The collection of premiums and the sale of new individual policies by life Insurance Corporation of India (lIC) have come down by 25 per cent over the years as the country’s biggest insurer removed a whopping 22 lakh agents for failing to meet their targets.

In 2010, lIC decided to get rid of those agents who cannot bring in a minimum of Rs1 lakh as new business premiums and 12 policies in a year. The termination of such big number of lIC agents, who are considered the backbone of lIC, has led to nearly 25 per cent fall in the collection of non-single premiums and the sale of new individual policies. Three years ago, lIC’s market share was 74 per cent, now it stands at 50 per cent.

Before 2010, a lIC agent was required to mobilise a minimum 12 new polices, but the new rule mandated him to contribute a minimum Rs1 lakh new business premiums every year. According to the information provided by lIC in response to an RTI application, in the very first year of the implementation of this drastic rule in 2009-2010 financial year, lIC terminated 3,72,039 agents. In the following years, the termination spree ranged between 3 lakh and 4.2 lakh of agents across India, mostly belonging to rural areas.

In total, according to the RTI response, lIC terminated 22,78,141 agents up to March 31, 2016. lIC is open to reinstate the terminated agents if they agree to be treated as new agents who would forgo their old bonus commission and other benefits. This has created a big resentment among agents across the country. Thousands of them have opted for other private insurance companies who were looking for an opportunity to poach lIC’s agents with vast experience in the field.

In the past six years, among the terminated agents, as many as 10,52,270 agents have rejoined lIC, while the firm recruited 8,84,624 agents.

Many of the fresh agents too were axed as they failed to meet the target. As per the RTI response, lIC has 10,61,560 agents as on March 31, 2016.

The mass termination of agents has resulted in sharp decline in the collection of individual non-single premiums and the sale of new polices, which are the main activity of the lIC. According to the lIC’s business figures, in 2014 alone the collection of individual non-single premiums suffered a decrease of 27 per cent. In 2011-2012 financial year, lIC’s total collection was Rs29,081 crore from individual non-single premiums, whereas in 2015-2016 financial year, it collected only Rs20,101 crore.

This also resulted in decline in the sale of new individual non-single premium polices. In 2011-12, the total number of policies from this segment was 3,36,22,969, whereas the figure for the corresponding period in 2015-2016 stands at 1,93,30,212 only.