Career Development in Insurance Sector
Career Development in Insurance Sector
Potential for career development in insurance sector is most vibrant topic today. One Million plus persons are working today as an employees in Insurance sector and 5 Million plus persons are associated with this sector as Agents, Consultants, Surveyors, Loss Assessors, Underwriters, Claim Settlers, Salvage Dealers, Brokers, Sub-brokers, etc etc. The growth rate in Insurance Sector is more than 20% in last 3 years. There is huge potential for development in Insurance sector. The sector is under developed and penetration of insurance is very very low in the country compared to other developing and developed countries. India is leading towards one of the strongest economy of the world by 2020 and it is international phenomenon that insurance sector always booms along with growing economy. Insurance Services are the foundation for smooth functioning of all business & commercial activities. Insurance is the backbone of overall economy of the country.
For the developing country like India where growth of the economy is at double digit rate, Insurance talent is inevitable. All Industries in this scenario can be monetarily well protected from all types of catastrophic and manmade risks. Insurance is a vehicle for growth in growing economies. The whole world is looking at India as one of the giant and Asian tiger in next 8 to 10 years. All this is true. But very interesting fact of the today is that no one is aware about the exact potential of career development and opportunities in Insurance Sector. This article is dedicated to find the facts and figures about career development opportunities in Insurance Sector in India. This is an effort to enlighten and guide the readers, employees, students, stake holders to understand the facts and facets of insurance sector and how one can develop long term career in Insurance Sector.
The article will review all aspects of insurance sector and discuss • Opportunities for Career Development • Growth potential in Insurance Sector • Changing Scenario of Insurance Sector • Manpower & Skill Sets Required by Insurance Sector • Regulatory Changes in Insurance Sector • New trends and Developments • International Impacts • Present Academic Scenario • Available Educational Facilities • Recent Educational & Academic Developments • Speed and growth cycles of career enhancement in Insurance Sector • Salary Packages at Entry Levels, Middle Level and Top Level • How to improve Employibility and Skill Sets • Career Opportunities Outside India
• Subsectors in Insurance for Career Development • Preparing Career Development Path in Insurance Sector • Challenges & Opportunities for Career Development in Insurance Sector, • FAQs i.e. Frequently Asked Questions @ Career Opportunities in Insurance Sector, etc After 25 years of experience in Insurance Sector and witnessing the changing scenario of insurance sector after IRDA, I have noticed that the present and future workforce in Insurance sector is totally puzzled about the career enhancement and confused to find a road map for growth. Thousands of Career Fairs & Exhibitions across the country are covering all sectors for career opportunities like IT, BPO, ITES, Engineering, Automobile, Management, Finance, Medical, Health Care, Accounts, Law, Company affairs, etc, nobody is talking about insurance sector for career development. People believe that insurance is a small part of finance sector and it need not be cared beyond mere selling of insurance products.
Unfortunately I have to state that working employees, students, parents, media, academicians, colleges, universities, top executives of insurance sector and society as a whole are not aware about the exact potential and scope of career enhancement in Insurance Sector. Working in insurance sector is always a secondary thought and society hesitate to honour career in insurance sector. Association in insurance activity is always presumed as below status career.
This prejudice attitude towards insurance sector is a great harm for new entrants and career growth of current workforce. This is ironical that due to this negative attitude, the new generation is neglecting and under estimating a golden opportunity of developing gorgeous career in insurance sector. It is more unfortunate that after more than 100 years of commencement of insurance business activity in our country, the academicians, regulators and top executives in Insurance Sector have ignored the need and importance of improving the brand image of insurance sector.
Growth Potential in Insurance Sector in India * Insurance is one of the fastest growing sector in India. Hardly 6 % of the population of the country has covered by life Insurance. The penetration is as low as 0.9 % in general insurance. Health Insurance has reached to merely 3 % of the population. In country like USA, where the population is @ 35 Crores, there are more than 6000 companies are engaged in insurance business. In India, population is more than 110 crores and hardly 52 companies are working in Insurance Sector. If we assume that only 50% population is insurable, still we need 10,000 companies to cater the need of 55 Crore people. Only Life Insurance sector has grown to certain extent and people say that I wish to purchase LIC policy for my car or LIC policy for stocks in my factory.
Only compulsory policies of general insurance sector have been sold like motor policies and fire and industrial policies. Large number of general insurance products are not even known to the employees of general insurance companies. Thanks to electro mechanical equipments, scientific development and commercialization of medical profession, health insurance penetration has reached to 3 % of population. Still this number is very poor comparing to developed countries. Central Government has targeted Life Insurance Penetration to 40 %, Health Insurance at 30 % and General Insurance at 15 % of the population by 2030. This will create very huge potential for development in insurance Sector. The insurance business was merely 12 Billion US $ by 2000 which has reached to approximately 100 Billion US $ by 2012 and is now expected to grow 1000 Billion US $ by 2020 and 5000 Billion US $ by 2030.
