CHAPTER II REVIEW OF LITERATURE 2.1...

CHAPTER II

REVIEW OF LITERATURE

2.1 INTRODUCTION

Research on General Insurance worldwide is much popular on certain forms of

general Insurance and the researchers neglected few forms. So for especially on

livestock insurance but an attempt is made in this research. These earlier studies have

no direct bearing on the subject of research, the methodology and findings of these

works have been found to be quite useful for the purpose of this study. This will show

how for this research work will differ from others and show the uniqueness of this

research work.

2.2 DOMESTIC STUDIES

Bashir Ahmad Joo (2013) made a study entitled, “Analysis of Financial

Stability of Indian Non Life Insurance Companies”, reports that World over after

liberalization insurance sector has undergone significant transformation. This is also

true with Indian insurance market, where insurance penetration and density is very low

compared to other countries. Therefore, many foreign insurance companies were lured

to make entry in Indian insurance in order to insulate positive spread from large

untapped insurance market, mainly by entering into joint venture with local partners.

Thus Indian insurance market after liberalization was assaulted by the pressure of

globalization, competition from multinational insurance companies and lavish

underwriting chase which are seen as threats as well as opportunities for insurance

companies. However, entry of new players has resulted into heavy underwriting losses

for Indian public and private insurers. But heavy underwriting losses had reverse

impact on their solvency margins. In present study, the Insurance Solvency

International Ltd. (ISI) predictors have been employed in this study to study the

solvency position of Indian non life insurers. Further, study highlights the extent of

relationship between various factors and solvency of non life insurers in India by using

multiple regression analysis. The result of the study has shown that claim ratio and firm

size have greater impact on solvency position of insurance companies9.

Bindiya Kunal Soni and Jigna Trivedi, (2013) “Crop Insurance: An

Empirical Study on Awareness and Perceptions”, universally agriculture is perceived

to be synonymous with risk and uncertainty. Crop insurance is one alternative to

manage risk in yield loss by the farmers. It helps in stabilization of farm production and

income of the farming community. As such it is a risk management alternative where

production risk is transferred to another party at a cost called premium. The ongoing

National Agricultural Insurance Scheme is a good step forward to insure risk of

millions of farmers whose livelihood depends on the pattern and distribution of

monsoon rain in India. However, the penetration of crop insurance is found to be very

less. This study is an attempt to understand the existing scenario of crop insurance in

India with a special reference to Gujarat. The study empirically checks upon the

awareness level of farmers in Anand district towards this product. The paper further

examines the perception of those who have availed or not availed crop insurance in

various villages of Anand district. The study concludes with various suggestions for

increasing the awareness level of the farmers for ensuring better penetration of crop

insurance in Anand district10

.

��9 Bashir Ahmad Joo, “Analysis of Financial Stability of Indian Non Life Insurance Companies”, Asian

Journal of Finance & Accounting, Vol. 5, No. 1, 2013, pp.23-27. 10 Bindiya Kunal Soni and Jigna Trivedi, “Crop Insurance: An Empirical Study on Awareness and

Perceptions”, Gian Jyoti E-Journal, Volume 3, Issue 2, Apr-Jun 2013, pp.81-93.

Goudappa, S.B. Reddy, B. S. and Chandrashekhar, S.M., (2012) “Farmers

Perception and Awareness about Crop Insurance in Karnataka”, the study on farmers

perception and awareness of crop insurance was conducted in North Eastern parts of

Karnataka because region receives very less rainfall compared to other part of

Karnataka and people of this region always suffering from drought, they continue to

suffer. The study revealed that average size of family among borrowers and non

borrowers was seven. Most of them (44%) are illiterate and 25% were education up to

primary level. Level of education, family size and experience in farming did not show

any significant difference between among the district selected for study. However, farm

size and crop income, which generally corresponds to farm size, were significantly

higher in Gulbarga district compared to Koppal and Raichur districts. Though NAIS

crop insurance scheme is operating since 2002-03 in the study area majority of

respondent (>80%) are not aware that who is implementing agency and who pay’s

compensation. Almost all respondents are in the wrong perception that banks will pay

compensation and are the implementing agency. More than three fourth of the

insurance beneficiaries mentioned that bank compulsion was the motivation for opting

insurance. Financial security, good experience from others was the region for opting

crop insurance. Further more than 80% of respondents are not aware of extent of

coverage premium paid, last date, procedure for insuring crops and method of loss

determination and compensation worked out by agriculture insurance company.

Respondent farmers were suggested for improving existing scheme and they want

quick settlement of claims which is usually taking more than one year. Around three

fourth of the beneficiaries suggested to consider adverse weather condition prevailed

during flowering and pod formation stage. National Agriculture Insurance Scheme

(NAIS) in operation needs to be continued with modification and simplification of

modalities of indemnity, loss assessment, settlement of compensation and disbursement

procedure11

.

Kavitha, Latha, and Jamuna., (2012) made a study titled, “Customers’

Attitude towards General Insurance - A Factor Analysis Approach”, explains that with

over a billion people, India is fast becoming a global economic power. With a relatively

youthful population, India will become an attractive insurance market over the next

decades. This study examines the customer attitude towards the General Insurance. A

study has been conducted at Erode district with the sample of 750 respondents to find

out the influencing factor of the policy holders in the study area. In this context, the

respondents’ opinion on the various related statements were collected with a 5 point

scaling. Factor analysis, an important multivariate technique has used to reduce the

large number of factors in a small group of factors. 25 factors which are considered to

be the different type of policy holders conscious. This study helps to find out the

various customers which are having different expectation from the General Insurance

Companies in the study area12

.

Jas Bahadur Gurung, (2011) “Insurance and Its Business in Nepal”, this

study aims mainly to analyze the performance of insurance business in Nepal. The data

used in this study is mainly quantitative and analysis has been carried out by using

simple percentage and correlation coefficient. The study reveals that there are

altogether 25 insurance companies viz. 8 life insurance and 16 non-life insurance and

one offer both life and non-life services. They have altogether 340 branch offices in

Nepal. The growth of insurance policies for both life and non-life insurance companies

has been increasing and significant during the study period. Similarly, the progressive

��11 Goudappa, S.B. Reddy, B. S. and Chandrashekhar, S.M., “Farmers Perception and Awareness about

Crop Insurance in Karnataka”, Indian Research Journal of Extension Education, Special Issue (Volume

II), 2012, pp.218-222. 12 Kavitha, Latha, and Jamuna., “Customers’ Attitude towards General Insurance - A Factor Analysis

Approach”, IOSR Journal of Business and Management, Volume.3, Issue.1, 2012, pp.30-36.

trend of premium collection reached to 48 percent for non-life and 37.06 percent for

life insurance in FY 2066/67 and contributed 1.70 percent in GDP of the economy.

Moreover, the investment of insurance companies has been positive but fluctuating

over the period under study. However, the correlation coefficient between total

premium collection and total investment is positive with r=0.97 and significant as its

PE is only 0.0163. These facts reveal that the performance of insurance business in

Nepal is satisfactory13

.

Altaf Ahmad Dar, (2011) made a study titled, “Awareness of Life Insurance-

A Study of Jammu and Kashmir State”, explains that to find out the awareness of life

insurance in the population of Jammu and Kashmir state, a community-based cross-

sectional study was carried out. A total number of 242 respondents from 242

households were interviewed by using a pretested questionnaire after obtaining

informed consent from the participants. The awareness of life insurance was found to

be 64.0 per cent. Around 45.0 per cent of the respondents came to know about life

insurance from the media which played an important role in the dissemination of

information. The mean premium amount agreeable to be paid by the respondents for

life insurance was found to be Rs 1804.00; even the low socio-economic group of

people was also willing to part with a reasonable amount of Rs. 697.00 annually for life

insurance. The middle and low socio-economic groups favored government life

insurance compared to private life insurance as they have more faith on Government

Company. The findings indicate that government should come out with a policy, where

��13 Jas Bahadur Gurung, “Insurance and Its Business in Nepal”, The Journal of Nepalese Business Studies,

Vol. VII, No. 1, 2011, pp.70-79.

the public can be made to contribute to a life insurance scheme to ensure unnecessary

events and also better utilization of life insurance facilities14

.

Suresh Kumara, Barahb, Ranganathana, Venkatrama, Gurunathana and

Thirumoorthya, (2011) “An Analysis of Farmers’ Perception and Awareness towards

Crop Insurance as a Tool for Risk Management in Tamil Nadu”, To insulate farmers

against risks in agriculture, government has launched several schemes such as National

Agricultural Insurance Scheme and weather index based crop insurance schemes. But

their coverage seems to be limited among the farmers primarily due to lack of full

information. This paper has reported the results of a survey of 600 farmers conducted to

assess their perception about various facets of crop insurance schemes. The Probit and

Tobit models have been employed to analyse the factors affecting awareness among the

farmers. Crop diversification index has also been used to examine the farmers’

adjustment mechanism against risks. The survey has revealed that most farmers (65%)

are aware of risk mitigation measures of the government. But, only half of the farmers

have been found aware about the crop insurance schemes/products. This implies that

there is need to disseminate information about insurance schemes across the target

groups. Further, it has been shown that factors such as gross cropped area, income from

other than agricultural sources, presence of risk in farming, number of workers in the

farm family, satisfaction with the premium rate and affordability of the insurance

premium amount significantly and positively influence the adoption of insurance and

premium paid by the farmers. The study has clearly brought out the urgency of

developing more innovative products, having minimum human interventions15

.

