Human Resource Development

_______________________________________________________________________
Recruitment & Selection

A STUDY ON RECRUITMENT & SELECTION

(With reference to AEGON RELIGARE Life Insurance Ltd..)
Contents

1. Theoretical framework
a. Main subject
b. Topic related concepts

2. The Present Study/ Methodology

a. Objective of the study
b. Scope of the study

3. Organization Profile
 a. Organization profile
b. Industry profile

4. Analysis

5. Findings, Suggestions, and Conclusion

EXECUTIVE SUMMARY

Human Resource Planning is a vital ingredient for the success of the

organisation in the long run. There are certain ways that are to be followed by
every organisation, which ensures that it has right number and kind of people,
at the right place and right time, so that organisation can achieve its planned
objective.
 The objectives of Human Resource Department are Human Resource
Planning, Recruitment and Selection, Training and Development, Career
planning, Transfer and Promotion, Risk Management,
For every organisation it is important to have a right person on a right
job. Recruitment and Selection plays a vital role in this situation. Shortage of
skills and the use of new technology are putting considerable pressure on how
employers go about Recruiting and Selecting staff. It is recommended to carry
out a strategic analysis of Recruitment and Selection procedure.
 SECTION – 1

THEORETICAL FRAME WORK/

CONCEPTUAL FRAMEWORK

Introduction to the life insurance industry

Indian insurance sector with the initiation of the deregulation created a tremendous
change in the last 10 years; the monopoly of big public sector companies in life insurance as
well as general (non-life insurance) has been broken. Indian insurance industry showed an
annual growth rate of 15-20% and the largest number of life insurance policies in force. New
private players have entered the market and with their innovative approaches and better use of
distribution channels and technology.

They are grabbing the market share of established public sector companies in Indian
Insurance Market. Since the deregulation has been put in to place, the market share of Life
Insurance Corporation of India has come down to 71.4% in life insurance sector. According to
government sources, the insurance and banking services’ contribution to the country's gross
domestic product (GDP) is 7% out of which the gross premium collection forms a significant
part.

Till date, only 20% of the total insurable population of India is covered under various life
insurance schemes, the penetration rates of health and other non-life insurances in India is also
well below the international level. These facts indicate the of immense growth potential of the
insurance sector. In order to meet the competition, these private companies are coming with
new strategies and innovative products.

The introduction of unit-linked insurance plans (ULIPs) has possibly been the single-
largest innovation in the field of life insurance. A ULIPS plan acts as a one stop financial
solution there by giving the client ease of managing his/her protection and long term savings.

Proper financial planning needs to be done in order to ensure that all such responsibilities
and needs are taken care of by the different investment option are available to address these
needs. How every , amongst all of them, ULIPs are emerging as a preferred investment option.
In a swoop, it has addressed and overcome several concerns that customers had about life
insurance – liquidity, flexibility and transparency.
A key area in which a unit-linked policy differs from a conventional with-profits policy
is that the investments of the unit-linked policy should be able to be valued at any point in time.
This means that a price for the individual investments of a unit-linked fund should be available
 at any time, i.e. efficient investment markets. This covers not only share markets but also
government bond markets, corporate bond markets and (as far as possible) property markets.

In markets where shares, bonds and property are popular investment media, there is a
predisposition towards investments that can be easily valued. This weighs heavily in favor of a
unit-linked policy rather than a conventional policy

In India, insurance has a deep-rooted history. The writings talk in terms of pooling of resources
that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This
was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the
earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in
India has evolved over time heavily drawing from other countries, England in particular.

   1818 saw the advent of life insurance business in India with the establishment of the Oriental
Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the
Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870
saw the enactment of the British Insurance Act and in the last three decades of the nineteenth
century, the Bombay Mutual (1871), Oriental (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 and the level of competition was high. There were also
allegations of unfair trade practices. The Government of India, therefore, decided to nationalize
insurance business. 

      An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and
Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian,
16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The
LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

      The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17 th century. It came to India as a
legacy of British occupation. General Insurance in India has its roots in the establishment of
Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian
Mercantile Insurance Ltd was set up. This was the first company to transact all classes of general
insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of
India. The General Insurance Council framed a code of conduct for ensuring fair conduct and
sound business practices.

    In 1968, the Insurance Act was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also set up then.

    In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general
insurance business was nationalized with effect from 1 st 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 and it commence business on January 1sst 1973.

      This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last decade
and more has seen it been opened up substantially. In 1993, the Government set up a committee
under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations
for reforms in the insurance sector. The objective was to complement the reforms initiated in the
financial sector. The committee submitted its report in 1994 where in, among other things, it
recommended that the private sector be permitted to enter the insurance industry. They stated
that foreign companies are allowed to enter by floating Indian companies, preferably a joint
venture with Indian partners.

      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
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000
onwards framed various regulations ranging from registration of companies for carrying on
insurance business to protection of policyholders’ interests.

   In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

      Today there are 24 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 23 life insurance companies operating in the country.
      The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together
with banking services, insurance services add about 7% to the country’s GDP. A well-developed
and evolved insurance sector is a boon for economic development as it provides long- term funds
for infrastructure development at the same time strengthening the risk taking ability of the
country.

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority
(IRDA, which was constituted by an act of parliament) specify the composition of Authority 

The Authority is a ten member team consisting of

   (a)    a Chairman;
    (b)    five whole-time members;
    (c)    four part-time members,
(all appointed by the Government of India)

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA:

 Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.
 Without prejudice to the generality of the provisions contained in sub-section (1), the
powers and functions of the Authority shall include, - issue to the applicant a certificate
of registration, renew, modify, withdraw, suspend or cancel such registration; 
 protection of the interests of the policy holders in matters concerning assigning of policy,
nomination by policy holders, insurable interest, settlement of insurance claim, surrender
value of policy and other terms and conditions of contracts of insurance; 
 specifying requisite qualifications, code of conduct and practical training for intermediary
or insurance intermediaries and agents
 specifying the code of conduct for surveyors and loss assessors; 
 promoting efficiency in the conduct of insurance business; 
  promoting and regulating professional organisations connected with the insurance and re-
insurance business; 
 levying fees and other charges for carrying out the purposes of this Act; 
 calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
and other organisations connected with the insurance business;
 control and regulation of the rates, advantages, terms and conditions that may be offered
by insurers in respect of general insurance business not so controlled and regulated by the
Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); 
 specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries; 
 regulating investment of funds by insurance companies; 
 regulating maintenance of margin of solvency; 
 adjudication of disputes between insurers and intermediaries or insurance intermediaries; 
 supervising the functioning of the Tariff Advisory Committee; 
 specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organisations referred to in clause (f); 
 specifying the percentage of life insurance business and general insurance business to be
undertaken by the insurer in the rural or social sector; and 
 exercising such other powers as may be prescribed
Life Insurance

Life Insurance is a commonly used term, yet it is seldom understood and not many are
confident about choosing the best life insurance policy for themselves and their families. There
are many life insurance companies and innumerable plans available, but before you opt for the
perfect life insurance policy, you need to evaluate the pros and cons.

Evaluate life insurance as an investment option and think about whether you really need
it. And if you do, should you choose a cheap life insurance policy or opt for the best life cover
available. Which insurance company should you select? And if you already have a policy, should
you buy another?

The questions that pop up are mind boggling; so to help you plan your life better, we
have provided answers to a few basic ones. This will equip you choose the best life insurance
company and plan for you and your family

What is life insurance?

Simply put, life insurance is a medium of providing a financial backup for your family
even after you pass on. Life insurance is an important part of a sound financial planning.
Different types of life insurance plans will not only financially protect you and your loved ones
in case of unfortunate event but, also help you save in a planned manner for important goals.

How Does Life Insurance Work?

Life insurance companies charge you a regular premium for the cover it provides for
chosen time period. Whereas, in case of ULIPs (Unit Linked Insurance Plans) part of the
premium post deductions of charges is invested to earn returns.

Do I Need Life Insurance?

Whether or not you need life insurance and how much, depends on whether or not you
have dependent family members. But practical wisdom suggests that even if nobody relies on
your income for daily living, you should still buy at least one life insurance plan which serves as
a means of personal investment and tax savings [Link] the other hand if your income is
important to your family members and your salary contributes to paying bills and loans, then you
must choose the best life insurance option that you can afford.
 Of all plans available, Term Plan is the pure protection plan and will be cheap life
insurance as well. Be sure to compare life insurance companies and the plans they offer well
before settling for one.

My Employer Offers Life Insurance; Do I Still Need a New Life Insurance Policy?

If your employer provides you with a life insurance policy, that's a bonus. These days’
large organisations do offer life insurance as one of the perks, but remember that often these
cheap life insurance plans may not cover enough.

So always ensure that you read the fine print and are aware of how much your
employer's life insurance company promises you. And if this insurance is not adequate, it is
advisable to invest in a new life insurance plan as well.

Also, the insurance amount changes from organisation to organisation and

different life insurance companies offer different plans and payment options which need to be
kept in mind. Having one new life insurance plan tucked away for safety will help you save in
the present and feel less worried about the future.

How Do I Determine How Much Life Insurance I Need?

There are some important things to consider when determining the best life insurance policy and
ideal policy amount for you:

 Evaluate the financial need of your family. Is it a growing family with diverse needs and
a single bread winner or a mature family with limited needs and perhaps more than one
source of income? The rule of thumb is the younger a family, the more the need for life
insurance.
  Secondly, you must assess how much money you can invest in life insurance premiums
on a regular basis. You may be tempted to get the best life insurance plans money can
buy but it may be too expensive for you to continue paying premiums after a certain time.
On the other hand if you pick a cheap life insurance policy it might prove to be
inadequate to cover basic necessities in your absence. Hence, it becomes very important
to evaluate your present and future needs before finalising the plan.

 Give a thought to how long you will need the life insurance money to work for you.
Whether you select a cheap life insurance cover that will sustain monthly expenses for
few years or the best life insurance plan that will exist lifelong, will depend on the
duration of your financial requirement.

 As you grow in life, you should revisit the existing plan and evaluate if you need to invest
in new life insurance plans. You can diversify your insurance savings with a new life
insurance plan and actually schedule when and how much money your family receives.

Different Types of Life Insurance Plans and How to Choose the Ideal Plan for you?

