Mandatory training of 50 hours for agents puts pressure on insurers

Insurance agents, who are required to undergo mandatory training of 50 hours by an insurance company may not have any qualms attached to this process. However, insurance companies, who pay for this training process, are of the view that while there is an expenditure on these individuals, 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 agent, especially the younger ones, quit the industry in 2-3 years," said an insurance executive in-charge of personnel development.

 

To bring out a solution to this, some insurers have circulated an internal note, wherein there is a proposal to approach the regulator to reduce the training hours. A senior life insurance company executive said that this could reduce costs.

 

According to the agent licensing rules by the Insurance Regulatory Development Authority (Irda), agents have to undergo 50 hours training for basic license and 75 hours training for composite license. Further, insurance agents also have to undergo a 25 hours of practical training to renew their licence, which was valid for three years. To renew their license, composite agents will have to undergo a practical training of 50 hours.

 

Earlier, the rules formulated in July 2000 had said that 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.

 

Officials are the regulatory body are, however, not in favour of reducing the training hours. A senior Irda official explained that with the present situation, it is not viable to reduce the 50 hours mandate. "In fact, agents should atleast undergo 100 hours training ideally, to ensure that he/she has adequate understanding of the industry and the products sold," the official said.

 

Various estimates suggest that 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%. At present, Life Insurance Corporation of India (LIC) is one of the largest employees of agents and has about 12 lakh insurance agents. 

 

The purpose of such practical 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.