Continuing the state of the Life insurance Industry…

One very important part of this industry are the agents. Now the agents are of 3 types

a. National Level Distributors (non banks), b. National Level Distributors (banks) and c. Individuals (largely local level).

The N L D as they are called seem to be making money, but they have their own share of problems. The quality of people they get is quite low so training interventions do not seem to help much. These low end people are unable to sell well – so they often end up mis-selling and this creates a huge lapsation and non payment of the next premium. All this cause losses for the distributors and the manufacturers who support them.

The banks seem to be better off! As they have 21 other products to sell, their costs get spread over a bigger product range. So they are not so badly off. However banks who have an open architecture in mutual funds (they can sell which ever fund they deem best) in life insurance they are stuck to one manufacturer (for ex. Hdfc bank is selling only Hdfc Standard life Insurance). This is hurting both Hdfc bank (they wish to sell other cos. products also) and Hdfc Standard Life insurance (other tied banks like Citi and Icici bank are not able to sell Hdfc Standard life insurance products!

The independent agent! The media makes you believe that these people make so much money that you cannot believe it. It is very funny because on one side you have companies cribbing and cribbing LOUD that NOBODY wants to be an agent. Curious case is it not? If life insurance distribution is so attractive why is the whole of the Indian population not CRAVING to become an agent. One Managing Director told me ‘after I took this post, many of my friends are not inviting me socially’ . L O L.