Business Targets For Insurance Agents May Become Passe

Setting minimum targets for life insurance agents -- as the Life Insurance Corporation of India (LIC) has been doing hitherto -- could soon become a thing of the past.

New private insurance players prefer to take a different tack: the focus is rather on recruiting the right person and get his skillsets right, says ICICI Prudential Life Insurance Company chief marketing officer Saugato Gupta.

For the new insurers, it is too early in the day to set targets.

"We are not pushing targets as this can be self limiting. We are rather looking at consistency," said the spokesperson of HDFC Standard Life Insurance Co, adding that there are no targets for the agents, at least not in the first year.

 

HDFC Standard Life expects agents to be more productive as it introduces an increasing number of products, and greater insurance awareness is created.

"If an agent has done 10 policies, we motivate him to do 15. No internal targets are set," said the spokesperson of HDFC Standard Life Insurance Co. Further, markets differ and targets cannot be uniformly set across the entire agency force, he added.

On the other hand, LIC's own agency force is pressing for higher achievement standards.

LIC has well over 80 odd products, and the minimum qualifying amount of business an LIC agent has to bring is 12 lives (policies) and Rs 2 lakh sum assured for him to renew his agency licence with the state insurer annually. Currently, of LIC's 8 lakh agency force, just about 20 per cent brings in 80 per cent of the business. For the year ended March 31, 2001, LIC sold well over two crore policies.

ICICI Prudential Life Insurance prefers to monitor the productivity of agents. Gupta explained, "We want to bring productivity higher than the current levels. More important is the overall productivity across all agents throughout the year." Targeting premium collection and not the number of policies sold by the agent, ICICI Prudential boasted of an average policy premium in the region of Rs 7,500, said Gupta.

"The average sum assured has to be in line with what is the value of human life, and our premium collections are higher as the cost of riders are added," he added.

The Life Insurance Agents Federation of India (LIAFI), in its Charter of Demands, has been asking the management of LIC to increase the minimum targets set so as to bring about better agents into the LIC fraternity, said LIAFI president H M Jain. It has proposed that in the first year of agency there ought to be no minimum business targets. In the second year, LIAFI has identified minimum targets at 15 lives to be increased gradually to 30 lives in the fifth year. "We have not suggested any minimum sum assured to be met in view of the minimum sum assured of most LIC plans stands at Rs 25,000, with none less than Rs 10,000," said Jain.

There has been no migration of LIC agents to a new insurance player. This is in light of LIC having established strong roots in the country over the last four decades coupled with the general perception that it cannot fail in view of the central government's backing.

Many LIC agents also view that new players might set steep achievement targets in the coming years, considering the cost of recruitment, training and the fact that they will face losses in the first few years.