India among the lowest commission paying countries: IRDAI

I salute IRDA efforts understand an agent hard work....SEBI ought to take overview the situation of MF agent too...and consider that MF is still a push product in the country.

I salute IRDA efforts understand an agent hard work....SEBI ought to take overview the situation of MF agent too...and consider that MF is still a push product in the country.

Life Insurance product is intangible product, they not only face competition among agent but also they face competition among all product, now a days young people are not believing much in saving rather they believe in spending ...so agent work is much harder.

Country scores not that bad on literacy rate, with 70% young population, good products (MF and Insurance), why do we still need so much sales/commission. And, inspite of years of selling with high commission, penetration is still low. Most people have exposure to ULIPS and not Term plans.

Does IRDAI realise all this? or doesn't want to realise all this?


Real Problems :-

1) Products are unnecessarily complicated. Why can't IRDAI have primarily term plans?

2) Very high hidden expenses and poor disclosure norms. Side effect of hidden pricing is miss-selling. Agent may be earning 10% commission, but consumer suffers massive expenses on their hard earned savings. When a right advice could have easily segregated investable corpus between debt and equity mutual funds, high commissions drive the sales of ULIPs, which fulfil no clear purpose.

Which wise investor will ever take ULIP over MF, if the purpose is wealth creation? And, why will anyone be required to sell a Term plan with 10-20% commissions? Can anyone answer these questions?

The result of all this is hesitant and cautious investors. The the repercussion is that products that deserve self-adoption, need case to case basis sales.

Regulators must realise all this and reduce complexity, adopt transparent pricing, and welcome fiduciary changes and there will be a automatic demand for these product.

All this is possible only if industry, all regulators and govt take a joint decisions.

More than industry opinions, regulators and govt must rely on "consumer opinions"

This is where Advisory plays a role. Correct approach is to explain how a combination of monthly SIP + ELSS + Term plan plays a better role than ULIP/Money Back. Distributor doesn't do this and that where Advisory is needed. One day, when client realises his mistake, he creates a bad perception for the product. Once such case is good enough to spoil all the efforts of good advisors.

There are cases where at the age 55-60, people are sold money back and ULIPs.

Has IRDAI ever realised the impact of these bad sales. All these clients, one bitten, go in shell and spread a bad word based on bad experience amongst their next generation.

FIRST OF ALL IRDA SHOULD REALISE THAT INSURANCE IS NOT A "LUXURY" BUT A NECESSITY - A SOCIAL OBLIGATION EVERY CITYZEN COMPULSORILY NEEDS. WE MUST STOP CALLING IT AS A FINANCIAL PRODUCT. A FUNDAMENTAL PARADIGM SHIFT IS REQUIRED. PRESENT SCENERIO CREATES ILLS LIKE
UNDER INSURANCE OR OVER INSURANCE
INSURANCE - SOLD AS MONEY MAKING OR TAX SAVING FORMULA
AGENTS MINT MONEY FOR CARRYING OUT A FEW SECRETARIAL JOBS.
MANY INSURERS SOMETIMES LOSE THEIR ENTIRE MONEY ( LAPSING)
POOR KNOWLEDGE OF INSURANCE AGENTS
IN VIEW F ABOVE I SUGGEST THAT ALL INSURANCE COMPANIES SHOULD BE SHUT OFF AND INSURANCE SHOULD BE MADE FREE AND MANDATORY FOR EVERY CITYZEN BY GOVT.

As an advisor, I dont believe any product is a push product. If we advise the right product based on the needs of the customer, then there is nothing known as Push product. we need to Push the product only if there is no need for the customer. Insurance is for covering risk and if rightly advised, customers will buy it. Average commission of 10% is not bad at all, compared to what the Mutual Fund Industry has to offer an average commission of less than a percent.

So why Crib about it!!!!

If insurance Agency is really so remunerative, why 20 Lakh, a few crore would have become agents. Agency termination is high. After the initial enthusiasm in covering near and dear ones, making a livelihood becomes difficult. Agency as a career is generation of self employment which is very important as it helps in social cause.
We have seen how the number of active agents in MF industry are languishing at 20 to 30 thousand while insurance agents are above 20 Lakh.
Advisory model is good but Indians are yet not prepared to pay fees for advice.
I was CEO of a Mutual Fund for 3 years so I am well versed with the woes of IFAs.
I have seen how the handful of TOP NDs exploit the MFs.
Insurance Agency is a noble profession. I don't mean that other Agents are not doing yeomen service. I only mean that Regulators should ensure that Agents are adequately paid to keep their interest in their profession.
My views, not necessary to be accepted. Thanks Khatriji and Cafemutual for posting my views and providing space for discussion.

Thanks to Sh Nilesh Sathe ji , Koi to Hai LIC Agents ki mehnat & profession ko samajh rahe hai
SO commission should be raised, & Insurance staff ko bhi agents ki mehnat ki kadar karni chahiye.
Thanks to all

thanks sir & Very Gd evening Neelesh Sathe sir Really you have to worried for Lic Agents & CLIAs
this is your good huminity N Honesty
we R pray to god for become You CHAIRMAN OF IRDA

Thank You Sathe Ji, you endorsed our view.We are demanding from LIC since about last two years to Pay the commission as per highest limit fixed by IRDAI.We demanded from Govt. Also.Due to increased cost and less commission there are huge turn over of agents.In 5 years about 20 lakhs LIC agents have left the agency !!! The lesser commission rate is also a major factor behind this.We want that young and educated youth join this profession as a full time carrier but looking to low commission rate we are failed to attract young educated group to this prosession.We urge upon IRDAI also to look into this matter and if instruct LIC about higher limit of payment of commission ,agent can do miracles in bringing new business premium,.