The Insurance Regulatory and Development Authority of India (Irdai) is evaluating an open architecture for insurance agents, similar to the structure proposed for banks who act as corporate agents.
In recent discussions with industry stakeholders, the regulator has suggested a pool structure for agents as well, though it is at a very early stage.
As of January, the life insurance sector had 2.1 million individual agents compared with 2.18 million in April 2014, according to data from the Life Insurance Council. Between April 2014 and January 2015, there were 503,130 additions. Deletions during the period stood at 583,009.
An industry official said that all agents could be trained and be part of a common pool for the industry.
"It is not clear whether the entire tied-agent system would be done away with. However, a proposal is being talked about to have a pool of trained agents so that penetration can improve through better distribution," he said.
Irdai had recently issued a set of proposals for appointment of agents, under which it has also asked insurers to check whether prospective agents had ever been black-listed. But it had said that no individual shall act as an agent for more than one life insurer, one general insurer, one health insurer and one of each of other mono-line insurers.
If a pool structure is formed, there could be agents as well as financial analysts selling products across the spectrum including mutual fund, pension and insurance.
According to the annual report of Irdai, the number of insurance agents has increased 3.1% after a steady decline since FY11. As of March 31, 2014, India has 2.18 million insurance agents, up from 2.12 million on March 31, 2013. Private insurers recorded an increase of 4.5% and Life Insurance Corporation of India 2% in the numbers of their agents.
It is estimated that about 500,000 agents have exited the industry in the past four years. This is primarily due to the commission-based salary structures and limited opportunities for career enhancement or progression.
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