Ethics of insurance agents

The ethics of insurance agents have always been in question, ever since we hear stories of how bad agents sell policies to people who dont really need it, just so that they can earn the commission. Whilst such cases are now few and far between, they still do exist. Thankfully the measures undertaken to regulate this industry worked to some extent.

I did write about the lousy standards of testing done to ensure an agent understands any new plan rolled out by their company. Hence, I would not touch on it further although this is one issue on the integrity and ethics of the insurance agent.

The view I am going to write about might not be really an ethical issue, as it depends on peoples opinion. I find that it is an important issue to raise, and I would try to explain my stand. Hopefully at the end of this post, people will concur.

The issue I am raising was talked about in the papers yesterday. In it, agents were reportedly poached by rival agencies with cash incentives. The paper acknowledged that it is an agents right to switch companies, which I have to reluctantly agree. But I feel that it would be good for agents to keep to their parent company.

Back when I was in the Great Eastern internship programme, I remember an agent telling me that he chose to work full time and not part time as a form of responsibility and commitment towards his client. Financial advisory is not only just a product being bought and sold; it includes the relationship aspect.

Most of the time, we buy policies from relatives and friends; not so much the man on the street. We trust our relatives and friends to give us the best advice, more so than the person cold calling my house or approaching me at mrt stations. This belief is not accurate, but that is the topic for another post.

Additionally, the policies of the company might not be very different than what other insurance companies are offering. Hence what we are buying is not a policy, but a responsible agent or advisor we can trust. An agent that we can trust to settle our hospitalization claims when the need arises.

Hence, isnt it unethical for agents to jump ship, resulting in our policies beig transferred to someone that we do not know of? That sense of trust is being betrayed, especially when the next agent is unwilling to provide the same service the original agent provided? This is not surprising because the new agent will not earn any commission on the premiums the policyholder pays! As such, why would he want to spend time explaining the policies when we are not going to buy a policy from him?

In such a case, changing of company or even changing of a career is unethical. It would be even more so when the agent who jumped ship then asks his friends to end the old policies and take up new ones.

For sure, if you end a life policy prematurely, it wouldnt be in the clients best interest. This is accepted to be unethical by the regulatory bodies. But they do allow the agents to change companies.

Perhaps when one day all agents are dedicated and responsible, this issue would cease to be unethical.

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