Hrm free essay sample

# 8211 ; Ever Evoloving Essay, Research Paper Outline Thesis Statement: Progresss in engineering along with displacements in the states? societal construction to a great extent impact the workplace environment, making a demand for new direction theoretical accounts in Human Resources. I.The Changing Workplace A.An Historical Perspective of Jobs in America B.Jobs in the twenty-first Century II.Identifying Corporate Needs A. The Emergence of Human Resource Management as a Component of General Management. B.Corporate Expectations III.Developing Human Resource Policy A. What HRM Professionals Have to State IV. Identifying Worker Needs A.Family VS Work B.The Working Environment C.Benefits and Compensation V.Where to From Here? # 8211 ; HRM Models for Innovation A. Motivation Theory B. Alternate Work Systems # 8211 ; a Comparrison Table This paper is written from the position that Human Resource Management ( HRM ) patterns are continually germinating to run into the alterations of dynamic work environments. New engineerings, progressively rapid exchanges of information, societal paradigm displacements and the restructuring of household systems contribute to a great extent to the demand to happen and use methods of HRM that meet the demands of industry, workers and consumers. We will write a custom essay sample on Hrm or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page To make so efficaciously, vision and creativeness are required in add-on to ongoing consciousness of the bottom line. The Changing Workplace At the gap of the twentieth century, the bulk of occupations in America were held in two countries, agribusiness and industry. Population distribution tabular arraies for that clip show that most of the state inhabited rural countries instead than urban countries. This continued to be the tendency up until WWII, when work forces left the state to contend and adult females left rural America to make full mill occupations as their part to the war attempt. This motion was the beginning of countrywide workplace and social alterations that have accelerated during the last half of the twentieth century. The move from rural to suburban environments changed the manner we did concern as a state. Where drawn-out households resided in and supported each other in culturally defined rural scenes, atomic households found themselves entirely in homogeneous vicinities. ( 1 ) This created a demand for goods and services that were once provided by drawn-out household and community members, opening up new markets and making occupations. It besides created the demand to acknowledge the direction of workers as a separate and formal subject. As we move into the twenty-first century we can follow our states? concern growing over the last 100 old ages. We moved from an agricultural base to an industrial 1. By the mid-50s? the bulk of occupations were found in mills. Fabrication suffered heavy blows during the late 60? s and early 1970ss and was displaced by the service industry. With the shutting of the twentieth century those services have become progressively technological. Surviving those alterations requires version, non merely in the retooling of physical workss and the retraining workers, but besides in the manner we manage those workers. Some feel that there appears to be an implicit in subject in books and documents on the topic of HRM, that there is merely one right manner to pull off people. ( 2 ) Maslow on Management offers a much different attack, showing once and for all that one size does non suit all ; i.e. , that different people need to be managed otherwise. HMR theoretical accounts runing on the premise that there is a individual right manner to pull off people are utilizing workplace standards that are rapidly going a thing of the yesteryear. The? one manner? exemplary positions people working for an organisation as employees who work full clip and are entirely dependent on that organisation for their support and their callings. These employees by and large were viewed as subsidiaries with limited or really narrow accomplishment sets. ( 3 ) These images of the worker may hold been valid several decennaries ago. However, today every one of these images has become indefensible. While the bulk of people working for an organisation may be classified as employees, a really big and steadily turning minority # 8211 ; by working for the organisation # 8211 ; no longer work as employees, but alternatively as outsource contractors. The construct of low-level places is melting every bit good, even in those countries that are considered reasonably low degree. As engineering becomes progressively more complex particular cognition is required in all operations. Subordinates, increasing their accomplishment sets, become associates. The secretary, with cognition of specialised package, becomes the Administrative Assistant. In order for the organisation to run swimmingly, the person who does his occupation good, frequently has more cognition about his occupation than his foreman. ( 4 ) For illustration, the frailty president of selling may cognize a great trade about merchandising, but nil about market research, pricing, packaging, service, or gross revenues calculating. Workers in these places may describe to the frailty president, but are frequently experts in their ain countries. Identifying Corporate Needs. Once, lower technological outlooks and a steadfastly established hierarchy allowed general directors to depute narrowly defined forces duties to those working as specializers. Today nevertheless, such patterns would be inefficient to the point of being considered inactive, and must be replaced. To neglect to make so would be to disregard and neglect to turn to the many unprecedented force per unit areas that demand a comprehensive and more strategic position in relation to the organisations? human resources. From the position point of General Management, what does the organisation demand? The General Mangement image of HRM is viewed from a planetary position, as demonstrated by a study of Fortune 500 CEOs in 1989. The consequences of that study determined that effectual direction of Human Resources must turn to corporate demands in the eight following countries: 1.Increasing international competition makes the demand for greatly improved human production mandatary. The crisis experienced in both the car and steel industries serve as clear illustrations. Foreign direction patterns, peculiarly Nipponese direction theoretical accounts, are being used to steer developing HRM techniques, particularly those that seem to increase employee committedness while supplying companies with a long term beginning of workers with necessary competences and accomplishments. 2.As organisations addition in size and complexness bed upon bed of direction has resulted in expensive, but non peculiarly effectual, bureaucratisms. Multiple beds of direction besides serve to insulate workers from the competitory environment in which organisations operate every bit good as company policy shapers. It? s hoped that a decrease of in-between direction layering will set workers closer to the competitory environment, furthering committedness to the organisation every bit good as sharpening the competitory border. Multinational companies have extra challenges in pull offing human resources, and need to accommodate policies to work within diverse civilizations and immensely different societal values. 3.Some companies may confront worsening markets or slower growing, disabling the organisations? ability to offer advancement chances and occupation security. How so to pull and retrain a competent and extremely skilled work force? 4.Greater authorities engagement in human resource patterns generates a demand to re-examine HRM policies and mandates the development of new policies. For illustration, the Americans with Disabilities Act forced the alteration of HRM policies in companies across the state. 5.America? s work force has become progressively more educated doing it necessary to rethink premises about employee capablenesss and the deputation of duties. Under use of employee endowment is a major cause of work force turnover. 6.Expectations and the values of the work force are altering, peculiarly those values and outlooks relative to authorization. This fosters a demand to review how much engagement and influence workers should be given. Means of voicing employee concerns and turn toing those concerns with due procedure demand to be provided. 7.As workers become more concerned with life and calling satisfaction corporations are revisiting traditional calling waies and seeking more alternate calling waies that take into consideration employee lifestyle demands. 8.Demographic displacements in the work force, peculiarly the extract of adult females and minorities into organisations, are doing corporations to review all policies, patterns and values that impact the intervention, duties, and promotion of these groups. ( 5 ) Developing Human Resource Policies How make cosmopolitan General Management issues affect HRM sections and patterns? While narrower in range than those concerns voiced by General Management, impact countries identified by HRM professionals closely mirrored major corporate demands identified by General Managers. Human Resource professionals, in an attempt to run into the demands of both worker and organisation, have examined ways to guarantee a coveted working environment while increasing productiveness. In the early 1990s, the consultative board of the Commerce Clearing House were asked to place the issues that they felt would determine the function of human resource maps in the following decennary. Commerce Clearing House consultative board members saw four chief HRM countries where current issues would act upon the function of the human resource map in the close hereafter: compensation ; communicating and forces patterns ; employment dealingss ; and Equal Employment Opprtunity requirments. ( 6 ) Compensation issues focused on the diverseness of worker demands, pay-for-performance programs, and the ordinance of employee benefit programs. Flexibility and adaptability in HRM patterns are primary keys in turn toing worker demands. Job sharing, staggered programming and flex clip are some of the results generated by originative attacks to HRM patterns. Pay-for-performance programs hold the temptingness of honoring productiveness while supplying pecuniary motive. Successful execution of such patterns, nevertheless, require effectual public presentation ratings. To try such compensation without valid, dependable, and standard appraisal instruments is to tribunal judicial proceeding. Fairness is a national concern strongly impacting human resource directors. Personnell plansfocused soley on organisational demands must be abandoned to profit workers and organisations likewise. One illustration is the turning societal phenomena of two calling twosomes. As the Numberss increase nepotism policies must be reexamined. Pull offing alteration and preparing people for alteration besides require HRM professionals to rethink policy. New demands for an addition in maps such as retraining evolve as workers move through alteration. Training and professional development are important in all countries of operation. Even the lowest clerk needs to remain abreast of the latest inventions brought on by proficient promotion. The March of engineering, nevertheless, non merely changes occupations, it makes some of them redundant or obsolete. In an epoch of company reconfiguration it becomes evident that layoffs and divestirtures will happen when retraining International Relations and Security Network # 8217 ; t an option. Outplacement policies must be considered and developed in readying of the demand. HRM professionals besides understand the demand for the development of effectual HR scrutinizing instruments to mensurate employee perceptual experiences of direction equity and the clime for effectual communicating within the company. The information obtained by employee attitude studies can be greatly good to supervisors, but merely if they # 8217 ; ve been trained to utilize it. ( 7 ) The legal environment of personnell direction is many fingered and rather comprehensive. In add-on to ordinances stemming from the Occupational Safety and Health Act ( OSHA ) , passed in 1970, HRM is greatly affected by the wide umbrella of Equal Employment Opportunity ( EEO ) ordinance. Equally good as protecting workers form favoritism based on race, colour, or credo, EEO serves workers in many other countries. Age favoritism besides falls under this umbrella. With an increasing figure of age favoritism suits, organisations need to develp a sensitvity to age issues and policy particular to older employees. A recent off shoot of EEO is the American with Disablities Act ( ADA ) . ADA has created a demand for new policies and processs in accommidating employees with disabilities and disablements. The emerging legal position that Acquired Immune Deficiancy Syndrome ( AIDS ) is a handicap brings policy inquiries about AIDS proving to the head. There is great possible for struggle in supplying for the demands of other employees and creates an HRM channel that must be carefully navigated. Benefit programs that are regulated by the Employee Retirement Income Security Act ( ERISA ) require particular attending. Companies must be prepared to supply resources that non merely offer such programs but besides impeccably pull off those employee benefit programs. Failure to make so will take to subsequent suits by employees disputing programs that are out of conformity with ERISA revelation, coverage and fiducial criterions are debatable. Governemnt ordinance is besides partially responsible for switching attending from brotherhood group representation to ordinances and policies that emphasize the rights of single employees. It is compulsory that this factor be taken into consideration in forces be aftering and policy devising. The function of brotherhoods as dickering units is on the diminution and will go on to decrease as bargaining relationships become progressively stable. This translates to decreased work stoppage activity and fewer actions filed with the National Labor Relations Board ( NLRB ) . While that is a positive result the tradeoff must be recognized, prepared and accounted for. While concerns will see fewer work