Pest Swot Analysis of Adidas Essay Example

Irritation Swot Analysis of Adidas Essay Lopito Jan 25, 2008 Addidas-You are specialist of the organization. Bug/SWOT and so forth Introduction Adidas is an organization that makes shoes and game clothing. The author is Adolf Dassler who is German. The name made by mix of the name and family name Adi Dassler, who began delivering shoes in 1920s with the assistance of his sibling Rudolf Dassler. That make costumer, to perceive Adidas is three equal stripes of a similar shading. Motto: â€Å"IMPOSSIBLE IS NOTHING† 1. History 1949-2005 Because of the demise of Adolf’s child (Horst Dassler), the Company was purchased in 1990 by Bernard Tapie. In those days Tapie was master of protecting bankrupt organizations. Following stage was to change the spot of creation to Asia and make an advancement crusade by utilizing a renowned individual as Madonna (celebrated artist). In 1992 practical issues lead Tapi to sell Adidas to Lyonnais bank. Lyonnais sold Adidas to Robert Louis-Dreyfus who was likewise the leader of the Olympique de Marseille football crew. In 1997, Adidas AG procured the Salomon Group, and its corporate name was changed to Adidas-Salomon AG. After seven years, top English style architect Stella McCartney propelled a joint-adventure line with Adidas. This line was a games execution assortment for ladies called Adidas by Stella McCartney. Following 2 years, Adidas presented the Adidas 1, the first since forever creation shoe to use a chip. In August 2005, Adidas purchased rival Reebok. Simultaneously deals had been nearer to those of Nike in North America. The securing of Reebok would likewise permit Adidas to rival Nike worldwide as the number two athletic shoemaker on the planet. We will compose a custom paper test on Pest Swot Analysis of Adidas explicitly for you for just $16.38 $13.9/page Request now We will compose a custom paper test on Pest Swot Analysis of Adidas explicitly for you FOR ONLY $16.38 $13.9/page Recruit Writer We will compose a custom paper test on Pest Swot Analysis of Adidas explicitly for you FOR ONLY $16.38 $13.9/page Recruit Writer A quarter of a year later Adidas discharged another adaptation of the Adidas 1, improve it, more grounded and quicker. On April 11 2006, Adidas reported a 11-year arrangement to turn into the authority NBA clothing supplier. 2. Items Adidas makes anything identified with sport, similar to shoes, garments, watches, balls, Sunglasses, Protective Equipment, and so on. You can buy Adidas anyplace. But unique stores that put in each city in each nation; you can discover them likewise in market as scent shower gel and so forth, or in gem store as watches. The estimating for per of shoe vary 60 to 250 Euros, High cost for the vast majority; reasonably for High quality materials that organization use. †¢PLANING Mission Statement â€Å"Our mission is to turn into the best games brand on the planet. Keeping that in mind, we will never liken amount with quality. Our organizer Adi Dassler was energetic about games. For Adi, the competitor started things out. He gave those on the field, the court and the track the unforeseen and the little contrasts that made them increasingly agreeable and improved execution. This is our heritage. This is what the brand depend on. This will never show signs of change. † Vision Passion for sport. This is adidas. We reliably carry our energy to each and every game, any place and at whatever point it is played. Regardless of whether its football in the recreation center or the 100 meters at the Olympics we have been there, we are there now, and we will consistently be there. Our fantasy is to bring our enthusiasm for sport, the competitor and the item, to any individual who comes into contact with adidas. Destinations We are development and plan pioneers who look to help competitors of all expertise levels accomplish top execution with each item we bring to the market. We are a worldwide association that is socially and earth dependable, innovative and monetarily compensating for our workers and investors. We are focused on ceaselessly reinforcing our brands and items to improve our serious position and money related execution. In the medium term, we will broaden our driving business sector position in Europe, extend a lot of the US footwear showcase and be the quickest developing major outdoor supplies provider in Asia and Latin America. The subsequent top-line development, along with severe cost control and working capital enhancements, will roll over-proportionate profit development. Dynamic style: Centralized/customized S. W. O. T. Investigation Strengths †¢In many creates is the greatest support †¢Strong supervisory crew †¢Brand acknowledgment and notoriety †¢Diversity and assortment in items offered on the web (footwear, clothing, sporting gear, and so on ) †¢Strong power over its own dissemination channel †¢No t errible notoriety like kid work or condition contamination †¢In the Soccer business, Adidas has a fortification Weaknesses †¢High costs in certain items †¢E-trade is constrained to USA The immediate deal to purchasers is making clashes with its own affiliates †¢Online client assistance not accommodating or simple to discover Opportunities †¢Increase female interest in games â€Å"Adidas by Stella McCartney† †¢Collaborate with other online retailers to offer Adidas items †¢Possibility of redistributing the web advancement and internet business to an outsider engineer Threats †¢Nikes solid notoriety in the footwear and attire industry †¢Negative picture made by the supported competitors (I. e. Kobe Bryant and his rape case) †¢Increase in the Price of Raw materials Continuing difficulties in import/send out obligations PEST Analysis Political Adidas strategy is to control and screen unsafe substance to ensure human wellbeing and condition one of those is to kill PVC gaining ground in discovering substitutes like polyurethane, ethyl vinyl, silicones thermoplastic elastic. Adidas likewise give instructional meetings on work gauges and HR frameworks, wellbeing and security is significant for the organization. Building up groups to oversee and screen SARS in Asia manufacturing plant, washing stations, disinfectant units. At long last Adidas ensures and bolsters the privileges of its representatives by observing all the current business laws. Conservative As a worldwide organization adidas causes nations to diminish joblessness by expanding each year the quantity of workers. The Industrial Production Growth Rate in Germany was 1% in 2001-3, 2004 become 1. 7%. Adidas is an explanation of this expansion Because of the large sponsorship in 2004 Olympic Games. As sending out to Europe isn't excessively costly as it was previously, Europe since 2002 has own cash (euro) and the outskirts are not all that tight. Work compensation is high in Germany and France however not all that costly in China (Suzhou). This is the explanation that a large portion of manufacturing plants situated in Asia. Social Adidas items announce in any raise, age, religion, and way of life, consistently in style with exceptional plan in any of item. Center in individuals who like games and competitors, nearly everyone can buy adidas items. Innovation Adidas join into innovation by make up the world’s first â€Å"smart shoe†, including a microchip inside the shoe and remote mp3 player. Additionally utilizing hot soften arrangement of the creation that is earth safe, utilizing heat-actuated glues. The bundling that organization use, are appropriate for transportation over significant distances, damp conditions and extraordinary temperature changes and use reused paper and other ecologically well disposed bundling materials. The same number of contenders that Adidas has, the outside condition can’t be no other by unique. BCG Matrix Apparel Watches Footwear Eyewear Strategy Formulation By made an assortment for ladies called Adidas by Stella McCartney† more ladies like to purchase adidas, additionally the advances that include shoe and watches. The cost fluctuant lower to higher to pronounce the vast majority of the individuals. Miss Eliot (well known vocalist) advances adidas. Moreover it tells clients that adidas care about condition and doesn’t have sweatshops. Life Cycle †¢ORGANIZING Organizational Chart Adidas is an unthinking association. As a huge, worldwide association with thousand of representatives, strangely has natural components by offering chance to workers to communicate their considerations and sentiment as clarify above. The organization puts numerous objectives that need collaboration; infer that Adidas has task culture. Correspondence channels Adidas stresses a great deal on the correspondence channels. It bolsters that making successful correspondence channels through the locales at Liaison Office (LO) and production line level is a consistent test. Adidas web based ‘Ask the Management’ discussion offers representatives all through the districts a chance to bring up concerns and post issues to top administration. Because of the way that there is full and open correspondence at work representatives are most profoundly energetic and make their most prominent commitment to the business. The presence of the bounty stream of data and thoughts among representatives create efficiency and limit disarray, duplication, and ineffective clash. Representatives The government assistance of the workers is critical for Adidas family. Adidas recognized that so as to accomplishing the objective to be the worldwide pioneer in the outdoor supplies industry relies upon the gifts, eagerness and commitment of the representatives. So as to progress their fulfillment Adidas utilizes different strategies. A portion of these are: †¢organize transport to our perations communities †¢provide clinical protection for staff situated in various urban areas †¢improve the lodging gathering asset and social retirement subsidize inclusion †¢introduce adaptable working hours in the LO †¢provide yearly execution reward for qualified representatives †¢Make inward concessions to the utilization of web, (cell) phone and E-mail, on reintegration of workers returning from paren tal lea

I Am the Messenger free essay sample

