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Agency Section, Marketing Department,

3rd floor, Central Office, “Yogakshema”,


Jeevan Bima Marg, MUMBAI 400 021
Ph: - (022) – 22027527, Fax: - 22824386,
e-mail: -co_agency@licindia.com

Ref: Mktg/ZD/16/2009 24.07.2009

Re: Amendment to Agents Rules, 1972 – Administrative Instructions

Pursuant to the Gazette notification in the Gazette of India ref: Extraordinary/Part


ii-Section3-Sub-section (i) no. 396 dated 09.07.2009, the following instructions are
issued:

1. Amendment in Minimum Amount of Business to be secured by the agents


(Rule 9 of Agents Rules, 1972)

W.e.f. 09.07.2009, the following amendments come into effect:

a. An agent shall bring in the following business in each of his First, Second and
Third agency year-

“Proposals resulting in policies on at least Twelve different lives for not less than
First Year Premium Income (FYPI) of Rs. One Lac;
Provided that a shortfall in fulfillment on one count namely lives or First Year
Premium Income shall be condoned up to a maximum of 50% at the end of 3rd Agency
year:
Provided further that it is compensated with same or higher percentage increase on
the other count and further subject to the condition that the agent brings in not less than six
proposals resulting in policies on at least six different lives and at least Rupees Fifty
Thousand First Year Premium Income in each of the First, Second and Third years of his
agency.

In Fourth Agency Year and in subsequent agency years, at least Twelve


proposals resulting in policies on at least twelve different lives with First Year
Premium Income of at least Rs.1 Lac. Please note that the condonation shall not be
applicable from fourth agency year onwards.

Please note that the agents appointed on or after 09.07.2009, the above mentioned
minimum business guarantee shall be applicable with immediate effect.

For the agents who were appointed before 09.07.2009, the minimum business
guarantee shall be applicable from the agency year falling after the date of notification.

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Example 1: Date of appointment of agent 09.07.2009 and onwards: The amended
Minimum Business guarantee shall be applicable to him from his First agency year i.e
with immediate effect. Kindly refer Annexure 1 to calculate the minimum business
required to be brought in by the agent as at the end of third agency year.

Example 2: For agents who have been appointed before 09.07.2009 but have not
completed one agency year prior to date of notification i.e agents appointed
between 02.07.2008 and 08.07.2009 : The amended Minimum Business guarantee shall
be applicable to him from his second agency year. For example an agent having Date of
appointment as 15.06.2009. The first agency year of this agent will end on 30.06.2010 as
shown below:

Agency Year Duration Minimum Business to be secured


by the agent
First 15.06.2009 to 30.06.2010 An agent, other than an absorbed
agent, shall bring in the following
business in his first agency year:
(a) if he is working in a City, Urban
agglomeration or Town with an
ascertained population of 5
lakhs or above- proposals
resulting in policies for not less
than Rs. 75,000 sum assured
on at least twelve different lives;
or
(b) if he is working in a City, Urban
agglomeration or town with an
ascertained population of one
lakh or above, but less than 5
lakhs- proposals resulting in
policies for not less than Rs.
60,000 sum assured on at least
twelve different lives ; or
(c) if he is working in any other
place with an ascertained
population of less than one
lakh- proposals resulting in
policies for not less than Rs.
40,000 sum assured on at least
twelve different lives.
( old rules would be applicable)

Second 01.07.2010 to 30.06.2011 12 lives and First Year Premium


Income of Rs. One Lac. However, if
an agent brings in at least 6 Lives
and Rs. Fifty thousand First Year
Premium Income, then he shall not
be terminated. The shortfall in
fulfillment shall be made good by
him in the third agency year.

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Third 01.07.2011 to 30.06.2012 At least 6 Lives and Rs. fifty
thousand First Year Premium
Income and provided that at the
end of the third agency year he
should have brought in at least 24
lives with First Year Premium
Income of Rs. 2 Lacs in his second
and third agency years taken
together. A shortfall in fulfillment on
one count namely lives or First Year
Premium Income shall be condoned
up to a maximum of 50% at the end
of his 3rd Agency year provided that
it is compensated with same or
higher percentage increase on the
other count. For example an agent
brings in 36 lives in his second and
third agency years taken together,
then a shortfall in First Year
premium Income can be condoned
upto Rs. One Lac provided he
brings in at least 6 lives with First
Year Premium Income of at least
Rs. Fifty Thousand in each of his
second and third agency year

Kindly refer Annexure 2 in such cases to calculate the minimum business required
to be brought in by the agent as at the end of third agency year.

Example 3: For agents who have completed one agency year prior to date of
notification i.e. agents appointed between 02.07.2007 and 01.07.2008 Date of
appointment of agent: 15.06.2008. His first agency year will end on 30.06.2009.

