TOPIC- Developing an effective agency force in a

General Insurance Company

Group Members-
 Stuti Singh -2224118
 Vaishnavi Nade- 2224120
 Rohit Kumar- 2224129
 Sakshi Mall- 2224133

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Genesis-
The concept of an “agency force” in the insurance industry refers to a
group of independent sales agents who are authorized to sell insurance
products on behalf of an insurance company. The history of the agency
force in general insurance companies can be traced back to the early
days of the insurance industry.
The first Insurance company in India, the Oriental Life Insurance
Company, was established in 1818. However, it was only after the
establishment of the Bombay Mutual Life Assurance Society in 1870
that the concept of agency force was introduced in the Indian insurance
industry.
During the early years, agents were mostly European merchants who
sold policies to other Europeans living in India. However, as the Indian
middle class began to emerge, Indian agents also started to play an
important role in selling insurance policies.
In 1938, the Indian Insurance Companies Act was enacted, which
brought all insurance companies under government control. This led to
the creation of the Life Insurance Corporation of India (LIC) in 1956,
which became the largest life insurance company in the country. LIC
relied heavily on its agency force to sell its policies.
In the 1990s, the Indian government started to liberalize the insurance
sector, allowing private players to enter the market. Private insurance
companies also relied on their agency force to sell policies, and many of
them adopted innovative strategies to recruit and retain agents.
Today, the agency force remains a key distribution channel for
insurance companies in India. While digital channels are gaining
popularity, agents continue to play a critical role in selling insurance
policies, especially in rural and semi-urban areas where insurance

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penetration is low. Insurance companies continue to invest in training
and development programs to enhance the skills of their agents and
improve customer experience.

The Concept of Agency-

The reciprocal rights and liabilities of Principal and Agent reflect

commercial needs and legal realities. In any business of size, it is not
possible for one person to travel everywhere to negotiate all the
transactions necessary to maintain or grow the business. These
problems are increased if the business is a corporation, because it is
then a fictitious legal person and, as such, it can only act through
human agents. Hence, independent people are contracted by
businesses to buy and sell goods and services on behalf of those
businesses. When agreements are made, the Principal is liable under
the contract made by the Agent. So long as the Agent has done what he
or she was instructed to do, the result is the same as if the Principal had
done it directly. Insurance sales agents working exclusively for one
insurance company are referred to as captive agents. Independent
insurance agents, or brokers, represent several companies and match
insurance policies for their clients with the company that offers the
best rate and coverage. An agent can act only to the extent of authority
granted to him by the principal. This authority may be expressed or
implied. An authority is said to be expressed when it is given by words,
spoken or written. It is implied when it is to be inferred from the
circumstances of the case.

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Agency Commission

The agency system is predominant in India as historically face to face

contact was considered essential in selling an insurance product. In
particular, the tied agency system for the industry constitutes almost
89% of the business in life insurance. In general insurance, by
commission paid, more than 60% of the business is coming from the
Agency channel, around 17% through brokers, about 15% from the
corporate agencies. Referrals constitute only 6.4% of the total business.
Under the prevailing state of affairs in the General Insurance Industry
and with the market treading towards a de-tariffed regime, the
statutory limitation on the commission rates and management
expenses is gradually losing relevance as management expenses
including commission over the time has become a function of the
nature of the policy, the market dynamics and its claim ratio than a
control mechanism to restrict expenses of an insurer. It is observed that
huge distribution expenses are incurred under heads other than
commission towards items such as reimbursement of agents’ expenses,
lead generation, infrastructure, performance based incentives,
competition prizes etc. It is also learnt that inordinate amounts are
being paid towards leads obtained from referral entities as well as third
parties.
The Insurance industry is expected to grow to $280 billion by 2020 as
the country is poised for higher economic growth. The insurance
market increased from $23 billion in 2005 to $ 84.72 billion in financial
year 2017. An increase in FDI and made, the Principal is liable under the
contract made by the Agent. So long as the Agent has done what he or
she was instructed to do, the result is the same as if the Principal had

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done it directly. Insurance sales agents working exclusively for one
insurance company are referred to as captive agents. Independent
insurance agents, or brokers, represent several companies and match
insurance policies for their clients with the company that offers the
best rate and coverage. An agent can act only to the extent of authority
granted to him by the principal. This authority may be expressed or
implied. An authority is said to be expressed when it is given by words,
spoken or written. It is implied when it is to be inferred from the
circumstances of the case.