Kennedy is a character that delineates numerous traits wherein give him an existence of isolation and feeling that there is no reason throughout everyday life. Yet, with one occasion Kennedy’s life changes into an existence of direction, a real existence brimming with experience, and a real existence wherein he generally needed. Kennedy was a beneath normal adolescent with a sorry future since he was a secondary school drop out. Being an underage cabdriver it gave him enough cash to endure yet insufficient to carry on with an extravagant way of life that each youngster needs to live. In the end he would see this and Kennedy would waited in an existence without reason. One day in his common life Ed Kennedy chooses to go to the bank without realizing that this occasion would transform him. Kennedy would be in a bank theft, not as burglarizing the bank yet as a blameless individual, and would be held at gunpoint commonly for not keeping his mouth shut. We will compose a custom exposition test on I Am the Messenger or then again any comparative subject explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page The burglar in the long run requests someone’s key and Kennedy without knowing would spare the theft from this activity. The looter went to get the vehicle however didn’t realize that it would not work right now. By giving him the keys to an old beat down vehicle the looter couldn't get away and in the end Kennedy would snatch the firearm that the burglar would leave at the ground and hold him at weapon point until the police came to capture the looter. With this single occasion Kennedy’s life would change and would be loaded with reason; accordingly, making it a significant piece of the topic. After the bank burglary Kennedy would be everywhere throughout the papers due to his alleged gallantry. Not long after his brave day see he would get an Ace of spades with a rundown of names on the card. Rather than imagining that this card was a message Kennedy accepting it as a commitment to discover these individuals and help. The main task was in the night at Edgar Street, this is a surprising occasion from various perspectives. At his first task Kennedy didn't have the foggiest idea what's in store since he had done nothing of this sort previously. At Edgar Street Ed Kennedy would watch a man assaulting his better half however would not realize how to respond and would ask himself who is giving him these assignments. Later assignments would come and Kennedy as a character would advance from a noninterventionist into a saint that would help other people. Kennedy would enchant the individuals in his assignments to change and would increase a reason in life that both the assignments and him generally needed. The topic of this novel is to discover a reason in your life and to strive constantly to discover it regardless of what the conditions are. In the novel I am the Messenger Ed Kennedy is carrying on with an existence without reason and simply enduring. Be that as it may, by doing every task with much charm Kennedy motivates numerous to endeavor to turn out to be better; in this way, making the general public around him a superior spot to live in. At the point when Kennedy at last discovered his motivation he discovered that a few assignments would be straightforward while others would be agonizing to experience, which he had never experienced in light of the fact that he carried on with an existence of segregation. At last this novel, I am the Messenger, can identify with numerous individuals, which can spur individuals to discover a reason throughout everyday life. Despite the fact that the assignments were clearly cruel it portrays a point that everybody can gain from. Living in disconnection doesn't hurt anybody aside from yourself yet once you carry on with an actual existence brimming with good cause and reason one can encounter life in a positive manner. By carrying on with an existence with these properties Ed Kennedy advanced into a character that charms his assignments into making the wisest decision. The subject of the novel instructs to discover a reason in our lives with the goal that we can carry on with a real existence loaded with satisfaction even in the hours of dimness.

What Is a Good Explanatory Essay

What Is a Good Explanatory Essay How to Write an Explanatory Essay: Bring Your Writing to the Next Level Essay writing is an important part of your studying process. No matter where you study you are likely to be asked to submit various types of essays like explanatory essay, persuasive essay, compare and contrast essay, expository essay, argumentative essay, etc. In this article, let’s consider explanatory essay definition and how to complete this type of assignment in a winning way. So, what is explanatory essay? This is a kind of academic paper that presumes you need to explain the given idea or topic doing deep research and presenting appropriate arguments to support it. It has nothing to do with your personal opinion. In other words, all you need to do is to define or explain something objectively relying on facts, not your personal vision. To compose explanatory essay in a good way it is necessary to read, write, rewrite, revise, give it to your friends or parents to read, revise it again and again until the paper becomes compelling, clear, and concise. Moreover, good writing skills are essential when completing this kind of paper. You need to understand that you have to spend a significant amount of time, effort, and focus on it, despite the fact that these essay papers are not so big. Pay your attention to the fact that there are clear-cut standards that you should meet if you want to submit a winning explanatory paper. Feel a little bit worried and disturbed? Good news is that you can learn how to meet all those explanatory essay format requirements and hone your writing skills. Explanatory essay example: How it can help you with your paper? How to start? Where to go? What should I do first of all? These questions may bring a lot of worries to you at the beginning of the writing process. Relax and focus on your goal. It can be a really great idea to look through the samples of explanatory papers completed by other students. It will help you get a clear picture how this assignment should be done. Here are some efficient tips that may be helpful for you during the process: Consider the topics for explanatory essay carefully before choosing them. If you have a chance to select the theme for your paper on your own, take advantage of it. Check academic resources on each topic and decide which one will be easier for you to research. Ask your tutor to give you this essay theme. Conduct an intensive research before putting ideas into writing. A good paper can’t be crafted without a proper research. Use only credible and relevant sources for your research otherwise it will be pointless. Create a good explanatory essay introduction and follow the format requirements. It is very important thing. No matter what essay you are writing you should always stick to the given reference style and academic standards. That’s the core of academic writing. Write your essay in the approachable and intelligent voice. Keep in mind that you should use academic and specialized language to represent your ideas both naturally and academically. It means that informal phrases and slang won’t do. Your ideas should flow logically. Never forget to check and edit your paper. Many students tend to make a big mistake when they submit their papers once they finish them. Do not follow their example. Always find time to reread your paper several times or you may find a professional editor online to help you with it. What if explanatory essay writing is not your cup of tea? If you are still puzzled and have vague ideas on how to start an explanatory essay, you can avoid this headache. This blog will appeal to everybody, who is in search of inspiration and academic assistance. You can look through articles find out what will work best for you. Obviously, forming a nice and well-structured essay requires a special approach. More often writers, students, bloggers, and journalists need some additional help due to the lack of time, resources or other reasons. We are writing good articles daily for those who really need professional assistance. How do we perform paper writing? This site is a safe, easy, fast and cheap way to get written texts you need. You are welcome to cooperate with the best writers from English speaking countries who can compose any type of essay for you. Hire an article writer and he/she will: Choose a good and interesting topic to highlight in your article, regarding your preferences and your potential audience; Perform best detailed research including such details as statistics, quotes, references, definitions, illustrative stories, etc.; Use natural and compelling tone to communicate with your audience; Adequately describe all the necessary points to cover your topic entirely. Expert writers can help you come up with a great paper which ensures that your essay will be interesting, original, and memorable.

The Promise and Pitfalls of Float (Loose Rock)

Too often when youre out in the field, youll be looking at a hillside and there are no outcrops of bedrock to tell you whats under it. An alternative is relying on float—isolated stones in the soil that you must assume came from the bedrock near by. Float is not reliable, but with care it can provide good information. Why Float Is Unreliable An isolated stone is hard to rely on because once its broken off, many different things can move it away from its original setting. Gravity pulls rocks downhill, turning bedrock into colluvium. Landslides carry them even farther. Thens theres bioturbation: Falling trees can pull up rocks with their roots, and gophers and other digging animals (fossorial animals is the official term) can push them around. On a much larger scale, glaciers are notorious for carrying rocks far from their origin and dropping them in big piles called moraines. In places like the northern United States and much of Canada, you cant trust any loose rock to be local. When you add water, there are new complications. Streams transport rocks entirely away from their places of origin. Icebergs and ice floes can carry stones across open water to places theyd never reach on their own. Fortunately, rivers and glaciers usually leave distinctive signs—rounding and striations, respectively—on rocks, and they wont fool an experienced geologist. Possibilities of Float Float is no good for a lot of geology, because the original position of the rock is lost. That means that its bedding features and orientation cant be measured, or any other information that comes from the rocks context. But if conditions are reasonable, float can be a strong clue to the bedrock below it, even if you must still map the boundaries of that rock unit with dashed lines. If youre careful with float, its better than nothing. Heres a spectacular example. A 2008 paper in Science tied two ancient continents together with the help of a small boulder found sitting on a glacial moraine in the Trans-Antarctic Mountains. The boulder, just 24 centimeters long, consisted of rapakivi granite, a very distinctive rock containing big balls of alkali feldspar with shells of plagioclase feldspar. A long series of rapakivi granites is scattered across North America in a wide belt of Proterozoic crust running from the Canadian Maritimes at one end to an abrupt cutoff in the Southwest. Where that belt continues is an important question because if you find the same rocks on another continent, it ties that continent to North America at a specific place and time when both were united in a supercontinent named Rodinia. Finding a chunk of rapakivi granite in the Trans-Antarctic Mountains, even just as float, is a key piece of evidence that the ancient supercontinent of Rodinia held Antarctica next to North America. The actual bedrock that it came from is underneath the Antarctic ice cap, but we know the behavior of the ice—and can confidently discount the other transport mechanisms listed above—well enough to cite it in a paper and make it the highlight of a press release.

