Professionalism in insurance sector

A.B.M. Nurul Haq brTHE word profession means a trade, a calling where people are engaged to earn their livelihood. To be precise, it means a collective body of persons engaged in any profession. The word professional means 'one who follows any profession' a difference from non-professionals. The word professionalism derives from the word professional meaning the skill, or the mark or the qualities required or expected of the members of a profession. As for example, a professional footballer will differ from an amateur not only in playing the game of football, but also in his behaviour as a player.brWe usually say that insurance is a service industry. We sell intangible product which can't be touched or tasted. A customer can feel the pulse of insurance when the promise is fulfilled through prompt settlement of a claim either at maturity or earlier in case of life insurance or on the happening of an accidental loss resulting from the perils insured in the case of general insurance. Besides, on several occasions when the customer may need after-sales service, those are fulfilled with full satisfaction. In order to fulfil these needs, professionalism is the answer. However, this matter should be approached taking into consideration all the players associated with the industry, such as, the organisation itself, both sales and administrative personnel, the regulator governing the industry and the environment in which the industry operates. It may not be possible to bring about professionalism in the industry for any player alone because it is the team of players working for common goal who can achieve the objective.brDefinition of organisation We all know what an organisation is but it is very difficult to define it. A hospital, for instance, is an organisation. But how to define such an organisation to someone who has no idea about it There is a building, patients are coming for treatment. Doctors and nurses are there to serve the patients etc. But these descriptions are not sufficient to define an organisation. The following definition may, in a nutshell, help us to understand the organisationbrAn assemblage of resources in a particular place (building) viz, men, money and materials that are arranged and sequenced through technology to achieve an intended output. (Management Today Thomas J. Atchis and Winston W. Hill)brIn order to identify a professional organisation, many of its aspects should be considered, such as, its structure, the environment prevailing within the organisation and most importantly, its service level. Let us analyse these aspects in brief.brA. Organisations' structure Like a person, an organisation has its own personality. Some are friendly, warm and positive while others are cold, indifferent and negative.brTruly speaking, an organisation has its pulse through which one can read its heartbeats. A lively company should be organised in a professional way so that the reading of the pulse can read its heartbeats. If the heartbeats are orderly, the organisation is said to be functioning properly through its body and limbs. Let us first discuss the organisational structure which is the anatomy of an organisation within which the body functions.brOrganisational structure is very important for achieving the desired performance efficiency. Organisations need to recognise themselves to ensure that the structure promotes a working environment conducive to getting the best results from the available talent.brThe set up of a traditional insurance company in our country is like this; there is a Board consisting of the directors from amongst the shareholders. The Board elect a chairman annually or bi-annually, in some cases, the same person is elected as chairman every year. The Chief Executive Officer (CEO) is appointed generally on contract basis, who is also an ex-officio member of the board but he has no voting power. Below the CEO, there are different layers of officers from Additional Managing Director down to messenger peon etc. The board form different committees to decentralise its functions. Usually the committees are like this Executive Committee to deal with administrative and financial matters; claim committee to deal with claim matters; audit committee to deal with internal audit matters relating to financial discipline, compliance of rules and regulations etc. In some companies, an establishment committee is also formed to deal with the procurement and purchase, supply of materials, printing of forms, documents, stationery etc.brNow the question is; what type of structure will best suit the insurance companies Insurance organisations are mainly service providers and one of its main functions is marketing. Therefore, a hierarchical structure with central command will not be suitable. Decentralisation in place of centralisation, autonomy in place of control, flexibility in place of rigidity, de-layering with reduced levels of middle management, a flat structure with larger span of control, external focus (customers and other stakeholders) in place of internal focus will be ideal for an insurance organisation.brToo many committees to hold too many meetings at frequent intervals may disturb the normal working atmosphere consuming most of the time in preparing and organising the meetings. The Board and its Committees should deal with only policy matters leaving the day to day decision-making with the professionals. There are companies where even a claim of taka five thousand need to be approved by the Boards' Committee. Even petty expenditures can't be done by executives. The delay in decision making is a serious impediment to the growth of the organisation. The gap between the entrepreneurs and the professionals is the main obstacle to the growth of the insurance companies in Bangladesh.brB. Human Resource Management People are the real asset of an organisation. The most important thing for a professional organisation is to recruit suitable personnel who will serve the purpose of the organisation in the best possible manner. Selection of right persons to suit the job requirement through competitive examination amongst a large number of candidates, instead of pick and choose, should be the process to hire employees for all grades. The purpose is to attract best talents available in the market commensurate with pay package and other facilities offered to them. In developed countries, big companies engage counsellors to hunt talents in the renowned universities who are just going to complete their graduation. This process helps the recruiters to get the best available fresh graduates to suit the organisations' requirement. This recruitment process should continue in order to add fresh blood to the organisation and also to fulfil the replacement needs.brAfter recruitment, these novice employees should be given foundation training. Training is important for moulding the employee's behaviour, development of skill and knowledge required for the job and to induct new employees into the culture of the organisation. Unfortunately, often this aspect does not get proper attention of the management of our insurance companies, because they think that expenses on training are waste of both money and time and as a result the organisation tends to operate on the basis of short-term considerations.brIn the words of B.I. Maheshwari, Chairman of Centre for Organisations Development, India, the knowledge organisations (professional organisation) need to meet the following challenges of human resources managementbr how to manage wild birds in captivity without clipping their wingsbr How to attract, develop and retain talent;br How to improve the productivity of knowledge workers to achieve the organisations goals; andbr How to reward individual and team performancebrThese challenges are to be met meticulously in order to meet the emerging needs of the customers, aiming to achieve higher rates of growth and profitability and maximising shareholders' value in the face of volatile stock markets.brC. Organisations service level As we have already said, insurance is a service-oriented organisation. What does it mean Insurance products are intangible products. These products can't be touched, felt or its utility can't be judged immediately after purchase. Insurance products provide a promise for future benefit in the form of lump sum payment on the happening of designated event in lieu of which insurance companies get periodical instalment of premium from the clients for the period of contract while a tangible product when purchased can be touched, its benefit can be enjoyed immediately on purchase. Here after-sales service is not very important and duration of providing service to the client is short lived.brWhat is service A definition given by John. M. Rothwell'o seems suitable, ''goods are produced, services are performed. According to the saying of modern management Guru Peter F. Drucker,brIf we want to know what business is, we have to start with its purpose. And its purpose must lie outside of the business itself............... There is only one valid definition of business purpose. To create a customer.............The customer is the foundation of a business and keeps it in existence.brInsurance company owners, managersofficers associated with insurance business should aim at creating customers - customers first and customers last. In order to retain a band of satisfied customers, all the efforts of the insurance management should lead to rendering best possible service to the customers and thus build up an image for insurance business worthy of its ideals as a service oriented organisation committed to ethical principles.brIn this connection, another point needs to be discussed here. That is insurance is not only a service-provider but it is also a business aiming at earning profit. May be that profit-making is not the only aim; nevertheless, there must be a basic aim to sustain and survive economically. To achieve that objective, customer service is very important because 'service is our business'. Following quotation from a book 'Sales and Sales Management' by P.Allen is worth mentioning herebrBusiness purpose -profit; brProfit achieved by making a sale,br Making a sale implies a customer; brThis must be a satisfied customer.brThe writer is Managing Director, Global Insurance Ltd.