Saturday, June 29, 2013

Integrity of agents and insurance companies

Dear Mr Tan,
I am reading your blog . I think you are a person with intergrity.
I supposed it is not the agent who want to behave wrongly. Is the way the insurance company teach their agent in selling to the market.
They use strategy and  incentive to push the agent to sell insurance to their client. Some old agent have to make a living thus they have to sell to fulfill the contract maintenance.
Newspaper awards are publicized by the insurer. This create the impression that agents are well to do. This create a lot of future problems as agents only focus on the first year commission used in the measurement. There are a lot of angry clients in the market.
The people who train the agent give biased comparison and teach the agent wrongly. They increase the agent's target.  Some old agents suffer and have to sell thing that don’t want.
Some insurers measure by life cases and force the agents to sell life insurance only. They internally throw challenge to the agent and force the agent to sell these biased product.
The agents are misled the insurer that they are building a franchise. The franchise cannot be sold, so the agents have to work like to hell.
We should stop pushing the blame to the agent. The insurer play a big part and is the party that  give the information , instruction, strategy and compensation plan. The agent has to follow.
Can we look at a bigger picture and talk about the insurer as they are the root of the problem rather on the agent. 

Recently, the commission has been cut. Newer agents have problem to enter the market and pass the examination. In the future, we will be left with old agents and brokers. I supposed more problem will occur.
Agents have to lead a poor lifestyle and need to tune to the timetable of the client every day. In the long run, they are promised nothing by the insurer - no retirement plan and regulatory changes. The problem is faced by older agents who have to take more examinations. 

We have to look into the welfare of the agents.  They are not protected by any party and cannot turn to the Ministry of Manpower if they have any problem.
What you have described applies to half of the agents, who are forced by circumstances or ignorance to sell products that are bad for customers.

But, after some time, these agents become aware. Some continue to sell the bad products to earn the good income or even to become the trainers and to recruit other people. Their integrity becomes questionable.

Other agents decide to leave the industry or opt to see the good products that are fair to customers. These agents have the integrity and interest of their customers. There are many of them.

The insurance companies should review their operation and offer products that are fair to customers. If they design bad products, their integrity is questionable. . 


zhummmeng said...

These agents are to be blamed. They entered the industry with their eyes wide open and with greed. They think this indsutry is a get rich quick industry.Most of them, 95% of them are not qualified and they don't care and because this industry is a product pushing for commission and NOT for their clients' interest.
The insurance companies are greedy too and they work hand in glove with the greedy agents.
The exams are very easy and yet many cannot pass. Why? they are not up to standard and their supervisors are equally not up to standard or competent. How can MAS allow them to advise ? MAS should set higher standard like Australia, UK and Europe and NZ where entry is tertiary professional qualification and NOT those tikam tikam exams monkeys and cows can pass too.
Imagine your family doctors have only 4 O level qualfication and they passed some tikam tikam biology/hygiene exam and practice as doctors and promote expensive products the moment you walk into their clinic. This is exactly what insurance agents are doing, pushing products that pay high commission and they don't care the clients.
Hope the new changes will weed out the incompetent agents and protect public from being conned.

TQC said...

I take issue with the idea that insurance companies are the only party to take the blame.

Insurance companies do not own customers. That is why they have to pay high upfront costs to acquire customers. This means most of the value chain goes to distributors and agents.

Besides, insurance companies have no control on the cost of goods sold, which is determined by the interest rate. When the interest rate is high,they can make a good return. When the rate is low, their margin is squeezed. The reward/risk is asymmetric.

zhummmeng said...

Shocking to hear many insurance agents still cannot pass the 'monkey and cow can pass' tikam tkam exams M8A & M9A. Isn't this proof that these insurance agents are not fit and not up to standard? Do the public want to be advised by these salesmen?
Surprised also to know some former receptionists and secretaries are pushing ILPs like investment experts.
You got to be careful lest your retirement fund go up in smoke.

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