LIC plans to increase agent strength by 40%, ramp up HR systems

The Life Insurance Corporation (LIC) of India is targeting to increase its agent strength by 40 per cent as it looks to generate more business by leveraging its strong agency channel.

India’s largest insurer is also looking to revamp its human resources systems in its drive to make the oldest insurance company more technologically advanced, said people aware of the development.

LIC relies most on its individual agents to procure individual new business premium. It had 1.33 million individual agents as on December 31, 2021, which accounted for 55 per cent of the total agent network in the country and was 6.8 times the number of agents of the second largest life insurer.

“Aggressive targets have been given to recruitment agencies to get new agents on board,” said people quoted above.

LIC has the most productive agent network in India’s life insurance sector. Its agents had an average new business premium (NBP) of Rs 2.6 lakh per agent in April-December 2021 period as compared to the average NBP of Rs 1.1 lakh/agent for the median of the top five private players. LIC agents sold nine individual policies per agent on an average during this period as compared with the median of the top five private players’ agents selling 1.1 individual policies/agent.

However, attrition rate and non-active agents is a concern for the insurer. In its red herring prospectus filed with the Securities and Exchange Board of India (Sebi) before its listing, LIC had said if it’s unable to retain and recruit individual agents on a timely basis, and at a reasonable cost, there could be an adverse effect on the insurer’s operations.

In the nine-month period ended December 2021, LIC terminated services of 260,378 individual agents, which represented over 19 per cent of the insurer’s individual agents in India as on March 31, 2021. During the same time, LIC had appointed and reinstated 236,018 individual agents in India.

LIC had 1.35 million individual agents as on March 31, 2021, which came down to 1.33 million as on December 31, 2021. Of these, 1.086 million agents were active as of March 2021, and 1.046 million were active as of December 2021, signifying that these agents sold at least one policy in the prior 12 months.

A decrease of nearly 4 per cent in the number of active agents was primarily due to restrictions during the Covid-19 pandemic. Deferral of examinations by the Insurance Regulatory and Development Authority of India (Irdai) for individual agents and corporate agents also prevented LIC from adding new agents, the insurer had said in its disclosures made before its public listing.

Individual agents, touted as the strength of LIC, helped the insurer in procuring Rs 53,574 crore in new business premium in FY21 from Rs 49,210 crore in FY20. In April-December 2021, individual agents procured new business premium of Rs 34,463 crore. A competent pool of individual agents is a key factor for the insurer to increase its premiums for individual products.

In its effort to upgrade its technological systems, India’s largest insurer has floated a request for proposal (RFP) to procure new human resources software to integrate its systems. “LIC is evaluating the systems in the market that can be used by it,” the people quoted above said.

AGENTS OF GROWTH

• 1.33 mn agents of LIC as on Dec 31, 2021, vs 1.35 mn in March 2021

• 1.04 mn agents were active as on December 2021 against 1.08 mn in March 2021

• Rs 34,463-cr new business premium procured by agents thanks to individual agents in April-Dec 2021

• Rs 53,574-cr new business premium procured by agents in FY21 vs Rs 49,210 crore in FY20