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Insurance regulator IRDA today relaxed norms for insurance agents by removing certain riders at pegging the persistency ratio,which refers to retention of clients,at 50 per cent.
“The average persistency rate is uniformly set as 50 per cent which is to be reckoned only on number of policies,” Insurance Regulatory and Development Authority (IRDA) said in a circular.
In February,the IRDA had pegged the persistency ratio,a measure of customer satisfaction,at 50 per cent with a rider that it should go up to 75 per cent by 2015-16.
IRDA also clarified that policies which continue to provide insurance cover to clients after the end of premium payment (auto cover policies) would be included while computing the persistency ratio.
However,it added,the policies,which have already matured or wherein death or surrender has happened,would be exempted from calculating persistency ratio for the agent.
IRDA also relaxed the definition of ‘relatives’ that employees of both life and general insurance companies cannot engage as agents.
“The term relatives is re-defined as spouse,dependent children or dependent step children whether residing with the employee or not,” the IRDA circular said.
In its earlier circular,IRDA had said that relative would include spouse,sisters,brothers,parents,sons,daughters-in-law,daughters and sons-in-law.
The circular also said that for transfer of insurance agency from one life insurer to another,the agent should mandatorily have a persistency ratio of 50 per cent.
