Over 51,250 agents have left distribution of life insurance policies in the financial year 2015-16, shows data collated from Life Insurance Council (LIC). LIC is a trade body of life insurance industry.
The total strength of insurance agents went down to 20.17 lakh as on March 31, 2016 from 20.68 lakh as on April 1, 2015.
State owned LIC India has lost over one lakh agents in FY 2015-16. Experts attribute this attrition to low persistency ratio and recruitment of non-serious agents. However, LIC has more individual agents as compared to all private life insurers put together. As on March 31, 2016, LIC had 10.62 lakh agents while private insurers had 9.55 lakh agents.
Interestingly, private life insurers have added close to 50,800 agents during this period. The increase in agency force was due to improvement in recruitment standards. The national sales head of a large private sector insurance company said, “Private insurers have improved their agent recruitment process and training quality in order to create skilled distribution force to grow business.”
In FY14-15, over 1.20 lakh insurance agents have left distribution business. The life insurance industry has been seeing attrition since FY 2010-11, barring FY 2013-14 during which the industry added 66,000 agents.
IRDAI has proposed to increase the upfront commission in order to check this attrition. 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.
