annual report 2009-10 - IRDA

ANNUAL REPORT 2009-10II.2.2 The turnover of agents continued to be a matterof concern for the industry even in the year 2009-10.While the number of agents appointed was 9.37 lakh,the number of agents terminated was as high as 8.97lakh. The scenario was worse for private insurers ascompared to LIC. The private insurers appointed 6.25lakh agents, while at the same time terminating 6.42lakh agents. On the other hand, LIC terminated 2.54lakh agents while appointing 3.12 lakh agents. Thus,the public sector insurer was a net contributor to theagency force. Such high turnover in the agency forceis a matter of concern, as it could have negativeconsequences for the life insurance industry as awhole. Firstly, it is a huge drain on the financials ofthe insurers who invest considerably in terms of moneyand time on prospecting, appointing and training ofindividual agents. Secondly, the policies procured bythese agents are rendered “orphan” upon terminationof the respective agent, and thereafter often result inlapsation due to absence of servicing support. Thirdly,the image of the profession of agents too suffers asetback since the public in general, and prospectiveagents in particular, perceive it as lacking in stability,thus making it more difficult for insurers to enrolcommitted agents. It is, therefore, in the interest of allstakeholders to work at finding a viable solution toreduce the turnover of individual agents and improvetheir productivity.TABLE 56DETAILS OF CORPORATE AGENTS : LIFE INSURERSInsurer As on 1 st April, 2009 Additions Deletions As on 31 st March, 2010Private 2091 686 357 2420LIC 415 167 72 510Total 2506 853 429 2930II.2.3 As on 31 st March, 2010 the number of corporateagents stood at 2,930. While 853 new corporateagents were added during 2009-10, licences of 429corporate agents were terminated, resulting in a 16.92per cent increase (3.77 per cent in 2008-09) in thenumber of corporate agents over the previous year.II.2.4 It has been observed that the agents are optingfor transfer of their agency licence from one insurancecompany to another company. In such cases, thepolicyholders have been put to inconvenience apartfrom losing the benefits of the policy due todiscontinuance of service. The Authority, in theinterests of policyholders has stepped-in to mandatethat “every insurance company shall make adequatearrangements for servicing of policies” before issuingNo Objection Certificate (NOC) to the concernedagent. Both, the insurers and corporate agents arerequired to inform the policyholders, in writing, aboutthe arrangements made to service their policies aswell as to ensure that they fulfil obligations topolicyholders at the levels prescribed by IRDA.CHANNEL-WISE NEW BUSINESS PERFORMANCEIndividual New BusinessII.2.5 For the first time since the opening up of theinsurance sector to private participation, individualagents have held on to their share in the new businesspremium. The share of individual agents in the newbusiness premium, underwritten increased marginallyto 79.61 per cent in 2009-10, as against 79.57 percent in 2008-09.II.2.6 Amongst the other channels, banks increasedtheir share in new business premium from 9.69 percent in 2008-09 to 10.60 per cent in 2009-10. Theshare of direct selling decreased from 4.76 per centin 2008-09 to 4.13 per cent in 2009-10. While theprivate insurers have procured 10.73 per cent of theirnew business through the direct selling channel, LICdid not procure any new business through thischannel, and has yet to make in-roads through thischannel of distribution to procure new individualbusiness.II.2.7 The share of corporate agents in the newbusiness premium procured by the private life insurersis significant at 35.16 per cent in 2009-10 as comparedto 31.70 per cent in 2008-09. On the other hand, LIChas continued to rely on its agency force, and 97.75per cent of its new business premium is procured byindividual agents.60