Determinants of Retention of Insurance Agents in Life Insurance Industry in Sri Lanka

Abstract

Financial planning is very personalized and requires greater attention in the insurance sector than in any other market. The needs and wants of individuals or families differ from person to person and require human touch. Due to this among all distribution channels, the insurance agents become the first choice in insurance marketing. As the insurance marketing is highly dependent on agents’ channel, retaining the agents for a longer period is also very critical. This paper attempts to identify the key factors influencing the retention of insurance agents in Sri Lanka. A sample of 140 agents who left the company during 2014 and 2015 was used to collect data through a structured questionnaire from three leading insurance companies in Sri Lanka. The chi-square test was used to analyze the data. The findings reveal that the Recruitment & Selection, Training and Remuneration fond have a significant effect on retention of insurance agents whereas Supervisory Leadership does not have a significant effect on retention. The findings imply that the senior management of the life insurance companies should uplift the managerial actions for enhancing the level of agents’ retention and the regulator of insurance industry in Sri Lanka to upgrade the licensing system of insurance agents.