by Mr. Kapil Mehta, SecureNow Insurance Broker Pvt.
I would not like to be an insurance agent. Research
regularly reconfirms that it is one of the most looked-down upon professions in
the US, Australia, the UK, most of Asia and India. A Gallup Inc. poll conducted
in the US between 1977 and 2012 has consistently had 30% to 45% of its
respondents aver that insurance agents have low ethics and honesty.
Members of Congress fare worse but, unlike insurance
agents, they are rich.
This stereotyping is unfortunate because it has resulted
in a vicious cycle where good people shy away from the insurance profession.
Even if good people were to sign-up, success is difficult. The combination of
skills required by an agent for success is difficult to find.
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In 2003, when the Indian insurance sector had just opened
up, I took, for a lark, the psychometric test that prospective agents must
qualify.
To my surprise, I failed. I walked up to the chief
executive officer of the insurer where I worked and told him to save the
company’s money by scrapping these tests.
Wise man that he was, he suggested
that I “dig deeper” and dismissed me. I did that and discovered the combination
of character traits needed for successes as an agent: perseverance, empathy and
extroversion.
Perseverance keeps agents going when friends and family
turn away; when closing a sale takes months. A leading Indian-origin agent in
the US once took me for a drive in his S-Class Mercedes through Edison, New
Jersey. What made him so successful? It turned out that when he went to the US
20 years ago and took an insurance licence, an uncle looked away when he saw
his agent-nephew approach.
That incident made him determined to become so good at
his work that people sought him out for advice. I once met a 70-year-old
leading Taiwanese agent at an international sales convention. She became an
insurance agent to send her grandchildren to college.
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| Kapil Mehta, SecureNow Insurance Broker Pvt |
Over 5 years, she established the most successful agency
in Taiwan and
attended the convention accompanied by her now college-going
grandchildren. Good insurers search for people who have adeptly handled
adversity in their lives.
Empathy helps the agent relate to the buyer, build a
rapport and recommend the right products. Empathy comes when the agent’s life
stage is similar to the buyer’s.
An agent with children understands the need to plan for
college education; the 60-year-old agent knows the importance of health
insurance for senior citizens. This is one profession where being young is a
deterrent because of the generation gap between the buyer and seller.
Finally, extroversion—which is the reason I failed the
test. An agent acquires new customers by putting her hand out and introducing
herself. Most of us are uncomfortable doing this as we fear rejection.
The agent takes rejection in her stride because deep down
she is convinced that selling insurance is a good thing. The agent is not
looking to sell some horrible products and then disappear. In fact, many agents
themselves buy the products they sell to you.
Why then are agents hated so much and why are so many
buyers dissatisfied with their insurances? The reason is poorly designed
products and ineffective complaint resolution. There is a huge responsibility
on insurers and regulators to ensure that products introduced in the market are
fair.
Importantly, buyers must have a respectable exit if they
change their mind about their insurance. Nearly 10 years ago, after I had been
in the insurance industry for some time, I bought a whole-life plan.
Despite being from the industry, I had not realized the
high penalties that would apply if I left the insurance mid-way. When I
surrendered the policy, I lost nearly 20% of the premiums paid. Recently, a
friend approached me with a unique problem. He had bought a pension plan that
matured about a year ago. Given his financial circumstances, he wants to
withdraw the accumulated funds rather than convert it into an annuity, even if
it means paying tax or a surrender penalty.
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The insurer has refused, and the funds were transferred
to the insurer’s general account. Had the person applied for his money a day
before maturity, the full amount would have been paid, but after maturity,
nothing. The insurer’s decision is consistent with the contract, even though
the contract itself is unfair. Blaming the agent for such issues is like
shooting the messenger.
It’s a myth that agents are rich with commissions. The
average premium for an insurance policy is less than Rs.20,000 on which
commissions are about
Rs.4,000. Only the best agents sell 2-4 policies a month.
This means that the earnings of high performers is Rs.10,000 to Rs. 15,000 a
month.
In 2014, there were fewer than 7,000 agents earning over
Rs.75,000 a month. Factor in discounts that buyers routinely ask for and get,
and the income is further depleted.
Also, it takes 3 to 5 meetings to close a sale. That’s
why only 15% of the two million registered life insurance agents are active in
the sense that they sell an insurance policy each month.
There are a few steps that the industry and regulator
must take to improve the quality of agents, and to develop the industry.
First, develop products that are more transparent and
have sensible exit provisions. Agents need these products to be successful.
Second, pay commissions spread over the lifetime of a policy. This will mean
more commissions if buyers renew their insurance regularly and less if lapses
take place.
Third, build a complaint handling process that is
customer-oriented, accessible and fast.
About the author..
Mr. Kapil Mehta is Executive Director at SecureNow
Insurance Broker Pvt. Ltd.
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