On the Development of Insurance Agency Company

Abstract: The formation and development of insurance agency is in step with the formation and development of insurance market. As soon as the agency company was established, it faced severe survival challenges. Because the cooperation mode with insurance companies is too single, the cooperation mechanism between the two parties has institutional defects. However, some speculators set foot in the construction of agency companies, which led to the wrong way of system construction from the beginning. Lack of mature business philosophy and keen on short-term behavior are internal or external factors that restrict its development. It is necessary to establish a specialized division of labor mechanism with the insurance market as the main body as an important means, and to establish a standardized group of professional agency companies as an important channel for developing goals and standardizing the insurance market.

For a long time, the organizational form of insurance companies in China is large and comprehensive. From the early 1980s to the late 1990s, except for a few part-time agents, most of the premium income came from direct business. Since the end of 1990s, with the emergence and gradual popularization of insurance intermediaries in China insurance market, insurance agencies have become the main body of insurance intermediaries. According to the data released by insurance association of china, by the end of 2002, there were 70 insurance intermediaries/kloc-0, including 7 brokerage companies/kloc-0, 26 assessment companies and 27 agency companies/kloc-0. It can be said that the formation and development of China's insurance intermediary market is synchronized with the formation and development of the insurance market. However, for a long time, insurance companies that have grown up in an independent business environment have established mature direct sales teams with clear division of labor in the long-term business process, and established a huge sales network through these teams. However, the agency can only establish its own marketing network by establishing its own sales team, and collect insurance premiums for insurance companies to seek its own survival and development, which conflicts with the functions of the sales team of insurance companies, causing many agency companies to face severe survival challenges as soon as they are established. Some agency companies are forced by the organizers' own quality problems and survival pressure to take some illegal measures when dealing with many affairs, which seriously affects the reputation of the industry and makes the situation even more embarrassing.

First, the problems existing in the operation of insurance agencies

1. The cooperation mode with insurance companies is too simple, which makes the cooperation mechanism between the two parties have institutional defects. The contact between insurance companies and agency companies is limited to the commission system, also known as the commission system. However, this model, which only takes the business volume as the measurement standard, not only ignores the underwriting quality, but also downplays the after-sales service, which makes the cultivation of professional agency market have institutional defects, making it impossible for agency companies to master and develop underwriting skills well, and making it impossible to solve the problem of low underwriting quality within agency companies. In this way, insurance companies must strengthen their underwriting power to solve the problem of low underwriting quality caused by poor underwriting technology of agency companies, which also encourages vicious competition with fee reduction as the main way. Because the premium is the only indicator to measure the agency, many malignant diseases such as high rebate, high return and disorderly fee reduction that have existed in the insurance market for a long time all stem from the competition in the agency field, and professional agency companies are undoubtedly infected after entering the market.

2. Some speculators set foot in the construction of agency companies, which led to the wrong way of system construction from the beginning. They are eager for quick success and instant benefit, and maximize the accumulation of living capital in an unconventional way in a short time. Cases of illegal operation in the insurance market and misleading consumers to abscond with money have occurred from time to time in agency companies. In recent years, there have been many cases in China in which the insurance premium was not paid to the insurance company, the insured vehicle happened to be in danger, and the insured went to the insurance company to claim compensation, and the insurance company refused to bear the insurance liability on the grounds that it did not receive the premium, which led to the two parties falling into legal proceedings and made the agents involved jump into the trap they dug. In fact, this case only reflects the tip of the iceberg. As a new thing, it is very normal for some speculators to get involved. They lack the business philosophy and technology necessary to run modern enterprises, and they also lack the extremely important credit consciousness in the insurance market. In business, they don't take it as their responsibility to complete the responsibilities of the enterprise and do a good job as a bridge between the insurance parties, but think about how to make more money through bad means. Although this kind of people and things are rare and have no universal significance, as long as there are a few cases in the just-started insurance professional agency industry, it is sometimes fatal, because it can directly crush the reputation of the whole industry. At present, such cases appear frequently and begin to be hyped by the media, that is to say, the real danger has emerged.

