Kathmandu, December 7:
The proposal by American Life Insurance Co (ALICO) to pay additional perks to its agents, which has been rejected by the regulatory board of Beema Samiti, has stirred deep resentment in other insurance companies.
The move to seek permission from Beema Samiti by ALICO to provide provident fund facilities to its agents is increasingly being viewed as just another attempt at luring insurance agents and tying them down to one company.
â€œThis is nothing short of an immoral market practice,â€ claimed an insurer on conditions of anonymity. In Nepal, unlike many other countries, one agent can be sell products from all the existing five insurance companies in the country. â€œBut dangling such carrots is intended to tie agents down to one company who will obviously inform prospective clients of products of only that company which may finally be detrimental to the interest of policy holders,â€ he said.
ALICO reportedly happens to be the market leader in life insurance in Nepal. According to some insurers, this is because the company goes overboard in offering very attractive incentive packages to its agents. The insurance market, it may be pointed out, basically works on the basis of agents. It is the agents who reach out to people, inform and simultaneously convince them to buy insurance products.
That is why insurance companies are heavily dependent on agents to develop their market and hence provide them with incentives from time to time. With the level of awareness on insurance being particularly low in the country, the role of agents assumes greater significance here.
â€œWhile even we offer cash incentives to our agents, there is an underlying principle that checks us from offering too much as incentives as that will only lead to draining the bonus of the policyholders,â€ pointed out a senior official of NLIC. He wondered aloud how an agent could even be considered to be given a PF when he works for only a commission and not for a regular salary. This is precisely why the proposal was nipped in its bud. â€œIt was an illogical proposal so we rejected it outright,â€ shot Madhav Prasad Upadhyay, executive chairman of Beema Samiti.
The other proposal of financing 80 per cent of the price of vehicles was for ALICOâ€™s employees and not for agents as reported in some dailies, he pointed out. â€œEven that was rejected as it entailed affecting policy-holdersâ€™s money,â€ he added.
Samitiâ€™s executive director, Ramesh R Bhattarai, said, â€œI think the company had probably forwarded demands made by their agentsâ€™ association to us without evaluating its credibility.â€