Insurance sales targets exerting pressure on agents
Correspondent
THESE days, the competitive environment is extremely challenging for most companies. The price, cost and innovation pressure is strong. At the same time, the expectations by the investors are very high: The return on the invested capital ought to be maximal.
“Companies set ambitious targets, which are defined for different organisational units and hierarchical levels within the company, in order to be successful in this environment,” says Olivier Fernandez in assessing the insurance industry.
From a layman’s point of view, insurance companies ought to be making super profits because they do not manufacture or sell goods.
However, an in-depth analysis of insurance companies’ operations will reveal that not much profit is made within the first and second years of a policy due to strain associated with new business such as marketing costs, set up and admin fees and commissions.
To offset these high costs, normally insurance companies formulate budgets that have very steep production figures with all of the business having to be acquired by sales agents.
Under normal circumstances, shareholders must inject capital for new business procurement, but this has not been so owing to an unfavourable economic climate.
Costs relating to business procurement are therefore largely borne by the sales agents. Companies may chip in here and there as and when they deem it fit to do so.
These budgets have the effect of exerting huge pressure on the sales force as targets are normally measured on a weekly basis with most insurance companies not accepting zero weekly productions or blank weeks as is known in insurance circles.
The general public may also wonder why despite huge premium amounts paid to insurance companies by policyholders, do not ease the financial burden on companies so that they do not set steep targets that may in most cases never be achieved. The answer to this lies in the composition of the premium itself.
Not everything paid belongs to the insurance company. In fact, the insurance company remains with a very little portion, normally part of the investment portion and the policy fee approximated at five percentage points of the premium.
For the insurer now to be profitable, it will be a game of setting and achieving high targets in terms of number of policies and size of premium as a way of offsetting costs associated with business strain.
In so doing the set targets tend to exert a lot of pressure on agents resulting in them obtaining business by hook and crook.
Agents will be under pressure to conclude sales as they have to beat set monthly deadlines for new business if they are to earn in a particular month.
They will in turn put the heat on the prospective client so that they end up signing without due consideration to their needs and financial standing. This hurried decision will be a source of policy rejection and cancellation on the part of the client in future.
Agents will resort to unethical methods of obtaining business so that they can meet targets, earn commission and sustain their agent’s contracts.
Obviously, this unethical practice of obtaining business will put the name of both the insurer, agent and insurance industry into disrepute.
All stakeholders who are supposed to benefit from the policy; that is the policyholder, insurer, employees of the insurance company, agents and Government through taxes, will obviously lose out as the contract will be cancelled as a way of remedying the aggrieved part.
Even commission clawbacks effected on agents’ earnings will not restore the company’s financial position to a better one as there are sunk costs such as set up and admin fees.
Furthermore, clawbacks, though they a negative effect on current earnings, have failed to work as a deterrence to agents as they are only concerned with current earnings.
Therefore, insurance companies should be at the forefront of setting realistic targets and taming the unholy behaviour from their sales force.
In my view, it would be better if agents were employees of the insurance companies with a basic salary plus commission. This way, pressure to earn commission and sustain the contract will be reduced on the part of the agent.
The insurance company may employ other various methods of performance monitoring such as scorecards which will keep agents on their toes at all times.
This way, insurance companies can have absolute control over agents’ activities in the market place and can apply their internal code of conduct in the event of untoward behaviour.
This will go a long way in protecting the general public from unscrupulous agents and can improve the general perception of people towards insurance in general.
Alternatively, companies may employ a larger sales force so that individual targets can be realistic and achievable.
This is possible given that insurance companies do not necessarily have to provide bigger office accommodation to agents as they can come in as and when the need arises. Independent agents can come in handy as they often have their own office space and equipment thereby relieving pressure of providing office accommodation on insurance companies
Innovation, though it may be argued that it will substitute, agents must be employed. This can be achieved through electronic sign ups. Application forms must be available online accompanied by all relevant literature on policy products.
This move then can be supported by having a call centre operating 24/7 to assist prospective clients. This will definitely eliminate some marketing costs, misrepresentations and will enhance industry image.