��14 Altaf Ahmad Dar, “Awareness of Life Insurance- A Study of Jammu and Kashmir State”, Shiv Shakti,

International Journal in Multidisciplinary and Academic Research (SSIJMAR), Vol. 1, No. 3,

September-October 2011, pp.14-19. 15 Suresh Kumara, Barahb, Ranganathana, Venkatrama, Gurunathana and Thirumoorthya, “An Analysis

of Farmers’ Perception and Awareness towards Crop Insurance as a Tool for Risk Management in Tamil

Nadu”, Agricultural Economics Research Review, Vol. 24, January-June 2011, pp 37-46

Sundar and Lalitha Ramakrishnan, (2010) “A Study on Farmers’

Awareness, Perception and Willing to Join and Pay for Crop Insurance”, This paper

discusses the findings of the study in the area of crop insurance. Firstly it measures the

awareness level and source of awareness, secondly examines the farmers’ perception,

finally identify the farmers willingness in paying for crop insurance. The study was

conducted in Kunichampet village, Puducherry District, India and 140 convenient

respondents were chosen and been carried out in June and July, 2012. From the

analysis farmers awareness level about crop insurance was low. Most of the farmers

were not willing to pay for crop insurance because of instable income, premium rate, no

or low compensation, problems with distribution channel and lack of financial

knowledge16

.

Legendary Kumar (2009) made a study titled, “Significant developments in

health insurance sector”, this research refers to development of health insurance sector.

The healthcare in India is in a state of enormous transition. Increased income for the

middles class, health consciousness among the majority of the classes price

liberalization, reduction in bureaucracy, and the introduction of private health care

financing have all made a world of difference. It’s aim agents of both life and general

insurance sectors to sell health covers, for life insures and non-life insurers to continue

to write health covers as now. Claims under the health insurance are settled by the

third party. Administrator but the experience with the agency has so for not been

satisfying to the policyholders. The record of private sector companies relating to

individual policyholders and small businessman and traders holding new positive and

not much different from that prevailing in public sector companies. The Indian

healthcare industry is expected to grow significantly and its contribution to the

��16 Sundar and Lalitha Ramakrishnan, “A Study on Farmers’ Awareness, Perception and Willing To Join

and Pay for Crop Insurance”, International Journal of Business and Management Invention, Vol.13,

Issue.1, 2010, pp. 21-41.

country’s GDP will increase from 5.2% at present to 8.5% over the next to years. This

is because the expenditure on health cares more than double by the year. The private

participation is also helping bridge the wide interregional disparities on the health front.

Already the sector has innovated with healthcare delivery. Such astele medicine that

delivers specialized advise to patients in remote location using information

communication technology. Indian insurance industry has completed five years of

liberalization, without many hiccups. The next big boom in the health care business is

expected to be fuelled see one are later when health insurance takes off in a big way.

Currently more than three fifth of the population spend for health from their pocket.

The rest accounts for various healthcare schemes offered by corporate and government

in addition to medi-claim policies17

.

Santhana Vadivu. N. (2008) in his study on, “Insurance industry and its role

in Indian economy”, the present distribution channels of insurance industry and the

awareness of insurance among the Dubai and rural population and the comparative

reach of different advertising the promotional media as being used by the insurance

selling companied the insurance product awareness and the insurance agents

performance in different areas the relative faith of the private and public insurance

players in the rural mass and the urban population. The findings of the study were

measured to compare insurance in India activities in insurance companies and their

products among the respondents18

.

Raju, S. and Chand, R. (2008) “Agricultural Insurance in India: Problems

and Prospects”. Crop insurance not only stabilizes the farm income but also helps the

farmers to initiate production activity after a bad agricultural year. It cushions the shock

��17 Legendary Kumar, “Significant Development in Health Insurance Sector”, The insurance Times,

Volume. XXIV, No.33 to 36, 2009, p.277. 18 Sauthana vidivu.N. Insurance Industry and its Role in Indian Economy”, the state level seminar

leveraging insurance for development 2008.

of crop losses by providing farmers with a minimum amount of protection. In a

working paper of National Centre for Agricultural Economics and Policy Research

(Indian Council of Agricultural Research), Raju and Chand (2008) discussed and

explored the problems and prospects of agriculture insurance in the country. They also

empirically examined the perceptions of the farmers in Andhra Pradesh regarding the

Agricultural insurance. Those who availed crop insurance mentioned financial security

as the most important factor for getting their crop insured and wanted quick settlement

of claims. The non loanee farmers mentioned lack of awareness as the major reason for

not availing such insurance19

.

Narsimha Rao. A.V (2007) in his study on, “Law of motor vehicle insurance

an analysis of insurance’s liability”, explains that the insurance companies face

complex problems is addition to the financial liabilities after marketing of insurance

policies against the risks of motor vehicles. The Motor Vehicles Act, 1988 is a

comprehensive piece of legislation defining various aspects of administration and ‘use

of’ motor vehicles. Chapter 10 of the Act provides for mandatory insurance of motor

vehicles. It specifically deals with the liabilities arising out of the ‘use of’ vehicles in

public places. The owners of the vehicles are liable to pay for the damages suffered by

the individual. The insurance companies protect the owners by covering their liability

towards the third party and also for the damage of the vehicle. The insurance

companies face various types of liabilities defined in the Act such as the third party

liability, liability for the owner, driver and occupants of the vehicle, no fault livability

and liability under the hit and run accidents. But, in the process of honoring claims,

��19 Raju, S. and Chand, R. (2008) Agricultural Insurance in India: Problems and Prospects. NCAP

Working Paper No. 8. Retrieved December 12, 2012 from

http://www.ncap.res.in/upload_files/others/oth_15.pdf

they suffer financial losses. They are also locked up in prolonged litigations many a

time. This article brings out some of the issues faced by the insurance companies20

.17

Ram Pratap Sinha (2007) in his study entitled, “Productivity and efficiency of

Indian general insurance industry” The deregulation of general insurance industry in

India is having far-reaching consequences in terms of market size, structure and

operational practices. The penetration level of general insurance in India is quite low

compared to the international standards and, therefore, has tremendous potential for

growth. The present paper compares the performance of 12 general insurance

companies in respect of technical and scale efficiency and total factor productivity in a

three-output three-input framework, for the years 2003-04 and 2004-05, by using Data

Envelopment Analysis and Malmquist Total Factor productivity Index. The public

sector insurers dominate the private sector insurers in terms of mean technical

efficiency in constant returns to scale, while the private sector insurers have a slightly

higher mean technical efficiency than the public sector insurers in variable return to

scale. A further comparison of total factor productivity and gross income is also made

in respect of both public and private sector insurance companies21

.

Chinnadorai, Kalpana and Sadhana (2007) has studied about the

“Motivational factors and level of satisfaction of agents development officers of LIC of

India”, with the aim to study the performance of agents & development officers in

team building, and the training methods used by the development officers to train their

agents and the level of satisfaction of agents on various aspects and identify the factors

that motivates the agents. This study was conducted in the city of Coimbatore. Primary

data has been used which was collected from a sample of 50 agents and 50

��20 Narsimha Rao.A.V, “Law of Motor Vehicle Insurance-An Analysis of Insurance’s Liability”, The

ICFAI Journal of Insurance Law, Volume No.2. Issue.1, 2007, pp.12-17. 21 Ram pratap sinha “Productivity and Efficiency of Indian General Insurance Industry”, The ICFAI

Journal of Risk & Insurance, Volume. IV, Issue. No.2, 2007, pp.21-24.

development officers through interview schedule. The study was conducted to know the

performance-oriented team building aspects of agents in LIC of India in the context of

the competitive environment created by the private players of the insurance industry.

The development officers motivate agents and guide them to perform better as a team.

From this study, it can be inferred that the team building can be enhanced by increasing

commission of the agents, co-operation and co-ordination between the development

officers and the agents, adopting innovative training techniques and motivating through

personal approach. The study was concluded that the agents and the development

officers play a vital role in performance - oriented team building activity in the

insurance business and thus give a personal touch in the insurance business. Hence the

management of the life insurance corporation of India should take good care of their

agents and development officers22

.

Nancy B. Kurland, (2007) has studied about “Sales Agents and Clients: Ethics,

Incentives, and a Modified Theory of Planned Behavior”, the study was highlighted

that the commission is popularly believed to engender unethical intentions, although

little research has directly examined this relationship. This paper directly examines the

influence commission, along with experience, income, professional accreditation, and a

modified theory of planned behavior, has on agents' ethical intentions toward

clients.

The study sample was systematically drawn from a national group of financial service

industry professionals. Only a modified theory of planned behavior significantly

predicted agents' ethical intentions. Implications and limitations are discussed. Thus, so

far there may not be systematic attempt made to study the problem relating to live stock

insurance. Hence, the study has been undertaken with this specific aim in mind to cater

��22Chinnadorai, K.M., Kalpana. B. and Sadhana, B., “Motivational Factors and Level of Satisfaction of

Agents Development Officers of LIC of India ”, ICFAI journal of Service Marketing, Vol. V, No. 1,

2007, pp. 44-53.

the needs of local & rural based community to insists and makes awareness among

rural population on live stock insurance23

.

Rajesham. C.H and Rajender. K (2005) made a study on, “Changing

scenario of India Insurance Sector”, reports that this research is highlighted historical

based of insurance, insurance penetration and density. This research concluded

insurance companies of India are required to come up with multi-benefit policies

including tax benefits with quality based timely customer services and need to focus on

health insurance, which is one of the untapped areas of insurance including services

through innovative products, smart marketing and aggressive distribution with internet

facility, with much individual attention, transparency and flexibility to increase the

quality and volume of insurance business24

.

Reddy, A. (2004) “Agricultural Insurance in India: A Perspective”.

Agricultural production is an outcome of biological activity which is highly sensitive to

changes in weather. The erratic and uneven distribution of monsoon rains perpetuated

yield/price volatility and hence increased farmer’s exposure to risk and uncertainty. In

this scenario of high risk and uncertainty of rain fed agriculture, allocating risk is an

important aspect of decision making to farmers25

.

Singh, S. (2004) “Crop Insurance in India-A Brief Review”. The risk burden of

the farmers can be reduced through crop insurance, which is primarily a way of

protecting farmers against the element of chance in crop production. Crop insurance

��23 Nancy B. Kurland, “Sales Agents and Clients: Ethics, Incentives, and a Modified Theory of Planned

Behavior’, Department of Management and Organization, University of Southern California, School of

Business Administration, Los Angeles, California 24 Rajesham.C.H. & Rajender.K., “Changing scenario of India Insurance Sector”, Indian Journal of

Marketing, Vol.5, Issue.3, 2005, pp.12-14.

