Last week I was talking to two CXOs of life insurance companies. They had similar problems – but not really the same one. One CXO was still opening branches for selling life insurance – this kind of surprised me. As he was on the sales side, he was saying that the ‘training’ is too long. In fact he wanted the training to be reduced. I guess he would have been happy with a ppt of say 45 slides, so that the training about new products, etc. could be done in 2 hours time. The EX-HEAD of training was telling me that 2 of his superiors hated him for saying ‘training should be done for 1 week’.
The best thing is both his bosses tell me once in a while how committed they are to training. Why they need to impress ME – is something that I have not been able to fathom for the past decade. Needless to say, I have not done any training with this company. This company excels in mis-selling, wrong selling, etc. but just could not care. Deep pockets really make you relaxed, does it not.
If I were the only shareholder, I would have shut it down.
The second company’s CXO was saying that the lapsation was not so much a problem as surrenders. Surrender means people look at what product they have bought, do not like it, and say ‘just give us our money back’.
Most life insurance companies assumed that many policies will be surrendered, but still the majority will be held up to maturity. However when after 4-5 years, they find that the ‘investment’ (as it was sold to them) has a lousy performance.
If they are wondering why there are so many surrenders, I am wondering about their wondering!!
It was sold to them as a 3 year product. Is it surprising that they are surrendering? It was sold as an investment product. It was sold by agents who had no choice but to become an agent. It was sold by employees who knew that by the time the 3 years were over, they would not be around. It was supervised by seniors who said
“Subra, I know it is wrong, but what to do…everybody is doing it” – most of them are today CXOs.
Is it surprising that there are so many surrenders? No. Not to me.
Are they really surprised? No. I think it is for public consumption. They continue to get their salaries, they make ppts on how to reduce surrenders, meet in Hyatt, Trident or Leela.
Then go home. Tomorrow is another day.
Sharholders, unit holders ki vaat lagi!
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