High termination rate dogs insurance agents

[NewsDesk]

10.4 lakh agents lose jobs as insurers try to cut costs

Being an insurance agent seems to be not so an attractive a career option anymore. While Life Insurance Corporation of India (LIC) is still regularly conducting agent recruitment drives at railway stations and with emails urging individuals to become insurance agents, it seems few agents are managing to strike gold at the end of the tunnel.

According to the Irda annual report for 2010-11 released on Wednesday, while life insurance companies appointed 7.02 lakh insurance agents in the financial year, the number of agents terminated were 10.40 lakh, indicating a termination rate of 39.42 per cent. In other words almost 3.4 lakh agents left the profession, which in India has largely been seen as a part time activity.

With the low average earnings insurance companies who are trying to cut costs are weeding out inactive agents and are terminating them. Agent termination was much higher in case of private insurers compared to LIC. While private insurers appointed 3.95 lakh agents, they terminated 6.69 lakh agents, a termination rate of 51 per cent. In other words private insurers fired over 2.7 lakh agents who have a tough job of selling market-linked savings schemes that also offer an insurance cover.

On the other hand, LIC terminated 3.72 lakh agents while it appointed 3.06 lakh agents. With the high agent termination rate, policies procured by these agents could get lapsed due of lack of servicing support, feel experts. “Such high turnover may have negative consequences. Firstly, it is a huge drain on financials of insurers who spend a lot of money and time on prospecting, appointing and training of these agents,” said the IRDA Annual report.

Source - mydigitalfc.com

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[Madhura]

Main reason for decline is stopping of ULIP product by IRDA.