6 out of 10 life insurance policies sold by agents

Insurance agents sold six out of ten life insurance policies (new individual business policies) in FY 2018-19, shows an annual report published by IRDAI.

IRDAI data shows that individual agents have sold 62% of the new individual life insurance policies last fiscal. However, the overall contribution of individual agents in the new business premium had declined from 66% in FY 2017-18. Experts attribute this to high attrition rate in the life insurance industry.

Of the total new business premium of Rs.2.15 lakh crore, agents have brought in Rs. 1.33 lakh crore to the life insurance industry. 

LIC agents continued their dominance in distribution business by selling 96% of total LIC policies sold during FY 2018-19. LIC had collected Rs.1.42 lakh crore in new business premium last fiscal.

Unlike LIC, many private insurance companies sell their policies through corporate agents, particularly banks. Agents have contributed to just 26% of the total business premium of private life insurers.  Banks account for 54% of the new business premium.

It is pertinent to note that many insurance companies have banks as their parent company or majority shareholders. For example, Canara HSBC sold its products through HSBC Bank and Canara Bank, HDFC Life through HDFC Bank, SBI Life through SBI, ICICI Prudential through ICICI Bank etc. 

Meanwhile, IRDAI report says that direct sales of life insurance companies have picked up marginally last fiscal. Growth in sales of individual life insurance policies through direct channel has increased from 5.60% in FY 2017-18 to 6.42% in FY 2018-19, a growth of 82 bps.

While LIC procured 1.24% of its new business premium from direct sales, private companies sold 12.08% of their policies through their direct channels.

Direct channel drove majority of the sales in group life insurance policies. Life insurance companies have sold 90.7% of such policies directly in 2018-19. Corporates tend to buy life insurance policies for their employees directly from life insurers to save cost. The contribution of direct channel in new business premium for group life policies was 97.7% for LIC and 66.1% for private insurers. Banks were an important channel for private insurers in group insurance too. They contributed 19% of the total group new business premium.

Individual new business performance of life insurers for FY 2017-18 (in % of premium)