Insurance penetration at 10-year low

India’s insurance penetration fell to 3.3% in FY15 compared to 3.9% in FY14, says global reinsurer Swiss Re

Insurance penetration, measured as a percentage of premiums to a country’s gross domestic product(GDP), has been on a constant drop in India. According to the latest sigma study from global reinsurer Swiss Re, India’s insurance penetration fell to 3.3 per cent in FY15, compared to 3.9 per cent in FY14. This has been the lowest since 2005-06, when the penetration was at 3.14 per cent.

India stands 15th globally with respect to premium income, is similar to last year’s. The only positive is insurance density figures, which have risen to $55 (Rs 3,498) from $52 (Rs 3,307 approximately). Insurance penetration refers to premiums as a percentage of GDP, whereas insurance density (measured in $) refers to per capita premium or premium per person.

Globally, insurance penetration stands at 6.2 per cent, while density is at $662 (Rs 42,103) for 2014. The study said global life premiums returned to positive real growth of 4.3 per cent in 2014, above the pre-financial crisis average. Further, non-life premiums were up 2.9 per cent in 2014, based largely on continuing improvement in the advanced markets.

In India, there was merely a one per cent growth in life premiums, while non-life premiums grew 4.8 per cent, is higher than the world average for 2014. “The global insurance industry gained momentum in 2014,  though the economic environment improved only marginally. Total direct premiums written were up 3.7 per cent to $4,778 billion, after having stagnated the previous year,” the study noted.

With lower rates of renewal and lesser disposable income available to invest, insurers said the penetration had come down. Non-life penetration also declined marginally, which insurers say is due to slower auto sales affecting premiums, it is life insurance that saw a bigger drop.

Anup Rau, chief executive officer of Reliance Life Insurance, said, “The larger issue here is that if you take away the top four-five players, top line and access to distribution is a challenge. The agency channel of distribution is not as viable. Hence, unless channels like banks open up to sell products of more than one insurer, distribution will be an issue.”

Rau said the Insurance Regulatory and Development Authority of India was looking to bring out newer channels such as insurance marketing firms. This could improve distribution by getting these firms to distribute products of more than one insurer in each category — life, non-life and health.

In life insurance, India had  penetration of 2.6 per cent in FY15 — down from 3.1 per cent in FY14. On the non-life side, it was 0.7 per cent — down from 0.8 per cent.

Penetration in India, surged consistently till 2009, has been seeing a gradual decline. Insurers said penetration has dropped since the sector has not been able to grow at the same pace as GDP. Recent studies have shown with higher inflation and lower disposable incomes, overall intention to buy life insurance policies in India has taken a hit.

Following the changes in unit-linked product regulations in September 2010, there was a big drop in premiums in life insurers from this space. Although unit-linked insurance plan, sales have caught on once again, thanks to better market conditions, overall, there has been a rise in surrenders.

According to the Swiss Re  study, overall profitability in the life insurance sector improved slightly in 2014, driven by stronger stock markets, higher premium growth and cost containment efforts. It said the underwriting results in non-life were positive but slightly weaker than in 2013 because claims experience deteriorated slightly and contributions from prior-year reserve releases lessened.

The study said life premium growth would remain solid in the advanced regions in 2015, and would increase in the emerging markets, particularly in Central and Eastern Europe and China. The US life insurance market would improve alongside the strengthening economy and jobs market but in Western Europe, premium growth would slow from the strong gain in 2014, it said. The outlook for the non-life segment in advanced markets is more moderate, it added.

Source: Business Standard

Date: 25/06/2015

Not Just Difficult, but Impossible Task

Irda has said that foreign shareholding in parent cos should be brought down to 49% in a year

New rules proposed by India’s insurance regulator could thwart investment plans of some of the world’s biggest insurance companies and work against the government’s attempts to simplify laws on foreign ownership, industry executives say .

