Less policy sales offline, lesser commissions, LIC agents could face the heat of the note ban

For over 1 million agents engaged with Life Insurance Corp (LIC), the country’s largest life insurer, the government’s move to push digital transactions after demonetisation has come as a big shock.

LIC typically depends on its agents to boost sales. As more and more people pay premiums online, it could mean lower commissions for agents working with the life insurer.

An LIC agent earns between R30,000 to R50,000 per month, depending on the products they sell. Most of them work only for LIC and are not employed with multiple agencies.

On Thursday, the government announced an 8% discount on all life insurance products of LIC if bought online.

Agents are, however, still awaiting the finer details from the government.

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“We are worried, but we will have to wait and watch how this impacts. As of now, what we understand is that this discount will apply only for new policies, but people will still have to come to us for renewal... that apart, there are other products, too, including loans,” Delhi-based LIC agent Rajesh Joshi told HT.

The issue could even be taken up with the company’s top management, he added.

To promote digital payments and move towards a cashless economy, finance minister Arun Jaitley said last week that public sector insurance companies, both general and life insurers, will offer discounts to customers opting to buy products directly from the portals. While a 10% discount will be provided to customers for general insurance products, 8% will be offered on life products, the finance minister had said.

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In November, LIC registered a 140% increase in its new premium collection, despite the withdrawal of old R500 and R1,000 notes. According to industry data, the company registered a 44% growth in premium collection during the April to November period of the current financial year, compared to the corresponding period of the previous fiscal.

LIC agents have to undergo a written test and a rigorous training programme before working with the company.