Answering a query of an intermediary on promoting direct sales, TS Vijayan, IRDAI Chairman said that the insurance regulator has no plans to push insurance companies to reduce the premium amount on direct sales. He was speaking at an industry event recently in Mumbai.
In fact, Vijayan said that insurance companies should continue to leverage agency channel to grow business. He said that policyholders need handholding of advisors to buy insurance policies.
He further said that distributors play a key role in the growth of the insurance industry. They are the means of communication between insurance companies and consumers. It takes a lot of effort to solicit insurance policies and give after sales services to clients, he said.
IRDAI data shows that direct sales channel in which life insurance companies sell insurance policies on their own through online channel has not taken off well largely due to non-differential pricing. Many companies do not offer different premiums for policies sold through direct and agency channels. They offer uniform premium across distribution channel i.e. agency channel and direct sales.
Only a few companies offer discount of up to 10% in term insurance policies if a person buys it online.
IRDAI data shows, the online sales channel had contributed 0.22% of new business premium in FY 2015-16. Private insurers sold around 42,000 life policies via the online platform whereas LIC sold 4,500 life insurance policies in FY 2015-16.