|On the face of it, HR challenges in all industries seem to be similar. After all, it is all about bringing the right talent on board, motivating them to deliver the best, rewarding them appropriately, and staying on course, isn’t it?
Wrong. Every industry (and every firm in the industry) has certain unique challenges which provide a different texture to the human capital management of the unit. The insurance sector in India too has its own special traits making it different from the general financial services sector. Let’s look at a few.
The Insurance sector in India is dominated by the mammoth Life Insurance Corporation (LIC). Created as a result of the nationalization of the sector in 1956, LIC has smartly kept its lead in the sector despite the advent of the private players post-liberalization. It is one of the rare instances where a public sector company has not just withstood but also continued to strive in the face of private competition (thereby serving as a lesson in change management to public sector banks & the national telecom companies, BSNL & MTNL, and the national airlines companies). With over a lakh employees and spread throughout the country it has emerged as a trust-worthy brand, synonymous with the Life Insurance business in the country.
The private sector, on the other hand, entered with much fanfare and has made some headway (with a market share estimated to be about 29%). However, what has made headlines is the colour of their balance sheets, a very bold red. LIC dominates the sector with 71% share & only ICICI Prudential & SBI Life have some market share worthy of note. The rest (from a total of about 25 firms) are part of the long tail of the industry, quite frankly.
The stronger presence of private players is reportedly in the Non-Life Insurance sector, where they have notched up about 43% share from the clutches of the public sector players. The biggest company is still a public sector firm, New India Assurance with 14.5% market share, from amongst the 15 competing firms in the sector.
As regards the Human Resources challenges, there was a flood of new faces to the Insurance sector when the multi-national firms came in, joining hands with the Indian private promoters. Attractive compensation package for senior managers was one of the USPs to entice talent from other sectors, including from the general financial segments. This exodus to the new Promised Land, drove up salaries all over the Financial Services sector. Skill scarcity in certain key areas (for instance, actuarial work) also became acute. The initial wave brought public sector employees into the new firms and the later entrants moved to poach talent from each other and thereby kept the compensation packages high. Till reality struck.
Today, the sector is gasping for air. Some of the foreign players have moved out and others are reportedly scouting for buyers. The shake-out has brought fresh challenge to the human capital managers. From the days of cherry picking talent from other sectors, their task now is to keep the flock enthusiastic in times of uncertainty. As heads have rolled at the top of firms, the need to develop a robust internal talent pipeline has been realised. Sadly, at a time when this should become a serious focus for all firms, only a few are doing sufficient work, with many complaining of empty pockets for people development. Such firms will continue to face dire straits when growth returns in the economy.
The popular villain of the story – as told in the industry - is the government and the Regulator, the IRDA. As is usually the case, there is some truth to this lament but largely firms that point a finger to the external agency are deluding themselves. The enemy is hiding within. Globally, it has been seen that the Insurance industry is a very long-term business (sometimes seen as a heritage business), only feasible for promoters with deep pockets. Without a longitudinal vision, and consequent strategies for organization building, firms will suffer. The emphasis on developing the human capital of the business in all respects & in all functions (and in particular in the front-end sales & customer service function) is vital not only for weathering short-term storms but for building a culture of excellence that is genuinely required in the industry (as promised by the unending Television commercials of various firms).
Is there a market opportunity? Experts will tell you that it is huge – the under-served customers deserve a better deal and will respond if wooed (& serviced) well. Soon some of the private players will come to the capital market with Initial Public Offerings (IPOs) after a policy induced 10 years wait. And, all segments (Life, Non- Life, Health, etc.) should recover from the current afflictions and resume their growth journey.
As regards the puzzle of sustainable growth, only time will tell whether the smart ones have learned valuable lessons & have addressed the deeper human capital challenges that have hampered them.
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