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INTRODUCTION OF LIFE INSURANCE CORPORATION OF

INDIA.
The Life Insurance Corporation of India (LIC) is the largest life insurance company in
India and also the country's largest investor. It is fully owned by the Government of
India. It also funds close to 24.6% of the Indian Government's expenses. It was founded
in 1956.
Headquartered in Mumbai, which is considered the financial capital of India, the Life
Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices
located in different parts of India, at least 2048 branches located in different cities and
towns of India along with satellite Offices attached to about some 50 Branches, and has a
network of around one million and 200 thousand agents for soliciting life insurance
business from the public.
The corporation is an autonomous and has necessary to run on sound principles. The
corporation has been carrying out the role assigned to it and justifying confidence of
public by offering adequate security at reasonable cost, dependable service, economic
management and favorable returns to the nation at large.
In the year 1956, LIC had 5 zonal offices, 33 divisional offices and 212 branch offices,
apart from its corporate office. Re-organization of LIC took place and large number of
new branch offices was opened. As a result of re-organization, servicing functions were
transferred to the branches, and branches made accounting units. It worked wonders with
the performance of the corporation.
It may be seen that from about 200 crores of new business in 1957 the corporation
crossed 1000 crores only in the year 1969-70, and it took another 10 years for LIC to
cross 2000 crore mark of new business. But with re-organization happening in the early
eighties, by 1985-86 LIC had crossed 7000 crore sum assured on new policies.
Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices,
7 zonal offices and the corporate office. LIC’s wide are network covers 100 divisional
offices and connects all the branches through a Metro Area Network. LIC has tied up
with some banks and service providers to offer on-line premium collection facility in
selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer
convenience. Apart from on-line kiosks and IVRS, Info Centres have been commissioned
at Mumbai, Ahmadabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and
many other cities. With a vision of providing easy access to its policy holders, LIC has
launched SATELLITE SAMPARK OFFICES. The Satellite offices are smaller, leaner
and closer to the customer. The digitalized records of the satellite offices will facilitate
anywhere servicing and many other conveniences in the future.
LIC continues to be the dominant insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past records;
LIC of India traversed its long and illustrious journey and now has a vision to emerge as
a world class customer centric organization.

Objectives of LIC:
Spread life insurance widely and in particular to the rural areas and to the socially and
economically backward classes with a view to reaching all insurable persons in the

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country and providing them adequate financial cover against death at a reasonable cost, is
the main objective of LIC. Some other objectives of LIC are as follows:
Maximize mobilization of people’s savings by making insurance linked savings
adequately attractive.
Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the community as a
whole; the funds to be deployed to the best advantage of the investors as well as the
community as a whole, keeping in view national priorities and obligations of attractive
return.
Conduct business with utmost economy and with the full realization that the moneys
belong to the policy holders.
Act as trustees of the insured public in their individual and collective capacities.
Meet the various life insurance needs of the community that would arise in the changing
social and economic environment.

LIC Achievements

Adjudged No.1 Service brand in India in Economics Time and AC Neilsen ORG Mark
for the year 2006, 4th consecutive year.
Adjudged as “Best life Insurance company of the year” NDTV PROFIT BUSINESS
LEADERSHIP AWARDS-2007
Adjudged “Most Preferred Life Insurance Company of the Year” at CNBC Awaaz
Consumer Awards 2007, 3rd time in succession.
Asia Insurance merit award 2005, 2006 in the field of “Corporate Social Responsibility”
Largest Financial Institutional Investor- both in equity market and term loans.

Current status of LIC


The organization now comprises 2048 branches, 100 divisional offices and 8 zonal
offices, and employs over 1 million agents. It also operates in 12 other countries,
primarily to cater to the needs of Non Resident Indians.
With the change in the India's economic philosophy from the early 1990s, and the
subsequent relaxation of state control over several sectors of the economy, the
monopolistic position of the Life Insurance Corporation of India was diluted, and it has
had to compete with a number of other corporate entities, Indian as well as transnational
Life Insurance brands. However, it still manages to be the largest player in the Indian
market, with the lion's share of 55%.
The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand
of the Country. The No. 2 position was held by the telecommunications behemoth Airtel.
In the financial year 2006-07 Life Insurance Corporation of India's number of policy
holders are said to have crossed a whopping 200 million (fourth in terms of population of
the countries of the world).

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POLICIES REGARDING EMPLOYEE CONDUCT AND
DISCIPLINE AT LIC
(Personnel Policies)

The preparation and up gradation of the personnel and Industrial Relations Department
Given here below are some rules and regulations regarding employee conduct and
discipline. Each of these issues are covered in detail in the manual but have been
explained very briefly:

Obligation to maintain secrecy:


An employee should not communicate directly or indirectly and official documents r
information to any employee or their person to whom he is not authorized to
communicate
Participation in demonstration : An officer in LIC is expected not t participate in any kind
of demonstration, resort, nor abet to any kind of a strike
Private trading: employees of LIC are not allowed to engage directly or indirectly in any
kind of trade or business. They are not allowed to be involved in the promotion or
management of any other company registered under the Indian Companies Act.
Part-time work: no employee is allowed to take any kind of part-time work for a private
or public body.
Acceptance of gift: An employee of LIC is not allowed t accept nor permit his wife or
any family member to accept any gift of more than a trifling value

HUMAN RESOURCE MANAGEMENT

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Human Resource Planning in LIC

Human resource (or personnel) management, in the sense of getting things done through
people. It's an essential part of every manager's responsibilities, but many organizations
find it advantageous to establish a specialist division to provide an expert service
dedicated to ensuring that the human resource function is performed efficiently.
"PEOPLE ARE OUR MOST VALUABLE ASSET" is what the Branch Manager of
LIC said to us.

