The process of globalization brought forth a sea change through reforms in the Indian
financial sector with the help of Malhotra and Narashiman committee recommendations. These
reforms mooted a stiff competition to public sector undertakings in both the insurance and
banking industries, in order to serve the community better through quality services, innovative
products and so on. The insurance industry in India is vested with greater belief in selling the
insurance policies only through man selling agents rather than other intermediaries, though they
were encouraged by the self regulating organization, Insurance Regulatory and
Development Authority (IRDA). The insurance penetration in India was 2% during the promulgation of
reforms and later it was increased to 4%; which was also less than the average global
insurance penetration level during the year 2007-08. The Indian insurance industry is vested with
a responsibility to reach not only the length and breadth of the country but also to
enhance the level of penetration, which could be met out only by the large man selling force rather
than other intermediaries.
LIC is the only insurer equipped with 11,93,744 agents in the man selling force, which is
highest among all other insurance companies not only in India but also across the world.
Table 1 highlights the dominance of man selling force towards the sale of insurance
policies not only in the public sector, but also in the private sector companies. The total number
of agents of the private sector surpassed the individual agents strength of LIC which
amounted to 13,26,748 during the year 2007-08.
The role of agents has been earmarked as the vital force not only through the numbers
in strength, but also the volume of business transacted. From Table 2 it is
evident that the role of agents/Insurance advisors is astounding in terms of volume of new business as well as
group premiums over the other intermediaries in the industry. The gap of insurance industry
between the insurer and the insured (prospects) is matched by the agents not only in the
public, but also in the private sector insurance companies. The volume of business contributed by the
individual agents is more in percentage in all categories of business over the private sector
insurance companies. This revealed the irreplaceable role
of agents over the other intermediaries towards the generation of business. Table 3 highlights that the total premium income of LIC has
come down to 74.39% during 2007-08, due to the remarkable presence
of private players. |