Agency Year Duration Minimum Business to be


secured by the agent
First 15.06.2008 to 30.06.2009 An agent, other than an
absorbed agent,
shall bring in the
following business in
his first agency year:
(a) if he is working in a
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City, Urban
agglomeration or
Town with an
ascertained
population of 5 lakhs
or above- proposals
resulting in policies
for not less than Rs.
75,000 sum assured
on at least twelve
different lives; or
(b) if he is working in a
City, Urban
agglomeration or
town with an
ascertained
population of one
lakh or above, but
less than 5 lakhs-
proposals resulting in
policies for not less
than Rs. 60,000 sum
assured on at least
twelve different lives ;
or
(c) if he is working in any
other place with an
ascertained
population of less
than one lakh-
proposals resulting in
policies for not less
than Rs. 40,000 sum
assured on at least
twelve different lives.

( i.e., old rules would be


applicable)
Second 01.07.2009 to 30.06.2010 In the second or
subsequent agency
year, the agent shall
bring in the following
business for each
year:
(a) if he is working in a
City, Urban
agglomeration or
Town with an
ascertained
population of five
lakhs or above-
proposals resulting in
policies for not less
than Rs. 1,00,000
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sum assured on at
least twelve different
lives; or
(b) if he is working in a
City, Urban
agglomeration or
Town with an
ascertained
population of one
lakh or above, but
less than five lakhs-
proposals resulting in
policies for not less
than Rs. 75,000 sum
assured on at least
twelve different lives ;
or
(c) if he is working in any
other place with an
ascertained
population of less
than one lakh-
proposals resulting in
policies for not less
than Rs. 60,000 sum
assured on at least
twelve different lives.

( i.e., old rules would be


applicable)
Third 01.07.2010 to 30.06.2011 12 lives with First Year
Premium Income of Rs.
One Lac. A shortfall in
fulfillment on one count
namely lives or First Year
Premium Income shall be
condoned up to a
maximum of 50% for his
3rd Agency year provided
that it is compensated
with same or higher
percentage increase on
the other count.

Kindly refer Annexure 3 in such cases to calculate the minimum business required
to be brought in by the agent as at the end of third agency year.

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Example 4: For agents who have completed two agency years prior to date of
notification i.e. agents appointed between 02.07.2006 and 01.07.2007
For Example, the Date of appointment of agent is 15.06.2007.
Agency Year Duration Minimum Business to be
secured by the agent
First 15.06.2007 to 30.06.2008 An agent, other than an
absorbed agent,
shall bring in the
following business in
his first agency year:
(a) if he is working in a
City, Urban
agglomeration or
Town with an
ascertained
population of 5 lakhs
or above- proposals
resulting in policies
for not less than Rs.
75,000 sum assured
on at least twelve
different lives; or
(b) if he is working in a
City, Urban
agglomeration or
town with an
ascertained
population of one
lakh or above, but
less than 5 lakhs-
proposals resulting in
policies for not less
than Rs. 60,000 sum
assured on at least
twelve different lives ;
or
(c) if he is working in any
other place with an
ascertained
population of less
than one lakh-
proposals resulting in
policies for not less
than Rs. 40,000 sum
assured on at least
twelve different lives.

( i.e., old rules would be


applicable)

Second 01.07.2008 to 30.06.2009 (2)


In the second or
subsequent agency
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year, the agent shall
bring in the following
business for each
year:
(a) if he is working in a
City, Urban
agglomeration or
Town with an
ascertained
population of five
lakhs or above-
proposals resulting in
policies for not less
than Rs. 1,00,000
sum assured on at
least twelve different
lives; or
(b) if he is working in a
City, Urban
agglomeration or
Town with an
ascertained
population of one
lakh or above, but
less than five lakhs-
proposals resulting in
policies for not less
than Rs. 75,000 sum
assured on at least
twelve different lives ;
or
(c) if he is working in any
other place with an
ascertained population of
less than one lakh-
proposals resulting in
policies for not less than
Rs. 60,000 sum assured
on at least twelve
different lives.
( i.e., old rules would be
applicable)

Third 01.07.2009 to 30.06.2010 In the second or


subsequent agency
year, the agent shall
bring in the following
business for each
year:
(a) if he is working in a
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City, Urban
agglomeration or
Town with an
ascertained
population of five
lakhs or above-
proposals resulting in
policies for not less
than Rs. 1,00,000
sum assured on at
least twelve different
lives; or
(b) if he is working in a
City, Urban
agglomeration or
Town with an
ascertained
population of one
lakh or above, but
less than five lakhs-
proposals resulting in
policies for not less
than Rs. 75,000 sum
assured on at least
twelve different lives ;
or
(c) if he is working in any
other place with an
ascertained population of
less than one lakh-
proposals resulting in
policies for not less than
Rs. 60,000 sum assured
on at least twelve
different lives.
( i.e., old rules would be
applicable)

In the above example since his third agency year has already commenced as on date of
notification, the agent will have to fulfill the minimum business criteria as per old rules.
However, for such agents the revised Minimum business to be secured by the agents i.e
12 lives with a First Year Premium Income of Rs. One Lac shall be effective from their
fourth agency year onwards.