Functions of HRM by LIC

Steps in developing HRM planning in LIC:

Step 1: Get the 'big picture'


Understand your business strategy.
• Highlight the key driving forces of your business. What are they? E.g. technology,
distribution, competition, the markets.
• What are the implications of the driving forces for the people side of your business?
• What is the fundamental people contribution to bottom line business performance?

Step 2: Develop a Mission Statement or Statement of Intent

That relates to the people side of the business.


Do not be put off by negative reactions to the words or references to idealistic statements
- it is the actual process of thinking through the issues in a formal and explicit manner
that is important.
• What do your people contribute?

Step 3: Conduct a SWOT analysis of the organization

Focus on the internal strengths and weaknesses of the people side of the business.
• Consider the current skill and capability issues.
• What impact will/ might they have on business performance?
• Consider skill shortages?
• The impact of new technology on staffing levels?
From this analysis you then need to review the capability of your personnel department.
Complete a SWOT analysis of the department - consider in detail the department's
current areas of operation, the service levels and competences of your personnel staff.

Step 4: Conduct a detailed human resources analysis

Concentrate on the organization's COPS (culture, organization, people, and HR systems)


• consider: Where you are now? Where do you want to be?

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• What gaps exists between the reality of where you are now and where you want to be?
Exhaust your analysis of the four dimensions.

Step 5: Determine critical people issues

Go back to the business strategy and examine it against your SWOT and COPS Analysis
• Identify the critical people issues namely those people issues that you must address.
Those which have a key impact on the delivery of your business strategy.
• Prioritize the critical people issues. What will happen if you fail to address them?
Remember you are trying to identify where you should be focusing your efforts and
resources.

Step 6: Develop consequences and solutions

For each critical issue highlight the options for managerial action generate, elaborate and
create - don't go for the obvious. This is an important step as frequently people jump for
the known rather than challenge existing assumptions about the way things have been
done in the past. Once you have worked through the process it should then be possible to
translate the action plan into broad objectives. These will need to be broken down into the
specialist HR Systems areas of:
• employee training and development
• management development
• organization development
• performance appraisal
• employee reward
• employee selection and recruitment
• manpower planning
• communication
Develop your action plan around the critical issues. Set targets and dates for the
accomplishment of the key objectives.

Step 7: Implementation and evaluation of the action plans

The ultimate purpose of developing a human resource strategy is to ensure that the
objectives set are mutually supportive so that the reward and payment systems are
integrated with employee training and career development plans.
There is very little value or benefit in training people only to then frustrate them through
a failure to provide ample career and development opportunities.

The functions of HRM followed by LIC are as follows:

Function 1: Manpower planning

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The penalties for not being correctly staffed are costly.
• Understaffing loses the business economies of scale and specialization, orders,
customers and profits.
• Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because
of modern legislation in respect of redundancy payments, consultation, minimum periods
of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the
business.
Planning staff levels requires that an assessment of present and future needs of the
organization be compared with present resources and future predicted resources.
Appropriate steps then be planned to bring demand and supply into balance.
What future demands will be is only influenced in part by the forecast of the personnel
manager, whose main task may well be to scrutinize and modify the crude predictions of
other managers. Future staffing needs will derive from:

• Sales and production forecasts


• The effects of technological change on task needs.
• Variations in the efficiency, productivity, flexibility of labor as a result of training, work
study, organizational change, new motivations, etc.
• Changes in employment practices (e.g. use of subcontractors or agency staffs, hiving-
off tasks, buying in, substitution, etc.)
• Variations, which respond to new legislation, e.g. payroll taxes or their abolition, new
health and safety requirements.
• Changes in Government policies (investment incentives, regional or trade grants, etc.).

That, in turn, will involve the further planning of such recruitment, training, retraining,
labor reductions (early retirement/redundancy) or changes in workforce utilization as will
bring supply and demand into equilibrium, not just as a one–off but as a continuing
workforce planning exercise the inputs to which will need constant varying to reflect
'actual' as against predicted experience on the supply side and changes in production
actually achieved as against forecast on the demand side.

Function 2: Recruitment and selection of employees

Recruitment of staff should be preceded by:


An analysis of the job to be done (i.e. an analytical study of the tasks to be performed to
determine their essential factors) written into a job description so that the selectors know
what physical and mental characteristics applicants must possess, what qualities and
attitudes are desirable and what characteristics are a decided disadvantage;

• In the case of replacement staff a critical questioning of the need to recruit at all
(replacement should rarely be an automatic process).
• Effectively, selection is 'buying' an employee hence bad buys can be very expensive.
For that reason some firms (and some firms for particular jobs) use external expert
consultants for recruitment and selection.

www.managementparadise.com
• Equally some small organizations exist to 'head hunt', i.e. to attract staff with high
reputations from existing employers to the recruiting employer. However, the 'cost' of
poor selection is such that, even for the mundane day-to-day jobs, those who recruit and
select should be well trained to judge the suitability of applicants.

The main sources of recruitment are:

• Internal promotion and internal introductions (at times desirable for morale purposes)
• Careers officers (and careers masters at schools)
• University appointment boards
• Agencies for the unemployed
• Advertising (often via agents for specialist posts) or the use of other local media (e.g.
commercial radio)

Interviewing can be carried out by individuals, by panels of interviewers or in the form of


sequential interviews by different experts and can vary from a five minute 'chat' to a
process of several days. Ultimately personal skills in judgment are probably the most
important, but techniques to aid judgment include selection testing for:
• Aptitudes (particularly useful for school leavers).
• Attainments
• General intelligence.

