Slowdown in insurance sector hits agents hard

The slowdown in the life insurance industry has taken a toll on individual agents. According to data collected by Life Insurance Council, around 331,000 agents lost their jobs in the April-December period, resulting in a 34 per cent drop in new premium collection from agency channels.

Premiums collected by selling new policies by agents in the same period stood at Rs 31,500 crore, compared with Rs 47,500 crore in the corresponding period of the previous year. The number of individual agents as on December 31 stood at 2.38 million, compared with 2.71 million in the year-ago period.

The total premium collected by the life insurance sector, including new business premium and renewal premium, declined three per cent to Rs 180,240 crore from Rs 186,396 crore. This was primarily due to the 17 per cent decline in first-year, or new, premium collection during the first nine months of the financial year.

However, renewal premium collection rose 8.75 per cent to Rs 108,232 crore, against Rs 99,523 crore in the corresponding period a year ago. The decline in sales, however, did not impact capital infusion in the sector. Till December 31, the life insurance industry had infused Rs 1,977 crore.

S B Mathur, secretary general, Life Insurance Council, said, “The infusion of capital to the tune of $400 million in nine months indicates promoters, both foreign and domestic, have a long-term appetite. As insurance has a long gestation period and companies record losses during the first 10-15 years, these have to be supported by capital.

“Also, given the current economic situation, in which capital is scarce and foreign promoters want to remain invested in life insurance in India, we feel the time is opportune for increasing the foreign direct investment limit in insurance to 49 per cent.”