The Insurance Regulatory and Development Authority (Irda) has stipulated that all insurance companies seeking higher foreign ownership should comply with norms that restrict such increase to only companies owned and controlled by Indians at the parent level. This, experts say, is likely to prevent higher foreign ownership in some of India’s biggest private sector insurance players such as HDFC Standard Life, owned partially by UK’s Standard Life.

The Narendra Modi government came to power last year promising to lift growth, provide jobs and sweep away archaic rules holding back business and investment.

His government also promised to make rules simpler and easier for foreign investors and the insurance Bill allowing foreign ownership of up to 49% in Indian insurance companies was a key item on the agenda. But the passage of the Bill has been followed by heartburn due to the clause on Indian ownership and con trol. By insisting on Indian majority ownership at the parent level, the law may make it very difficult for large scale insurance FDI. It also makes things complex and cumbersome, be lying government assertions of a transparent and simple FDI regime.

“We are waiting for the matter to be resolved by the department of finan cial services,“ said Amitabh Chaud hry , MD and CEO, HDFC Life. The problem for foreign insurance firms and their Indian partners is acute. It is no longer a simple job of increasing investment by handing out a cheque and securing clearances. The partners also have to ensure that the entity which controls the Indian investment in the insurance venture is majority owned and controlled by Indians.

For instance, mortgage giant HDFC owns 74% in HDFC Standard Life. Standard Life wants to increase its stake in the firm from 26% to 35% and leave some room for FIIs in case the firm floats an IPO.Under current rules, they will not be allowed to do this. This is because parent HDFC is owned 80% by foreign offshore funds, making it echnically a foreign-owned firm.

Irda has said foreign shareholding n parent companies should be brought down to 49% in six months o one year, a considerably difficult ask as it will have to involve massive selling by large overseas inves ors in some of the marquee blue chips. This is not just difficult but quite impossible as there is no reason why FIIs would sell just because of insurance sector regulations.

“This will have an implication on he current ownership of the exist ng companies,“ said G Murlidhar, MD and CEO, Kotak Life Insurance. Kotak Mahindra Bank, the parent of the insurance venture, has a sim lar problem. Foreigners do not yet own a majority but Kotak wants to ncrease its FII ceiling from 48% to 55%. Its application has been put on hold as the FIPB feels the increase would affect its insurance venture.“Every insurer being an Indian insurance company and who have already been granted certificate of registration for carrying on insurance business in India shall ensure he compliance of Indian owned and controlled as specified in Sec ion 2(7A) of the Act within six months from the date of notifica ion of these regulations,“ Irda said n a circular. The draft of the regula ions was sent to companies on June 8, and Irda is expected to soon notify guidelines.

Some experts are peeved that the change was made only in the recent amendments to the Bill. Offshore strategic partners could have substantial control rights on operational and financial policy decisions of he joint venture in the earlier regime which is now not possible.“One could argue that these regula ions amount to a retrospective application of a new law since the cri eria of `owned and controlled’ did not apply to insurance companies prior to 2015 Amendment Act,“ said Simone Reis, partner-M&A, Nish th Desai Associates.

Source : Economic Times

Date: 24-06-2015

TRY ON the LEADER’S SHOES…

Have you ever wondered what a CEO’s life is like? Have you yearned to get a peek at the goings-on at the topmost echelons of a company? Leadership shadowing programmes allow you to do just that

Imagine if you get to be by the CEO’s side all day, for ten days.How much would you learn? How much exposure would you get to the kind of challenges the head of an organisation has to face? How inspired would you be by hisher unique methods of dealing with problems? How motivated would you be to aim to be in hisher place one day, if you knew how exactly hisher work day unfolded?
These questions have occurred to the people managers at several organisations such as Cisco, Deloitte and Adobe.And their introspection and innovation has resulted in the phenomenon known as `leadership shadowing’. Today, leading organisations are inviting students, employees and entrepreneurs to literally be the `shadow’ of their leaders and learn from observing the best in the industry . These programmes tend to be a part of CSR activities, induction or industry-academia partnerships at times and the duration can last from a day to several months. Divyangana Srivastava, director of human resources, JW Marriott Mumbai Juhu tells us why such programmes can be beneficial for management graduates, “The graduates will be ready to excel in future leadership roles within the market having developed the key requisitesskills for the roles. This greatly reduces the incubation time of settling in.“