Health Insurance Agent Commission

Category Commission
Health Individual 15%
Health Group (Employer-Employer) 7.5%
Health Group (Non-Employer- 15%
Employee)
Health Group (Credit Linked Up to 5 15%
yrs.)

General Insurance Agents Commission Intermediary

(Other Than Vehicle) Commission
Fire Retail 15% 16.5%
Fire- Corporate Risk 15% 17.75%
Marine-Cargo 15% 16.5%
Marine-Hull 10% 11.5%
Miscellaneous-Retail 15% 16.5%
Miscellaneous- 10% 12.5%
Corporate/Group

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Importance of agency force in GI Co.-

The agency force plays following critical roles in the success of general
insurance companies-
1. Sales and distribution: General insurance companies rely heavily on
their agency force to sell and distribute their policies. Agents have a
deep understanding of the local market and can help insurance
companies reach a wider customer base. Agents are often the first
point of contact for customers, and they play a crucial role in building
trust and confidence in the insurance company.: General insurance
companies rely heavily on their agency force to sell and distribute their
policies. Agents have a deep understanding of the local market and can
help insurance companies reach a wider customer base. Agents are
often the first point of contact for customers, and they play a crucial
role in building trust and confidence in the insurance company.
2. Customer service: Agents also provide a high level of customer
service to policyholders. They help customers understand their policy
coverage, assist with claim filing, and resolve any issues or concerns
that customers may have. This level of personalized service can help
insurance companies build long-term relationships with their
customers.
3. Market intelligence: Agents are in a unique position to provide
valuable market intelligence to insurance companies. They have a deep
understanding of customer needs and preferences, as well as emerging
market trends. Insurance companies can leverage this information to
develop new products and services that better meet customer needs.

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4. Cost-effective: Compared to other distribution channels, such as
direct marketing or digital channels, the agency force can be a cost-
effective way to reach customers. Insurance companies can leverage
the existing network of agents to promote their products and services,
without incurring significant marketing or advertising costs.
5. Brand building and reputation management: The agency force is
often the primary point of contact between customers and the GI
company. As such, they play a critical role in brand building and
reputation management. A strong and productive agency force can
help build a positive brand image for the company and enhance its
reputation in the market.
6. Product development and innovation: The agency force plays a
critical role in providing feedback to the GI company on customer
needs, preferences, and emerging trends in the market. This feedback
can be used to develop new insurance products and services and to
identify areas where the company can innovate and differentiate itself
from its competitors.

Need for agency force

Individual agents dominate the retail health insurance space in India

with 75% share, as per FY 2020 numbers. Their share in retail premium
went up substantially between FY 2015 and FY 2020 as banks lost
ground in retail distribution, according to a CRISIL Research report.
Retail policies are often purchased with the guidance of an insurance
agent or broker to help navigate plan choices and premium costs. The
dominance can be attributed to the fact that health is still largely an

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assisted product, wherein customers often require help in choosing the
right policy in line with their needs.
In the case of group health insurance, individual agents have a much
lower share at 8%. With 42% share, brokers occupy the lead spot. Non-
online direct sales and banks are the other major distributors in group
business.
Individual agents account for 34% of the health insurance premium
garnered by standalone health insurance companies (SAHI) and general
insurance companies. Their share went up 3 percentage points
between FY 2019 and FY 2020. Along with brokers, they command over
50% share in total health insurance premium.
The share of individual agents has been fairly stable in last 5 years in
the range of 30-35%. The share of business through direct channel has
also remained stable at approximately 29%. Broker channel has lost
market share to banks and their market share has reduced from 26% in
FY 2015 to 23% in FY 2020

pg. 8
Fig- Data excludes data for personal accident and travel insurance; Figures in
bracket represents health insurance premium (excluding PA and travel) | Source:
IRDAI, CRISIL Research

