Thursday, October 04, 2007

Insurance agents - the bad and the good

Someone has been posting strong comments that are critical of insurance agents. According to him, the insurance agents:

* Offer products that are not suitable for the customer
* These products provide poor value to the customers
* The agents will not buy these products for themselves
* The agent are only interested in the high commission from selling the product.

This is true to a certain extent. The blame is not with the insurance agents only. The insurance companies share in the blame for not serving the public well.

We must not overlook the fact that there are insurance agents who operate ethically, as follows:

* They educate the customer about their financial needs
* They offer products that suit these needs
* These products give better value, compared to other similar products available in the market
* They earn a modest rate of commission for their time and service.

Customers need the insurance agents or advisers to help them find the suitable products. There is a role for the adviser.


Anonymous said...

It is quite interesting that you have posted on this subject about bad agents. In fact i have in mind to write something about this but wonder you would publish it. This is real and is not intended to denigrate the insurance agents.
Talking about the first 4 points Income agents break all of them when it comes to the product REVOSAVE.
Not suitable--- no one in his or right sense would buy a product just to feel good;it cannot meet their needs adequately; short changed in terms of return and protection.
Poor value---other products give better value for money
Agents won't buy--- they know it is lousy; ask them.
Although the agents know it is a lousy product and not suitable for THEIR clients it is alright to sell to OTHER clients because the commission is VERY GOOD.
For the other 4 below. The agents don't do all that because if they do they can NEVER ABLE to sell revosave. Also because the analysis will not point to that product.
So, Mr. Tan i don't know whether you will agree to all that I stated. Prove me wrong by going for mystery shopping.

Anonymous said...

i have been approached by an Income agent at a roadshow promoting their new product revosave.After listening to a presentation by a female agent i have this verdict.
The agent wasn't professional and knowledgeable about personal finance.She couldn't answer many questions.
She was trying to push that product to me aggressively. I told her i didn't have this lifestyle need that she was promoting about the product.I also told her I didn't have money to throw away and splurge on those things she suggested. I found the product is useless; it has no real value; talking about flexibility, I have greater flexibility and freedom by saving in a money market or saving account. You cannot have a product that can meet different needs without dilution.
I think she is typical of a pushy product salesman.

Anonymous said...

Dear Mr Tan,

I think the reason why insurance agents act this way, is because of the commission they stand to earn if they sell a policy.

I think the way to eradicate this, is by the insurance company coming up with an innovative way of paying their agents.

For e.g
1st month - Commision Based
2nd month - Feedback / Customer satisfaction based
3rd month - Quota based (no. of policies)

The company can mix this 3 up, and the agent will not know what kind of pay grading for the month they are going through. They will do their best to provide excellent customer service, in the interests of the customer more often.

The Customer service based payout, could also be tweaked to be 5-10% more, to provide incentive for agents to put the considerations of customers first.

Of course, all these will be kept secret from the agent, until the end of the month, where a feedback session or debrief on performance is done. He will then know the type of grading that was done on him, and how to improve.

I think these measures might help in the insurance industry. Maybe you could consider that in your company.

Alex Chan

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