* Approval of Bill of 49% FDI in Insurance sector is long awaited. Once it is enacted, the number of insurance companies may rise to @ 150 to 200 in next 7-8 years. There is immense potential for insurance industry to grow. At present there are 24 Life, 27 Non Life and 1 Reinsurance, thus total 52 Insurance companies are in insurance business. Out of this, 4 companies are working exclusively as Health Insurance Companies. 334 insurance broking companies, 800+ corporate agents and thousands of banks have entered in insurance business.
Third Party Administer (TPAs) Companies in Health Sector are 29 and TPAs growing in Automobile and Legal Sector. The specialized functions in insurance sector are slowly outsourced and lot many new companies will enter in this area. International insurance surveyors, loss assessors, adjuster, underwriters, claim settlers, have already entered in India and expanding their business activities. Even the world insurance and finance giants like Warren Buffet, Lloyds, Munich Re, Swiss Re, have entered in India.
* Health insurance is developing as separate branch of Insurance. It is expected that the number of health insurance companies will be equal to the number of life insurance companies in near future. Bancassurance is also developing as Separate branch of Insurance. People is India have more faith in banks than insurance agents. Many banks have already entered into insurance business and lot more in pipeline. Banks find insurance as growth vehicle. At present only GIC of India is the reinsurance company in the country. But government is now thinking over allowing many more international reinsurance companies in India. In few years, we may find 5 independent branches of insurance in India as Life, General, Health, Bancassurance & Reinsurance.
* India is becoming Insurance Hub of the world. Giant insurance companies from across the globe are outsourcing core insurance functions to India. IT infrastructure in the country and new generation Indian Talent are attracting world insurance business for core functions for cost effective solutions. Indian software companies are leading in this race. Even BPO in Insurance Sector is growing very fast. All this require technical and domain skills sets of Insurance functions. This IT, ITES and BPO business in Insurance Sector from outside India is expected to rise to 1000 Billion US $ by 2025 It is believed that next boom is in insurance sector. Insurance will play key role in boosting economy further. In India, next 25 years will be dominated by Insurance Sector. The growth is expected at horizontal as well as vertical levels. It will be from inside the country and from outside the country.
Changing Scenario in Insurance Business in India * Insurance was strictly dominated by Agents and Development officers till 2000. But IRDA has opened up new distribution channels such as Corporate Agent, Insurance Broker, Bancassurance, Mallasurance, Online Sale of Insurance, Direct Sale, etc. These new channels are growth engines of the insurance industry. One interesting aspect of this growth is that Insurance Sector is heading towards SERVICING from merely Selling. The mantra of “Sell it and Forget it” is now converting as “Service & Retain Client”. This requires Core insurance knowledge and not merely Selling Expertise.
* The commission rates of insurance agents are slowly getting downward trend. The servicing of client is now taken care by customer servicing department. The Technology has now key role in policyholders servicing and provides better knowledge and expertise than agents. Companies are now offering new gate ways for renewal commissions like through internet banking, ATMs, ECS, Mobile banking, etc. It has reduced the dependency of policyholders on agents for timely renewal of existing policies.
* Government is slowly removing the Income Tax rebates from insurance policies. It has already signaled the same and introduced few provisions in current budget by restricting the percentage of amount of premium with the sum assured of any policy.
* Product Development and new innovative policies has changed the olden rules of the selling game. Merely begging for insurance or forcing a policy will not exist anymore. The 35 % commissioned policy selling dominance will be eroded. .
* Insurance is Risk Cover or Investment is a matter of debate but common policyholder is now diverting to PURE Insurance products such as Term Insurance. The ULIP Story between IRDA and SEBI has focused on a need of domain insurance talent.
* There is certainly reasonable improvement in policyholder’s awareness and knowledge about insurance. Government, IRDA and NGOs like FIBLI, insurance companies and related stake holders are concentrating on customer education, literacy and awareness about insurance products and services through advertisements, seminars, workshops, comics, e-literature, animated films, etc.
* As Insurance need is vertical as well as horizontal, the insurance business is spreading across the country. Insurance companies are focusing and spreading network in rural markets as it has huge potential. Technological development is helping this drive of rural expansion.
* Health Insurance and Bancassurance sectors will grow drastically. General Insurance Sector will also develop. In life Insurance Sector, Term Insurance Business will dominate.
* In future, Online Insurance will have a key role in new business. * It will be difficult to get insurance claims in future. There will be huge scope for Claim consultants who will help people to get insurance claims.
* Insurance sector will slowly dominate the economy and there will be overall developments in insurance sector. There will huge revenue generation form insurance business in India as well as outsourced insurance business from outside India.
Employability Potential in Insurance Sector
As insurance sector is growing with 20% rate, there will be a huge requirement of Insurance professionals in the country.
* NSDC Report – National Skill Development Corporation has estimated the job creations of 2 Million persons in insurance and banking sector by 2021 in its latest report.
* CII Report – The recent survey of Confederation of Indian Industries estimated that there is a need of @ 21 lakhs insurance educated employees by 2025.