25 Reddy, A. (2004) Agricultural Insurance in India: A Perspective. Retrieved December 12, 2012 from

http://www.actuariesindia.org/downloads/gcadata/6th%0GCA/pdf/agricul-tural%20

Insurance%20In%20India%20_A%20Perspective.pdf

spreads the crop losses over space and time, provides social security to the farmers,

helps in maintaining their dignity, offers self-help, encourages large investments in

agriculture for improving crop yield and increasing agricultural production26

.

Malliga (2002) studied the “Marketing performance of LIC agents in Tirunelveli

Division”, the study aims at to analyze the marketing performance of the LIC in

Tirunelveli Division, to study the marketing practices of the agents and the marketing

performance to examine the impact of socio economic factors on the marketing

performance of the agents. To evaluate the role of attitude of the agents on the

marketing performance and to assess the relationship between the personality traits of

the agents and marketing performance. The study was undertaken in Tirunelveli

Division. Both the primary and secondary data were used. Double staged sampling

technique was used. Questionnaire is used to collect the data from the agents. The

Major suggestions in the form of refresher course can be planned to strengthen the

relationship between the organization and the agents the organization and the

professional status. Agents must be encouraged to become members of the professional

club like Rotary, Lion, Arima Sangh and welfare groups which will facilitate the direct

penetration among the members of the clubs with higher income strata and directly to

the people at large by participating in social welfare activities. The LIC has still to be

innovative in product development to offer cost effective policies to cover even the

irregular and low income group of people. Besides, the commission rates on different

policies should be modified suitably so as to make the agents concentrate uniformly on

all the kinds of policies. This study was concluded that in this regulated life insurance

��26 Singh, S. (2004). Crop Insurance in India-A Brief Review. Journal of the Indian Society of

Agricultural Statistics, 57 (special Issue), pp 217-225. Retrieved December 10, 2012 from

http://www.isas.org.in/jsp/volume/vol57/Shivtar%20Singh.pdf

business, the personality of the LIC agents may have an impact on the marketing

performance27

.

Punithvathy Pandian (2001) in her study entitled, “Impact of Liberalization on

the productivity of LIC agents”, assessed the productivity trend of the LIC agents

before and after the economic liberalization. Based on the secondary data, productivity

of agents in terms of the number of policies sold (coverage productivity) and the sum

assured (sum amount productivity) for a period of 1981-2000 has been analyzed. The

linear and the compound growth rates along with the t-test between the compound

growth rates of the productivity of the agents in both the performance categories were

higher during the period after the economic liberalization when compared to earlier

period. The difference between compound growth rates at the number of policies sold

between the pre and post Liberalization period was not significantly. But that of the

sum assured was significant statistically at 5% level 28

.

Selvarani (May 2000), studied the “Attitude of Policy holders towards Career

Agents” with the aim to study the various life insurance schemes, to measure the

attitude of policy holders towards rural career agents, to make suggestions based on the

study. She used both the primary & secondary data. The primary data were collected by

using interview schedule. There are 150 samples were chosen to do the study. It is

suggested that the agents may pay attention to the loan requirements of policy holders

and assist them in getting loan with least difficulty29

.

��27Malliga, “The Study of Marketing Performance of LIC Agents in Tirunelveli Division”, Department of

Commerce, Madurai Kamarajar University, Madurai. 28 Punithvathy Pandian, “Impact of Liberalization on the Productivity of LIC Agents”, Journal of

Bombay Productivity Council, Vol. XXVIII, No.4, April – June 2001, pp. 12-15. 29T.Selva Rani (2000), “Attitude of Policy holders towards Career Agents”, Sri Parasakthi College for

women, Courtallam.

Sonnentag S.; Kleine B. M.( 2000) has studied about ‘Deliberate practice at

work: A study with insurance agents’ with the aim to study about the concept of

deliberate practice (Ericsson, Krampe, & Tesch-Romer, 1993) to work settings.

Deliberate practice comprises regularly performed activities which aim at competence

improvement. It is hypothesized that the amount of deliberate practice is positively

related to work performance. Results of a study with 100 insurance agents provided

evidence for the occurrence of deliberate practice activities in work contexts. The

amount of current time spent on deliberate practice was significantly related to

supervisory ratings of insurance agents’ work performance. Accumulated amount of

time spent on deliberate practice in the past was not related to work performance30

.

Malliga (2000) studied on “Marketing of LIC policies - A study on agents of

Tirunelveli Division” attempted to analyze the impact of marketing strategies, socio-

economic factors, personality traits and attitude of LIC agents in Tirunelveli Division

was chosen at random. The study revealed that there was a significant association

between the socio-economic factors and the performance of both the number of policies

sold and the sum assured marketing strategies followed by the agents had significantly

influenced the performance. Among personality traits empathy, introversion, need

achievement and dominance - were - found to have no association with performance.

The correlation co-efficient between the attitude of the agents and the performance was

not significant at 5% percent level. It was found that the performance of the agents was

dependent on the nature of the agency (part time & full time) and not on the type (direct

and attached) of agency31

.

��30Sonnentag S.; Kleine B. M., “Deliberate Practice at Work: A Study with Insurance Agents”, Journal of

Occupational and Organizational Psychology, Volume.73, Number.1, March 2000, pp. 87-102. 31 Malliga, “Marketing of LIC Policies - A Study on Agents of Tirunelveli Division”, Indian Journal of

Marketing, August –October 2000, pp. 6-9.

Parks, Charles Alan (1999) has studied about the “Personality and the

prediction of turnover of insurance sales agent”, with the aim to examine the

relationships between certain personality dimensions, performance and turnover of a

sample of insurance sales agents. The personality variables used in this research were

Emotional Intensity, Assertiveness and Recognition Motivation. Performance was

defined in terms of average weekly sales commissions. The sample of 470 insurance

agents was used to determine if the personality and performance variables

discriminated between individuals who remained actively employed beyond one year

and those who voluntarily terminated within a one year period. The sample was split

into a classification sample of 237 agents and a holdout sample of 233 agents.

Discriminant functions analysis was used to determine if the combination of predictor

variable could effectively classify agents into the active or terminated groups. The

performance, Emotional Intensity and Assertiveness variables contributed to effective

classification of agents as actively employed or voluntarily terminated. Agents who

demonstrated higher levels of performance in terms of commissions and higher levels

of Assertiveness and Emotional Intensity were more likely to remain actively

employed. Among the Agents who voluntarily terminated employment, those who

were in the top half in terms of performance demonstrated a higher need for recognition

than agents in the lower half32

.

Rao (1997) in a case study, “Drop outs in life insurance selling” analyzed the

drop outs in relation to age; education, experience and area of operation. The study was

limited to a branch for a period of one year. He found that a large number of agents got

terminated every year. Majority of them were in first year of their agency. Number of

termination got reduced over the years. Eighty two percent of the agents, terminated

��32Parks, Charles Alan D.B.A., (1999) “Personality and the Prediction of Turnover of Insurance Sales

Agent”, University of Sarasota, 115.

were below 35 years. Though more and more qualified youth were had studied up to

PUC or less were the main stay33

.

Balammal, M. (1996) in her research entitled, “Job satisfaction of LIC

employees - Tenkasi Branch”, has studied the major factors which effect satisfaction of

LIC employees, and level of job satisfaction among employees of LIC in Tenkasi

Branch, and study how the factors affect the individuals satisfaction regarding their job.

The primary data were used for the study and collected through questionnaire and

convenience sampling method has been adopted to frame the sample. It was concluded

that the training methodology must be appropriate to the subject taught and it should be

participative nature and also it must increase the number of training weeks. For higher

satisfaction and productivity, it is extremely important to give the employees

participation in management34

.

Arora and Singh (1995) has studied about “Growth and Performance of Life

Insurance Corporation of India - A study on Jalandhar Division”, with the aim to

appraise the Performance of LIC Agents in his paper. It covered a period of 10 years

from 1980-81 to 1989-90. The result showed that the LIC and made manifold progress

in terms of its business activities at national as well as divisional levels. The individual

business - in - force and the new business had shown positive growth rates during the

study period. However the higher growth rate was observed in the urban than the rural

area35

.

��33Sathyanarayana Rao. R., “Life Insurance Selling- A Case Study of Dropouts”, The Insurance Times,

November 1997, pp. 11-13. 34 Balammal. M. (1996) “Job Satisfaction of LIC Employees - Tenkasi Branch”, Sri Parasakthi College

for Women, Courtallam. 35 Radha shorn Arora and Raghbir singh, “Growth and Performance of Life Insurance Corporation of

India - A Study on Jalandhar Division”, The Insurance Times, Vol.15, November 1995, pp. 16-18 and

December 1995, pp. 10-12.

Nagapandy (1994) in his research entitled, “Performance evaluation of the life

insurance corporation - Madurai division”, has studied the potential tapped from the

insurable population (coverage performance) and the performance-oriented perception

of the agents. Both primary & secondary data were used F-test and chi-square test

along with percentage analysis were applied. It was found that high potential is

management group and low potential in agricultural group were tapped in Madurai

division. One way analysis of variance showed that the potential tapped in the insurable

population differs significantly among the different segments. Further the agents were

found to give priority to the policies - Endowment, money back and new Jana Raksha

at the time of canvassing36

.

Thanulingam and Muthupandi (1989) in the research titled, “Working career

agency scheme in LIC”, highlighted the working of the career agency scheme in Life

Insurance Corporation of India in general and in Madurai city in particular. The data

were collected from the publications and bulletins published by the LIC of India. It was

conducted that there was a direct relationship between the performance of the LIC &

the number of career agents. They suggested that instead of spending much money on

advertisements it was advisable to recruit more number of career agents and give them

good training and motivation37

.

