Life insurance agents may lose their licences if the annual persistency ratio of their clients’ policies is less than 50 per cent. In an exposure draft on persistency in life insurance policies announced on Saturday, the Insurance Regulatory and Development Authority proposed norms for enhancing the performance of agents.
It has proposed a minimum of 20 policies per agent a year and the first year premium income to be procured by an agent at Rs 1.5 lakh per annum. If these two conditions were not met, the agent would have to achieve proportionately more in either one to make up for the shortfall in the other. Spouses and close relatives of employees of insurers should not be engaged as agents.
Further, there should be a disincentive for lapse in the form of commission clawback by the insurer, on a proportionate basis, the draft said. “These proposals would be a step forward in protecting the interests of policyholders, who stand to gain if persistency is high, both in terms of protection of life and profitability of the life insurance business,” Mr A. Giridhar, Executive Director, IRDA, said. Feedback on the proposals could be sent to the Authority on or before, July 31. Persistency is the percentage of business retained without policy lapse or surrender.