3. Lack of mature business philosophy, keen on short-term behavior. The most typical example is that some agencies are keen to play cards between insurance companies and earn high agency fees. In order to get the maximum profit from the market, some agency companies do not put the improvement of service level at the top of their business strategy, but rely on their own insurance resources to play a game of "cat and mouse" with insurance companies, and raise the agency fee standard by provoking insurance companies to bid. For example, in 2002, the standard of auto insurance agency fees in many cities was raised to as high as 30%-50%, which seriously affected the accumulation of funds of insurance companies, forcing insurance companies to jointly take action to ban and adopt industry conventions to hard limit prices to curb this reckless short-term behavior. In the auto insurance reform in 2003, individual agency companies strictly implemented the main points of handling fees stipulated by the regulatory authorities on the surface, but privately signed other contracts with some insurance companies eager to obtain business. They take their office expenses and other operating expenses to the insurance company for reimbursement as disguised agency fees to improve their profit level.

4. Pragmatism prevails, and the sense of honesty needs to be cultivated. Like the personal agency business of insurance companies, the business personnel of agency companies mainly come from personal agents, and the phenomenon of mixed good and bad is very serious. In order to persuade the insured to apply for insurance, some agents often take advantage of the weakness of the insured's ignorance and unfamiliarity with the insurance terms, arbitrarily promise some insurance responsibilities that do not exist in the insurance terms, and exaggerate the coverage of the policy to make the insured submit. Once the insured is in danger, the insurance company can't pay for it, which causes great misunderstanding and a series of problems to the insured.

5. The management system is not perfect, and the business order needs to be standardized. The internal management system of most agency companies has not really been established, and there are many management loopholes. In addition, most employees are personal agents, and the relationship with the company is relatively loose. Bad behaviors and new illegal behaviors that originally only appeared in individual agency groups also appeared in agency companies, which seriously interfered with the market order and caused a series of profit losses and reputation damage. Some agencies are eager to expand their business, and have established many promotion agencies when conditions are not available. However, the relationship between these institutions and the headquarters is actually just a affiliation. Many times, as long as these institutions pay a certain percentage of management fees to the headquarters, they can use the name of the headquarters to carry out various businesses. But headquarters can't understand the business development and financial situation of these institutions at all. Some branch employees only declare a part of the corresponding agency fee income to the headquarters through the way of "hiding the sky from the sea", while others divide it privately. However, due to the lack of management system, the headquarters can not verify and contain this phenomenon, which objectively makes this attempt very easy to succeed. Employees of individual agency companies collude with insiders of insurance companies, take advantage of the management loopholes of insurance companies, and take the form of high-rate underwriting and then reducing fees and refunding fees to seek improper benefits from insurance policies and enrich themselves.

Second, the particularity of the market situation and development space of insurance agents.

1. The organizational forms and functions of the personal agency departments of the agency company and the insurance company almost coincide, but the sales team of the agency company is far smaller than that of the insurance company, which is in an awkward position. Judging from the organizational form of insurance companies, most insurance companies, especially life insurance companies, have not only direct sales organizations specializing in the sales and public relations of large-scale target businesses, but also set up a large marketing department, that is, personal agency business department, in addition to recruiting individual agents to form a marketing team in the society. There are a lot of people in this team. Often a life insurance company in a medium-sized city has a marketing team with a total number of more than 500 people, and there are usually only a dozen or dozens of agents. The purpose of establishing personal agency department in insurance companies is not only to tap some resources by using personal agents' social relations, but also to attract the business of ordinary people and small and medium-sized enterprises through personal agents. This concept and business strategy are undoubtedly highly coincident with the business concept and business development strategy of the agency. Generally speaking, what the agency company is doing and preparing to do in the near future is what the personal agency department of the insurance company has done and is doing. Assuming that the personal agency of an insurance company is independent and has been granted legal person status through legal procedures, it is actually a much more mature and powerful agency than any other agency at present. Judging from the reality, due to the huge number of individual agents of insurance companies and close relationship with all walks of life, the business scope has long been limited to ordinary people and small and medium-sized enterprises. Many excellent personal agents charge premiums as much as the top-level business in direct selling business, that is to say, at this stage, the development level of personal agents in insurance companies is more mature and perfect than that of agency companies.

More importantly, the organizational form of personal agency of insurance company also coincides with the personal agency department of agency company. They all recruit personal agents from the society to form business teams, and the management mode of their team organizations is basically the same. This determines that the competitors of insurance agencies are actually their clients-insurance companies. In fact, most insurance companies also look at agency companies from the perspective of competitors.