Life insurance players are facing a tough time in increasing their business. They are eager to ramp up their distribution network by empanelling CFPs.
With over three lakh agents exiting the industry in the first three quarters of FY 2011-12 (read more here) and IRDA’s new syllabus proving to be a deterrent for many insurance agents, insurers are contemplating new ways to expand their distribution network. They look forward to adding certified financial planners (CFPs) to their distribution channel.
“Insurance today is not only about meeting targets. Advisors have to ensure that the proposed product is suitable for the prospect to meet his/her needs. Also, it is not easy to pass the new IRDA syllabus. This has opened many new opportunities for IFAs holding CFP certification,” said Dr. P. Nandagopal, MD and CEO of IndiaFirst.
CFPs are time and again approached by insurers for recommending their products to clients. However, the tied agency model puts off IFAs who seek to give best-of-breed products based on client needs. They usually advise their clients to buy term plans online.
“Insurers have been approaching us for a long time. In recent times, however, I have observed a gradual increase in their activity as many insurance agents have left the industry. The insurance business has declined over the last ten months,” said Mukesh Dedhia, a Mumbai-based CFP.
“CFPs are ideal for need-based selling as they write comprehensive financial plans which always include an insurance policy. With IRDA stressing on need-based selling, we feel it is the appropriate way to expand our distribution channel. We have already engaged a few CFPs but we plan to add more who understand clients’ requirements,” said a top official from SBI Life.
Another Mumbai-based financial advisor – Amar Pandit agrees, “When we write a financial plan for clients, it takes care of all their financial goals and also includes an insurance policy. We have been approached by some insurers for suggesting their products.”