Insurance Agent Movement in India

By N C Chandak, Ex. President LIAFI

It is said ?Necessity is the mother of invention?. So also the associations are formed out of necessity. Life Insurance Agents? Associations or organisations are no exceptions.

It was in November 1944 that the bill was introduced in Central Legislative Assembly (Now Parliament) to amend the Insurance Act 1938. This bill suggested for reduction of Agency Commission From 40% to 25% on the first year premium and 2.5% from 5% on renewal premium.

Actuarial Society of India was mainly behind the introduction of this amendment. The Actuarial Society of India was formed in the year 1940. Their first memorandum to the Government of India suggested this reduction.

Insurance Agents who were sincerely involved in selling Insurance, all over India were very much perturbed with the introduction of above amendment.

True to the spirit of Bengal, the agents of Calcutta took lead and came forward, organised a meeting on 24th January 1945 under the leadership of late Shri Shamsher Ali (S.S. Ali the all time great agent of India) to oppose this amendment. They formed the Association of agents and gave the name as Insurance underwriters Association of India. Immediately on 31st January 1945, a public meeting was held in Calcutta under the banner of Insurance Underwriters? Association of India and various resolutions were passed to condemn the amendment bill. A comprehensive memorandum was prepared and submitted to all the members of assembly. Mr. Ali and other colleagues personally contacted the influential members of assembly and explained them the necessity of increasing the benefits to agents instead of reducing it.

Ultimately assembly passed the bill with reducing the commission to 35% from 40% on first year and increasing it to 7 ? % from 5% on second and third year premium.

Thus we find that with the help of association in proper hands, the agents? community could prevent the otherwise inevitable damage not only to the agents, but to the policy holders and the Industry itself.

In the same bill the commission on revival of orphan policies was reduced to 2 ? % from 5%. Thus reduction in commission is one of the reasons for non-revival of lapsed orphan policies.

Readers, who don?t know earlier, will now appreciate the reason why agents? community, all over India celebrates 24th January as APP Day (Agency Profession Protection Day).

In the post independence era, once again Government of India thought of having fresh look into the Insurance Act 1938. A comprehensive bill was introduced to amend Insurance Act 1938. The bill was referred to select committee of Parliament for examining the bill.

Insurance Underwriters Association became active. A committee under the leadership of Shri S.S.Ali was formed. The Committee prepared the memorandum, approached the Government, and gave its evidence before Select Committee on 18th and 19th of December 1949 and agents? community could get hereditary commission to be paid after the death of agent. On the issue of granting of license, important section 64 (I) was incorporated. It required passing of examination before granting an agency license to any person. Another section 31 (A) was incorporated which prohibited the insurance company from remunerating their own salaried class of employees on the basis of or being related to or dependent upon the quantum or percentage of profit or bonus or the premium income of the insurer. These two sections were the first step towards the Professionalisation of agency force.

In India the Life Insurance business was nationalised by promulgation of ordinance by the president of India. Later on, while introducing this bill in the Parliament on 17.2.56 Mr. CD Deshmukh, the then Finance Minister widely deliberated on the reason for nationalisation. In the course of introduction of this bill, he said ?most of the field agents are dummy and their main purpose seems to be to function as a channel for passing illegal rebates. Unfortunately despite of above statement, Section 31 (A) and 64 (I) of Insurance Act 1938 were not included in the Life Insurance Act, 1956.

Late Shri C. D Deshmukh wanted to give free hand to the managers of newly formed Life Insurance Corporation in the above matter. Perhaps industry managers were successful in convincing the Finance Minister for deletion of above two sections. It was a great setback to the agent?s movement towards professionalisation of agency career.

Estimates Committee of Parliament under the chairmanship of Shri HC Dasappa looked into the working of Life Insurance Corporation of India in the year 1960. The Committee invited suggestions. Active Insurance Agents working under different banners or individuals gave their evidence before Estimates Committee. Dasappa Committee in its report suggested preventive actions against benami agencies.

