Productivity of the tied insurance agents in life insurance in India

The tied distribution channels play the prime role in the sale of life insurance business. Therefore, use of mix of different distribution channels generally helps in spreading the business, developing the product and framing marketing strategy of the insurer.

The usage of mix of distribution channel is in the interest of the Regulator too. This has significance in the following regulatory functions:

  • Approving a product;
  • Level of supervision required to ensure that the channel is “fit and proper”;
  •  Curb market malpractices; and
  •  Establish orderly growth of the market.

Traditionally, the individual tied agents were the dominant players in the market; gradually the corporate agents have occupied a significant space in the arena. In view of the above and based on the available information with the IRDA compiled from the returns submitted by the insurers, the movement of average productivity of the Corporate Agency Channel and Individual Agency Channel over the years is observed.

The productivity is measured with two parameters – average number of individual new policies sold and average amount of individual new business premium income. While calculating the productivity it is assumed that movement of number of corporate agent and individual agent

From the above table, it is observed that the average number of individual policies sold by the corporate agents of LIC has shown significant increase during the last two years. In case of individual agents, the average number of individual policies sold by private insurers has been consistently lower than that of the LIC and has also witnessed a downward trend over time.

The same has dipped from an average of seven policies in 2007-08 to mere three in 2011-12.

It is interesting to see that the share of individual policies sold through corporate agents of the private insurers is increasing over the years in line with the increase in its average number of individual policies sold through corporate agents.

The share of number of individual policies sold through individual agents of LIC remained stable over the years with a marginal increase over time. It stood at 98.10 per cent in 2011-12, up from 97.99 per cent in 2007-08.

Courtesy IRDA Annual Report 2011-12

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