Josephine. A (1989) made a study on, “Role of New India Assurance Company

in providing rural insurance schemes in Tirunelveli Kattabomman District”, this

research is highlighted the study of overall growth of New India Assurance Company,

determine the level of utilization of rural insurance schemes by the weaker section

based on quota sampling and convenience sampling technique in 250 policyholders. It

��36 Nagapandy “Performance Evaluation of the Life Insurance Corporation - Madurai Division”,

Unpublished thesis, Department of Commerce, N.M.S.S. Vellaichami Nadar College, Madurai, 1994. 37 Thanulingam and Muthupandi, “Working Career Agency Scheme in LIC”, The insurance Times,

Vol.19, February 1989, p.3.

was concluded would be appropriate for the consideration of the company for the

benefit of its future business operations38

.

Mishra (1988) in his study on, “Appraisal of Marketing Strategies of the Life

Insurance Corporation of India”, the researcher found that the personal attitudes and

expertise of the chairman had influenced the business. The existing strength of the

corporation (marketing field force) was not properly utilized, trained and motivated. He

further found that in Indian situation, sex composition was a significant factor to

determine the market potential. Age, residence and occupational pattern of the

population had influenced the potential tapped in the life insurance market. According

to him, the LIC had not given much weightage to customer satisfaction39

.

National Insurance Academy (1988) studied, “The continuation of agencies

(Survival) and business performance of the agents”, reports that data were collected

from three Divisions of LIC of India namely Jamshedpur, Jaipur, Nasik for the period

1965-1986. It was concluded that monetary performance of the agents was low at the

younger agent; it reached the peak level in the age group of 30 to 40 years and

thereafter, it declined. During the 1st year of agency, the coverage performance

(number of lives covered) was quite high reflecting the number of contacts already

available with the persons taking up the agency ; it decreased slightly during the next

year or two & again it would increase for a duration of 15 to 20 years. The personality

of the recruiting development officer affected the performance of agents. Full time and

part time, direct and attached and education were other three important variables that

��38 Josephine . A (1989) “Role of New India Assurance company in providing rural insurance schemes in

Tiurnelveli Kattabomman District”, Madurai Kamaraj University 39M.N.Mishra, (1998), Appraisal of Marketing Strategies of Life Insurance Corporation of India”, The

insurance Times, Vol. 8, October 1988, pp. 3-8.

affected the average monetary performance and growth rates of performance. General

was found to influence the performance significantly40

.

Meena. K (1986) in her study on, “Utilization of Oriental Insurance Company

Ltd. by policy holders in Madurai City- An Empirical Study”, reports that a sample of

200 policy holders was taken on the basis of stratified sampling has portrayed the

attitude of policy holders towards the services provided by oriental Insurance Company

Ltd in Madurai41

.

Chandrasekhar. S (1986) made a study entitled, “Customer service in United

India Insurance Company ltd”, tells that the growth of united India Insurance Company

Ltd. to evaluate the beneficial attitude towards the services of the united India

Insurance Company ltd. He has examined the degree of customer satisfaction among

the policyholders of united Insurance Company limited42

.

Padmanaban. V (1985) in his study titled, “Crop Insurance in Chengalpet

District”, with the aim to know to crop insurance and these policies to the people

determine the level of utilization of crop insurance in rural area. The researcher has

highlighted the significance of crop insurance stating that crop insurance is not only

business proposition but also a source of security indispensable for the well being of

India agriculturists43

.

Dnyanajothi, National insurance academy (1985), in this survey on the

“opinion of the life insurance agents” examined the performance using stratified

��40 National Insurance Academy, “The Continuation of Agencies (Survival) and Business Performance of

the Agents- A Study, Vol.5, No-2, December 1988. 41 Meena.K (1986) “Utilization of Oriental Insurance Company Ltd. by policy holders in Madurai city-

An Empirical Study”, Madurai Kamaraj University.

42Chandrasekar.S (1986) “Customer service in United India insurance Company Ltd”, Madurai Kamaraj

University.

43 Padmanaban .V (1985) “Crop Insurance in Chengalpet District”. Madurai Kamaraj University

sampling methods, the strata being club members and non-club members. Altogether a

sample of 3,905 agents who had been on the LIC’s roll for more than three years had

been selected. Agent’s profile revealed that majority of the agents was male, middle

aged (between 30 & 49 years) married and had education up to SSLC and experience of

more than 10 years. They found that agent secured and average sum assured of Rs. 15

lakhs through 50 policies in a year. Agent spent less than five hours a day on the

agency work. The conclusion drawn were that the agent had confirmed that the plans

and terms clients were selected by them rather than by the clients themselves. Their

choices were mostly in favor of endowment or money back covers. On the whole the

agent’s morale was high and that they were satisfied with their profession. They were

highly confident about their personal image in the society as insurance agents. Agents

perception about their perception about their organization44

.

2.3 INTERNATIONAL STUDIES

Bashir Ahmad Joo, (2013) in his study on, “Analysis of Financial Stability of

Indian Non Life Insurance Companies”, World over after liberalization insurance

sector has undergone significant transformation. This is also true with Indian insurance

market, where insurance penetration and density is very low compared to other

countries. Therefore, many foreign insurance companies were lured to make entry in

Indian insurance in order to insulate positive spread from large untapped insurance

market, mainly by entering into joint venture with local partners. Thus Indian insurance

market after liberalization was assaulted by the pressure of globalization, competition

from multinational insurance companies and lavish underwriting chase which are seen

as threats as well as opportunities for insurance companies. However, entry of new

players has resulted into heavy underwriting losses for Indian public and private

��44Dnyanajothi, “Opinion of Life Insurance Agents”, National insurance academy ,Vol-2, June 1985, pp.

41-45

insurers. But heavy underwriting losses had reverse impact on their solvency margins.

In present paper, the Insurance Solvency International Ltd. (ISI) predictors have been

employed in this paper to study the solvency position of Indian non life insurers.

Further, study highlights the extent of relationship between various factors and

solvency of non life insurers in India by using multiple regression analysis. The result

of the study has shown that claim ratio and firm size have greater impact on solvency

position of insurance companies45

.

Reaz Fallah, Mohammad Armin and Mohammad Tajabadi (2012) in their

study entitled, “A Study of Attitudes and Determinant Factors in Insurance

Development for Strategic Agricultural Products”, The objectives of this study were to

evaluate the factors involved in the development of strategic agricultural crop insurance

among farmers for increase efficiency and improve the agricultural insurance services.

To achieve these objectives, data were collected from 100 out of 139 selected farmers

from Neyshabur which had insurance contract for at least one of their crops during

2010. The present survey was applied and conducted using a descriptive correlation

method. Data were collected from growers using a face-to-face questionnaire. To

determine the validity of the questionnaire suggestions and recommendations from

teachers, specialists and graduate students of agricultural extension were used. To

evaluate reliability of the questionnaire, 30 copies of the questionnaires were completed

and a preliminary survey using SPSS and Cronbach's alpha was done. Cronbach's alpha

was 79 and internal consistency described acceptable. Results of Pearson Correlation

Coefficient revealed that there is positive and significant correlation among level of

education, cultivation of non-irrigated wheat, the amount of frost and cold damage and

��45 Bashir Ahmad Joo, in his study on, “Analysis of Financial Stability of Indian Non Life Insurance

Companies”, Asian Journal of Finance & Accounting, Vol. 5, No. 1, 2013, pp.306-319.

cultivated area versus the dependent variable of strategic crops insurance development

at 95% level of probability, while statistically negative significant correlation have been

found to exist among number of crops and awareness of premiums versus the

dependent variable of strategic crops insurance development. Results of Spearman rank

correlation indicated that there was positive and significant correlation among the rate

of referrals to other farmers (technical issues), confidence the experts of Agricultural

Jihad, satisfaction with the visit rate of compensation insurance experts and contact

with experts of the Agricultural Jihad versus the dependent variable of strategic crops

insurance development at 95% level of probability, while a negative and significant

correlation was observed among advertising role and farmers tend to the insurance46

.

Charles Ackah and Adobea Owusu, (2012) made a study on, “Assessing the

Knowledge of and Attitude towards Insurance in Ghana”, the majority of people living

in Africa have to bear the financial burden of catastrophes themselves, without access

to insurance or government assistance. In Ghana, access to insurance is low: 4.1 percent

(excluding public health insurance) in 2010. A previous study suggested that lack of

knowledge about insurance products, and to an extent misunderstanding of the concept

of insurance accounts for the low uptake of insurance among the low-income

population in Ghana. This study therefore seeks to determine the level of insurance

awareness in Ghana, where awareness is defined with respect to people‘s knowledge of

and attitude towards insurance. An Insurance Awareness Index was computed to give a

quantifiable measure of a person‘s knowledge of and attitude towards insurance.

Knowledge of Insurance was measured using multiple choice and true/false questions,

whilst attitude was tested using a Likert scale. Index scores were obtained for

knowledge and attitude, based on the sum of correct / favorable responses respectively.

��46 Reaz Fallah, Mohammad Armin and Mohammad Tajabadi “A Study of Attitudes and Determinant

Factors in Insurance Development for Strategic Agricultural Products”, Technical Journal of Engineering

and Applied Sciences, Vol.2, Issue.2, 2012, pp.44-50.

A main finding from the qualitative investigation is that most Ghanaians, especially

those in the informal sector, do not take-up insurance as a way of preparing towards

future unforeseen misfortunes. This could be because of the perception among some

individuals that planning ahead for a possible misfortune is like inviting evil. Other

reasons given for low insurance uptake were the general lack of insurance knowledge

amongst the populace, low income levels and the reliance on God‘s protection to

prevent calamities. With regards to attitude towards insurance, the study confirmed the

general impression that insurance companies will eventually renege on their promises.

It is recommended that education on insurance is increased, government‘s supervision

of insurance operations is strengthened, and that insurance companies improve their

client orientation so as to redeem their public negative image47

.

Ragnar Norberg and Bjorn Sundt (2012) made a study titled, “System for

Solvency Control in Non-Life Insurance”, explains that an outline is given of a

proposed system for solvency control in non-life insurance that has recently been

discussed within a Working Party appointed by the Norwegian supervisory authorities.

According to this system the factual technical reserves must at any time be sufficient to

meet, with high probability, all future liabilities stipulated by insurance contracts that

have either expired or are currently in force. The system is applied to a provisional,

simple model that has been fitted to claims data assembled from Norwegian non-life

companies. The numerical examples illustrate, inter alia, how the required reserve

depends on the volume of the business, the portfolio mix, and the reinsurance cover48

.

