The Men Who (not) Cried Wolf!

There are two types of self-serving Insurance intermediaries – Online Portals and Insurance “Salesmen”. Each of these are broadly of two types again. Two types of Online Portals are – Aggregators, earning referral fees and Brokers earning commissions. Online portals are too focused on conversions and quick sales than understanding the customer needs, educating the customer etc.; well online portals are not built for that kind of high-touch & personalized engagements. Then, two types of Salesmen are – Sales Staff of Banks or Sales Executives, earning incentives, lured by pay hikes/promotions and Individual Insurance agents earning commissions, lured by foreign trips etc. These salesmen too are too focused on achieving their personal sales numbers than what is best for the customers. A disclaimer to clear any smallest doubt – No, I don’t mean all of them are same; not all are bad.

Then there are media houses, bloggers, vloggers, influencers earning through ads or/and referral fees.

As a matter of disclosure, and to fortify my above disclaimer, we belong to the group of Individual Insurance Agents but we are in letter & spirit, how an agent should be – caring & professional. We are largely unbiased, though being unbiased isn’t expected from an agent and in fact agent is supposed to be biased towards to the company s/he is agent of. But we are still unbiased perhaps for two reasons – First we have tie-ups with all major insurance companies in one or the other way (which means whichever company’s insurance you buy from us; our revenue isn’t impacted significantly) and secondly & candidly we are honest. Of course, honesty isn’t something verifiable quickly but it is something that can be certainly experienced over a period of time.

In this article I am trying NOT to make a point against any of the above (directly at least) but making strong points in favour of caring & professional agents, like us.

So, first thing to understand is everyone out there is earning one or the other way. That should NOT be a problem for any sane thinking person. Problem is, earning at an expense of the customer’s good or customer him/herself falling for or picking up something inappropriate in an attempt to “save” that something someone is earning, “unnecessarily”.

Though Insurance is very small revenue contributor to our overall revenue, it’s my daily routine to listen from prospects & customers about their insurance blunders (many a times they don’t even realize that those were blunders, until I educate them). With that, I have very well understood that, how much ever be written about insurance, like this very piece and many other I have written in the past, one-to-one interaction & education is far more effective & useful. For that matter, not just insurance, but whole of the ‘personal finance’ is indeed very ‘personal’.

So, why you should hire a CARING & PROFESSIONAL insurance agent? Well, before that if you wonder how, you find a caring & professional agent, don’t worry, if you are sure that your agent is going to do all of the following, then s/he is indeed caring & professional!

So, here are reasons for hiring a caring & professional agent:

1.      Counselling, Need Analysis and Calculations

2.      Guidance in Product Comparison, Cost-benefit Analysis & Selection

3.      Assistance in Proposal Submission

4.      Mediation, Moderation in Policy Issuance

5.      Policy Servicing

6.      Claim Assistance

Counselling, Need Analysis and Calculations: An agent is not the one who just fills the forms and picks up the documents. An agent isn’t just the one who has passed very easy insurance licentiate exam with the sponsorship of an insurance company. S/he should be a person who has learned & studied well from the resources apart from the text books and few hours of product training of the insurance company. S/he should be capable of asking you the right questions and answering all the questions you might ask and even the most relevant ones you miss to ask, for gathering the information required to make a good decision. S/he should be capable of making need analysis. S/he should be capable of performing related calculations – for example Human Life Value for arriving at Life Insurance Sum Assured Value. A trivia: Have you ever met an insurance agent who said someone doesn’t need an insurance s/he was keen to buy? If not yet, you’ll find such one in us! It is said “you shouldn’t ask a barber whether you need a haircut”. But wouldn’t your trust & respect increase when a barber candidly says you don’t ‘need’ haircut when you really don’t need but you are just ‘wanting’ it. We have many-many a times told people that they don’t need a term insurance, or a base health insurance, or they don’t need a cover for a long period they want and almost all the times they don’t need child policies or some other endowment or whole-life policies.

Guidance in Product Comparison, Cost-benefit Analysis & Selection: Insurance products or plans have evolved from their basic versions to multiple variants offering host of additional features and also the number of insurance companies keep increasing every passing year. Hence there are plenty of choices. Options are good but too many will confuse, especially when you are buying something like insurance that is an intangible (non-physical) one. First step is to do a good product-need fit test based on analysis of the features – which are real value-adds to the customer and which are fancy fads. Then do a cost-benefit analysis, ease of buying & servicing analysis. Avoid all the pitches and all salesmen who make such pitches of life insurance cum investment plans that make illustrations in absolute numbers (i.e., “you pay this much and you get back this much”) with no regard to time value of money (i.e., IRR, XIRR, CAGR).