Function 3: Employee motivation

To retain good staff and to encourage them to give of their best while at work requires
attention to the financial and psychological and even physiological rewards offered by the
organization as a continuous exercise.
Basic financial rewards and conditions of service (e.g. working hours per week) are
determined externally (by national bargaining or government minimum wage legislation)
in many occupations but as much as 50 per cent of the gross pay of manual workers is
often the result of local negotiations and details (e.g. which particular hours shall be
worked) of conditions of service are often more important than the basics. Hence there is
scope for financial and other motivations to be used at local levels.

As staffing needs will vary with the productivity of the workforce (and the industrial
peace achieved) so good personnel policies are desirable. The latter can depend upon
other factors (like environment, welfare, employee benefits, etc.) but unless the wage
packet is accepted as 'fair and just' there will be no motivation.

The former demand better-educated, mobile and multi-skilled employees much more
likely to be influenced by things like job satisfaction, involvement, participation, etc. than
the economically dependent employees of yesteryear.

Hence human resource management acts as a source of information about and a source of
inspiration for the application of the findings of behavioral science. It may be a matter of
drawing the attention of senior managers to what is being achieved elsewhere and the

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gradual education of middle managers to new points of view on job design, work
organization and worker autonomy.

Function 4: Employee evaluation

An organization needs constantly to take stock of its workforce and to assess its
performance in existing jobs for three reasons:

• To improve organizational performance via improving the performance of individual


contributors (should be an automatic process in the case of good managers, but (about
annually) two key questions should be posed:
o What has been done to improve the performance of a person last year?
o And what can be done to improve his or her performance in the year to come?

• To identify potential, i.e. to recognize existing talent and to use that to fill vacancies
higher in the organization or to transfer individuals into jobs where better use can be
made of their abilities or developing skills.

• To provide an equitable method of linking payment to performance where there are no


numerical criteria (often this salary performance review takes place about three months
later and is kept quite separate from 1. and 2. but is based on the same assessment).
On-the-spot managers and supervisors, not HR staffs, carry out evaluations. The
personnel role is usually that of:

• Advising top management of the principles and objectives of an evaluation system and
designing it for particular organizations and environments.

• Developing systems appropriately in consultation with managers, supervisors and staff


representatives. Securing the involvement and cooperation of appraisers and those to be
appraised.

• Assistance in the setting of objective standards of evaluation / assessment, for example:


o Defining targets for achievement;
o Explaining how to quantify and agree objectives;
o Introducing self-assessment;
o Eliminating complexity and duplication.

• Publicizing the purposes of the exercise and explaining to staff how the system will be
used.

• Organizing and establishing the necessary training of managers and supervisors who
will carry out the actual evaluations/ appraisals. Not only training in principles and
procedures but also in the human relations skills necessary. (Lack of confidence in their
own ability to handle situations of poor performance is the main weakness of assessors.)

• Monitoring the scheme - ensuring it does not fall into disuse, following up on

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training/job exchange etc. recommendations, reminding managers of their
responsibilities.

Basically an evaluation / appraisal scheme is a formalization of what is done in a more


casual manner anyway. Most managers approve merit payment and that too calls for
evaluation. Made a standard routine task, it aids the development of talent, warns the
inefficient or uncaring and can be an effective form of motivation.

Function 5: Industrial relations

Good industrial relations, while a recognizable and legitimate objective for an


organization, are difficult to define since a good system of industrial relations involves
complex relationships between:
(a) Workers (and their informal and formal groups, i. e. trade union, organizations and
their representatives);
(b) Employers (and their managers and formal organizations like trade and professional
associations);
(c) The government and legislation and government agencies l and 'independent' agencies
like the Advisory Conciliation and Arbitration Service.

Oversimplified, work is a matter of managers giving instructions and workers following


them - but (and even under slavery we recognize that different 'managing' produces very
different results) the variety of 'forms' which have evolved to regulate the conduct of
parties (i.e. laws, custom and practice, observances, agreements) makes the giving and
receipt of instructions far from simple.

Function 6: Provision of employee services

Attention to the mental and physical well-being of employees is normal in many


organizations as a means of keeping good staff and attracting others.
The forms this welfare can take are many and varied, from loans to the needy to
counseling in respect of personal problems.
Among the activities regarded as normal are:

• Schemes for occupational sick pay, extended sick leave and access to the firm's medical
adviser;
• Schemes for bereavement or other special leave;

• The rehabilitation of injured/unfit/ disabled employees and temporary or permanent


move to lighter work;
• Provision of financial and other support for sports, social, hobbies, and activities of
many kinds which are work related;
• Provision of canteens and other catering facilities;
• possibly assistance with financial and other aid to employees in difficulty (supervision,
maybe, of an employee managed benevolent fund or scheme);

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• Provision of information handbooks,
• Running of pre-retirement courses and similar fringe activities;
• Care for the welfare aspects of health and safety legislation and provision of first-aid
training.

Attention to the mental and physical well-being of employees is normal in many


organizations as a means of keeping good staff and attracting others.
The forms this welfare can take are many and varied, from loans to the needy to
counseling in respect of personal problems.
Among the activities regarded as normal are:
• Schemes for occupational sick pay, extended sick leave and access to the firm's medical
adviser;
• Schemes for bereavement or other special leave;
• The rehabilitation of injured/unfit/ disabled employees and temporary or permanent
move to lighter work;
• Provision of financial and other support for sports, social, hobbies, activities of many
kinds which are work related;
• Provision of canteens and other catering facilities;
• Possibly assistance with financial and other aid to employees in difficulty (supervision,
maybe, of an employee managed benevolent fund or scheme);
• Provision of information handbooks,
• Running of pre-retirement courses and similar fringe activities;
• Care for the welfare aspects of health and safety legislation and provision of first-aid
training.

