BUYING BLINDLY?
Back in January 2014, The Guardian reported in the UK that “six well-known agencies had sold personal accident policies to workers who were already covered by their employers' insurance.”
Source:- www.theguardian.com
This posts will discuss key factors & views in miss-selling.
MARKET ENVIRONMENT
In some places especially developed countries, the market segments are already saturated with various products available and most demographics are already covered.
Issues arise when agents/sales staff’s performance are based on number of insurance policies sold rather than number of genuine deals closed or number of customers reached.
In a scenario of mis selling, agents/sales staffs will rely on keywords such “return guaranteed”, “consistent historical returns”, and “zero risks” which will not appear on brochures or product materials on investment linked insurance products to entice customers.
For general insurance products, agents/sales staffs try to offer unnecessary insurance productsby up-selling, cross-selling their products to existing customers creating duplicates of coverage.
VIEWS
There are various channels to lodge a complain or to seek mediations for customers who were mis-sold with products not suitable to their needs but all this is coming from the customer’s side.
On the other end, an indication or yellow flags of agents/ sales staffs practicing mis selling can be seen in the percentage of insurance policies cancelled during renewal after the 1st year period.
For insurance companies trying to curb or control mis-selling, a monitoring system can be placed and enforced with penalties to agents/ sales staff’s commission revoked when high number of cases are detected.
But then again a cost VS benefit analysis will be done before implementing an expensive system in a market with stiff competitions.
