Insurance sector faces high rate of attrition Radhika Menon N. S. Vageesh |When the rejections start and the doors start getting banged in the face, new agents confront failure. The dropouts begin. | Mumbai/Chennai , March 9 YOU might have heard of high job attrition rates of between 15 per cent and 20 per cent in the software sector. But even these pale in comparison to the kind of turnover that the insurance industry witnesses with its agency force. Conservative estimates put the attrition rates at 35-40 per cent.
The opening up of the sector five years ago provided insurance agents with new opportunities and an image makeover as “life insurance advisors”. But little has changed in the basic nature of the business – insurance still needs to be sold to a reluctant populace. Most agents or advisors who join in enthusiastically, spurred by dreams of “working at one’s own hours, getting full reward for the hard work” and other such motivational spiel, meet reality soon enough. Once the initial list of potential customers such as close relatives, friends and neighbours is exhausted, the climb for an agent is uphill.
Even meeting the minimum requirement of bringing in two viable insurance proposals every month proves daunting. For some companies, the target in terms of sum assured is Rs 1 lakh. For some others, it is as low as Rs 10,000. When the rejections start and the doors start getting banged in the face, new agents confront failure. The dropouts begin. Mr Lalit Kumar Dash, Executive Director (Marketing), LIC, says, “The attrition rate is about 35 per cent in the first year of recruitment. This goes down to about 18 per cent by the fourth year. Most of those who drop out are non-performers”.
Agrees Mr Rahul Sinha, Vice-President (Marketing) at Kotak Mahindra Old Mutual Life Insurance Company, and says, “Last year, the attrition rate was much worse than 30 per cent. It has been a cause for worry and we are trying our best to stem it. ” He attributes it to the high expectations on the part of the agents. “Most people think that they can make a lot of money in a short span of time. Besides, one has to acknowledge that it is a high-pressure job. Sustenance requires constant networking and acquiring new relationships for your business. This requires a lot of discipline. Some insurance companies complain that the booming economy has caused the rampant poaching of insurance agents. They also say that it will settle down once they have their expanding networks are in place. Insurance companies believe that adequate training will help in contain the problem in some measure. They say that in a business such as insurance one has to accept the fact that 20 per cent of the work force will bring in 80 per cent of their business. But, while private insurance companies are still struggling to break even, the rising attrition rate is yet another challenge that they have to battle.
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