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Insurance agent mentoring plan gathers dust

More than two and a half years after a proposal by the Insurance Regulatory and Development Authority (Irda) was mooted to have a set of senior agents with five-plus years of experience mentor junior agents, final regulations are yet to be put in place. This is because there are contradictory views among industry players about this system and hence Irda officials have decided to put a stop to it for the time being.

In end-2011, former Irda chairman J Hari Narayan had proposed a new set of agents called senior agents to mentor junior agents. These senior agents could mentor up to 15 licensed agents at a time. As an incentive, the senior agents would be entitled to 25 per cent of first-year commissions on the policies sold by those agents who were mentored by them. Individual agents with at least five years of experience, and at least 100 operational policies, would have qualified as senior agents.

“The proposal is on the back-burner now since there are some differences,” said a senior regulatory official. Insurance company executives said new entrants into the agency channel have not been positive about having to share their commissions with their mentor.

The regulator had earlier proposed this move since it was expected to increase the productivity of the insurance agency force, add more agents into the system and help those who had this as their sole profession to earn additional revenue in the insurance industry.

“Though the proposal to have some agents mentor and guide new agents in the system is a welcome move, the remuneration proposal is not acceptable to all. While companies may not be against making some non-monetary payments to these ‘senior agents’, the present proposal is not feasible,” said the chief executive of a private life insurance company.

According to estimates, only 18-20 per cent of the total agency force is purely dependent on insurance commissions for their livelihood. If they are provided additional income, insurers said this would be a tool to attract more people.

“Almost all companies have structured training and development programmes for newcomers. Hence, while a senior agent would be best fit to act as a trainer, he may be only given non-cash rewards and recognition for his time devoted to the new agent, since the industry itself already spends a considerable sum on training new agents,” explained the chief agency officer of a bank-promoted insurer.

Most insurers have a basic training course for new agents in the system to acclimatise them with the industry practices and its standard style of functioning.

One of the common complaints of individual agents is that they are not adequately compensated in the industry and also do not have a steady career progression plan to stay put in their current jobs. Experts said having senior agents in the system to constantly mentor juniors would have increased retention and helped them earn more compensation.  

According to Irda’s annual report for 2012-13, the financial year saw a 10 per cent decrease in the number of individual agents. The number declined from 2.35 million as on March 31, 2012, to 2.12 million as of March 31, 2013. In 2012-13, while the total number of agents appointed was 565,000, while the number of agents terminated was as high as 801,000.

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