The Insurance Regulatory and Development Authority (IRDA) seems to be trying to micro-manage the sector with its proposed measures on hiking the policy persistency ratio, say industry experts.
In an exposure draft on persistency of life insurance policies, the IRDA has suggested a target of 20 policies per year for individual agents and a minimum first year premium income of Rs 150,000.
IRDA has also proposed non-renewal of an agent’s licence where the persistency ratio is less than 50 per cent.
"Ulips accounting for nearly 85 per cent of the industry's sales are sold by companies/ agents as a short-term investment product. The blame for this and other ills of plaguing the sector entirely rests with the IRDA," said R. Ramakrishnan, a member of the Malhotra Committee on insurance reforms.
Ramakrishnan and other industry experts said if IRDA wants to focus on policy persistency it should focus on fixing the minimum persistency ratio for the life insurers, rather than for the agents.