Challenges and Prospect for Agency Distribution Model in Life Insurance in India and Role of Regulator in It

Abstract

Life Insurance across the world and in India has been traditionally sold through Agent which was referred as Agency Model. Life Insurance Corporation (LIC) since its inception has been working on this model till date which has been copied by most of the new private companies which came into existence post year 2000.  However the Agency Model in last few years has started showing a declining trend and the trend is more alarming in private players. The private players are finding difficult to bring new advisors on board and thereafter to ring fence them and also to get sustainable business for long. The problem has also been compounded because of increasing misspelling complaint which questions the quality of agent coming in. The Agency Model has also been hurt by tough competition coming from various other distribution channels and also because of reduction of commissions for agent. The paper discusses about how the challenge can be addressed and what role regulator need to play for sustainable growth of Agency keeping the interest of customers and society as a whole