Comparison of Civilizations in the Ancient World Essay

Early civilization consisted of core values that defined the communities that resided within it. These communities were driven by numerous factors in which would decide the overall outcome of the civilization. Geography, social and economic values, and they’re culture all played an important role in the makeup of these civilizations. Mesopotamia was a successful farming community early on. Utilizing the Tigris and Euphrates rivers this community was able to create a successful way of farming through the use of irrigation and drainage ditches (Duiker Spielvogel, 2010). Once the use of irrigation became large scale and widely used it was possible to support a larger community base and thus encouraged expansion throughout the civilization.†¦show more content†¦Discovery of clay tablets inscribed with cuneiform proved that the Mesopotamian civilization were able to communicate through written pictures and stylized signs, this was used for purpose of record keeping and schools to teach cuneiform. Egyptian civilization was born from the vast and unique Nile River. This river provided the rich â€Å"Black Land† soil that was the foundation for agriculture (Duiker Spielvogel, 2010). Although there was no need for irrigation as in Mesopotamia, Egyptians were able to provide an abundance of foods for their civilization base. The Nile River not only provided land perfect for farming it was also used as a mode of transportation for the Egyptians enabling the trade of imports and exports. Due to natural barriers in the geography and the strategic use of fortifications, Egyptians were able to create a secure way of life protected from invasion. This way of life was organized hierarchical lines with a god-king at the top (Duiker Spielvogel, 2010). The ruling class consisted of nobles and priests who assisted the god-king and ran the government. The middle class society was made up of merchants and artisans who controlled trade and art while the rest of the population were comm on farmers and slaves. Similar to the Mesopotamians, controlling the vast civilization of Egypt were the numerous gods and goddesses created by the polytheism belief. These gods were represented in wall paintings,Show MoreRelatedThe Most Influential Innovators Of The Ancient World Essay1510 Words   |  7 Pagessouth and mountain ranges dotted the north. This land was also known as the Fertile Crescent. Mesopotamia is one of the first major of civilization along with others that sprung up along major rivers around the world at approximately the same time. Mesopotamia was home to the Sumerians, who became known as one of the most influential innovators of the ancient world. A couple thousand miles southwest of Mesopotamia lies the land of Egypt. Like Mesopotamia, Egypt had the mighty Nile flowing south toRead MoreEssay about Ancient Egypt and Ancient Greece903 Words   |  4 Pagesâ€Å"Ancient Egypt and Ancient Greece† According to history there existed two of many important ancient civilizations that left a significant mark in the history of human development that even today leaves modern society in awe of its greatness. In spite of being distant civilizations, Ancient Egypt and Ancient Greece share similarities and difference in terms of how they practiced religion,political structure, everyday life style, and how they built the monumental architectures that continued to amazeRead MoreSamuel Kramer s Argument That The Ancient Civilization Of Sumer And The Modern Day World Essay1402 Words   |  6 PagesSamuel Kramer’s argument that the ancient civilization of Sumer and the modern-day world are â€Å"fundamentally analogous† (p. 250) is supported heavily throughout his literary work History Begins at Sumer, and has evidenced this from the social perspective, as well as from an institutional one. The first social comparison Kramer mentions is that of Juvenile Delinquency. Starting from page 14, Kramer describes a fathers point of view about this social disease and describe that his child is one of fewRead MoreAncient Egypt And The Egyptian Civilization951 Words   |  4 PagesBC, the rise of the civilization along the Nile river began what we know today as the reign of Egypt. As one of humanity s oldest civilizations, Ancient Egypt was responsible for the amalgamate out of the smaller cultures found along the Nile River and into the Nile Valley civilization, developing into the three stages of kingdoms over time. The Egyptians or the Nile Valley civilization got its name due to the proximity of the river Nile in Egypt. Rivers of the ancient world were vital to mankindRead MoreEgypt And Mesopotamia Similarities984 Words   |  4 Pageswhat ways were the civilizations of Mesopotamia and Egypt alike? In what ways were they different? What accounts for these similarities and d ifferences? Mesopotamia and Egypt were the first known civilizations in history. While maintaining separate identities, they still managed to have a vast number of similarities. Differences that go beyond general location were also very prevalent between the two civilizations. One of the biggest similarities between the two civilizations is that they bothRead MoreThe Link Between Earth And Heaven1278 Words   |  6 Pagesdifferences between each ancient civilization. Despite cultural differences, miles of separation, and existence in difference centuries, all three of the civilizations discussed above share one distinct similarity that links them all together—The link between Earth and heaven. All three civilizations maintained an expectation for their kings to perform the same task: to serve as the main connector between the heavens and life on Earth. Beginning in Mesopotamian civilization, the link between mereRead MoreAnalysis Of Ruins Of An Ancient City, By John Martin1456 Words   |  6 Pagesthat would spread throughout Europe, the United States, and Latin America. The characteristics typical of Romantic painting consist of landscapes, freedom, and beauty. John Martin s Ruins of an Ancient City, completed around 1810-1820, depicts desolate ruins that remind us that all civilizations will eventually collapse. In its wake, a new culture will develop out of the previous one, with or without knowledge of the past. The piece implicitly shows that the ruins serve as a place of sightseeingRead MoreThe Product Of Baked Products832 Words   |  4 Pagesto shed light on the baked products in Ancient Egypt such as cakes and bread†¦.etc, to spot light on the different types of bakery in Ancient Egypt, to focus on the shapes and sizes of bakery throughout the history of Ancient Egypt, to study the representations of cakes and b read and other types of baked products on the walls of the ancient Egyptians private tombs dating back to the Old, to shed light on the baking techniques all over the history of Ancient Egypt, to study the relation between theRead MoreClassical Civilizations of Ancient Greece, Rome, and China Essay897 Words   |  4 PagesThroughout history, there have been many civilizations, empires, colonies, and tribes that have impacted the world. The civilizations of Greece, Rome, and China have done this, but what sets them apart from the others is their lasting significance and lasting impact they had on the world. For this reason, they are considered classical civilizations. To describe how Greece, Rome, and Han China are classical, there are three systems that are used; these are Economic, Social, and Political. OutRead MoreThe Romanticism Of The 19th Century1289 Words   |  6 Pagescharacteristics typical of Romanticism consists of landscapes, freedom, and beauty. John Martin s Ruins of an Ancient City, completed around 1810-1820, depicts desolate ruins that remind us that a civilization will eventually collapse due to the passage of time. In its wake, a new culture will grow out of the previous one, but it will require knowledge of the past to develop. All knowledge of civilization is not erased completely from history; it is documented through the use of observation, preservation

Channels of Distribution for Insurance Products Free Essays

Channels of Distribution for Insurance Products PRAKASH PRABHAKAR PATIL DPGD/JL10/0480 Specialization: – Banking, Investment and Insurance Welingkar Institute of Management Development Research Year of submission: – May 2012 ACKNOWLEDGMENT I would like to acknowledge and extend my heartfelt gratitude to the following persons who have made the completion of this project possible. I am highly indebted to Wellingkar Institute of Management for this opportunity and constant guidance as well as for providing necessary information regarding the project. I would like to express my gratitude towards my parents colleagues of HDFC Life Insurance for their kind co-operation and encouragement which help me in completion of this project. We will write a custom essay sample on Channels of Distribution for Insurance Products or any similar topic only for you Order Now I would like to express my special gratitude and thanks to industry persons for giving me such attention and time. Prakash Patil TABLE OF CONTENTS |Content |Page No | |Introduction – Insurance Market in India – A Quick look 4 | |Distribution Channel – Definition Importance |6 | |Current distribution channels for Insurance products |8 | |Tied (Agency) Channel |9 | |Corporate Agency |13 | |Brokers |14 | |Bancassurance |17 | |Online/ Internet |23 | |Microinsurance |26 | |Worksite Marketing |28 | |Indian Postal Services |30 | |Telemarketing |32 | |KIOSK or Virtual Marketing |33 | |Background |34 | |Methodology |35 | |Problems in Distribution of Insurance products in India |35 | |Conclusions Recommendations |44 | |Limitations |48 | |Bibliography |49 | INTRODUCTION ? Insurance Market in India – A Quick look Life insurance industry in India has gone through many phases since its start in 1818 with the establishment of the Oriental Life Insurance Company in Cal cutta. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), 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 operating in India by independence and the level of competition was high. There were also allegations of unfair trade practices. Therefore, post independence, Government of India decided to nationalize insurance business. Accordingly in January 1956, nationalization of life insurance was done by formation of Life Insurance Corporation (LIC) by absorbing 154 Indian, 16 non-Indian insurers and 75 provident societies. In 1972, general insurance business was also nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd. , the New India Assurance Company Ltd. , the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 which commenced its operations in 1st January 1973. There has been considerable time lag between reforms of insurance sector and rest of financial sector. Therefore in 1993, Government of India set up committee chaired by RN Malhotra, former governor of RBI, to propose recommendations for reforms in Insurance sector. Committee submitted its report in 1994 wherein it recommended to open the Insurance Sector for Private and foreign players. Following the recommendations of the Malhotra Committee report, in 1999 the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. A number of amendments were brought in various insurance related statutes, viz. , Insurance Act, 1938, LIC Act, 1956 and General Insurance Business Nationalization Act, 1972 (GIBA). The Progress in the overall developments in the insurance sector were swift and more prominent after the establishment of IRDA. The four public sector non-life insurance companies were de-linked from being subsidiary of the General Insurance Company of India. Now they operate independently and compete with each other. With the progress of reforms, Insurance market has been flooded with a number of players. As at end-March 2006, among the life insurers, there were 23 companies in private sector and Life Insurance Corporation of India (LIC) was the solitary public sector company. Among non-life insurers, nine companies were in private sector and four companies were in public sector (Annex II). As regarding the present size of the insurance market in India, it is stated that India accounts not even one per cent of the global Insurance market. However, studies have pointed out that India’s insurance market is expected to grow rapidly in the next 10 years. The Indian Insurance Industry: A Case Study Let’s understand the rules for formation of Insurance Company in India. ABC is foreign company having diverse business interests, including the arketing and selling of insurance products in the United States of America (USA). It has a strong infrastructure, good customer base and brand equity. ABC has heard that the Indian insurance market has opened up and seeks some information a bout opportunities there. ABC wants to tie-up with an Indian company (â€Å"XYZ†) by forming a joint venture and wants to know the amount of equity it can hold in an Indian joint venture company and the insurance products it can sell in India. The company has distributable profits in three (3) preceding financial years, prior to the year in which shares with differential rights are to be issued; Further, ABC has a subsidiary in India (the â€Å"ABC Sub†). ABC wants to know whether ABC Sub can enter into a joint venture with XYZ. Observations and Comments The Indian government has recently passed the Insurance Regulatory Development Authority Act, 1999 (the â€Å"IRDA†) whereby amendments have been made to the existing insurance laws prevailing in the country, namely, the Insurance Act, 1938 (the â€Å"Ins Act†), the Life Insurance Corporation Act, 1956 (the â€Å"Life Act†), and the General Insurance Business (Nationalisation) Act, 1972 (the â€Å"GIB Act†). An authority called the Insurance Regulatory Development Authority (the â€Å"Authority†) has been established to regulate the insurance sector. (Section 3 of the IRDA) The Authority, inter alia, will have the power to: Issue applicants a certificate of registration; renew, modify, withdraw, suspend or cancel such registration. (Section 14(2)(a) of the IRDA) A certificate of registration will have to be renewed annually. (Section 3A of the Ins Ac t r/w the First Schedule of the IRDA) †¢ Prescribe prudential norms such as solvency margins and investment guidelines for insurance companies (Section 14(2)(k) and (l) of the IRDA) †¢ Protect interests of policyholders in matters concerning assignments of policies, nominations by policyholders, insurable interest, settlement of insurance claims, surrender value of policies, and other terms and conditions of contracts of insurance. (Section 14(2)(b) of the IRDA) However, the Indian Government has retained with itself the power to issue directions on questions of policy. (Section 14(2)(b) of the IRDA) The definition of an â€Å"Indian insurance company† has been amended to include â€Å"any insurer being a company- 1. Which is formed and registered under the Companies Act, 1956; 2. In which the aggregate holding of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees does not exceed twenty-six per cent (26%) of the paid-up capital; and 3. Whose sole purpose is to carry on life insurance business or general insurance business or reinsurance business. (Section 2(7A) of the Ins Act r/w the First Schedule of the IRDA) The explanation to this section provides that a â€Å"foreign company† is a company that is not a domestic company. (Section 2(23A) of the Income-tax Act, 1961 r/w section 2(7A) of the Ins Act r/w the First Schedule of the IRDA) The IRDA by amending the Ins Act clearly provides that the aggregate holding of equity shares by a foreign company, either by itself or through its subsidiary companies or nominees should not exceed 26% of the paid-up capital of the insurance company. It has been clarified that the twenty-six per cent (26%) cap applicable to foreign companies will also apply to foreign institutional investors, non-resident Indians and overseas corporate bodies. Section 2(7A)(b) of the Ins Act r/w the First Schedule of the IRDA) Thus, a foreign company is now permitted to own upto 26% of the equity in an Indian joint venture company. Therefore, if ABC proposes to form a joint venture with XYZ, ABC’s shareholding will be restricted to a minority shareholding of 26 % in the joint venture company. It must be noted that the Indian insurance company must be a public limited company. (Section 2C of the Ins Act) Now, let us assume that ABC has a subsidiary company in India (the â€Å"ABC Sub†) in which it owns a fifty-one per cent (51%) equity and decides that ABC Sub should enter into the insurance joint venture with XYZ. This will not be permissible. According to recent informal pronouncements of the Authority, Indian companies that are subsidiaries of overseas companies will not be allowed to tie-up with other Indian companies to do insurance business. The Authority perceives this as violation of the twenty-six per cent (26%) equity cap by forming insurance companies. ABC can, however, along with several other foreign companies have a stake in an insurance company operating in India as long as the combined equity stake of all foreign companies does not exceed twenty-six per cent (26%). The Authority will not register any new insurance company carrying on the business of life or general insurance unless it has a minimum paid-up capital of Rs. 100 crores. No composite license for life and non-life business will be granted. For companies in the reinsurance sector, a minimum paid-up capital of Rs. 200 crores is required. (Section 6 of the Ins Act) The foregoing paid-up share capital must be brought into the new company within six (6) months of issue of the license. (Section 6 of the Ins Act r/w the First Schedule of the IRDA) In addition, every insurer will be required to undertake such percentages of life insurance or general insurance business in the rural or social sector, as specified in the Official Gazette by the Authority in this behalf. (Section 27D of the Ins Act r/w the First Schedule of the IRDA) Furthermore, a new insurance company will be permitted to invest policyholders’ funds only in India. Section 27C of the Ins Act r/w the First Schedule of the IRDA) Every insurer shall, in respect of its life insurance business, be required to deposit with the Reserve Bank of India, either in cash or in approved securities, a sum equal to one per cent (1%) of its total gross premium written in I ndia, not, however, exceeding Rs. 10 crores. In respect of the general insurance business, this sum will equal three per cent (3%) of its total gross premium written in India, not, however, exceeding Rs. 10 crores. In respect of re-insurance business, this sum will equal Rs. 20 crores. (Section 7(i) of the Ins Act r/w the First Schedule of the IRDA) It has been provided that an Indian promoter holding more than twenty-six per cent (26%) of the paid-up equity capital of an Indian insurance company will ave to divest in a phased manner the share capital in excess of twenty-six per cent (26%), after a period of ten (10) years from the date of commencement of business by the Indian insurance company. (Provision to section 6AA of the Ins Act r/w the First Schedule of the IRDA) On the one hand, the Indian government has restricted foreign equity ownership in Indian insurance companies to twenty-six per cent (26%) whereas on the other hand, it wants Indian partners to divest their equity h oldings to twenty-six per cent (26%) after ten (10) years. Recently government has been in considering increasing the limit on foreign investments up to 49% from current 26%. Also norms for IPO are expected to be finalized shortly which would enable companies to go public for raising funds. The IRDA has allowed three kinds of insurance brokerage firms to operate in the country, namely, insurance, re-insurance, and composite brokerage firms. The twenty-six per cent (26%) equity cap will apply to such firms too, except that; composite brokers may enjoy a higher equity cap of forty-nine per cent (49%). Company formation consideration †¢ On complying with the registration formalities, ABC and XYZ will have to enter into a shareholders’ agreement. The main issue that arises here is exercise of control in the functioning of the joint venture company. Generally, exercise of control can be at two levels Board of Directors; and Shareholders. †¢ Under the Companies Act, 1956 (the â€Å"Cos. Act†) a company can carry on activities by passing either of two resolutions, special resolutions and ordinary resolutions. Ordinary resolutions can be passed by shareholders having 50% plus one shares with voting rights in the company, whereas special resolutions can be passed only by shareholders having 75% shares with voting rights in the company. A special resolution is, inter alia, required to amend the Memorandum and Articles of Association of a company, to issue further shares through a rights issue, to give loans or guarantees to other companies, etc. With a twenty-six per cent (26%) equity stake, ABC will only be in a position to block special resolutions. It will not be able to control the day-to-day functioning of the joint venture company. Additionally, the Authority has prescribed that foreign insurance companies cannot retain Board control in Indian insurance joint venture companies. Therefore, ABC will not be able to appoint majority directors on the joint venture company’s Board. Another pertinent point that arises is infusion of funds to the extent of seventy-four per cent (74%) of the equity of the joint venture company by the Indian partner, namely, XYZ. XYZ will have to bring in a minimum amount of 74 cores, if the joint venture company seeks to enter into the business of life or general insurance. Further, in the event of increase of share capital, XYZ will have to pump in an amount equal to its seventy-four per cent (74%) equity stake. This can cause some problems. It should be noted that preference shares cannot be issued by companies carrying on life insurance business (Section 6A(1)(i) of the Ins Act). As such, the joint venture company carrying on life insurance business cannot comply with the capitalization stipulations by issuing preference shares to ABC In such circumstances, the parties can consider