Function 7: Employee education, training and development

In general, education is 'mind preparation' and is carried out remote from the actual work
area, training is the systematic development of the attitude, knowledge, skill pattern
required by a person to perform a given task or job adequately and development is 'the
growth of the individual in terms of ability, understanding and awareness'.

Within an organization all three are necessary in order to:

• Develop workers to undertake higher-grade tasks;


• Provide the conventional training of new and young workers (e.g. as apprentices,
clerks, etc.);
• Raise efficiency and standards of performance;
• Meet legislative requirements (e.g. health and safety);
• Inform people (induction training, pre-retirement courses, etc.);

From time to time meet special needs arising from technical, legislative, and knowledge
need changes. Meeting these needs is achieved via the 'training loop'. (Schematic

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available in PDF version.)
Designing training is far more than devising courses; it can include activities such as:

• Learning from observation of trained workers;


• Receiving coaching from seniors;
• Discovery as the result of working party, project team membership or attendance at
meetings;
• Job swaps within and without the organization;
• Undertaking planned reading, or follow from the use of self–teaching texts and video
tapes;
• Learning via involvement in research, report writing and visiting other works or
organizations.

So far as group training is concerned in addition to formal courses there are:

• Lectures and talks by senior or specialist managers;


• Discussion group (conference and meeting) activities;
• Briefing by senior staffs;
• Role-playing exercises and simulation of actual conditions;
• Video and computer teaching activities;
• Case studies (and discussion) tests, quizzes, panel 'games', group forums, observation
exercises and inspection and reporting techniques.
• Evaluation of the effectiveness of training is done to ensure that it is cost effective, to
identify needs to modify or extend what is being provided.

RECRUITMENT AND SELECTION PROCESS OF LIC

LIC
There is basically 3 types of employees in LIC. First are the ones working on payroll
basis? There are permanent employees of LIC and receive their monthly incomes.
Second are the ones who are on temporary basis basically working for a year or 2 years
approximately. They also receive their incomes on monthly basis.
Third are the ones who are agents who are purely working on Commission basis. Their
Commission is decided on the number of policy holders they track.
Recruitment at LIC: recruitment at LIC is done on all India bases. Class 1 officers are
assistant administrative officers.
Class 2 officers are development officers.
Class 3 officers are assistant officers.
Class 4 officers are the sub staff usually Job rotation is practiced in LIC means
employees have to work in different departments. This is usually done to import different
types of sails in their employees.

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Recruitment at LIC is done by central office at Mumbai. The recruitments process for
above mentioned officers at LIC begins with placing at advertisements in popular
national and regional newspapers across the country.
Candidates applying for above mentioned posts should be between 21 and 28 years at
age. They should be graduate/post graduate degree with minimum 50 % marks candidates
from certain background(SC,ST,OBC) are given some commissions with regard to age
and marks.
Short listed candidates are asked to appear for an entrance examination. The entrance
examination has 2 papers – one is objective type and other is an essay type. The objective
type paper test is intelligence, aptitude, mathematical knowledge, logical reasoning,
general awareness and awareness of political and cultural events.
After written test, candidates have to appear for interviews which are conducted by LIC
officers across the country. Based on overall performance candidates reselected.
There are basically 3 types of employees in LIC. First are the ones working on payroll
basis? There are permanent employees of LIC and receive their monthly incomes.
Second are the ones who are on temporary basis basically working for a year or 2 years
approximately. They also receive their incomes on monthly basis.
Third are the ones who are agents who are purely working on Commission basis. Their
Commission is decided on the number of policy holders they track.

Recruitment at LIC: recruitment at LIC is done on all India bases. Class 1 officers are
assistant administrative officers.
Class 2 officers are development officers.
Class 3 officers are assistant officers.
Class 4 officers are the sub staff usually Job rotation is practiced in LIC means
employees have to work in different departments. This is usually done to import different
types of sails in their employees.

Recruitment at LIC is done by central office at Mumbai. The recruitments process for
above mentioned officers at LIC begins with placing at advertisements in popular
national and regional newspapers across the country.
Candidates applying for above mentioned posts should be between 21 and 28 years at
age. They should be graduate/post graduate degree with minimum 50 % marks candidates
from certain background(SC,ST,OBC) are given some commissions with regard to age
and marks.
Short listed candidates are asked to appear for an entrance examination. The entrance
examination has 2 papers – one is objective type and other is an essay type. The objective
type paper test is intelligence, aptitude, mathematical knowledge, logical reasoning,
general awareness and awareness of political and cultural events.
After written test, candidates have to appear for interviews which are conducted by LIC
officers across the country. Based on overall performance candidates are selected.

The different motivating programs like competitions are use. These are parameters to
value them at different targets.
The performance apparatus for employees is usually once in 1 year. 6 months after
information.

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For class 1 officers it’s on financial year basis.
For other employees it’s every calendar year.
For class 1 officer’s double appraisal system is used. It is named as DOPA.
Usually there is very much transparency in the organization.
There is mutual agreement, planning agreement between employees and employees.

Recruitment of other employees of the organization.

Applications are invited from eligible candidates for selection and appointment for the
desired profile in the various Offices of LIC of India. The selection and appointment is
subject to the reservation of SC/ST/OBC as per rules. The total number of vacancies
including vacancies for the reserved category may increase or decrease, depending upon
the actual vacancies at the time of final selection and availability of successful candidates
after the interview.

INDUCTION PROGRAMME AT LIC

LIC has recognized the importance of induction.