stoppages, they can anticipate to see increasing Numberss of employment-at-will and unlawful discharge suits. An extra considertion affects employers who contract impermanent employees. This pattern is sing an increasing figure of suits by impermanent employees avering improper activity. This surely influences staffing policy determinations. It should come as no surprise that such force per unit areas have created the demand for a greater accent on the human facet of concern. With something so apparently obvious the qustion is why hasn # 8217 ; t this human facet been addressed before? It may be due, in portion, to the inclination to educate, develop, and train directors to fixate on analytical and proficient facets while presuming that? concern as usual? in covering with employees was sufficient to advance productiveness. So why are companies now trusting to happen solutions to concern jobs in the human side of endeavor? The reply lies in portion to turning social force per unit areas. Concern over the status of blue-color occupations in the 1930s, every bit good as civil rights and equal chance statute law in the sixtiess and 1970s, has paved the manner to revamping HRM policies to acknowledge and react to switching societal values. More merely set, other attacks to better employee productiveness and organisational effectivity haven? T worked. ( 9 ) Identifying Worker Needs The country of individual most impact on worker public presentation lies outside of the work environment. Family demands are the primary cause of absenteeism, tardiness, and lower productiveness. ( 9 ) The here are several factors making this phenomena. First there is the steady flow of adult females into the work topographic point. In 1970, 20.2 % of adult females worked outside the place. That figure grew to 73.8 % in 1995. The addition in two calling twosomes has assisted households in making fiscal stableness and filled a demand for personal satisfaction. It has besides, nevertheless, created a nothingness in attention giving that was traditionally a adult female? s function. Another major cause of household issues impact is the increasing figure of individual parent places. Single parent places have grown from 12 % in 1970 to 49.8 % in 1995. ( 10 ) As the exclusive load of kid raising is placed on a worker, child care agreements, school duties, and childhood unwellnesss are far more likely to interfere with attending and productiveness. Another societal phenomenon, which strains workers and, in bend, disrupts the workplace, is increasing length of service. As the population grows older the phenomena of life thirster allows workers the luxury of proroguing matrimony and holding kids. It? s comparatively common today for twosomes to prorogue their first kid until their late mid-thirtiess or early mid-fortiess, a clip once used for the readying of an empty nest. Alternatively of retiring to grandparenthood these later in life parents are covering with adolescents and how to acquire them through college. A big per centum of the work force now finds itself in the place of non merely holding kids to care for, but aged parents as good. Add to the list of household pressures the moral and fiscal duty workers must postulate with in supplying for the well-being of two coevalss. The American worker is now faced with a dual whammy in the effort to run into household demands. When looking at the increasing length of service of the work force, one must see that piece of the large image which has to make with the rate that people retire. It? s estimated that within the following 20 to thirty old ages the retirement age in developed states will, by necessity, travel up to seventy-nine or so. Seventy-nine, in footings of wellness and life anticipation, correlates with the age of 65 and the wellness and life anticipations of 1936, when the United States, the last western state to make so, adopted a national retirement program ( Social Security ) . ( 11 ) As America continues to grey, a important per centum of the work force will develop unprecedented demands that are geriatric in nature, impacting worker outlooks of benefit bundles. The inquiry confronting concern in the hereafter is finding what that age and experience are deserving in footings of pecuniary compensation and benefits. This is a quandary presently being faced by the Armed Forces, with many subdivisions happening themselves to be top heavy with senior officers. The support resources dedicated to forces are non distributed in a manner that attracts and retains military members, earnestly endangering the productiveness of military organisations. ( 12 ) This is relevant in that many private organisations every bit good as public and authorities bureaus are happening themselves in the same place. Retirement Incentive fillips have become common topographic point and are a primary tool used by organisations to cull the work force. Will this stay a feasible agency of thinning an aging work force? In add-on to household force per unit areas, and salary and benefits demands, there is a turning concern throughout the state? s work force refering quality of life. While benefits and compensation are cardinal to employee satisfaction, and hence productiveness, a strong value is placed on the emotional satisfaction one finds professionally. These emotional fringe benefits come out of all countries, and are every bit solid as extra preparation and added duty or every bit intangible as acknowledgment, grasp, and creativeness. ( 13 ) Business must take into history the societal deductions of such information, as it becomes indispensable to turn to staff demands and to find successful schemes that should environ any HRM policy. New HRM Models The direction of human resources centres on a individual basic map of the direction procedure: staffing. The HRM professional is charged with fiting the right individual to the occupation. While enlisting is an demanding country of HRM, a more important piece of employee productiveness lies in motive. Motivation methods are cardinal to fashoning successful HRM theoretical accounts. Motivation is a deceivingly simple construct but likely one of the most complex constituents of human resource direction. Motivation is simple in footings of human behaviour. Peoples are fundamentally motivated or driven to act in ways that they find honoring. So the undertaking seems easy ; merely happen out what they want and keep it out as a possible wages or inducement. It becomes complex when seeking to happen a cosmopolitan inducement in a really diverse work force. What has value to worker A may be meaningless to worker B. And what has value at one point in clip may go insignificant at another. For illustration, everyone has a demand to eat. A large steak dinner, as an inducement to succesful completion of a undertaking, is motivation # 8211 ; every bit long as your hungry! Had you merely eaten, a steak dinner would keep no involvement. An extra factor in the motive equation has to make with the world of obtaining the wages. Stating a individual that they will be promoted to gross revenues director if gross revenues in that legal power addition is empty if that undertaking is percevied as virtually inpossible. Two conditions must be met for motive to happen, harmonizing to Vroom # 8217 ; s anticipation theory of motive. First the value of the peculiar result ( such as recieving a publicity ) is really high for the individual and, secondly, the individual feels that there is a moderately good opportunity of carry throughing the undertaking at manus and obtaining the result. This is the procedure of motive. ( 14 ) Theories of motive centre on a a individual basic inquiry: what do people desire? Abraham Maslow states that worlds have five basic classs of demand ; physiological, safety, societal, ego, and self-actualization. These demands have been arranged in order of there importance to worlds. When the basic physiological demands, nutrient, drink, etc. , are met, they no longer function as motive. Alternatively, those impulses toward safety, i.e. , protection and security, go the impulsive force. Human existences move up this needs ladder as basic demands are met. Frederick Herzberg has divided Maslow # 8217 ; s hierarchy into two planes, the lower meeting physiological, safety and societal demands, and the higher meeting those demands environing self-importance and self realization. Herzberg believes that the best motive lies in fulfilling those higher degree demands. Based on his surveies, Herzberg believes that factors that satisfy lower degree demands, which he identifies as hygiene factors, are markedly different from those, reffered to as incentives, that satisfy higher degree demands. Herzberg states that if hygeine factors are unequal workers will go dissatisfied, but one time satisfied there is no inducement to execute. Therefore, hygiene factors are necesary for forestalling dissatisfaction, but really inefficient in promoting motive. Job content, nevertheless is the beginning of actuating factors. Opportunities for accomplishment, acknowledgment, duty, and more ambitious occupations motivate employees. Motivating factors work because they appeal to higher degree demands that are neer completly satisfied. Harmonizing to Herzberg, the best manner to actuate employees is to construct challenge and chances for accomplishment into their occupations. Herzberg reffers to this method of using his theory as occupation enrichment. Basically, occupation enrichment consists of constructing incentives like chance for achievment into the occupation by doing it more interesting and challenging. This theory restructures more traditional HMR theoretical accounts since occupation enrichment is frequently accomplished by giving workers more autonomyand leting them to make more of the planning and review usually done by a supervisor. This is diametricaly opposed to strict hierarchical theoretical accounts. The displacements made in HRM patterns can be most easy observed in the attach toing table comparing traditional and advanced HRM theoretical accounts. Alternate Work Systems Table ___________________________________________________ Traditional Model High-Committement Model ___________________________________________________ Narrowly defined jobsBroadly defined occupations Specialization of workersRotation through occupations and crosstraining Wage by specific occupation contentPay by accomplishments mastered Closely supervised workSelf or peer supervising Assignment or transportations byTeam assigns members to the regulation bookcover demands in flexible manner No calling developmentPromotion of larning and growing Employees as single partsEmployees in a squad Employee kept nescient aboutTeam runs as a concern: businessdata is widely shared Status symbols used to Status differences reinforce hierarchyminimizied No employee feedbackBroad employee engagement _______________________________________________________________ In Conclusion It seems evident that HMR patterns have evolved to more worker friendly theoretical accounts out of necessity. Surveies have found that usage of specific patterns, or what are more normally reffered to as high public presentation work patterns enhances overall organisational patterns. It was determined in a 1995 survey that extended enlisting and preparation processs, incentive compensation and increased employe involvment are assosciated with lower degrees of turnover, higher productiveness, and better fiscal public presentation. With respect to placing the ideal HR systemfor invention, it may be that such a unequivocal HR theoretical account would be to rigid for the advanced organisation and it # 8217 ; s invariably altering demands. A flexible combination of traditional and high-commitment patterns, and others found to be contingent on a scheme of invention, may be what organisations need to stay successfully competative. Notes 1.H. Stephen Glenn, Developing Capable Peoples ( Rockland CA: Prima Press 1989 ) 14-21 2.Martin Isenberg, A Short History of Human Resource Management, Strategic Human Resource Management Readings, ( January 1994 ) University of Massachusetts Press, 97 3.Peter F. Drucker, Management Challenges for the twenty-first Century, ( New York: Harper-Collins, 1999 ) 17 4.Drucker, 112 5.Beer, Spector, Lawrence, Mills, Walton, Managing Human Assets ( London: Collier Macmillan, 1984 ) 49-55 6.Gary Dessler, Personnel Management, 4th Edition, ( New Jersey: Prentice Hall, 1988 ) 706 7. Dessler, 323 8.Drucker, 154 9.R.P. Kalleberg, Social Perspectives on Labor Markets, ( New York: Academic Press, 1991 ) 119-149 10.US Bureau of Statistics Data Base, hypertext transfer protocol: //www.stats.gov.public 11.Drucker, 189 12.Jan Nybor, More Than a Few Good Work force Navy Times, 14 Sept. 1994, 16 13.Dessler, 388 14.Victor H. Vroom, Work and Motivation, ( New York: Wiley, 1964 ) 350-367 15.Fredrick Herzberg, One More Time: How Do You Motivate Your Employees? Harvard Business Review, vol. 47 Jan-Feb. 1968 16.Pritchard, DeLao, Von Bergen, A field Test of Expectancy # 8211 ; Valence Incentive Motivation Techniques, Organizational Behavior and Human Performance, vol. 15 no.2 April 1976 111 17.Dessler, 323-338 18.Beer, et Al, 165-167 19.Tushman and O # 8217 ; Reilly, Winning Through Innovation, ( Boston: Harvard Business School Press, 1997 ) 299 Biblography Primary Beginnings Collected Documents Nybor, Jan.Navy Times, 14 Sept. 1994 Pritchard, DeLao, Von Bergen, A Feild Test of Expectancy # 8211 ; Valence Incentive Motivation Techniques, Organizational Behavior and Human Performance vol.15 Herzberg, Fredrick, One More Time: How Do You Motivate Your Employees? Harvard Business Review vol. 47 Electronic Mentions US Bureau of Statistics Data Base Books Glenn, H. Stephen, Developing Capable Peoples, Rockland CA: Prima Press 1989 Isenberg, Martin A Short History of Human Resource Management, Strategic Human Resource Management Readings, ( January 1994 ) University of Massachusetts Press Drucker, Peter F. , Management Challenges for the twenty-first Century, New York: Harper-Collins, 1999 Dessler, Gary, Personnel Management, 4th Edition, New Jersey: Prentice Hall, 1988 Kalleberg, R.P. Social Perspectives on Labor Markets, New York: Academic Press, 1991 Vroom, Victor H. Work and Motivation, New York: Wiley, 1964 Tushman A ; O # 8217 ; Rielly, Winning Through Innovation, Boston: Harvard Business School Press, 1997