Before you get into the different kinds of life insurance plans available, our guide to
understanding life insurance will help you understand the basics. Life insurance plans not only
act as a protection cover for you and your family in case of ill health and untimely demise but,
also doubles as a savings and investment plan to achieve set goals.

So, remember that the decision of selecting the ideal Plans is very critical and instead of
purchasing any life insurance plan that you are offered in haste, take time to make your decision

Life insurance plans have various options to suit different people at different life stages.
Before you decide on which life insurance Plans you need to buy , you must carefully analyze
why you need the Plans, what will be the sum assured and for how long.

To help you answer these questions we have prepared a step by step guide that takes you through
the process of understanding and selecting the best life insurance Plans for your needs.
STEP 1: Evaluate why you are investing in life insurance plans.

 If you have dependent family members, then life insurance plans like Protection Plans
which provide only life cover will help your family tide over financial losses in tough
times.

 If you are planning for your retirement, then special plans like Retirement Plans would be
better life insurance schemes.

 If you don’t have dependent family members, then your life insurance plans can become
your channel of investment. Earlier you start saving better it is because your investments
get that much more time to grow in the long run.

 For people who don’t have any other major investments, life insurance schemes are also
ideal ways to save tax.

STEP 2: Assess the total financial needs of your family.

 In the unfortunate event of your demise, knowing the amount of monetary compensation
that will be sufficient to honour your family’s financial commitments is important and
must be considered while buying any life insurance schemes available.

 If the plan is to achieve certain future goals then it is important to ascertain the future
value to the goal and save for the same.

STEP 3: Assess how much you can invest regularly.

 After you know how much you need, assess how much you can save and invest in life
insurance plans on an ongoing basis.
  If you expect your income to grow in the near future, then you can opt for an increasing
premium Plans where the premium increases gradually and also helps increase the sum
assured.

STEP 4: Pick a Plans to suit your needs.

 After having assessed your life insurance requirements and the amount you can save, it is
time for you to evaluate different products. It is also important to spend some time
researching various plans available.
There are a lot of insurance companies offering numerous life insurance plans. The names of
plans may vary but what you need to look out for is the advantage each plan offers you over the
other.

[Link] LINKED INSURANCE PLAN

ULIP are new generation life insurance plans that provide the dual benefits of protection
and investment. ULIPs provide a lot of flexibilities to the policy holders and hence they help in
asking provisions for an individual’s multiple needs.

IRDA has issued guidelines with effect from 1st July 2006 for unit linked insurance
products. The guidelines were intended mainly to ensure that they lead to greater transparency
and understanding of these products to the insured, since, the investment risk is borne by the
policy holders.

The number of units that a customer would get would depend on the unit price when he
pays his premium. The daily unit price is based on the market value of the underlying assets
(equities, bonds, government securities, etc) and computed from the net asset value.

The advantage of unit-linked plans is that they are simple, clear, and easy to understand.
Being transparent the policyholder gets the entire upside on the performance of his fund. Besides
all the advantages they offer to the customers, unit-linked plans also lead to an efficient
utilization of capital.

Unit-linked products are exempted from tax and they provide life insurance. Investors
welcome these products as they provide capital appreciation even as the yields on government
securities have fallen below 6 per cent, which has made the insurers slash payouts.

According to the IRDA, a company offering unit-linked plans must give the investor an
option to choose among debt, balanced and equity funds. If you opt for a unit-linked endowment
policy, you can choose to invest your premiums in debt, balanced or equity plans.

If customer chooses a debt plan, the majority of his premiums will get invested in debt
securities like gilts and bonds. If he chooses equity, then a major portion of his premiums will be
invested in the equity market. Customer chooses the plan according to his risk profile and
investment need.

The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead.
This is especially so if one also believes that current market values (stock valuations) are
relatively low.

So if investor opts for a plan that invests primarily in equity, the buzzing market could
lead to windfall returns. However, should the buzz die down, investors could be left stung.
 SECTION – 3

AEGON RELIGARE LIFE INSURANCE Company

a. Life Insurance Industry :

Who regulates Life Insurance industry?

Insurance Regulatory & Development Authority

As Reserve Bank of India (RBI) regulates the banks, IRDA regulates the Insurance companies in
India

IRDA is based at Hyderabad and has power to

1) Register and de-register new insurance companies

2) Make regulating to the conduct of the business of insurance

3) Check the insurance companies for their financial health

4) Appoint additional directors

5) Take serious action against the insurance company for any non-compliance or
fraudulent practice

6) Official website: [Link]

Who assists IRDA in matters concerning training?

Insurance Institute of India-Main objectives

 1) Anybody who wants to sell insurance (life or non life has to be licensed

2) Insurance Institute of India prepares the syllabus for pre-licensing examination and
behalf of IRDA conducts these examinations

3) Official website: [Link]

Brief History of Insurance

The story of insurance is probably as old as the story of mankind. The same instinct that
prompts modern businessmen today to secure themselves against loss and disaster existed in
primitive men also. They too sought to avert the evil consequences of fire and flood and loss of
life and were willing to make some sort of sacrifice in order to achieve security. Though the
concept of insurance is largely a development of the recent past

Life Insurance in its modern form came to India from England in the year 1818. Oriental
Life Insurance Company started by Europeans in Calcutta was the first life insurance company
on Indian Soil. All the insurance companies established during that period were brought up with
the purpose of looking after the needs of European community and Indian natives were not being
insured by these companies.

But Indian lives were being treated as sub-standard lives and heavy extra premiums were
being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian
life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as
Indian enterprise with highly patriotic motives, insurance companies came into existence to carry
the message of insurance and social security through insurance to various sectors of society.
 Bharat Insurance Company (1896) was also one of such companies inspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies.

The first two decades of the twentieth century saw lot of growth in insurance business.
From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with
total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies
many financially unsound concerns were also floated which failed miserably.

The Insurance Act 1938 was the first legislation governing not only life insurance but
also non-life insurance to provide strict state control over insurance business. The demand for
nationalization of life insurance industry was made repeatedly in the past but it gathered
momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the
Legislative Assembly.

However, it was much later on the 19th of January, 1956, that life insurance in India was
nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident
were operating in India at the time of nationalization. Nationalization was accomplished in two
stages; initially the management of the companies was taken over by means of an Ordinance, and
later, the ownership too by means of a comprehensive bill.

The Parliament of India passed the Life Insurance Corporation Act on the 19th of June
1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the
objective of spreading life insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country, providing them adequate financial cover at a
reasonable cost.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a
large number of insurance companies and the level of competition was high. There were also
allegations of unfair trade practices. The Government of India, therefore, decided to nationalize
insurance business. 
      An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and
Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian,
16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The
LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

     History of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17 th century. It came to India as a
legacy of British occupation. General Insurance in India has its roots in the establishment of
Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian
Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of
general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of
India. The General Insurance Council framed a code of conduct for ensuring fair conduct and
sound business practices.  

    In 1968, the Insurance Act was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also set up then.  

    In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general
insurance business was nationalized with effect from 1 st 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 and it commence business on January 1sst 1973.

     This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last decade
and more has seen it been opened up substantially. In 1993, the Government set up a committee
under the chairmanship of [Link], former Governor of RBI, to propose recommendations
for reforms in the insurance sector. The objective was to complement the reforms initiated in the
financial sector. The committee submitted its report in 1994 where in, among other things, it
recommended that the private sector be permitted to enter the insurance industry. They stated
that foreign companies are allowed to enter by floating Indian companies, preferably a joint
venture with Indian partners.

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
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000
onwards framed various regulations ranging from registration of companies for carrying on
insurance business to protection of policyholders’ interests.

    In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

     Today there are 24 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 23 life insurance companies operating in the country.

 
     The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together
with banking services, insurance services add about 7% to the country’s GDP. A well-developed
and evolved insurance sector is a boon for economic development as it provides long- term funds
for infrastructure development at the same time strengthening the risk taking ability of the
country.

Insurers are in the business of taking over the risk of others - individuals as well as
corporate houses. As a result, there is a vast accumulation of risks in their portfolio. As long as
the risks that they are exposed to are predictable and where they can make a reasonably fair
assessment of the risks, their management is not a very critical issue.

But in a world where there is an increasing complexity of relationships as also a higher

incidence of corporate debacles; risk management for insurers is certainly not a bed of roses. It
calls for a great alertness and caution in their risk management strategy.

Further, it has to be appreciated that a comprehensive risk management policy is

assimilated into their organizational culture rather than working in isolated, issue-based tactical
management.

There is need for the players to be sensitive to the various happenings around the globe –
natural and man-made - to ensure that any possible ill effects that might have an impact on their
operations are tackled in time. There has been an increasing emphasis on Corporate Governance
globally in the aftermath of the failure of several players that once used to command huge
reputations.

It should be realized that long-term reputation that is hard to come by has to be protected
carefully. In a domain that is not very high on financial literacy and especially in a business that
is not easily understood, protecting one's reputation is all the more significant.

Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started
functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its
business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of
protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over by the central
government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a
capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins
and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the
general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four company’s viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the
Oriental Insurance Company Ltd. and the United India Insurance Company
Ltd. GIC incorporated as a company.

What is General Insurance?

 Insurance other than ‘Life Insurance’ falls under the category of General Insurance.
General Insurance comprises of insurance of property against fire, burglary etc, personal
insurance such as Accident and Health Insurance, and liability insurance which covers legal
liabilities. There are also other covers such as Errors and Omissions insurance for professionals,
credit insurance etc.

Non-life insurance companies have products that cover property against Fire and allied
perils, flood storm and inundation, earthquake and so on. There are products that cover property
against burglary, theft etc. The non-life companies also offer policies covering machinery against
breakdown, there are policies that cover the hull of ships. Further, insurance of motor vehicles
against damages and theft forms a major chunk of non-life insurance business.

In respect of insurance of property, it is important that the cover is taken for the actual
value of the property to avoid being imposed a penalty should there be a claim. Where a property
is undervalued for the purposes of insurance, the insured will have to bear a rateable proportion
of the loss.

Personal insurance covers include policies for Accident, Health etc. Products offering
Personal Accident cover are benefit policies. Health insurance covers offered by non-life insurers
are mainly hospitalization covers either on reimbursement or cashless basis. The cashless service
is offered through Third Party Administrators who have arrangements with various service
providers, i.e., hospitals.
 The Third Party Administrators also provide service for reimbursement claims.
Sometimes the insurers themselves process reimbursement claims. Accident and health insurance
policies are available for individuals as well as groups. A group could be a group of employees
of an organization or holders of credit cards or deposit holders in a bank etc. Normally when a
group is covered, insurers offer group discounts.