Entry interview for effective induction of new entrant.

Objectives
To provide psychological assurance that he will be looked after and cared in the new
place.
To ensure introduction of the new entrant to the institution, its culture and tradition.
Help the employee t shed apprehensions, if any and feel free in the environment.
help to create welcome feeling t the new entrant and thereby make induction a peasant
experience
To have a formal interaction between the head of the office and the new entrant in order
to have introduction to the job and colleagues.

System
1. The branch manager conducts the entry interview of the new employees in the first
week.
2. The interview has to be conducted I a friendly atmosphere and the employee is made to
feel at ease
3. The manager volunteer’s information about the company’s history, its rich heritage and
culture, its mission and goals to make the employee aware of the duties expected from
him
4. The manager finds out the needs of the employee at the new place and helps him to
settle

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5. The manager introduces the new employee to his colleagues.

TRAINING AND DEVELOPMENT PROGRAMME FOR


EMPLOYEES AND AGENTS OF LIC.

IRDA norms for LIC agents to come in force by July 15


VIJAY PINJARKAR

NAGPUR, JULY 5: Becoming a Life Insurance Corporation (LIC) agent would now be a
tough task, thanks to the insurance agents' `Regulations 2000', formed under the
Insurance Regulatory Development Authority (IRDA), which will come into force by
July 15, 2000. The IRDA has taken this step, aware that the LIC would have to face stiff
competition from private insurance companies who would make their presence felt in the
country, following the privatisation of the insurance sector in India.
This would have far-reaching implications on day-to-day functioning of the LIC as agents
would now have to work in adherence to the expectations of the IRDA.

The new code of conduct was supposed to come into force on June 15, 2000. But delay
on part of the Central Government in issuing a notification in this regard has caused a
delay in the implementation of the IRDA regulations. The notification is expected by July
15, 2000.

In the past, after the nationalisation of the LIC in 1956, agents were governed by
insurance regulations of 1962 under five categories viz club membership, zonal
membership, branch membership, divisional membership and distinguished membership.
The Act would be scrapped once the new IRDA regulations come into force.
Following this development, the LIC branches in the division have stopped recruiting
new agents abiding by the new IRDA regulations. Works pertaining to the renewal of
licenses of agents is only being done by the branches.
Speaking about the new IRDA regulations, Vijay Deshmukh, Senior Divisional Manager,
LIC, Nagpur Division, told The Indian Express, that once the IRDA rules come into
force, it would change the entire insurance scenario in the country.

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Deshmukh said now the agents would have to undergo a rigorous training of four weeks
or 100 hours, during which all the aspiring agents will be made aware of the technicalities
in LIC business.
He said the agents would have to give an objective-type test, based on subjects related to
agency law, company profile, finance, planning & taxation, products of LIC, premiums
and bonuses, health insurance, rural insurance, claims settlement, feedback to companies
as per their needs and requirements, group insurance and pension plans, among others.
The LIC official said this had been done to see that LIC gives the best to its customers.
``As there will be private insurance companies in the fray, their staff would be highly-
competitive. Our aim is to equip our agents with thorough knowledge about our products
so that can face competition. They should be professionals and must be able to tell
customers the money they are putting in is worth it or not.''
Deshmukh further informed that the LIC has chalked out a training programme for all its
absolved and new agents at the national level from July 7. The aim is to impart technical
training and to tell agents about the new IRDA code of conduct. ``LIC will lay more
stress on training sessions with a view to keep its existing business intact. Our monopoly
has been threatened by the private entrants,'' he added.
On being queried on the mode of the conduct of the examinations, Deshmukh said branch
managers have been empowered to conduct the exams. The exams would be held every
month depending on the number of candidates. The fee structure would be decided by the
IRDA. Till now agents were being recruited at very nominal fees and same were the
charges for licence renewal.
Under the new regulations, the Government has made HSSC the basic qualification for
becoming an agent in urban areas and minimum SSC for becoming agents in rural areas.
Earlier, SSC was the only basic qualification for becoming a LIC agent. Initially, there
were no such hard-and-fast rules. Anyone, whom the development officer deemed fit,
was recommended for the post. These people were later confirmed as agents after giving
a simple confirmation test.
Meanwhile, there was hectic activity at all branches in Nagpur with officers busy
recruiting as many as agents knowing that it would not be possible after July 1.
Although no private sector companies have yet started their shops here, the picture would
only be clear once IRDA norms are implemented.

Copyright © 2000 Indian Express Newspapers (Bombay)

LIC OF INDIA

LIC of India or Life Insurance Corporation of India is perhaps India’s largest financial
institution. It came into existence when a large number of life insurance companies were
taken over by government of India. The nationalization of private insurance companies
started a new era of insurance business i.e. LIC of India. In its early years, being a
monopoly public sector company, it did not face any competition. After opening the
sector to private players, LIC of India faced some heat of competition. The large field
force of Development Officers and Agents were not properly trained in soft skills viz.

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communication, human relation, customer service etc. There was no human touch in
these sales personals.
Though LIC has its own training department yet it felt the need of hiring professionals
from outside the organization. It was the time when TS got the training assignments.
As TS started his career as a Development Officer with Life Insurance Corporation of
India, Amritsar Punjab India branch, it was an easy concept to understand and feel the
requirement of LIC of India. During his tenure, TS created records in business
procurement and recruitment of agents. PHS or policy holder servicing or after sales
services was his tool to grow in insurance business. This way, Jalandhar division of Life
Insurance Corporation hired him for all its 19 branches spread over Jalandhar,
Kapurthala, Hoshiarpur, Nawansheher, Banga, Garhshanker, Phagwara, Nakodar,
Sultanpur Lodhi and Kartarpur. TS trained their development officers and their agents for
insurance selling and policy holder servicing.