Prominent Agents like Shri SS Ali, AK Purkaystha, SP Hazra from Calcutta, Shri MM Ahuja, GL Dhingra from Delhi, Shri KG Rao, A Subbaiah from Madras could interact with each other because they all came to give evidence before Dasappa Committee.

Shri D.S.Mudbidri eminent agent (Creation of Sun Life of Canada) had his clients spread up in different cities. He realised the need for having as Association of Agents wherein there is participation from all over the country.

Shri D.S.Mudbidri discussed this issue with late Shri S.S.Ali at Calcutta. He also talked to many prominent agents who were representing different associations limited to their areas. However Shri. S.S.Ali could not see the fruits of his efforts as he passed away in the year 1963. But Shri D.S.Mudbidri continued his efforts and ultimately on 24th April 1964 a meeting was called at Branch 911 of Bombay. Agent representatives from different parts of the country participated. A Committee under the Presidentship of Shri D.S.Mudbidri and Shri H.B.Vasudev as Secretary was formed, Other members of the Committee were Shri K.G.Rao (Madras), Shri S.P.Hazra, A.K.Purkaystha, Shri S.C.Shah (Calcutta), Shri H.D.Dhingra, Delhi, Shri I.P.Kotak, and Shri P.V.Virkar. Next meeting of the committee was held at Calcutta in July 1964. They decided to hold All India Convention. The shape to the convention was given in early September in the same year at Bombay. Accordingly first ever convention of Life Insurance Agents of all India nature took place in Bombay from 30th September to 2nd October at C.J.Hall of Bombay. It was in this convention that the Life Insurance Agents Federation of India was formed. It was in this very convention that the first charter of demand was prepared and submitted to L.I.C. of India.

In this convention about 500 agents from all over India representing about 60 agents associations from different parts of the country took part. It was a mile stone in the Agents? movement of the country. L.I.C. management realised the importance of this convention and gave reply to each and every item of the charter of demand.

Thus the Federation LIAFI started working in full swing under the Presidentship of Shri D.S.Mudbidri and Secretaryship of Shri H.B.Vasudev. The Federation started publishing monthly magazine called Insurance India. This magazine was informative. Valuable articles were also published in the magazine. It became popular in a very short time.

It will not be out of place to mention here that Shri H.B.Vasudev first Secretary of the Federation was very intelligent and dedicated agent fully devoted to the cause of agents. Unfortunately he died early. It was a great set back to the agents? movement in the country.

The first General Council Meeting of LIAFI took place at Vijayawada (A.P.) in January 1967. Shri R.S.Bhashyam and Shri R.Shankarnarayana of Madras were elected President and Secretary of the Federation respectively. Accordingly Headquarters of the Federation was shifted to Madras (now Chennai).

Federation Headquarter was in Madras for a period of two years 1967 to 1969. In this period of two years Federation appeared before two important committees of Central Government. 1) Working Group of Administrative Reforms Commission and the Morarka Committee. Mr. A.K.Purkaystha was one of the members who represented federation before these committees. It was here that agent leaders could realise the intellectual capacity of Shri A.K.Purkaystha (creation of Sun Life of Canada), Life Insurance Agent from Calcutta.

Unfortunately monthly magazine ?Insurance India? could not be continued for long and the publication was stopped. In the year 1969 second General Council Meeting of the Federation took place at Palace in Andhra Pradesh. Madras Agents expressed their inability to continue the headquarters at Madras. Hence Shri S.P.Hazra and Shri A.K.Purkaystha of Calcutta were elected President and Secretary respectively. So in 1969 Federation Headquarter shifted to Calcutta. In Calcutta there was a good team of learned and dedicated agents like Shri S.P.Hazra, Shri J.Prasad, Shri S.N.Shah, and Shri H.L.Dube to support Shri A.K.Purkaystha as secretary.

Federation Headquarter remained in Calcutta for 21 years from 1969 to 1991. In the year 1980 the Federation changed the name of the post of Secretary to that of Secretary General. Because of dedicated hard work, sense of belonging and intellectual capacity of Shri A.K.Purkaystha, he was forced to continue as a Secretary and then Secretary General of the Federation for 21 years. It was but for his ill health he would have been persuaded to continue further.

