Insurance Agents as Problem to Insurance Industry

It may sound funny but there are elements of truth in the topic. Sincerely, some insurance agents are the problem of insurance industry. Some agents are painting the image of precious insurance sector black. They have turn insurance companies upside down and ended up making people see insurance as something that does not worth doing.

Risk management is an important thing everyone have to put into consideration. Nobody will be happy to be taken unaware. Risk management is what insurance entails. Nobody knows when the unplanned may happen in his or her life. Because of the uncertainty, the need to reduce the loss that may be experienced comes into play. That is what gave birth to insurance. Companies that are established to help manage these unforeseen circumstances when they happen are call insurance companies.
But, it seems as if some insurance companies are not keeping to their promises in some cases. That is what many people that have had bad experience in insurance think. But it is not so. Some of the issues are like that because many agents did not do their jobs well. That is why the topic "insurance Agents as Problem to Insurance Industry."
They are problem to insurance sector in almost all parts of the world. They have made many people lost interest in buying insurance. The problems they cause centre on mis-selling. They have sold many insurance services wrongly to people. They can lie and play dirty games in the business.

How are Insurance Agents Problem to Insurance Companies?

There are ways insurance agents or financial advisors have shown they are problem to the industry. We will be analyzing these ways step by step.

By giving Clients High Interest Rates

Some insurance agents find it difficult to tell their customers the correct interest rate given by the insurance company. Many customers ask of interest rate given by the insurance company when they are buying endowment or savings plans from any insurance company. This is to make them know whether they can buy such plan or not. Because agents want to make sales and earn commission, they lie to their prospects.
They give the prospects high interest rate which is much higher that what the company gives. Sometimes before the customer finds out that the agent lied to him on the interest rate, it is already late. This is one of the reasons many people call insurance agents technical liars.
Instead of some of them to tell the customer the real truth, they lie. They know the real rate given by the company but they do not want to tell the customer. Sometimes they conclude that telling the customer the true rate will make such customer not to buy. As a result of this, they have to lie by hyping the rate.
The annoying thing is that the rate they give sometimes is so high that is not even close to the one given by the company. The company may state that their interest for a one year savings plan is 5% and agents tell customers 12%. Can you imagine the gap? When the policies mature and the policyholders are paid their maturity benefits, that is when they find out that the agents lied to them. That is a big disappointment. Many have stopped buying insurance because of issues like this.

Insurance agents reading policy terms from their laptop

They lie concerning Maturity Date

Many new life insurance agents in insurance companies are guilty of this problem. As a financial advisor, I know what it means to be a new agent in any insurance company. Sometimes you find it difficult to build your commission because you are new in risk management. You end up living with small allowance paid to you by the company you work for and yet it is usually not okay. Allowance give is usually for transport to different places to market people on insurance services you sell.
But, a well discipline new agent do not need to lie to agents on the main maturity time of a life insurance policy because he or she wants to earn commission. Many agents have told customers that they can withdraw the money they saved in any insurance company irrespective of anything. Some of these products are long term investments. That policyholders are not to withdraw from the money they save until it has accumulated a good monetary value. Sometimes insurance companies states one year at least.
The maturity time for the long term life insurance policy can be five years. Because insurance agents want to make sales, they end up telling their clients that they can take the money they save in life insurance policies as from the third year. This is a problem. They have been creating this kind of problem to the insurance companies and giving them bad reputation. They have failed many clients and drag the company they work for into mud.
Some insurance policyholders do not have time to read through any policy documents. As a result of this, they believe in what the agent told them rather than reading through the policy document to be sure of what they were told. There is no way five years maturity policy can be three years.
When these customers come in the third year to sign the discharge voucher to be printed for them by an insurance administrator, that is when they usually find out that the policy they did is for full maturity time of five years and not three years. They feel weak as they have planned what they want to do with the money already. Sometimes the unit manager usually convince the customers to wait till the maturity time that what happened was a mistake from the agent/salesperson. If the customer is an easy going someone, she then exercises patience. But if she insists and goes on with the termination of the policy, she may be charged some money from her already saved money.

