Professionalism in life insurance industry

By Stuart Solomon

My trusted Webster’s Seventh Collegiate Dictionary defines “professionalism” in two ways: The first is a “following of a profession for gain or livelihood.” We are all familiar with the huge “gains” that successful professional athletes can attain.

The second definition reads, “The conduct, aims, or qualities that characterize or mark a profession or a professional person.”

Let’s focus on this definition. There is little disagreement that doctors and lawyers, to name a few, are regarded as professionals as their chosen professions require extensive education and training and they are held to extremely high technical and ethical standards.

Here in Korea, we often hear the description “professional” when referring to career life insurance salespersons (agents) as well. What does this mean and why is it important?

There are several characteristics that define the career professional life insurance salesperson (agent):

a. As the word “career” implies, this is a full time (as opposed to part-time) single-company dedicated agent. We have seen the Korean life insurance industry move toward a more professional sales model in recent years as life events and the complexity of products and planning such as variable annuities for retirement, has increased the need for professional consultative services.

b. Professional life insurance agents may come from a variety of backgrounds ― each insurance company has its own criteria for selection. Some require varying levels of prior work experience and within this, some companies may target specific industry segments such as the financial industry or sales-oriented businesses. The selection process can be extremely rigorous requiring many interviews, detailed background and reference checks and aptitude testing.

c. Like all professionals, the individual sales agent must meet certain requirements. Licensing is required for all life insurance agents in Korea and separate licenses are required for particular products that are more complicated, i.e., variable life products, and must be thoroughly explained to the customer.

d. How do we measure professionalism for life insurance agents? There are a number of metrics used to measure a life insurance agent’s performance. One of these is persistency ― how long does the customer maintain his or her insurance policy. This is an important indication of how well the agent has met the needs of the customer. Other measures reflecting productivity are also important because they tell us how well the agent is performing.

In addition to these “internal” measures there are other external organizations that provide another measure of professionalism. One of them is MDRT which stands for Million Dollar Round Table. Founded in 1927, MDRT is an international, independent association of more than 35,000 members from over 476 life insurance companies in 76 countries. MDRT members are internationally recognized as the standard of sales excellence in the life insurance and financial services industry _ they are professionals/advisors who serve their clients by exemplary performance and the highest standards of ethics, knowledge, service and productivity.

Korea currently has about 4,300 MDRT members representing over 12 percent of the total MDRT membership and is the third highest ranked country. MetLife, Korea has 681 MDRT members representing 11.3 percent of our total agent population while the industry has an overall 4.2 percent representation, indicating our strong support of MDRT and its programs.

The real point here is that Korea has embraced professionalism and these numbers bode well for the consumer looking for professional advice.

e. Acting at all times in an ethical and compliant manner is an absolute must for any professional. Being ethical is not about “how much” insurance you have sold, it’s about “how” you have sold that insurance to the customer.

The reputational risk for the company is extremely high when a breach in ethics occurs. In an industry that operates on a “promise to pay” its customers on valid claims 10, 20, 30 years in the future it is easy to understand the importance of customer and public trust.

The professional sales agent must be the trusted advisor to his client. He must understand the client’s needs, be knowledgeable of products and services and be skilled at offering financial advice that is unbiased and in the best interests of his or her client.

The most successful professional agents, many of these have had long rewarding careers well into their 80s, are those that have put the client first. In the words of the British novelist, Douglas Adams, “to give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity”.

For the good of the insurance industry and for our clients, professional agents are priceless. A professional agency force brings credibility to the industry and will allow clients to get the best financial advice possible to make informed decisions about their financial future.