There are general insurance products that are in the nature of package policies offering a
combination of the covers mentioned above. Suitable general Insurance covers are necessary for
every family. It is important to protect one’s property, which one might have acquired from
one’s hard earned income.A loss or damage to one’s property can leave one shattered. Losses
created by catastrophes such as the tsunami, earthquakes, cyclones etc have left many homeless
and penniless. Such losses can be devastating but insurance could help mitigate them. Property
can be covered, so also the people against Personal Accident. A Health Insurance policy can
provide financial relief to a person undergoing medical treatment whether due to a disease or an
injury.

Industries also need to protect themselves by obtaining insurance covers to protect their
building, machinery, stocks etc. They need to cover their liabilities as well. Most general
insurance covers are annual contracts. However, there are few products that are long-term.

One of the main reasons one should insure is to protect one’s belongings and assets
against financial loss. When one has earned and accumulated property, protecting it is prudent.
The law also requires us to be insured against some liabilities.

That is, in case we should cause a loss to another person, that person is entitled to
compensation. To ensure that we can afford to pay that compensation, the law requires us to buy
liability insurance so that the responsibility of paying the compensation is transferred to an
insurance company.

INSURANCE OF ECONOMIC DEVELOPMENT

Investments are made out of saving and they are necessary for furthering economic
development. The life insurance company is a quit important in mobilizing saving of people,
from the higher, middle and lower income groups and these saving are channelled into
investment for economic growth.

Most of the life insurance companies have large fund that are accumulated through the
payment of small amount of premium of individual and these fund further the economic
development of the countries in which they do business .

These funds are collected and held in trust for the benefits of the policy holder .the
management of the life insurance company have to remember these aspects and take decision
keeping in mind the benefits of the community.

Advantages of Life Insurance

Risk Cover- Life today is full of uncertainties; in this scenario Life Insurance ensures that your
loved ones continue to enjoy a good quality of life against any unforeseen event.

Planning for life stage needs - Life Insurance not only provides for financial support in the
event of untimely death but also acts as a long term investment. You can meet your goals, be it
your children's education, their marriage, building your dream home or planning a relaxed retired
life, according to your life stage and risk appetite.

Protection against rising health expenses - Life Insurers through riders or stand alone health
insurance plans offer the benefits of protection against critical diseases and hospitalization
expenses. This benefit has assumed critical importance given the increasing incidence of lifestyle
diseases and escalating medical costs.
Builds the habit of thrift - Life Insurance is a long-term contract where as policyholder, you
have to pay a fixed amount at a defined periodicity. This builds the habit of long-term savings.
Regular savings over a long period ensures that a decent corpus is built to meet financial needs at
various life stages.

Safe and profitable long-term investment- Life Insurance is a highly regulated sector. IRDA,
the regulatory body, through various rules and regulations ensures that the safety of the
policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a
long-term savings instrument, also ensures that the life insurers focus on returns over a long-term
and do not take risky investment decisions for short term gains.

Assured income through annuities- Life Insurance is one of the best instruments for retirement
planning. The money saved during the earning life span is utilized to provide a steady source of
income during the retired phase of life.

Protection plus savings over a long term - Since traditional policies are viewed both by the
distributors as well as the customers as a long term commitment; these policies help the
policyholders meet the dual need of protection and long term wealth creation efficiently.

Growth through dividends - Traditional policies offer an opportunity to participate in the

economic growth without taking the investment risk. The investment income is distributed
among the policyholders through annual announcement of dividends/bonus.

Facility of loans without affecting the policy benefits - Policyholders have the option of taking
loan against the policy. This helps you meet your unplanned life stage needs without adversely
affecting the benefits of the policy they have bought.

Tax Benefits-Insurance plans provide attractive tax-benefits for both at the time of entry and exit
under most of the plans.

Mortgage Redemption- Insurance acts as an effective tool to cover mortgages and loans taken
by the policyholders so that, in case of any unforeseen event, the burden of repayment does not
fall on the bereaved family.
[Link] RELIGARE LIFE INSURANCE Company

HISTORY

AEGON, an international life insurance, pension and investment company, Religare, a

global financial services group and Bennett, Coleman & company, India’s largest media house,
have come together to launch AEGON Religare Life Insurance Company Limited (ARLI). This
venture is dedicated to build a profitable customer-centric business with scale, providing a work
environment that fosters excellence and innovation. This joint venture will balance a local
approach with the power
of an expanding global operation.

ARLI launched its pan-India operations in July, 2008 following a multi-channel

distribution strategy with a vision to help people plan their life better. The fulfillment of this
vision is based upon having a complete product suite, providing customized advice and
enhancing the overall customer experience through superior service.

ARLI has launched a suite of products that are focused on providing the customer with
the means to meeting their long-term financial goals. At the same time product development has
been founded on the tenet of providing the customer with great value. ARLI products such as
AEGON Religare item Plan and AEGON Religare Invest Maximizer Plan have been ranked
among the best in terms of value and have attracted many external accolades.

VISION:

To help people plan their life better

Mission:
 Being sensitive to the needs of the customers, with intuitive insights into their goals and
priorities.

Values:

1) Professional

Better understanding our customer needs. imparting valuable advice and relevant
solutions. Doing what we say

About AEGON

AEGON has come a long way since then. Today, AEGON is one of the world’s leading life
insurance and pension companies, with businesses in some 25 countries around the world.

AEGON Origin:

AEGON can trace its origins back to the burial funds that began to spring up in the
Netherlands in the mid nineteenth century. The oldest was the Algemene Friesche, which was
created by two civil servants in the northern part of the Netherlands in 1844.
After 1860, Dutch burial funds began to face competition from new "life insurance" companies.

In the Netherlands, life insurance became increasingly tied up with the idea of social
reform and "self help." One of AEGON’s predecessors, Olveh, was initially formed as a self-help
organization for civil servants and white-collar workers.

At the same time, another AEGON company – Nillmij – was establishing roots in the Dutch East
Indies. Formed in 1859, Nilmij provided civil servants and military personnel in the former
Dutch colony with an opportunity to save and invest.

For many years, Nilmij had a virtual monopoly on private life insurance in the Dutch East
Indies. Strong economic growth in the latter part of the nineteenth century led to a rapid
expansion of the Dutch life insurance market.

However, the outbreak of the First World War brought severe disruption across Europe,
and the years immediately following the fighting were characterized by economic uncertainty
and high inflation.

Consolidation:

For the insurance industry in the Netherlands, the inter-war years were a time of
consolidation. The Dutch government introduced social reforms, making greater provisions for
people's retirement and old age

Facing volatile business conditions in the Dutch East Indies, Nilmij began to turn its
attention to the Netherlands. Meanwhile, one of the few mergers to take place in the inter-war
years was between two of AEGON's predecessor companies: Algemene Friesche and Groot
Noordhollandsche. The return of war in Europe in 1939 brought more upheaval to the Dutch
insurance business. During the war, Dutch insurers were forced to hand over property belonging
to Jewish investors. After 1945, many families returned to reclaim their property.

Return to growth:
 The end of hostilities in 1945 ushered in a period of strong premium income growth for
the Dutch insurance industry. As the European economy recovered, US money flooded into the
continent and prices rose. In 1949, Indonesia won back its independence. Eight years later, the
government in Jakarta nationalized Dutch-owned assets, including many of the country’s
insurance companies. By that time, however, Nilmij had transferred much of its business to the
Netherlands as rising prices and stiff competition made the former colony increasingly
unattractive.

The 1960s brought a wave of mergers in the insurance sector. Growing competition, a
need to control costs and rising inflation led to a round of mergers and acquisitions. In 1968,
three insurers – Algemene Friesche, Groot Noordhollandsche and Olveh – joined forces to create
a new company called AGO.

A year later, Eerste Nederlandsche, Nieuwe Nederlandsche and Nilmij created Ennia.
Between them, AGO and Ennia controlled 20% of the Dutch market. Fourteen years later, they
would join to create a new force in the global insurance industry: AEGON.

International expansion

In the years before their merger, both AGO and Ennia took steps to expand their
international businesses in Europe and the United States.

In 1979, AGO bought the US life insurance company Life Investors. Two years later, Ennia
acquired National Old Line, based in Arkansas.

The 1980s proved a decade of international expansion. In 1986, three years after the
merger between AGO and Ennia, the newly created AEGON bought Western Reserve Life in
Ohio. A few months later, the Group acquired the Baltimore-based life insurer Monumental
Corp. By June 1988, AEGON’s growing US business had been united under a single roof:
AEGON USA.

AEGON’s international expansion was not confined to North America. The 1980s saw
other acquisitions as well – in Spain, Belgium and the Netherlands. By 1986, AEGON had
become one of ten largest insurance companies in Spain.
 In the 1980s, AEGON also began listing shares on stock exchanges around the world,
giving the company access for the first time to international capital markets, which proved vital
for its continued growth. By the early 1980s, AEGON was already listed in Amsterdam and
London.

In 1985, the Group went one step further and floated shares in New York. At the time, the
flotation was heralded, not without a touch of hyperbole, as "the most important arrival from
Holland since Peter Stuyvesant founded New Amsterdam in 1653."

Today, AEGON shares are traded around the clock in Amsterdam and New York.

New markets:

The 1990s saw AEGON continue to expand its international presence. At the beginning
of 1991, the company bought Regency Life, a UK insurer specializing in unit-linked products
and pensions. Then, two years later, AEGON began its relationship with Scottish Equitable, one
of the best-known names in the UK financial services industry.

By 1998, AEGON had taken full control of Scottish Equitable.

The following year, the company extended its businesses in the United Kingdom further,
buying the life insurance operations of Guardian Royal Exchange. The United Kingdom is now
one of AEGON’s three main markets, the others being the United States and the Netherlands.

The early 1990s also saw AEGON take its first steps in two other regions that were to
become increasingly significant for the company in the years ahead: Central and Eastern Europe
and Asia. In March 1992, AEGON bought a 75% stake in Állami Biztosító, Hungary’s former
state-owned insurance company. This was a springboard for further expansion in the region, at
the time only just emerging from decades of Soviet domination.

