The IA began granting insurance intermediary licences on 23 September 2019. During the period from 23 September 2019 to 31 December 2024, we have granted just over 70,600 new licences to individuals who were new entrants to the insurance market1.
We thought, with five years of data behind us, it would be an opportune moment to mine the data to find out how many of those 70,600 new entrants were still in the industry.
Of the 70,600 new licences granted, 44,000 licences remain active – a percentage 62%. On the face of it, this does not look too bad!
However, we have to bear in mind that licences are granted for three-year periods. These numbers do not, therefore, present the full story as they are skewed by the inclusion of the 18,700 licences granted in 2024 (which would only have been running for less a year), 13,000 licences granted in 2023 (which would only have been running less than two years) and 9,300 licences granted in 2022 (which would only have been running for less than three years).
What if we were to look at just the licences granted in 2019, 2020 and 2021, for all of which the first full three-year licence period has passed? In respect of these licensees, what if we asked the question: how many of them are still in the industry now? In other words, how many of these decided to renew their licences?
During the period 23 September 2019 to 31 December 2021, the IA granted 29,600 licences to individuals who were new entrants to the market. Of these, only 10,500 – or 35% - are still licensed some 3+ years later, as at 31 December 2024. Of the 19,100 who have dropped out, 15,600 actually dropped out before the end of their initial three-year licence. So let’s state those figures again – 29,600 three-year licences granted, with 15,600 (53%) not even making it to the end of the first three-year licence. In other words, as a newly licensed insurance intermediary, the likelihood of you giving up before the end of your first three-year licence is greater than 50%. Here are some statistics for new entrants:
| Year of licences granted# | 2019 (Sept – Dec) | 2020 | 2021 |
|---|---|---|---|
| No. of licences granted to new entrants | 4,600 | 13,100 | 11,900 |
| No. of licences remaining active as of 31 Dec 2024 | 1,400 | 4,300 | 4,800 |
| No. of licences revoked | 3,200 | 8,800 | 7,100 |
| - Revoked within 1st year | 300 | 900 | 900 |
| - Revoked between 1st – 2nd year | 1,000 | 2,900 | 3,000 |
| - Revoked between 2nd – 3rd year | 900 | 3,400 | 2,300 |
| - Revoked after 3 year | 1,000 | 1,600 | 900 |
# Remark: the figures were rounded to the nearest hundred, and did not include experienced hire who rejoined the industry or swapped their existing licence.
And let’s not forget, the licences granted in the aforesaid table were free as the IA only started to collect licensing fees from September 2024!
What should one make of these numbers?
Perhaps they are not a surprise to those serving in insurance intermediary management functions of insurers? After all, isn’t recruitment focused mainly on quantity – the belief that the more agents the better – which lends itself to high attritional rates in the first 3 years?
From the conduct regulatory viewpoint, however, these numbers show a bright red-flag for the risks associated with orphan policies in the life insurance industry, being a main root cause for a number of the complaints the IA receives. For example, when individual insurance agents leave the industry, the long term policies they arranged still require servicing. That burden passes to the individual insurance agents remaining in the industry to pick up, a burden which becomes more significant, the earlier the outgoing agent leaves the industry which, according the licensing data, is more likely than not going to be in the first three years.
This problem is then compounded further with the remuneration structures offered by insurers on participating policies, which skew commission payments to the first year of the policy, such that the agents who arranged the policies take most of the commission and then leave the industry. This begs the question: what monetary incentive is left for those agents who have to pick up the serving obligations on the policies left behind? Any insurer that answers to the regulator: ‘well there are cross-selling opportunities’, only demonstrates how little regard it has for conduct risk.
Surely then, this data reinforces the need to look at a smoothing mechanism for payment of commission on participating policies, doesn’t it?
Notes:
1 In addition to this, we have granted 22,000 licences to individuals who were swapping their existing intermediary licence for a different type of intermediary licence (e.g. moving from being a technical representative (agent) to a technical representative (broker)) and processed the licensing applications for 85,000 deemed licencees (who were already in the market).