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| Irda cracks whip on agents |
| BS Reporter / Mumbai Sep 08, 2009, 01:24 IST |
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In order to protect the interest of policyholders from agents or corporate agents switching from one insurance company to another, the Insurance Regulatory and Development Authority (Irda) today asked all insurers to enter into an agreement with agents or corporate agents for a minimum of three years.
“There has been instances where agents are opting for transfer of agency from one insurer to another. In all such cases, the policyholders are experiencing difficulties with regard to service,” Irda said.
At present, the attrition level of the insurance industry is as high as 70 per cent and agents tend to leave a firm after every six months.
This will have a direct bearing on around two million agents. The regulator has asked insurers not to release renewal commission of agents who have left them before completing five years of service.
Agents get around 40 per cent commission in the first year, 7.5 per cent in the second year and 2-3 per cent from the third year onwards.
In order to mitigate the difficulties arising from the transfer of agency, Irda has asked insurers to meet certain norms before issuing the no objection certificate.
In case the agent leaves the insurer, insurers should ensure adequate arrangement for servicing of policies that was earlier rendered by the agents or corporate agents, the regulator said.
Moreover, Irda said the insurer should match the service level of the agent and should not leave it in the hands of call centres.
Insurers will have to inform the policyholders in writing about the arrangement made to service their policies. In addition, no insurer can issue NOC to their agents leaving their firm to tie up with another without informing the policyholders in writing.
Irda said the service level should be maintained on the basis of the agreement despite agents leaving the firm.
Life Insurance Corporation has recently the insurer with the largest agency force over 1.3 million said that they would not sack agents in the first three years despite of non-performance.
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