(Kadappaad Dhanam Magazine – 15th August 2011)
It was three years ago that a woman employed in a private institution took the policy of a private insurance company on the promise that within three years the policy would be doubled. But till now there is no significant increase in the amount. Not only that the deposited amount also has reduced. The agent who gave the policy has quit and is employed in another company. What to do now? Whom to ask about the policy matters? She is at a loss!

It is not the only case. She is one of the thousands of Malayalees who have fallen victims of the promises ULIPs (Unit Linked Insurance Plan). In our state, the dropout among the private insurance agents is reaching about 80%. Out of ten who join as insurance agents, only two survive as agents in the first three to four months. The consumers are at a loss as what to do with this dropout among the agents and their change of jobs. According to a survey conducted in the National level, during the Financial Year 2011-12, dropout rate is expected to be 25%. When analysed, the private insurance sector is in an alarming situation.

Why this situation?
According to Mr. Vishvanathan Ottat, the Director, AIMS Insurance Broking Pvt. Ltd., the agents in the private insurance sector survived only due to the high rate of commission and the new directives in the ULIPs have come as a blow to them. There was a time when one could get up to 60% commission, compared to the 30% now. What was happening for the past two to three years was “mis-informative selling” or “mis-selling”. As the people realized the truth, many of the private insurance agents went in search of jobs in other sectors.
The dropout among the Sales Managers who select the agents in most of the private insurance companies is 50-60%. As they change the companies, many agents too dropout, so says, Krishnakumar, the Chief Executive Officer, Green Pepper Consulting India Pvt. Ltd. He further states that the recruitment of low graded agents also has created problems.

What will happen in the future?
The spokesman of a major private insurance company opines that this is a warning to those who saw insurance as a means to gather quick money. With the departure of those without professional outlook, the private insurance sector has now become more clean. He hopes that, as the agents are now forced to give more attention to after-sale-service, it would serve as a solution to the present problems faced by the consumers. For the past two to three years, in general, the agents were reluctant to sell Conventional Polices and Term Policies. But the situation has changed. Now, including private insurance agents more insurance policies and children’s policies are sold. The experts rate the present problems as the signal to steadying private insurance sector.

It is expected that for one or two years more there would be small amount of dropouts and change of jobs in this sector………

Have you ever experienced such a situation ??? then do please report it in the comment box …