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Paradzai Masvingise, Correspondent

We have often heard that “Insurance is never bought but sold.” This implies that even if one has a need for an insurance product they have to wait for an agent to approach them. 

There is need for the insurance industry and insurance regulators to change this perception through education. Insurance education should be disseminated to all and sundry highlighting. 

Once consumers understand a product or service, it is easier for them to consider purchasing. The majority of people including those who are knowledgeable do not understand the vital role of insurance.

 Insurance takes away the financial burden of recovery from the insured in the event of a loss or death but rarely do prospects make the first move towards purchasing life cover. This role is performed by insurance intermediaries.

These are people employed by insurance companies, agencies and brokers to solicit, negotiate and sell insurance products in return for commission as compensation.  They represent the Principal (insurer). Agents remain central to what both the insurance company and policyholders wish to achieve.

There are three types of intermediaries operating in the insurance industry:

Tied Agent — Represents a principal (insurer) and are tied to a single insurance company. The insurance company has full control over tied agents.

Broker — Represent the insurance applicant and are employed by a broking firm and can sell products of different insurance companies. 

Independent agent — Individuals who can sell for any company (Freelance agent). They have more freedom to offer plans that better fit their clients than other types of agents. This flexibility makes these representatives a strong competitor in the insurance industry.

Intermediaries being a key resource in the insurance industry need support and continuous training if insurance goals are to be achieved by both parties. The sale and marketing of insurance products is a very difficult task for agents given that they do not always get financial support from their principals, that is the insurer, but rather they use their own resources to accomplish this function.

 It also follows that selling insurance products can be a daunting task, given that one would be selling a promise or a service as opposed to other industries where there are tangible goods.

Intermediaries facing difficult conditions end up engaging in unethical behaviour as they seek to achieve set targets and earn commission for a living. 

Agents can be very sly and tend to employ every trick in the book to close sales such as misrepresentation of product information, completing proposal forms in the absence of clients, forgery of documents and signatures. All these acts violate their code of ethics bringing the name of the industry into disrepute.

In Zimbabwe all insurance agents are required to be licensed by the regulator, the Insurance and Pension Commission (IPEC), before they are allowed to sell insurance products. Without registration and licensing of agents, it is also difficult for IPEC to regulate and oversee agent activities. The license is only granted on a permanent basis after having set and passed the Certificate of Proficiency (COP) examinations.

Licensing of agents will allow the regulator to adopt a supervisory framework and ensure that they comply with their code of conduct which instills discipline, sanity and as well as market stability. 

Regulating activities of agents will ensure protection of rights and interests of policyholders such as privacy and data protection of sensitive documents such as medical records, pay slips, contact details and other personal information.

Insurance companies and Broking firms must play ball by ensuring that they employ agents with requisite qualifications who can be licensed in the shortest period. In some cases, the unethical behaviour by agents may be due to lack of knowledge of consequences of their action which can be ruinous to the insuring public which may fail to benefit from insurance products. 

The violation of customer rights calls for increased supervision of agent activities by both the Insurance companies and IPEC. Principal officers being custodians of all company compliance issues should ensure that all agents are licensed and to a larger extend should be accountable for the actions of their agents. 

In fact, a Principal officer must be subjected to “a fit and proper assessment” by the IPEC before appointment. This will ensure that people with sound insurance knowledge, experience and conduct are in control of this very important function. Insurance companies can also do policy verifications with clients for all new business submitted as a way of verifying if business submitted is authentic and if it meets client expectations.  Regular Client Relationship Management programmes will ensure that companies remain visible to the public and will provide an interaction platform for companies and its customers.

Increased supervision, spot checks and blacklisting (x-rating) of agents by the regulator can also act as deterrence. The regulatory authority (IPEC) should consider adopting consumer education programmes in the media such as radio, television and widely read newspapers to inform people about the need for insurance, procedures to be followed and how they can go about having their grievances addressed by the regulator.

On the other hand, the general public should request for licenses or identification cards from agents before favouring agents/brokers with their business. Entrusting your insurance advise from unregistered agents is suicidal. 

It is just as good as boarding a vehicle being driven by an unlicensed driver. Selling insurance should be relationship based. Some form of relationship and trust must develop between the prospect and agent given that there will be exchange of sensitive personal information such as disclosure of health related information. 

Once trust is gained even agents themselves will benefit from referrals which increases their profitability. I recommend that prospective clients deal with agents who reside or work in their locality as this reduces chances of misrepresentation of marketing information when dealing with an agent who is readily available to give service on a daily basis unlike dealing with agents from far afield who may employ “a hit and run approach” and will never be available to offer after sales service. 

Normally these type of agents contaminate the market and will give the industry a very bad reputation.

A good agent must at all times maintain proper records of clients and must be always available to clients to offer services from New business stage, premium collections up to claims stage.  

A good agent will do a proper needs analysis first before prescribing certain financial solutions or products to a client. An agent must explain benefits of insurance and give the prospects information as to what is covered and not. 

Commission must not be the motivating factor on the part of an agent but the need to make a positive impact in people’s lives. After all insurance is all about paying claims if it is to gain public confidence.

•  Paradzai Masvingise is an insurance practitioner with vast experience in the insurance industry. He can be contacted on e-mail: [email protected] or app +263772955507.

Once consumers understand a product or service, it is easier for them to consider purchasing. The majority of people including those who are knowledgeable do not understand the vital role of insurance