Calcutta agents did great service to agent?s community in many ways. Most important being the preparation of agent?s regulation. They had no agent?s regulation anywhere in the world to be referred to. They prepared the draft of agent?s regulation themselves and submitted to L.I.C. in July 1970.

The Calcutta team with Shri A.K.Purkaystha as Secretary worked hard for almost 30 months to prepare the draft then discuss with L.I.C. management and again redrafted after the suggestions from L.I.C. etc.

Finally the Agents? regulation first of its kind in the world was passed by Government of India and became effective from 1st May 1972. L.I.C Agents? Regulations 1972 was the corner stone in paving the way for professionalisation of agency force in India.

Efforts of Federation continued in the direction of making agency as full time Profession. One hurdle was the staff agencies being granted by L.I.C. to its employees. Most of the agents in the country were opposed to the staff agencies.

With the persuation of Federation, Govt. of India intervened and compelled L.I.C to stop giving Life Insurance Agency to its employees from the year 1976 onwards.

The staff agents were given option either to continue as agent or as staff of L.I.C. Many staff agents opted to continue as staff member only and their agencies were terminated. Few of them opted to embrace agency as career and resigned as employees of L.I.C. It is because of this rule that Federation could get some leaders like Shri N.C.Chandak of Nagpur, Shri B.N.Chary of Hyderabad and Shri P.Srinivasan of Coimbatore etc. who had earlier worked as important office bearers of LIC employees unions.

Mr. Purkaystha wrote destiny of Federation (LIAFI). Whenever the history of agent?s movement in India will be written, name of Shri A.K.Purkaystha (Ajoy Kumar Purkaystha) of Calcutta will appear prominently. Late Shri A.K.Purkaystha born on 22.03.1920, and expired on 15.04.2000 at Calcutta ceaselessly served the cause of agents? community for more than 30 years.

Formation of all India Agents Organisation and putting it on sound foundation was not an easy task. Once late Shri S.S.Ali said ?Each agent is so indivualistic that it is difficult to organise them and hence I leave it to next generation?. The work which Shri S.S.Ali left for next generation was completed by Shri A.K.Purkaystha in a most dynamic way with hard work and full of sacrifices.

It was because of the efforts of Shri Purkaystha that L.I.C. is regularly discussing with Federation in the form of Agents Consultative Committee meetings. Club rules were formed by LIC Management in consultation with Shri A.K.Purkaystha. Monthly Magazine of the Federation called ?News Letter? was being published from Calcutta. Contribution coming to the Federation was sometime so poor that the money collected for magazine had to be utilized for other essential expenses of the federation.

Federation always felt need for proper training to agents. Educational Cell was created in Federation. Late Shri D.S.Mudbidri was assigned the job and made Chairman of Educational Cell of the Federation. Shri D.S.Mudbidri did great service to the agents? community by convincing LIC authorities about the need of education to the agents.

First training school for agents was created at Pune with the help of Shri D.S.Mudbidri. LIC gave its helping hand. It was with the initiative of Shri D.S.Mudbidri that Shri Appa Rao Machiraju came to India from America and took on himself the job of imparting training to agents at Pune. Shri P.S.Kochar, experienced and successful agents from Bombay also took keen interest and helped in creating LIRT (Life Insurance Round Table) on the basis of M.D.R.T. (Million Dollar Round Table) of America. Another agent of Bombay Shri H.M.Jain with the help of Shri N.C.Chandak of Nagpur took initiative in forming Jeevan Vidya Trust which started agents? training school at Jaipur.

Our great Leader, Friend, Philosopher and great Visionary Shri Dev S. Mudbidri expired on 10th February 1996 at Mumbai. It was an irreparable loss to L.I.A.F.I and Agents Community as a whole. But the biggest loss was to the Agent?s Education Movement floated by L.I.A.F.I in India.

