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Trichy, Tamil Nadu, India
Working as an Assistant in LIC of India, Rockfort BO, Trichy, TN. Having a strong belief that LIC's welfare is our welfare and always trying to work towards that. Also functioning as an office bearer of AIIEA Thanjavur Division.

Monday, September 27, 2010

Insurance agent’s biz cap cut to Rs 100,000

Insurance Regulatory and Development Authority (Irda) has revised the benchmark for minimum annual business by each insurance agent downwards to Rs 100,000 from the earlier proposed Rs 150,000 in annual premium collection.
This follows a presentation made by life insurance companies to lower the requirement as not more than half the present agency force can meet the target.
The final guidelines on persistency of agency channels, prepared by Irda, are expected to be announced in October.
“The life insurance companies have made joint representation asking for the requirement to be lowered,” a senior Irda official said. The final guidelines that are expected in October will revise the benchmark to Rs 100,000 per annum, the official said.
“Not more than 30-40 per cent of our existing agency force gets Rs 150,000 per annum of business,” said Tarun Chugh, executive vice president (sales and distribution) for ICICI Prudential Life Insurance Company, on the sidelines of a recently concluded conference.
Irda in its draft guidelines July 16, 2010, recommended a minimum business generation (in terms of premium collection) by agents and distribution channels of all life insurance companies, in line with that of Life Insurance Corporation of India. As per Irda, persistency of the agents and the various distribution channels remain key in the growth and profitability of any life insurance company.
Amitabh Chaudhry, managing director and CEO of HDFC Standard Life Insurance Company, told FC in an interview that the company would find it difficult to meet the requirement as asked in the draft guidelines. “Not more than 15,000 of the 2 lakh agents that we have would not be producing Rs 150,000 of premium annually and hence, we have written to Irda in our feedback to relook at the benchmark,” he said.
According to the Irda official, this (life insurance companies’ plea) talks a lot about the quality of the agents these companies have. The idea of the draft guidelines is to ensure non-performers are weeded out, as there is huge cost involved in training these agents.
“Though we will look at lowering the requirement to Rs 100,000, we will ensure the performance of these agents is closely monitored by the companies,” the official said.
There are around 3 million agents working with all the life insurance companies in India, of which around 2 million are working with private life insurers.
According to Andrew Cartwright, executive vice president and head actuary of Kotak Life Insurance, there are a lot of dormant life insurance agents who do not actively seek life insurance business. “Around 5,000 of our 37,000 strong agency force will be getting Rs 1.5 lakh worth of business in terms of premium annually,” Cartwright said.
According to him, there are chances that Irda will give some levy to companies to form layers of agents achieving 25 per cent, 50 per cent and 75 per cent of the target in levels.

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