Simon Bolivar and the Battle of Boyaca

Simon Bolivar and the Battle of Boyaca On August 7, 1819, Simà ³n Bolà ­var engaged Spanish General Josà © Marà ­a Barreiro in battle near the Boyaca River in present-day Colombia. The Spanish force was spread out and divided, and Bolà ­var was able to kill or capture almost all of the enemy combatants. It was the decisive battle for the liberation of New Granada (now Colombia). Bolivar and the Independence Stalemate in Venezuela In early 1819, Venezuela was at war: Spanish and Patriot generals and warlords were fighting each other all over the region. New Granada was a different story: there was an uneasy peace, as the populace was ruled with an iron fist by Spanish Viceroy Juan Josà © de Smano from Bogota. Simon Bolivar, greatest of the rebel generals, was in Venezuela, dueling with Spanish General Pablo Morillo, but he knew that if he could just get to New Granada, Bogota was practically undefended. Bolivar Crosses the Andes Venezuela and Colombia are divided by a high arm of the Andes Mountains: parts of it are practically impassible. From May to July of 1819, however, Bolivar led his army over the pass of Pramo de Pisba. At 13,000 feet (4,000 meters), the pass was extremely treacherous: deadly winds chilled the bones, snow and ice made footing difficult, and ravines claimed pack animals and men to falls. Bolivar lost a third of his army in the crossing, but made it to the western side of the Andes in early July, 1819: the Spanish at first had no idea he was there. Battle of Vargas Swamp Bolivar quickly regrouped and recruited more soldiers from the eager population of New Granada. His men engaged the forces of young Spanish general Josà © Marà ­a Barreiro at the battle of Vargas Swamp on July 25: it ended in a draw, but showed the Spanish that Bolà ­var had arrived in force and was headed for Bogota. Bolivar moved quickly to the town of Tunja, finding supplies and weapons meant for Barreiro. Royalist Forces at the Battle of Boyaca Barreiro was a skilled general who had a trained, veteran army. Many of the soldiers, however, had been conscripted from New Granada and doubtless there were some whose sympathies were with the rebels. Barreiro moved to intercept Bolivar before he could reach Bogota. In the vanguard, he had some 850 men in the elite Numancia battalion and 160 skilled cavalry known as dragoons. In the main body of the army, he had about 1,800 soldiers and three cannons. The Battle of Boyaca Begins On August 7, Barreiro was moving his army, trying to get into position to keep Bolivar out of Bogota long enough for reinforcements to arrive. By the afternoon, the vanguard had gone ahead and crossed the river at a bridge. There they rested, waiting for the main army to catch up. Bolà ­var, who was much closer than Barreiro suspected, struck. He ordered General Francisco de Paula Santander to keep the elite vanguard forces occupied while he hammered away at the main force. A Stunning Victory It worked out even better than Bolivar had planned. Santander kept the Numancia Battalion and Dragoons pinned down, while Bolivar and General Anzotegui attacked the shocked, spread-out main Spanish army. Bolà ­var quickly surrounded the Spanish host. Surrounded and cut off from the best soldiers in his army, Barreiro quickly surrendered. All told, the royalists lost more than 200 killed and 1,600 captured. The patriot forces lost 13 killed and about 50 wounded. It was a total victory for Bolà ­var. On to Bogot With Barreiro’s army crushed, Bolà ­var quickly made for the city of Santa fà © de Bogot, where Viceroy Juan Josà © de Smano was the ranking Spanish official in Northern South America. The Spanish and royalists in the capital panicked and fled in the night, carrying all they could and leaving their homes and in some cases family members behind. Viceroy Smano himself was a cruel man who feared the retribution of the patriots, so he, too quickly departed, dressed as a peasant. Newly-converted â€Å"patriots† looted the homes of their former neighbors until Bolà ­var took the city unopposed on August 10, 1819, and restored order. Legacy of the Battle of Boyaca The Battle of Boyac and capture of Bogot resulted in a stunning checkmate for Bolà ­var against his enemies. In fact, the Viceroy had left in such haste that he even left money in the treasury. Back in Venezuela, the ranking royalist officer was General Pablo Morillo. When he learned of the battle and the fall of Bogot, he knew the royalist cause was lost. Bolà ­var, with the funds from the royal treasury, thousands of possible recruits in New Granada and undeniable momentum, would soon sweep back into Venezuela and crush any royalists still there. Morillo wrote to the King, desperately begging for more troops. 20,000 soldiers were recruited and were to be sent, but events in Spain prevented the force from ever departing. Instead, King Ferdinand sent Morillo a letter authorizing him to negotiate with the rebels, offering them some minor concessions in a new, more liberal constitution. Morillo knew the rebels had the upper hand and would never agree, but tried anyway. Bolà ­var, sensing the royalist desperation, agreed to a temporary armistice but pressed the attack. Less than two years later, the royalists would once again be defeated by Bolà ­var, this time at the Battle of Carabobo. This battle marked the last gasp of organized Spanish resistance in northern South America. The Battle of Boyac has gone down in history as one of the greatest of Bolà ­vars many triumphs. The stunning, complete victory broke the stalemate and gave Bolà ­var an advantage he never lost.

Automotive Cruise Control System Essay Example | Topics and Well Written Essays - 1000 words - 1

Automotive Cruise Control System - Essay Example The governor adjusted the engine up thrift when the engine speed changed. The system was first used in automobiles in the year 1910. Thanks to Peerless motor company who upgraded the system to maintain speed of an automobile regardless of the topography the vehicle was moving on. Modern cruise control or speedostat was invented in 1948 by Ralph Teetor a long term president of the perfect circle company which specialized in manufacture of automotives. The first car with speedostat system was manufactured in 1958 which processed a vehicle speed on driveshaft and utilized a loop wire wrapped in a metallic core to vary throttle positions. In 1950 constant speed regulator a patent was imposed by Frank Riley, however in the following years, Mr. Riley and the other patent holders did not manage to collect royalties for inventions using the cruise control. Automotive device controls became more popular in USA in the year 1973 after the historical oil crisis which led to tremendous rise in fu el price. This was due to the nature of the system of saving gas intake by minimizing level of fuel intake when a vehicle was accelerating. Automotive cruise control uses the mechanism of transmission whereby a sensor system is mounted to the vehicle front. Control mechanism is transmitted through the on board sensors. A driver feeds in the speed and the unit maintains the speed by taking over the car’s throttle. The systems are ideal because they improve a driver comfort in a free flowing traffic conditions. However the systems are not ideal in heavy congested traffic as they do not allow the cruise control to run below a certain speed normally 25mph. the vehicle maintains the desired speed by up thrusting the throttle cable with a loop wire and a closed loop feedback. Modern cruise systems have power buttons which allows a driver to turn on or off. The systems

On Being A Music Therapist Essay Example | Topics and Well Written Essays - 750 words

On Being A Music Therapist - Essay Example t; highly developed aural awareness; and the ability to make arrangements for unconventional combinations of instruments requiring variable or minimal levels of playing proficiency† (Musictherapyworld.de). A basic knowledge in â€Å"human psychological, physiological and emotional response to music, historical development of music therapy, detailed study of one music therapy approach, wide range of music therapy approaches and their theoretical bases, and the ability to compare contrast and critically evaluate clinical applications† are significant in the practice and application of the profession (Musictherapyworld.de). In becoming a professional MT, one must possess fine personal qualification and attitude such as: being responsible; good in written and oral communication skill; good interpersonal skill; â€Å"knowledgeable in professional and institutional code of ethics, experience in a multi-disciplinary team, sharing and accessing Bachelor degree in music therapy is necessary in acquiring the profession as a music therapist. United States of America is setting a standard in granting the board certificate to MT graduates. â€Å"A music therapist must complete 1200 hours of clinical training in addition to required coursework, research, and passing a nationally accredited certification exam† to be a Board-Certified or MT-BC (Wikipedia.com). The various cultures, practices, and lifestyles have an influence on physical, emotional, and mental aspects of a person. Dealing and living with our high-stressed, busy, and sophisticated technology-oriented environment subject us to sickness, depression, psychological illness and others. Thus, music therapy gives more opportunity in terms of employment and career because everyday more people are having those negative feelings that need to be treated. I have great interest in choosing this career since I have the potential skills in the field of music. I can play guitar and electronic organ and even compose my own songs.

