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Often eulogised by life insurers as the lifeline of their business, individual agents are also a source of comfort for many policyholders who prefer dealing with a familiar face. While banks that are engaged in insurance distribution have the advantage of a wide network of branches and enormous staff strength, individual agents continue to account for a major chunk of the business. It is for this reason that insurance companies do not hesitate to dole out lucrative commissions to agents.

While the rewards do attract agents in hordes, there is no dearth of those who treat it as a part-time profession and are unable to invest adequate time and energy into it. As a result, many choose to drop out of the profession, leaving the policyholders in a lurch. Figures (see graphic) indicate that of late, the industry has been losing a significant number of agents in a year. This is especially true in the current scenario where the altered regulatory landscape has shrunk their earnings from commissions considerably.

However, don't despair if your agent downs the shutters. After all, s/he is just a conduit between you as a policyholder and the insurance company, and you can always knock the latter's doors when the need arises. Also, the Insurance Regulatory and Development Authority (Irda) has laid out guidelines for handling 'orphan' policies, as plans where the original agent is not available for servicing are generally called in the industry. Here are some scenarios that you may face if your agent decides to give you the slip:

Agent Winds Up Business:

In such a case, your first stop would be your insurance company. "At all times, the insurance company and its staff are responsible for offering continuous service to its customers whether the agent is available or not. If an agent leaves the insurance company or winds up his business, an insurance company is required to appoint an official for servicing the policy," says P Nandagopal, MD and CEO, IndiaFirst Life Insurance. The insurance company can either designate another agent for servicing the policy or can appoint an official in any branch for providing the necessary help to the policyholders. Usually, insurers move such policies to an in-house team set up specifically for the purpose. "These days, companies try not to allocate the business to other agents because many may not be interested given that the first-year commissions would have already been paid out," adds Rahul Aggarwal, CEO, Optima Insurance Brokers. For policyholders, therefore, little will change in such cases. The insurance company typically intimates them about the change while asking them to establish a direct contact when necessary.

Another possible scenario is where the agent decides to terminate the agency agreement with your insurance company but chooses to carry on with his other advisory businesses. "If the agent has serviced policies for at least five years, insurers let them retain the right to earn renewal commissions. In this instance, technically, the policy won't be an orphan policy. The agent can continue to service the policy," explains Vinay Taluja, principal officer, Bajaj Capital Insurance Broking.

Agent Bank & Insurer Part Ways:

Banks play a key role in selling insurance policies and contribute significantly to the insurer's business. In the recent past, many banks have severed distribution ties with insurance companies, either to move on to more remunerative partnerships with other companies or to venture into the insurance space themselves. This change could spell some trouble for the policyholder of the bank's former insurance partner. "It could be a challenge because the bank will refuse to tend to you citing the non-existence of the agency," points out Optima Insurance's Aggarwal. "The policy then will go into the orphan mode. Changed loyalties have caused some amount of turbulence," concurs Bajaj Capital's Taluja. "However, insurance companies that have lost banking partners tend to become particularly proactive in managing such policies, as they are keen on maintaining high persistency ." Several insurers have set up call centres to cater to such policyholders.

Unsatisfactory Services of The Agent :

Then, there could be an instance where the policyholders themselves may be keen to terminate the services of their existing agent and move on to another, if they are dissatisfied with the quality of services being offered. Again, this may not be very easy. "Life insurers are usually reluctant to act on this. If you complain, they may take over the servicing themselves, but could continue to pay commission to the agent," says Aggarwal. "On your part, you can write to the company requesting a change. The insurer then has to handle your policy directly. They may also decide to assign another agent, but bringing in a different agent of your choice is ruled out," adds Girish Batra, chairman and managing director, Net Ambit, a financial products distribution company.

Take Charge Of Your Policy:

Finally, you need to remember that an agent is not entirely indispensable when it comes to policy servicing. Sure, agents form a very a vital cog in the wheel here - in addition to selling the policy and ensuring the delivery of policy and related documents, they render a host of services. They are required to help you with paying renewal premiums (and sending reminders when necessary), providing receipts for the same, arranging to get changes (like change in address, nomination etc) made, carry out your instructions with respect to switching of funds, top-ups , partial withdrawals, policy surrender and guiding your dependents with the claims process in the event of your demise . But, you always have the choice of dealing with the company directly for the purpose, irrespective of whether you are satisfied with your agent's services or not. "In practice, though customers buy policies from agents, they do approach the insurance companies directly over phone/email/internet to avail of policy servicing. All insurance companies have established processes to directly deal with the customers in case of any servicing requests," sums up Nandagopal.

Source: http://economictimes.indiatimes.com