I envision a situation where the public understands the importance of insurance and have absolute faith and trust in the industry and its products and benefits to be derived such that they will have the confidence to invite sales agents for presentations and sign ups.
This way the society would have created a culture of saving and preparing for future eventualities both evitable and inevitable.
Reserves can be created and capital amounts availed for infrastructural development as insurers are required by law to invest in certain prescribed assets. The nation at large will benefit.
This harmonious situation can only be achieved if there is concerted effort to return the purpose of insurance to its essence from all stakeholders such as Government through Insurance and Pensions Commission aggressively regulating the industry, Insurance companies availing market support to sales agents as a way of easing financial burden, and agents themselves undertaking personal development courses.
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DUNHU reHarare Metropolitan Province ndiro mwongo kana kuti “epicentre” pachirungu yechirwere cheCovid-19 muZimbabwe kana zvichienzaniswa nehuwandu hwevanhu vawanikwa vaine denda iri munyika muno kusvika pari zvino.
Mashoko anoburitswa nebazi rezveutano nekurerwa kwevana pamusoro pemamiriro echirwere ichi munyika anoratidza kuti Harare ndiyo ine vanhu vakawanda vawanikwa vaine Covid-19 mushure mekunge vavhenekwa ichiteverwa neMatabelelanda South, Mashonaland East kwozouya dunhu reBulawayo.
Asi pavanhu vashaika nekuda kwedenda ranetsa pasi rose iri, Harare neBulawayo ndiwo matunhu ari pamusoro nevanhu vatatu padunhu pavarwere vasere vashaika nyika yose.
Murwere wekugumisira kufa mugari wemuHarare – munhukadzi wemakore 21 – uyo ange asina nhoroondo yekubuda kunze kwenyika uye akashaika nemusi weMugovera angobva kuonekwa kuti ane Covid-19.
Pavanhu 698 vainge vabatwa vaine Covid-19 nyika yose kusvika nemusi weMugovera uyu, Harare yakatungamira nevarwere 242.
NeMugovera uyu bedzi, vanhu 73 nyika yose vakabatwa vaine denda iri – 16 vemuHarare, 19 vekuMashonaland East, 36 vekuMatabeleland South nevaviri vekuMashonaland West.
Pavanhu 73 vakawanikwa vaine Covid19 zuva iri, 55 vakabva kuSouth Africa, vatatu kuBotswana, vamwe vatatu kuMozambique, vaviri kuUnited States, mumwe chete kuZambia, mumwezve mumwe chete aidzoka kubva kuAustralia nevamwe vasere vagara vari muno.
Vose vanhu ava vakatogariswa kwavo voga.
Kusvika musi uyu, vanhu 78 465 vange vavhenekwa Covid-19 nyika yose.
Pavarwere vemuguta guru reHarare ivava, 64 vanaya kuchiti vamwe 175 vachine chirwere kuchiti vatatu ndivo vakatofa.
Dunhu reMatabeleland South rava nevanhu 90 vawanikwa vaine Covid-19, kusanganisira 36 vakabatwa musi weMugovera. Uku hakuna murwere ati ashaya nekuda kwedenda iri.
Mashonaland East yangs yava nevanhu 75 vane Covid-19 nemusi weMugovera. Pavanhu ivava, 27 vavo vatonaya uye hakuna ati atorwa upenyu hwake nechirwere chisati chawanirwa mushonga wekuchirapa pasi rose ichi.
Pamwe chete, dunhu reBulawayo rine vanhu 72 vawanikwa vaine Covid-19 uye 23 vavo vatopona.
Pahuwandu hwevane Covid-19, Bulawayo inoteverwa nedunhu reMidlands uko kune vanhu 65 vange vawanikwa vaine Covid-19 kusvika nemusi weMugovera. Vasere vevarwere veko vakatonaya kuchiti mumwe chete akashaya.
KuMasvingo kwava nevanhu 53 vawanikwa vaine Covid-19, varwere 17 vapona uye hakuna ati ashaya.
