Stricter Syllabus, Tough Business Environment: 10 Lakh Life insurance Agents Exited in 4 Years.

The introduction of a stricter syllabus and a tough business environment, more than 10 lakh life insurance agents have exited the industry over the past 4 years.

Mr. V. Manickam, Seceratary-General, Life Insurance Council, said , ''Life insurance companies have terminated more than 36 lakh agents and hired about 26 lakh agents over the last 4 years. This marks a net decline of 10 lakh agents for the life Insurance industry. Agency is the main channel for distribution in the life insurance sector. The fall in the total number of agents is a big challenge to the sector”

The life insurance industry has seen a decline in new business premium collection for the past 3 years, particularly in the unit-linked insurance product (ULIP) segment.

After rampant mis-selling in 2010, the Insurance Regulatory and Development Authority (IRDA) revamped ULIP norms by increasing the lock-in period & cutting commissions on their sale for agents from an average of 15% per cent of the premium collected to 5 to 6%. This led to a massive dip in ULIP sales & a shift in focus to traditional insurance products.

In 2011, the IRDA also introduced a new, tougher syllabus & examination pattern for those seeking to get an agency licence. This resulted in a big drop in the number of agents clearing the exam. The regulator identified the cut-off percentage of 50 as one of the major reasons for the fall in the number of agents. Subsequently, 35% was made the minimum pass mark.

Mr. S. Roy Chowdhury, Member (Life), IRDA, said,  “Earlier, only 40% of the agents appearing were able to clear the exam, But after the reduction in the minimum pass percentage, over 80% have been able to pass. So, we expect more agents to step into the life insurance industry from hereon”

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