Individual agents rule life insurance business

Individual agents continue to hold a lion’s share in the life insurance industry. IRDAI data shows that individual agents account for 60% of the total new business premium in the life insurance industry.

However, share of agents in the total new business premium has marginally declined by 2% from 62% in FY 2018-19.

While LIC India has procured 95% of its new business premium through individual agents, the share of agents was 25% in the total new business premium for private insurers in FY 2018-19.

Unlike LIC, many private insurance companies sell majority of their policies through corporate agents, particularly banks. Not to forget, many insurance companies have banks as their parent company or majority shareholders. For example, Canara HSBC has HSBC Bank and Canara Bank, HDFC Life has HDFC Bank, SBI Life has SBI, ICICI Prudential ICICI Bank etc. Overall, banks account for 53% of the total new business premium of private insurers.                                                                                                                                                                                                                                                                                                                                      

Meanwhile, IRDAI report says that direct sales of life insurance companies has picked up marginally last fiscal. Growth in sales of individual life insurance policies through direct channel has increased from 6% in FY 2018-19 to 7% in FY 2019-20.

While LIC procured 1% of its new business premium from direct sales, private companies sold 13% of their policies through their direct channels.

Direct channel drive majority of the sales in group life insurance policies. Life insurance companies have sold 98.33% of such policies directly in 2019-20. 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 98.33% for LIC and 64.58% for private insurers. Banks are an important channel for private insurers in group insurance too. They contribute  23% of the total group new business premium.

Individual new business performance of life insurers for FY 2019-20 (in % of premium)