Mumbai: Despite earning high commissions, a whopping 7 lakh life insurance agents failed to achieve the minimum business target set by their insurers, thereby facing termination in 2023-24, revealed the Insurance Regulatory and Development Authority of India (IRDAI) Annual Report. “During the year 2023-24, 9.75 lakh agents were appointed, and 6.98 lakh agents were terminated. Out of the total 28.95 lakh individual agents of the life insurance industry, male individual agents form 69.87 per cent, and female individual agents are 30.13 per cent,” said the IRDAI Annual Report 2024.Life insurance agents earn as high as 25-40 per cent of the premium paid as commission in the first year of the policy (depending on the policy’s tenure and the term of premium payments) and renewal commission ranging from around 5 per cent to 7.5 per cent on premiums paid in subsequent years. Each insurance company has a minimum business guarantee (MBG), that is a minimum amount of business its agent is required to do to remain in business. Failure to fulfill the MBG leads to termination of the agent.The number of individual agents with life insurance companies as of March 31, 2024, was 28.95 lakh as against 26.28 lakh as at March 31, 2023. The industry showed a growth of 10.17 per cent in net number of agents over the previous year. While the private life insurers recorded a growth of 15.6 per cent, public sector behemoth Life Insurance Corporation of India (LIC) recorded a growth of 5 per cent. As at March 31, 2024, the number of agents with LIC stood at 14.15 lakh and the corresponding number for private life insurers was 14.81 lakh.Nilesh Sathe, former member (life), IRDAI, said, “Agent termination has been an issue historically for the life insurance industry. Insurers pay high commissions because the product is difficult to sell. Unlike tangible consumable products like refrigerator, TV where the consumer uses them from day one, people do not realise the utility of insurance from day one. The agent has to do constant follow ups with customers , meet them several times and convince them to buy to be able sell a certain number of policies which many may find difficult.”The report pointed out that during 2024, while individual agents continued to be the major distribution channel for individual new business, their contribution to the individual new business premium fell to 50.90 per cent compared to 52.76 per cent in 2022-23.
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