Agency Service: Savings and Investment Agency, Services Provided to the Public and Functions of the Insurance Agency (For CBSE, ICSE, IAS, NET, NRA 2022)

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The financial agency services deal with savings, investments business. Savings and investment agency services and insurance agency services are the most common form of financial agency services. The key activities involved in saving and investment agency include educating people about the benefits of saving; inform them about alternative channels of investment with safe and stable income; collecting the savings at intervals on behalf of the organization and helping the investors in getting loans against the investment, if needed. The insurance agency, on the other hand, involves educating people about the benefit of insurance and informing them about the terms and conditions of insurance and the types of policies available, helping them to fill up the form of application for insurance collecting premium on behalf of the insurance company; help the insured people to settle their claim, if any, from the insurance company.

Savings and Investment Agency

  • Savings and investment are indispensable for the economic growth of a country. Various savings and investment schemes are provided by post office, commercial banks, Life Insurance Corporation of India, and other insurance companies, Unit Trust of India and other mutual funds and joint stock companies. The different schemes provided by them are profitable to investors and useful to the society as a whole. But when the people are not aware about the different savings and investment schemes, they will not be able to derive any benefit out of these schemes. Therefore, someone is definitely needed to motivate, encourage and educate the people to save and invest. Here comes the role of savings and investment agents who work for various financial institutions on commission basis.
  • The savings and investment agencies provide the following services to the investing public and collecting organisations.

Services Provided to the Public

Services Provided to the Public

Provide Personalised Service

These agents approach the individuals at a place and time convenient to them. They collect the savings as per the convenience of the investors. They also assist them in getting loans against their investments in case of their need; remind the investors about the due dates of periodic payment, maturity date of the investments and help them in the realisation of their investments.

Channelize the Investment

These agencies collect the savings from the investing public; direct them in different savings schemes provided by different organizations according to the choice of people.

Educate the Public About Investments

These agencies motivate and encourage public to save more. They educate the people about the different schemes available for investment with the different institutions, their comparative merits and demerits and encourage the public to invest their savings in secured and profitable channels of investment.

Services Provided to Collecting Organisations

The agents help the collecting organisations as well as the government in raising funds for growth activities. They play a major role in bringing the public and these institutions closer to each other.

Insurance Agency

  • Nothing is free from accidental losses. An individual may face an accident at any moment. Property may be damaged by fire and ships may sink in ocean. As a protection against such risks, the system of insurance has been devised. Insurance, as you have already learnt, is a contract by which an insurance company for a certain premium in return, undertakes to compensate the insured for the damages caused to him on happening of some specified event. Insurance cannot prevent risks, but it provides for mitigating the sufferings arising there from. This is true in case of fire, marine and general insurance. In case of life insurance, people are motivated to save and invest and provide for eventualities like death and accidents.
  • In order to secure insurance business, insurance companies appoint agents. These agents are specialists in the field of insurance. They act as an indispensable link between insurance companies and prospective insured. They are beneficial not only to the insurance companies but also to the insuring public. Besides securing good business to the insurance companies, they render very useful services to the society.
  • Let us now discuss the service provided by the insurance agency to the insurance companies and the policyholders.

Functions of the Insurance Agency

For Insurance companies: Insurance agencies are very important for the insurance companies because of the following reasons:

Functions of the Insurance Agency

They Propagate Business

Agents meet different people personally and explain the salient features of different schemes and their benefits to them. They also distribute various forms and pamphlets and this way propagate the insurance business.

Procure Business

Almost all the business of insurance is procured through agents. Only a small part of the business is procured directly by insurance companies.

Protect the Interests of the Companies

Insurance companies rely on the agency force to select good business. In deciding upon the risk, the companies have to satisfy themselves as to the purpose of insurance and the character, habits and financial standing of the insurers through their agents.

For Policyholders

An insurance agent is the link between the insurance company and the policyholder. He/she renders many useful services to the policyholders. These may be:

Educate People About the Benefits of Insurance

An insurance agent explains to the public about the various available schemes and their benefits. He also helps them to select scheme best suited to their needs.

Encourage Thrift by Providing Better Channels of Investments

An insurance agent ensures that the policyholder saves regularly and pays the premium on time.

Help in Payment of Premiums and Settlement of Claims

An insurance agency informs the insured about the due dates of premiums and expiry of policies; and help them in payment of premiums and collection of claims, if any.

Frequently Asked Questions (FAQs)

  • What is your citation?if u want to reference someone to read ,its reallly an interesting write up

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    1 Answer

    This is based on NIOS - National Institute of Open Schooling under Government of India.

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