* ASSOCHEM Report on Insurance Sector – It has pointed out on employability potential in Insurance Sector in its latest report. The report has estimated manpower requirement to be 30 Lakhs by 2030. The job creation in insurance sector will be across the country as insurance business is spreading across the country. The innovative distribution channels will play a vital role in insurance penetration and of course, technology will be a great supportive tool for this development. The manpower is required across the country.
Insurance companies, banks and financial services providers are focusing and spreading network in rural markets as it has huge potential. It will generate huge employability not only at Metro and urban areas but at semi urban and rural levels, too. At present there are 52 companies, 334 brokers, 1200 + banks, 29 TPAs, 2000 IT, ITES & BPO companies, 400 surveyor and other insurance services provider companies are working in India. The number will rise to double or triple in next 8 to 10 years. These companies will have offices across the country and will generate jobs across the country.
Career Development Path in Insurance Sector
Till IRDA, insurance career was dominated by selling activity. It is the assumed misconception that any career in insurance sector will have to be connected with selling of insurance products. The Insurance Agents and Development Officers community in the country has coloured insurance policy selling with either begging of insurance or forcing for insurance.
The rebating in insurance premium has eroded insurance profession as under privileged one. After IRDA and entry of corporate insurance companies, the face of insurance career was always compared with the face of poor insurance agent. Career in Insurance was always neglected one and approach towards it was one of the ridiculous one. But the situation is now changing drastically. Career in Insurance is not merely a selling activity. Insurance Sector require domain technical knowledge. The employees with core insurance competency can only grow henceforth. After a decade of privatization, corporate companies have understood that insurance is not a FMCG product and one must possess technical skills and fundamental knowledge to exist & grow in this market. Servicing will be key for growth and for this, one require domain expertise.
For new entrants, any graduation with specialized diploma in insurance domain like underwriting, claims, motor insurance, health insurance, bancassurance, reinsurance, liability insurance, aviation insurance, engineering insurance, agricultural insurance, marine insurance, etc will be helpful to enter in insurance sector. One has to improve his academic qualification and scope of skills by adding various diplomas from various streams of insurance. As one grows with experience, this academic excellence and expansion will improve his employibilty and scope of promotions and growth. For existing employees, one has to improve his academic position along with experience. Mere experience will not help beyond certain limit. As we expect 49 % FDI and steep increase in number of insurance companies, the existing employees will have clear advantage to grow.
But for this, they must obtain domains skills and competency through academic enhancement. The present employee in insurance sector should focus on overall and multi dimensional development in his capacities, skill sets and academic qualifications. The candidate with multifaceted core skills will have better opportunities over general candidate. He should not limit himself only to underwriting or claims. He should always seek for more and more knowledge. One can select a sector of insurance like Life or general or health for developing his career path but he should be equipped with qualifications and skills of other sectors also. It will widen the scope of opportunities available to him.
Salary Packages In Insurance Sector
As per the present scenario in Insurance Sector, one may join insurance company at entry level with a annual package of @ Rs.1.2 lakh to 1.5 Lakh. He may be designated as Associate or Assistant. In 3-4 years, he may grow to higher position with a scale of Rs. 3 to 4 Lakhs if he has academic qualifications with experience. After 6-8 years after joining insurance, one may easily grow to annual package of 7 to 10 Lakhs. After 12 to 15 years, one may dream to annual package of Rs.15 to 20 Lakhs. Of course, this needs academic up gradation and continuous improvement of domain skills. This trend may continue for next 20 years as there is long term and inside outside country potential.
The speed of career growth and expansion is smooth and fast in insurance sector than perhaps any other sector in the country. But it needs hard work, academic excellence and aggressive approach towards opportunities. I will share one practical example here. The employees who joined insurance sector in the newly entrant companies like Bajaj Allianz, HDFC, ICICI etc between 2001 to 2003 were drawing annual salary package of 1.5 to 2.5 lakhs. They are now grown to key positions in new companies after 8 to 10 years with annual packages of Rs.20 to 25 Lakhs. Some of them have even clinched packages of 40 to 50 Lakhs per annum.
Skill Sets Requirements by Insurance Sector
At present, man power requirements are basically skilled based. Employees with academic qualifications are encouraged for promotions. Fresher with academic qualification in insurance are preferred. At present, Insurance Companies recruit freshers and train them for 6 months or one year. But the attrition rate is so high that more than 42 % of new recruits leaves the company.
Insurance companies are seriously concerned over the expenditure on training and the rate of turnout. They are looking for employees who have been already trained and having domain academic qualifications. Insurance Companies have found that domain knowledge will improve selling, servicing, operations and all other functions. New companies prefer persons with experience and academic qualifications. Skill sets required by the insurance sector are underwriting skills, claim handling skills, operational skills, servicing skills, risk assessment and classification skills, insurance product skills, distribution channel operating skills, coordination skills, IT skills with domain knowledge, insurance accountancy skills, etc.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 3 November 2016
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