Small and Medium Enterprises Master Essay Example | Topics and Well Written Essays - 3500 words

Small and Medium Enterprises Master - Essay Example SME also receives integrated solutions which are tailored to their particular requirements, to the right connections, to the secure accesses, also to the professional services and to the intelligent networks. SMEs are the enterprises which are working in order to make the Swiss economy the world's best economy. Small and medium-sized enterprises are also considered as the backbone of the Swiss economy. Along with this Credit Suisse also considers it as an important in order to support the Swiss SMEs by operating a consistent as well as reliable lending policy and also by offering them various advices on various topics such as the succession planning. In the previous year 2008, the Credit Suisse also increased its particular credit volume to SMEs by 5%, figure which is much higher than the annual growth rate of the country's gross domestic product and services. The bank has also its business relationship with around 100,000 Swiss companies; it means that almost every third SME is a client of the Credit Suisse. Along with this the general banking services, which they provide SMEs with various alternative forms of financing that also allow their clients in order to obtain various products to meet their individual needs and demands. In addition to all this system, they also make available thei r international know how, that how their business actually works. All of this, combined with their other services which are offered throughout the bank, means that they are also able in order to give the competent advice to all the Swiss companies. They are also always on hand in order to support their clients planning so that they can easily invest or can also launch different kinds of the business activities in the growth markets like China. Clients can also count on their extensive, on also their global network and their many years of experience. Their aim is to be able to use their products and also their respective expertise in order to assist all the companies and also all the entrepreneurs, particularly in those time when there is an economic difficulty, and to be one of the reliable partner in the long term goal and planning. (Haathi, Hall and Donckels, 185) Small and medium sized enterprises (SMEs) are one of the principal and also the driving forces in the economic development. They basically stimulate the private ownership and also the entrepreneurial skills, they are also flexible and can therefore adapt quickly to all the changing market supply and demand situations, they also generate employment, try to help the diversify economic activity and tend to make a significant contribution to trade and also to exports. Different transition economies have also acknowledged that SMEs are very much crucial for the industrial restructuring and have also formulated the national SME policies, all the different kinds of programmes and the enterprise development policies. In order to improve their economic situation and also to achieve their goals related to their development, different macroeconomic policies must also translate into a certain on the ground in order to help the business turn opportunities which are the outcomes from the globaliza tion of the overall world economy into an actual export

Rationale for concentrating on teaching of reading strategies

Rationale for concentrating on teaching of reading strategies Becoming a teacher is a complex process of change and development not only in terms of behaviour but also in cognition, affect and knowledge (Calderhead, 1990). Moreover, as a language teacher, the importance of keeping your language skills and classroom methods up to date is essential. Thus, attending an in-service training course may hold a significant key to solving a myriad of obstacles facing teachers development (Day, 1999; Craft, 2000; Sugrue, 2001; Hammadou, 2004; Lee, 2007). Why I chose this format for the workshop? Considering that teachers appear to be allergic to theory, especially when it is delivered in the lecture mode (Kouraogo, 1987, p.173), the workshop is designed as a communicative interaction between the trainer and the teachers who are supposed to act as students in a normal classroom environment. As Kouraogo(1987, p.173) maintains teachers consistently ask for practical tips and ready-made usable materials as soon as they return to their classrooms and it is the trainers intended . to show teachers how ineffective teaching may become if learners are not taught explicitly how to use reading strategies to perform better. While subscribing to Hayes opinion that training/development sessions should value participants existing knowledge, it is the role of the teacher trainer to make these theories explicit during the course (Wright, 1990, p. 92). In practice, this means that sessions should give participants an opportunity to talk about their perceptions of the teaching-learning process, and provide guidance in understanding its theoretical underpinning. What am I aiming at in terms of teacher cognition and their instructional practice? The training programme is based on my belief that an awareness, knowledge and understanding of theoretical aspects of language and language learning theory will enhance the chances for the language teacher to adopt a more effective methodology and promote students effective learning . Similarly, Ellis (1986, p.92) emphasizes the idea that the practice of actual teaching can be improved by making teachers aware of the options open to them and the principles by which they can evaluate these alternatives. I assume that in-service teachers experience a certain level of comfort with the teaching strategies they have previously employed often for many years and see no real reason to alter them (Adams and Chen (1981). Therefore in-service training is a good opportunity to help teachers reflect upon their teaching practices and make them aware of their teaching weaknesses and strengths. Upgrading teachers knowledge on the chosen topic as well as assessing and reviewing their own teaching role in the light of changes in research is another aim of the teacher trainer. Why I chose the topic reading strategies? The main arguments in support of my choosing this topic for the training programme are manifold. Firstly, the scarcity of studies on investigating teachers beliefs in the area of second language reading instruction have indicated an unclear picture of teachers belief construct in teaching reading( Chou, 2008, p.192). However, making the teachers aware of their consequent instructional practices may reshape their knowledge about teaching reading and allingn their practice to the research. The second point is a practical one. The effectiveness of teaching reading is closely related to reading- related strategies and strategy-training. As (Singhal, 2001) suggests research in the area have found that strategy training leads to improved reading performance. Her view is reinforced by Wellingham (2007, p.39) who emphasizes that strategy instruction improves comprehension. Therefore, the teachers role is to maximize the students potential reading ability by helping them use reading strategies so as they become fluent and efficient readers. The third point is determined by the context in which I teach and the target audience of the workshop. The question whether teachers develop reading skills in their classroom may be answered negatively if we consider the result of the questionnaire that I administered to my target audience. As a result, discovering the best methods and techniques for achieving fluent reading with adequate comprehension, and identifying what techniques or processes the learners may use becomes a prerequisite of this workshop. Why I chose these activities? Taking into consideration that participants usually bring a wealth of ideas and experience to in-service sessions( Hayes, p.9) and the fact that it is an awareness raising session, the activities have been chosen to with the above mentioned reasons. Student teachers have a rich store of initial knowledge and beliefs about teaching and learning (Nisbett and Ross, 1980), and these beliefs are mainly shaped by their prior learning experiences (Lortie, 1975). In the present study, student teachers are conceptualised in this way, and thus it aimed to identify sources of their initial beliefs In the first part of the session, participants are briefly introduced to the topic of the Then, they are invited to respond to some given texts and share ideas with their peers. Concept Mapping- Morine-Deshimer (1993), Artiles, Mostert, and Tankersley (1994), and Winitzky and Kauchak (1995). It is the view of Armour-Thomas (1989) that teachers thought processes influence their judgements, decisions and practices. Therefore, attempting to uncover teachers thoughts for elicitation of mental processes in research on teacher thinking are concept mapping. Choosing this method, will enable me to examine participants understanding of the topic and investigate the influences of particular components of a teacher education course on student teachers knowledge (Calderhead,1990). As well as this, it will be useful in revealing gaps, misconceptions, and the degree of sophistication of their conceptualisations. Presentation of the training programme This training programme consists of 6 interrelated theoretical and practical workshops to be attended by EFL/ ESL in-service teachers with a special interest in teaching reading, and who are willing to explore the potential benefits of exploring the reading process in more depth. Acquiring practical and theoretical skills will be taught in interactive and student-centred workshops, focussing on the participants personal input while attending the training session: 1.an introductory session to shed light on the reading process in L1 and L2 including types of reading, different theoretical approaches to teaching reading- 2 hours 2. teaching and using effective reading strategies 2 hours 3. understanding and evaluating reading teaching materials and their aims while focusing on selecting materials to motivate students and to improve their reading skills- 4 hours 4.assessing reading and designing a reading task- 4 hours 5. a practical session which offers each participant the possibility of choosing a certain type of reading and to explore it in more depth in terms of efficient classroom activities or as Clair (1995) ironically emphasizes Give me stuff. Give me a goody bag. You can use this with your fourth grade students who dont speak English. I will use it (p.191). 4 hours 6. evaluation of the workshop and reflective feedback on teachers beliefs- 2 hours Prior to attending the training programme, each teacher answered a questionnaire whose results will be used during the training sessions. In addition, the training programme will be led entirely by one trainer so as any changes in teachers beliefs can be observed and evaluated. At the end of the training programme, each participants will receive an observation sheet containing information about the changes he/she might undergo. Presentation of the workshop about teaching reading strategies The objectives of this two-hour training session are to improve the expertise of in-service EFL teachers in relation to teaching reading strategies and dissipate some of the misunderstandings that hamper effective and efficient classroom practice. Aims of the training session To raise awareness of advantages and disadvantages of different types of reading strategies To help teachers begin to develop competent To highlight the role of reading strategies training in reading comprehension Learning outcomes At the end of this session teachers are expected To distinguish between effective and ineffective reading strategies To select or identify the best reading strategies in order to help the learners gain language knowledge To decide on appropriate ways of encouraging effective reading Workshop outline Task Activity Objective Duration Process Materials Notes Welcome, introduction, session outline To activate learners schemata 5 minutes Powerpoint presentation- 1 slide Exploring experience problem-solving activity To reflect upon the use of reading strategies 5 minutes copies of texts Concept Mapping to examine the structure of student teachers knowledge and to investigate the 20 minutes Participants are asked to brainstorm about reading strategies. After having produced a list of terms (i. e. concepts) they are then asked to arrange them and demonstrate their connections, and on some occasions label what these relationships are. The concept map eventually produced is thought to represent participants understanding of the topic. The doing of the activity and, implicitly the reflection on the process itself hopefully triggered a certain amount of learning. 3-2-1 Strategy 3 things you learned 2 interesting things you discovered 1 question that you still have To review issues from the workshop and to get feedback from the activities 20 minutes Individual response to the task Table format 3-2-1 Awareness raising

Kudler Fine Foods Case Study: Personal Values Essay -- Business Case

Aristotle, the famous Greek Philosopher, believed ethics is common knowledge. In fact, he taught and practiced virtues and ethics, and strongly believed that ethics is the behavior learned through practice. According to Aristotle, "The ultimate value of life depends upon awareness and the power of contemplation rather than upon mere survival† (Irwin, 1988, p.702). To be clear, there are many descriptions used to analyze a person’s ethical behavior. The description used to analyze my behavior is the ethical perspectives of the Williams Institute Ethics Awareness Inventory (EAI). The EAI identifies four CORE ethical perspectives to determine the effect of one’s decision-making. However, this paper will focus on the ethical perspective, Character. Likewise, the paper will compare and contrast my personal values related to the core perspective, Character, with that of Kudler Fine Foods. It is worth noting that sound judgment enables a person to build character and make the right decision in their personal or professional life. In fact, according to the Williams Institute, â€Å"Character is a key factor in the workplace because integrity is highly regarded. Also, sound judgment applied in a business strategy within an organization, is relevant to the character profile.† (The Williams Institute of Ethical Management, 2003). The Author’s Values: Developing positive Character traits are essential to the success of any organization and the EAI results provided valuable insight to my management style. After personally completing the self-assessment test, the following details are the results: The ethical perspective most likely aligned with is Character; and the ethical perspective least likely aligned with is Equity. Character by d... ...ate the ethical standards set. Therefore, resolving any potential problems by displaying leadership, effective communication, and positive ethical behavior. Works Cited Character. (2010). In Merriam-Webster Online Dictionary. Retrieved February 28, 2010, from http://merriamwebster.com/dictionary/character Hunte, S. (2009, December 9). Character Quotes - Do You Have the Best Character? Retrieved February 28, 2010, from ezinearticles.com/? Character- Quotes- - - Do- You- Have- the- Best- Character?&id=3401750 Irwin, Terence. Aristotle’s First Principles. Oxford: Clarendon Press; New York: Oxford University Press, 1988. p.702 University of Phoenix. (2003). Williams Institute Ethical awareness [Computer Software]. Retrieved from University of Phoenix, Simulation, MGT521 website.