In Asia, AEGON set up a greenfield operation in Taiwan at the end of 1993. Over the
next few years, the company strengthened its position in Taiwan, which, like Hungary, was to
play a significant role in helping AEGON push out into new markets, this time in Asia.
 Alongside this international expansion, AEGON began to concentrate on its core
markets: life insurance, pensions and long-term savings and investments. As a result, the
company withdrew from some markets and businesses, including Belgium and Greece, the
general insurance market in the United Kingdom and part of the healthcare sector in the
Netherlands.

AEGON also sold its stake in FGH Bank and its merchant bank Labouchere. The result
was a more efficient and focused company. As an international life insurance, pension and
investment company, AEGON has businesses in over twenty markets in the Americas, Europe
and Asia.

With headquarters in The Hague, the Netherlands, AEGON companies employ

approximately 28,000 people and serve some 40 million customers across the globe. The
company’s common shares are listed on three stock exchanges: Amsterdam, New York and
London.

AEGON has more than 160 years of experience with its roots going back to 1844.
AEGON holds 26% equity in ARLI.

[Link]
About Religare Enterprises Limited
Religare Enterprises Limited (REL) is a global financial services group with a presence
across Asia, Africa, Middle East, Europe and the Americas. In India, Religare’s largest market,
the group offers a wide array of products and services ranging from insurance, asset
management, broking and lending solutions to investment banking and wealth management.
The group has also pioneered the concept of investments in alternative asset classes such
as arts and films. With over 10,000 employees across multiple geographies, Religare serves over
a million clients, including corporate and institutions, high net worth families and individuals,
and retail investors. Religare is a Latin word that translates as 'to bind together'.

Symbol:
The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered
good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000
three-leaf clovers found.

For us, each leaf of the clover has a special meaning. It is a symbol of Hope.

Trust, Care, Good Fortune.

For the world, it is the symbol of Religare.

The first leaf of the clover represents Hope. The aspirations to succeed. The dream of
becoming. Of new possibilities. It is the beginning of every step and the foundation on
which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place one’s own faith in
another. To have a relationship as partners in a team. To accomplish a given goal with
the balance that brings satisfaction to all, not in the binding, but in the bond that is
built.

The third leaf of the clover represents Care. The secret ingredient that is the cement in
every relationship. The truth of feeling that underlines sincerity and the triumph of
diligence in every aspect. From it springs true warmth of service and the ability to
adapt to evolving environments with consideration to all.

The fourth and final leaf of the clover represents Good Fortune. Signifying that rare
ability to meld opportunity and planning with circumstance to generate those often
looked for remunerative moments of success.

Hope. Trust. Care. Good Fortune. All elements perfectly combine in the emblematic
and rare, four-leaf clover to visually symbolize the values that bind together and form
the core of the Religare vision.

This name has been chosen to reflect the integrated nature of the financial services the
company [Link] hold 44% equity in ARLI. [Link]
Vision and Mission statements:

Vision - To build Religare as a globally trusted brand in the financial services domain.

Mission - Providing complete financial care driven by the core values of diligence and
transparency.

Brand Essence - Core brand essence is Diligence and Religare is driven by ethical and dynamic
processes for wealth creation

About Bennett, Coleman & Company Limited

Bennett, Coleman & Company Limited (BCCL), part of the mammoth Times Group, is
India’s largest media house. It reaches out to 2468 cities and towns all over India. The group
owns and manages powerful media brands like The Times of India, The Economic Times,
Maharashtra Times, Navbharat Times, Femina, Filmfare, Grazia, Top Gear, Radio Mirchi,
Zoom, Times Now, Times Music, Times OOH, Private Treaties and [Link]. All of its
brands are multinational in outlook, traditional at heart and national in spirit. From the very first
edition on November 3, 1838 the mammoth BCCL Group has come a long way. By way of the
innovative venture of Times Private Treaties ([Link] the BCCL
Group holds 30% equity in ARLI.

STRONG PARENTAGE

Aegon
Life insurance/ pension/ investments

 Presence in over 20 markets throughout the Americas, Europe and Asia

 5th largest life insurance company in the world based on revenue.
 Ranked 103 on the fortune 500 list.
 More than 5 crores customers worldwide.
 More than 31,500 employees worldwide.

Religare

Value that bind

 One of India’s leading integrated financial services group

 Services in retail, wealth & institutional spectrums
 Presence in more than 460 cities and towns and more than 1550 locations across India

The Opportunity

 Population of India -103 crores (in 2010)

 78% of households are aware of insurance products
 Growth in no. of policies from 2009 -2010 was 149%

Life Insurance Plans

AEGON Religare Life Insurance offers insurance and pension plans specifically designed
to help you plan your life better. Select a plan based on your need – protection, saving, child or
retirement.     

Protection plans
 Protection plans are Term Plans which provide only life cover. These plans can help you
get adequately covered and secure your family financially in case of unfortunate event. These are
low cost life insurance plans. What’s more, depending on your future responsibilities and
financial commitments Increasing and Decreasing Term Plans offers you the flexibility to
increase or decrease the sum assured in systematic manner.

Level term Plans:

Your family looks to you for support and strength. You have given them the best till now
and you would want them to get the best even in the future. However, no one has control over
uncertainties of life. Will they be able to sustain the same lifestyle even in your absence? To deal
with your concern and give your family the best, we offer you AEGON Religare Level Term
Plan, which ensures protection for your loved ones at a fraction of the cost. With the help of our
Life Agent, fill out the Life Planner that will help you take the steps to having your own plan.

Features and Benefits:

Enhanced Sum Assured:

There are some special occasions in life such as your marriage or the birth of your child
that need your support. On such occasions this policy gives you the option to increase your Sum
Assured. This increase in the sum assured is subject to a maximum of 50% of the sum assured or
Rs 10 lakh (whichever is lower), without the hassle of going through a medical examination or
any other underwriting requirements.

Grace period:

You are allowed to pay premiums within 30 days from the due date. If a due premium is
not received within the grace period, your policy will lapse and the life insurance cover,
including the rider cover, if any, will be terminated.

Lapsed Policy Reinstatement:

 You can reinstate your lapsed policy any time (within 2 years from the due date of the
first unpaid premium) by paying all the due premiums.

Free Look Cancellation:

In case, you are not satisfied, you may choose to cancel the policy within 15 days of
receiving the policy documents. Upon such cancellation, you will be paid back the premiums
minus the cost of stamp duty, medical reports and proportionate premium for the period for
which the risk was covered.

Death:

Incase of unfortunate demise, the benefit payable to nominee is sum assured and it does
not change during the term of the contract.

 Tax Benefits:

Section 80C, 10 (10D) of the Income Tax Act, 1961 would apply. Premiums paid for
AEGON Religare CI Rider may qualify for a deduction under Section 80D of the Income Tax
Act, 1961. Consult your tax advisor for confirmation.

ULIP - Unit Linked Insurance Plans:

Unit Linked Insurance Policies or ULIPs as they are commonly called, are more
innovative forms of life insurance that also offer returns on your investments.

Every ULIP provides cover against death. In addition, this unit linked insurance plans
also serve as great means of long-term savings, structured to give you maximum benefit.

In simple words, investment in ULIPs is great combination of protection and investment.

Let us help you understand ULIPs better.

AEGON Religare Future Protect Plan:

Life, if systematically managed, can constantly keep changing for better, leading only to
a more secured tomorrow. AEGON Religare Future Protect Plan aims to do just that for you.
With the help of our Life Agent, fill out the Life Planner that will help you take the steps to
having your own plan.
How does the plan work?

Step 1: Decide on the amount of premium you wish to pay every year

Step 2: Choose the amount of insurance cover you want (Sum Assured)

Step 3: Decide on the policy term

Step 4: Invest your premium in choicest of 4 Funds OR a unique ‘Invest Protect’ option

Features & Benefits:

Maturity - On maturity, you receive the fund value existing on maturity date. If you do
not wish to take the entire maturity amount at one go, you can avail of the Settlement Option.

Settlement Option - Under this option, you receive your maturity proceeds in
instalments over a period you choose (not exceeding 5 years). Investment risk during the
settlement period is borne by you.

Partial Withdrawal - You can partly withdraw your money after first 5 policy years.
The maximum amount of partial withdrawal allowed in any policy year is 20% of the fund value
at the beginning of that policy year. You can also avail of AEGON Religare Future Protect
Plan’s Systematic Partial Withdrawal facility by which we redeem units periodically from your
unit account and credit the money to your bank account. You can opt for systematic partial
withdrawals frequency; say monthly or quarterly for the duration you choose.

Discontinuance - You can discontinue the policy any time. Discontinuance value is paid
after first 5 years. Discontinuance value is fund value minus the discontinuance charges of the
year in which the premiums were discontinued. The charge will depend upon the period for
which you have paid your premiums, for detailed charges refer to the brochure. There is no
charge on top-up or if the policy is discontinued after 4 policy years.
 Death - In case of your unfortunate demise during the policy term, the nominee will
receive the sum assured or the fund value, whichever is higher. However, it will not be less than
105% of the total premium including top-up premium. The fund value is the number of units in
your unit account multiplied by their respective unit price. For further details on the above
benefits refer to Terms and Conditions in the brochure.

Tax Benefits - Premium paid under this policy will be eligible for tax benefit u/s 80C and
the benefits received under the policy will eligible for tax benefit u/s 10(10D). Please consult
your tax advisor for details.

Child Plan:

AEGON Religare Child Plans are life insurance plans that can help you save for your
child’s future goals. This plan comes with a Waiver of premium feature, which guarantees to
waive all future premiums in event of your demise, pays an amount equal to the analysed
premium every year and ensures that your child receives full sum assured immediately and 100%
of fund value on maturity of policy.

AEGON Religare Rising Star Plan:

Your dream has always been to see your children outshine your dreams. To be able to
meet their needs and aspirations is what you always strive towards. Life, if systematically
managed, can keep changing for the better leading to a more secure future for your children.
AEGON Religare Rising Star Plan aims to help you in doing just that. It not only makes
provisions for your children’s future but also ensures that their future remains secured. With the
help of our Life Advisor, fill out the Life Planner that will help you take the steps to having your
own plan.
How does the plan work?

Step 1: Decide on the amount of premium you wish to pay every year

Step 2: Choose the amount of insurance cover you want (Sum Assured)

Step 3: Decide on the policy term and premium pay term of your policy

Step 4: Invest your premium in choicest of 4 Funds OR a unique 'Invest Protect' option.

