More agents join force to sell insurance

Regulator raises concern about high attrition rate despite net increase in number by 3.1%

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Selling insurance seems to be a gainful employment, attracting a large number of people to become agents of both private insurers as well as Life Insurance Corporation of India (LIC).

According to the Insurance Regulatory and Development Authority of India (Irdai) Annual Report for 2013-14, the number of insurance agents have increased by 3.1 per cent, after a steady decline since FY11. As of March 31, 2014, India has 2.18 million insurance agents, up from 2.12 million on March 31 the previous year. Private insurers recorded an increase of 4.5 per cent and LIC two per cent in the numbers of their agents.

“LIC had a higher number of individual agents than all private life insurers put together,” said Irdai in its report. At the end of FY14, the number of agents with LIC stood at 1.19 million, the corresponding number for private sector insurers was 0.99 million.

In 2013-14, the total number of agents appointed was 0.72 million and the number of agents terminated was as high as 0.65 million. While private insurers appointed 0.38 million agents, about 0.34 million agents were terminated. At LIC, 0.31 million agents were terminated while it appointed 0.34 million agents.

The regulator has raised concerns about high levels of attrition among insurance agents. In the annual report, it said even though there was a net increase in the number of individual agents, such high attrition may adversely affect life insurers’ business, policy persistency and public perception of the agency channel as a stable career.

“It is, therefore, in the interest of all the stakeholders to work on reducing the turnover of agents and building a stable and growing agency force,” said Irdai.

Life insurance companies have been making additional efforts to ensure that the longevity of an agent’s career in the organisation and in the insurance sector.

Apart from offering training and mentoring, financial and non-financial incentives are being offered to high-performing agents to attract and retain them in the sector. Agent attrition has been an ongoing issue in the life insurance sector.

Irdai has decided to remove minimum persistency criteria (the minimum number of policies sold by agents that have to be renewed), leaving it to the board of each life insurer to have their own norms on persistency, the insurance regulator said.

Before this, agents were required to have a minimum persistency rate of at least 50 per cent to remain in the business.