The insurance regulator has raised concerns over the high rate of agent attrition in the life insurance industry, and said that this may affect life insurers’ business.
In 2013-14, the total number of agents appointed by life insurers was 7.25 lakh, but those terminated was as high as 6.59 lakh.
While private insurers appointed 3.83 lakh agents and terminated 3.40 lakh, LIC appointed 3.41 lakh and terminated 3.18 lakh.
“Even though there was a net increase in the number of individual agents, such high attrition may adversely affect life insurers’ business, policy persistency and public perception of the agency channel as a stable career,” said the Insurance Regulatory and Development Authority of India (IRDAI) in its 2013-14 annual report.
The industry needs to work on reducing the turnover of agents and build a stable and growing agency force, the report said.
Agent attrition has been a major issue for the life insurance industry for the last three years, especially after the industry took a hit on the back of changing product regulations.
To tackle this issue, the had earlier reduced the pass percentage from 50 per cent to 35 per cent. It also decided to remove the persistency criteria (the minimum number of policies sold by agents who seek renewal), leaving it to the board of each life insurer to have their own norms on persistency. Before this, agents were required to have a minimum persistency rate of 50 per cent to remain in business.
Further, the regulator said that keeping in mind the gap created by the exit of insurance agents in servicing life insurance policies and also to promote persistency, it has prescribed that insurers allot lapsed orphan policies to individual insurance agents whose licence is in force. The allottee agent’s details would be intimated by the insurer to the policyholder concerned.