Chennai: Private life insurer ICICI Prudential Life Insurance Company Limited has begun hiring graduate non-commissioned officers of the armed forces or ex-servicemen to sell policies in rural areas.

According to N S Kannan, executive director, retired servicemen with 10 years experience are eligible to become unit manager in rural areas.
He said a unit manager has to manage a team of around 25 agents apart from bringing in business on his own.

On successful completion of training, the selected ex-servicemen will be given a Certificate of Insurance Management and absorbed by the life insurer.

Till date the company has recruited around 231 retired armed forces personnel across the country and nearly 48 per cent of them belong to South India.

This move is expected to boost ICICI Prudential Life's premium income and its agency field force in rural areas, which currently numbers 30,000 rural agents who contribute around 3 per cent of fresh business.

On the agency churn rate experienced by the company Kannan says, "Typically 75 per cent of the agency force fades away four years after recruitment." The churn and the resultant fresh recruitment increase a life insurer's operational cost apart from the huge commissions and incentives given to the distributors. This in turn necessitates huge infusion of capital at regular intervals and delays breaking even.

Interestingly, as the most heavily capitalised life insurer in the country at Rs3,362 crore, ICICI Prudential Life earns around 90 per cent of its new business from capital-efficient unit-linked insurance policies.

Nevertheless the average premium per policy for the company (APPP) is around Rs20,000.

While Kannan agrees the APPP is lower than that of some of the smaller private life insurers, he attributes that to the 63 per cent business earned from the 2.6 lakh individual agents.

"Most of the other companies get their business from their bancassurance channel." ICICI Prudential Life itself has tied up with 22 banks to distribute its products.