 Reach: The agency force enables general insurance companies to

reach a wider customer base, especially in semi-urban and rural
areas where digital channels may not be as prevalent. Agents can
interact with customers face-to-face, which helps build trust and
understand their insurance needs better.
 Personalization: Agents can provide personalized insurance
solutions to customers based on their individual requirements.
This is particularly important in the case of general insurance,
where policies can vary significantly depending on the nature of
the risk and the customer’s specific needs.
 Sales: The agency force is an effective sales channel for general
insurance companies. Agents are trained to sell insurance policies,
and they can identify potential customers, educate them about
insurance products, and persuade them to buy policies.
According to the report, companies witnessed strong co-relation
between retail business growth and increase in number of agents.
For example, in FY 2020, the number of individual agents for SAHI
companies saw a year-on-year growth of 31% from 5.2 lakh to 6.8
lakh. In the same period, retail business premium of SAHI
companies went up by 26%.
In case of private sector insurers, premium and agent count both
witnessed an 8% growth in FY 2020.

 Service: Agents can provide post-sales services, such as assisting

customers with the claims process and addressing their queries

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 and concerns. This helps improve customer satisfaction and
loyalty.

 Feedback: Agents can provide valuable feedback to general
insurance companies about customer preferences, market trends,
and competition. This helps companies develop new products,
improve existing products, and refine their sales and marketing
strategies.

Development-
Developing an effective agency force is critical to the success of a
general insurance company. Here are some key strategies that can be
used to develop a strong and productive agency force:
 Recruiting and hiring: It's essential to recruit and hire the right
people for the agency force. This means identifying individuals
who have the skills, experience, and personality traits needed to
be successful in the role. It's also important to provide a clear
understanding of the company's expectations, goals, and culture
during the recruitment and hiring process.

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  Training and development: Providing comprehensive training and
development programs for the agency force is essential to ensure
that they have the knowledge, skills, and tools needed to
effectively sell insurance products and provide exceptional service
to customers. This can include training on products, sales
techniques, customer service, and regulatory compliance.
 Compensation and incentives: Providing competitive
compensation and incentives can help attract and retain top-
performing agents. This can include commission structures,
bonuses, and other incentives that reward performance and
achievement.
 Technology and tools: Providing the agency force with the latest
technology and tools can help them be more productive and
effective in their roles. This can include customer relationship
management (CRM) systems, mobile applications, and other tools
that facilitate sales and service.
 Support and resources: Providing ongoing support and resources
to the agency force is essential to their success. This can include
marketing support, access to training and development resources,
and other resources that help them sell insurance products and
provide exceptional service to customers.
 Performance measurement and feedback: Measuring and
tracking the performance of the agency force is essential to
identifying areas for improvement and providing feedback and
coaching to agents. This can include setting clear performance
goals, tracking key performance indicators (KPIs), and providing
regular feedback and coaching to agents.

Challenges faced by agency force of general insurance companies-

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The agency force of general insurance companies faces several
challenges in today’s competitive business environment. Here are some
of the key challenges:
 Increasing Competition: One of the most significant challenges
facing the agency force of general insurance companies is the
increasing competition from other players in the market. The
insurance sector has seen a lot of new entrants in recent years,
including direct insurers, online aggregators, and insurtech
startups, which have disrupted the traditional distribution
channels.
 Digital Transformation: The insurance industry is undergoing a
digital transformation, and insurance agents need to adapt to the
new digital environment to stay relevant. Digital tools and
technologies, such as online platforms and mobile apps, have
changed the way customers interact with insurance companies,
and agents need to be able to use these tools effectively to serve
their clients.
 Changing Customer Expectations: Customers today have higher
expectations than ever before, and they demand a seamless,
personalized experience from their insurance providers. Insurance
agents need to be able to understand their clients’ needs and
preferences and provide them with tailored solutions that meet
their unique requirements.
 Regulatory Compliance: Insurance agents need to comply with
various regulatory requirements and standards, which can be
challenging and time-consuming. They need to be aware of the
latest regulatory changes and ensure that they are operating in
compliance with all relevant laws and regulations.

