Article Synopsis :
The agency channel in China is seen by some [Reinventing Life Insurance Agency Distribution Globally] as being an exemplar of digitalisation. It has embraced digital means of distribution and become more customer focused and more efficient.
It still has challenges to address and this McKinsey paper looks at four key themes that if implemented, would greatly improve the agency channel in China.
Not enough management structure
Managers in agencies are seen more as head of sales and it is on the basis of personal sales their performance is measured. Insurers should focus time and resources on professionalising the agency managers by developing them into business leaders who can develop agents in the field.
This will require different incentives for these managers, but these managers should be totally focused on recruiting, coaching and managing up to 30 agents. It is a model well established in the US and Japan and creates a career path for agents.
Take control of the talent pool
Much of the recruitment that is undertaken is informal and done by agents in order to add those Individuals to their team of agents.
Insurers need to apply a more systematic – scientific – approach in order to have better control over the process and to ensure a healthy pipeline of talent.
This means determining where the best talent comes from, using screening, matching and onboarding processes to develop their recruitment strategy and centralising that process in a regional office.
All the time in the world
Most Chinese agents work part-time. Only four in every 10 (39%) work more than six hours a day and activity is low, with 70% making between one and three client visits a day. Full-time agents tend to make three to five visits a day, so making more agents full time will drive up productivity.
Developing a career track, backed by professional development opportunities and training resources for agents and managers reinforces the importance for all to be continually learning and improving.
This should be backed by a reward and incentive programme that is geared towards full-time agents, as these are the ones who have made the greatest commitment.
Digital all over
Insurers have developed systems to support sales. Many other systems will replace the old manual processes of servicing such as enquiries, claims, etc. Agents must embrace these and other channels to generate leads and engage with customers.
The paper ends by saying that the value growth of life insurance in China will depend upon the agency route. If the innovations outlined are implemented, the authors of the report believe that Chinese agents will be the global role model that other insurers undergoing a similar transformation will seek to follow.
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Digital Insurer's CommentsThe agency model has been essential to the growth of life insurance in China. But for real value growth, it requires reshaping.
A more professional, full time, focused profession – that is the operative word, here – will make the agency channel more efficient and drive value.
If this new profession is properly supported with a coaching, training and formal career path, it will redouble any efficiency savings by developing an engaged and aspirational workforce.
The Chinese are already lauded for their technology that has allowed them to develop new and exciting products.
If the Chinese crack the agency model, perhaps incumbents in other jurisdictions should fear Chinese insurers deciding their own market alone is no longer big enough for them.
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