In one of his appreciation testimonial, Sh. S.R.Bhatacharjee, Senior Divisional


Manager, LIC of India, Jalandhar Division quotes, “The trainings conducted by T.S.
(Madaan) were highly effective and created a remarkable improvement in hundreds of
development officers and agents in all the 19 branches of Jalandhar Division”..
After him, Sh. Janak Raj took over the charge of this post and assigned TS a motivational
seminar for Administrative Officers (AO) and Assistant Administrative Officers (AAO).
A flavor of TsMadaan’s program reached Karnal division and as a result TS was assigned
a Motivational and Educational Seminar, able leadership of Sh. Vijay Kumar, then Senior
Divisional Manager, Karnal Division of LIC of India.
A huge seminar for LIC Agents was conducted at Surat.

Sales Skills being explained with interactive games

16
A Motivational Seminar in progress for LIC agents at Skylark Hotel

LIC officers along with agents being benefited by TSMadaan's workshop

Insurance Agents - New Qualifying Requirements

Details of the New Training & Test Scheme

Written Test/ Interview

Suddenly there is a rush to recruit new agents. With the Insurance Regulatory &
Development Authority (IRDA) laying down new licensing norms for insurance agents,
from July 1, 2000 each new agent will have to undergo a mandatory training course. With
that being the case, becoming an insurance agent may not be a child's play anymore.
With IRDA setting the rules of the game, existing insurance companies are not too sure
how the future will frame up. And thus not any to take chances, the existing players are
on an agent recruitment binge. So much so that the exam for licensing new agents which

17
used to be conducted once a month earlier, is now being conducted almost every other
day at some of the centres. But what is the reason behind this sudden influx?
IRDA is not banning new recruitments/ licenses. All that the new rules say is that an
independent body shall conduct the training programme and examination, based on which
licenses to all new agents would be issued. Until now, all that was required to become an
insurance agent was a matriculation certificate.
Now with the new provisions coming into force from July 1, 2000 the basic minimum
qualification would be 12th pass. However, in rural areas the minimum qualification
would still be matriculation. And this qualification alone would not suffice because all
new agents will have to undergo a training programme and also pass in the tests
associated with it.
The minimum age for becoming an agent is 18 years. While some people feel that this is
on the lower side, others argue that if a person is grown up enough to cast his vote at 18
years, then he’s grown up enough to become an insurance agent. Besides an early start is
always more beneficial in the long run.
While the Insurance Institute of India has been recognised by the IRDA as the only
institute to conduct the exam as present, a number of institutes shall start offering training
for this course. It is also expected that the duration as well as the coverage of the course
will keep on increasing with time. For the present, the training programme will be for
duration of 100 hours each for Life and Non-life agents.
However, for a person wishing to act as a composite insurance agent (an agent who
would sell both lives as well non-life policies) the training period shall be for 150 hours
(75 for life insurance and 75 hours for general insurance).
After the training, the person shall possess the Certificate in Insurance Salesmanship. The
new provisions also give certain relaxation to those who have a professional
qualification. For such people the training period could be reduced to 50 training hours
(70 hours in case of composite insurance agents – 35 hours for life insurance and 35 for
general insurance).
The professionals who would qualify for such reduced training period are
Associates/ Fellows of the Insurance Institute of India
or Associates/ Fellows of Institute of Chartered Accountants of India or
Associates/ Fellows of Institute of Cost and Works Accountants of India or
Associates/ Fellows of Institute of Company Secretaries of India or
Associates/ Fellows of Actuarial Society of India or
Masters in Business Administration from any recognised Institute or
Any professional qualification in marketing sales from any recognised institute
The buck, however, does not stop here. Every newly appointed insurance agent, before
renewal of his license after the notification of these Regulations shall undergo training
organised by an approved institute or by an insurer's institution which has been approved
by the Authority for a minimum training period of 25 hours.
Where a person is a composite insurance agent, the training period will be for a period of
50 hours (25 hours for life insurance and 25 hours for general insurance). Though there is
some relaxation for those possessing professional degrees like a CA, MBA etc, the course
is mandatory for one and all.

18
For the existing agents, training for two weeks has been prescribed, though they have
been exempted from passing the test for the time being. This may only be the passing
phase and sooner or later they will also have to prepare themselves for passing the test.
With the public sector’s penchant for numbers, the existing managements at the helm of
the Indian Insurance Companies do not want a blip in their track record, showing that
new agent recruitments have gone down. And IRDA’s new regulations might play spoil
sport to achieving the full year's quota.
It is a known fact that as many agents drop out or discontinue their agency every year as
the new ones join which simply means that those inducted in are not serious about
insurance as a career. With Development Officers and Branches having targets to meet,
each D O is supposed to bring in a given number of new agents.
While it is very well known that some of the agents will not be able to provide the
mandatory minimum business to keep the agency in force, it serves the purpose of LIC as
new agents do bring in some amount of new business. And if their agencies lapse before
five years of continuous business, LIC saves on the recurring commission payout even
though the clients/ policies brought in by these agents continue.
Development Officers are the key drivers for initiating new agents into the business of
selling life insurance. Though LIC does have an exam that the agents have to pass before
they are allotted an agency license, most people know that this is just a facade.
Afraid of not being able to recruit new agents when the new rules for agent recruitment
come into force next month, LIC’s marketing department has issued unofficial
instructions to all branch offices to take in as many agents as possible.
With an army of over 5 lakh agents, LIC business is highly dependent on this sales
channel for growth. On an average LIC recruits about 80,000 –1, 00,000 new agents
every year.
However, that does not mean that LIC's agent population grows by that number each
year. For every 100 new agents acquired about 85-90 or the existing agents drop out
every year. However, as long as the new additions keep ahead of those dropping out of
the race, LIC is in a pretty comfortable state. But now LIC is being attacked by a twin-
edged sword.
While on one hand it is likely that the pace of new recruitment would slow down, on the
other hand there is a very real threat that some of its existing and consistently well
performing agents may change course and join hands with some of the new entrants.
The new guidelines will come in as a double-deal. While any agent is free to choose the
company whose products it can sell, he or she can sell the products for any one company
only. A composite agent can pick one life and one Non-life Company. This augurs well
for LIC’s existing agents as they would not like to switch over to a new company where
the risks would definitely be higher.
But at the same time, this will also limit the capabilities of the existing agency force as
they will not be exposed to the new techniques of marketing and sales that the new
players will bring in. Thus more than the insurance companies, it will be the agents who
will be under tremendous pressure. New techniques of marketing will threaten the modus
operandi of the existing agents most of whom are retired officials, housewives or others
for whom selling insurance is a just a part time job.
More than the new techniques it is the new channel called internet which is emerging as a
greater threat to the insurance agents all over the world. The question being asked is