As early as 1970, Dr Larry Senn, a pioneer in the field of corporate culture, said that `organisations become shad ows of their leaders’ in his doctoral dissertation titled `Organisational character as a tool in the analysis of business organisations’. `Leaders often tend to underestimate the length of their shadow’, observed Dr Senn. Their shadowees might agree with Dr Senn when they see how much influence a president tends to wield. Shalini Pillay, head of people, performance and culture (PPC) for KPMG in India suggests, “With 70 per cent of learning coming from on the job, leadership shadowing is the key to foster talent. It also ensures that the leaders take time to invest in nurturing future talent.“

Essar Group conducts a `Business Leadership Program’ wherein MBA graduates undergo a two-week induction programme and then a value chain int within the business for and then a value chain stint within the business for four weeks. At the end of the six weeks, the candidate is deployed to work directly with the CEOCXO within any of Essar’s businesses. Sujaya Banerjee, chief talent officer and senior VP-HR, Essar Services India Private Limited lists the advantages: Enables participants to develop a top-down approach to leadership; Enables participants to learn to ap preciate subtext, the art of network ing and influencing; Enables participants to get mentored by seasoned professionals; Provides participants an opportuni ty to experiment early, take responsi bility and develop maturity; Enables participants to go up a steep learning curve on business and capa bilitiesbehaviours.

Thus, the day might not be too far where you’re lunching with the CEO or at the very least, getting a glimpse of what it means to wear hisher shoes.

LEADERS SHADOW OTHER LEADERS!

BETWEEN APRIL 22 AND 29, Young Bombay Forum (YBF), a youth wing of Bombay Chamber of Commerce and Industry invited participants to bid to meet and shadow one of several listed leaders.Proceeds from the online auction conducted for Proceeds from the online auction conduct the `Shadow the Leader Program’ were donated to charity, making it part of a CSR initiative as well. Amit Sarda, MD, Soulflower shadowed Ravi Kirpalani, MD, Castrol India Limited for a day. He shares his experience,“I got to see how he operates and thinks about the future. At the end of the day, I could ask whatever questions I had. I learnt about his strategy for the next 25 years; the way he engages with consumers and thinks about the economy and business worldwide.“

AN APPRENTICE FOR A DAY

PEPSICO INDIA’S CAMPUS connect programme `The PepsiCo Apprentice’ drew participation from over 5000 management students in April this year.The programme gave three students the opportunity to shadow members of PepsiCo’s top management for a day.Parth M Joshi, one of the three winning participants relates his experience of shadowing Vipul Prakash, CMO, PepsiCo India,“The very fact that nothing different was planned just because of the presence of the apprentice made the shadowing experience close to a real world corporate experience.Meeting all the stakeholders i.e.distributors, retailers, agencies and brand managers gave me lot of inputs on the strategy adopted by PepsiCo.“

Source : The times of India

Date : 24-06-2015

30 DAYS AND GOING STRONG

A 30-day feedback can help capture pain areas early in an individual’s tenure and reduce employee turnover

The first day at work is full of excitement, jitters and aspirations of the new recruit. Along with the avalanche of information that flows in the first few days, it also paves the way for creating the first impression about the organisation on the whole. Dr TK Mandal, VP HR, JK Paper Ltd shares his views on the impact of a positive on-boarding experience for the organisation, “If we can make an employee feel deeply touched with our welcome, especially during the first few weeks, chances are that he would be an engaged employee and more importantly , would remain a tacit spokesperson for the company even after a job change.“