Features & Benefits

Death- In case of your unfortunate demise during the term of the policy, the nominee will
receive the following as death benefit:

 Higher of Sum Assured or 105% of all premiums paid immediately;

 All future premiums will be waived and paid into the Policy Fund Value;
 An amount equal to the annualised premium will be paid every year to the nominee
 On maturity, Policy Fund Value will be paid.

Maturity: On maturity, you receive the fund value existing on the maturity date. If you do not
wish to take the entire maturity amount at one go, you can avail of the Settlement Option.

Tax Benefits:

The premiums paid and the benefits received under the policy will be eligible for tax
benefits as applicable from time to time. Please consult your tax advisor for details.

Partial Withdrawal:

You can partially withdraw money after first 5 policy years. The maximum amount of
partial withdrawal allowed in any policy year is 20% of the fund value at the beginning of that
policy year. You can also avail of AEGON Religare Rising Star Plan’s Systematic Partial
Withdrawal facility by which we redeem units periodically from your unit account and credit the
money to your bank account. You can opt for systematic partial withdrawal frequency; say
monthly or quarterly for the duration you choose.

INTRODUCTION

Human resource is an important corporate asset and the overall performance of company
depends on the way it is put to use. In order to realize company objectives, it is essential to
recruit people with requisite skills, qualification and experience. While doing so we need to keep
present and future requirements of company in [Link] recruitment methods include a
thorough analysis of the job and the labour market conditions. Recruitment is almost central to
any management process and failure in recruitment can create difficulties for any company
including an adverse effect on its profitability and inappropriate levels of staffing or skills.
Inadequate recruitment can lead to labour shortages, or problems in management decision
making.

Recruitment is however not just a simple selection process but also requires management
decision making and extensive planning to employ the most suitable manpower. Competition
among business organisations for recruiting the best potential has increased focus on innovation,
and management decision making and the selectors aim to recruit only the best candidates who
would suit the corporate culture, ethics and climate specific to the organisation. The process of
recruitment does not however end with application and selection of the right people but involves
maintaining and retaining the employees chosen. Despite a well drawn plan on recruitment and
selection and involvement of qualified management team, recruitment processes followed by
companies can face significant obstacles in implementation. Theories of HRM may provide
insights on the best approaches to recruitment although companies will have to use their in house
management skills to apply generic theories within specific organizational contexts.

RECRUITMENT

Recruitment is defined as, “a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that
manpower in adequate numbers to facilitate effective selection of an efficient workforce.” Edwin
B. Flippo defined recruitment as “the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.” In simple words recruitment can be
defined as a ‘linking function’-joining together those with jobs to fill and those seeking jobs.

PURPOSE AND IMPORTANCE

The general purpose of recruitment is to provide a pool of potentially qualified job candidates.
Specifically, the purposes and needs are:

 Determine the present and future requirements of the organization in conjunction with its
personnel-planning and job-analysis activities.
 Increase the pool of job candidates at minimum cost.
 Help increase the success rate of the selection process by reducing the number of visibly,
under qualified or overqualified job applicants.
 Help reduce the probability that job applicants, once recruited and selected, will leave the
organization only after a short period of time.
 Begin identifying and preparing potential job applicants who will be appropriate
candidates.
 Induct outsiders with a new perspective to lead the company.
 Infuse fresh blood at all levels of the organization.
 Develop an organizational culture that attracts competent people to the company.
 Search for talent globally and not just within the company.

FACTORS AFFECTING RECRUITMENT

The following are the 2 important factors affecting Recruitment: -

1) INTERNAL FACTORS
 Recruiting policy
 Temporary and part-time employees
 Recruitment of local citizens
 Engagement of the company in HRP
  Company’s size
 Cost of recruitment
 Company’s growth and expansion

2) EXTERNAL FACTORS

 Supply and Demand factors

 Unemployment Rate
 Labour-market conditions
 Political and legal considerations
 Social factors
 Economic factors
 Technological factors

THEORIES AND POLICIES OF RECRUITMENT AND SELECTION

Theories:

1. Objective theory

1) Assumes applicants use a very rational method for making decisions

2) Thus, the more information you can give them (e.g. salaries, benefits, working condition,
etc), the better applicants weight these factors to arrive at a relative “desirability” index

2. Subjective theory

1) Assumes applicants are not rational, but respond to social or psychological needs (e.g.
security, achievement, affiliation)
2) Thus, play to these needs by highlighting job security or opportunities for promotion or
collegiality of work group, etc.

3. Critical Contact theory

1) Assumes key attractor is quality of contact with the recruiter or recruiter behavior, e.g.
(promptness, warmth, follow-up calls, sincerity, etc.)
2) Research indicates that more recruiter contact enhances acceptance of offer, also experienced
recruiter (e.g. middle-aged) more successful than young or inexperienced recruiter - may be
especially important when recruiting ethnic minorities, women, etc.

Policies: Recruitment policy of any organization is derived from the personnel policy of the
same organization. However, recruitment policy by itself should take into consideration the
government’s reservation policy, policy regarding sons of soil, etc., personnel policies of other
organizations regarding merit, internal sources, social responsibility in absorbing minority
sections, women, etc.

Specific issues which may be addressed in Recruitment Policy:

1) Statement : Nondiscrimination (EEO employer) or particular protected class members that

may be sought for different positions (see also Affirmative Action guidelines)
2) Position description: Adherence to job description (& qualifications) in recruitment &
selection -BFOQ’s -bonafide occupational qualifications
3) How to handle special personnel in recruitment/selection: e.g. relatives (nepotism)
veterans (any special advancement toward retirement for military experience?), rehires
(special consideration? vacation days or other prior benefits?), part-time or temporary
personnel (special consideration? benefits?)
4) Recruitment budget/expenses: what is covered? Travel, Lodging/meals, Staff travel to
recruit, relocation, expenses, etc.
5) Others:
a. Residency requirement in district?
b. Favors, special considerations related to recruitment? - e.g. get spouse a job?
INDUCEMENTS TO RECRUITMENT

Organisational inducements are all the positive features and benefits offered by an
organization that serves to attract job applicants to the organisation. Three inducements need
specific mention here, they are:-

 Compensation: Starting salaries, frequency of pay increases, incentives and fringe

benefits can all serve as inducements to potential employees.
 Career Opportunities: These help the present employees to grow personally and
professionally and also attract good people to the organization. The feeling that the
company takes care of employee career aspirations serves as a powerful inducements to
potential employees.
 Image or Reputation: Factors that affect an organisation’s reputation include its general
treatment of employees, the nature and quality of its products and services and its
participation in worthwhile social endeavors.

CONSTRAINTS

 Poor image: If the image of the firm is perceived to be low( due to factors like operation
in the declining industry, poor quality products, nepotism etc), the likelihood of attracting
large number of qualified applicants is reduced.
 Unattractive jobs: if the job to be filled is not very attractive, most prospective candidates
may turn indifferent and may not even [Link] is specialy true of job that is boring,
anxiety producing, devoid of career growth opportunities and generally not reward
performance in a proper way( eg jobs in post office and railways).
 Government policy: Government policies often come in the way of recruitment as per the
rules of company or on the basis of merit and seniority. Policies like reservations
(scheduled castes, scheduled tribe etc) have to be observed.
 Conservative internal policies: Firms which go for internal recruitments or where labour
unions are very active, face hindrances in recruitment and selection planning.

RECRUITMENT- Relationship with other activities

CENTRALISED V/s DECENTRALISED RECRUITMENT

Recruitment practices vary from one organization to another. Some organizations like
commercial banks resort to centralized recruitment while some organizations like the Indian
Railway resort to decentralized recruitment practices. Personnel department at the central office
performs all the functions of recruitment in case of centralised recruitment and personnel
departments at unit level/zonal level perform all the functions of recruitment concerning to the
jobs of the respective unit or zone.

SOURCES OF RECRUITMENT

The sources of recruitment may be broadly divided into two categories: internal sources and
external sources. Both have their own merits and demerits.

Internal Sources:-Persons who are already working in an organization constitute the ‘internal
sources’. Retrenched employees, retired employees, dependents of deceased employees may
also constitute the internal sources. Whenever any vacancy arises, someone from within the
organization is upgraded, transferred, promoted or even demoted.

External Sources

External sources lie outside an organization. Here the organization can have the services of: (a)
Employees working in other organizations; (b) Jobs aspirants registered with employment
exchanges; (c) Students from reputed educational institutions; (d) Candidates referred by unions,
friends, relatives and existing employees; (e) Candidates forwarded by search firms and
contractors; (f) Candidates responding to the advertisements, issued by the organization; and (g)
Unsolicited applications/ walk-ins merits and demerits of recruiting candidates from outside an
organization may be stated thus:

METHODS OF RECRUITMENT

Internal Methods:

1. Promotions and Transfers

This is a method of filling vacancies from internal resources of the company to achieve
optimum utilization of a staff member's skills and talents. Transfer is the permanent lateral
movement of an employee from one position to another position in the same or another job
class assigned to usually same salary range. Promotion, on the other hand is the permanent
movement of a staff member from a position in one job class to a position in another job
class of increased responsibility or complexity of duties and in a higher salary range.

2. Job Posting
Job Posting is an arrangement in which a firm internally posts a list of open positions (with
their descriptions and requirements) so that the existing employees who wish to move to
different functional areas may apply. It is also known as Job bidding. It helps the qualified
employees working in the organization to scale new heights, instead of looking for better
perspectives outside. It also helps organization to retain its experienced and promising
employees.

3. Employee Referrals
It is a recruitment method in which the current employees are encouraged and rewarded for
introducing suitable recruits from among the people they know. The logic behind employee
referral is that “it takes one to know one”. Benefits of this method are as follows:
  Quality Candidates
 Cost savings
 Faster recruitment cycles
 Incentives to current employees
On the other hand it is important for an organization to ensure that nepotism or favoritism
does not happen, and that such aspects do not make inroads into the recruitment process.

External Methods:

External methods of recruitment are again divided into two categories- Direct External
Recruitment and Indirect External Recruitment methods.

Direct External Recruitment Methods

Campus Recruitment
In Campus Recruitment, Companies / Corporate visit some of the most important Technical
and Professional Institutes in an attempt to hire young intelligent and smart students at
source. It is common practice for Institutes today to hire a Placement Officer who
coordinates with small, medium and large sized Companies and helps in streamlining the
entire Campus Recruitment procedure.

