The regulator had earlier suggested that the super agency model might help curb exit of agents and improve insurance penetration. But can such a model really take off? Cafemutual finds out.
The insurance industry has witnessed a huge exodus of agents. Poor penetration is another issue plaguing the industry. IRDA had suggested last month that insurers should adopt a super agency model for distribution to resolve these issues.
Under a super agency model, a big IFA recruits agents and sells insurance through them. The agent would ideally be freed from operational issues and can focus on selling insurance policies, since he will have the backing of the big IFA’s office infrastructure. But is this model really the panacea that the industry has been waiting for?
“I had earlier thought of starting a super agency model, but did not go ahead. To achieve economies of scale, the model needs at least 20 full-time agents working diligently under you. The model needs volumes; I was unable to gather so many agents,” says Pradip Agarwal, an IFA from Kolkata.
Though IRDA has not issued its guidelines for the super agency model, insurers are already gearing up for the rollout. After IRDA’s announcement, Dr P Nandagopal, MD and CEO, IndiaFirst Life Insurance, told Cafemutual, “We look forward to adopting this channel of distribution soon, for increasing penetration in rural as well as urban areas.”
“It will take some time to adopt this model and regularize it in the industry. In today’s scenario, it is difficult to retain 5 agents. So to manage a large number of agents, you need manpower and capital. Another issue is that IRDA should clearly specify the commission structure for this model,” says Deepak Jain, a Kolkata-based advisor.