Channels of Distribution for Insurance Products

Channels of Distribution for Insurance Products PRAKASH PRABHAKAR PATIL DPGD/JL10/0480 Specialization: – Banking, Investment and Insurance Welingkar Institute of Management Development & Research Year of submission: – May 2012 ACKNOWLEDGMENT I would like to acknowledge and extend my heartfelt gratitude to the following persons who have made the completion of this project possible. I am highly indebted to Wellingkar Institute of Management for this opportunity and constant guidance as well as for providing necessary information regarding the project.I would like to express my gratitude towards my parents & colleagues of HDFC Life Insurance for their kind co-operation and encouragement which help me in completion of this project. I would like to express my special gratitude and thanks to industry persons for giving me such attention and time. Prakash Patil TABLE OF CONTENTS |Content |Page No | |Introduction – Insurance Market in India – A Quick look 4 | |Dis tribution Channel – Definition & Importance |6 | |Current distribution channels for Insurance products |8 | |Tied (Agency) Channel |9 | |Corporate Agency |13 | |Brokers |14 | |Bancassurance |17 | |Online/ Internet |23 | |Microinsurance |26 | |Worksite Marketing |28 | |Indian Postal Services |30 | |Telemarketing |32 | |KIOSK or Virtual Marketing |33 | |Background |34 | |Methodology |35 | |Problems in Distribution of Insurance products in India |35 | |Conclusions & Recommendations |44 | |Limitations |48 | |Bibliography |49 | INTRODUCTION ? Insurance Market in India – A Quick look Life insurance industry in India has gone through many phases since its start in 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), O riental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business.In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies operating in India by independence and the level of competition was high. There were also allegations of unfair trade practices. Therefore, post independence, Government of India decided to nationalize insurance business.Accordingly in January 1956, nationalization of life insurance was done by formation of Life Insurance Corporation (LIC) by absorbing 154 Indian, 16 non-Indian insurers and 75 provident societies. In 1972, general insurance business was also nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd. , the New India Assurance Company Ltd. , the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 which commenced its operations in 1st January 1973. There has been considerable time lag between reforms of insurance sector and rest of financial sector.Therefore in 1993, Government of India set up committee chaired by RN Malhotra, former governor of RBI, to propose recommendations for reforms in Insurance sector. Committee submitted its report in 1994 wherein it recommended to open the Insurance Sector for Private and foreign players. Following the recommendations of the Malhotra Committee report, in 1999 the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.The IRDA opened up the market in August 2000 with the invitation for application for registr ations. Foreign companies were allowed ownership of up to 26%. A number of amendments were brought in various insurance related statutes, viz. , Insurance Act, 1938, LIC Act, 1956 and General Insurance Business Nationalization Act, 1972 (GIBA). The Progress in the overall developments in the insurance sector were swift and more prominent after the establishment of IRDA. The four public sector non-life insurance companies were de-linked from being subsidiary of the General Insurance Company of India. Now they operate independently and compete with each other. With the progress of reforms, Insurance market has been flooded with a number of players.As at end-March 2006, among the life insurers, there were 23 companies in private sector and Life Insurance Corporation of India (LIC) was the solitary public sector company. Among non-life insurers, nine companies were in private sector and four companies were in public sector (Annex II). As regarding the present size of the insurance marke t in India, it is stated that India accounts not even one per cent of the global Insurance market. However, studies have pointed out that India’s insurance market is expected to grow rapidly in the next 10 years. The Indian Insurance Industry: A Case Study Let’s understand the rules for formation of Insurance Company in India. ABC is foreign company having diverse business interests, including the arketing and selling of insurance products in the United States of America (USA). It has a strong infrastructure, good customer base and brand equity. ABC has heard that the Indian insurance market has opened up and seeks some information about opportunities there. ABC wants to tie-up with an Indian company (â€Å"XYZ†) by forming a joint venture and wants to know the amount of equity it can hold in an Indian joint venture company and the insurance products it can sell in India. The company has distributable profits in three (3) preceding financial years, prior to the year in which shares with differential rights are to be issued; Further, ABC has a subsidiary in India (the â€Å"ABC Sub†).ABC wants to know whether ABC Sub can enter into a joint venture with XYZ. Observations and Comments The Indian government has recently passed the Insurance Regulatory Development Authority Act, 1999 (the â€Å"IRDA†) whereby amendments have been made to the existing insurance laws prevailing in the country, namely, the Insurance Act, 1938 (the â€Å"Ins Act†), the Life Insurance Corporation Act, 1956 (the â€Å"Life Act†), and the General Insurance Business (Nationalisation) Act, 1972 (the â€Å"GIB Act†). An authority called the Insurance Regulatory Development Authority (the â€Å"Authority†) has been established to regulate the insurance sector. (Section 3 of the IRDA) The Authority, inter alia, will have the power to: Issue applicants a certificate of registration; renew, modify, withdraw, suspend or cancel such re gistration. (Section 14(2)(a) of the IRDA) A certificate of registration will have to be renewed annually. (Section 3A of the Ins Act r/w the First Schedule of the IRDA) †¢ Prescribe prudential norms such as solvency margins and investment guidelines for insurance companies (Section 14(2)(k) and (l) of the IRDA) †¢ Protect interests of policyholders in matters concerning assignments of policies, nominations by policyholders, insurable interest, settlement of insurance claims, surrender value of policies, and other terms and conditions of contracts of insurance. (Section 14(2)(b) of the IRDA)However, the Indian Government has retained with itself the power to issue directions on questions of policy. (Section 14(2)(b) of the IRDA) The definition of an â€Å"Indian insurance company† has been amended to include â€Å"any insurer being a company- 1. Which is formed and registered under the Companies Act, 1956; 2. In which the aggregate holding of equity shares by a for eign company, either by itself or through its subsidiary companies or its nominees does not exceed twenty-six per cent (26%) of the paid-up capital; and 3. Whose sole purpose is to carry on life insurance business or general insurance business or reinsurance business. (Section 2(7A) of the Ins Act r/w the First Schedule of the IRDA)The explanation to this section provides that a â€Å"foreign company† is a company that is not a domestic company. (Section 2(23A) of the Income-tax Act, 1961 r/w section 2(7A) of the Ins Act r/w the First Schedule of the IRDA) The IRDA by amending the Ins Act clearly provides that the aggregate holding of equity shares by a foreign company, either by itself or through its subsidiary companies or nominees should not exceed 26% of the paid-up capital of the insurance company. It has been clarified that the twenty-six per cent (26%) cap applicable to foreign companies will also apply to foreign institutional investors, non-resident Indians and overs eas corporate bodies. Section 2(7A)(b) of the Ins Act r/w the First Schedule of the IRDA) Thus, a foreign company is now permitted to own upto 26% of the equity in an Indian joint venture company. Therefore, if ABC proposes to form a joint venture with XYZ, ABC's shareholding will be restricted to a minority shareholding of 26% in the joint venture company. It must be noted that the Indian insurance company must be a public limited company. (Section 2C of the Ins Act) Now, let us assume that ABC has a subsidiary company in India (the â€Å"ABC Sub†) in which it owns a fifty-one per cent (51%) equity and decides that ABC Sub should enter into the insurance joint venture with XYZ. This will not be permissible.According to recent informal pronouncements of the Authority, Indian companies that are subsidiaries of overseas companies will not be allowed to tie-up with other Indian companies to do insurance business. The Authority perceives this as violation of the twenty-six per ce nt (26%) equity cap by forming insurance companies. ABC can, however, along with several other foreign companies have a stake in an insurance company operating in India as long as the combined equity stake of all foreign companies does not exceed twenty-six per cent (26%). The Authority will not register any new insurance company carrying on the business of life or general insurance unless it has a minimum paid-up capital of Rs. 100 crores. No composite license for life and non-life business will be granted.For companies in the reinsurance sector, a minimum paid-up capital of Rs. 200 crores is required. (Section 6 of the Ins Act) The foregoing paid-up share capital must be brought into the new company within six (6) months of issue of the license. (Section 6 of the Ins Act r/w the First Schedule of the IRDA) In addition, every insurer will be required to undertake such percentages of life insurance or general insurance business in the rural or social sector, as specified in the Offi cial Gazette by the Authority in this behalf. (Section 27D of the Ins Act r/w the First Schedule of the IRDA) Furthermore, a new insurance company will be permitted to invest policyholders' funds only in India. Section 27C of the Ins Act r/w the First Schedule of the IRDA) Every insurer shall, in respect of its life insurance business, be required to deposit with the Reserve Bank of India, either in cash or in approved securities, a sum equal to one per cent (1%) of its total gross premium written in India, not, however, exceeding Rs. 10 crores. In respect of the general insurance business, this sum will equal three per cent (3%) of its total gross premium written in India, not, however, exceeding Rs. 10 crores. In respect of re-insurance business, this sum will equal Rs. 20 crores. (Section 7(i) of the Ins Act r/w the First Schedule of the IRDA) It has been provided that an Indian promoter holding more than twenty-six per cent (26%) of the paid-up equity capital of an Indian insura nce company will ave to divest in a phased manner the share capital in excess of twenty-six per cent (26%), after a period of ten (10) years from the date of commencement of business by the Indian insurance company. (Provision to section 6AA of the Ins Act r/w the First Schedule of the IRDA) On the one hand, the Indian government has restricted foreign equity ownership in Indian insurance companies to twenty-six per cent (26%) whereas on the other hand, it wants Indian partners to divest their equity holdings to twenty-six per cent (26%) after ten (10) years. Recently government has been in considering increasing the limit on foreign investments up to 49% from current 26%. Also norms for IPO are expected to be finalized shortly which would enable companies to go public for raising funds.The IRDA has allowed three kinds of insurance brokerage firms to operate in the country, namely, insurance, re-insurance, and composite brokerage firms. The twenty-six per cent (26%) equity cap will apply to such firms too, except that; composite brokers may enjoy a higher equity cap of forty-nine per cent (49%). Company formation consideration †¢ On complying with the registration formalities, ABC and XYZ will have to enter into a shareholders’ agreement. The main issue that arises here is exercise of control in the functioning of the joint venture company. Generally, exercise of control can be at two levels Board of Directors; and Shareholders. †¢ Under the Companies Act, 1956 (the â€Å"Cos.Act†) a company can carry on activities by passing either of two resolutions, special resolutions and ordinary resolutions. Ordinary resolutions can be passed by shareholders having 50% plus one shares with voting rights in the company, whereas special resolutions can be passed only by shareholders having 75% shares with voting rights in the company. A special resolution is, inter alia, required to amend the Memorandum and Articles of Association of a company, to i ssue further shares through a rights issue, to give loans or guarantees to other companies, etc. With a twenty-six per cent (26%) equity stake, ABC will only be in a position to block special resolutions. It will not be able to control the day-to-day functioning of the joint venture company.Additionally, the Authority has prescribed that foreign insurance companies cannot retain Board control in Indian insurance joint venture companies. Therefore, ABC will not be able to appoint majority directors on the joint venture company's Board. Another pertinent point that arises is infusion of funds to the extent of seventy-four per cent (74%) of the equity of the joint venture company by the Indian partner, namely, XYZ. XYZ will have to bring in a minimum amount of 74 cores, if the joint venture company seeks to enter into the business of life or general insurance. Further, in the