��47 Charles Ackah and Adobea Owusu, “Assessing the Knowledge of and Attitude towards Insurance in

Ghana”, Institute of Statistical, Social and Economic Research (ISSER), Vol.6, Issue.5, 2012, pp.529-68. 48 Ragnar Norberg and Bjorn Sundt, “System for Solvency Control in Non-Life Insurance”, Astin

Bulletin, Vol.15, No 2, 2012, pp.25-32.

Sojung Carol Park and Jean Lemaire, (2012) in their study entitled, “The

Impact of Culture on the Demand for Non-Life Insurance”, explains that regression

techniques are applied to an unbalanced panel data that includes 82 countries observed

over a ten-year period, to explore the factors that affect non-life insurance demand

across nations. While previous literature has discovered several significant economic,

demographic, and institutional variables, little attention has been devoted to cultural

dimensions. We find that non-life insurance consumption is adversely impacted in

countries where a large fraction of the population has Islamic beliefs. Also highly

significant are three of the cultural scores developed by Hofstede in a celebrated study:

Power Distance, Individualism, and Uncertainty Avoidance. A conjecture that culture

impacts non-life insurance more in affluent countries receives ample statistical support,

with an adjusted R-square coefficient increasing by 20%. These results have

implications for multinational insurers seeking to enter a new market. Ceteris Paribus,

these insurers should target countries, and population segments within these countries,

that exhibit low Power Distance, and high Individualism and Uncertainty Avoidance

scores49

.

Sommarat Chantarat, Andrew G. Mude, Christopher B. Barrett and

Michael R. Carter, (2012) in their study entitled, “Designing Index Based Livestock

Insurance For Managing Asset Risk In Northern Kenya”, This paper describes a novel

index-based livestock insurance product now being piloted for pastoralists in the arid

and semi-arid lands of northern Kenya, where insurance markets are effectively absent

and uninsured risk exposure is a main cause of poverty. We describe in detail the

methodology used to design the contract and its underlying index of predicted area-

average livestock mortality. The underlying statistical model uses longitudinal

��49Sojung Carol Park and Jean Lemaire, “The Impact of Culture on the Demand for Non-Life Insurance”,

Insurance and Risk Management Working Paper Insurance and Risk Management, Vol.15, Issue.60,

2012, pp.1-21.

observations of household-level herd mortality, fit to high quality, objectively

verifiable, remotely sensed vegetation data not manipulable by either party to the

contract and available at low cost and in near-real time. The resulting index performs

very well out of sample, both when tested against other complementing household-

level herd mortality data from the same region and period and when compared

qualitatively with community level drought experiences over the past 27 years.

Household-level performance analysis based on simulated data also reviews that IBLI

is most effective in protecting household from catastrophic covariate risks, currently

uninsurable by existing means. We describe contract pricing and the potential risk

exposure of the underwriter and establish that IBLI should be readily reinsurable on

international markets. Finally, implementation opportunities and challenges are

discussed50

.

Nicola Ranger and Andrew Williamson (2011) in their study on,

“Forecasting Non-Life Insurance Demand in the BRICS economies: a preliminary

evaluation of the impacts of income and climate change”, Insurance demand is driven

by many factors, but for the emerging economies, one of the most significant historical

drivers of growth has been income per capita. Based on a simple forecasting approach,

we project that insurance penetration in the BRICS economies could increase at a rate

of between 1.6 and 4.2% per year over the coming decade, depending on the country,

due to rising per capita income. When other factors are included, this broadens to

between 0.1 and 4.3% per year. This equates to a rate of increase in gross premium

volumes of between 5.4 and 12.3% per year. The largest growth in insurance

penetration and premium volumes is expected in China, closely followed by India and

��50Sommarat Chantarat, Andrew G. Mude, Christopher B. Barrett and Michael R. Carter, “Designing

Index Based Livestock Insurance For Managing Asset Risk In Northern Kenya”, American Journal of

Agricultural Economics, Vol.79, 2012, pp.1024-34.

Russia. A concern for (re)insurers is how climate change may impact these growth

paths. Based on current projections, we expect the impact on growth mediated through

income to be small; less than a 0.4% adjustment in the annual growth rate in premium

volumes to 203051

.

Aranee Treerattanapun (2011) made a study titled, “The Impact of Culture on

Non2life Insurance Consumption”, this study investigates the impact of culture on

non�life insurance consumption. Various economic, institutional, and cultural variables

regarding 82 countries across a 10�year period are considered when building up the best

and most parsimonious regression model. Employing blocking and bootstrapping

techniques, we find that nations with a low degree of Power Distance, a high level of

Individualism, and a high degree of Uncertainty Avoidance tend to have a high level of

non�life insurance consumption. The empirical results suggest that consumers may

respond to insurance solicitations according to their cultural belief, not only economic

rationality52

.

Fazelbeigi & Yavari (2010) in their study entitled, “An Analysis of Challenges

Faced by Crop Insurance Fund in Iran”, found the most significant drawbacks in

insurance fund to be lack of compliance with economic frameworks and business

principles, issues in statistics system, lack of competition in service sector, and lack of

constant evaluation and monitoring. In addition, they found several threats faced by

insurance fund: improper structure of production entities, disintegrated lands, lack of

��51 Nicola Ranger and Andrew Williamson “Forecasting Non-Life Insurance Demand in the BRICS

economies: a preliminary evaluation of the impacts of income and climate change”, Grantham Research

Institute on Climate Change and the Environment and the Centre for Climate Change Economics and

Policy, London School of Economics and Political Science, September 2011.

52 Aranee Treerattanapun “The Impact of Culture on Non2life Insurance Consumption”, Wharton

Research Scholars Project Submitted, May 13, 2011

production standards, and poor living and operation systems. In examining effective

constructs in attitudes of the insured toward private agents53

.

Nwosu, Oguoma; Lemchi; Ben–Chendo; Henri-Ukoha; Onyeagocha;

Ibeawuchi, (2010) in their study on, “Output Performance Of Food-Crop Farmers

Under The Nigerian Agricultural Insurance Scheme In Imo State, South East, Nigeria”,

The Nigerian Agricultural Insurance Scheme was established in 1984 by the Federal

Government with the promotion of agricultural production as one of its specific

objectives. This study was conducted to evaluate the output performance of the food-

crop farmers who have embraced the scheme. The study also analysed the influence of

socio-economic characteristics on the farmers output. Primary data and secondary

information sources were used in the study. The primary data were obtained from 77

food-crop farmers selected through simple random sampling from a list of 145 food

crop farmers under the scheme in Imo State. Data analyses were done using both

descriptive and inferential statistics. The descriptive statistics such as mean, frequency

were used to analyse the socio-economic characteristics of the farmers while inferential

statistics (Z - test and multiple regression model) were used to determine the impact

and influence of socio-economic characteristics like age, farming experience,

educational background etc on the farmers’ output respectively. The Z – test analysis of

the impact of the scheme on the farmers’ output showed that there was a positive and

significant change in the farmers’ output after insurance. The results of the analyses of

the socio-economic characteristics of the respondent farmers showed that majority

(66.23%) of the sampled farmers are males. It also showed that majority (46.75%) of

the sampled farmers were within the age bracket of 41-50 years. Also, over 70% of the

insured farmers had secondary school education and above. The Z – test analysis

��53 Fazelbeigi M M, Yavari G R, “An Analysis of Challenges Faced by Crop Insurance Fund in Iran”,

Rural Areas & Development, Vol.13, Issue.1, 2010, pp.21-41.

showed that there was an increase in farm output of the farmers after embracing the

scheme. The average farm output was 16.01 metric tones before insurance but rose to

21.66 metric tones after insurance. The multiple regression analysis on the influence of

socio-economic characteristics on the farm output after insurance showed that

educational level, farming experience, farm size and number of technologies used in the

farm are significant variables. While age, sex and household size are insignificant

variables. The study therefore recommends that more effort should be put in to creating

awareness of the laudable objectives of the insurance scheme to food-crop farmers

(especially in the enhancing the nation’s quest for food security54

.

Barroso and Maria (2010) made a study titled, “Critical analysis of the

European Union solvency model for "non-life" insurance companies: the Portuguese

case”, this study presents a critical analysis of the current solvency system of the

European Union for non-life insurance undertakings and, in particular, the Portuguese

case. This model, based on some ratios, presents some weaknesses such as: to modify

the obtained result, the insurance companies can lower the solvency margin

requirements by changing the numerator or the denominator of the “solvency margin

ratio”. This paper deals with the manipulation of the denominator, namely through

processes of under-rating or under-reserving. This paper discusses some techniques

that, theoretically, could be used and put in risk the most important objective of the

financial guaranties: the protection of policyholders55

.

Mohammad Chizari, Ahmad Yaghoubi and James R. Lindner, (2010) in

their study entitled, “Perceptions of Rural Livestock Insurance among Livestock

��54 Nwosu, Oguoma; Lemchi; Ben–Chendo; Henri-Ukoha; Onyeagocha; Ibeawuchi, “Output Performance

of Food-Crop Farmers Under The Nigerian Agricultural Insurance Scheme In Imo State, South East,

Nigeria”, Academia Arena, Vol.2, Issue.6, 2010, pp.12-16. 55 Barroso and Maria “Critical analysis of the European Union solvency model for "non-life" insurance

companies: the Portuguese case”, Economy of Agriculture & Development, Vol.1, Issue.1, 2010, pp.17-

34.

Producers and Insurance Specialists in Isfahan Province, Iran”, The purpose of this

descriptive and correlational study was to describe the perceptions of livestock

producers and insurance specialists regarding livestock insurance in Isfahan Province,

Iran. Using cluster sampling techniques, 236 livestock producers and 22 insurance

specialists were chosen to participate in the study. Results show that livestock

producers perceived that agriculture and livestock producers are continuously faced

with risks and dangers and that livestock insurance is beneficial to farmers. Livestock

producers indicated that over the past five years, diseases, wild animal attacks, drought,

and theft were primarily responsible for damage and loss in their operations. Of

livestock producers adopting insurance, most indicated the attitude that insurance

specialists and insurance costs were good. Major obstacles hampering the development

of rural livestock insurance as perceived by insurance specialists includes lack of

equipment and facilities for personnel at the agriculture bank branches and lack of

knowledge by livestock producers of the benefits of livestock insurance56

.

