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Is low quality marketing staff – a problem for insurance industry or a risk?

In Insurance, Risk Management on August 18, 2014 at 4:17 am

Last week, I had a meeting with HR head of a leading insurance company in India. I was surprised to know that the insurance companies marketing department is facing more than ‘90% attrition’ every month for last 3-5 years. Such high and consistent attrition has decreased the quality of hires and created pressure to recruit more agents. Insurance companies HR department has to recruit lower quality agents to fulfil the vacancies according to strict time lines given by the management. The consequence is the decreased sales output and mis-selling of the policies. The management expectation from these agents have grown over time, which created more pressure on existing employees and caused attrition. The problem has become spiral due to high growth expectations but eventually the circle is not completed. There is not much effect on the balance sheet of insurance companies because of high attrition – which creates a question of whether it is a risk or problem. It raises further questions –

          Why insurance companies are not able to retain good talent in marketing?

          Why Insurance products have push factors why not pull factors is generated?

          Does this pressure will ever bring “excellence in the services” of insurance companies?

          What is the big reason for increasing customer complaints and lapsation of policies?

          Will it degrade the trust of existing and potential policyholders?

Spiral Problem of Insurance Industry

Insurance products have so many terms and conditions and involves complicated language which is difficult to understand. The industry is based on trust as insurance product/services are intangible in nature. What an agent communicate, customer believes and product is sold, in addition to this, the payment is also given in advance. What worries – the declining trust of customer?

Obviously, development of talent of the marketing agents can be helpful. We should try to understand the current process. How much time an agent spend on building a company’s product knowledge. Does he only want to understand the benefits of the products which he can sell to the customer or have interest in spending time the needs of customer and have reliable growth. From insurance agents’ point of view – to accomplish high targets and to save his job, selling fast is the most logical solution in the current scenario. Therefore, we may see some instances where some insured are sold more than 10 life insurance policies of different companies by informing numerous benefits to gain advantage of commissions and targets rather than single policy which is suitable to person’s need.

Low quality marketing staff is not considered a major risk until its interconnection to other problems is easily overlooked by insurance industry. There is a growing need to have better quality marketing people in Indian insurance industry which require extensive training in this area. If bonus of the marketing employees are set on the basis of retention of customers with the company, I think they can be better motivated to understand customer needs.

Comments welcome.

Ruchi Agarwal