By IANS,
Chennai: Low productivity of individual agents, a high policy lapse rate and lack of experienced personnel are among the challenges that private life insurers in India will have to be contended with over the next couple of years, an industry survey has said.
On the positive side, industry players expect the sector to grow 10-20 percent over the next three years.
According to the survey done by global actuarial consulting firm Milliman, low productivity of agents is a major concern and improving that would involve significant efforts in training and ongoing agent management activities.
The survey said: “It is refreshing to note that most of the respondents expect an ‘improved’ tied agency channel to dominate the distribution scene in the industry, whereas none of the respondents expect the ‘current’ form of agency channel to survive for too long. If this is indeed achieved, there is hope for improvements in areas such as mis-selling, persistency levels, productivity levels and high cost ratios
etc.”
Very few respondents believe that other channels such as employee sales force, direct marketing, tele-marketing and others will be successful, the survey noted.
Queried about the impact of insurance regulator’s guidelines on unit linked insurance policy (ULIP) officials agreed that it is good for the policyholders. They said that the new business volumes would get affected owing to lowering of distributor commission.
According to survey respondents, distributors would have to be adequately compensated failing which products that offer better value for money for policyholders will not reach them.
The majority of the respondents expect the proportion of new business from ULIPs to be between 25 percent and 50 percent in the future.
According to the survey, more than 30 percent of the respondent felt that Indian market is big enough to accommodate more life insurers while 25 percent respondent feels the number of players will come down to 20 from the current 23 over the next five years.
According to the survey, even after 10 years of the existence of private sector players the industry faces the challenge of lack of experienced professionals.