Private sector life insurer Aegon Religare Life Insurance Company Ltd has reported one of the highest persistency rates from its Gujarat operations.
As per the data shared by the company, persistency rate was as high as 90 per cent in Ahmedabad for the year-to-date period of 2013-14, while the national average was 55-60 per cent for the company.
“Twenty years ago, the persistency rates used to be good across the industry. But in the past 5-6 years, this has become bad. Large part of the industry do not keep personal touch with the customers, hence we are at the lower persistency rate,” KS Gopalakrishnan, MD and CEO, Aegon Religare Life Insurance Company Ltd, told
“Our model is to get engaged with clients. Ahmedabad market has recorded highest persistency rate. Overall, Gujarat market has comparatively higher persistency rate for us,” Gopalakrishnan said.
At other centers in Gujarat including Surat and Vadodara, the rate was seen at 69 per cent and 59 per cent respectively. The industry average hovers around 60 per cent nationally, he informed.
For the life insurance industry, persistency remains important as it helps monitor the company’s marketing and services segment. Higher persistency rate means high product performance.
Higher persistency also helps companies improve their profitability as policies lasting for longer time fetch more premiums.
Notably, the insurance regulator, Insurance Regulatory and Development Authority (IRDA) had relaxed the norm for renewal of agency licenses of insurance companies. Earlier this year, IRDA has done away with the requirement to meet the minimum persistency rates for renewal of agency license.
The regulator had scraped the requirement of meeting the minimum persistency rates for renewal of agency license with effect from July 1, 2014. Currently, the minimum requirement of persistency rate is 50 per cent for renewal of agency licence.