Assistance in Proposal Submission: Any material information so provided, knowingly or UNKNOWINGLY, if found to be wrong at any point of time (including at the time of claim), policy can be called 'INVALID' and all the benefits payable under the policy may cease. So, what constitutes a 'material fact' and what’s not, it's importance may not be well known to layman and there is a fair chance that while filling the application him/herself without a knowledgeable agent’s assistance, s/he could make errors / misrepresentations / omissions. A 'PROFESSIONAL' agent helps you to fill the form accurately and completely and helps in necessary supporting documentation.

Mediation, Moderation in Policy Issuance: An agent is Official Primary Underwriter of a policy. Underwriting (process of evaluating & accepting the risk) is a critical function of an insurer. Every person capable of paying premium may not get a policy. But if you are buying some other product/goods, you will get it if you can pay the price. In insurance by filling the application form and paying the premium, you are making an offer to the insurance company to give you a policy. That's why application form is called 'PROPOSAL FORM'. Whether to accept your proposal / offer or not will be decided by the underwriter of the insurance company. Each proposal goes through different types and levels of underwriting. And legally Insurance agent is a primary underwriter and his/her recommendation adds weight to the proposal and helps favorable issuance of the policy and settlement of the claims. Many a times, especially when the Sum Assured involved is high or the case is little non-standard (medical adversities found in the proposal form or during the medical examination etc), higher level underwriters will have queries that need satisfactory answers to avoid/minimize the quantum of the premium re-rating (increase) or avoid rejection of the application. A good agent will help you handle such queries well.

Policy Servicing: Insurance policies are very long-term contracts (20-30 Years or even life-long). In such a long term you need service at different point of times for various reasons (such as premium payment, change of mode of payment, change of address / contact details, premium certificates, policy revival, change of bank, change of nominee and so on). It may be inconvenient for you to run around, enquire yourself doing all that, which you have to, if you have bought yourself directly. In case of offline policy your agent will help you in all these matters save you from nightmare experience of contacting customer “Care(free)” where you first face robots asking you to choose option 1/2/3... or get an auto response email reply which is followed by some “human(oid)” response not making much of difference and you remain clueless even after hours or days of wait. Alas! it shouldn’t be that way and we hope & wish that we should stop counting this as an advantage in the nearest future. And there are some advantages specific for policies like Unit Linked Life Insurance Policies (ULIPs) that require periodic asset allocation / rebalancing. The tax-free, cost-free switch options given in the ULIPs are best exploited with the help of a knowledgeable insurance advisor. A caveat here though: a good & caring advisor rarely recommends Insurance cum Investment plans, in first place.

Claim Assistance: This is the last and most important point. For example, may God forbid, what if the eventuality (ex: death) for which you have taken the policy happens? It is not you who has to claim but your family. How comfortable will they be, to complete those formalities? Will they know answers if Insurance Company has some questions/queries/ investigations before they settle the claim? If you have taken policy through an agent, s/he will help you from the beginning to the end. Many a times, with our strong interventions by highlighting right interpretation of the policy wordings, quoting the court orders, regulatory circulars etc., we have helped our customers to get the claims when insurance company rejected the claims or reinstate a cancelled policy.

I have many case studies for each point mentioned here; but just a couple of case studies briefly to mention here about this one most important point:

A client’s child suffered a special condition and was hospitalized. Insurance company rejected the claim saying it was out of scope/excluded ailment. We studied the case and found claim was acceptable. Hence, we fought with the insurance company till the top-level for months and got the claim honored & hospital expenses were reimbursed. Consequently, there were relapses and follow-up hospitalizations which went smoothly as cashless claims, as it was already established as the acceptable & payable ailment.

In another case, where a client who was actually thinking he was wasting money on health insurance as he was not claiming anything, had to go for claim for a minor ailment, for rather small amount. To his bad luck, based on some error of reporting from the hospital where he was admitted, insurance company took a stand that, there was concealment of the material fact while applying for the policy several years ago and hence, it not only declined the claim, but it even cancelled the policy. Obviously, client was furious. We intervened, proved with evidence that, the error was from the hospital’s side, dug-open the initial proposal form establishing that all the material facts were disclosed, and then quoted court orders, escalated the matter to consumer court and got the policy reinstated. In the consequent years, client was unfortunately hospitalized multiple times for critical illnesses and made multiple successful cashless claims to the extent that his sum insured was falling short!

On the other hand, we also educate clients about what is not covered in health insurance when something is not paid under the insurance. For example, there are few things in healthcare, for a layman that look like any other sickness/surgery might be just diagnostic tests, which as stand-alone things are not covered under the health insurance. So, the clients who may get disappointed or feel they were dealt unfairly by the insurance company, thanks to our explanation & education they appreciate the fact and find solace.