Career in Insurance Sector
Career in Insurance Sector
Despite the phenomenal growth in insurance sector since liberalization in 1991, the insurance sector has huge potential of growth in India. Most of the population are still uninsured and under-insured. The number of middle-class population is increasing. There is a persistent growth in GDP. People are still unaware of the importance of life insurance, health insurance, personal accident insurance, householders insurance, shopkeepers insurance and rural insurances. Motor insurance policy, which is mandatory, is also not renewed by many motor vehicle owners in view of ignorance regarding its mandatory nature throughout the period of ownership of motor vehicle. In view of the above, the insurance sector offers immense opportunities of jobs at all levels, especially for those having professional qualifications in insurance domain.
Various Career Options in Insurance Sector
- Administrative Officer and Assistant: This is an entry-level executive position in public sector insurance companies which offers good salary and perquisites with promotion opportunities. The advertisement of this post is published in leading newspapers and Employment News. The qualification required for generalist officer is graduation and for specialist officer BE, CA, MBA etc, depending on the posts advertised.
- Development officer: A Development Officer is responsible for his territory for the development of insurance policies. His responsibilities include marketing & procurement of business, training of agents, meeting prospective clients and agents, promoting the policies & getting contracts.
- Insurance agents: An agent is a person who represents an insurance firm and sells insurance policies on its behalf. Generally, there are two types of agents who reach the prospective parties that may be interested in buying insurance. These are independent agents and captive or exclusive agents. Independent agents may represent many insurance firms and receive commission for their services accordingly. On the other hand, there are captive agents who are exclusively employed by a particular insurance firm and sell policies of the same. Their services can be rewarded in the form of salary or commission.
- Insurance surveyors: Surveyors and loss assessors are not employees of insurance companies. They are independent persons possessing professional qualifications who are licensed by the Insurance Regulatory and Development Authority (IRDA) and who do the work of survey and loss assessment of non-life insurance claims and get the suitable fees and expenses from insurance companies for the survey work done by them. The qualifications required are a degree of a recognized University in any branch of engineering, or a fellow or associate member of the Institute of Chartered Accountants of India or the Institute of Cost and Works Accountants of India, or possesses actuarial qualifications or holds a degree or diploma of any recognized University or institute in relation to insurance.
- Actuary: To be eligible to be appointed as an actuary in an insurance company, a person is required to be the Fellow of Actuarial Society of India. With the opening of insurance sector the requirements of Actuaries has increased.
- Underwriter: An executive who is responsible for scrutiny, assessment and acceptance of proposals for insurance. A graduate with an associate diploma in relevant branch from Insurance Institute of India and some experience of insurance and training may prove to be a good underwriter in the long run.
- Bancassurance executive
- Other jobs
Growth Potential in Insurance Sector in India
* Insurance is one of the fastest growing sectors in India. Hardly 6% of the population of the country has been covered by Life Insurance. The penetration is as low as 0.9% in general insurance. Health Insurance has reached merely 3% of the population. In the US, where the population is about 32 crores, there are more than 6000 companies engaged in insurance business. In India, population is more than 125 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 to their needs.
Only Life Insurance sector has grown to a certain extent. As for General Insurance, only compulsory policies have been sold like car insurance policies and fire and industrial policies. A large number of General Insurance products are not known even to the employees of General Insurance companies.
Thanks to electro-mechanical equipment, scientific development and commercialization of medical profession, health insurance penetration has reached 3% of the population. Still this number is very poor compared to developed countries. Central Govt has targeted Life Insurance Penetration at 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 in 2000. It reached approximately $100 billion in 2012 and is now expected to grow to $1000 billion by 2020 and $5000 billion by 2030.
* Health Insurance is developing as a 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 the near future. Bancassurance is also developing as a separate branch of Insurance. People in India have more faith in banks than in insurance agents. Many banks have already entered into the insurance business and there are a lot more in the pipeline. Banks find insurance as a growth vehicle.
* At present only GIC of India is the reinsurance company in the country. But Govt is now thinking of allowing many more international reinsurance companies in India. In a few years, we may find five independent branches of insurance in India as Life, General, Health, Bancassurance & Reinsurance.
* India is becoming the 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. The IT, ITES and BPO business in Insurance Sector from outside India is expected to rise to $1000 billion by 2025. It is believed that the next boom will be in the insurance sector. Insurance will play key role in boosting the economy further. In India, next 25 years will be dominated by the 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 on a downward trend. The servicing of clients is now taken care of by customer servicing department. Technology has now assumed a key role in policyholders servicing and provides better knowledge and expertise than agents. Companies are now offering new gateways for renewal commissions like internet banking, ATMs, ECS, Mobile banking, etc. This has reduced the dependency of policyholders on agents for timely renewal of existing policies.
* Govt is slowly removing the Income Tax rebates from insurance policies. It has already signalled the same and introduced a few provisions by restricting the percentage of amount of premium with the sum assured of any policy.
* Product Development and new innovative policies have changed the olden rules of the selling game. Merely begging for insurance or forcing a policy will not exist anymore.
* Whether Insurance is a Risk Cover or an Investment is a matter of debate. But the 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 the policyholder’s awareness and knowledge about insurance. Govt, IRDA and NGOs like FIBLI, insurance companies and related stakeholders 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 a 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 be huge revenue generation from insurance business in India as well as outsourced insurance business from outside India.
Employability Potential in Insurance Sector
* As insurance sector is growing at the rate of 20%, 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 lakh insurance-educated employees by 2025.
* ASSOCHAM Report on Insurance Sector — It has pointed out on employability potential in Insurance Sector. 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 they have a huge potential.
Salary Packages in Insurance Sector
As per the present scenario in Insurance Sector, a person may join an 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 of joining insurance, he may easily grow to an annual package of 7 to 10 lakhs. After 12 to 15 years, he may dream of an annual package of Rs 15 to 20 lakhs. Of course, this needs academic upgradation and continuous improvement of domain skills. This trend may continue for the next 20 years as there is long-term potential.
The speed of career growth and expansion is smoother and faster in insurance sector than perhaps any other sector in the country. But it needs hard work, academic excellence and aggressive approach towards opportunities.
Skill Sets Required by the Insurance Sector
At present, manpower requirements are basically skill-based. Employees with academic qualifications are encouraged for promotions. Freshers 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 leave the company. Insurance Companies are seriously concerned over the expenditure on training and the turnover rate. They are looking for employees who have already been trained and have 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.