In its bid to arrest the high attrition levels and encourage them to do more business, the national insurer Life Insurance Corporation has hiked gratuity for its over a million agents to Rs 3 lakh.The Corporation makes as much as 94 per cent of its premium income through its over 1.1 million agents, while the private sector rivals net around half their business through the agency route.
During the past financial year, the Corporation recruited 2.45 lakh agents but as many as 3.40 lakh agents got terminated or voluntarily let during the year. As of March 2016, the Corporation had 10.60 lakh agents, while this rose to 11.05 lakh as of end January.
But this year so far, the Corporation has added 45,000 agents on net basis.
“So far this financial year, we recruited 2.7 lakh agents while 2.25 lakh were terminated/voluntarily left the Corporation, which is a net addition of 45,000. This takes our total agency strength to 11.05 lakh as of end January,” an LIC official told PTI.
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“Gratuity payable to an agent shall be at the eligible rate for each qualifying year for the first 15 qualifying years and at half the eligible rate for the subsequent 10 qualifying years, provided the maximum amount of gratuity payable shall not exceed Rs 3 lakh,” says a Gazette of India notification.
Under the existing rules, an LIC agent gets Rs 2 (rpt) 2 lakh as gratuity on leaving the service after 15 years. On an average an agent gets 35 per cent commission on the premium sold and 2 per cent on single premium policies.
At present, the gratuity in the case of an agent who has worked on the relevant date for 15 years or more, means 180th part of the aggregate renewal commission earned by an agent, says the notification says.
In the case of an agent who has worked on the relevant date for less than 15 years as an agent, one 12th of the amount arrived at by dividing the aggregate renewal commission in the qualifying years by the total number of agency years, it adds.
The notification dated February 2 is signed by the only managing director of the Corporation Usha Sangwan.
LIC gets 94 per cent of its revenue through the agency channel though it also sells online and through banassurance channels.
As of end January, its total premium income stood at Rs 29,000 crore, up 76 per cent from Rs 16,460 crroe a year ago. It has set a target of mopping up premium income of Rs 31,000 crore by March.