Status check: Life Insurance Industry
There are some very important players in this industry. Lets name them:
The Insurance Regulator: IRDA
The CXOs in the industry: mainly the CEO, the CMO, and the head of compliance.
The sales guys: who bring in the moolah. One is a set of salaried guys and one is a set of commission earning guys.
Then there is the media: full of intellectuals who think they know how the business should be run, but are happy writing about it.
Bloggers: Most times think they are journalists who know a lot about the industry, but closet salesmen.
Priyanka Sambhav who regularly does programs on insurance on Cnbc TV – called ‘Pehredar’ – a.k.a. watchdog.
Well, each person’s role is clear – or is it?
What about the Editor who regularly sells ULIP through his column? Another editor who can take a fund with 20 year track record, see its 3 month performance and do articles like ‘Why you must get out of X fund now’.
Or another editor who said ‘No liquid fund has EVER given negative return because its NAV has never fallen below 10’ .
To me these are the dangerous guys. More dangerous than the salesman who says lies about the product. Salesmen’s credibility is anyway low…but Editors? well, well.
CEO says: – Subra do you really think the Agent is bothered about client’s IRR or my fund performance? ‘I am paying that …..(unprintable even on my blog!!!) so much money that the dog has no choice but to bring his cheques here.’ Fairly obviously I cannot say this to him or her but no Agent can bring the topic of fund performance, classic endowment customers getting less than the money paid as a premium over 12 years, switching mistakes, fund composition, over concentration, OBVIOUSLY poor end of term bonus, etc. Like a dog he has to bring the cheques, take his commission, take his foreign trips, and tell his customers ” sir markets are in bad shape” at at time when the markets are at their historical highs.
Subra my Chairman is even questioning should I have the Agency channel – after all 80% of my business is coming from the banking channel, and if the Regulator makes all banks as brokers, we will NOT need the agency channel and associated costs. However I need the agency channel – the size of the organisation is important when I seek to change jobs. Cannot just say I managed 43 banking relationships. I need to say ‘We are planning to have a million agents by 201x so that the company can continue to look big’.
Hmmmm will give you details of the others soon..lol..
saurabh
Subra,
Very rightly pointed out that Agent “doent care about the IRR of the client nor the performance of the Fund”, he is just a dog who brings cheques to the Insurance company till they keep throwing bones(commission) at him.
Sorry state of affairs of Insurance Industry in this country.
I am also curious to know is this also in other nations or only in India?
saurabh
Do Watch Wolf of wall-street.
2 agents talking
“How do you make money?”
Ans:”Simple,You shift the money from clients pocket to your pocket”
subra
Not just that the Agent shifts the money from the client to himself – in fact he transfers it to the pocket of the main player. For that he gets a salary / commission!!
Ramesh
That is how the incentives are placed in the system. Few people want to pay the advisor / agent directly adequately, while the incentives in the commissions are quite big.