The months of January, February and March are usually months of booming business for the insurance sector. The last quarter of the financial year brings more than half of the annual business for the insurance companies. The insurance agents become more active in these months as customers opt for insurance policies mainly to save on income tax.
However, this time the companies are witnessing decline in business collections, thanks to the new product guidelines issued by the Insurance Regulatory and Development Authority (IRDA). New product guidelines rendered the existing products of all the companies ineffective from January 1 this year due to which the companies withdrew their traditional products not in line with the new product regulations.
The insurance companies now have very few products to sell and the sale force, too, is taking time to align with the new products. This has severely affected the new business collections. One branch manager of an insurance company here on the condition of anonymity said that top honchos of the companies have pressed the panic button as new business has dropped drastically as compared to last year. limited number of products to offer is affecting the sales of insurance companies. One of the big private life insurance company Bajaj Allianz for example has only two products in its sale kitty as compared to 23 products on December 31 last year. The public sector insurance giant life Insurance Corporation (lIC) of India has nine products to offer now, while it had 52 on December 31, 2013, the last day of old regime products.
Interestingly, the IRDA came out with new product regime to safeguard customer interests but lack of public knowledge and lukewarm response of agents is affecting the sales. The products are more customers friendly now as the insurers have to give a minimum guaranteed surrender value to those customers who are pulling out of the policy contract; the commissions for the agents have been reduced as companies are forced to cut their profit margins.
The companies are now training their sales teams on the new products. The IRDA now wants that the insurance should be sold more as a risk covering instrument and sale of insurance policies as an investment tool should be discouraged. The regulator is now more stringent on miss-selling of insurance policies by the agents. Sales manager of lIC Dehradun division, SK Sharma told The Pioneer that the corporation is conducting rigorous training programme for its personnel so that they understand the new products. Puneet Trivedi, regional manager of Bajaj Allianz life Insurance Company said that sales executives would take time to align with the new product guidelines and those taking the new products would benefit.
He said that his company would soon launch new products to cater the demands. Customers however are skeptic when informed about new insurance policies and their benefits. One such customer, Ramesh Jakhmola said that his insurance agent insisted that he buy a unit linked insurance policy claiming that it would get good returns; but he lost money when he surrendered his policy last year.