Get Ready for New Dimension

This case was developed by Dr. Ajay Joshi, Prof. Kumkum Sinha, Prof. Shweta Mogre, and Prof. Himanshu Gupta, Pioneer Institute of Professional Studies in the workshop on “Case Writing & Analysis” organized in association with AIMS Hyderabad during March 28, 2011-March 30, 2011.


In law and economics, Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. In India, Insurance is a national matter, in which life and general insurance is yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% and general insurance premiums account to 0.65% of India's GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. of India opened up the insurance sector for private companies to solicit insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a flourishing market amongst global insurance companies.

Indo-Aksh Life Insurance Co. Ltd

Indo-Aksh Life Insurance Co. Ltd. is a joint venture between Indo - one of India’s leading business groups with interests in telecom, agriculture business and retail, and Aksh - global leader in financial protection and wealth management.
Indo-Aksh Life Insurance has a 74% stake of Indo and 26% stake of Aksh in the joint venture. In December 2006, the Company launched its operations in India. At present, it has more than 5200 employees working over 12 states in the country. With the continuous expansion, Indo-Aksh Life Insurance is making itself proactive to cater to insurance and wealth management needs of people.

Recruitment Process adopted by Indo-Aksh:

The recruitment of life insurance policies works on
(1) Agency Model
(2) Recruitment Model

In agency model Agency Manager recruits the officers who sell the insurance policies.
Before a person is eligible for selling of the insurance policies, he has to go through 50 hours of training which is provided by Indian Insurance Institute (III) and Insurance Regulatory and Development Authority (IRDA). After 50 hours of training the candidate appears in a written test and upon passing that examination, he is eligible as a consultant to sell the insurance policies. Every consultant after passing the examination gets the license and is identified by a unique code which remains the same even if the consultant switches the company. The cost of the training a consultant is born by the company and the companies recruit on rolls or hire third party trainers. The process of training new consultants is an ongoing process and run round the years. This process is also a resource intensive and requires huge expenditure. But even after all the efforts and expenditure in training a consultant, there is no certainty that the consultant would remain with the company. No doubt the insurance sector registers one of the highest attrition rates across the industry.      Before changing the job a consultant has to take the “No Objection Certificate” (NOC) from the current employer and is required to produce it to the new employer. The foot prints of the consultant can also be verified over the Internet by entering the unique code or Permanent Access Number (PAN).

The process of recruitment can be simply explained as below:
Training ---  Examination ----- License ----- Unique code from company ----- practice as consultant
While recruiting a consultant, the recruiter who in most of the cases is a senior marketer keeps the following things in mind while rating candidate appearing for the post of consultant:

Initial Screening

Criteria/Points awarded    2    4    6
Education    12th    Graduate    Postgraduate
Language Known    Only Local    Local+ Hindi    Local+Hindi+English
Marital Status    Unmarried    Married    *****
Age    18-25 Yrs    >40 yrs    25-40 Yrs
Tenure in city    0-3 yrs    3-5 yrs    > 5 Yrs
House Hold Income    0-2 Lacs    2-5 Lacs    > 5 Lacs

Once the team of trained consultants is formed the company starts pushing its product in to the market. The market per say is not segmented as far as the level of consultants is concerned.

Company Strategies

The company at higher management level has designed several products suited to different categories of customers. These products are customizable to greater extent based on the requirement of the individual. Company at national level also runs advertising campaigns which includes advertisement via TV  channels, magazines,  TV program sponsorship, sponsorship of sports events, Celebrity endorsement etc.  i.e. Above the Line Advertising.

The sales promotion activities at district level includes  putting up the Canopy/stalls near joggers park, organizing drawing competition in schools, venue marketing through corporate agents, and  paper insertions etc. called Below the Line Activity.
Both the above activities i.e. advertising at corporate level and sales promotion at local office seem like supporting activities in contrast to direct sales which has the ultimate task of converting a potential customer in to direct customer. This is the last and critical step in selling process which may result into a performer and non performer. It is because of this the company at local level pays utmost importance in selecting a advisor. They see in potential what they call his natural market i.e. his contacts in local market and because of these they choose local persons. 

The Insurance industry had to face a big drop in sales post November, 2010 because of the controversy caused by dispute between the Security and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDA), which resulted in enforcing cap on remuneration paid to fund managers and ad-visors/consultant in case of unit linked plan. This reduction in commission paid to the consultants resulted in lack of motivation to the extent that some advisors even switched to other jobs, resulting in steep fall in the revenue to the company.

This has taken the planners back to the drawing board to formulate new strategies to boost the company sales.

1) What are the major strategies which should be adopted by Indo- Aksh to overcome the retention rate of advisers?

2) Discuss the Environmental Impact which is faced by the Company (With relation to ULIP)?

3) Critically analyze the Recruitment scale/procedure which has been adopted by the company for the selection of the Agents?

Teaching Objectives:
This Case will be helpful for the organizations to understand and realize the challenges faced by Agents/Advisors in the field of Life Insurance
This case will also be helpful to the students to understand the various issues and challenges related to Life Insurance and developing strategies to bring improvement in the retention rate. 

Broad Guidelines

This case should be discussed among a group of four members. The total time required to analyze the case will be 2 hrs.