event of increase of share capital, XYZ will have to pump in an amount equal to its seventy-four per cent (74%) equity stake.This can cause some problems. It should be noted that preference shares cannot be issued by companies carrying on life insurance business (Section 6A(1)(i) of the Ins Act). As such, the joint venture company carrying on life insurance business cannot comply with the capitalization stipulations by issuing preference shares to ABC In such circumstances, the parties can consider entering into a three-way joint venture either with another Indian company or with a bank. The Reserve Bank of India (â€Å"RBI†) has permitted banks to enter into the insurance sector and to invest up to fifty per cent (50%) of their paid-up capital in insurance joint ventures.The liberalization of the Indian insurance sector has open up the sector to private competition. If ABC and XYZ can establish the right amount of trust and take a long-term perspective on the Indian market, their joint venture can be a major success. ? Distribution Channel – Definition & Importance in Indian i nsurance Industry The process of making a product or service available to customer for use or consumption at desired place and time by set of two or more interdependent organizations. It can also be termed as an Intermediary between end consumer and seller or service provider. Intermediaries typically charge a â€Å"mark-up† or â€Å"commission† for participating in the channel.Post nationalization of Insurance companies, tied agents were the primary channels for insurance distribution in the Indian market; the public sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. The agents are from various segments in society and collectively cover the entire spectrum of society. A person who has lived in the locality for many years sells the products of the insurance company with a local branch nearby. This ensures the last mile touch point being closer to the customer. Of course, the profile of the people who acted as agents suggests they may not have been sufficiently knowledgeable about the different products offered, and may not have sold the best possible product to the client. Nonetheless, the customer trusted the agent and company. This arrangement worked adequately in the absence of competition.In terms of ‘Insurance Penetration Ratio’ (defined as ratio of insurance premium to GDP), a key indicator of the spread of insurance coverage and insurance culture, India compares very poorly by international standards. The penetration ratio was less than one per cent in 1990s and it improved to 5. 2% by year ended on March 2009. As against this, as per report from Swiss Re penetration ratio by year ended on March 2009, in respect of some of the developed countries, viz. , UK and South Africa at 12. 90%. In Asia, Taiwan and Hong Kong had registered their respective ratio of as high as 16. 8% and 11. 0%. Insurance penetration for the world was placed at 7. 0% w hich was far ahead than that of India. Refer: Table 1) Thus in a country with 1. 21 billion overall population, the penetration ratio indicates that still there is vast majority of population still outside reach of Insurance; especially in rural and semi-urban areas, in the context of the absence of social security schemes. This clearly suggests that there is a vast opportunity to tap in insurance sector by widening the distribution channels. Nearly as old as the banking industry or perhaps even older, insurance as a model of risk management, is centuries old. Though the industry began in a small way, it evolved to become an integral part of the financial services businesses over time.Table 1: International Comparison Of Insurance Penetration, March 2009. Developed Countries |Country |Total |Life |Non-Life | |Australia |6. 40 |3. 40 |3. 00 | |Brazil |3. 10 |1. 60 |1. 50 | |France |10. 30 |7. 20 |3. 10 | |Germany |7. 00 |3. 30 |3. 0 | |Russia |2. 50 |0. 00 |2. 50 | |South Africa |12. 90 |10. 00 |2. 90 | |Switzerland |9. 80 |5. 40 |4. 50 | |United Kingdom |12. 90 |10. 00 |3. 00 | |United States |8. 00 |3. 50 |4. 50 | Asian Countries Country |Total |Life |Non-Life | |Bangladesh |0. 90 |0. 70 |0. 20 | |Hong Kong |11. 00 |9. 60 |1. 40 | |India# |5. 20 |4. 60 |0. 60 | |Japan |9. 90 |7. 80 |2. 10 | |Malaysia |4. 40 |2. 90 |1. 0 | |Pakistan |0. 70 |0. 30 |0. 40 | |PR China |3. 40 |2. 30 |1. 10 | |Singapore |6. 80 |5. 10 |1. 70 | |South Korea |10. 40 |6. 50 |3. 90 | |Sri Lanka |1. 40 |0. 60 |0. 90 | |Taiwan |16. 0 |13. 80 |3. 00 | |Thailand |4. 00 |2. 40 |1. 60 | |World |7. 00 |4. 00 |3. 00 | Source: Swiss Re, Sigma various volumes * Insurance penetration is measured as ratio of premium (in US Dollars) to GDP (in US Dollars) # Data relates to financial year ? Current distribution channels for Insurance products in India:- Traditionally before privatization insurance products were only sold by agents.Strategy also worked due to absence of competition in market. However post privatization, competition got tougher and need for alternate channels of distribution was strongly felt. Currently insurance products are being distributed through following channels: Current distribution of Insurance products in India Insurers ? Tied (Agency) Today's insurance agent has to know which product will appeal to the customer, and also know his competitor's products in the same space to be an effective salesman who can sell his company, the product, and himself to the customer. To the average customer, every new company is the same. Perceptions about the public sector companies are also cemented in his mind.The new companies are looking for educated, aware individuals with marketing flair, an elite group who can be attracted only with high remuneration and the lure of a fashionable job, all of which may not be possible in this business with its price pressures and the complexity of selling insurance. Unable to attract this segment, they have started easing recruitme nt conditions as against the stringent norms they had earlier, thereby diluting the process. While the public sector companies are able to attract agents, they continue to suffer from high attrition rates due to indiscriminate agent appointment. The most successful of these companies tied agents are hardly of the elite variety of salesman.They are still the people from neighborhood — the postman, the schoolteacher, and the shopkeeper — who know the people and are themselves known in the community. The challenge here is the lack of knowledge of the competitive market and the inability to do intelligent comparisons with the competitor's products. Educating and training these agents is a serious challenge for the insurance company. The relevance of this kind of agent continues even today as agents are sought or contacted by families by word of mouth. Insurance companies are advised not to follow the path of FMCG's/credit card companies, believing that a suited and booted customer care consultant or financial consultant will necessarily appeal to the average Indian customer.In this context it might be a rewarding exercise to recruit some older people (who have taken Voluntary Retirement from banks and other financial institutions) to sell some lines of products like pension plans, annuities etc. Gender of agents is another relevant feature in the rural context that makes a difference, especially for the female population. Women to whom the customers can relate –e. g. , nurses, gram sevikas — can target the female segment of the population more effectively. What is applicable for the rural women and children health programs and population control programs is equally applicable for insurance selling also. With this kind of segmentation of intermediaries the challenge for the insurance company lies in training and educating these people to become effective sales persons.But this in no way diminishes the benefits of intermediary segmentatio n. †¢ SWOT Analysis on Agency Channel Strengths:- †¢ Typicality of Indian customers who always favors known and reliable intermediary. †¢ Through agency, personal contact and relationship can be established with the customer. Agents usually enjoy personal credibility with customers. †¢ Agents provide various presales and post sales services to customers. †¢ This channel’s awareness and acceptability is maximum among people. †¢ Cross selling is possible through this channel. †¢ Due to personal contact, it can provide valuable feedback about the need and expectation of consumers. Weakness:- Insurers have to bare higher cost to set up of agency channel network and provide training to personnel †¢ Higher commission rates forces insurers to deduct high charges from policy. †¢ High attrition rate of agents is a serious concern. Due to this, initial investment done on training and educating the agents goes waste. Attrition causes the prob lem of servicing orphan policies. †¢ Agents are generally not tech savvy. Opportunities:- †¢ High net worth individuals who prefer relationship over cost can be tapped. †¢ Technology can be embraced to convert prospect into business. †¢ Commissions structure can be designed in such a way that agents would want to stay active for long term. Threats:- Alternate distribution channels are more preferred by the insurers due to cost effectiveness over agency channel. At present, the number of agents working in life insurance industry is approximately 15 lakhs but a majority of them are dormant which leads to poor activity ratio. Out of the massive agency force approximately only 20% are active. What is need of the hour is not the quantity but the quality. Having some productive and lots of unproductive lot drags down the morale of the community of agents, leads to discontent within the profession and the respect for the profession is downgraded. Over manpower has its c ost to the company in terms of unrecovered or under recovered training cost.Also, opportunity cost in terms of a more productive agent serving in place of a dormant agent can’t be looked over. Over manpower also contributes to mis-selling and refunds. Adequate concept, product and soft skill training is indispensible for professionalizing agency force. IRDA mandates companies to impart 100 hour training to its agents and today most of the companies have in-house training facility. But number of agents attending subsequent product trainings at the time of product launches and other soft skill training sessions gets reduced substantially. It leads to poor knowledge about company’s whole basket of offerings and agents selling only a few products instead of doing a true need-based selling to customers.The concern of the regulator towards growing proportion of linked products in companies’ total percentage of business can also be attributed to biasedness of training programs in favor of linked products. Training becomes all the more important in today’s competitive environment where the agent is not only selling insurance but the company providing insurance. Adequate and quality initial training at the time of licensing is like laying a strong foundation for agents entering the industry and subsequent trainings are like sharpening the agents’ willingness to stay competitive. Agents are off-roll employees of an insurance company and keeping them motivated is a big challenge. Companies run loyalty and engagement programs and sales incentive programs (like short term contests) providing various monetary and non-monetary benefits.They serve well to motivate the agents to perform better, increase interaction of agents with the companies, promote spirit of healthy competition among the agents and to recognize good performing agents, provided these programs are easily understandable, transparent and quick in benefit disbursal. This profe ssion is also not left untouched by Information Technology. Most of the companies have a dedicated agent’s portal but the number of agents accessing them is less than satisfactory. One step forward in making the agents more efficient and professional is to make them more tech-savvy through training and other means. Looking at the regulatory front, a dispute redressal mechanism for the agents should be established by the IRDA. Insurance selling is a tough job.Agents are facing sharp competition from other alternative distribution channels and with so many insurance players in the fray, their job has become all the more difficult. Though the image of an agent has undergone lot of change since the time it was first introduced but still agents face a lot of sales resistance. Insurance companies need to consciously endeavor into dedicated efforts for the image makeover of their agents which will go much beyond calling them advisors or financial consultants instead of agents. Agent s are the true Brand Ambassadors of the company and they deserve a fair treatment from the insurers. In spite of multitude of other distribution channels coming up, tied agency is here to stay because of attitude and typicality of Indian customers.What is needed is a genuine effort in recruitment, training and development of a good agency force critical for growth and survival, knowing that for a long-term business like insurance quality, productivity and ethical values must be deep-rooted fully in the workforce. ? Corporate Agency The corporate agent is an extension of the agent as the insurance agent is an individual and if two agents join together and form a firm or company, it becomes corporate agent. The procedure to become a corporate agent is the same as that of an agent but may have to contribute the share capital of 15 lakh at the discretion of the insurer. Corporate agency channel was the key distribution channel for Insurance. Since IRDA allowed corporate agents into dist ribution of Insurance, it flourished like anything.It has a major