Insurance agents with more than five years of experience are in for a pleasant surprise. In a move that could provide additional income avenues to these agents, the Insurance Regulatory and Development Authority (Irda) plans a new set of agents — senior agents — to mentor junior agents.
In a recent discussion paper, Irda had suggested senior agents be allowed to mentor up to 15 licensed agents at a time, and as an incentive, the senior agents would be entitled to 25 per cent of first-year commissions on the policies sold by agents mentored by them.
The move is expected to increase the productivity of the agency force in the insurance industry, lure more agents into the system and, most important, throw up additional avenues to experienced agents, particularly those solely dependent on commissions earned for their livelihood, said J Hari Narayan, chairman, Irda.
HANDHOLDING
* Those with 5 years of experience would be eligible to be senior agents
* To be a senior agent, an agent should have at least 100 policies in force
* A senior agent would monitor up to 15 new or junior agents
* They will get 25% of commissions earned by those they mentored in the first year
“Agency as a profession is becoming less attractive to the younger generation. We have seen only 15-20 per cent of the total agency force is solely dependent on commissions for their livelihood. Hence, in a bid to empower these agents and attract new people, there is a need to do something substantial about the agency channel,” he said.
Agents with at least five years of experience, and at least 100 operational policies, would qualify as senior agents. Insurance companies have been asked for their response by the end of this month.
Empowering experienced agents is important, since over the last one year, more than 500,000 agents left the industry, owing to low commissions and declining sales. The impact has been more severe for the life insurance sector, in which 85 per cent of the premiums collected are accounted for by the agency channel. According to Irda data, the number of agents in the insurance industry is around three million.
Insurance industry officials said Irda aimed to take the help of experienced insurance agents to revive the agency business as a profession and nurture new talent, since lately, an agency is often seen as a part-time business.
“As a result of low productivity, most agents who continue work part-time, and the profession is largely perceived as a low-income one. There is a need for steps to strengthen the agency system and provide agents with a suitable growth path for professional development through the sale of insurance products,” the discussion paper said.
Niladri Bhattacharya / Mumbai November 17, 2011, 0:00 IST
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