entering into a three-way joint venture either with another Indian company or with a bank. The Reserve Bank of India (â€Å"RBI†) has permitted banks to enter into the insurance sector and to invest up to fifty per cent (50%) of their paid-up capital in insurance joint ventures. The liberalization of the Indian insurance sector has open up the sector to private competition. If ABC and XYZ can establish the right amount of trust and take a long-term perspective on the Indian market, their joint venture can be a major success. ? Distribution Channel – Definition Importance in Indian insurance Industry The process of making a product or service available to customer for use or consumption at desired place and time by set of two or more interdependent organizations. It can also be termed as an Intermediary between end consumer and seller or service provider. Intermediaries typically charge a â€Å"mark-up† or â€Å"commission† for participating in the channel. Post nationalization of Insurance companies, tied agents were the primary channels for insurance distribution in the Indian market; the public sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. The agents are from various segments in society and collectively cover the entire spectrum of society. A person who has lived in the locality for many years sells the products of the insurance company with a local branch nearby. This ensures the last mile touch point being closer to the customer. Of course, the profile of the people who acted as agents suggests they may not have been sufficiently knowledgeable about the different products offered, and may not have sold the best possible product to the client. Nonetheless, the customer trusted the agent and company. This arrangement worked adequately in the absence of competition. In terms of ‘Insurance Penetration Ratio’ (defined as ratio of insurance premium to GDP), a key indicator of the spread of insurance coverage and insurance culture, India compares very poorly by international standards. The penetration ratio was less than one per cent in 1990s and it improved to 5. 2% by year ended on March 2009. As against this, as per report from Swiss Re penetration ratio by year ended on March 2009, in respect of some of the developed countries, viz. , UK and South Africa at 12. 90%. In Asia, Taiwan and Hong Kong had registered their respective ratio of as high as 16. 8% and 11. 0%. Insurance penetration for the world was placed at 7. 0% which was far ahead than that of India. Refer: Table 1) Thus in a country with 1. 21 billion overall population, the penetration ratio indicates that still there is vast majority of population still outside reach of Insurance; especially in rural and semi-urban areas, in the context of the absence of social security schemes. This clearly suggests that there is a vast opportunity to tap in insurance sector by widening the distribution channels. Nearly as old as the banking industry or perhaps even older, insurance as a model of risk management, is centuries old. Though the industry began in a small way, it evolved to become an integral part of the financial services businesses over time. Table 1: International Comparison Of Insurance Penetration, March 2009. Developed Countries |Country |Total |Life |Non-Life | |Australia |6. 40 |3. 40 |3. 00 | |Brazil |3. 10 |1. 60 |1. 50 | |France |10. 30 |7. 20 |3. 10 | |Germany |7. 00 |3. 30 |3. 0 | |Russia |2. 50 |0. 00 |2. 50 | |South Africa |12. 90 |10. 00 |2. 90 | |Switzerland |9. 80 |5. 40 |4. 50 | |United Kingdom |12. 90 |10. 00 |3. 00 | |United States |8. 00 |3. 50 |4. 50 | Asian Countries Country |Total |Life |Non-Life | |Bangladesh |0. 90 |0. 70 |0. 20 | |Hong Kong |11. 00 |9. 60 |1. 40 | |India# |5. 20 |4. 60 |0. 60 | |Japan |9. 90 |7. 80 |2. 10 | |Malaysia |4. 40 |2. 90 |1. 0 | |Pakistan |0. 70 |0. 30 |0. 40 | |PR China |3. 40 |2. 30 |1. 10 | |Singapore |6. 80 |5. 10 |1. 70 | |South Korea |10. 40 |6. 50 |3. 90 | |Sri Lanka |1. 40 |0. 60 |0. 90 | |Taiwan |16. 0 |13. 80 |3. 00 | |Thailand |4. 00 |2. 40 |1. 60 | |World |7. 00 |4. 00 |3. 00 | Source: Swiss Re, Sigma various volumes * Insurance penetration is measured as ra tio of premium (in US Dollars) to GDP (in US Dollars) # Data relates to financial year ? Current distribution channels for Insurance products in India:- Traditionally before privatization insurance products were only sold by agents. Strategy also worked due to absence of competition in market. However post privatization, competition got tougher and need for alternate channels of distribution was strongly felt. Currently insurance products are being distributed through following channels: Current distribution of Insurance products in India Insurers ? Tied (Agency) Today’s insurance agent has to know which product will appeal to the customer, and also know his competitor’s products in the same space to be an effective salesman who can sell his company, the product, and himself to the customer. To the average customer, every new company is the same. Perceptions about the public sector companies are also cemented in his mind. The new companies are looking for educated, aware individuals with marketing flair, an elite group who can be attracted only with high remuneration and the lure of a fashionable job, all of which may not be possible in this business with its price pressures and the complexity of selling insurance. Unable to attract this segment, they have started easing recruitment conditions as against the stringent norms they had earlier, thereby diluting the process. While the public sector companies are able to attract agents, they continue to suffer from high attrition rates due to indiscriminate agent appointment. The most successful of these companies tied agents are hardly of the elite variety of salesman. They are still the people from neighborhood — the postman, the schoolteacher, and the shopkeeper — who know the people and are themselves known in the community. The challenge here is the lack of knowledge of the competitive market and the inability to do intelligent comparisons with the competitor’s products. Educating and training these agents is a serious challenge for the insurance company. The relevance of this kind of agent continues even today as agents are sought or contacted by families by word of mouth. Insurance companies are advised not to follow the path of FMCG’s/credit card companies, believing that a suited and booted customer care consultant or financial consultant will necessarily appeal to the average Indian customer. In this context it might be a rewarding exercise to recruit some older people (who have taken Voluntary Retirement from banks and other financial institutions) to sell some lines of products like pension plans, annuities etc. Gender of agents is another relevant feature in the rural context that makes a difference, especially for the female population. Women to whom the customers can relate –e. g. , nurses, gram sevikas — can target the female segment of the population more effectively. What is applicable for the rural women and children health programs and population control programs is equally applicable for insurance selling also. With this kind of segmentation of intermediaries the challenge for the insurance company lies in training and educating these people to become effective sales persons. But this in no way diminishes the benefits of intermediary segmentation. †¢ SWOT Analysis on Agency Channel Strengths:- †¢ Typicality of Indian customers who always favors known and reliable intermediary. †¢ Through agency, personal contact and relationship can be established with the customer. Agents usually enjoy personal credibility with customers. †¢ Agents provide various presales and post sales services to customers. †¢ This channel’s awareness and acceptability is maximum among people. †¢ Cross selling is possible through this channel. †¢ Due to personal contact, it can provide valuable feedback about the need and expectation of consumers. Weakness:- Insurers have to bare higher cost to set up of agency channel network and provide training to personnel †¢ Higher commission rates forces insurers to deduct high charges from policy. †¢ High attrition rate of agents is a serious concern. Due to this, initial investment done on tr aining and educating the agents goes waste. Attrition causes the problem of servicing orphan policies. †¢ Agents are generally not tech savvy. Opportunities:- †¢ High net worth individuals who prefer relationship over cost can be tapped. †¢ Technology can be embraced to convert prospect into business. †¢ Commissions structure can be designed in such a way that agents would want to stay active for long term. Threats:- Alternate distribution channels are more preferred by the insurers due to cost effectiveness over agency channel. At present, the number of agents working in life insurance industry is approximately 15 lakhs but a majority of them are dormant which leads to poor activity ratio. Out of the massive agency force approximately only 20% are active. What is need of the hour is not the quantity but the quality. Having some productive and lots of unproductive lot drags down the morale of the community of agents, leads to discontent within the profession and the respect for the profession is downgraded. Over manpower has its cost to the company in terms of unrecovered or under recovered training cost. Also, opportunity cost in terms of a more productive agent serving in place of a dormant agent can’t be looked over. Over manpower also contributes to mis-selling and refunds. Adequate concept, product and soft skill training is indispensible for professionalizing agency force. IRDA mandates companies to impart 100 hour training to its agents and today most of the companies have in-house training facility. But number of agents attending subsequent product trainings at the time of product launches and other soft skill training sessions gets reduced substantially. It leads to poor knowledge about company’s whole basket of offerings and agents selling only a few products instead of doing a true need-based selling to customers. The concern of the regulator towards growing proportion of linked products in companies’ total percentage of business can also be attributed to biasedness of training programs in favor of linked products. Training becomes all the more important in today’s competitive environment where the agent is not only selling insurance but the company providing insurance. Adequate and quality initial training at the time of licensing is like laying a strong foundation for agents entering the industry and subsequent trainings are like sharpening the agents’ willingness to stay competitive. Agents are off-roll employees of an insurance company and keeping them motivated is a big challenge. Companies run loyalty and engagement programs and sales incentive programs (like short term contests) providing various monetary and non-monetary benefits. They serve well to motivate the agents to perform better, increase interaction of agents with the companies, promote spirit of healthy competition among the agents and to recognize good performing