While agents contribute 80 percent of new business premium under individual policies in FY 2013-14, online distribution channel registers exponential growth.
Individual agents contribute 79% of new business premium collected under individual policies in FY 2013-14, shows an annual report published by IRDAI. It has gone up by 2% from 77% in FY 2012-13.
While LIC has procured 96% of its individual new business premium under individual policies through its agents, their private counterparts acquired around 40% of individual new business premium through agents. However, individual agents has contributed a little less than 2% of the total new business premium collection under group policies.
All in all, individual agents contributed 41% of total new business premium collection of both individual and group policies in FY 2013-14. In terms of new business premium collection, individual agents contributed close to Rs. 50,000 crore through sales of such policies.
Meanwhile, the share of corporate agents, which was 18% during 2012-13, has decreased to 17% in the FY 2013-14. The share of corporate agents in the new business premium procured by the private life insurers was significant at 48% in the previous fiscal. Among corporate agents, the share of banks in total new business premium had come down marginally to 16% in FY 2013-14.
Many bank promoted private insurance companies channelized their policies through their parent companies. In fact, life insurance companies like Canara HSBC, Star Union Daichi and India First have sold almost 100% of their policies through banks. Banks contributed close to Rs. 19,000 crore to sales of life insurance policies.
Interestingly, direct channel which involves online sales through company’s website is gaining momentum at a faster pace. Sales through direct channel have increased exponentially to 48% in FY 2013-14. It contributed Rs. 57000 crore in new business premium on account of healthy business from group insurance segment. Direct channel has collected Rs. 42,380 crore in new business premium collection in FY 2012-13.
A national sales head of a private insurance company 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. Also, 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, he added.
Insurance brokers contributed a miniscule 1% to the new business premium of both individual and group policies in previous fiscal. Typically, insurance 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.