The following is an account of a growing dilemma that in my humble opinion, will inevitably go on to ring the death knell for the well-being of any and all personnel associated with the General Insurance sector namely, the Insurance companies, their sales teams, and the associated economy. Unless we actively acknowledge the Achilles Heel mentioned in this article and work in a synergistic manner to alleviate the same, this disaster will not be mitigated.
The current treatment being dealt out to agents and advisors associated with the General Insurance sector has failed to change much over the past few decades. The sheer gravity of this disdainful treatment is one that should draw sympathy and concern over humanitarian grounds but goes on to draw nothing but apathy.
Being associated with this profession since 1987, I have been plagued and displaced by the magnitude of pain that this sector brings along with it. Although, I would love to paint a fairy-tale picture for the same, it is difficult to come to terms with the ground zero reality that the situation hasn’t improved much all the way from the PSU era to the current one, largely inhabited by private companies, ones that everyone sought after as a balm of Gilead.
People privy to the latent functioning during the PSU era would know that amount and significance of the powers vested in an Inspector (the yesteryear term for a Sales Manager) by the company, ended up providing him with bountiful efficiency far beyond the reach of your average agent, thus rendering an agent pathetically speechless with a simian expression in his bid to prove his competence to a client.
Add to this the fact that in the event of a client purchasing a new car, only the Inspector had the power to instantly issue a Cover Note to the client. An agent, who is a direct agent owing to the retirement of his inspector, is not in a position to issue the Cover Note to a client because the Insurance companies would only issue Cover Notes to the Inspectors.
To further highlight the disparity that existed then, in the event that a business had a bank finance or paid-up capital of a company above the monetary amount of Rs.10 lacs and god forbid, if it was an agent who was procuring that business for the company, he/she was not entitled to get any commission from that, as the procured business was referred to as ‘Business of Zero Code’ and the commission that an agent is logically entitled to get from his/her business is, and with much unearthly inaptitude for sensibility, deducted from the premium of the customer. Where does the disparity come in? Juxtapose this to the fact that if an Inspector procured the same business, he/she will be given credit for the same in their minimum business guarantee requirement that they need to fulfill on an annual basis. The lack of a training culture, was the last nail in the coffin to ensure that an agent would not be in a position to compete against a highly trained Inspector in terms of Product Knowledge. In the off-chance that all of that managed to sink in while you were reading it, greetings, welcome to our world.
The real sustaining change within the general insurance sector, came about the very moment private companies stepped into the playing field. Their entry brought along with it a range of perks such as their support to Agents, equipping the Agents with Cover Notes and giving them the power to use it, the long sought after respect and training and a ground-breaking remuneration scheme for Agents. A direct consequence of the above is the very fact that a substantial number of Agents joined the General Insurance sector and went on to prove their mettle and mark their spot in the early stages itself. It is the support by Private General Insurance Companies without which it would have been impossible for an Agent to flourish in this earlier biased and cut-throat sector. A domino effect of change was set up as countless job opportunities opened under the General Insurance Agency profession and even countless more for the staff appointed by every Agent for providing service to the client. This, at a time when the Indian Economy badly needed job opportunities, ended up forming a resolute faith in and strong goodwill for Private General Insurance Companies.
The moment everyone thought that they could enjoy a comfy ride from here on in, was the very moment the decision maker of the Insurance sector i.e. the Governing Body ended up taking so many wrong decisions that the General Insurance sector is already beyond the point of return and will soon see itself to the point of non-existence. Either the decision makers are totally unaware of the perilous road they are maneuvering this sector into or they are conscious of it but they don’t care about saving the General Insurance sector and safeguarding Agents.
Firstly, the mere idea of the unnecessary existence of something like Detariffing in the General Insurance sector is one of much sadness. I personally, am very ashamed and feel humiliated, during every instance of having to negotiate the Premium with the Insurer and the Client in a bid to make the Client buy the policy with me and the companies I am associated with. From the entry level agent to the crème de la crème, this particular exercise forms the bane of our very existence. Few customers go on to quote an imaginary premium figure from a random company and inhumanely negotiate with us by asking us to provide the same or a better rate. Such kind of a dog eat dog and uncivilized marketplace style haggling process is something that I am sure, no Agent ever wants to voluntarily be a part of.
While the whole world (including the local shop) is proceeding towards a Fixed Rate scheme, the Insurance sector is proceeding towards an open battleground of negotiation. Almost each and every Client intending to buy a Policy is aware of this and it feels like the Rule Makers encourage the Clients to negotiate the rate with Agents and Insurance Companies. This not only affects the remuneration to Agents but also the Profit Margin of the Insurance Companies. This steps up a ripple effect, amounting to an Agent having to sell much more policies to derive the same earning which ends up in a bad service to the client during their time of claim, as the Agent is already busy with getting more policies in an effort to barely extract his earning.
As a Commerce graduate, I personally know much about and can explain a lot on the costing system of each and every product that is sold in the market. The Agent on one hand, has to invest heavily on Infrastructure and bear large expenses to run his Agency, such as a designated office space, employed staff, computer expenses, telecommunication, and so on and so forth. The Insurance Company on the other hand, has to face even more financial burdens than the Agent, such as the high marketing cost of the product which they need to pay to their Sales Team and the Agent. Add to this the Claim amount that they might have to pay to the Client in the near future, and you see the level of monetary requirement and investment entailed in this sector that I was hinting towards.
The General Insurance sector itself is plagued with very low Premium and that is without taking into account the practice of Detariffing. A customer can safeguard his property from unforeseen future loss at such low rates that this whole scenario is heading for a downward spiral to collapse. It baffles me that our Decision Makers never put forward this detariffing scenario to the PSUs when there weren’t any Private Insurance Companies in this sector. It is mind-boggling that discounts to customers on their premiums were at the costs of the Agent’s remuneration and the profit of the General Insurance Companies.
