Licence rules eased for life insurance agents
For life insurance agents, a breather is at hand.
New guidelines spelled out by the Insurance Regulatory and Development Authority (Irda) on Tuesday said agents need to show a lower persistency ratio of 50% to keep their licence, compared with 75% earlier, with effect from July 1, 2014. Meaning, if an agent sells 100 policies in a year, he has to worry about getting only 50 of them renewed instead of 75 earlier.
Persistency, thus, indicates an agent's ability to generate policy renewals and premiums in time.
Debiprasad Bhattacharya, a Mumbai-based insurance agent since more than two decades, said he is a relieved man. "This is a very good move by Irda for people like us. It eases the pressure. This would also mean a lesser number of agents will move out of the life insurance industry compared with what we saw last year," he said. Failure to comply with the 50% ratio will lead to termination of the agent's licence.
Earlier in February this year, Irda had said agents needed to maintain a 75% persistency rate in both, the number of policies and premiums.
In the revised norms put out on Tuesday, Irda said the average persistency rate has to be at least 50% in terms of number of policies — the premium collection limit is no longer a performance metric.
The objective of the modification is to ensure a high level of persistency of life insurance policies, Irda said.
"This new guideline will help the LIC. Agents should get more serious about collecting renewal premiums. They should do their best to avoid any lapsation in policies. Earlier, 2 out of 10 life insurance agents left the industry, according to our study. Now fewer may leave," said R R Dash, zonal manager, LIC. M N Rao, managing director and CEO, SBI Life Insurance, said the new guidelines "will help insurers maintain a professional agency force".
For life insurance agents, a breather is at hand.
New guidelines spelled out by the Insurance Regulatory and Development Authority (Irda) on Tuesday said agents need to show a lower persistency ratio of 50% to keep their licence, compared with 75% earlier, with effect from July 1, 2014. Meaning, if an agent sells 100 policies in a year, he has to worry about getting only 50 of them renewed instead of 75 earlier.
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Debiprasad Bhattacharya, a Mumbai-based insurance agent since more than two decades, said he is a relieved man. "This is a very good move by Irda for people like us. It eases the pressure. This would also mean a lesser number of agents will move out of the life insurance industry compared with what we saw last year," he said. Failure to comply with the 50% ratio will lead to termination of the agent's licence.
Earlier in February this year, Irda had said agents needed to maintain a 75% persistency rate in both, the number of policies and premiums.
In the revised norms put out on Tuesday, Irda said the average persistency rate has to be at least 50% in terms of number of policies — the premium collection limit is no longer a performance metric.
The objective of the modification is to ensure a high level of persistency of life insurance policies, Irda said.
"This new guideline will help the LIC. Agents should get more serious about collecting renewal premiums. They should do their best to avoid any lapsation in policies. Earlier, 2 out of 10 life insurance agents left the industry, according to our study. Now fewer may leave," said R R Dash, zonal manager, LIC. M N Rao, managing director and CEO, SBI Life Insurance, said the new guidelines "will help insurers maintain a professional agency force".
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