The Hindu Business Line : LIC forms biz unit to groom agents

Mumbai, May 19 LIC plans to leverage the strength of its high performing agents and to attract new talent in the face of growing competition from private insurers.

The corporation has carved out a strategic business unit for hiring new agents and offering incentives to existing high performing agents. The new department will be headed by Mr Nilesh Sathe, Executive Director .

LIC currently has an agency force of 12 lakh and plans to hire around 1 lakh more this year.

The SBU which is called “Chief Life Insurance Advisors” works on a new model. As per this model, LIC will choose some of its high performing insurance agents and offer them the opportunity to be “Chief Life Insurance Advisors”.

These agents will be offered a five year contract and remuneration (on a variable basis) for identifying at least five suitable candidates for recruitment as agents. The new candidates will get trained and be placed under the supervision of the Chief Life Insurance Advisor. “Around 60,000 of our agents will meet LIC’s criteria of a ‘high performing agent’. We will further shortlist and finalise around 10,000-15,000 agents to be chief life insurance advisors,” said a senior LIC official.

Until now, LIC has been appointing only development officers (on a salary) to manage agents. The corporation which showed a sharp slip in growth last year is now looking at ramping up and creating a strong agency force. The corporation grew at just 5.8 per cent and raked in new business premium of Rs 59,182 crore in 2007-08, against Rs 55,934 crore in the previous year.

For private insurers, doubling the agency force year on year has been a conscious strategy for increasing business volumes.

Among the private insurers, Tata AIG Life Insurance was one of the first to create a “Business Associate” model where agents recruit other agents and head teams of 5-25 people.

Globally, this is an established model as a variable earnings structure will also nurture the bottomline of a company, said an analyst.

“In the past eight years, the private insurance industry has hired 9 lakh insurance advisors while LIC has recruited just 4 lakh agents during the same period,” said the LIC official.

For life insurers, high attrition among agents is another significant challenge. Industry estimates peg attrition at around 20-40 per cent in the first year of recruitment.

For LIC, the creation of this new scheme is also aimed at making its agents feel special. “The common feeling is that you enter as an agent and you go out as an agent. So, this scheme is aimed at making them feel special,” said the official