Crunch is forcing newer firms to hire from sectors such as pharma, paints and consumer durables
MUMBAI Necessity is the mother of all invention. And innovation.
The boom in the number of life insurance companies has caused a shortage of the industry’s most precious asset — the life insurance agent.
Unlike in mutual funds, life insurance agents are allowed to sell products of only one company at a time. Hence, newer entrants can’t hire existing agents to sell their products.
Instead, they have been forced to hire from other industries.
Kapil Mehta, chief executive officer of DLF Pramerica Life Insurance, said, “We have been hiring people from completely different sectors such as pharma, paints, consumer durables etc” His company has launched operations in Delhi and will enter Mumbai soon.
“We plan to get about 80% of people from other sectors,” Mehta said, adding, “Fresh people get fresh ideas unlike other agents who will sell in the way they are used to sell other products.”
Taping agents from other sectors, though, comes with its own set of costs.
Akhila Srinivasan, managing director of Shriram Life Insurance, said, “Hiring people from other sectors mean you have to spend more time on training them as they do not know anything about the financial services industry.”
Some new players feel this trend will be limited to the bigger cities. Rajiv Jamkhedkar, chief executive officer, Aegon Religare, said, “There will be a crunch of insurance agents in bigger centres such as Mumbai and New Delhi, but may be not in the smaller centres.”
Meanwhile, the rise in the number of life insurers has ensured the number of insurance agents also grows at a stupendous speed.
The industry has seen the entry of its 21st player and the agency force is already 25 lakh-plus strong.
The Life Insurance Council, which acts as self-regulatory body for the life insurance sector, on Thursday revealed that 25,04,353 agents are distributing life insurance products as on March 31.
S B Mathur, secretary general, Life Insurance Council, said, “Indian life insurance industry services the highest number of policies. There is no document to support it, but we (India) might also be number one in terms of number of agents…”
One major reason for the large number of life insurance agents is the low sales ratio. Srinivasan of Shriram Life said, “In India, one agent sells around 24 policies a year, whereas in countries like South Africa, during the same period, an agent sells around 70 policies.”
The number is low because agents in India are not permitted to sell products of multiple firms. Trevor Bull, managing director of Tata AIG Life Insurance, indicated this is unlikely to change anytime soon. “The Irda Working Group set up to suggest industry reforms has not mentioned anything about agents or banks being permitted to sell products of more than one company,” he said.
d_khyati@dnaindia.net