Catherine Bruneau and Selim Mankai (2009) made a study titled, “Economic

Capital and Optimal Investment for Non-Life Insurance Companies”, We propose two

optimization models to jointly solve a capital requirement and a portfolio selection

problem for non-life insurance companies. In a one-period framework, the expected

return on risk-adjusted capital (RORAC) is optimized subject to zero-conditional value

at risk shortfall constraint. Equity capital adjustment to match the global balance sheet

economic capital is assumed to be exclusively allocated in a risk-free asset. A closed

form relationship is derived between optimal economic capital and investment

portfolio. Using a Monte Carlo simulation calibrated to major French non-life

insurance company data, we develop first a curve of efficient portfolios verifying the

��56 Mohammad Chizari, Ahmad Yaghoubi and James R. Lindner, “Perceptions of Rural Livestock

Insurance among Livestock Producers and Insurance Specialists in Isfahan Province, Iran”, Journal of

International Agricultural and Extension Education, Volume 10, Number 1, 2010, pp.37-42.

shortfall constraint. Then, we analyze optimum sensitivity to some factors. It turns out

that, depending on adjustment costs, risk management by equity shift can be more

effective than assets risk management with a fixed capital. Furthermore, optimum

presents a high sensitivity to initial surplus level and dependence structure between

assets and liabilities. The numerical results are robust to the relaxation of the

assumption regarding equity adjustment allocation57

.

Anne Borge Johannesen and Anders Skonhoft (2009) in their study entitled,

“Livestock as insurance and social status Evidence from reindeer herding in Norway”,

The theory of livestock as a buffer stock predicts that agro pastoralists facing

substantial risks typically will use liquid assets, such as livestock, for self-insurance to

smooth consumption. This study examines this hypothesis for reindeer herders in

Norway where the herders, in contrast to pastoralists in, say, Sub-Saharan Africa, face

well functioning credit markets. Using survey data including slaughtering responses to

a hypothetical meat price increase, we test whether keeping reindeer as insurance

against risks affects the slaughter response. Furthermore, we study whether status

motives for keeping large herds affect the harvest response to a changing slaughter

price. As a background for the empirical analysis, a stochastic bio economic model

describing Saami reindeer herding is formulated58

.

Sommarat Chantarat, Andrew G. Mude and Christopher B. Barrett (2009)

made a study titled, “Willingness to Pay for Index Based Livestock Insurance: Results

from a Field Experiment In Northern Kenya”, Index based livestock insurance (IBLI)

is designed for managing livestock asset risk by compensating for location-averaged

��57 Catherine Bruneau and Selim Mankai “Economic Capital and Optimal Investment for Non-Life

Insurance Companies”, American Journal of Agricultural Economics, Vol.5, Issue.6, 2009, pp.2605-

2612.

58 Anne Borge Johannesen and Anders Skonhoft, “Livestock as insurance and social status Evidence

from reindeer herding in Norway”, Department of Economics, Norwegian University of Science and

Technology, 2009.

livestock mortality estimated using remotely sensed measures of vegetative cover on

rangelands. This paper uses a double-bounded contingent valuation technique to elicit

willingness to pay (WTP) for IBLI among pastoralists in five arid and semi-arid

locations in northern Kenya, where the product is scheduled for pilot sale in 2010. A

sequential insurance decision was considered. Pastoralists were first asked to make

decision regarding the proportion of herd they wish to insure. Conditional on their

chosen proportion, they were then asked a sequence of dichotomous WTP questions,

responses of which were used to form bounds for their unobserved WTP. A modified

Heckman’s two-step conditional expectation correction approach is applied to estimate

pastoralists’ insurance demand. Wealth, risk preference, perceived basis risk and

subjective expectation of loss serve as the key WTP determinants, conditional on

understanding of the mechanics and value of IBLI. Households most vulnerable to

falling into poverty trap were also shown to have the highest price elasticity of demand,

despite their potentially highest dynamic welfare gain from the insurance. This is in

contrast to the high and relatively low elasticity of demand found among the poorest,

whose dynamic welfare benefits from insurance were minimal59

.

Chad E. Hart, Bruce A. Babcock, and Dermot J. Hayes (2009) in their study

on, “Livestock Revenue Insurance”, this study outlines several possible structures for

livestock revenue insurance. The policies take the form of an exotic option—an Asian

basket option. The actuarially fair premiums for these policies are equal to the prices of

the options they represent. Due to the complexity of pricing Asian basket options, we

have combined two techniques for pricing options to reach the actuarially fair

premiums. Projected premiums, producer welfare, and program efficiency are evaluated

for the insurance products and existing market tools. Using efficiency ratios and

��59 Sommarat Chantarat, Andrew G. Mude and Christopher B. Barrett, “Willingness to Pay for Index

Based Livestock Insurance: Results from a Field Experiment in Northern Kenya”, Economy of

Agriculture & Development, Vol.11, Issue.41-42, 2009, pp.167-184.

certainty equivalent returns, we compare the insurance policies to strategies involving

existing futures and options60

.

Torkmani (2009) made a study titled, “Impacts of Crop Insurance on

Reduction in Risk and Income Inequality for Operators; Case Study: Farce Province”,

showed how insurance influenced farmers’ attitude toward risk and reduced the level of

risk aversion. In addition, Gini coefficients evaluated in this study revealed positive

effects of agricultural insurance on reducing income inequality among operators61

.

Yazdanpanah et al. (2009) their study entitled, “Farmers’ Satisfaction with

Crop Insurance: an Application of Path Analysis”, attributed farmers’ satisfaction with

crop insurance to several factors. Commitment to bank and quality of services, for

farmers insured previously, and bank image, quality of service, for currently insured

farmers, and finally, bank image, quality of service, and indemnity, for all farmers, are

the most significant factors determining level of satisfaction in farmers62

.

Karami A, Zamani G H, Keshavarz M, (2008) in their study on,

“Determinant Factors in Continuation of Crop Insurance”, examined determinant

factors in continuation of crop insurance for 1,241 farmers and found that satisfaction

with insurance, attitude toward insurance, bank accountability, indemnity, bank image,

and awareness of insurance are the most significant factors influencing continued

insurance63

.

��60 Chad E. Hart, Bruce A. Babcock, and Dermot J. Hayes “Livestock Revenue Insurance”, Center for

Agricultural and Rural Development Iowa State University, Ames, Iowa, 2009.

61 Torkmani J. “Impacts of Crop Insurance on Reduction in Risk and Income Inequality for Operators;

Case Study: Farce Province”, Agricultural Research, Vol.1, Issue.1, 2009, pp.17-34. 62 Yazdanpanah M, Zamani G H, Rezaei Moghaddam K, “Farmers’ Satisfaction with Crop Insurance: an

Application of Path Analysis”, Economy of Agriculture & Development, Vol.17, Issue.66, 2009, pp.139-

164. 63 Karami A, Zamani G H, Keshavarz M, “Determinant Factors in Continuation of Crop Insurance”,

Economy of Agriculture & Development, Vol.16, Issue.62, 2008, pp.53-81.

Mojarradi G R, Zamani G H, Ahmadi H, (2008) made a study titled, “An

Analysis of Determinant Factors in Policyholders’ Attitude toward Private Agencies: a

Path Analysis Approach”, used path analysis to find that policyholders’ expectations

met by insurers, their views on insurance, and access to resources have positive and

significant impact on attitudes. In addition, age and insurance background indirectly

influence attitude toward insurance. They believed that creating and maintaining

optimum attitude toward private agency can be achieved through meeting

policyholders’ expectations, emphasizing training and agricultural extension, and

making optimum use of mass media, in particular radio and TV64

.

Braun Micheal (2008) in his study entitled, “Claims and deductibles for home

owner’s insurance”, this research examines the interplay between claims and

deductibles in home owner’s insurance. The researcher examines the effect of

marketing dues on asymmetric information. Economic Theories of asymmetric

information predict that customers who are more likely to file claims during the

coverage period will choose lower deductibles on their policies, one of the challenges

in testing this theory is that customers may exhibit inertia and net consider their

insurance options for an extended period of time, furthermore, the ultimate “Trigger”

for a deductible charge could be a factor unrelated to that customer’s expected claims

propensity such as a pricing change or marketing activity. Hence the rate at which a

customer files a claim after a deductible change may be related to why to deductible

change was made at all65

.

��64 Mojarradi G R, Zamani G H, Ahmadi H, “An Analysis of Determinant Factors in Policyholders’

Attitude toward Private Agencies: a Path Analysis Approach”, Agriculture Economy (Agriculture &

Economy), Vol.2, Issue.2, 2008, pp.169-197. 65 Braun Micheal “Claims and deductibles for home owner’s insurance”, Braun Michal University of

pennsyluanig International Abstracts, Volume.67, 2008, p.2658.

Rostami et al. (2007) in their study titled, “Determinant Factors in Adopting

Insurance (Case Study: Wheat Farmers in Hersin, Kermanshah)”, showed that several

individual, economic, and social factors influence farmers’ attitude toward agricultural

insurance. The most important factors in this area are education, area of lands used to

produce wheat, diversity in production, risk aversion, and type of ownership66

.

Quaiser. R (2007) made a study entitled, “Claims Management in General

Insurance-Issues and concerns” This topic is metal for claim settlement facilities.

Unlike life Insurance, where all polices necessarily result in claims-either maturity or

death-in General Insurance not all polices result in claims. Approximately around 15%

policies in General Insurance result in claim. He concluded insurer’s procedure for

handling claims are coming under closer secreting by the regulators as well as the

consumers forum or court. If recent judgments are any indication, in so far as retail

customers are concerned in the obscene of any frauds the insures may not be able to

repudiate the claim on the ground of innocent non-disclosure or misrepresentation of

facts and non-causation of breaches of warrantee and get away with it67

.

