Target-Free World In The Offing For Insurance Agents

Setting minimum targets for life insurance agents, as the Life Insurance Corporation of India (LIC) has been doing, could well become pass.

Stating it is too early days, new private insurance players deny having set any minimum targets for agents. "The focus is rather on recruiting the right person and getting his skill-set right," said Saugato Gupta, chief marketing officer, ICICI Prudential Life Insurance Company.

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

 

HDFC Standard Life expects agents to be 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. Further, markets differ and targets cannot be uniformly set across the entire agency force, he added.

Even as the LIC has well over 80-odd products, the minimum qualifying amount of business an LIC agent has to bring in is 12 lives policies and Rs 2 lakh sum-assured policies to renew his agency licence with the state insurer annually.

Currently, of LIC's eight-lakh agency force, around 20 per cent brings in 80 per cent of the business. For the year ended March 31, 2001, LIC sold over two crore policies.

ICICI Prudential Life Insurance Company 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 plans 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 LIC management 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 amount to be met in view of the minimum sum-assured of most LIC plans standing at Rs 25,000, with none less than Rs 10,000," said Jain.

There has been no migration of LIC agents to new insurance companies. 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.