The changes in regulatory norms and
reduction in commissions lead to termination of insurance licenses
IRDA data shows that around 15.85 lakh
insurance agents have left the industry in 2011. During the first half of the
year 10.45 lakh agents terminated their license and by the second half another 5.4
lakh left the industry. Experts from the industry reveal that the steep drop of
commissions and introduction of strict regulation from September 2011 is
leading to walkout of the agents.
“Earlier agents used to receive average
commission of 50% which has currently dropped to 10%. Even IRDA has introduced
new curriculum for agents from September 2011 which is stricter than the
existing one,” said P Nandagopal, Managing Director and CEO, IndiaFirst Life Insurance Company. Over the past couple of years, almost all
insurers have cut down on the number of their sales managers on their payrolls.
“Insurance companies have now become strict
with the sales target to be achieved by the agents which is leading to
termination of licenses by many agents,” said a top official from HDFC Life
Insurance.