Benefits of Campus Recruitment

 Companies get the opportunity to choose from and select the best talent in a short
span of time.
 Companies end up saving a lot of time and efforts that go in advertising vacancies,
screening and eventually selecting applicants for employment.
 College students who are just passing out get the opportunity to present themselves to
some of the best companies within their industry of interest. Landing a job offer while
still in college and joining just after graduating is definitely what all students dream
of.
On the negative front, campus recruiting means hiring people with little or no work
experience.
Indirect External Recruitment Methods

Advertisements
Advertisements are the most common form of external recruitment. They can be found in many places (local
and national newspapers, notice boards, recruitment fairs) and should include some important information
relating to the job (job title, pay package, location, job description, how to apply-either by CV or application
form, etc). Where a business chooses to advertise will depend on the cost of advertising and the coverage
needed i.e. how far away people will consider applying for the job.

1. Third Party Methods

 Walk-ins: Walk-ins is relatively inexpensive, and applicants may be filed and

processed whenever vacancies occur. Walk-ins provide an excellent public relations
opportunity because well-treated applicants are likely to inform others. On the other
hand, walk-ins show up randomly, and there may be no match with available
openings. This is particularly true for jobs requiring specialized skills.

 Public and private employment agencies: Public and private employment agencies
are established to match job openings with listings of job applicants. These agencies
also classify and screen applicants. Most agencies administer work-sample tests, such
as typing exams, to applicants.

 E-Recruiting: There are many methods used for e-recruitment, some of the important
methods are as follows:

a. Job boards: These are the places where the employers post jobs and search for
candidates. One of the disadvantages is, it is generic in nature.
b. Employer web sites: These sites can be of the company owned sites, or a site
developed by various employers.
c. Professional websites: These are for specific professions, skills and not general in
nature.
  Gate Hiring and Contractors: The concept of gate hiring is to select people who
approach on their own for employment in the organization. This happens mostly in the
case of unskilled and semi-skilled workers. Gate hiring is quite useful and convenient
method at the initial stage of the organization when large number of such people may be
required by the organization
STEP 2: DEVELOP AN EFFECTIVE RECRUITMENT STRATEGY EVALUATION OF
SOURCES OF RECRUITMENT

Time-lapse data: They show the time lag between the dates of requisition for manpower supply
from a department to the actual date of filling the vacancies in that department. For example, a
company's past experience may indicate that the average number of days from application to
interview is 10, from interview to offer is 7, from offer to acceptance is 10 and from acceptance
to report for work is 15. Therefore, if the company starts the recruitment and selection process
now, it would require 42 days before the new employee joins its ranks. Armed with this
information, the length of the time needed for alternative sources of recruitment can be
ascertained - before pinning hopes on a particular source that meets the recruitment objectives of
the company.

Yield ratios: These ratios indicate the number of leads/ contacts needed to generate a given
number of hires at a point at time. For example, if a company needs 10 management trainees in
the next six months, it has to monitor past yield ratios in order to find out the number of
candidates to be contacted for this purpose. On the basis of past experience, to continue the same
example, the company finds that to hire 10 trainees, it has to extend 20 offers. If the interview-to-
offer ratio is 3:2, then 30 interviews must be conducted. If the invitees to interview ratio is 4:3
then, as many as 40 candidates must be invited. Lastly, if contacts or leads needed to identify
suitable trainees to invite are in 5:1 ratio, then 200 contacts are made.

Surveys and studies: Surveys may also be conducted to find out the suitability of a particular
source for certain positions. For example', as pointed out previously, employee referral has
emerged as a popular way of hiring people in the Information Technology industry in recent
times in India. Correlation studies could also be carried out to find out the relationship between
different sources of recruitment and factors of success on the job. In addition to these, data on
employee turnover, grievances, and disciplinary action would also throw light on the relative
strengths of a particular source of recruitment for different organizational positions. Before
finally identifying the sources of recruitment, the human resource managers must also look into
the cost or hiring a candidate. The cost per hire can be found out by dividing the recruitment cost
by the number of candidates hired.

SELECTION

Introduction

The size of the labour market, the image of the company, the place of posting, the nature
of job, the compensation package and a host of other factors influence the manner of aspirants
are likely to respond to the recruiting efforts of the company. Through the process of recruitment
the company tries to locate prospective employees and encourages them to apply for vacancies at
various levels. Recruiting, thus, provides a pool of applicants for selection.

Definition

To select means to choose. Selection is the process of picking individuals who have
relevant qualifications to fill jobs in an organisation. The basic purpose is to choose the
individual who can most successfully perform the job from the pool of qualified candidates.

Purpose

The purpose of selection is to pick up the most suitable candidate who would meet the
requirements of the job in an organisation best, to find out which job applicant will be successful,
if hired. To meet this goal, the company obtains and assesses information about the applicants in
terms of age, qualifications, skills, experience, etc. the needs of the job are matched with the
profile of candidates. The most suitable person is then picked up after eliminating the unsuitable
applicants through successive stages of selection process. How well an employee is matched to a
job is very important because it is directly affects the amount and quality of employee’s work.
Any mismatch in this regard can cost an organisation a great deal of money, time and trouble,
especially, in terms of training and operating costs. In course of time, the employee may find the
job distasteful and leave in frustration. He may even circulate negative information about the
company, causing incalculable harm to the company in the long run. Effective election,
therefore, demands constant monitoring of the ‘fit’ between people the job.

The Process

Selection is usually a series of hurdles or steps. Each one must be successfully cleared
before the applicant proceeds to the next one. The time and emphasis place on each step will
definitely vary from one organisation to another and indeed, from job to job within the same
organisation. The sequence of steps may also vary from job to job and organisation to
organisation. For example some organisations may give more importance to testing while others
give more emphasis to interviews and reference checks. Similarly a single brief selection
interview might be enough for applicants for lower level positions, while applicants for
managerial jobs might be interviewed by a number of people.

Steps in selection process:-

 1.

Reception

A company is known by the people it employs. In order to attract people with talents, skills and
experience a company has to create a favourable impression on the applicants’ right from the
stage of reception. Whoever meets the applicant initially should be tactful and able to extend
help in a friendly and courteous way. Employment possibilities must be presented honestly and
clearly. If no jobs are available at that point of time, the applicant may be asked to call back the
personnel department after some time.
2. Screening Interview

A preliminary interview is generally planned by large organisations to cut the cost of

selection by allowing only eligible candidates to go through the further stages in selection. A
junior executive from the Personnel Department may elicit responses from the applicants on
important items determining the suitability of an applicant for a job such as age, education,
experience, pay expectations, aptitude, location, choice etc. this ‘courtesy interview’ as it is often
called helps the department screen out obvious misfits. If the department finds the candidate
suitable, a prescribed application form is given to the applicants to fill and submit.

[Link] Blank

Application blank or form is one of the most common methods used to collect
information on the various aspects of the applicants’ academic, social, demographic, work
related background and references. It is a brief history sheet of employee’s background.

Usefulness of Application Blank or Form

Application blank is highly useful selection tool, in that way it serves three important
purposes:

1. It introduces the candidate to the company in a formal way.

2. It helps the company to have a cross-comparison of the applicants; the company can
screen and reject candidates if they fail to meet the eligibility criteria at this stage itself.
3. It can serve as a basis to initiate a dialogue in the interview.

[Link] Testing

Selection tests or the employment tests are conducted to assess intelligence, abilities, and
personality trait.A test is a standardized, objective measure of a person’s behaviour, performance
or attitude. It is standardised because the way the tests is carried out, the environment in which
the test is administered and the way the individual scores are calculated- are uniformly applied. It
is objective in that it tries to measure individual differences in a scientific way giving very little
room for individual bias and interpretation. Some of them are
1. Intelligence Tests: These are mental ability tests. They measure the incumbent’s learning
ability and the ability to understand instructions and make judgements. The basic objective of
such test is to pick up employees who are alert and quick at learning things so that they can
be offered adequate training to improve their skills for the benefit of the organization.
2. Aptitude Test: Aptitude test measure an individual’s potential to learn certain skills-
clerical, mechanical, mathematical, etc. These tests indicate whether or not an individual has
the capabilities to learn a given job quickly and efficiently. In order to recruit efficient office
staff, aptitude tests are necessary
3. Personality Test: The definition of personality, methods of measuring personality factors
and the relationship between personality factors and actual job criteria has been the subject of
much discussion. Researchers have also questioned whether applicants answer all the items
truthfully or whether they try to respond in a socially desirable manner. Regardless of these
objections, many people still consider personality as an important component of job success.
4. Simulation Tests: Simulation exercise is a tests which duplicate many of the activities and
problems an employee faces while at work.
5. Graphology Test: Graphology involves using a trained evaluator to examine the lines,
loops, hooks, stokes, curves and flourishes in a person’s handwriting to assess the person’s
personality and emotional make-up.
6. Polygraph (Lie-Detector) tests: the polygraph records physical changes in the body as the
tests subject answers a series of questions. It records fluctuations in respiration, blood
pressure and perspiration on a moving roll of graph paper. The polygraph operator forms a
judgement as to whether the subject’s response was truthful or deceptive by examining the
biological movements recorded on the paper.

TEST AS SELECTION TOOL:

Tests are useful selection devices in that they uncover qualifications and talents that can’t
be detected otherwise. They can be used to predict how well one would perform if one is hired,
why one behaves the way one does, what situational factors influence employee productivity,
etc. Tests also provide unbiased information that can be put to scientific and statistical analysis.
 However, tests suffer from sizeable errors of estimate. Most psychological tests also have
one common weakness, that is, we can’t use scales which have a known zero point and equal
intervals. An intelligence test, for example starts at an arbitrary point, where a person may not be
able to answer question properly. This does not mean that the person is totally lacking in
intelligence. Likewise, a person who is able to answer all the 10 questions correctly cannot be
called twice as intelligent as the one who was able to answer only 5.

SELECTION INTERVIEW: Interview is the oral examination of candidates for employment.

This is the most essential step in the selection process. In this step the interviewer matches the
information obtained about the candidates through various means to the job requirements and to
the information obtained through his own observations during the interview. Interview gives the
recruiter an opportunity

 To size up the candidate personally;

 To ask question that are not covered in the tests;
 To make judgments on candidates enthusiasm and intelligence;
 To assess subjective aspects of the candidate – facial expressions, appearance,
nervousness and so forth;
 To give facts to the candidates regarding the company, its policies, etc. and promote
goodwill towards the company.

