However, high attrition remains a cause of concern for the industry.
After witnessing a continuous attrition of distributors for the past three years, the life insurance companies have finally registered a moderate growth of 3.1% in terms of number of insurance agents in FY 2013-14. The industry has added close to 66,000 new agents in FY 2013-14 as the total number of insurance agents has gone up to 21.88 lakh as on March 2014 from 21.22 lakh as on March 2013, shows IRDAI’s annual report.
While the private life insurers recorded an increase of 4.5% in terms of number of agents, LIC showed a growth of 2% last fiscal. LIC saw an addition of 23000 agents in FY 2013-14 whereas their private counterparts added 43000 distributors.
However, LIC has a higher number of individual agents than all private life insurers put together. As on March 2014, the number of agents with LIC stood at 11.96 lakh, the corresponding number for private insurers was 9.92 lakh.
The slight increase in agency force was due to improvement in recruitment standards. A national sales head of a large insurance company said, “Private insurers have improved their agent recruitment process and training quality in order to create skilled distribution force to grow business.”
Another senior official of a private insurance company pointed out that the new product guideline has helped industry check its rising attrition. “The new product guideline comes with a reduced commission structure and higher transparency. This ensures that only serious distributors will continue with the new model thereby reducing mis-selling and improving service quality,” he said.
Though there was a net increase in number of individual agents, more than 6.5 lakh agents left the industry in FY 2013-14. Both LIC and private life insurers recruited 7.2 lakh agents in FY 2013-14. “Such a high attrition may adversely affect life insurers business, policy persistency and public perception of the agency channel as a stable career. It is, therefore, in the interest of all stakeholders to work on reducing the turnover of agents and build a stable and growing agency force,” said IRDAI.
Experts attributed this high attrition to reduced commission structure and changing regulatory environment. Majority of these agents were empanelled with LIC. It had lost over 3 lakh agents in net in the previous fiscal with its distribution force increasing slightly to 11.95 lakh in FY 2013-13 to 11.72 agents in FY 2012-13. Similarly, the 23 private insurers saw a dropout of 3.4 lakh agents during the same period.