The evaluation practice popularly known as `30-day feedback’ is increasingly gaining momentum basis the studies conducted. It is also being considered a sincere effort to restrict infant attrition. Efforts are made to not only make the new hire feel comfortable, but also makes him feel valued and a part of the new organisation. The preparation to have the basics in place starts even before the person joins. Maneesha Jha Thakur, group head HR, Edelweiss Financial Services shares, “Start from the time the offer is made, and send mails and other information about the organisation and business. On the day of joining, send a welcome SMS in the morning with the office ad dress, time of reporting and contact person. At work, the new joinees should be met by a HR representative who helps them through the joining process. All employees must have an appointed seat, a ready laptop, phone, access card and printed business cards. Within a month of joining, they must attend an induction programme where they are formally introduced to the organisation and its functions.“

The employee connect needs to be adopted and owned mutually by business and HR. A feedback format or platform needs to be well defined for effective encapsulation of the collected inputs. Asha Poluru, chief, people experience, Altimerik suggests, “To quantify feedback, an employee effectiveness survey can be used. This digitised tool captures the data of new employee experiences at every stage of an employee’s assimilation in the organisation by quantifying them on predefined parameters.“

A 30-day feedback if taken seriously , can help capture pain areas early in an individual’s tenure, reduce employee turnover, increase engagement and assist in brand building.

Source: Times Of India

Date: 17-06-2015

Organisations Salvage Bad Hiring Calls Through Training, Mentoring

It’s virtually impossible to have a 100% strike rate when hiring, but as every human resource professional knows, a wrong hire can be an organisation’s worst nightmare.

The cost of a bad hire can go up to five times that employee’s annual salary , according to a study by Society for Human Resource Management. And companies are doing the best they can to minimise the damage, whether it means investing in training or even in mentoring.

“Wrong hires -whether they be cultural mismatches within the overall organisational framework or lacking in necessary skills -cost companies very dearly because investment in their hiring and training goes to waste,“ said Kevin Freitas, director -talent sciences at InMobi.

At Motilal Oswal Financial Services, bad hires were calculated at approximately 6-7% of 700-odd employees recruited in the past year. “New employees upload their KRAsgoals after a discussion with their reporting manager on joining the organisation,“ said Sudhir Dhar, director and head -HR and administration, MOFSL. Employees who are unable to fulfill these and are not confirmed after the completion of six months undergo a performance enhancement plan. At the end of a specified period, the performance is reviewed and if found satisfactory , the employee is retained. In cases where the employee is unable to perform, he or she is asked to resign. This, said Dhar, helps the com pany maintain its quality workforce.

Out of 250-odd people hired at executive and senior positions at the Bhartiya Group last year, about 4-5% turned out to be wrong fits for the job, and these were mostly cases of cultural mismatch, said Alok Nigam, senior VP and CHRO. A gap in explanations of job profile and company culture was to blame, he added.

SV Nathan, senior director and chief talent officer, Deloitte in India, takes a pragmatic view of wrong hires. “On a general level, approximately 5-10% of people recruited by an organisation can turn out to be wrong for the job.The pressure of hiring in high volumes in a limited period can ensure the quality of hires is compromised.“

At Mercer, detailed reference checks and comprehensive mentorship have been put in place to bring down the number of wrong hires. In any given year, out of the total number of employees hired, about 2-3% perform be low expectations. However, personalised support and extensive coaching can go a long way in dealing with the problem, said Anish Sarkar, country leader, India consulting business.

Bad hires have hit the e-commerce sector, too. Among the 100-150 employees hired by FabFurnish in the past year, almost 10 12% of them turned out to be wrong fits for the job.

Shilpi Shukla, head strategist at FabFurnish is, however, upbeat about weeding out bad hires. “For future hires, we are making employee reference checks a must while recruiting candidates with a few years of work experience.“

With company time and hiring expenses at stake, constant efforts are made to correct the problem of wrong hires . “An adjustment of expectations is essential,“ said Nigam.

