A Long Way To Go

Insurance companies in China need to improve their credibility before people will take them seriously


‘Yesterday they were seen selling vegetables on the market, today, they sell insurance policies.” This is the current joke doing the rounds in Beijing and it is a sad reflection of the way people view the state of the insurance industry in China.

ARE YOU INSURED? A Taikang Life salesperson (left) in Dalian City tries to convince a client to take a policy

Many insurance companies are only focused on the wallets and purses of their customers, while neglecting the quality of their service and products, said Tang Jing, a Beijing resident.

Sun Guodong, Director of Shanghai Supervision and Management Bureau of the China Insurance Regulatory Commission, shares Tang’s feelings. He said the insurance industry should be a respected profession, but today insurance salesmen are among the most disliked business people. Some companies have even put up signs at their gates reading “Insurance sellers, no admittance.”

Insurance Contract Confusing

Luo Sheng, a Beijing resident, said that an insurance salesman recently asked him to buy insurance. While reading the long, dull contract, Luo gave up. It was too exhausting to try to understand the contract. “Not understanding the contract, who would sign it?” Luo complained.

Luo voiced most people’s opinions and revealed that China’s insurance business is devoid of reality.

Ma Yongwei, former Vice Minister of China Insurance Regulatory Commission, said frankly that he could not fully understand an insurance contract. If an official in charge of an insurance sector cannot understand the contract, what chance does an ordinary citizen have of understanding it?

An insider with a foreign insurance company, unwilling to be identified, said that selling insurance is a specialized business. It is the duty of insurance companies to give consumers relevant knowledge before selling insurance products to them. Compared with developed countries, China lags far behind in this field. Insurance companies must make efforts to make their products understandable. Only when customers can fully understand insurance products can they invest money in them.

Low Profits

Little profit from investment products is another reason that people dislike to buy insurance. When investment products debut, they are warmly received. But several years later customers find their investment profits limited. This dampened their enthusiasm to further invest in insurance. Worse still, many people who wish to withdraw their capital from insurance companies are told to bear the loss. Then customers complain about it.

“This is due to Chinese insurance companies’ negligence of consumer interests,” said Wang Xujin, Professor of Beijing Technology and Business University.

It is a systematic problem after all, said Wang. China is in the process of economic transformation, but currently public ownership is still the main structure of the economy. This leads to the separation of the interests of insurance companies and of their employees. To uproot the problem, a shareholding system should be introduced. Only by doing so, can the shareholders be concerned about the development of the companies and the interest of clients.

Experts say that new products should be developed in accordance with the requirement of customers. Lin Zhongwen, General Manager of Manulife-Sinochem Life Insurance Co., said every new product would bring new opportunities and a new system. While developing new products, employees should be involved in eliciting the opinion of clients. Before a product comes out, it should go through repeated discussions between products designers and products sellers to make sure it suits the market.

Payout Blues

Shan Lin bought life insurance for his sister and paid premiums for three years running. In April, his sister died in an accident, Shan went to the insurance company several times for a payout, but was refused under the excuse that his sister had diseases when purchasing the insurance. This had nothing to do with the fact that she died in an accident. “They promised much while asking customers to buy insurance, but haggled over every small thing when it came to the payout. In this case, who would want to spend money on insurance?” Shan complained. Many customers agree with Shan. Over the past years, the number of lawsuits against insurance companies has been on the rise, which has further caused a loss of credibility in the industry.

Ma Jianjun, Professor of Peking University, said China’s insurance companies are shortsighted in payout. They should show more concern on their reputation than on money. Even if an accident is the fault of the customer, the insurance company should pay a certain sum of money, from a humanitarian point of view. Sometimes, a lawsuit can directly affect the survival of a company, said Ma.

Payout is the key in reflecting a company’s service quality. Payout procedure should be simplified and relevant services provided. In a case that should not be paid out, insurance companies should give full reasons for their decision.

A Matter of Trust

Recently Zheng Mei changed her child’s name on her residence registration and correspondingly on the insurance contract. She found that the person in charge of her child’s insurance has left for another job.

Employees in the insurance industry change jobs frequently and quite often nobody takes over their work timeously. Besides, the personal information of customers, such as ID card number and account number, are arbitrarily passed to others. Is it safe to do this? And can the latter honor the promise of the former? “I regret buying the insurance,” said Zheng. Her experience reflected the trust crisis faced by the insurance industry.

Regarding the problem of a personnel system, insiders called for the development of professional insurance intermediaries, whose duty is to protect the interest of customers. The insurance intermediaries’ employees should be suitably qualified, as they are expected to help uplift the quality of employees of the entire insurance industry.

Currently, the number of insurance intermediaries is growing rapidly in China. By the end of March, the number of the intermediaries reached 776, still not enough. China lags far behind developed countries in this aspect. In Britain, for example, intermediaries conduct more than 95 percent of insurance business. Professor Wang stresses, supervision and management should be intensified. We can draw on foreign experience to establish trust files for employees and those who violated professional regulations should be put on a blacklist. In the meantime, more professional training of staff is required.