An individual agent of LIC India contributed Rs.4.18 on an average to the new business premium in FY 2021, shows the draft red herring prospectus of LIC India filed with SEBI.
Interestingly, the average agent contribution in new business premium collection of the top five private general insurer was Rs.1.25 lakh per annum in FY 2021, which is 30% of the LIC agent’s contribution.
In FY 2021, LIC’s individual agency force has procured new business premium of Rs.53,500 crore, which was 95% of its total new business premium.
Acknowledging the role of individual agents in India, LIC said that they have to recruit new agents and retain existing agents to continue the growth momentum.
LIC said that one of the major risks to their business is acquiring and retaining agents. The company said that their ability to increase premiums is due to competence of their individual agents as they bring over 95% of the new business premium for the company.
LIC said, “We attract and attempt to retain our individual agents through incentives, such as remuneration paid, retirement benefits, advances, group insurance, training support, pre- and post-sale support services, our reputation, our diverse product range, and our financial position. We may need to increase commission and other benefits in order to attract and retain enough agents, subject to the cap on commission payable to our agents.”
LIC further said, “There is no guarantee that we will be able to find suitable replacements for agents whose services we lose in a timely manner or at all and successfully implement a smooth transition of responsibilities to them. Individual agents may resign or be terminated for various reasons, including non-procurement of minimum business and pursuing other employment avenues for personal reasons. If we fail to attract and retain agents, our ability to market and sell our products and provide our customers with the level of service we aim to provide them could be adversely affected since a considerable decrease in the number of our agents could lead to us having reduced capacity in distributing our products, which could have a material adverse effect on our results of operations.”
Currently, LIC India accounts for 55% of the total agency force of 25 lakh.