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  Training and Development: To stay competitive, insurance agents
need to keep up with the latest industry trends and
developments. Continuous training and development are
essential to ensure that agents have the skills and knowledge they
need to provide high-quality services to their clients.
Shortcomings of an insurance agency force-

 Lack of training and development : Insurance agents need to keep

up with the latest industry trends and regulations to provide the
best advice to customers. If an agency force lacks proper training
and development opportunities, they may not be equipped with
the necessary knowledge and skills to perform their job
effectively.
 High turnover rates: The insurance industry can be competitive,
and many agents may leave their positions for better
opportunities or higher pay. A high turnover rate can result in a
loss of experienced agents, which can impact customer
satisfaction and agency performance.
 Inadequate technology and automation: In today’s digital age,
insurance agents need to use technology and automation to
streamline their workflows and provide efficient services to
customers. If an agency force lacks proper technology and
automation tools, they may not be able to keep up with customer
demands and expectations.
 Limited product offerings: Insurance agents need to offer a range
of products and services to meet customer needs and
preferences. If an agency force has a limited product portfolio,
they may struggle to compete with other insurers and may miss
out on potential customers.

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  Inconsistent customer service: Providing excellent customer
service is crucial in the insurance industry. If an agency force lacks
consistent customer service practices, they may struggle to retain
customers and may damage the company’s reputation.

Suggestions on Improving Insurance Agency Force-

 Improving the agency force of a general insurance company can
be a challenging task, but there are several steps that can be
taken to enhance their performance and effectiveness. Here are
some suggestions:
 Provide extensive raining: To improve the performance of the
agency force, it is essential to provide them with extensive
training that covers all aspects of the insurance business. This
training should include product knowledge, sales techniques,
communication skills, and customer service.
 Set clear targets and incentives: Setting clear targets and
incentives can motivate the agency force to work harder and
achieve better results. The targets should be realistic, achievable,
and measurable. Incentives can be in the form of bonuses,
commissions, or rewards for meeting or exceeding targets.
 Offer ongoing support: Providing ongoing support to the agency
force is essential to help them achieve their goals. This support
can be in the form of regular feedback, coaching, and mentoring.
It can also include providing them with tools and resources that
can help them improve their performance.
 Foster a culture of collaboration: A culture of collaboration can
encourage the agency force to work together and share
knowledge and best practices. This can be achieved by creating a

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 platform where agents can connect with each other, share ideas,
and learn from each other.
 Use technology to streamline processes: Technology can be used
to streamline processes, reduce paperwork, and improve
efficiency. This can free up the agency force to focus on sales and
customer service.
Insurance agency management system or AMS is a SaaS (Software
as a Service) tool that can optimize the existing agency business
processes and run help the operations effectively. It tracks details
of the insurance policy, improves agent productivity, and provides
instant access to client data. Not just this, but it also helps in
managing claims for customers and handling commissions for the
agents. It automates multiple processes, making the agency
operations fast and efficient. The agency management system
allows storing a vast amount of data under a single umbrella. As a
result, the agents do not have to use multiple applications to
retrieve even a small amount of information. Instead, they get a
simple-to-use customer-friendly product that streamlines all
documents and client-base without any technical support.
As an agency’s book of business grows, it becomes extremely
difficult to manage agents, sales commissions, clients, and more
importantly, make sense of client data. Agency management
software can help increase agencies’ potential by utilizing the data
and automating processes. It increases an agency’s ability to
retain customers while acquiring new business.

1. Build Personalized Journeys with Customer Journey

Builder:-
The insurance agency has to make sure that the
customer journey is smooth and satisfying so as to

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 reach their target audience. No matter what the
campaign goal is – new customer acquisition, dormant
lead reactivation, increasing upsell/cross-sell rates,
increasing renewal ratios, app installs, app usage, a
well-thought journey builder addresses all the issues.
A customer journey builder is one of the most

important features of an agency management system. It

allows insurance agents to sketch customer and
prospect journeys visually, identify pain-points and
drop-off areas, and reduce lead leakage if any. A
journey builder helps build an end-to-end customer
journey across communication channels to increase
goal completion rates.

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2. Increase Agent Productivity using Intelligent Sales Automation:

An insurance selling process consists of multiple repetitive tasks – from

generating leads to storing and assigning them to the right agent.
However, these tasks can be cumbersome and time-consuming.

Sales automation takes care of all of these routine time-consuming

tasks and other additional tasks triggered by a certain event. It makes
the sales process more efficient and impacts revenues directly.
Similarly, the sales and marketing automation engines completely
eliminate any chance of human error.

Automation can perform various tasks within an insurance agency such

as:

 Assigning leads to agents automatically based on the

insurance product, geography, source, and more

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  Setting rules to automatically alert agents as soon as
something important happens
 Assigning quality scores to leads based on lead activity

 Monitoring sales team using automatic reports based on

performance and other attributes.

