More than 8 lakh life insurance agents call it quits

While many life insurers lost their agents during previous fiscal, a few like ICICI Prudential, SBI Life and Kotak Mahindra witnessed a growth in their distribution force in FY 2012-13.

According to IRDA data, more than eight lakh life insurance agents left the industry in FY 2012-13 due to reduced commission structure and changing regulatory environment. Majority of these agents were empanelled with private sector insurers.

The industry added 5.7 lakh new agents. Both LIC and private insurers have recruited 2.8 lakh new agents each. With 5.7 lakh new agents joining the industry, the net reduction in distribution force stood at 2.4 lakh.

Public sector behemoth LIC lost over one lakh agents in net in the previous fiscal with its distribution force dropping from 12.7 lakh in FY 2011-12 to 11.7 agents in FY 2012-13. The 23 private insurers saw a net dropout of 1.3 lakh agents during the same period.

Experts attribute this decline to recruitment of non-serious individuals and reduction in commission structure.

Pankaj Mathpal of Optima Money feels that laxity in agent’s recruitment process is a major reason behind exodus of life insurance agents. He says that some private insurance companies often recruit unskilled people to achieve their internal targets. Such agents, after acquiring a few clients from their family and friends circle, usually leave the profession. He stressed the need of recruiting committed agents who want to opt for distribution as a full time profession.

“Like other industries, life insurance industry too witnessed a decline in sales due to slowdown in economy during last fiscal. As a result, distributors found it difficult to sell insurance policies and left the profession,” said GN Agarwal, Whole Time Director, Future Generali India Life Insurance.

“In the last three years, commissions have fallen drastically due to regulatory constraints which has made many agents discontinue their distribution business,” said Subrat Mohanty, Head Distribution, Bajaj Allainz Life Insurance. He expects that dropouts of agents will persist since new products come with a reduced commission structure and higher transparency. On the positive side, only serious players will continue with the new model thereby reducing mis-selling and ensuring better quality service, he added.

While many life insurers lost their agents during previous fiscal, companies like ICICI Prudential, SBI Life and Kotak Mahindra witnessed growth in their agent force. A senior official from a mid-sized life insurer told Cafemutual that many companies recruit unit managers to increase their distribution force. Typically, these managers approach their family members and friends to motivate them for becoming an insurance agent. Also, these managers have to achieve their target within a stipulated time in order to get incentives, he added.

Total number of agents of top ten life insurers

Source: IRDA