It was January 2014 when a crucial meeting was on between insurers and the regulator. About 200 representatives of the industry discussed solutions on how to improve insurance distribution architecture in the country. Cut to 2016, distribution is still the biggest challenge in the industry. While touch-points of sales have seen a jump, sales and penetration remain low.
Insurance distribution in India is divided into tied-agency channel and third party distributors such as corporate agents, brokers and web aggregators. Recent additions to this include insurance marketing firms and common service centres (CSCs).
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But are these enough? Insurance industry wants more. V Manickam, secretary general, Life Insurance Council said that the agency channel has traditionally been the lifeline of the industry. "However, the number of exits of agents is alarming and this is primarily due to the low remuneration that they receive," he said.
Higher fees for agents
The life insurance industry has seen over 30,000 agents exit between April 2015 and February 2016. Lack of a continuous income flow and no proper career development have led to the decline in numbers.
However, the regulator has a solution for this. Insurance Regulatory and Development Authority of India (Irdai) in an exposure draft on remuneration for insurance agents and intermediaries has proposed higher commission for agents. Further, it has also said that insurance companies can give rewards over and above commissions.
This, say insurers, could resolve part of the problems. R M Vishakha, MD & CEO, IndiaFirst Life Insurance said that the proposals would help incentivise agents and would be especially beneficial in the group term space to bring it on par with the non-life sector. (INSURANCE INDUSTRY: A SNAPSHOT)
Even flexible incentives based on performance and business quality would be facilitated, said Deepak Mittal, MD & CEO of Edelweiss Tokio Life.
Commissions have been raised by up to 50 per cent in the first year for term products. This is in order to enable them to do more business and earn more incentives.