Types of interviews:

Several types of interviews are commonly used depending on the nature and importance of the
position to be filled within an organization.

In a non directive interview the recruiter asks questions as they come to mind. There is no
specific format to be followed.
In a patterned interview, the employer follows a pre-determined sequence of questions. Here
the interviewee is given a special form containing questions regarding his technical competence,
personality traits, attitudes, motivation, etc.

In a structured or situational interview, there are fixed job related questions that are presented
to each applicant.

In a panel interview several interviewers question and seek answers from one applicant. The
panel members can ask new and incisive questions based on their expertise and experience and
elicit deeper and more meaningful expertise from candidates.

Interviews can also be designed to create a difficult environment where the applicant’s
confidence level and the ability to stand erect in difficult situations are put to test. These are
referred to as the stress interview. This is basically an interview in which the applicant is made
uncomfortable by a series of, often, rude, annoying or embarrassing questions.

Steps in interview process:

Interview is an art. It demands a positive frame of mind on part of the interviewers. Interviewers
must be treated properly so as to leave a good impression about the company in their minds. HR
experts have identified certain steps to be followed while conducting interviews:

PREPARATION:

 Establishing the objective of the interview

 Receiving the candidates application and resume
 Keeping tests score ready, along with interview assessment forms
 Selecting the interview method to be followed
 Choosing the panel of experts who would interview the candidates
 Identifying proper room for environment

[Link]: The candidate should be properly received and led into the interview room.
Start the interview on time.
[Link] EXCHANGE:

 State the purpose of the interview, how the qualifications are going to be matched with
skills needed to handle the job.
 Begin with open-ended questions where the candidate gets enough freedom to express
himself.
 Focus on the applicant’s education, training, work experience, etc. Find unexplained gaps
in applicants past work or college record and elicit facts that are not mentioned in the
resume.

[Link]: Evaluation is done on basis of answers and justification given by the

applicant in the interview.

4. PHYSICAL AND MEDICAL EXAMINATION: After the selection decision and before the
job offer is made, the candidate is required to undergo a physical fitness test. A job offer is often
contingent upon the candidate being declared fit after the physical examination.

[Link] CHECKS: Once the interview and medical examination of the candidate is
over, the personnel department will engage in checking references. Candidates are required to
give the names of 2 or 3 references in their application forms. These references may be from the
individuals who are familiar with the candidate’s academic achievements or from the applicant’s
previous employer, who is well versed with the applicant’s job performance and sometimes from
the co-workers.

HIRING DECISION:

The line manager has to make the final decision now – whether to select or reject a candidate
after soliciting the required information through different techniques discussed earlier. The line
manager has to take adequate care in taking the final decision because of economic, behavioral
and social implications of the selection decisions. A careless decision of rejecting a candidate
would impair the morale of the people and they suspect the selection procedure and the very
basis of selection in a particular organization.

A true understanding between line managers and personnel managers should be

established so as to facilitate good selection decisions. After taking the final decision, the
organization has to intimate this decision to the successful as well as unsuccessful candidates.
The organization sends the appointment order to the successful candidates either immediately or
after sometime depending upon its time schedule.

Interviewing Mistakes: May have been influenced by ‘cultural noise, snap judgments, halo
effect, stereotyping, first impression etc.

STRATEGIES FOR SUCESSFUL RECRUITMENT

STEP 1: ENSURE AN UP-TO-DATE JOB DESCRIPTION

A clear, accurate and up-to-date job description is crucial to ensuring a good person-job fit. It is
worthwhile spending some time making sure that the job description matches the everyday
reality of the job.

STEP 2: EVALUATE THE RECRUITMENT STRATEGY

Periodically evaluating the effectiveness of your recruitment strategy, such as the type of sources
used for recruiting, can be a useful activity. For instance, a cost-benefit analysis can be done in
terms of the number of applicants referred, interviewed, selected, and hired. Comparing the
effectiveness of applicants hired from various sources in terms of job performance and
absenteeism is also helpful. One could also examine the retention rates of workers who were
hired from different sources.

Introduction to HRM:
Human resource is an important corporate asset and the overall performance of company
depends on the way it is put to use. In order to realize company objectives, it is essential to
recruit people with requisite skills, qualification and experience. While doing so we need to keep
present and future requirements of company in mind.
Successful recruitment methods include a thorough analysis of the job and the labour market
conditions. Recruitment is almost central to any management process and failure in recruitment
can create difficulties for any company including an adverse effect on its profitability and
inappropriate levels of staffing or skills. Inadequate recruitment can lead to labour shortages, or
problems in management decision making.

Recruitment is however not just a simple selection process but also requires management
decision making and extensive planning to employ the most suitable manpower. Competition
among business organisations for recruiting the best potential has increased focus on innovation,
and management decision making and the selectors aim to recruit only the best candidates who
would suit the corporate culture, ethics and climate specific to the organisation.

The process of recruitment does not however end with application and selection of the right
people but involves maintaining and retaining the employees chosen. Despite a well drawn plan
on recruitment and selection and involvement of qualified management team, recruitment
processes followed by companies can face significant obstacles in implementation. Theories of
HRM may provide insights on the best approaches to recruitment although companies will have
to use their in house management skills to apply generic theories within specific organiztional
contexts.

RECRUITMENT & SELECTION:

RECRUITMENT:
Recruitment is defined as, “a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that
manpower in adequate numbers to facilitate effective selection of an efficient workforce.” Edwin
B. Flippo defined recruitment as “the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.” In simple words recruitment can be
defined as a ‘linking function’-joining together those with jobs to fill and those seeking jobs.

SELECTION:
The size of the labour market, the image of the company, the place of posting, the nature
of job, the compensation package and a host of other factors influence the manner of aspirants
are likely to respond to the recruiting efforts of the company. Through the process of recruitment
the company tries to locate prospective employees and encourages them to apply for vacancies at
various levels. Recruiting, thus, provides a pool of applicants for selection.

Definition

To select means to choose. Selection is the process of picking individuals who have relevant
qualifications to fill jobs in an organisation. The basic purpose is to choose the individual who
can most successfully perform the job from the pool of qualified candidates.

SECTION 2:

PURPOSE AND IMPORTANCE

The general purpose of recruitment is to provide a pool of potentially qualified job candidates.
Specifically, the purposes and needs are:

 Determine the present and future requirements of the organization in conjunction with its
personnel-planning and job-analysis activities.
 Increase the pool of job candidates at minimum cost.
 Help increase the success rate of the selection process by reducing the number of visibly,
under qualified or overqualified job applicants.
 Help reduce the probability that job applicants, once recruited and selected, will leave the
organization only after a short period of time.
 Begin identifying and preparing potential job applicants who will be appropriate
candidates.
 Induct outsiders with a new perspective to lead the company.
 Infuse fresh blood at all levels of the organization.
 Develop an organizational culture that attracts competent people to the company.
 Search for talent globally and not just within the company.
OBJECTIVE

 To Understand the process of Recruitment and Selection in an organisation like SOMA.

 To study the time intervals at which the process of R&S gets reframed.
 To know the necessary steps of which the organisation involve in to get right person at
right place.
 To know about the employee referral schemes.

SCOPE

 Sourcing and Submission of profiles

 Scheduling Interviews
 Discussing with selected candidates to finalise designation and salary
 Follow up with candidates till joining

Data Collection Methods:

Primary Data:
  Every type of research requires two types of data to be collected to reach up to any
conclusion.
 Primary data are those data,which are directly obtained from the people by approaching
them individually.
 Primary data is generated when the researcher employing mail questionnaire,telephone
surveys,personal interviews,observations and investigations of particular problem at
hand.

Secondary Data:

The whole study can be termed as a desk [Link] there is field work and collection of
primary data but the information is basically is collected from internet ,journals and magazines.
 SECTION 4: ANALYSIS

Information Flow (E-R Diagram) – Corporate Office:

In charge
Corporate
HR
Recruitme
nt
 Recruitment Process –
Manager & Below Positions.

In
charge
Regional
HR

FLOW CHART
 Start

Obtain Position Requisition forms

from internal customers

Approval from Director-HR &

Head-Finance if chosen paper
Channels for talent advertisements (or) Consultants
acquistion (or) New job portals

Collect proposals from Vendors,

Negotiate and obtain approval
from Director-HR & Head-
Finance

Source profiles, check suitability,

speak to candidates & send Finalise Consultant /
suitable profiles to internal Newspapers/Magazines/
customers Jobportal

Obtain shortlisted candidates list &

interview dates from internal
customers.

Send Employment application

forms to candidates. To send PAT
form also for DGM & above
positions. Obtain filled forms.

Approval from internal customers

Schedule interviews and obtain and Head-finance if travel fare to be
feedback on the interviews reimbursed to the candidates

Collect break-up of present salary,

expected salary and three
professional references from
selected candidates

Consider back-up candidates if suitable or

start the process again
Proposed offer to be sent for
approval of Director-HR On
successful reference check
Stop

If candidate rejects the Candidates’ joining

offer Discuss the proposed offer with
candidates

If candidate accepts, Issue appoint Send joining status reports till

letter and send copy of the letters candidates’ joining every Saturday
to reporting executive & regional to reporting executives
HR
Candidate dropped
Merits and Demerits of ‘Recruiting people from ‘within’

Merits Demerits

1) Economical: The cost of recruiting 1)Limited Choice: The organization is

internal candidates is minimal. No forced to select candidates from a
expenses are incurred on limited pool. It may have to sacrifice
advertising. quality and settle down for less
qualified candidates.
2) Suitable: The organization can pick 2) Inbreeding: It discourages entry for
the right candidates having the talented people, available outside an
requisite skills. The candidate can organization. Existing employees may
choose a right vacancy where their fail to behave in innovative ways and
talents can be fully utilized. inject necessary dynamism to
enterprise activities.
3) Reliable: The organization has the 3) Inefficiency: Promotions based on
knowledge about suitability of a length of service rather than merit,
candidate for a position. ‘Known may prove to be a blessing for
devils are better than unknown inefficient candidate. They do not
angels!’ work hard and prove their worth.

