A survey by the Insurance Association of China shows that the proportion of insurance salespersons with a reported annual income exceeding CNY360,000 ($52,000) last year was 1.56%. In contrast, 52% of insurance salespersons reported an annual salary of less than CNY42,000 (US$6,000).
The study by the association indicates that low education levels, low retention rates and low incomes are restricting the healthy development of the insurance sales force in the country.
Turnover of insurance salespersons
The low income may be the most direct and fundamental reason for the high turnover of insurance salespersons.
The report believes that there are several reasons for this situation: the shift since last year of life insurance sales to protection policies from investment products and the surge in the number of salespersons recruited for the industry, leading to lower sales per person and hence lower commissions earned.
At the same time, the impact of InsurTech on the intermediary market is gradually emerging, leading to a change in insurance marketing approaches and demand for insurance.
In addition, regulators are tightening the management of insurance agents, covering recruitment; registration; professional capabilities and training; business and product restrictions and penalties for violation of laws and regulations.
The survey shows that as at end-May 2018, the proportion of insurance salespersons with educational qualifications of up to high school was over 65%.
China and the US agree to halt new tariffs - What does it mean?
Implement a formal retirement plan for your clients for greater customer satisfaction and trust – LIMRA
Over the years, insurance companies' approach to recruiting agents has been that of mass induction and merely getting the numbers. One consequence of this strategy is that the 12-month retention rate of insurance salesmen has remained at a low level of 30-35%. From 2015 to 2017, the dropout rate in the life sector was around 50%, which has seriously affected the image of the industry.
Regulator mulling reforms
The CBIRC is mulling reforms for the insurance sales force which numbers around 8 million. It has proposed flattening the tiers of sales team management and improving the commission and assessment systems. For the moment, the central authorities are letting each region carry out changes at their own pace in line with local conditions.
Industry executives said insurance marketing reform should be a holistic undertaking. This is because insurance marketing is not merely a matter for the marketing department, but instead is closely intertwined with product development, underwriting, claims, investment management and cost control.
This first appeared on Asia Insurance Review's premium eWeekly China service.
If you are keen to tap one of the world's leading insurance markets, subscribe here.