Example 5 : For agents who have completed more than three agency years prior to
date of notification i.e. appointed on or before 01.07.2006.

The amended minimum business to be secured by the agents shall be applicable to


them from the agency year commencing after the date of notification.

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For example the date of appointment of agent is 15.06.2000. His current agency
year will be 01.07.2009 to 30.06.2010. The amended rules shall be applicable to him from
his agency year commencing from 01.07.2010 to 30.06.2010.

2. Amendment in Rule 19(4)

If the renewal commission payable under sub-regulation (1) or sub-regulation (2) or


sub-regulation (3) falls below Rs. 3000/- in any financial year (hereinafter referred to as the
said financial year), the competent authority may, notwithstanding anything contained in
the said sub regulation, commute all commission payable in subsequent financial years for
a lump sum which shall be three times the amount of renewal commission paid in the said
financial year, and on the payment of such lump sum to the agent or his nominees or heirs,
as the case may be, no commission on the business effected through the agent shall be
payable in the financial years subsequent to the said financial year.

3. Amendment in Schedule III and Schedule V

In the schedules of the said rules, for the words “ clauses” and sub-clauses”
wherever they occur, the words “paragraphs” and sub-paragraphs” shall be substituted.

In Schedule III of said rules,-


(i) For paragraph 2 and 3, the following paragraph shall be substituted, namely,
“2. An agent including an absorbed agent shall be entitled to bonus commission at the
rate of 40% of the eligible First Year commission if he has secured not less than six
proposals on different lives resulting in a completed business and a First Year premium
Income of at least Rs. Fifty thousand in the respective Agency year”.

(ii) After substitution of paragraphs 2 and 3 as paragraph 2,the paragraphs 4 and 5


shall be renumbered as paragraphs 3 & 4;
(iii) For paragraph 4 as so renumbered, the following paragraph shall be substituted,
namely,-

“4. Notwithstanding anything contained in sub-rules 2 & 3, an agent who has been
exempted under sub rule (4) of rule 9, shall be entitled to bonus commission, if he has
to his credit at the time of such exemption 15 qualifying years as defined in Schedule
VI”.

For paragraph 2 of Schedule V of said rules, the following paragraph shall be


substituted, namely,-

“2. An agent including an absorbed agent shall be entitled to bonus commission at the rate
of 40% of the eligible First Year commission if he has secured not less than six proposals
on different lives resulting in a completed business and a First Year premium Income of at
least Rs. Fifty thousand in the respective Agency year”.

You are requested to bring it to the notice of all concerned.

Encl: Annexure 1, 2 &3 Executive Director (Marketing)

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ANNEXURE – 1

CHART SHOWING THE MINIMUM BUSINESS TO BE SECURED BY THE AGENT


AS AT END HIS/HER THIRD AGENCY YEAR

(FOR AGENTS APPOINTED ON OR AFTER DATE OF NOTIFICATION I.E. 09.07.2009)

NO. OF LIVES FIRST YEAR PREMIUM


(CUMULATIVE FOR INCOME (CUMULATIVE
FIRST,SECOND AND FOR FIRST, SECOND AND
THIRD AGENCY YEARS) THIRD AGENCY YEARS)
18 450000
19 441667
20 433333
21 425000
22 416667
23 408333
24 400000
25 391667
26 383333
27 375000
28 366667
29 358333
30 350000
31 341667
32 333333
33 325000
34 316667
35 308333
36 300000
37 291667
38 283333
39 275000
40 266667
41 258333
42 250000
43 241667
44 233333
45 225000
46 216667
47 208333
48 200000
49 191667
50 183333
51 175000
52 166667
53 158333
54 150000

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ANNEXURE – 2

CHART SHOWING THE MINIMUM BUSINESS TO BE SECURED BY THE AGENT AS


AT END OF HIS/HER THIRD AGENCY YEAR

(FOR AGENTS APPOINTED BETWEEN 02.07.2008 AND 08.07.2009)

FIRST YEAR PREMIUM


NO. OF LIVES INCOME
(CUMULATIVE FOR (CUMULATIVE FOR
SECOND AND THIRD SECOND AND THIRD
AGENCY YEARS) AGENCY YEARS)
12 300000
13 291667
14 283333
15 275000
16 266667
17 258333
18 250000
19 241667
20 233333
21 225000
22 216667
23 208333
24 200000
25 191667
26 183333
27 175000
28 166667
29 158333
30 150000
31 141667
32 133333
33 125000
34 116667
35 108333
36 100000

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ANNEXURE – 3

CHART SHOWING THE MINIMUM BUSINESS TO BE SECURED BY THE AGENT

DURINGHIS/HER THIRD AGENCY YEAR

(FOR AGENTS APPOINTED BETWEEN 02.07.2007 AND 01.07.2008)

NO OF LIVES FIRST YEAR PREMIUM INCOME


6 150000
7 141667
8 133333
9 125000
10 116667
11 108333
12 100000
13 91667
14 83333
15 75000
15 75000
17 58333
18 50000

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