Masvingo inoteverwa neMashonaland West uko kwava nevarwere 43 veCovid-19. Pavanhu ava, vaviri vavo vanaya asi mumwe chete akashaya.
KuManicaland kwava nevarwere 29 uye hakuna ati ashaika nekuda kweCovid-19, kuMatabeleland North kune 19 vanhu uye hakuna ati arasikirwa neupenyu kuchiti kuMashonaland Central ndiko kune vanhu vashoma, gumi, vane denda iri.
Zvinoreva kuti matunhu afa vanhu neCovid-19 ndeanoti Bulawayo (3), Harare (3) nemumwe chete kuMashonaland West newe kuMidlands.
Muhurukuro neKwayedza svondo rapera, Chief Co-ordinator wezvirongwa zveCovid-19 mumahofisi emutungamiri wenyika nedare reCabinet, Dr Agnes Mahomva vanoti vakawanda vevanhu vari kubatwa vaine Covid-19 vanhu vemuno avo vari kudzoka vachibva kune dzimwe nyika.
“Hongu, huwandu hwevanhu vane Covid-19 huri kukwira munyika, asi tange tichizvitarisira uye tinoramba tichigadzirira. Vakawanda vevanhu ava ihama dzedu idzo dziri kudzoka muZimbabwe dzichibva kunze kwenyika.
“Ndokusaka tiine zvirongwa zvekuti vanhu vose vari kudzoka ava vavhenekwe pavanongopinda muno, vawanikwa vaine Covid-19 vobva vamboendeswa kwavo apo vamwe vanenge vachiongororwa. Asi iri ibasa guru rekuti hatingabva tati takagadzirira zvose, tinoramba tichishingaira mukuedza kumisa kupararira kwechirwere ichi,” vanodaro Dr Mahomva.
Vanokurudzira veruzhinji kuti vasarivare panyaya dzekuzvidzivirira kuchirwere ichi uye kuti vanhu vachitorarama upenyu hutsva.
“Ngatichitoraramei upenyu hutsva hwekugeza maoko edu nesipo nguva nenguva, tosiyana nekuungana takaita chitsokotsoko, tichipfekawo iwo mamasiki aya uye vanhu ngavasamhoresana nemaoko. Kuti tinyengedzane tichiti tichararama sezvataisiita kare hazvichaitaba,” vanodaro.
Basi reutano rinoramba richikurudzira veruzhinji kukoshesa mashoko aro pamusoro peCovid-19.
“Kusvika nhasi (musi weAmugovera), vanhu 698 vawanikwa vaine Covid-19 muZimbabwe, uye 181 vavo vakatonaya kuchiti vamwe 509 vachinayo. Vanhu vasere vashaya kubva patanga kuonekwa chirwere ichi muno musi wa20 Kurume 2020,” rinodaro bazi iri.
Rinokurudzira veruzhinji vane mibvunzo pamusoro pedenda iri kuti vaitumire panhamba yeWhatsApp inoti +263 714 734 593 kana kuridza nhare yepachena inoti 2019.
Vachitaura nepepanhau reSunday Mail nemusi weMugovera, mutevedzeri wegurukota rezveutano nekurerwa kwevana, Dr John Mangwiro vanokurudzira veruzhinji kukoshesa hutsanana uye kuti vasaungane sezvo paine tarisiro yekuti vanhu vari kubatwa neCovid-19 vachawanda muZimbabwe – kusanganisira vanenge vasina kumbobvira vabuda munyika.
“Tiri kuti vanhu ngatigare kudzimba kana zvichikodzera uye tokoshesawo hutsanana, tisingaungane uye tichipfeka mamasiki nemazvo.
“Kune avo vari kubva kunze kwenyika, ngavakoshese mirawo iripo vorega kungosangana neruzhinji kana vasati vaongororwa. Tinotofanirwa kusimbaradza matanho edziviriro sezvatakamboita pakutanga kwelockdown,” vanodaro Dr Mangwiro.