The ground zero scenario is that the client has the audacity to tell the General Insurance Agent that he/she will only give the Premium Cheque to the Agent if the Agent is attached with that particular General Insurance company. Yet again, the humble and hardworking Agent finds himself handicapped as opposed to a Broker Firm that can sell the policy of every company after having paid a nominal fee. Why is this feature made available to Broker Firms alone? What level of kindergarten stupidity is this in a sector full of mature adults? Irrespective of the tag (Broker Firm or Agent), each and every Individual Agent who has the threshold Volume of Business should be allowed to pay the nominal fee and must be allowed to sell the Policy of every Insurance company. The sheer inclusion of an Agent under this Nominal Fee scheme will gather a much larger net income as the number of Agents willing to entitle themselves to this optional benefit far exceeds the number of Broker Firms out there. The whole idea of not letting an Agent avail himself of this opportunity gives off the impression that we are just slaves to this sector like the British Colonial rule and this will go on to herald a day of reckoning when this sector is driven into the ground until is nothing but dust.
The reach, strength and power of Agents knows no bounds. A lot of them have the business volume, monetary income and market goodwill that will put the best of the best Broker Firms to shame. I for one have no qualms whatsoever, in paying the above said nominal fee. I have amassed the power to pay a sum between Rs. 5,000/- to Rs. 10,000/- on a yearly basis for each Insurance Company I am allowed to work for. I would gladly love to negotiate the actual amount with the decision makers, over a heated discussion wherein I quote imaginary figures by other parties and humiliate and embarrass them to the core much like what an Agent undergoes when negotiating with a Client. I would gladly love this opportunity where the tables are turned and the Decision Makers are at the receiving end.
The Decision Makers are a cartload of monkeys who have very wrongly been invested with the topmost authority and power. Their wrong decisions, one of which is allowing only Broker Firms to sell the policies of every company results in Agents losing their customers and income, Agents having to visit Broker Firms to book their Clients with them wherein a few unlucky Agents have to undergo the painful but eye-opening experience of having their Clients snatched away by corrupt staff associated with these Broker Firms.
For all I am aware of, there is hardly any grocery out there that sells a single product, and even if there might be one such example, I am pretty sure that it falls under the category of a dedicated store that receives many perks from that company that it is associated with. Extrapolating this analogy to our scenario, are the Insurance Companies giving any perks to us for our dedicated association with them alone, and if not, then why force our association with one single organization alone. What benefit do we gain from this cause for all I see it is nothing but shackles binding us from our true potential. Agents visit customers at their own conveyance expenditure along with time investment, which in our industry is similar to money investment for me, and most probably for all my fellow colleagues and peers who want to achieve something in life. Agents also advertise their Insurer but do not get a single penny in the form of remuneration till a policy is sold to the Client.
I’m pretty sure that the Decision Makers must have heard the names of top-notch companies such as Amazon, Flipkart, Snap deal and so on. I implore them to imagine the state of the same companies if they were allowed to sell only one product. Doesn’t look good, does it now? Agents also need to be able to sell multiple products by multiple companies. Agents are not working to survive because we are not cattle, Agents are working to grow in life, both financially and in terms of status. Agents provide job opportunities to the countless staff that work for them. An Agent’s economic growth on a pan-India scale will translate into the country’s growth because as humans, Agents spend money on travelling, food, FMCGs, durable goods and other paraphernalia. By selectively allowing this basically essential practice to Broker Firms alone and not to the Agents, the Decision Makers have very evidently made it clear that they have consciously placed these blockers and limiters on us and do not want to see neither us nor this country grow. Even Online Insurance Companies can sell policies of every Insurance Company, which makes me even more certain that all the Agents, as a whole, ended up drawing the short end of the stick and are fated to approach their natural doom.
In conclusion, drastic remedial measures need to be undertaken immediately if we plan on saving this sector. Alluring discounts to the Client at the cost of the Agent’s Commission and the Insurance Company’s profit margin should not be allowed. Agents of the General Insurance Sector should be allowed to sell the policies of every Insurance Company. The above mentioned changes are in the best interest of the Agent, the Insurance Company and every person at large who is either directly or indirectly associated with this profession.
I largely look towards the Decision Makers as the only force that can rectify these mistakes. In the unfortunate event that they do not pay heed to these words and further worsen the current state, I for one have the power to sustain my existence and grow exponentially, like I have managed to do so for all these past years, while the Decision Makers kept dealing out one wrong decision after another. My storehouse of knowledge and objectionable handling skills, may not be something that every Agent is equipped with and hence they will not be able to be able to make their ends meet in such an uninhabitable market unless things are rectified. I am not one who can jump ship easily nor do I want to, because I associate myself with this sector by my own choice stemming from the love and appreciation I have for this sector.
This write-up is the result of a burning desire within me to redefine and direct the way in which Insurance is sold and purchased in India. Any and all offense to any person as a result of this write-up was not intentional. I am fulfilled by the fact that I didn’t just take from the General Insurance sector, but I gave something back to it by safeguarding it as well as the interests and welfare of the Sales Team and the people involved in the Selling Process associated with this profession. I have derived a lot from this sector. My achievements in life are because of and dedicated to this sector and hence I am proud of having the opportunity to join this sector and serve the policyholder with my guidance during the time of purchasing a policy and claim settlement. I hope I am the quintessence of an Agent dedicated to his craft.
About the Author
Alok Kumar Poddar
Insurance & Investment Consultant
Aayush Insurance Consultancy Services
Commercial Point, 79, Lenin Sarani
4th Floor, Room No. 411A
Kolkata – 700 013
E-mail : [email protected]
Cell: 98310 30148