Guira, R.C. (2006) made a study entitled, “General Insurance de-terrifying-to be

or not to be”, highlighted to ensure survival, to protect policy holders interests, to

protect shareholders interests. In the past 1991 reform era de-traiffing has become a

need but not the option of the people India is shining brilliantly Capital Market, Forex

Market, Commodity Market, Export Market and Insurance Market etc. Insurance

��66 Rostami F, Shabanali H, Movahed Mohammadi H, Irvani H. “Determinant Factors in Adopting

Insurance (Case Study: Wheat Farmers in Hersin, Kermanshah), Economy of Agriculture &

Development, Vol.15, Issue.60, 2007, pp1-21. 67 Quaiser. R.C, “Claims Management in General Insurance-Issues and Concerns”, The Insurance Times,

Volume. XXVI, No.7, 2007, p.255.

market has yet to be more shining with the global standards removing the tariff regime

in non-life sector68

.

Ghosh Roy, H.J., Sanket Vij and Puneet Goswami, (2006) “Claims

Automation in Indian Non-Life Insurance Sector: Gaining A Competitive Edge”, Claim

management and processing which accounts for an estimated 80% of operational cost

for an insurance company. By automating all or some of the elements of the lengthy

claims process, insurers can capture substantial cost savings and gains efficiency by

providing a faster, more transparent, claimant friendly and participative experience.

Key objectives of claim automation includes automating first notification of loss, the

initial customer/claimant touch points reducing manual processes, and streamlining

workflow throughout the process69

.

Thomas Dufhues, Ukelemke, Isabel Fischer (2004) made a study entitled,

“Live stock insurance schemes in Vietnam”, tells that in developing countries,

insurance markets are usually underdeveloped. Nevertheless, if the development path

is supported by strong structures and institution, anonymous markets will over time

replace informal insurance networks, as they are more efficient. In Vietnam, livestock

is an important household income source and has additional non-economic functions in

the households. Rural financial institutes in Vietnam financed for a long time only a

small array of agricultural investments, but frequently including livestock purchase.

The absence of off-farm investment possibilities further promotes the investment into

livestock production. Livestock death is considered to be a main factor contributing to

poverty. Farmers using credit to purchase livestock face two risks at once: (1) loosing

��68 Guira.R.C, “General Insurance de-terrifying to be or not to be”, The Insurance Times, Vol. XXVI,

Issue.No.3, 2006, pp.13-15.

69 Ghosh Roy, H.J., Sanket Vij and Puneet Goswami, “Claims Automation in Indian Non-Life Insurance

Sector: Gaining A Competitive Edge”, The Journal of Computer Science and Information Technology,

Vol. 3, No.1, 2006, pp. 35-39.

the livestock due to disease and subsequently (2) failure of investment. Farmers would

like to reduce the uncertainty. Nevertheless, a formal agricultural insurance market

hardly exists in Vietnam and farm households have to rely mainly on informal mutual

aid schemes. The objective of this paper is to contribute to the discussion on the

general feasibility of a livestock insurance scheme (LIS) in Vietnam. In this context

the supply of LIS is discussed. Qualitative data collection took place mainly between

2003 and 2004. Four different types of insurance providers were selected for analyzing

the supply side: 1. Insurance tied to credit within a state owned company. 2. Insurance

tied to credit within a development project, 3. A state owned insurance company. 4. A

private insurance company. By selection of these different insurance providers the

variance of livestock insurances offered in Vietnam was covered. The main result is

that offering sustainable livestock insurance is mostly hampered by unreliable data on

livestock mortality and by politically low set premiums70

.

Cushing, J. (2004) in his study entitled, “Increasing livelihood security

amongst yak herders through livestock insurance in western Sichuan, P.R. China”, Yak

form the basis of the economy for many communities resident upon the western

Chinese rangelands. However, disease and heavy snow make yak populations

vulnerable to death, and as such the security of those who depend so much on them for

the basis of their economy is threatened. This paper looks at these threats and considers

the feasibility of establishing a community owned insurance scheme through which

herders will be able to insure their livestock against such losses. Unlike similar

commercially run schemes in other countries, the scheme will be run by members of

the community and profits will be invested back into the scheme and the community.

��70Thomas Dufhues, uke lemke, Isabel fischer, “Livestock insurance schemes in Vietnam”, Rural Areas &

Development, Vol.13, Issue.1, 2004, pp.21-41.

The study looks at similar schemes established elsewhere and considers the problems

such a scheme may encounter should it be established in western Sichuan. It concludes,

that such a scheme will, if established, contribute towards increasing livelihood security

amongst herders, and it may provide a platform upon which further community based

projects can work71

.

Jacqueline K. Eastman; A D. Alan Eastman; Kevin L. Eastman, (2002) has

studied about that “Insurance Sales Agents and the Internet: The Relationship Between

Opinion Leadership, Subjective Knowledge, and Internet Attitudes", with the aim to

study about the Internet which offers a number of opportunities and threats for

insurance sales agents. On the one hand, the Internet provides opportunities to

communicate with and reach customers. However, it also introduces the risk of losing

business to insurance providers or competitors. These opportunities and threats create a

need to understand the characteristics that may affect the views of insurance agents

regarding the Internet and its impact on their business. This paper compares insurance

sales agents' scores on an opinion leadership scale (Flynn, Goldsmith, and Eastman

1996) and subjective knowledge scale (Flynn and Goldsmith 1999) with their attitudes

toward the Internet. The results suggest that those insurance sales agents with a higher

level of subjective knowledge about the Internet are more likely to be opinion leaders

about the Internet. Both opinion leaders and those with higher levels of subjective

knowledge have a more positive attitude about the Internet, but only the relationship

with opinion leadership is significant. In addition, those insurance sales agents who are

younger (than the approximate mean age of 46 years old) are more likely to be opinion

leaders and have a higher level of subjective knowledge of the Internet. The results

suggest that perceived knowledge and the willingness to discuss the Internet with

��71 Cushing, J. (“Increasing livelihood security amongst yak herders through livestock insurance in

western Sichuan, P.R. China”, Mountain Research and Development, Vol. 20, Issue.3, 2004, pp.226-231.

others impact one's attitude of it, and that the younger insurance agents will play a

leading role in how the Internet will be used72

.

Choi Byeongyoung (2002) made a study on, “An empirical investigation of

market structure, efficiency, and performance in property-liability insurance”, reports

that the financial services industry is in the midst of consolidation and restructuring

worldwide. Financial service firm consolidation in the U.S. has accelerated because of

technological progress and deregulation (e.g., the Gram-Leach-Bliley Act of 1999).

The recent movement toward consolidation within the insurance industry and across

industry segments is affecting the structure of the insurance market. Consolidation

impacts competition and the economic performance of the industry. Therefore, a public

policy question arises as to the effect of consolidation on consumers and whether or not

government should pursue antitrust policy or other regulatory actions. This research

directly investigates these issues directly. Little research has been conducted on the

structure-performance relationship for the insurance industry, and the research that does

exist contains conflicting results. Moreover, no existing insurance study explicitly

incorporates the effects of efficiency on structure-performance relationship. This paper

tests the structure-performance relationship for the property-liability insurance industry

using explicit measures of X-efficiency and scale efficiency73

.

Martina Eckardt (2002) has studied about “Agent and broker intermediaries

in insurance markets”, with the aim to study about the legal incentives induces

insurance brokers to provide more high quality information and advisory services than

insurance agents. The data used are obtained from a survey among 4,687 self employed

German insurance intermediaries with the help of questionnaire. The major findings

��72 Jacqueline K. Eastman; A D. Alan Eastman; Kevin L. Eastman, “Insurance Sales Agents and

the Internet: The Relationship Between Opinion Leadership, Subjective Knowledge, and Internet

Attitudes”, Journal of Marketing Management, Volume 18, Numbers 3-4, April 2002, pp. 259-285. 73 Choi Byeongyong, “An Empirical Investigation of Market Structure, Efficiency, and Performance in

Property-Liability Insurance”, Temple university, International Abstracts, Volume.57, 2002, p.3132.

are, the institutional incentives set by the legal framework thus seems to induce them to

supply more information and better suited advice. But the influence of different legal

rules are outweighed by structural factors to some extent with respect to the quality

indicators applied. The advisory services of agents degree by firm size and employment

structure as well as by the degree of specialization on private customers. The study was

concluded that the agents and brokers put only small weight on these aspects in their

counseling interviews. This is backed by the statement of 98% of the interviews that the

quality of the advisory services should be improved74

.

Craig Brad Kubin (2001) made a study on, “A study of private passenger

automobile insurance regulation: The effects of regulatory change on the taxes

Insurance Market”, tells that this dissertation develops a theory of private passenger

automobile Insurance regulation and examine the effects or regulatory change on the

PPA insurance market. Specifically, the market impact of the 1991 changes in the rate

regulation of PPA insurance in the state of taxes is studied. The 1991 flexible –rating

“Law enacted in taxes enable rate-regulated insures to see their own rates for PPA

Insurance within a plus-or-minus. Thirty percent band of the “Benchmark” rates

established by the Insurance commissioner. The major empirical findings of the paper

are that flexible rating has led the increased available of PPA Insurance with a

corresponding decline in the number of taxes insured through the “Assigned-risk” plan.

Also, there has been a noticeable improvement in the financial health of insurance as

reflected in the fall of the liability loss rations of PPA insurance75

.

��74Martina Eckardt, “Agent and Broker Intermediaries in Insurance Markets- An Empirical Analysis of

Market Outcomes”, Paper presented at the 6th Annual Meeting of the International Society for New

Institutional Economics, Cambridge, September 27- 29, 2002. 75Craigh Brod Kusin, “A Study of Private Passenger Automobile Insurance Regulation- the Effects of

Regulatory Change on the Taxes Insurance Market”, Taxes A& M University, International Abstracts,

Volume.62, 2001, p.1512.

