Over 1.60 lakh life insurance agents call it quits in CY 2015

Over 1.60 lakh agents in India have left distribution of life insurance policies in the calendar year 2015, shows data collated from Life Insurance Council (LIC). LIC is a trade body of life insurance industry.

The total number of insurance agents went down to 20.4 lakh as on December 31, 2015 from 21.6 lakh as on December 31, 2014.

While the private life insurers witnessed attrition of close to 14,500 agents, Life Insurance Corporation of India lost over one lakh agents in a year. However, LIC has more individual agents as compared to all private life insurers put together. As on December 31, 2015, LIC had 10.8 lakh agents while private insurers had 9.67 lakh agents.

Experts attribute this attrition to low persistency ratio and recruitment of non-serious individuals.

“A few agents find it difficult to retain their clients after the initial years. As a result, the commission income reduces due to low persistency ratio,” said the senior official of a large insurer. He further 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 added.

                                                            Number of agents as on December 31, 2015         

Source: Life Insurance Council

To retain the agents, IRDAI plans to increase the upfront commission. In January, IRDAI had issued an exposure draft on payment of commission and rewards to insurance agents in which it has hiked the first year commission (upfront commission) in pure risk policies like term insurance plans having premium paying term of over 12 years to 50% of annual premium. The regulator has hiked commissions in other segments too.

FY 2013-14 was the last year where the industry saw an addition of new agents after which the life insurance industry has been witnessing attrition of agents.