Moneycontrol
Feb 16, 2017 03:34 PM IST | Source: Moneycontrol.com

Proposal to appoint mentors for insurance agents yet to take off

The proposal to have mentors for insurance agents is still to be implemented in the sector. While agent numbers continue to dwindle, plans to help them stay longer in the industry have been short-lived.

Proposal to appoint mentors for insurance agents yet to take off

The proposal to have mentors for insurance agents is still to be implemented in the sector. While agent numbers continue to dwindle, plans to help them stay longer in the industry have been short-lived.


The regulatory body Insurance Regulatory and Development Authority of India (IRDAI) had in 2011 proposed a set of norms for mentors for junior agents. These senior agents with experience of five years and above were to act as mentors for new joinees helping them with the business and progress their career.


These senior agents could mentor up to 15 licensed agents at a time. As an incentive, the regulator had proposed that the senior agents would be entitled to 25 percent of first-year commissions on the policies sold by those agents who were mentored by them. Agents with at least 100 operational policies could qualify as senior agents.


While there were some differences in the way this mentorship process would be conducted, insurance companies are not in favour of paying additional incentives to them.


“We already have incentives and training for agents. There is no requirement to have additional staff to train new entrants since the costs will have to be borne by us,” said the head of distribution of a mid-life life insurance company.


The proposal to have mentors for new entrants was to help increase the number of active agents at any given point in an insurance company. While the industry had 2,027,184 agents at the end of January 31, 2017, the number of active agents will be only between 50-60 percent of this number.


The agents get active normally when their licences come up for renewal as well as when the financial year rolls to an end to go after new customers. For staying in business as an agent, each company has a persistency formula wherein an agent has to renew a certain number of policies that have been bought in the previous years.


As per industry estimates, only 25-30 percent of the total agency force is purely dependent on insurance commissions for their livelihood. If they are provided additional income, insurers said this would be a tool to attract more people.


The year 2015-16 witnessed a decline of 2.48 percent in the number of individual agents. The number had declined from 2.06 million as on March 31, 2015 to 2.01 million as on March 31, 2016.

While the private life insurers recorded a growth of 5.61 percent, Life Insurance Corporation of India (LIC) recorded a decline of 8.77 percent. LIC had a higher number of individual agents than all private life insurers put together. At the end of the year 2015-16, while the number of agents with LIC stood at 10.62 lakhs, the corresponding number for private sector insurers was 9.55 lakh. 

Sections
Follow us on
Available On