New insurance companies are acting coy of recruiting agents as they are awaiting the entry of corporate agents and brokers, to ensure "quality of service".
At the same time, the slowdown in recruitment is partly on account of the Insurance Regulatory and Development Authority's (Irda) decision allowing the continuation of the two-decade-old 5 per cent direct discount on premium to corporates approaching insurers directly.
This has knocked out the intermediary even before the game has taken off, as insurance companies cannot remunerate agents and at the same time offer a discount to corporates. Should they do so, it would amount to violation of Irda regulations.
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New insurance companies are not aggressively pursuing the only distribution channel available today, that of tied agents as they look at quality selling. This is as opposed to Life Insurance Corporation of India's emphasis on the number of policies sold.
"Unless we can remunerate agents, there is no point in our recruiting and training them. Till corporates are willing to give up the direct discount on premium, or till we go in a major way into retail sales, there is no way we can remunerate agents," said a senior official from Reliance General Insurance Company.
"We do not want an army of agents because it is not feasible to guarantee high quality of service," said Bajaj Allianz General Insurance Company general manager Praveen Gupta. Worldwide, 70 per cent of Allianz's business is through brokers, and the balance through tied agents. Like most other new insurers, Allianz is awaiting the introduction of corporate agents and brokers.
There is more at stake with corporate agents and brokers in terms of their investments in infrastructure, as they have to ensure quality and achieve critical mass, said Gupta.
Even as the expected huge recruitment drive for insurance agents among new private insurance companies has failed to take off, LIC has chalked out an aggressive marketing strategy in terms of recruiting tied agents.
LIC with its eight lakh agency force will recruit another 30 per cent during the current fiscal, with each development officer told to recruit at least one agent a month. The incumbent life insurer is looking at a 15 per cent growth in terms of productivity of its agency force.