Insurance Council, The life insurance industry had earlier been anticipated to grow by 15% in the year 2009 - 10 and surpass the US$ 54.1 billion mark in total premium income by March-end. This growth in premium income includes new business as well as renewals, driven by increasing awareness on the value of getting insured.

The US$ 41-billion Indian insurance industry made a grand return with better performances in the April-November 2009 period. Life insurance in India recorded the first year premium (inclusive of Single Premium) segment accounting to US$ 24 billion.

Some Major insurance player in India

HDFC Standard Life Insurance Company Limited

ICICI Prudential Life Insurance Limited

Birla Sun Life Insurance Company Limited

TATA AIG Life Insurance Company Limited

Max New York Life Insurance Company Limited

SBI – Cardiff Life Insurance Company Limited

ING Vysya Life Insurance Company Limited

Bajaj Allianz Life Insurance Company Limited

MetLife Life Insurance Company Limited

Aviva Life Insurance Company Limited

AMP Sanmar Life Insurance Company Limited

Sahara India Life Insurance Limited

Sri Ram Life Insurance Limited

Protection of the interests of policyholders:IRDA has the responsibility of protecting the interest of insurance policyholders. Towards

achieving this objective, the Authority has taken the following steps:

IRDA has notified Protection of Policyholders Interest Regulations 2001 to provide for:

i. Policy proposal documents in easily understandable language; claims procedure in both life and non-life; setting up of grievance redressal machinery; speedy settlement of claims; and policyholders' servicing. The Regulation also provides for payment of interest by insurers for the delay in settlement of claim.

ii. The insurers are required to maintain solvency margins so that they are in a position tmeet their obligations towards policyholders with regard to payment of claims.

iii It is obligatory on the part of the insurance companies to disclose clearly the benefits, terms and conditions under the policy. The advertisements issued by the insurers should not mislead the insuring public.

Iv All insurers are required to set up proper grievance redress machinery in their head office and at their other offices.

vi The Authority takes up with the insurers any complaint received from the policyholders in Connection with services provided by them under the insurance contract.