19
whether the breed of agents will be able to survive the onslaught from the direct
marketing and internet selling. While internet may not be a very serious threat now but
with corporate entities and trusts now allowed to become insurance agents, individual
agents might witness a completely new market place evolving in the future.
The merging global trends are likely to be followed here as well. While the net will
cannibalise the business at one end, banks are likely to start selling insurance in the near
future. While the guidelines are quiet about both these channels right now, the market
dynamics are loaded against the individual agents.
Whether they will be able to survive as they have for so many years, only time will tell.
And since their survival depends on their performance as agents, www.InsureMagic.com
has ensured their professional practice by introducing the record-breaking feature of
Visual Magic Pro on the internet for all LIC agents, WonderPlans.

Details of the New Training & Test Scheme

Every person appointed as an insurance agent after 1st July, 2000 shall have to undergo
training organised by independent institute or by an institute of insurance to be accredited
by the IRDA for a minimum period of 100 hours.
Class Room Training: 2 weeks (66 hours)
Practical/ Hands on training: 1 week (34 hours)

Written Test/ Interview

A person desiring to take an agency will have to pass the written examination to be
conducted by the Insurance Institute of India. The Test shall be conducted on every first
Sunday of the month at the Divisional Headquarters of LIC.
This test is to be taken after completion of 100 hrs of training. Successful candidates shall
be called to appear for an interview.
Time of Examination: 2 hours.
Examination will be objective type carrying 100 marks.
Interview will be for 25 marks.
Minimum Passing standard.
Written Test: 50 percent.
Interview: 60 percent.

PERFORMANCE APPRAISAL

LIC set to adopt new method for Performance Appraisal

20
Life Insurance Corporation is re-writing its hr policy. Development oriented performance
appraisal (DOPA) allows an employee draw up his own review on a continuous basis on
performance targets. The changing market conditions with number of players increasing
may have prompted the life insurance giant to rework its human resources management
systems. "The objective of DOPA is to steer the entire operational framework within the
organisation. The goals and targets for individual officers set will be reviewed openly on
a regular basis for the first time. Any kind of intervention needed in the form of support
systems will be provided too", the official added.

In LIC, managing employee performance is an integral part of the work that all
managers and rating officials perform throughout the year. To accomplish these
objectives, managers need to identify organizational goals to be accomplished,
communicate individual and organizational goals to employees that support the overall
strategic mission and evaluate employee performance, and use performance as a basis
for appropriate personnel actions, including rewarding noteworthy performance and
taking action to improve less than successful performance.
Lic follows certain standards which are expressions of the performance threshold(s),
requirement(s), or expectation(s) that must be met for each element at a particular level of
performance. It is focused on results and includes credible measures such as

1. QUALITY- Addresses how well the employee or work unit is expected to perform the
work and/or the accuracy or effectiveness of the final product.
2. QUANTITY addresses how much work the employee or work unit is expected to
produce.
3. TIMELINESS addresses how quickly, when, or by what date the employee or work
unit is expected to produce the work.

The rating officials are strongly encouraged to develop standards at additional levels so
employees clearly understand their performance expectations at various levels.

Effective and timely feedback during the performance appraisal period addressing
employee performance on elements and standards is an essential component of a
successful performance management program. Employees need to know in a timely
manner how well they are performing. They need to be told what they are doing well and
if there are areas needing Improvement.

Providing employees with training and developmental opportunities encourages good


performance, strengthens job-related skills and competencies, and helps employees keep
up with changes in the workplace, such as the introduction of new technology.
When an employee has a concern about the rating given on a particular element, which, if
changed, will affect the outcome of the rating of record, he/she may request a
reconsideration of this rating through their Bureau/Office reconsideration process.

LIC also follows rewarding performance means providing incentives to, and recognition
of, employees for their performance and acknowledging their contributions to the

21
agency’s mission. Recognition is an ongoing, natural part of day-to-day experience. Good
performance should be recognized without waiting for nominations for formal awards to
be solicited.

