Mandatory training for agents puts pressure on insurers

Insurers say they don't mind bearing the training cost but high attrition has made the process futile

Insurance agents, who are required to undergo a mandatory training of 50 hours, might not have any qualms attached to this process. However, their employers — insurance companies — are not very happy about it. While insurers say they don’t mind bearing the expenses for training their agents, they point out that high attrition has made the process futile.

“It is essential that agents are made to undergo practical training in life and general insurance industry, so that they are equipped to deal with the new trends in the insurance sector. However, while we have incurred additional expenses in training them, the agents, especially the younger ones, quit the industry within two-to-three years,” said an insurance executive in-charge of personnel development.

To resolve the problem, some insurers have circulated an internal note suggesting that companies should approach the regulator, the Insurance Regulatory and Development Authority of India (Irda), to press for reducing the training hours. A senior life insurance company executive said that this could reduce costs.

Licensing rules by Irda stipulate that agents have to undergo 50 hours’ training for basic licence and 75 hours’ training for composite licence. Insurance agents also have to undergo a 25-hour practical training to renew their licence, which is valid for three years. Composite agents will have to undergo a practical training of 50 hours if they want to renew their licence.

According to earlier rules formulated in July 2000, mandatory training was 100 hours for insurance agents and 150 hours for composite agents who were entering the industry for the first time. This was reduced to 50 hours and 75 hours, respectively, in October 2007.

Irda officials, however, are not in favour of reducing the training hours. According to a senior Irda official, under the current circumstances, it may not be viable to reduce the 50 hours mandate. “In fact, agents should ideally undergo at least 100 hours training to ensure that s/he has adequate understanding of the industry to sell the products,” said the official.

Various estimates suggest  approximately Rs 600-650 crore is spent annually by insurance companies on training their agents. This, at a time when attrition is as high as 55-60 per cent. Life Insurance Corporation of India (LIC) has one of the largest pool of agents at about 1.2 million.

The purpose of training is to enable agents applying for the renewal of licences to acquaint themselves with the latest developments in the insurance market. The topics for practical training under life and general insurance business shall include new regulations, notifications and circulars issued by Irda that affect intermediaries or policyholders.

The training module will include new products introduced by insurers, all tax matters relating to and benefits accruing from such products, advance sales training, services which policyholders expect from agents and provisions of agents’ code of conduct, protection of policyholders’ interest and grievance redressal mechanism and refresher for some important topics of previous 100-hour training on request from trainees.