agents, provided these programs are easily understandable, transparent and quick in benefit disbursal. This profession is also not left untouched by Information Technology. Most of the companies have a dedicated agent’s portal but the number of agents accessing them is less than satisfactory. One step forward in making the agents more efficient and professional is to make them more tech-savvy through training and other means. Looking at the regulatory front, a dispute redressal mechanism for the agents should be established by the IRDA. Insurance selling is a tough job. Agents are facing sharp competition from other alternative distribution channels and with so many insurance players in the fray, their job has become all the more difficult. Though the image of an agent has undergone lot of change since the time it was first introduced but still agents face a lot of sales resistance. Insurance companies need to consciously endeavor into dedicated efforts for the image makeover of their agents which will go much beyond calling them advisors or financial consultants instead of agents. Agents are the true Brand Ambassadors of the company and they deserve a fair treatment from the insurers. In spite of multitude of other distribution channels coming up, tied agency is here to stay because of attitude and typicality of Indian customers. What is needed is a genuine effort in recruitment, training and development of a good agency force critical for growth and survival, knowing that for a long-term business like insurance quality, productivity and ethical values must be deep-rooted fully in the workforce. ? Corporate Agency The corporate agent is an extension of the agent as the insurance agent is an individual and if two agents join together and form a firm or company, it becomes corporate agent. The procedure to become a corporate agent is the same as that of an agent but may have to contribute the share capital of 15 lakh at the discretion of the insurer. Corporate agency channel was the key distribution channel for Insurance. Since IRDA allowed corporate agents into distribution of Insurance, it flourished like anything. It has a major advantage of cost affordability over traditional agency channel for insurers. However due to increased complaints of mis-selling and high lapsation of policies sourced through corporate agencies was a growing concern over the time. Majority of the policies were sold as a short term investment option rather than long term security. Customers were kept under dark about various charges of policy and other terms and conditions which makes insurance policy a long term investment option. Also there were instances where same set of individuals have floated different corporate agencies and they even employed people without valid licenses. To overcome these challenges and protect customer interest, IRDA came up with tringent licensing norms for corporate agencies in June 2010 which tighten the license renewal process that made many small corporate agents ineligible as they were not conforming to the new norms. In addition of this IRDA also recommended regular on-side inspection of corporate agents to control various mal practices that had entered the system. Due to IRDA’s on-side inspection companies wherein same set of individuals have floated different corporate agencies went out of business. In November 2011, IRDA came out with persistency ratio for corporate agents; according to which it would mandatory for corporate agents to retain at least 50% of their clients. These norms with cap on commission have made its viability questionable. Also IRDA proposed a disincentive for lapsation in the form of commission claw back by the insurer, on a proportionate basis. Alternatively, a part of the first year commission should be withheld to be paid based on persistency in later years. These guidelines have ensured the restriction of the agencies which used to sell the insurance policies only for higher first year commission by using malpractices and only those who are willing to do long term and ethical business can survive. ? Brokers Insurance brokers is being totally new distribution channel which can sell the products of all the insurers on all India basis but minimum capital requirement is 50 lakh with proper office infrastructure and manpower. Every Insurance Broker will have to pay annual fees of 0. 5% of his brokerage and insure himself under Professional Indemnity insurance. Broker channel offers several benefits for customers like Choice, expertise and customer servicing. These are elaborated below. Choice:- There are about 50 insurance companies in India and as a result hundreds of different product options which can help customer to choose product exactly as per his need. Unfortunately the benefit of this market diversity never reaches the customers if they purchase insurance through agents. Brokers by definition are not tied to any one insurer and have a bias to present as many options as possible to clients. Also, brokers have a unique advantage as they can combine the life, non-life and health insurance requirements of a client. A broker can explain the distinctions of these different product types to a client and pick the most relevant options. This allows brokers to work with relatively smaller companies in a profitable manner. Individual insurers and agents would not have the same economies of scale in serving small clients. Expertise:- Brokers are constantly exposed to people and product offerings of different companies. Brokers participate in training programme conducted by different companies. This puts brokers in a unique position to understand market trends and developments. A good broker will harness this information to create deep market expertise. Such expertise has three main benefits. First, brokers can educate clients about product options and then push insurers hard to develop the appropriate products. The result is a steady improvement in product quality. Second, brokers can express a client’s case in a language that insurers understand and vice versa. Quite often clients are confused when faced with all the technicalities of insurance. Brokers bridge this gap. Finally, the expertise is vital in effectively managing the client’s risk, particularly in volatile times. Customer Servicing:- Because of the privileged customer–broker relationship, the broker has to build customer servicing capability. In fact the ability of a broker to retain a client, quite often depends upon its servicing strengths. No insurer or agent can play this role adequately because of the inherent conflict of interest between the claimant and the insurance company. Benefits to Industry and regulators point of view:- Brokers offer several benefits to the regulator as well. The strong customer focus of a broker is an obvious benefit. Moreover, primarily because of their deep expertise, brokers can be a very effective route to collate consumer feedback on its guidelines and regulations. Brokers go through a rigorous screening process by the regulator. Fly-by-night operators are effectively screened out. Therefore, a robust broking channel will result in fewer customer grievances and mis-selling issues. Last but not the least; brokers are very effective in reducing the cost of distribution. The experience in several countries has been that intermediation costs reduce as the broking channel becomes better established. The IRDA has a significant role to play in strengthening the broker’s role in industry. First, it should attract high quality talent and capital in the channel. The quality of the players will be the foremost determinant of the development of the channel. Second, IRDA should look to incentivize focus on pure protection solutions. The low ticket size of pure protection plans and the current commission structure results in small absolute earnings for the channel. In the backdrop of low consumer awareness, the cost of acquiring a customer is high, hence the current compensation does not provide an economic rationale for intermediaries to focus on such pure risk products. Finally, in its developmental role, IRDA can educate customers on the advantages, roles and responsibilities of a broker. Issues faced by Brokers Channel:- The Brokers segment offers a mystifying problem to the insurers. This segment is able to reach out to a wide audience and has gained pace over the decade since liberalization. Hence it is an effective channel to gain market share. But profitability issues remain due to greater costs incurred on this high maintenance channel. Given that the Indian customer, just as customers in the developing world, will not like to pay upfront charges for consulting, the broker too needs to maintain his overheads by placing the policy that makes the most economic sense, rather than one that would benefit the customer the most. That said, brokers segment is a specialized channel that will continue to maintain a reasonable share in the new business premiums. The positives are that brokers in the urban arena can attract the elite and the upper middle class customer. Brokers represent the customer and will sell the products of more than one company. They seek to determine the best fit for the client and can effectively address the mind block faced by the public about the various companies. This is applicable in the case of life insurance for the high-end and corporate/group segment. In the non-life segment, broking is not entirely new, as reinsurance brokers were arranging exotic covers. For individual customers also, with a wide range of competitive products, the broker can get a good deal. The corporate broking companies will have to play a prominent role. We are still in the early years of the industry’s growth in India. The best is yet to come. We expect that over time the market will mature and the broking channel will develop with considerable depth and robustness. ? Bancassurance – Comprehensive medium of Insurance distribution The banking Insurance industry have charged rapidly in the changing and challenging economic environment through out the globe. In the competitive open environment each every one wants to do better than others. And they know that if they are not able to provide better service they won’t survive in Industry. Insurance companies are also to be competitive by cutting cost serving in the better way to customers. Now the time has come to choose and adopt appropriate distribution channel. The Bancassurance is the distribution of insurance products through the bank’s distribution channels. It is a phenomenon where in insurance products are offered through the distribution channels of the banking services along with a complete range of banking investment products services. In simple term we can say Bancassurance tries to exploit synergies between both the insurance companies banks. Bankers Perspective:- In the post reforms, the financial sector has more number of players of both domestic and foreign and the dividing line between the banks and non-banking financial institutions’ activities had considerably thinned down. Overlapping in one another’s functions/ areas have become more common than exception. The direct upshot of these developments led to intensive competition in the banking sector and which in turn had a strong bearing on the banks’ net interest margin (spread). In fact the emerging scenario is likely to bring down the banks’ spread even thinner. Despite the monstrous size of public sector banks, they too observed decline in their spread. Further, banking system in India was prone to very high NPA’s (Non Performing assets) which was further ruining the burden on banks. Therefore, banks were compelled to be constantly on the look out for stable alternate sources of earnings in the form of non- traditional and fee based sources of incomes and diversification towards new areas such as bancassurance, promises greater scope for further enhancement in earnings with no menace of increase in NPA’s. Persistent endeavor in scouting for new technology, new products/ services/ new avenues, has become necessary for the growth as well as sustainability of banking system. It is in this context possibly, bancassurance could well be an appropriate choice for banks to increase their stable source of income with relatively less investments in the form of new infrastructure. As far as banking sector’s infrastructure is concerned, only a few countries could match with India for having largest banking network in terms of bank branches spreading almost throughout the length and breadth of the country. As on year end on March 2011, no of branches of all banks across India stands at staggering 89622 with growth of 36% since 2010. Out of this large network of branches nearly 62% of branches are located in rural and semi urban areas and the remaining around 38% are in urban and metropolitan areas. Besides the commercial banking system, India has large rural credit cooperatives as also urban cooperative banking network. Taken together these institutional set up, the ratio of population served by a bank branch would work out to be far lower. Thus, on the one hand we have a very low insurance penetration and low insurance density as compared with the international standards; on the other hand, India has a widely stretched and well established banking network infrastructure. It is this contrasting situation to absorb the two systems by way of ‘bancassurance strategy’ to reap the benefits of synergy. This is an opportune time for both banking and the insurance sectors to come closer and forge an alliance for the mutual benefit. For, both the regulators, i. e. , RBI and IRDA have already proffered appropriate policy guidelines and set in a congenial environment for such an endeavor. Besides, the Government of India’s unequivocal policy to provide insurance cover to the low income households and the people at large at a minimum cost are also favorable. Table 2: POPULATION GROUP-WISE NUMBER OF BRANCHES OF BANKS IN INDIA YEAR |RURAL |SEMI-URBAN |URBAN |METROPOLITAN |TOTAL | |1970 |3063 |3718 |1744 |1606 |10131 | |1980 |15105 |8122 |5178 |4014 |32419 | |1990 |34791 |11324 |8042 |5595 |59752 | |2000 |32734 |14407 |10052 |8219 |65412 | |2001 |32562 |14597 |10293 |8467 |65919 | |2002 |32380 |14747 |10477 |8586 |66190 | |2003 |32303 |14859 |106 93 |8680 |66535 | |2004 |32121 |15091 |11000 |8976 |67188 | |2005 |32082 |15403 |11500 |9370 |68355 | |2006 |30579 |15556 |12032 |11304 |69471 | |2007 |30551 |16361 |12970 |11957 |71839 | |2008 |30914 |17791 |14416 |13038 |76159 | |2009 |31576 |19075 |15479 |13921 |80051 | |2010 |32497 |20707 |16884 |14935 |85023 | |2011 |33495 |22631 |17712 |15784 |89622 | Source: RBI annual report, 2010-11. Note: Data are exclusive of administrative offices. Above all, in India still vast majority of banking operations are conducted manually at the bank’s branch level with relatively less automation such as ATMs, tele-banking, internet banking, etc. , unlike many developed countries. This stands out as an added advantage for the banks to have direct interface with the customers, to understand their needs/tastes and preferences, etc. , and accordingly customize insurance products. In fact there is also greater scope for innovation of new insurance products in the process. Therefore bancassurance can be a feasible activity and viable source of additional revenue for the banks. Insurers Perspective:- Contemporaneously, with the sweeping financial reforms in the insurance sector and the consequent opening up of this sector, all the private entities plunged almost simultaneously with a very little spacing of time and the entire insurance sector has been exposed to stiff competition. Insurers too have much to gain from bancassurance. The cost of the traditional agency channel is prohibitive with the high risk of agency turnover ranging between 30 to 40% every year, thus making the entire recruiting and training expenses going down the drain. Moreover, the price competition has reduced the profit margins and increased the compensation demands of the successful agents. The incentive pattern has a lot to do in this spiraling of the cost of the agency channel. Bancassurance has come in very handy for winning the middle income market which forms the bulk of the bank customers. With Bancassurance, the cost of opening new insurance branches comes down drastically for the insurer. With an agreement with a bank, all the thousand and more branches of the bank become the extended arms of the insurer. Customer Perspective:- The most immediate advantage for customers is that, in insurance business the question of trust plays a greater role, especially due to the inbuilt requirement of a long term relationship between the insurer and the insured. In India, for decades, customers were used to the monopolistic attitude of public sector insurance companies, despite there were many drawbacks in their dealing, they enjoyed customer confidence, this trend continues even now mainly due to their Government ownership. The customers to move over to private insurance companies that are collaborated with foreign companies which are less known to the Indian public would take little more time. The void between the less known newer private insurance companies and the prospective insured could be comfortably filled by the banks because of their well established and long cherished relationship. Under these circumstances, any new insurance products routed through the bancassurance channel would be well received by the customers. Bancassurance is always a win-win situation for customers. It provides greater convenience by providing all the financial needs under one roof. The customer need not always wait for his insurance agent to come and render service. Whenever the client goes to the bank for his/her other needs like housing loan, overdraft, some draft issuance etc, he can complete his insurance needs too. It’s always easier to deal with one agent for all the financial needs rather than separate agents for every product. For paying renewal premium for policy would also be easier with services like ECS, Billpay or standing Instructions. Reduced distribution cost for insurers will lead to reduced premiums for policies. SWOT Analysis on Bancassurance Strengths:- In a country of more than one billion population, sky is the limit for selling insurance products. There is a vast untapped potential as the life insurance industry just covered around 20 crores of people – the number of policies will be more in view of the multiplicity of the policies per person. Millions of people travel out of India every year for various reasons, necessitating the purchase of Travel insurance and Health insurance. This is besides their need for conventional policies. There are a lot of sunrise industries like the IT sector, the hospitality sector, the healthcare portfolio, the education sector, BPOs and the call centers, R D etc, providing a huge pool of professionals ready to be tapped for their insurance needs. Weakness:- The difference in working style and culture of the banks and insurance sector needs greater appreciation. Insurance is a ‘business of solicitation’ unlike a typical banking service, it requires great drive to ‘sell/ market the insurance products. It should, however, be recognized that ‘bancassurance’ is not simply about selling insurance but about changing the mindset of a bank. Moreover, in India since the majority of the banking sector is in public sector and which has been widely disparaged for the lethargic attitude and poor quality of customer service, it needs to refurbish the blemished image. Else, the bancassurance would be difficult to succeed in these banks. Unlike, the banking service, there is no guarantee for insurance products that all efforts that a bank staff spends in explaining to a customer would clinch the deal due to the very nature of the insurance products. This frustration of the bank staff has the danger of spillover effect even on their regular banking business. With the financial reforms and technological revolution embracing the financial system, there has been a great deal of flexibility in the mind set of people to accept change. The above outlined problems need not, however, deter the banking sector to embark on bancassurance as any form of resistance from the bank employees could be tackled by devising an appropriate incentive system commensurate with intensive training to the frontline bank staff. On other hand, the middle class population is over-burdened today by the inflationary pressures. This is considerably reducing the amount of savings of a middle class income group. Also absence of elementary IT requirements is still the case in many of the PSU and co-operative bank branches which is a concern area. Opportunities:- Bank has a huge database to work on. This has to be analyzed thoroughly and similar groups should be churned out in order to sell the bancassurance products. Since the Government pensions and other payments are handled through the bank branches, the bank can become a rallying point for more and more insurance business. Banks can become the ‘One stop shop’ where a customer can apply for banking, mortgages, pensions, investment and insurance products. Threats:- The bank employee is so well entrenched in his classical way of working that there is a definite threat of resistance to any change the Bancassurance may bring in. The knowledge level of the bank staff on insurance matters is so low that all enquiries of the customers are turned over to the insurer much to the disappointment and discomfiture of the client. The bank employee simply becomes a post man in transferring the problems of the client. The same trouble comes in the matter of other servicing aspects like the policy revivals or claims. There are hazards of direct competition to conventional banking products. The bank personnel may become resistant to sell insurance products, fearing that the bank’s savings may be diverted to the insurance companies. The strategy should be using multiple banks according to their presence in different regions. Success would come by using bancassurance where it will be most effective i. e. selling simple, cheap products to the masses at a low cost. This awareness is growing and is evident from the fact that nearly every insurance company has partnered with one or many banks to implement bancassurance. ? Online Sales Channel – A feasible alternative India is joining the fast growing breed of net users and using net for banking transactions is also growing rapidly. Now almost all the public and private sector banks provide online banking facility as an add-on advantage with savings accounts. In insurance industry, just few years back internet was used mostly used by Insurers for Policy servicing, promotion of new products and providing various tools like illustrative calculators etc†¦ However selling insurance products online is a relatively new concept in India. Let’s understand the need of online distribution in Insurance industry. In 2010, the insurance regulator tightened norms which forced insurers to cut down commission to agents. The regulator also made it mandatory for agents to achieve a minimum level of productivity and persistency of business. As a result of these tough measures the number of life insurance agents dropped from 28. 