This article is mainly written for the existing life insurance agents who have outgrown the agency environment; those who are considering a career in life insurance and financial planning; and life insurance purchasing public who want to know the changes happening in the industry that will benefit them.
“ Now the public became more educated. Due to books, magazines, newspapers, radio and television, consumers eventually learned to shop for life insurance. They learnt something about different types of policies.. “
I am not describing the life insurance market in Malaysia now. The above statement was taken from Norman Levine’s book, “From Life insurance to Diversification” and the author was describing the US insurance market in the mid 1970’s.
The only mass media not mentioned above by the author was internet. In a way, the market in Malaysia is 35 years behind the US market. And as the world wide web is democratizing the flow of information and empowering the consumers further, we are going to see the pace of change picking up in Malaysia.
Similarities of US market in 1970s and present Malaysian market
The reason why I am still talking about what are mentioned in this book is that there are some striking similarities that the author described about the US market and what the industry is experiencing now in Malaysia. Therefore there are a lot of things we can learn from this book and help prepare ourselves to move forward in this changing environment.
The author also remarked that the life insurance agents in US at that time quickly learned they had to provide their clients with good products at fair prices or, at the very least, they would lose sales: at the worst, they would lose established trust and continued relationships with existing clients.
Difficult ethical and moral decisions
This created very difficult ethical and moral decisions for the good agents. They felt a commitment and loyalty to the companies that had recruited them, trained them and provided them with the necessary facilities to function. On the other hand, they felt their first and primary responsibility was to their clients. The agent’s conflict became intense because it was sometimes not in their clients’ best interest to recommend products available from their primary life insurance company.
During these transitional years many agents were forced to choose between the clients and the company in many sales situations. The bottom line result was that more and more business were being placed with companies other than the agents’ primary company. Other agents, to stay competitive, left their primary companies and became independents or develop affiliations with companies that were more competitive in the market place.
These were tough times and they were aggravated because the companies that were recruiting, training, and providing significant agent services were the largest and slowest to change.
Many companies made decisions, some revocable and some irrevocable, in trying to react to this new economic world. For the life insurance industry cost control became important as, or more than, marketing. Expenses were cut in all areas. Many field marketing organizations were merged and some were closed. Many presumed the traditional agency system was going to die because of its apparently high distribution cost. Some companies abandoned that system for alternate marketing schemes. Nearly all companies began to experiment with other marketing system even if they maintained their agency network. They were all afraid of being left behind. Agent loyalty, which had already being challenged, deteriorated even further. Some agents asked why they shouldn’t seek alternate companies if their current companies were considering abandoning them as their principal method of distribution.
Adapt or Die
In the chapter, “ Adapt or die “, Mr Levine mentioned that there was a market research project conducted by Standard Research Institute (SRI) that learned that the typical consumer was confused by a great diversity of problems and solutions. That confusion was compounded when they were approached by people from the different financial persuasions making what were often contradictory recommendations.
For example, if a stock broker, or a banker, or an insurance agent, or an attorney or accountant, or a financial adviser analyzed their client’s financial position each advisor, from their own unique frame of reference, might well suggest a totally different approach to the client’s problem.
Consumer prefer total coordinated solution
SRI further suggested that a majority of consumers would prefer one individual who would be their ‘account exec’ generalist. They would like for that caring individual to overview their entire financial requirements and make a comprehensive recommendation for a total, coordinated solution.
They further recommended that, despite our current interest in high technology and complex approaches to solutions and problems, the consumer really enjoyed an individual who approach them with high touch rather than high tech. They wanted somebody who cared enough to get to know them very well on a personal level and then respond to their needs and wants, not just from a salesman’s perspective.
Conclusion
In conclusion, the previous experiences from the US market can be a good reference point and valuable lessons for life insurance agents in Malaysia today to make their successful transformation from product-focused to client focused financial advisors.
