MEMORANDUM (SHIMLA)
INSURANCE ADVISORS FORUM (REGD)
Flat No-101, R.G.Complex-1, Sector-14, PrashantVihar, Rohini, Delhi-110085
MEMORANDUM
TO:
1. Hon’ble Sh. NamoNarainMeena, State Minister of Finance, Govt. of India
2. Sh. NSRC Prasad, Chairman GIPSA and CMD, National Insurance Company Ltd.
3. Sh. G. Shrinivasan, CMD, United India Insurance Company Ltd.
4. Sh. A.R.Sekhar, CMD, New India Assurance Company Ltd.
5. Dr. A.K.Saxena, CMD, Oriental Insurance Company Ltd.
EVENT
• CONVENTION OF DEVELOPMENT OFFICERS OF ALL FOUR PSU COMPANIES BEING HELD AT HOTEL HOLIDAY HOME, SHIMLA ON 30.09.2012
DATE:
• 30.09.2012
• RE:
• REDUCTION IN AGENT’S COMMISSIONS
Respected Sir
Since last two months or so we the agents of all four PSU General Insurance Companies have been having a horrible time and sensing the dark future ahead due to the announcement and implementation of policy by four PSU Companies dealing in General Insurance for reducing the agent’s commissions in Mediclaim, Motor and perhaps the other portfolios too.
This is driving the (us) agents to think and find the reasons of such a reduction in our commissions and we are failed to understand the hard look of these companies on the Agent Force which has been their back bone for ages. Looking at the present scenario in General Insurance run by the four PSU Companies, we the agents are forced to unite at this point of time and hence the idea of forming the INSURANCE ADVISORS FORUM.
So through this Memorandum we would like to draw the attention of all those concerned to please have a sincere and serious look closely into the hardships faced by their agents and their uncertain future. Hereunder we are furnishing the details of our concerned grievances and a few suggestions for your reference and consideration:
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1. Circular No- HO/TECH/HIN/12-13/003 DT: 20.7.2012 regarding All Health Insurance Portfolios and Circular No- HO/TECH/MOTOR-TP/OD DT: 09.08.2012 regarding All Motor Insurance Portfolios does not state clearly that the commission of agents is going to be decreased. We respectfully demand clarification on this from your side.
2. If at all the commissions are going to be reduced as per the formulations indicted in the above mentioned circulars, WE STRONGLY OPPOSE AND DO NOT ACKNOWLEDGE THIS MOVE.
3. Why your increased administrative and operative expenses instead are not being controlled? Why these Four PSUS are eyeing the agents’ commissions only? You will agree that AGENTS are and have been the back bone of Insurance Industry. We strongly think that with your decision of reducing the agent’s commissions, you are going to break your back bone only.
4. We through this Memorandum wish to know the LOGIC behind reducing our commissions and why a serious thought is not given of looking at other avenues where expenses could be controlled and curtailed? For your information the products are designed by the companies/actuaries not the agents and at the time of deciding the premium for a particular product, the CTC includes commission part also. Are the premiums being reduced by the same percentage the commissions are reduced? This is high time we become more professional than being orthodox. Are the agents being treated the same way the employees of these four PSU companies are? The employees are getting profit linked incentives (PLI), whereas the agents are being subjected to lesser (reduced) commissions. Do the employees share the losses of a company if any?
5. On the other hand we are surprised to note that the Private Sector Insurance companies are paying handsome commissions/ incentives to their agents although they are also being governed by the same IRDA as in your case. They are showing continuous growth and profits. We are really failed to understand all this. Please explain?
6. It is certain that an agent will take least interest in procuring fresh business when he or she knows that he/she will not be paid adequately for his/her efforts in procuring the business. This will definitely decrease the volume of business done by the respective Insurance Companies. Can you please tell us that in this scenario what shall be the fate of Four PSUS? Will they survive? Is this a very well thought of process of Four PSUS in the company of Finance Ministry to liquidate the Four PSUS and encourage the Private Sector Insurance Companies and shift all the business of Four PSUS to Private Sector Companies ?
7. It is truly on record that our commissions have not been revised to higher percentage since 2007, whereas the inflation has been rising up regularly. Our operative costs range between 4 % to 7 % for selling the policies for our respective Insurers and rendering the after sales services to the insured. We have to work 24x7x365 days in a year and have no back up for us to procure the business for us if we fall ill or have any emergency whatsoever. We the agents have no other business to carry on with other than selling Insurance and meet the expenses required for running a family. Why the axe is falling on our heads?
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8. For the majority of agents this Insurance Business was picked up as a career and after more than 15 years into this business and having set our living standards according to the income we generate from selling the Insurance, we suddenly find ourselves staring in dark (due to the reductions in our commissions) and trying to find out the ways to support our dependents and fast approaching retirement age. Please suggest us the alternates we could adopt to meet our expenses and stand in society with some dignity. Have you thought of the after effects of reduction in our commissions? Have you drawn a plan to formulate a policy for the agents and their dependents? Please note that majority of agents are engaged in Insurance Business full time. They are entirely depending upon the income from Insurance Commissions. We are seeing darkness all around us.
9. TPA’s are allowed 6% commissions for merely processing the claims which are always on the higher side. There seem to be healthy relations among TPAs and Hospitals which clearly are resulting in higher cost of medical assistance to the Insured and increasing the percentage of ICR. This is quite evidently eating into the revenues of the Insurance Companies. TPAs of late have become a real irritant factor for the Insurers as well as agents. They are not following the guidelines set by the Insurers and have a variety of excuses while processing the claims. Our suggestion is to have in house processing of claims as was being done prior to appointing the TPAs. This will certainly help reducing the processing cost and could utilize the services of idle work force of Insurance Companies found loitering here and there and not doing any value addition to their employers.
10. Many private sector insurers approve the claims in 4 hours from intimation about the hospitalized insured, whereas, the PSU companies are taking too long a period to process the claim and on top of it the TPAs are icing on the cake. This is a very serious issue and main hindrance for agents to sell the insurance plans of PSU companies. This clearly hits the inward volume of potential business. Guidelines to this effect should be formed and strictly adhered to.
11. Incentives in line with the private sector insurance companies are announced by the PSU companies, but even after meeting the set targets we helplessly keep on waiting to receive the rewards so announced. The authorities in respective offices apply so many undue conditions on us to receive such rewards which do nothing but demoralize us.
12. We suggest that advisor promotional programmes should be organized to encourage the agent community as is done by the private sector insurers. Nothing really is being done to enhance the level of our skills, be it product knowledge or under writing norms or marketing the products or the latest amendments brought out by the PSU companies. No one including those sitting at the helm of affairs seems seriously interested for the progress of the company. This is typical scenario where one is ensured monthly salaries including persiquites and all the raises according to the rising inflation index irrespective of the company they are working for is going into profits or losses. We have no problem with that. But at the same time we request you all to appreciate that same rising inflation index is affecting us too. So why reducing our commissions instead of increasing?
13. A thought could be given to offering direct discounts to the customers. The Premium rates could be enhanced to bring down the ICR. Conventional and orthodox products should be discontinued and new products competitive with the products offered by the private sector companies should be launched.
14. We through this MEMORANDUM request you to please adopt the measures so that the move to reduce the AGENT’S COMMISSIONS is scrapped with immediate effect.
We request your good self to please look into the matter personally and help us to get rid of this nightmare surrounding us. You are also requested to please forward our concern to the concerned higher authorities in Insurance Sector as well as Ministry of Finance.
Thanking you.
vinay mohanty
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