Forty-two year-old Abhishek Tiwari from Mumbai has been an insurance agent all his life. Tiwari is often among the handful of agents at his life insurer who got bumper sales incentives including international trips, lavish parties at casinos apart from the cash bonuses every year.
However, 2020 has been a dull year for Tiwari. Not because of sales. Tiwari has meticulously met all his sales targets so far and is confident of achieving 2X of the yearly Rs 1.5 crore sales target. But he is of the view that the ‘real’ incentive is missing amidst the Coronavirus outbreak.
“Insurers have moved to virtual events across India due to COVID-19 and the allied lockdown. The whole idea about sales incentive is not just the cash but also the allied benefits including yacht parties and international trips,” he says.
Tiwari is also disappointed that the company opted for a virtual gathering but did not increase the bonus payouts even though agents went out-of-the way to get business during the pandemic.
The COVID-19 outbreak has forced individuals to stay indoors. Amidst this, all events including the annual party for agents planned by companies have also moved online. Even as India is in an unlock-phase, insurers are playing it safe.
Three life insurers told Moneycontrol that it wasn’t feasible to conduct physical events this year. Further, the consensus in the industry is that increasing cash bonuses for agents would be an additional cost, something that life insurers don’t want to incur at a time when business is under pressure.
“Flights have resumed but we don’t think it is safe to travel for leisure yet. Also we don’t want to risk the lives of agents at this time,” says the head of distribution at a bank-led private insurer.
Since March 2020, the Coronavirus outbreak and the subsequent nationwide lockdown had led to a slump in premium collection for life insurers by close to 25 percent. However, from July 2020 onwards there are signs of growth and latest data
for October 2020 showed a 32 percent year-on-year growth in new premiums for life insurers. Insurers however don't want to start spending on additional incentives yet and are going conservative on costs.
Agents, however, are not convinced. Lucknow’s 34-year-old Waseem Sheikh who has worked with five different insurance companies in his 10-year sales career says that this year has been very discouraging.
“We are risking our and our family members’ lives in COVID-19 times by going out for insurance sales purposes. But what do we get in return? Not even a 20 percent rise in incentives,” he adds.
Sheikh says that he has visited parts of Europe including Germany, France as well as Japan and Thailand as part of his ‘reward’ for exceeding his sales targets. He has exceeded his six-month premium target of Rs 60 lakh by 40 percent.
Agents are indispensable for the life insurance business. Every year, close to 30 million individual policies are sold. Of this, close to 45-50 percent are sourced by insurance agents. This year (FY21), the share of agents has gone upto 55-58 percent as banks have slightly shifted focus on core operations amidst the pandemic.
Hence, agents are of the view that despite business moving online they have worked twice as hard sourcing new policies online and also meeting clients offline.
A few are also quick to point out that local destinations have now opened for tourists and that insurers could at least provide local tour package options as an incentive to agents.
Delhi’s Pratima Pandit who has been selling insurance for the past 16 years says that insurers should in fact offer higher incentives to agents at the time of crisis so that they are motivated to sell more policies. She has already completed 80 percent of her annual target of Rs 80 lakh premium.
“Places like Uttarakhand, Goa and Kerala are open for tourists. Why cannot travel, stay and sight-seeing be arranged at these locations? It is these little gestures that help us sustain in this sector,” she adds. Pandit got the regular bonus and an e-commerce voucher as incentive for meeting the targets.
Right now, cost seems to be the major deterrent for insurers to offer travel vouchers or host lavish intimate gatherings. However, the fact remains that at a time when agents have made a comeback as the biggest distributors of insurers in India, a small gesture in the form of higher bonuses or short trips could go a long way.