IRDA insures safe passage in exams

Regulator worried by mass failure of agents.

Fail your exams and force the school to lower the bar. This is exactly what the country's insurance agents have done to the sector's watchdog.

The Insurance Regulatory and Development Authority (IRDA) has extended a helping hand by lowering the pass marks from 50 per cent to 35 per cent. What's more, this has been done with retrospective effect.

The reason: agents failing en masse on account of stricter vigilance in examinations and a change in the question paper.

Following a meeting of insurance training heads on August 2, the IRDA""along with the Insurance Institute of India (III) which conducts the exams""lowered the pass mark to 35 per cent with effect from July 1.

Simply put, the agents who had got 35 per cent in the exam have now crossed the hurdle. Online examinations are held five days a week while a sit-in exam facility is extended every alternate Sunday.

"The percentage of agents passing the exam fell drastically from 80-90 per cent to as low as 25-30 per cent since late June. In the case of exams conducted online, the percentage of agents who passed fell to a low of 10 per cent," said the HR head of a private insurance company. Now with the lower bar, 80 percent of the agents taking the examination have passed.

Lowering of the passing mark is an interim measure undertaken by the regulator, which will be rectified once the insurance companies submit a question bank, senior officials said.

The IRDA decided to crack the whip when it came across irregularities in conducting agents' exams. Cheating and copying were rampant in many training institutes, and there was evidence of people sitting on behalf of candidates, which worried the regulator, said a senior official.

The dramatic reduction in the number of agents undergoing the 100-hour training and passing the exam has affected the recruitment process. This has led to insurance companies failing to meet internal performance targets, said the chief executive of a leading European insurance outfit, which trains and recruits around 3,000 agents a month.

However, on account of the revised syllabus and examination paper, "the percentage of our agents passing the exam has fallen to 60 per cent", he added.

On an average, about 25,000-30,000 agents are recruited every month. Even if one were to take an average sale of one or two policies per agent in the initial months, this translates into about 60,000 policies sold for the industry as a whole.

"There has been a slowdown in the number of agents recruited, but I think we will be able to meet our target," said Shivaji Dam, chief executive of Kotak Mahindra Old Mutual Life Insurance.