3. Building a Strong Business Process with Accurate Commission

Processing:

Commission processing is a critical part of the insurance agency

business process. Using spreadsheets or excel for calculating sales
incentives can lead to inaccurate results. Hence, it is essential to use an
automated, data, and purpose-driven solution to increase agents’
morale and revenue potential. It helps the agents be

up to date with their daily progress and promotes simple and error-free
accounting practices.

An automated commission processing can benefit an insurance agency

in ways such as:

 Enables quota attainment and motivates agents to perform

better
 Reduces time, effort, and overpayment costs

 Increases agent productivity and increases trust and morale

within an organization
 Improves data integrity and streamlines the compensation

administration process.

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4. Increase Bottom-line Sales with Automated Up-sell/ Cross-sell &

Renewal Alerts:
The concept of up-selling and cross-selling has been prevalent across
industries for a long time now. From retail shops and restaurants to e-
commerce and finance, every industry has been benefiting from this
concept. But what if the up-sell and cross-sell alerts can be automated
based on the customer’s purchase history? Sounds relieving, right?

Similarly, agencies might lose potential customers if agents forget to

reach out to the customer at the time of renewal. It might result in a
reduced customer retention rate and can affect the revenue potential.
Hence, the sales reps must be reminded on time.

An agency management system can help by:

 Optimizing and automating up-sells and cross-sells by setting

predetermined factors such as policy issue date, policy type,
family details etc. in the system
 Setting renewal task reminders for the agents to keep them

up-to-date with their customers

 Automating marketing activities based on up-sell, cross-sell,

or renewal
 Nurturing leads and onboarding customers based on

automated alerts.

5. Manage All the Leads with In-Depth Analytics & Reporting:

Another process that is crucial but time-consuming for agencies is
collecting data and analysing reports. Measuring data such as lead

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generation, quarterly revenue, and sign-ups at the end of the sales
cycle is a regular business practice. However, not many leaders track
and analyse data in real-time.

Creating reports in real-time helps in predicting cash flows, removing

bottlenecks, and enhancing sales productivity. Maintaining a sales
funnel helps track the number of leads at each stage, forecast pipelines,
and reach revenue goals on time. The automated reports help in:

 Keeping a tab on all on-field agents’ work hours, monthly

sales, and commissions at all times.
 Recognizing any discrepancies, keeping track of company

efficiency level, and reducing errors.

 Improving accuracy by providing real-time insights into total

policies sold, renewals done, claims settled, and more.

Insurance Agency Management System helps organize policy, agent, and

client management within an agency. The system not only deals with all back-
office operations but also manages the customer journey.

1. Improves Sales:

 The AMS improves sales by identifying cross-sell opportunities and

helps grow the agencies’ books of business.
 It also helps in policy management by mapping clients, agents, insurers,
and everything involved in between. Efficient sales is important for an
agency’s growth, and with the help of agency software, insurance
agencies can sell more policies and manage agents efficiently.

2. Marketing Automation:

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A non-obvious perk of the software is reducing the communication gap
between the agent and his customer. With the email marketing feature
of AMS, agencies can keep in touch with the leads, prospects, and
clients and send the right kind of communication at the right time.
Many evolved Agency Management Systems also support omnichannel
communication. It further increases the capabilities of agents to
communicate with prospects via their preferred channels. Automated
communication based on factors like renewal dates, cross-sell and
upsell signals help avail more sales opportunities.

In a nutshell, a good insurance agency management system is one of

the most fundamental building blocks for a successful agency model. It
not only takes care of customer relations and manages the book of
business but also automates the otherwise time-consuming and
cumbersome tasks. An effective insurance agency management system
saves money, retains customers, and adds to the company revenue.
Hence, investing in the best insurance agency management system
based on your requirements is very important.

Conclusion-

Developing an effective agency force is critical to the success of a

general insurance company. By recruiting and retaining high-
performing agents, providing them with the training and support they
need, adopting technology, and fostering a collaborative relationship,
companies can build a strong and productive agency force. Despite the
challenges, a well-developed agency force can help companies reach a
wider customer base, provide personalized service, and improve
customer satisfaction and loyalty.

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pg. 22