The Metamorphosis Of The Insurance Agent

There's a paradigm shift taking place in the insurance agents business. Cut-throat rivalry has made it imperative for insurers to hire well-bred and educated agents, akin to the transformation that has taken place in the share broking business.

The risk firms are zeroing in on MBAs, chartered accountants, former bankers, lawyers, financial experts plus housewives with the right connections, to boost sales and mop up the premium cream.

The new companies, however, face a major hurdle -- their inability to offer fixed remuneration to agents.

However, many management graduates and professionals are willing to join only on part-time basis as ICICI Prudential Life Insurance Company managing director Shikha Sharma points out: "We have very few MBAs on a full-time basis."

The Insurance Regulatory and Development Authority (IRDA) has struck down a proposal made by the new players to offer stipends to agents.

The regulator argued on the cost factor, stating that stipends paid would be taken from the policyholders' fund. This would be a loss to the policyholder.

Life insurance companies like Max New York Life are resorting to offering advances against commissions in the form of monthly payments of around Rs 4,000. This is one way to entice better quality agents, offsetting the monthly outgo against future commissions.

"There could be problems should these agents not perform. But then it is a call that the company will have to make," said a CEO of life insurer.

OM Kotak Mahindra Insurance Company, which commenced operations early this financial year, has sold two policies of Rs 1 crore each and one for Rs 1.25 crore to three businessmen.

The company's CEO Shivaji Dam attributes this to agents having good contacts and having built up strong relationships. The Life Insurance Corporation of India (LIC) with its field force of over eight lakh agents and 18,000 development officers, has sold Rs 752 crore worth of policies where the value exceeds Rs 1 crore in the last six months.

OM Kotak has taken on three management students at Calcutta. With their superior intelligence and good contacts, as well as support from families, they are doing well, says Dam.

It's all about relationships and connections where it counts. A CEO of a life insurance company was heard telling a friend of his to cancel the LIC policy. "I can offer you a better cover," he points out. Even as the agency force is still at a nascent stage, new players are capitalising on their corporate and personal relationships.

They equally demand the same from their field force. A prospective agent has to undergo a 10-hour screen test before OM Kotak Mahindra Insurance Company will sign him on to the mandatory 100-hour training programme as stipulated by the IRDA.

"We look into his profile, his family and his ability to sell. It is difficult to get good agents, but we are trying to see that our agents fall into the 20 per cent productive agency force of LIC," says Dam.

SBI Life Insurance Company among many others has taken on a number of bank employees who opted for voluntary retirement.

Said the company official: "This makes sense, as they already have the experience in customer contacts, and understanding of finance to advise their fellow comrades."