LIC to review incentives for development officers

Life Insurance Corporation (LIC) is planning to review the new incentive scheme, launched in September 2004, for development officers.

The scheme has received a lot of resistance for setting stiffer targets. Development officers have protested against the scheme and have stopped recruiting and training agents on behalf of LIC, due to which the corporation lost around 56,000 agents on a nationwide basis.

The new incentive scheme puts greater focus on selling of unit-linked insurance plans (ULIPs). It has resulted in credit loss for development officers in case of agency termination, early claims and lapses.

It has also reduced the credit a development officer gets after 10 years of an agent's service under him/ her. Resisting the move, the development officers, who officially did not go on a strike, decided to follow a non-cooperation strategy.

T Chattopadhyay, zonal manager, LIC (south-central zone), said that a few development officers earned more than Rs 1 crore a year via the earlier incentive scheme.

"This was not commensurate with their efforts, as after a period of time the agents become competent enough to work on their own and the officers need not take credit for that. It needs to be realised that while our market share is going down, the incentive burden has been increasing. This is not practical," he added.

The new incentive scheme was aimed at addressing issues such as controlling lapses of policies, inadequate recruitment, quality of agents and quality of business by arresting the number of early death claims.

"So while the new incentive scheme will affect the earnings of the officers who do not work enough by at least 40 per cent, the hardworkers will not be affected," Chattopadhyay said.

"We have, however, decided that a year after the implementation of the scheme, we will review it taking into consideration its impact," he added.

The new scheme was implemented in September last year. "Our aim is not to punish the innocent but to encourage the laid-back ones, so that our market share is retained," Chattopadhyay said.

Due to the protest by the officers, LIC had also decided to recruit agents directly and not just depend on the officers. The corporation has around 10 lakh agents on a nationwide basis and plans to raise this number by another 30 per cent this year.