At Deloitte, managers are assigned to help fresh recruits navigate the career traps of under-performance. Career mentors are also provided for insights into the industry and work functions.“It is impossible to bring the number of wrong hires in any company down to zero,“ says Nathan. “However, with training, personalised attention, and constant coaching, it is possible to bring the numbers down.“

An open dialogue needs to be created between senior management and the employee on where improvements can be made. “Degrees don’t always guarantee skills,“ said Rituparna Chakraborty , president, Indian Staffing Federation. “Recruiters need to develop specific parameters for hiring, and interviewers should look beyond resumes. Openness and honesty during the on-boarding and induction processes should be encouraged.“

Source: Economic Times

Date: 16th June 2015

A RICH HARVEST – Jobs May Rain Down at Entry Level in July-Sept

Jobs tend to rain down on entry-level candidates during the monsoon, shows data since 2011 from TimesJobs.com recruitment index RecruiteX, and this July-September quarter is likely to see the trend continue.

The data reveals that since 2011, the demand for candidates with zero to two years of experience registered a significant rise of 6% on average between July and September.

Leading the surge in entry-level demand during these three months have been the IT, telecom, healthcare and hospitality sectors, which have registered a rise of 3% on average since 2011. The hiring is also set to peak in this period for e-commerce giants, says an industry expert.

Metros have reported highest average increase in fresh talent demand between July and September. Demand for entry-level candidates in Delhi-NCR, Bangalore and Mumbai together grew by an average of 4% during July, August and September between March 2011 and March 2015.

In fact, the demand for entry-level candidates peaked in 2014, shows data from RecruiteX. Other experience categories however have had a fair share of ups and downs since 2011. From 2011-2012, people with over 20 years of experience saw a massive dip in demand between July and September. It was only after 2013 that the demand has improved across all experience categories.

The primary reason for this spike is that Indian companies, in general, follow the April to March financial year cycle for the variable, bonus component payouts and disbursements, and these usually gets completed by the first quarter (April-June) of the following financial year, said Vivek Madhukar, COO, TimesJobs.com in a release.

Not only the bonus payout, but salary increments too usually come into effect from April. “The first quarter helps job seekers build the requisite documents, such as two to three months’ pay slips, increment letters, etc for applying for a new job,“ he said.

Interestingly enough, while the monsoon sees a demand for entrylevel talent, the winter months of January and February have always seen a surge in demand for senior professionals, according to analysis of RecruiteX year-onyear data since 2011.

Information technology, telecom, manufacturing and healthcare sectors are the biggest recruiters of senior professionals during the winter season. Among cities, Mumbai reported the highest demand for senior professionals during January-February in the past five years (2011-2015).

Source: Economic Times

Date: 16th June 2015

5 WAYS TO – Minimise Workplace Distractions

Distractions at the workplace abound in the form of co-workers engaged in loud conversation or even noisy office equipment. There are ways, however, that employees can plan their day and achieve professional goals despite these obstacles to productivity.Brinda Dasgupta shows how.

1 Use Technology

Organise your work intelligently and efficiently, and plan your daily schedule. “Use flags and reminders to help organise your day,“ said Rohit Sandal, director -HR, Lenovo India.“There are several project management apps also available to employees, who can use them to communicate, update tasks, share documents and keep track of project work.“

2 Restrict

Opportunity Avoid the chances of distraction completely. “Restrict access to social media, online shopping and trading during office hours,“ said Mukund Menon, director of HR and communications at International Paper, India.

3 Allocate Time

Learning to efficiently manage your time can cut down your distractions at the workplace to a large extent. Identify your high productivity hours and use them to reply to emails, complete pending projects and catch up on approaching deadlines.“Identify and use the low productivity hours to check on personal emails and texts,“ said Shilpi Shukla, HR head at Tolexo.

4 Exercise Self Discipline

Taking the decision to efficiently manage the way you work can go a long way in keeping your mind off distractions. Planning out how much time you need to spend on a project and working according to the schedule will be helpful. Also, “don’t feel compelled to arrange meetings for everything when a simple email, conversation or text message may suffice,“ said Sandal.

5 Promote Silence

Noise can affect your focus on tasks and impact productivity.Keeping phones in silent mode, and keeping IMs on offline mode during peak hours can be handy tools to make sure your mind is on your work, said Shukla.

Source: Economic  Times

Date: 16th June 2015