Insurance agents as problem to insurance industry. Their high quest to make huge commission bring problems to the company they work for; Image source: Uzochukwu Mike's Zone. 

Inadequate Product Knowledge

Knowledge is important in all areas of life. Some insurance agents worldwide do not have solid ideas on the insurance products they sell to people. Many who are into life insurance companies sometimes forget the insurance benefits of what they sell to customers. Some have fail to explain these benefits to the buyers because they lack concrete knowledge of what they sell.
There are banks that have insurance companies as well. These banks have insurance companies as their subsidiaries. They employ staff separately that manage such arm differently. This acts as a way the banks make more money. Example of some banks that also have insurance companies are First Bank of Nigeria and Zenith bank of Nigeria. The insurance companies are called FBN Insurance and Prudential Zenith Life Insurance respectively. This is also obtainable in other banks in other countries. They also have insurance companies. The individual companies make up the holdings.

Product knowledge is important in insurance sales but many agents are poor in it.

Sometimes both the staff of the banks and that of the insurance company work in the same building but different offices. Sometimes customers come into the bank to open ordinary savings account and are marketed on insurance policies by agents of the insurance arm and they gladly buy. The reason why the holding have these two in the same building is to make more money. That is a good marketing strategy. If you came to open account, you could also buy insurance from the same bank.
But the problem is that the staff of the insurance arm sometimes fail to explain these products properly to the buyer to understand that they are different from ordinary bank accounts. Some agents even call insurance policies accounts. That is poor knowledge. As accounts are to banks, policies are to insurance. In ordinary accounts, you can withdraw your money anytime you like but in life insurance, you wait till maturity or your beneficiary claims the benefit depending on the type of insurance policy.
Many later came back to the company to collect their paid premium and that is usually when they found out that what they registered into was insurance policy. Agents with weak knowledge of what they sell should go and learn more. Some customers have fought agents because they were not explained to properly on the insurance product they bought.

Increasing Policy Duration without Customers Consent

This is another dirty game that many insurance agents play that is making insurance looks like scam. Why should an insurance agent increase the duration of a particular life insurance policy without the customer given the approval for him to do so? There are many factors behind such insincere act.
One of the factors is because of the agent's quest to make higher commission. He knows that what he did was wrong but to him he wants to satisfy himself. Yes, he wants to be comfortable once commission is paid to him on that business he brought into the company. But little does he know that this can make people hate insurance in their entire life. Also, it gives people negative impression on what insurance is all about.

Increasing policy duration in life insurance by agents; Image source: Uzochukwu Mike's Zone. 

In some life insurance policies, the lengthier the years signed up for, the higher the commission the agent receives. An insurance policy with minimum maturity years of 5 can give an agent 10% of the premiums paid by the client in the first year but if the years is increased to 10 can give the agent 15% of the total premiums paid in the same first year. You can see the difference in the two. This has made many agents increase the duration which is different from the initial agreement.
Action of this kind usually have negative effects on the policyholder when it comes to liquidation. The customer comes to the insurance office in the fifth year which is the supposed maturity time and sees ten years. If he or she goes on to liquidate the policy like that, it is called termination. And since it is termination of the policy, the customer may be charged some money from the total contribution. In other words, instead of him getting interest, he is charged from the money he saved in the endowment policy. Customers are not satisfied with this kind of treatment and the problem is caused by insurance agents.

Conclusion, Suggestion and Recommendation

This article sees some insurance agents as problem many insurance companies are having today. Attitude of this nature is giving insurance sector bad name. So, it is not a good one.
If you are an insurance agent, try and do things right. Good name is some cases is better than money. Do not take some bad actions because you want to earn high commission and sell insurance policies. Be truthful in your dealings.
To prospects and customers out there, insurance is a good thing to purchase. Not all insurance agents are insincere. Many know what they are doing so go ahead and keep buying insurance services. Ensure you read through policy documents and monitor your policies well.