Whenever the Federation was in crisis, Delhi agents under the leadership of late Shri K.L.Thukral always came forward to give helping hand. Shri K.Thukral, Shri M.M.Ahuja, Smt Annapurna Rao, Shri Prem Singhal and other prominent agents of Delhi were always in forefront. Four General body meetings took place in Delhi. LIAFI celebrated its Silver Jubilee Function on 2nd October, 1989 at Delhi. It is a mere coincidence that in the same year N.A.L.U. (National Association of Life Underwriter) of America started its centenary celebration in Boston City of America. Two representatives of LIAFI (i) Shri P.S.Kochar from Mumbai and Shri N.C.Chandak from Nagpur were invited and took part in NALU?s centenary celebration at Boston.

9th General Council Meeting of (LIAFI) Federation took place at Delhi from 20th to 22nd September 1991. At this time Shri B.N.Chary of Hyderabad and Shri A.K.Purkaystha were President and Secretary General of LIAFI. Mr. Purkaystha?s health was not allowing him to continue as Secretary General and as such Shri H.M.Jain of Bombay and Shri. N.C.Chandak of Nagpur were elected as new President and Secretary General of Federation respectively.

Newly elected team under the President ship of Shri H.M.Jain and Secretary General Shri N.C.Chandak worked hard for spreading the wings of the Federation in nook and corner of the country. Agent?s community from all over India gave good response to this new team. Magazine called Indian Life Underwriter (I.L.U.) was being published by Nagpur Divisional Association which had the facility of Postal Concession. This Magazine was used to convey the message of the Federation to the nook and corner of the country. This magazine Nike named as I.L.U. became very popular in a short span of time because of the substance Mr. N.K.Varma, Career Agent from Nagpur, Editor of I.L.U. took pains to publish the magazine regularly.

10th General Council Meeting of LIAFI took place again at Delhi from 14th September to 16th September, 1995. Mr. Chandak wanted to relinquish the office as he was finding it difficult to work with Mr. Jain but Agents community forced him to continue. No nomination papers were field for the post of Secretary General in the 10th General Council Meeting and as such once again Mr. H.M.Jain and Mr. N.C.Chandak were elected President and Secretary General of LIAFI. This newly elected team could not continue for long because of the wide differences between President Shri H.M.Jain and Secretary General Shri N.C.Chandak.

Special General Council Meeting of LIAFI was summoned from 14th to 17th December 96 at Nagpur by Central Secretariat to elect the new body of LIAFI as the Federation work not being carried out. Mr. Jain and Colleagues opposed to this Special General Council Meeting. Mr. H.M.Jain went upto Bombay High Court to stop this meeting called for electing new leaders. His appeal was dismissed on 13.12.96 by Justice Patankar of Bombay High Court at Bombay. Accordingly, Special General Council Meeting took place at Nagpur. Mr. Chandak refused to file his nomination for the post of Secretary General in the larger interest of Federation. Shri B.N.Chary of Hyderabad and Shri S.R.Mishra of Bombay were elected President and Secretary General respectively. They accepted the responsibility at a critical juncture. Mr. A.K.Purkaystha in spite of his bad health attended the special General Council Meeting at Nagpur and it was be last G.C. attended by Leader of leader Shri A.K.Purkaystha.

Now in a changed scenario, Where the Insurance Industry has been privatized, the role and responsibility of Agents Organisation and of Insurance Agents has increased many fold. We have to keep in mind the Powerful Body called Insurance Regulatory and Development authority to supervise the Insurance industry as a whole consisting of very Powerful Business magnets of National and International level entering as Insurers in India. We will have to keep strict vigil, in as much as the agents? community should not be sandwiched between the above referred two powers.

If we have to safeguard our interest and the interest of policy holders then we will have to be Educated and Professionals. The Need of the hour is unity and the job of the Leaders of the organisation to sacrifice Ego and work hard to fight for the cause of full time Professional status to Insurance agency Career. It is the pious duty of each and every agent of the Industry to strive hard to achieve our ultimate aim of full time Professional status.

Successful working of agents? organisation in it self is not an end. It is only the means to achieve our ultimate aim of Professionalisation. Solutions to all our problems big or small lie in the unity and Professionalisation of agents? community. Hence let all of us understand the importance and then work hard to achieve our ultimate aim. (N.C.Chandak)