advantage of cost affordability over traditional agency channel for insurers. However due to increased complaints of mis-selling and high lapsation of policies sourced through corporate agencies was a growing concern over the time. Majority of the policies were sold as a short term investment option rather than long term security. Customers were kept under dark about various charges of policy and other terms and conditions which makes insurance policy a long term investment option. Also there were instances where same set of individuals have floated different corporate agencies and they even employed people without valid licenses. To overcome these challenges and protect customer interest, IRDA came up with tringent licensing norms for corporate agencies in June 2010 which tighten the license renewal process that made many small corporate agents ineligible as they were not conforming to the new norms. In addition of t his IRDA also recommended regular on-side inspection of corporate agents to control various mal practices that had entered the system. Due to IRDA’s on-side inspection companies wherein same set of individuals have floated different corporate agencies went out of business. In November 2011, IRDA came out with persistency ratio for corporate agents; according to which it would mandatory for corporate agents to retain at least 50% of their clients. These norms with cap on commission have made its viability questionable.Also IRDA proposed a disincentive for lapsation in the form of commission claw back by the insurer, on a proportionate basis. Alternatively, a part of the first year commission should be withheld to be paid based on persistency in later years. These guidelines have ensured the restriction of the agencies which used to sell the insurance policies only for higher first year commission by using malpractices and only those who are willing to do long term and ethical business can survive. ? Brokers Insurance brokers is being totally new distribution channel which can sell the products of all the insurers on all India basis but minimum capital requirement is 50 lakh with proper office infrastructure and manpower.Every Insurance Broker will have to pay annual fees of 0. 5% of his brokerage and insure himself under Professional Indemnity insurance. Broker channel offers several benefits for customers like Choice, expertise and customer servicing. These are elaborated below. Choice:- There are about 50 insurance companies in India and as a result hundreds of different product options which can help customer to choose product exactly as per his need. Unfortunately the benefit of this market diversity never reaches the customers if they purchase insurance through agents. Brokers by definition are not tied to any one insurer and have a bias to present as many options as possible to clients.Also, brokers have a unique advantage as they can combine the l ife, non-life and health insurance requirements of a client. A broker can explain the distinctions of these different product types to a client and pick the most relevant options. This allows brokers to work with relatively smaller companies in a profitable manner. Individual insurers and agents would not have the same economies of scale in serving small clients. Expertise:- Brokers are constantly exposed to people and product offerings of different companies. Brokers participate in training programme conducted by different companies. This puts brokers in a unique position to understand market trends and developments. A good broker will harness this information to create deep market expertise.Such expertise has three main benefits. First, brokers can educate clients about product options and then push insurers hard to develop the appropriate products. The result is a steady improvement in product quality. Second, brokers can express a client's case in a language that insurers unders tand and vice versa. Quite often clients are confused when faced with all the technicalities of insurance. Brokers bridge this gap. Finally, the expertise is vital in effectively managing the client's risk, particularly in volatile times. Customer Servicing:- Because of the privileged customer–broker relationship, the broker has to build customer servicing capability.In fact the ability of a broker to retain a client, quite often depends upon its servicing strengths. No insurer or agent can play this role adequately because of the inherent conflict of interest between the claimant and the insurance company. Benefits to Industry and regulators point of view:- Brokers offer several benefits to the regulator as well. The strong customer focus of a broker is an obvious benefit. Moreover, primarily because of their deep expertise, brokers can be a very effective route to collate consumer feedback on its guidelines and regulations. Brokers go through a rigorous screening process by the regulator. Fly-by-night operators are effectively screened out.Therefore, a robust broking channel will result in fewer customer grievances and mis-selling issues. Last but not the least; brokers are very effective in reducing the cost of distribution. The experience in several countries has been that intermediation costs reduce as the broking channel becomes better established. The IRDA has a significant role to play in strengthening the broker's role in industry. First, it should attract high quality talent and capital in the channel. The quality of the players will be the foremost determinant of the development of the channel. Second, IRDA should look to incentivize focus on pure protection solutions.The low ticket size of pure protection plans and the current commission structure results in small absolute earnings for the channel. In the backdrop of low consumer awareness, the cost of acquiring a customer is high, hence the current compensation does not provide an economic rationale for intermediaries to focus on such pure risk products. Finally, in its developmental role, IRDA can educate customers on the advantages, roles and responsibilities of a broker. Issues faced by Brokers Channel:- The Brokers segment offers a mystifying problem to the insurers. This segment is able to reach out to a wide audience and has gained pace over the decade since liberalization.Hence it is an effective channel to gain market share. But profitability issues remain due to greater costs incurred on this high maintenance channel. Given that the Indian customer, just as customers in the developing world, will not like to pay upfront charges for consulting, the broker too needs to maintain his overheads by placing the policy that makes the most economic sense, rather than one that would benefit the customer the most. That said, brokers segment is a specialized channel that will continue to maintain a reasonable share in the new business premiums. The positives are that bro kers in the urban arena can attract the elite and the upper middle class customer.Brokers represent the customer and will sell the products of more than one company. They seek to determine the best fit for the client and can effectively address the mind block faced by the public about the various companies. This is applicable in the case of life insurance for the high-end and corporate/group segment. In the non-life segment, broking is not entirely new, as reinsurance brokers were arranging exotic covers. For individual customers also, with a wide range of competitive products, the broker can get a good deal. The corporate broking companies will have to play a prominent role. We are still in the early years of the industry's growth in India. The best is yet to come.We expect that over time the market will mature and the broking channel will develop with considerable depth and robustness. ? Bancassurance – Comprehensive medium of Insurance distribution The banking & Insurance industry have charged rapidly in the changing and challenging economic environment through out the globe. In the competitive & open environment each & every one wants to do better than others. And they know that if they are not able to provide better service they won't survive in Industry. Insurance companies are also to be competitive by cutting cost & serving in the better way to customers. Now the time has come to choose and adopt appropriate distribution channel.The Bancassurance is the distribution of insurance products through the bank's distribution channels. It is a phenomenon where in insurance products are offered through the distribution channels of the banking services along with a complete range of banking & investment products & services. In simple term we can say Bancassurance tries to exploit synergies between both the insurance companies & banks. Bankers Perspective:- In the post reforms, the financial sector has more number of players of both domestic and foreign a nd the dividing line between the banks and non-banking financial institutions’ activities had considerably thinned down. Overlapping in one another’s functions/ areas have become more common than exception.The direct upshot of these developments led to intensive competition in the banking sector and which in turn had a strong bearing on the banks’ net interest margin (spread). In fact the emerging scenario is likely to bring down the banks’ spread even thinner. Despite the monstrous size of public sector banks, they too observed decline in their spread. Further, banking system in India was prone to very high NPA’s (Non Performing assets) which was further ruining the burden on banks. Therefore, banks were compelled to be constantly on the look out for stable alternate sources of earnings in the form of non- traditional and fee based sources of incomes and diversification towards new areas such as bancassurance, promises greater scope for further en hancement in earnings with no menace of increase in NPA’s.Persistent endeavor in scouting for new technology, new products/ services/ new avenues, has become necessary for the growth as well as sustainability of banking system. It is in this context possibly, bancassurance could well be an appropriate choice for banks to increase their stable source of income with relatively less investments in the form of new infrastructure. As far as banking sector’s infrastructure is concerned, only a few countries could match with India for having largest banking network in terms of bank branches spreading almost throughout the length and breadth of the country. As on year end on March 2011, no of branches of all banks across India stands at staggering 89622 with growth of 36% since 2010.Out of this large network of branches nearly 62% of branches are located in rural and semi urban areas and the remaining around 38% are in urban and metropolitan areas. Besides the commercial banki ng system, India has large rural credit cooperatives as also urban cooperative banking network. Taken together these institutional set up, the ratio of population served by a bank branch would work out to be far lower. Thus, on the one hand we have a very low insurance penetration and low insurance density as compared with the international standards; on the other hand, India has a widely stretched and well established banking network infrastructure.It is this contrasting situation to absorb the two systems by way of ‘bancassurance strategy’ to reap the benefits of synergy. This is an opportune time for both banking and the insurance sectors to come closer and forge an alliance for the mutual benefit. For, both the regulators, i. e. , RBI and IRDA have already proffered appropriate policy guidelines and set in a congenial environment for such an endeavor. Besides, the Government of India’s unequivocal policy to provide insurance cover to the low income households and the people at large at a minimum cost are also favorable. Table 2: POPULATION GROUP-WISE NUMBER OF BRANCHES OF BANKS IN INDIA YEAR |RURAL |SEMI-URBAN |URBAN |METROPOLITAN |TOTAL | |1970 |3063 |3718 |1744 |1606 |10131 | |1980 |15105 |8122 |5178 |4014 |32419 | |1990 |34791 |11324 |8042 |5595 |59752 | |2000 |32734 |14407 |10052 |8219 |65412 | |2001 |32562 |14597 |10293 |8467 |65919 | |2002 |32380 |14747 |10477 |8586 |66190 | |2003 |32303 |14859 |10693 |8680 |66535 | |2004 |32121 |15091 |11000 |8976 |67188 | |2005 |32082 |15403 |11500 |9370 |68355 | |2006 |30579 |15556 |12032 |11304 |69471 | |2007 |30551 |16361 |12970 |11957 |71839 | |2008 |30914 |17791 |14416 |13038 |76159 | |2009 |31576 |19075 |15479 |13921 |80051 | |2010 |32497 |20707 |16884 |14935 |85023 | |2011 |33495 |22631 |17712 |15784 |89622 | Source: RBI annual report, 2010-11. Note: Data are exclusive of administrative offices.Above all, in India still vast majority of banking operations are conducted manually at the ban k’s branch level with relatively less automation such as ATMs, tele-banking, internet banking, etc. , unlike many developed countries. This stands out as an added advantage for the banks to have direct interface with the customers, to understand their needs/tastes and preferences, etc. , and accordingly customize insurance products. In fact there is also greater scope for innovation of new insurance products in the process. Therefore bancassurance can be a feasible activity and viable source of additional revenue for the banks. Insurers Perspective:-Contemporaneously, with the sweeping financial reforms in the insurance sector and the consequent opening up of this sector, all the private entities plunged almost simultaneously with a very little spacing of time and the entire insurance sector has been exposed to stiff competition. Insurers too have much to gain from bancassurance. The cost of the traditional agency channel is prohibitive with the high risk of agency turnover r anging between 30 to 40% every year, thus making the entire recruiting