Mumbai-- A pension welfare fund set up from forfeited commissions of terminated life insurance agents running into hundreds of crores of rupees - that is what some 10 lakh agents of the Life Insurance Corporation of India are trying to secure by way of post-retirement benefits.
Currently, LIC agents receive commissions ranging from 14 per cent to 35 per cent for traditional products depending on the sum assured. It is only two per cent for investment products. In the case of renewal premia, the commission is around five per cent. Last year, LIC handed out Rs 6,000 crore as commissions to agents.
The Life Insurance Agents Federation of India, the apex body of LIC agents, is demanding a pension welfare fund. The federation will forward this demand to the LIC Chairman as well as the Ministry of Finance.
H. M. Jain, President, Life Insurance Federation of India and member of the advisory board of the Insurance Regulatory and Development Authority (IRDA), said the commissions of terminated agents would run into hundreds of crores of rupees.
"In its 50 years of existence, LIC has terminated over 30 lakh agents and their forfeited commission may be running into hundreds of crores. This commission, as of now, goes to the LIC fund, though it is the hard-earned money of the agents," Jain said.
At present, premium charged by insurance companies includes the risk premium amount, bonus, administrative charges and commission.
Additionally, the licence fee charged by the Insurance Regulatory and Development Authority, which has been hiked from Rs 15 to Rs 250, goes to the Government. Members of the federation said that this would add up to about Rs 50 crore a year.
Jain said this money should be used to create an independent professional body to look after the welfare of the profession on the lines of other recognised professions such as chartered accountants.
The agents are also demanding that their gratuity benefits be brought on par with those of LIC staff. Currently, an agent can avail himself of a maximum of Rs 1,00,000 as gratuity benefit as opposed to Rs 3,50,000 for LIC employees.
The federation is also seeking a revision of the IRDA training norms for agents. Currently, it is mandatory for insurance agents to put in 100 hours of training. "There is no effective control to ensure quality in the stipulated 100-hour training programme. Obviously, the stress is on building up a large quantity of agents with no eye on quality," he said.
In response to these demands, an official at LIC told Business Line said the renewal commission handed to agents is as good as pension.
"It is only in the case of life insurance that agents receive commission on renewal premium. Besides, many agents are involved in other professions and the gratuity and term insurance the corporation offers is an added incentive," the official said.