Percy and Allison Marie, (2000) their study entitled, “Community rating and

regulatory reform in health insurance markets”, reports that this research assesses the

impact of community rating laws and other state health insurance market reforms in the

small group and Individuals market on health insurance coverage, including changes in

the overall number of uninsured as well as specific effects on different risk groups. The

primary data source for this research is the current population survey from 1990 to

1996. Data on health insurance regulation by state and by year were obtained from the

national conference on state legislatures. A legit model is applied to the pooled cross.

Sectional data to study the impact of health insurance regulation considered include

guaranteed issue, guaranteed renewal limits on preexisting conditions exclusions, and

various rating rotes ranging from rating bonds to pure community rating. When

individual and small group market reforms are considered separately. Their impact on

small firm employees and the self-employed is difficult to assess. However reforms are

generally implemented as packages. In split sample models weak reforms in the small

group market had a significantly positive impact on the odds of coverage for lower

income low risks a surprising finding for this group. In the absence of mandates to

purchase insurance, policies which pool higher and lower risk group may either

increase or decrease overall coverage as people enter or leave the health insurance

market. The net impact on equity is unclear. Healthy young workers may see their

insurance rates increase and may choose to drop coverage. When crafting any

regulatory reforms in health insurance markets, attention should be focused on the

effect of this legislation on vulnerable groups, such as these with lower incomes76

.

Harounan Kazianga and Christopher Udry, (1999) made a study entitled,

“Consumption Smoothing? Livestock, Insurance and Drought in Rural Burkina Faso”,

��76 Percy Allison Marie, “Community Rating and Regulatory Reform in Health Insurance Markets”,

University of Pennsylvania, Vol.61, No.10, 2000, p.4099.

this paper explores the extent of consumption smoothing between 1981 and 1985 in

rural Burkina Faso. In particular, we examine the extent to which livestock, grain

storage and inter-household transfers are used to smooth consumption against income

risk. The survey coincided with a period of severe drought, so the results provide direct

evidence on the effectiveness of these various insurance mechanisms when they are the

most needed. We find evidence of little consumption smoothing. In particular, there is

almost no risk sharing, and households rely almost exclusively on self-insurance in the

form of adjustments to grain stocks to smooth out consumption. The outcome,

however, is far from complete smoothing. Hence the main risk-coping strategies which

are hypothesized in the literature (risk sharing and the use of assets as buffer stocks)

were not effective during the survey period77

.

Javadian & Shirzad, (1999) made a study on, “A Comparative Study on Crop

Insurance System in the World: an Emphasis on Developing Countries”, Insurance

development is hindered, among other things, by unnecessary regulations and

redundant formalities in policy issuance and indemnification system. If insurance

agents show higher levels of speed, accuracy, and good faith in provision of services,

such as issuing policies, paying compensations, and if inflexible bureaucracies are

eliminated, members of rural communities will have more confidence in crop

insurance. Every year, a large portion of crops is damaged by unfavorable

environmental conditions, resulting in income drops for farmers. This reduction in

income can be compensated through insurance services. However, farmers are often

reluctant to obtain insurance for their production. It is necessary to identify determinant

��77 Harounan Kazianga and Christopher Udry, “Consumption Smoothing? Livestock, Insurance and

Drought in Rural Burkina Faso”, Journal of Agricultural and Resource Economics, Vol.18, 1999, pp.17-

24.

factors in development of insurance for strategic agricultural products. The present

study attempts to fill the gap in this area78

.

Gorvett Richard Wayne (1998) made a study entitled, “Dynamic Financial

analysis of property-liability Insurance Companies”, reports that this research applies

state-of –the-art financial techniques to the dynamic financial modeling of property

Liability (PL) Insurance Companies. Dynamic financial analysis (DFA) a relatively

new concept in the P-L Industry attempts to analyze the underwriting and financial

whole. The objective of this research to provide a framework for current and future

DFA models for the P-L Industry, to use this models to test various Hypotheses

concerning valuation, corporate decision making and optimal regulatory policy. Two

types of DFA models are developed the first is termed “Conventional” since its builds

on existing financial models in the life and P-L Insurance industries. The single period

conventional model developed here incorporates insurance specific factors, in a

stochastic framework and provides probability distribution of outcomes of key financial

variables. The second type of model uses continues-time financial techniques, which

provide a more sophisticated approach to dealing with certain financial parameters.

Parallel development to these two types of models will allow for an evaluation of the

benefit of moving from a conventional the more financially sophisticated alternative

model and will aid in the selection of appropriate parameter for Future Conventional

model79

.

Joseph A. Fields , Dogan Tirtiroglu (1991) has studied about the “Research

Agency-Theory Implications for the Insurance Industry: A Review of the Theoretical

��78 Javadian A., Shirzad H. “A Comparative Study on Crop Insurance System in the World: an Emphasis

on Developing Countries”, Proceedings of the 2nd Nationwide Conference of Crop Insurance Fund, Crop

Insurance Fund Press, 1999. 79 Govett Richared Wayne, “Dynamic Financial Analysis of Property Liability Insurance Companies”,

University of Californla, Berkeley, International Abstracts, Volume.59, 1998, p.3126.

and Empirical”, this study explores the resolution of incentive conflicts in the

insurance industry from an agency-theoretic perspective. It concentrates on the role of

organizational forms in mitigating conflict. The paper reviews the concept of agency

conflicts and resolution, examines agency conflicts and the use of organizational form

in insurance, reviews empirical work that examines the structure of incentive/conflict

resolution in insurance, and synthesizes the implications of the theory and empirical

findings. The diversity of organizational forms in the insurance industry has been a

subject of much inquiry and curiosity. Agency theory has tied many aspects of the

industry's diversity into a unified framework and has provided a common ground for

analysis. This paper reviews the major tenets of the agency theory literature, focusing

on the resolution of agency problems in the insurance sector. This research concentrates

on recent empirical work concerning the resolution of conflict through the various

organizational forms in the insurance sector. Four issues are examined. First, what is

the rationale for the existence of the wide variety of organizational structures in this

industry? Hansmann (1985) observes that stock and mutual insurance companies differ

in a number of respects, such as size and growth patterns. Mutual insurance companies,

a successful part of the industry for more than a century, differ from other financial

mutual. Reciprocal associations and Lloyd's associations also operate in this industry,

but they are generally small in size and appeal to specific niches. Second, insurers

exhibit complex contractual relationships in an attempt to control incentive problems

between contractors. Mayers and Smith focus on contracting from an agency-theoretic

view, demonstrating how organizational structure is a function of interactions and

contracts among participants. Mayers and Smith argue that survival of organizational

structures depends on the amount of managerial discretion required and the cost of

monitoring managers. Third, mutual firms have tended to be most successful in the

financial sectors, such as insurance, banking, and mutual funds. Fama and Jensen argue

that the survival of the mutual form is due to the characteristics80

Hoverstad et al (1990) empirically examined, “The differences in the sales

force turnover of part time & full time insurance sales agents” on a major national

insurance firm. All new hires over three, two year periods 1971-72, 1975-76, 1980-81

were analyzed. According to them, part time agents remained in the job longer than full

time agents although there were some differences in two years survival rates among the

three periods. The insurance industry clearly had a problem in retaining the full-time

agents. The part time agents were likely to remain with the company for a longer time,

but they were not as productive as many full time agents part time agents were more

able to survive a period of low sales, while period of low sales may force a full time

employees to pursue other career opportunities. The attitudes and demographic factors

of the part time employees had played a part in retention, very young full time

employees turned over faster than other part timers. The nature of the job and primary

loyalty could affect the retention of the job for the part timers81

.

Dumm Randy Efugene (1988) made a study on, “Access to capital and the

role of group affiliation in the Insurance Industry: Empiric Evidence”, tell that this

dissertation concerns itself with several closely related objectives. The first is to

investigate the factor that explain the substantial increase in usage of subordinated debt

contracts called surplus notes the second is to examine more fully the role that group

affiliation plays in determining capital retention levels and management of capital.

This research is focus on three closely related issues that are addressed through the

��80 Joseph A. Fields, Dogan Tirtiroglu, “Research Agency-Theory Implications for the Insurance Industry:

A Review of the Theoretical and Empirical”; Quarterly journal of Business and Economics, Vol. 30,

1991. 81Ronald Hoverstad William C. Moncrief III and George .H.Lucas. Jr. “The use of survival analysis to

examine sales force turnover of part time & full time sales employees”, International journal of research

in marketing, vol.7, 1990, pp. 109- 119.

examination of the relation between group affiliation and the level and management of

regulatory capital. The findings of this research show that intra-group capital transfers

occur to financial distressed firms at the highest levels of regulatory scrutiny. This may

indicate that indirect bankruptcy costs to the group exceeded the benefits of limited

liability. This benefit of intra-group capital management may help explain the increase

in insurance groups82

.

Francois et at (1987) had studied about “Job related response of insurance

agents: More evidence on job satisfaction-It is the relationship that count”, concluded

that life insurance agents were in general satisfies with their careers factors found to be

most closely related to job satisfaction were training experience and earnings and the

major source of dissatisfaction was revealed to be the attitude of the public

towards them. They suggested that managers and supervisors must provide agents with

more support and encouragement to enhance their job satisfaction83

.

��82Dumm Randy Engene “Access to Capital and the Role of Group Affiliation in the Insurance Industry”,

University of Georgia International Dissertation Abstracts, Volume.59, 1988, p.1242. 83Francois et al, “Job related response of insurance agents; More evidence on Job Satisfaction. It is the

relationship that count”, Journal of Risk and insurance, Vol.54, 1987, pp. 800-809.

2.4 Research Gap

Thus, so far there may not be systematic attempt made to study the problem

relating to livestock insurance. Hence, the study has been undertaken with this specific

aim in mind to cater the needs of local & rural based community to insists & makes

awareness among rural population on livestock insurance.

Several attempts have been made to assess the awareness of livestock insurance

in India. Some of them are helpful to understand the importance of livestock insurance

and the basic principles of livestock insurance. From the direction of the previous

studies, the present research focuses on the awareness of rural masses towards livestock

insurance and problems faced by the rural masses in Tirunelveli district.

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