CHENNAI: The $50 billion Indian life insurance industry is facing a people problem. The 24 life insurers collectively lost nearly nine lakh agents in just five years to other sectors.
State-run Life Insurance Corporation of India (LIC) has been the worst-hit with more than two lakh agents quitting in the past eight months. The sector has been losing more agents than it has been adding. If insurers added 4.1 lakh agents between April and November 2015, they lost 4.41 lakh during the same period, according to figures by Life Insurance Council.
“Youngsters do not want to become insurance agents. Selling insurance is a tough job — the youth find it difficult to understand and communicate. Despite training, we are unable to retain them,” V Manickam, Secretary, Life Insurance Council told Express. Insurers have been losing about 30,000-40,000 agents every month and the number now stands at 20,37,007 agents as on November, 2015 down from 28,98,653 in FY10. “These 20 lakh agents reached out to just 25 crore people and still 75 crore are yet to be addressed,” Manickam said.
The country’s largest insurer LIC, which gets nearly 96 per cent of its business through agents as on FY14, lost 2,65,131 agents in April-November 2015. LIC added 1,86,503 during the same period. To contain attrition, LIC in April launched a TV ad to attract housewives and students. Continued on: P6
“Attrition is a common problem. We invest in training and provide a performance-based, well-defined career progression for front-line managers to impress upon the need for looking at a long-term career with us,” said Manoj Jain, MD, Shriram Life Insurance Company Ltd, whose agent base fell from 21,553 in FY10 to 4,412 as on November, 2015.
Considering high attrition, private players are relying heavily on alternate channels like banks and corporate agents to distribute products.
While LIC sells only 2.77 per cent of its total new policies via banks, private insurers collectively mop up 43.62 per cent of their business via banks as on FY14.
“Agent’s earnings come only when the proposal is converted into policy. Hence the necessity to have simple products. For performing agents, we also offer employment opportunities,” said Manoj.
Sector regulator IRDAI, on its part, reduced the minimum pass percentage for insurance agent’s pre-recruitment examination to 35 per cent in 2013 from 50 per cent earlier.
According to Manickam, remuneration is fairly good for those putting in hard work.
However, youth get attracted to other sectors like retail or call centres, he said.
LIC was yet to comment on the issue at the time of going to press.