Out of 4.41 crore policies sold last year, individual agents sold 3.90 crore policies, online sales register exponential growth.
Nine out of ten insurance policies (both individual and group insurance policies) were sold by individual insurance agents in FY 2012-13, shows an annual report published by IRDA.
Out of 4.41 crore policies sold during the previous fiscal, individual agents sold 3.90 crore policies. In terms of new business premium collection, individual agents contributed close to Rs. 50,000 crore or 46% of total new business premium (Rs. 1.07 lakh crore) in FY 2012-13.
LIC agents continued their dominance in distribution business by selling 3.60 crore policies or around 82% of total policies sold during FY 2012-13. LIC agents collected Rs. 41,276 crore in new business premium.
Unlike LIC, many private insurance companies channelized their policies through their corporate agents, particularly banks. In fact, life insurance companies like Canara HSBC, Star Union Daichi and India First have sold 100%, 99% and 88% of policies respectively through banks in FY 2012-13.
Among other players, HDFC Life (70%), ICICI Prudential (45%), Kotak Mahindra (51%), SBI Life (44%), IDBI Federal (72%) and PNB Metlife (60%) have sold majority of their policies through banks. LIC has channelized only 3% of its policies through banks during the previous fiscal.
The CEO of an insurance company told Cafemutual that many insurance companies have banks as their parent company or majority shareholders. For example, Canara HSBC channelized its products product through HSBC Bank and Canara bank, HDFC Life through HDFC Bank etc. He said “Some insurers like Star Union Daichi and India First have recently opened their distribution channel for individual agents. In fact, SBI Life had opened its distribution channel for individual agents after two years of operations. These insurers are predominantly dependant on their banking channel for distribution. On the other hand, companies like us get limited business from banks. Hence, we are eagerly waiting for banks to acts as insurance brokers.”
Pankaj Mathpal of Optima Money is of the view banks use their database of clients to sell financial products like insurance policies and mutual funds. Also, some insurance companies compensate banks better compared to their individual agents in form of marketing expenses resulting in generating a healthy business for them, he added.
In terms of new business premium collection, banks contributed close to Rs. 11,000 crore through sales of insurance policies.
Policies including individual and group insurance sold in FY 2012-13
|
Sector (Total policies sold in FY 2012-13) |
Policies sold by agents in lakh |
Policies sold by banks in lakh |
Policies sold by brokers in lakh |
Policies sold through direct channel in lakh |
|
Private insurers (74 lakh) |
33 |
20 |
4 |
7 |
|
Public insurer or LIC (3.67 crore) |
361 |
5 |
0.04 |
1 |
|
Total (4.41 crore) |
394 |
25 |
4 |
8 |
Source: IRDA
Note: Remaining 2% insurance policies sold by other sources like corporate agents except banks.
Online sales
Sales of policies through direct channel have increased exponentially in FY 2012-13. With over 8 lakh policies sold through this route, direct channel has contributed 40% or Rs. 42,380 crore in new business premium collection on account of healthy business from group insurance segment. Direct channel has collected Rs. 40,791 crore in new business premium collection in FY 2012-13.
GN Agarwal, Whole Time Director, Future Generali India Life insurance attributed this growth to increasing awareness among people about online policies. He said many people prefer buying insurance policies through online platform which is cheaper than buying offline.
“Generally, group insurance policies are bought by corporate houses who like to deal directly with insurers due to added benefits of low premium and exclusion from some charges, ” said Mathpal.
Insurance brokers
Meanwhile, insurance brokers sold around 4 lakh policies in previous fiscal contributing only one percent to the industry. Agarwal said that many brokers don’t prefer to sell life insurance to retail customers as it entails heavy marketing expenses. Instead, they focus on selling large ticket size non-life products like group health insurance, motor insurance, liability insurance etc. to corporates.