Mumbai: The poor success rate of agents in selling life insurance products has led to high termination levels of agents in 2018-19. The industry continued to grapple with the problem of large agency termination during the year.
Sample this; during 2018-19, the total number of agents appointed by the life insurers were 6.46 lakh and the number of agents terminated were a whopping 5.34 lakh.
While the private insurers appointed 3.82 lakh agents, they terminated 3 lakh agents. Similarly LIC of India appointed 2.64 lakh agents and terminated 2.33 lakh according to the recent annual report 2018-19 released by the Insurance Regulatory and Development Authority of India (Irdai).
Reduction in the number of agents adversely affects the life insurers’ business, persistency and public perception of the agency channel as a stable career. It is, therefore, in the interest of the stakeholders to work on reducing the turnover of agents and build a stable and growing agency force.
“Termination problem is due to poor productivity of agents. Accept-ance of protection products is low among people and therefore the success rate of agents is low,” said the head of a large private life insurer.
The number of individual agents as on March 31, 2019 were 21.95 lakh as against 20.83 lakh in the previous year. At the end of the year 2018-19, while the number of agents with LIC stood at 11.79 lakh, the number for the private sector insurers was 10.16 lakh.
Large agent termination has continued over the years despite the insurance regulator lowering the pass percentage for a person to qualify as an agent to 35 per cent from 50 per cent earlier, making the syllabus easier and allowing life insurance companies to have their own board-approved policy for classifying their agents as active. Therefore, each insurer has a different norm for terminating an agent.