03 lakh in September 2010 to 24. 53 lakh in September 2011. Until a couple of years back most life insurers were swearing by face-to-face sales and maintained that online would be largely used for servicing. Change in the regulatory environment, which has compelled insurers to cut distribution costs, is leading companies to look at new low-cost channels for distribution. Recent developments in information technology (IT) and web-enabled systems have made it easier for insurers to run global operations in a way that would not have been possible even two years ago. Insurers are already reaping advantages from IT improvements in internal efficiencies in areas as diverse as underwriting, claims, policy administration, financial reporting and human resources. But efficiencies go beyond these internal ones. In the coming years, the internet will have at least two major effects on the insurance industry: cost efficiencies and broader distribution. These efficiencies will come as insurers experience a greater availability of data from the internet and the transfer of business processes from manual-related or computer-related systems to newer communication related systems. Such internet-style technology will reduce cost; reduce the level of effort and improve accessibility to large-scale data. Data accumulation becomes much easier under the internet approach and thus affects costs and value of insurance. The internet will bring insurers to a whole new base of customers and will allow them to sample new markets that would have been too expensive to enter. Making information available to potential customers and the ability to market products to the new audience will have a tremendous impact. Advantages of Online distribution:- †¢ It would reduce the internal administration and management costs by automating business processes, permitting real-time networking of company departments, and improving management information. †¢ It would reduce the commissions paid to intermediaries since it can be sold directly to clients. †¢ It would reduce the cost of training staff and other miscellaneous expenses required to run a branch. Response time for a conversion of policy would be much lesser than the manual submission. †¢ 24 hour connectivity for purchase and servicing of insurance policies. This would enable customer to pay premiums, check NAV, track due dates etc. as per his or her convenience. †¢ It will enable online request for quotes and data gathering which will improve efficiency. †¢ It will reduce the re-keying and typing errors which would save time and decrease risk. Compared to online stock broking or online banking, development of internet in insurance industry is somewhat cautious. There are some factors which makes the online selling of insurance policies difficult. Difficulties in selling Insurance online:- The complexity of many insurance products can make it difficult to automate the provision of information. However with improved technology and continuous innovations sometimes later it may be possible to automate complex information and offer that product online. †¢ In many cases, it is difficult to standardize claims settlement. E. g. Claims involves various investigations which needs to be carried out before making decision and would be subjective on case to case basis. This process often involves people and companies who are not in a contractual relation with insurers. †¢ Internet is particularly suitable for products where contact with company is very frequent. For Insurance products, contact with customer is often infrequent. Once policy is carried out, with some type of insurance the policy holder and insurers would get in touch only in case of occurrence of insured event. †¢ In India many customers still view internet as an insecure medium. This prevents large transactions being carried out through Internet and it deters the transmission of confidential information, both of which are essential aspects of insurance policies. While the technology capability is there, improvement in bandwidth and infrastructure are needed. There is also a need of simpler products where auto-under writing is feasible. Automobile insurance, one of the segments of insurance purchased â€Å"off the shelf† in India, would be the ideal segment to start with. On the life side, term assurance for standard lives with simplified underwriting is a possibility. Nowadays many general insurance products like Travel Insurance, Auto Insurance, Health Insurance and in case of life insurance Term Insurance are being sold over internet successfully. Because of the simple nature of these products insurers are have standardized the terms and conditions to be able to sell products online. Online selling has given them chance to go beyond the normal markets and sell these products to new entrants’ altogether. ? Microinsurance Microinsurance is the protection of low -income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. Low-income people can use microinsurance, where it is available, as one of several tools (specifically designed for this market in terms of premiums, terms, coverage, and delivery) to manage their risks. India currently has the most dynamic microinsurance sector in the world. Liberalization of the economy and the insurance sector has created new opportunities for insurance to reach the vast majority of the poor, including those working in the informal sector. Even so, market penetration is largely driven by supply, not demand. It is often assumed that a microinsurance policy is simply a low -premium insurance policy. This is not so. There are a number of other important factors. Low-income clients often: †¢ Live in remote rural areas, requiring a different distribution channel to urban insurance products; †¢ Are often illiterate and unfamiliar with the concept of insurance, requiring new approaches to both marketing and contracting. †¢ Tend to face more risks than wealthier people do because they cannot afford the same defenses. So, for example, on average they are more prone to illness because they do not eat as well, work under hazardous conditions and do not have regular medical check –ups. Have little experience of dealing with formal financial institutions, with the exception of the National Bank of Agriculture and Rural Development (NABARD) Linkage Banking programme. Traditiona How to cite Channels of Distribution for Insurance Products, Essay examples

Accounting And The Control Of Energy Costs Functioning †Free Samples

Questions: 1.What did you contribute in this project? 2.What did the other members of the group contribute? 3.What is your assessment of how the group functioned as a team? 4.What three key skills and attributes you have gained as a group member in undertaking this project? 5.What three specific team work strategies will you adopt in completing tasks as a group in the accounting profession? Answers: 1. My contribution in this project was preparing introduction part on accounting and control of energy costs which are used in the organizations for their better business functioning. There were several parts and levels which have been taken into consideration by me and my team members. I helped my team members in reading accounting standards and other applicable laws which helped in completion of accounting and control of energy costs project. My contribution in this project was related with the preparing introduction part on accounting and control of energy costs. It helped me to develop data analysis skills in effective manner. I used primary and secondary data sources for collection of data for this project. 2. There are several members in my group which played pivotal role in the completion of project on accounting and control energy cost, sustainability and external reporting and accounting and control of energy costs. The topic of accounting and control energy cost sustainability and external reporting and other topics of this report have been prepared by other team members. All members played their parts in effective manner. 3. This report is prepared on the basis of collective efforts of team members. All the group members of team had made collective efforts to complete this research. The Main intent of our team could be defined with the collaborative behavior with each others. 4. In the completion of this report I have gained several intents and skills such as I learned how to collect data and make analysis of same. I used several means such as internet sources, magazines and books to evaluate the critical part of this report project. Throughout this project, I learned to work in a team. I learned that a person could provide effective level of result if he works hard but people working in team could provide unimaginable result for the project. I also learned to work in pressure with broad level of thinking. I had to use my mind while collecting data. I learned to think in such a way like all other board of directors and managers thinks to run their company. However, throughout this project I learned these three skills attributes Working in team as team members. Critical thinking analysis and using smart way to accomplish set targets and objectives. Learned several accounting and cost functioning. 5. There are several tasks which have been adopted in the completion of this accounting and control of energy costs project. However, team members who are having good level of knowledge in accounting and costing will be indulged in completion of this report. There are several three strategies which could be adopted for completion of this project Meeting- All the team members could gather on daily basis to discuss the key points and action plan regarding to how to complete set projects Build up trust in other team members work- All the team members need to trust other members works and have to collaborate in their works. Cultivate open communication- All the members would be indulged in cultivating open communication between all the team members. It will help members to mitigate the possible problems.