A disgruntled policyholder and an agent

It would be rare to find a worker in Ghana or are a Ghanaian worker who is yet to be approached by an insurance agent to offer on sale an insurance product or two.

Insurance agents can be found virtually everywhere particularly where there are working people and serve as ambassadors of their principals - the insurance companies. 

Their mission is to assist people on how to plan and protect their lives and assets financially.  

They are an integral arm of insurance intermediaries who, not only facilitate the placement and purchase of insurance, but also act as links between insurance companies and their clients. 

Traditionally, insurance intermediaries can be categorised into insurance agents or brokers. The difference between the two relates to the manner in which they function in the field of business acquisition. 

The perception 

In recent times, however, the unconventional practices of some insurance agents have deepened the already unpleasant perception about insurance by a section of the insuring public, further mitigating against the rate of penetration in Ghana, which is currently under two per cent. 

A scenario

Auntie Memuna is an employee of the Ghana Health Service. She has a policy with insurance company (A). She walks into an office with the intention to cancel the policy because her agent who signed her on told her that the moment the first premium was received, death to any member of her family will be covered. 

Two weeks after her first premium was deducted, she received a policy document in which it was indicated that since it was a funeral policy, there was a waiting period of six months within which a claim could not be made unless there was death resulting from an accident. 

She was furious because the agent did not tell her that at the time of signing on. No amount of explanation could make her change her mind.

Was Auntie Memuna Right?

Yes! However, she could have been more patient with the explanation being offered by the management of the company. Some agents in their bid to quickly sign on prospective clients often do not dedicate ample time to explain the details, terms and conditions of various insurance policies. 

Consequently, when the client gets informed, through policy documents, about the terms and conditions, they get disgruntled and the easiest reaction is to consider cancelling the policy and often this is done with a ‘mind made up’ and no amount of convincing can change that! 

If the agent had explained the waiting period to her, I am sure, she would have understood the reason right from the beginning.

Agents as distribution Channels of Insurance Products

Indeed, most insurance companies, especially, life insurance rely heavily on their trained agents in the distribution of their products. 

Pundits have raised issues about agents not being properly trained; hence ‘the way they do their things’. However, I tend to disagree with this assertion, as to the best of my knowledge, most agents are given proper training and retraining by their companies, but are just comfortable doing their own things on the field when confronted with various challenges. 

From mis-selling to outright mis-representation of their companies, some agents cannot escape being caught in the web. They often fail to explain the details of policies to clients and sometimes suggest things that the policies can do which may not be true.

What insurance agents really do

Insurance agents are, in general, licensed to conduct business on behalf of insurance companies. agents represent the insurer in the insurance process and usually operate under the terms of an agency agreement with the insurance company. 

The insurance company-agent relationship can take a number of different forms. In some markets, agents are typically independent and work with more than one insurance company. 

The practice in Ghana is that, agents operate exclusively by representing a single insurance company selling specific lines of business. Meanwhile, some general insurance agents are also permitted to sell for non-life insurance companies, provided they are licensed by the National Insurance Commission (NIC) for both companies. Typically, agents may operate either as independent, exclusive, insurance company-employed or self-employed.

Increasing client sophistication

Given the increasing client sophistication, agents provide their clients with the necessary information required to make informed decisions. By their training, agents help their clients to establish their needs in order that they can make informed choices in terms of products and premiums. 

This, therefore, enables insurance companies to offer desirable policies; served mainly through their agents and at competitive premiums.  

This reinforces the need for insurance companies to continue to enhance the capacity of their agency force in order to remain competitive and contribute to national development.

Recruitment, placement and profiling of agents

In Ghana, agents are mainly recruited through newspaper, radio/TV adverts, announcements in Churches and Mosques, referrals and online job placements. Successful candidates are, then, trained after a thorough screening process, which includes the basic qualifying criteria of 18 years and above and WA/SSSCE (with passes in English and Mathematics). Meanwhile, agents with diplomas and degrees are usually placed in the upper market, while the WA/SSSCE holders, many of whom easily fall out after training, are placed in the mass market. 

These agents earn commission, but sometimes with an overriding commission component. Similarly, single parents and students with higher degrees tend to be more successful in the insurance agency career. 

For instance, while single parents are often motivated by the need to provide for their children, higher degree holders are usually motivated by the desire to be independent and entrepreneurial, with control over their earnings.

Training and re-training of agents

Instructively, most insurance companies pay particular attention to the continued skills development of their agents, usually in the form of periodic in-house refreshers. 

Thus, insurance companies spend a fortune to train their agents on the concept of insurance, product updates, customer service, and selling skills among others, and these, by no means, enhance their capacity. 

Poised to go into the sales battle, and believing that ‘being asked to go to battle requires individual strategy to either come back alive or otherwise,’ some miscreant agents employ unethical practices such as spewing lies and/or deliberate misinformation, in their engagements with the public. 

Unfortunately, these unacceptable practices not only affect the agent in terms of commission loss, but most importantly, deny the client access to quality service delivery. Additionally, the company’s revenue for investment is lost and the industry is denied the positive public perception required to increase insurance penetration.

The way forward

Insurance companies must focus on recruiting mainly prospective agents with a minimum of diploma rather than WA/SSSCE graduates many of whom are largely desperate to just mobilise short-term funds for other pursuits. 

Meanwhile, the agents’ recruitment process should be enhanced through the involvement of professional recruitment agencies and experienced sales consultants. 

Moreover, the refreshers must emphasise insurance policies as long-term rather than short-term. 

Orphaned clients must also look beyond their personal relationships with agents and rather strengthen their relationship with the insurance companies, albeit through their contact agents. After all, they will still get their proceeds with or without their contact agents. Similarly, disgruntled clients must rather seek clarity from the company directly on the product details. Agents must also endeavour to live by the ethics of their job at all times.