4) Satisfying: A policy of preferring 4) Bone of contention: Recruitment from

people from within offers regular within may lead to infighting among
promotional avenues for employees. It employees aspiring for limited, higher
motivates them to work hard and earn level positions in an organization. As
promotions. They will work with years roll by, the race for premium
loyalty commitment and enthusiasm. positions may end up in a bitter race.

Merits and Demerits of External sources of Recruitment:

 Merits Demerits

Wide Choice: The organization has the Expenses: Hiring costs could go up
freedom to select candidates from a large substantially. Tapping multifarious sources
pool. Persons with requisite qualifications of recruitment is not an easy task either.
could be picked up.
Time consuming: It takes time to
Infection of fresh blood: People with advertise, screen, to test and test and to
special skills and knowledge could be hired select suitable employees. Where suitable
to stir up the existing employees and pave ones are not available, the process has to be
the way for innovative ways of working. repeated.

Motivational force: It helps in motivating De-motivating: Existing employees who

internal employees to work hard and have put in considerable service may resist
compete with external candidates while the process of filling up vacancies from
seeking career growth. Such a competitive outside. The feeling that their services have
atmosphere would help an employee to not been recognized by the organization,
work to the best of his abilities. forces then to work with less enthusiasm
and motivation.
Long term benefits: Talented people
could join the ranks, new ideas could find Uncertainty: There is no guarantee that the
meaningful expression, a competitive organization, ultimately will be able to hire
atmosphere would compel people to give the services of suitable candidates. It may
out their best and earn rewards, etc. end up hiring someone who does not fit and
who may not be able to adjust in the new
setup.

METHODS OF RECRUITMENT
Internal Methods:
4. Promotions and Transfers
This is a method of filling vacancies from internal resources of the company to achieve
optimum utilization of a staff member's skills and talents. Transfer is the permanent
lateral movement of an employee from one position to another position in the same or
another job class assigned to usually same salary range. Job Posting

Job Posting is an arrangement in which a firm internally posts a list of open positions
(with their descriptions and requirements) so that the existing employees who wish to
move to different functional areas may apply. It is also known as Job bidding. It helps the
qualified employees working in the organization to scale new heights, instead of looking
for better perspectives outside. It also helps organization to retain its experienced and
promising employees.

5. Employee Referrals
It is a recruitment method in which the current employees are encouraged and rewarded
for introducing suitable recruits from among the people they know. The logic behind
employee referral is that “it takes one to know one”. Benefits of this method are as
follows:

 Quality Candidates
 Cost savings
 Faster recruitment cycles
 Incentives to current employees
SECTION 5:

FINDINGS
From the analyzed data I could find that –

 The main source of the recruitment is through external sources i.e. through
advertisement.
 The other source of recruitment is through references , natural market and
consultants.
 Maximum prospects fulfils all the criteria prescribed by the IRDA.
 Research shows that the Financial Advisors generally belong to the age of 30-50 years
 It is found that the company provides both types of training and mainly prospects goes
for the online training.
 Every year company recruits as many as 50 Advisors in order to increase the sales
force of the company.
 Most of the recruited people are aware of the insurance sector and the person who
are not aware of the insurance sector are made aware through the training before
sitting for the test.
 It has been found through the studies that most of the candidate recruited belongs the
banking and insurance sector . It means that they are having some knowledge about
the insurance sector.
 For most of the prospects attending 21 days training is a major problem. As the
timings for the training are full time 10:30 am to 5.00 p.m.
 For most of the prospects they join AEGON RELIGARE LIFE INSURANCE for the
extra income.
 Most of the recruited people continue working as a Financial Advisor.
Data Analysis
QUESTION: What are the sources for recruitment and selection?

Internal
9%

External
18%

Both
73%

About 75% of the manager say that they prefer both internal as well as external source for
recruitment and selection where as only 9% go for internal source and 18% go for external
sources.

Question: Which method do you mostly prefer for recruitment and selection
preferred way of recruitment?

Direct
27%

Third Party
59%
Indirect
14%

Ab
out 65% of the mangers go for direct recruitment and selection and 32% go for indirect and
only 3 % go for third party recruitment way.
Question: When do you prefer to go for manpower planning?

No fixed time
30%
Quarter
50%

Yearly
20%

Around 50% of the managers go for Quarterly manpower planning and 20 % do not follow
any pattern they don‟t have any fixed time where as 20% go for yearly.

Question: What are the sources for external recruitment are preferred?
 Casual applicants
25% Campus Interviews
34%

Data bank
33%
Placement agencies
8%

In AVIVA 34% of manager go for campus interviews, 33% go for data bank, 25% from the
casual application that are received and only 8% go for any placement agencies.

Question: What form of interview did you prefer?

Personal Interviews
19%

Other Telephonic interview

57% 14%

video Conferencing
10%
Most of the manager Prefer Personal interviews, 30% prefer to take telephonic interviews
where as only 20% go for video conferencing and rest 10% adopt some other means of
interviews

Question: How do you rate the HR practices of the company?

Very Good
14%

Good
19%
Bad
57%

Average
10%

50% of the managers feel that HR department is good where and 30%say that‟s its very
good where as 20% says its average and only 10% manager feel it‟s bad.

SUGGESTIONS:

Based on the findings in the Research following suggestions are made –

 Finding new prospects is like breathing, so Unit Manager should be in regular touch
with the market so that he will gets some good prospects.
  Company should go for regular Market Survey for finding out the smart worker who
can stay under the Managers Sales Team, and will generate long term business.

 Branch Manager should take the feedback from the existing advisors so that he can
easily understand the advisors problem as well s he can recommend new changes.

 The company should concentrate on the rural part so that they can compete with LIC
India, and can generate some business from there as it is found that most of the
Private Life Insurance companies are targeting the urban market.

 Company should follow the pull strategy where it can use advertising media, by
preparing attractive Ads, through Newspaper, T.V. , and radio can increase the
awareness about the company & will help in improving the market share.

 Unit Manager should meet regularly with the existing advisors so that he can find out
their problems & also take their suggestions.

 Most of the Indian families still believe in the LIC. They don’t feel comfortable with
other brands. In such cases ICICI Prudential can opt for descriptive advertisements
how our solutions are better than the traditional business solutions.

CONCLUSION

The employees of any organization are its life blood, without doubt. With the dawn of this
realization upon the present day business organizations, there appears to be a major shift
towards human resource management. In fact, the employees of today are encouraged to
participate in the major decisions and thus play a vital role in the management of the firm.
The performance of the organization depends on the efficiency that its employees exhibit.
Hence it is of crucial importance that employees with the most suitable qualifications be
selected. This is where the processes of recruitment and selection come in. It is difficult to
separate one from the other.
The various company illustrations given in this report indicate that these processes require a
great deal of thought and advanced planning. In fact, it is not only the HR department that is
involved. The finance department provides the budget for the processes and the manpower
gap is determined by inputs from all the departments. Also the grueling procedure through
which the candidate goes through is, in itself, an indicator of the significance of these
processes in the efficient functioning of the organization. It is found that in the last five years
the Indian economy has progressed, which has increased the average purchasing power & the
insurance sector has contributed significantly in this.
1. Since last five to six years many Private Company has entered in insurance sectors &
because of which the Indians are having number of options in front of them investing
their money & to safeguard the life.
2. While doing this project it is found that recruiting of the advisor is done by the Unit
Manager, and the parameters on which the advisors are to be recruited are :
 Income Level – 1.2lacs to 2 lacs per annum
 Marital Status – Married
 Age – above 25 years
 Minimum Education – Graduation
 Staying in the same city for more than 5 years
3. The study of the profile of the advisor is depending on their industry background i.e.
their work experience and the age wise [Link] level of awareness of the
prospects about the private insurance company has increased because of the heavy
advertising ad marketing by the companies over the period of time.
4. It is important to appoint only those prospects as financial advisor, who can give &
generate long term business for the company, so to analyze the prospects & study
their status is very important thing.
5. Most of the prospects wanted to join, as their first preference to earning extra money,
second to start business with no capita investment, third to Association with the No. 1
Private Life Insurance Company.
BIBLIOGRAPHY

WEBSITES :

1) [Link]
 2) [Link]
3) [Link]

BOOKS:

1. Subba Rao, Essentials of HR Management and Industrial Relations, Vikas

Publishing House, New Delhi, 1998, Fourth Edition.
2. Gupta C.B., Business Studies, Tata McGraw-Hill Publishing Company Limited,
New Delhi, 1998, Third Edition.

3. Prasad L.M., Principles and Practice of Management, Sultan Chand & Sons
Educational Publishers, New Delhi, 2001, Sixth Edition.

4. HUMAN RESOURCE MANAGEMENT : SHASHI K. GUPTA

5. PERSONNEL MANAGEMENT : C. B. MAMORIAL

JOURNALS & ARTICLES :

1) IRDA JOURNAL
2) BROUCHERS & REPORTS OF COMPANY

ANNEXURE

“RECRUITMENT AND SELECTION OF FINANCIAL ADVISORS “

Name:

Age : Sex :

Address :
Phone No. : Mobile No. :

Email Id :

(if any)

QUESTIONNAIRE FOR THE RESEARCH

1: When are the resources need and forecasted?

 Quarterly
 Monthly
 Annually
 Not fixed

2: How do you rate the recruitment procedure?

 Short
 Average
 Long
 Very Long
 Cant say

3: Which method do you mostly prefer from the following for recruitment and selection?

 Direct Method
 Indirect Method
 Third Party

4: What sources you prefer for recruitment and selection?

 Internal sources
 External sources
 Both

6: What are the sources for internal sourcing among the following -:
  Present permanent employees
 Present temporary employees
 Retrenched / Retired / employees
 Deceased / disabled / employees

7: What are the sources for external recruitment among the following

 Campus interviews
 Placement agencies
 Private employment agencies
 Public employment agencies
8: How many rounds of interviews are conducted?

 1-3
 3-5
 More than 5

9: Are you satisfied with round of interviews conducted?

 Yes
 No
 To some extent
 Cant say

10: What form of interview did you prefer?

 Personal Interview
 Telephonic Interview
 Video Conferencing
 Any two (then tick those two)
 All three

11: Are you satisfied with the interview process?

 Yes
 No
 To some extent

12: Are the aptitude test conducted?

  Yes
 No
 Till some extent
 Cant say

13: If yes then it is for

 Fresher
 Executives

14: How do you rate the HR practices of the company?

 Very Good
 Good
 Average
 Bad