WELFARE MEASURES FOR EMPLOYEES OF LIC

Group Insurance and Group Mediclaim facilities are given to the whole staff.
Class IV officers and sub officers are provided with uniform and shoes from the company
itself.
Commissions and incentives are given to advisors and officers { both with pay roll and
without pay roll}
Fees are provided by the company to officers willing to go for higher level international
education.
Different percentages of discount are given to officers of all classes for MBA studies
Schemes for occupational sick pay, extended sick leave and access to the
firm'smedicaladviser;

• Schemes forbereavementor other special leave;

• The rehabilitation of injured/unfit/ disabled employees and temporary or permanent


move to lighter work;

• Provision of financial and other support for sports, social, hobbies, and activities of
many kinds which are work related;

• Provision of canteens and other catering facilities;

• Possibly assistance with financial and other aid to employees in difficulty (supervision,
maybe, of an employee managed benevolent fund or scheme);

• Provision of information handbooks,

• Running of pre-retirement courses and similar fringe activities;

• Care for the welfare aspects of health and safety legislation and provision of first-aid
training.

Attention to the mental and physical well-being of employees is normal in many


organizations as a means of keeping good staff and attracting others.
The forms this welfare can take are many and varied, from loans to the needy to
counseling in respect of personal problems.
Among the activities regarded as normal are:

22
• Schemes for occupational sick pay, extended sick leave and access to the firm's medical
adviser;

• Schemes for bereavement or other special leave;

• The rehabilitation of injured/unfit/ disabled employees and temporary or permanent


move to lighter work;

• Provision of financial and other support for sports, social, hobbies, and activities of
many kinds which are work related;

• Provision of canteens and other catering facilities;

• Possibly assistance with financial and other aid to employees in difficulty (supervision,
maybe, of an employee managed benevolent fund or scheme);

• Provision of information handbooks,

• Running of pre-retirement courses and similar fringe activities;

• Care for the welfare aspects of health and safety legislation and provision of first-aid
training.

23
INTERVIEW MISS. MEETA KHARE
CHIEF BRANCH MANAGER
DADAR BRANCH,
BRANCH NO. 897

1. Could you please brief us a bit about LIC?


Ans: It is one of the oldest n the trusted insurance brand in India.
It is also one of the largest insurance companies. For more details you can log on to
our website.

2. What is the recruitment process of the employees in LIC?


Ans: It is done at all India level. People enter at three levels. Class1 (bottom level)
Class 2 (development officers) class 3 (assistants) class 4 (sub class employees)

3. What are the eligibility criteria in LIC?


Ans: The employees should be between 21 and 28 years at age. They should be
graduate/post graduate degree with minimum 50 % marks candidates from certain
background(SC,ST,OBC) are given some commissions with regard to age and
marks.

4. What is the selection procedures used in LIC?


Ans: For the selection of an employee: The candidates have to undergo various
stages such as preliminary interview, have to give selection tests, medical
examinations. There are reference checks and then there is final selection.
For agents the appointment is as per IRDA norms.

5. What is the job description of the employees in LIC?


Ans:
Meet targets
Sales generation activities
Regular customer care calls
Update on completion activities
Discipline and compliance
Daily, weekly, monthly reporting on activities
Above said things are the main crux of our job & then the other profiles depend on
which department of the company you are working in.

6. What is the training process for the agents & employees in LIC?
Ans: Training is an ongoing process for both employees & agents to keep them
updated about the new products being launched & the various changes taking place
in the organisation. Both have to undergo practical training for a stipulated time.
There is online training also. There are 8 zonal training centers for the same.

24
7. What are the methods you apply for the employee’s performance
appraisal?
Ans: There are no methods as such but we do ranking, rating scale, comparisons,
DOPA (Development oriented performance appraisal).The employees are promoted
once in a year and after confirmation they are promoted on six monthly bases.

8. What are the personnel policies of your company?


Ans: Some of the personnel policies of our company are
Obligation to maintain secrecy
Participation in demonstration
Private trading
Part time work
No acceptance of gift

9. What is your organizations greatest strength?


Ans: Our organizations strength is much focused attitude towards goal achieving
process and towards completion of our work & targets on timely n effective manner.
In short we the employees are willing to walk the extra mile to achieve excellence.

10. What are the timings for the employees?


Ans: There are no fixed timings for the agents and the employees they have to work
from 9.00 am to 5.00 pm. On Saturdays the employees have a half day and on
Sunday they have a leave.

11. Do the employees have a dress code in your organization?


Ans: Yes, there is a formal dress code for employees from Monday to Friday and
casuals on Saturday. Incase if there is a meeting or presentation on Saturday then
the employees have to wear formals. There is no specific dress code for the advisors.

25
Bibliography & Webliography

1.) Vinay V. Prabhu & Bharat M. Pithadia – Human Resource Management in


Banking & Insurance (Third revised edition)—Vipul Prakashan.

2.) LIC manual

3.) www.managementparadise.com

4.) www.indianexpress.com

5.) www.licindia.com

6.) http://economictimes.indiatimes.com/articleshowarchive.cms?msid=1592561

7.) www.raminfo-insuranceonline.com

8.) http://www.themms.com/performance_appraisal_training.php

9.) Interview of Ms. Meeta Khare,


Chief Branch Manager, Dadar Branch, Branch no. 897
1
www.kotaklife.com
2
http://www.hinduonnet.com/2004/10/12/stories/2004101203331402.htm
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Managing Human Resources, Wayne F. Cascio; Fifth Edition
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Personnel management, C.B. Mamoria
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http://209.85.175.132/search?q=cache:0fFAr-
rdBToJ:www.kotak.com/Kotak_BankSite/pressroom/pdf/Q4FY07_press.pdf+awards+at+
kotak+life+insurance&hl=en&ct=clnk&cd=7&gl=in&client=firefox-
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http://www.astellas.com/en/csr/pdf/astellas_csr2008v5_eg.pdf
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q=cache:XDCcZdkCENwJ:ncw.nic.in/sexualharassmentatworkplacebill2005.pdf+sexual
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