and training expenses going down the drain. Moreover, the price competition has reduced the profit margins and increased the compensation demands of the successful agents. The incentive pattern has a lot to do in this spiraling of the cost of the agency channel. Bancassurance has come in very handy for winning the middle income market which forms the bulk of the bank customers.With Bancassurance, the cost of opening new insurance branches comes down drastically for the insurer. With an agreement with a bank, all the thousand and more branches of the bank become the extended arms of the insurer. Customer Perspective:- The most immediate advantage for customers is that, in insurance business the question of trust plays a greater role, especially due to the inbuilt requirement of a long term relationship between the insurer and the insured. In India, for decades, customers were used to the monopolistic attitude of p ublic sector insurance companies, despite there were many drawbacks in their dealing, they enjoyed customer confidence, this trend continues even now mainly due to their Government ownership.The customers to move over to private insurance companies that are collaborated with foreign companies which are less known to the Indian public would take little more time. The void between the less known newer private insurance companies and the prospective insured could be comfortably filled by the banks because of their well established and long cherished relationship. Under these circumstances, any new insurance products routed through the bancassurance channel would be well received by the customers. Bancassurance is always a win-win situation for customers. It provides greater convenience by providing all the financial needs under one roof.The customer need not always wait for his insurance agent to come and render service. Whenever the client goes to the bank for his/her other needs like housing loan, overdraft, some draft issuance etc, he can complete his insurance needs too. It’s always easier to deal with one agent for all the financial needs rather than separate agents for every product. For paying renewal premium for policy would also be easier with services like ECS, Billpay or standing Instructions. Reduced distribution cost for insurers will lead to reduced premiums for policies. SWOT Analysis on Bancassurance Strengths:- In a country of more than one billion population, sky is the limit for selling insurance products.There is a vast untapped potential as the life insurance industry just covered around 20 crores of people – the number of policies will be more in view of the multiplicity of the policies per person. Millions of people travel out of India every year for various reasons, necessitating the purchase of Travel insurance and Health insurance. This is besides their need for conventional policies. There are a lot of sunrise industries l ike the IT sector, the hospitality sector, the healthcare portfolio, the education sector, BPOs and the call centers, R & D etc, providing a huge pool of professionals ready to be tapped for their insurance needs. Weakness:- The difference in working style and culture of the banks and insurance sector needs greater appreciation.Insurance is a ‘business of solicitation’ unlike a typical banking service, it requires great drive to ‘sell/ market the insurance products. It should, however, be recognized that ‘bancassurance’ is not simply about selling insurance but about changing the mindset of a bank. Moreover, in India since the majority of the banking sector is in public sector and which has been widely disparaged for the lethargic attitude and poor quality of customer service, it needs to refurbish the blemished image. Else, the bancassurance would be difficult to succeed in these banks. Unlike, the banking service, there is no guarantee for insurance products that all efforts that a bank staff spends in explaining to a customer would clinch the deal due to the very nature of the insurance products.This frustration of the bank staff has the danger of spillover effect even on their regular banking business. With the financial reforms and technological revolution embracing the financial system, there has been a great deal of flexibility in the mind set of people to accept change. The above outlined problems need not, however, deter the banking sector to embark on bancassurance as any form of resistance from the bank employees could be tackled by devising an appropriate incentive system commensurate with intensive training to the frontline bank staff. On other hand, the middle class population is over-burdened today by the inflationary pressures.This is considerably reducing the amount of savings of a middle class income group. Also absence of elementary IT requirements is still the case in many of the PSU and co-operative bank bra nches which is a concern area. Opportunities:- Bank has a huge database to work on. This has to be analyzed thoroughly and similar groups should be churned out in order to sell the bancassurance products. Since the Government pensions and other payments are handled through the bank branches, the bank can become a rallying point for more and more insurance business. Banks can become the ‘One stop shop' where a customer can apply for banking, mortgages, pensions, investment and insurance products. Threats:-The bank employee is so well entrenched in his classical way of working that there is a definite threat of resistance to any change the Bancassurance may bring in. The knowledge level of the bank staff on insurance matters is so low that all enquiries of the customers are turned over to the insurer much to the disappointment and discomfiture of the client. The bank employee simply becomes a post man in transferring the problems of the client. The same trouble comes in the matt er of other servicing aspects like the policy revivals or claims. There are hazards of direct competition to conventional banking products. The bank personnel may become resistant to sell insurance products, fearing that the bank's savings may be diverted to the insurance companies.The strategy should be using multiple banks according to their presence in different regions. Success would come by using bancassurance where it will be most effective i. e. selling simple, cheap products to the masses at a low cost. This awareness is growing and is evident from the fact that nearly every insurance company has partnered with one or many banks to implement bancassurance. ? Online Sales Channel – A feasible alternative India is joining the fast growing breed of net users and using net for banking transactions is also growing rapidly. Now almost all the public and private sector banks provide online banking facility as an add-on advantage with savings accounts.In insurance industry, j ust few years back internet was used mostly used by Insurers for Policy servicing, promotion of new products and providing various tools like illustrative calculators etc†¦ However selling insurance products online is a relatively new concept in India. Let’s understand the need of online distribution in Insurance industry. In 2010, the insurance regulator tightened norms which forced insurers to cut down commission to agents. The regulator also made it mandatory for agents to achieve a minimum level of productivity and persistency of business. As a result of these tough measures the number of life insurance agents dropped from 28. 03 lakh in September 2010 to 24. 53 lakh in September 2011.Until a couple of years back most life insurers were swearing by face-to-face sales and maintained that online would be largely used for servicing. Change in the regulatory environment, which has compelled insurers to cut distribution costs, is leading companies to look at new low-cost channels for distribution. Recent developments in information technology (IT) and web-enabled systems have made it easier for insurers to run global operations in a way that would not have been possible even two years ago. Insurers are already reaping advantages from IT improvements in internal efficiencies in areas as diverse as underwriting, claims, policy administration, financial reporting and human resources.But efficiencies go beyond these internal ones. In the coming years, the internet will have at least two major effects on the insurance industry: cost efficiencies and broader distribution. These efficiencies will come as insurers experience a greater availability of data from the internet and the transfer of business processes from manual-related or computer-related systems to newer communication related systems. Such internet-style technology will reduce cost; reduce the level of effort and improve accessibility to large-scale data. Data accumulation becomes much easier u nder the internet approach and thus affects costs and value of insurance.The internet will bring insurers to a whole new base of customers and will allow them to sample new markets that would have been too expensive to enter. Making information available to potential customers and the ability to market products to the new audience will have a tremendous impact. Advantages of Online distribution:- †¢ It would reduce the internal administration and management costs by automating business processes, permitting real-time networking of company departments, and improving management information. †¢ It would reduce the commissions paid to intermediaries since it can be sold directly to clients. †¢ It would reduce the cost of training staff and other miscellaneous expenses required to run a branch. Response time for a conversion of policy would be much lesser than the manual submission. †¢ 24 hour connectivity for purchase and servicing of insurance policies. This would e nable customer to pay premiums, check NAV, track due dates etc. as per his or her convenience. †¢ It will enable online request for quotes and data gathering which will improve efficiency. †¢ It will reduce the re-keying and typing errors which would save time and decrease risk. Compared to online stock broking or online banking, development of internet in insurance industry is somewhat cautious. There are some factors which makes the online selling of insurance policies difficult. Difficulties in selling Insurance online:- The complexity of many insurance products can make it difficult to automate the provision of information. However with improved technology and continuous innovations sometimes later it may be possible to automate complex information and offer that product online. †¢ In many cases, it is difficult to standardize claims settlement. E. g. Claims involves various investigations which needs to be carried out before making decision and would be subjectiv e on case to case basis. This process often involves people and companies who are not in a contractual relation with insurers. †¢ Internet is particularly suitable for products where contact with company is very frequent.For Insurance products, contact with customer is often infrequent. Once policy is carried out, with some type of insurance the policy holder and insurers would get in touch only in case of occurrence of insured event. †¢ In India many customers still view internet as an insecure medium. This prevents large transactions being carried out through Internet and it deters the transmission of confidential information, both of which are essential aspects of insurance policies. While the technology capability is there, improvement in bandwidth and infrastructure are needed. There is also a need of simpler products where auto-under writing is feasible.Automobile insurance, one of the segments of insurance purchased â€Å"off the shelf† in India, would be the ideal segment to start with. On the life side, term assurance for standard lives with simplified underwriting is a possibility. Nowadays many general insurance products like Travel Insurance, Auto Insurance, Health Insurance and in case of life insurance Term Insurance are being sold over internet successfully. Because of the simple nature of these products insurers are have standardized the terms and conditions to be able to sell products online. Online selling has given them chance to go beyond the normal markets and sell these products to new entrants’ altogether. ? MicroinsuranceMicroinsurance is the protection of low -income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. Low-income people can use microinsurance, where it is available, as one of several tools (specifically designed for this market in terms of premiums, terms, coverage, and delivery) to manage their risks. India curren tly has the most dynamic microinsurance sector in the world. Liberalization of the economy and the insurance sector has created new opportunities for insurance to reach the vast majority of the poor, including those working in the informal sector. Even so, market penetration is largely driven by supply, not demand.It is often assumed that a microinsurance policy is simply a low -premium insurance policy. This is not so. There are a number of other important factors. Low-income clients often: †¢ Live in remote rural areas, requiring a different distribution channel to urban insurance products; †¢ Are often illiterate and unfamiliar with the concept of insurance, requiring new approaches to both marketing and contracting. †¢ Tend to face more risks than wealthier people do because they cannot afford the same defenses. So, for example, on average they are more prone to illness because they do not eat as well, work under hazardous conditions and do not have regular medica l check –ups. Have little experience of dealing with formal financial institutions, with the exception of the National Bank of Agriculture and Rural Development (NABARD) Linkage Banking programme. Traditiona