In the last few years, the life insurance industry has seen high attrition of individual agents largely due to low remuneration. At the same time, the contribution of bank channels in selling life insurance policies has gone up.
According to the annual report of the Insurance and Regulatory Development Authority of India (Irdai), corporate banks had a share of 47.37% of individual new business premium in 2014-15, while the share of private insurers in 2012-13 was 43.08%. On the other hand, individual agents who had share of 39.68% of individual new business premium in 2012-13 came down to 35.73% in 2014-15 for private insurance players.
The data from Life Insurance Council shows that at the end of March 2016, there were 20.16 lakh individual agents, down from 20.67 lakh individual agents in 2014-15. Senior officials in the industry added that, one of the major reasons of banks contribution going up is due to the loyal customer base and the low cost compared to hiring individual agents.
Insurance players believe that, unless individual agents get economic of scale, their survival in this industry will become more difficult, while banks are likely to continue their dominance in selling insurance policies.