Why about 400,000 insurance agents may be "purged" and leave the market

Perhaps never before has the life insurance industry received as much attention as it has in the past two years. After the turmoil and many conflicting opinions, a “cleansing” of insurance sales people is taking place, about 400,000 agents may leave the industry.

Many valuable lessons after the "storms"

2023 is considered a year of many storms for the life insurance industry, especially the incident related to SCB bank.

In the life insurance market, the top 5 "big guys" leading in total premium revenue include Bao Viet Life, Manulife, Prudential , Dai-ichi and AIA.

Life insurance is considered a financial “lifesaver” for many families, when properly and adequately advised. However, many problems have occurred, due to both objective and subjective reasons.

Looking at the life insurance market in 2023, there were a total of 1,915,623 new contracts, down 43.8% compared to 2022. The contract retention rate was also low, the number of contracts in effect by the end of the period decreased by 10.6% compared to 2022. Meanwhile, the compensation rate increased by 35.7% compared to the same period in 2022 with an estimated payment of VND 57,070 billion; total insurance premium revenue of the whole market in 2023 decreased by 11.6% compared to 2022, only at approximately VND 157,024 billion.

The market in 2024 is expected to “warm up”, however, the aftermath of the “storm” in 2023 still has consequences. Mr. Ngo Trung Dung - Deputy General Secretary of the Vietnam Insurance Association commented that in the short term, even in 2024, the revenue of insurance companies will still decrease.

Mr. Ngo Trung Dung - Deputy General Secretary of the Vietnam Insurance Association commented that in the short term, even in 2024, the revenue of insurance companies will still decrease.

There is no denying the value that life insurance brings, but customer confidence has been more or less affected after the incidents that have occurred. The lesson comes from the quality of consultants and the management of relevant levels, departments and sectors.

Ms. Tina Nguyen - General Director of Manulife Vietnam shared that over the past time, the industry has had many changes, challenges, and "learned many lessons".

According to her, like many other countries, the Vietnamese market is young and must go through challenges. The important thing is to know how to accept them and invest in professionalism and dedication.

In the market, many insurance agents often only talk about the good points of the product, not the limitations. Therefore, businesses need to apply digital transformation and increase control over consulting content. Initially, many employees were worried that if they talked too much about the limitations, customers would not buy anymore, but this was extremely necessary to be objective and transparent, to help customers trust more.

Regarding insurance benefit payments, Ms. Tina emphasized that the company does not have any KPI (target) for the maximum number of payments. On average, it receives more than 48,000 claims each month, and there may be some errors, but they are at a controllable level. When discovered, the insurance company will definitely correct them and cannot be stubborn. She said that the figure of nearly 30,100 billion VND in insurance benefits paid in the first half of 2024 says a lot.

Big "revolution", 400,000 agents may leave the industry

Reality requires a re-evaluation of the quality of insurance consultants and the current extremely fierce "cleansing" of life insurance salesmen is inevitable. To survive, insurance consultants must improve their knowledge and professional ethics. 2024 is considered the year that insurance companies have the strongest and fastest innovation ever, instead of "fake news" like previous years.

Along with that, the recently-amended Law on Insurance Business officially took effect, which is expected to help control the market better and strengthen people's trust.

Ms. Tina Nguyen - General Director of Manulife Vietnam said that the Vietnamese insurance market is still young and has to go through challenges. The important thing is to know how to accept it and the business must be truly professional and dedicated.

Specifically, on November 2, 2023, the Minister of Finance issued Circular 67/2023/TT-BTC guiding a number of articles of the Law on Insurance Business 2022, Decree 46/2023/ND-CP dated July 1, 2023 of the Government detailing the implementation of a number of articles of the Law on Insurance Business. Accordingly, banks are not allowed to sell investment-linked insurance before and after 60 days of disbursement. Insurance agents must record some content during the sales consultation process. The insurance company must store and secure documents and recorded data for at least 5 years.

Mr. Ngo Trung Dung - Deputy General Secretary of the Vietnam Insurance Association said that currently the market has about 700,000 insurance agents, but "maybe it will be reduced to about a few hundred thousand in the future". Those who are not worthy or suitable will have to leave. Those who want to stay in the profession must be trained to improve their qualifications and professional ethics.

There have also been significant changes in the commission policy. Previously, the first year commission was 40%, the second year was 10%. From July 1, 2024, the commission paid to agents will be reduced to 30% in the first year, 20% in the second year, and gradually decrease in the following years. This adjustment will increase the likelihood of insurance consultants sticking with the profession, limiting agents from entering the industry just to sell a few contracts, then quitting, causing customers to not receive adequate care and advice in the following years.

Mr. Dung commented: "A few years ago, life insurance companies sometimes "pretended to show off". But now businesses have to really get involved, do real work, change real processes, and modify and improve products."

According to Mr. Dung, 2024 is the year insurance companies have the fastest innovation ever.

According to the Vietnam Insurance Association, Vietnam currently records more than 11.7 million life insurance contracts in effect, accounting for about 10% of the population.

In the first half of 2024, the total assets of the whole industry reached nearly VND 819,600 billion, an increase of 9.6% over the same period last year. Investment in the economy was approximately VND 721,300 billion (up 10%); the total amount of benefits paid was nearly VND 30,100 billion (up 35%).

Source: https://baodautu.vn/vi-sao-khoang-400000-dai-ly-bao-hiem-co-the-bi-thanh-loc-roi-thi-truong-d219733.html