At a time when the economy is booming, 10,000 life insurance industry employees stand to lose their jobs in the next few months as companies finalise plans to reduce headcounts and slash wages.
Industry sources said some firms have already started handing out pink slips. ICICI Prudential, HDFC Standard Life and Max New York Life (MYNL) between them could lay off an estimated 8,500 employees, the sources said.
Insurance firms are groping for ways to cut cost after watchdog Insurance Regulatory Development Authority enforced a new set of norms from this month for Unit Linked Insurance Products (ULIPs) that crack down on exorbitant agent
“Given the regulatory changes, we are in the process of adjusting our distribution infrastructure to reflect these changes,” an MYNL spokesperson said.
"This will involve sharper focus on training and productivity of our field force. This will have some human impact but we are ensuring all performing employees are not affected.”
MYNL has roped in consulting firm McKinsey to finalise a plan to cut costs.
An HDFC Standard Life official denied any plans to retrench but maintained that the industry was witnessing a 10 per cent attrition rate every month and hence, the company had no plans to fill up vacancies.
“We are focused on increasing the productivity and efficiency of our workforce,” the official said.
ICICI Prudential did not respond to text messages or phone calls from HT.
The new norms have capped surrender charges of policies, slashed agent commissions and seek to make charges more transparent.
The crackdown may hit the profitability of firms but consumers will gain from the transparency.
ULIPs are hybrid life insurance products that mix insurance with investment.
In ULIPs, a part of the money invested by a subscriber is set aside as premium and the rest invested in equities. ULIPs account for more than 50 per cent of the life insurance business but have been characterised by opaqueness in charges and fees.