Don't let high agent churn hurt you

While the company may send an alert, the onus is on the customer to ensure timely payments

The number of life insurance agents with public sector behemoth Life Insurance Corporation (LIC) of India declined by about 76,000 over the one-year period ended July 2016. For the industry as a whole, the number of agents declined by 27,000 over the same period (private sector insurers added around 50,000 agents). Insurance companies terminate agents when the latter are unable to fulfil their minimum sales target for the year. If your agent was among those who quit the industry, here is how you should deal with the situation.

When an agent quits, his customers lose their point of contact with the insurance company, and may have to deal with it directly, which can at times be inconvenient. The most important service an agent renders his customers is to offer timely reminder that the annual premium payment is due. Says Hyderabad-based V Venkateswara Rao, LIC’s top agent for the past four years: “If the agent has gone out of business and the reminder is not given on time, many customers don't pay the premium on their own and their policy lapses.”

Customers also depend on their agent to make a claim, for change of address or nominee in the policy, to obtain a loan against the policy, and so on. When an old policy matures, they rely on the agent to get them the cheque for the maturity amount.

If your agent has quit

You may still receive SMS and email reminders from the insurer when premium is due

The insurer could re-allot the policy to its direct sales team, or to another agent

Set up your own reminders to ensure that you pay the premium on time. Pay online

Lapsed policies can be revived by paying the premium and interest charge

If the policy has remained lapsed for more than a year, you may have to undergo a health check-up

If an agent quits the business and his policy is not serviced, it becomes known as an ‘orphaned’ policy. The insurance company may re-allot such policies to its direct sales force, but here the customer does not enjoy the personalised rapport that he had with his agent. The policy could also be re-assigned to a new agent. “Taking over orphaned policies allows new agents to build a relationship with those customers and get their future business,” says Bharat Parekh, an MDRT (million dollar round table) LIC agent from Nagpur. Sometimes, however, there is the risk that the new agent may not service the orphaned policy properly as the commission he earns from it is small.

 
Nowadays, customers also get reminder e-mails and SMSes directly from the insurance company. Customers should also set up their own reminders and start paying their premium online or at the nearest branch. In case the policy has lapsed, it will have to be revived. Says Kapil Mehta, chief executive officer, Secure Now Insurance Broker: “If you pay within 30 days, you will just need to pay the premium. Up to two years, you can revive the policy by paying the premium and an interest charge, and making a declaration of good health.

After two years, the insurer may revive the policy but is not obliged to do so. “In case of any delay, the insurer is within his rights to ask the customer to undergo a health check-up. The usual market practice is to ask for it after a year has elapsed.

Given the considerable churn of agents, choose the agent from whom you buy a policy carefully. “Buy policies from professional and established agents who have been in the business for a long time. Give preference to those who have a proper establishment and support staff,” says Parekh. Mehta suggests opting for MDRT agents who have reached a high level of earnings. If you can’t find one, opt for an agent with a four-five year track record. “By then, he would have built up a considerable number of clients. He would have a renewal income to protect, and would, hence, remain committed to the business,” says Mehta.