epidemic has entered its third year, 4 million agents have left the insurance industry, and the recruitment activities of insurance companies have also suffered the biggest Waterloo in history. In this context, large insurance companies began to formulate negative growth plans and give up short-term premium objectives for the long term
accidentally, Guo Qi became the most popular person in the Shanghai community this spring – “head”
“Materials fluctuate with the market price and mood fluctuates with logistics.” Guo Qi, head of a community in Pudong, Shanghai, told a Chinese reporter of a securities firm a few days ago. She makes group purchases for the residents of three surrounding communities. She spends most of her time looking for sources of goods, sorting out forms, receiving points and distributing materials. It is common to be busy until midnight. However, the feedback from the neighbors when they received the materials made her feel very valuable.
At the beginning of the epidemic, three people in Guo Qi’s family made wishes in the community. Later, the epidemic situation became severe and the materials became tense. Guo Qi became the head of the group and soon became familiar with the neighbors in the community.
Guo Qi has another identity: Taiping Life insurance agent. Many of Guo Qi’s colleagues volunteered during the epidemic prevention and control period because they were unable to go out to visit customers. Wei Zhengxi’s team of Taiping Life Insurance Huangpu branch, where she works, accounts for about 50% of volunteers. In Zhuang Meijie’s team of Xuhui Branch, business partners who are volunteers account for about 30%.
They are sometimes misunderstood. Song Aiying of Jilin Zhongzhi went to the community to report for duty and encountered a little embarrassment: when the community staff heard that he was from an insurance company and thought he was coming to sell insurance, their first reaction was to refuse, but when they heard that he was coming to be a volunteer, they immediately changed their attitude.
the insurance agent who moves towards the front line of anti epidemic is trying to combine public welfare and insurance. They went to the community when everyone needed to help the people around them. Some of them also became the backbone of the local volunteer team and gained the trust of their neighbors
This trust relationship is a force worth cherishing at the moment of in-depth adjustment of the insurance industry.
“no income without insurance policy”
“Who has the logistics resources from Kunshan to Shanghai?” On April 22, Zhou Chongzhi, an insurance agent in Suzhou, Jiangsu Province, asked questions in the circle of friends to help his 100000 anxious customers find a little hope.
Zhou Chongzhi is also a volunteer. Like many agents, during the epidemic prevention and control period, he was busy in the community while carrying the performance pressure of billing.
In mid April, Zhou Chongzhi met a customer who lowered the insurance plan. “Originally, we talked about a policy with an annual payment of 500000. Now the boss’s company has some difficulties, and we are also trying to help. I have made a plan to reduce the annual payment of 200000 for my customers.” Zhou Chongzhi said.
Under the epidemic, all walks of life have been impacted. After people’s disposable income decreases, the first consideration is to reduce non emergency expenses, and insurance premium is one of them.
A business director in Shanghai said that due to the suspension of customer visits, the performance of business partners has been zero in recent months. From the questions in the morning meeting every day, he can feel the anxiety of his colleagues.
On April 12, the Chinese reporter of Securities Times securities company sent a questionnaire to the insurance agent group with the theme of “insurance industry under the epidemic”. As of April 21, a total of 467 questionnaires had been collected, and the top five respondents in the province (city) were Shanghai, Jiangsu, Guangdong, Zhejiang and Beijing. Among them, nearly half of the old agents have been employed for more than three years.
In response to the question “the greatest impact of the epidemic on your work”, 34.48% chose “visit customers”, and 36.83% chose “the customer’s mentality has changed”. In the impact of supplementary filling, “no insurance policy, no income” and “shrinkage of company treatment” are mentioned most.
In response to the question “the impact of the epidemic on wages”, 51.61% of agents chose to “reduce by more than 50%, which is an impressive figure. 12.21% chose “salary reduction by 40-50%, while only 4 people chose” salary improvement “, accounting for 0.86%. In terms of “the most needed help at present”, 60% of people hope to have measures to alleviate the pressure of assessment.
For the survey results of “more than 50% of the agent’s salary decreased by more than 50%, the business directors of many large life insurance companies in first tier cities told reporters that this was not surprising. Two directors added that since the epidemic in 2020, the Income Differentiation of salesmen has been very serious, and the performance of a few excellent agents has still achieved considerable growth.
In this survey, because the samples are concentrated in Shanghai and Jiangsu, which are greatly affected by the epidemic, the above figures may not represent the national level. However, since the outbreak of the epidemic in 2020, the living conditions of insurance agents across the country are not ideal.
This is the background of the declining share prices of listed insurance companies (Figure 1). Since the beginning of 2020, the insurance index has fallen 43.6%.
Figure 1: stock price trend of five listed life insurance companies since 2020
loss of 4 million agents
With the decline of income, a large number of agents left the insurance industry.
On February 23 this year, the China Banking and Insurance Regulatory Commission announced the practice registration of sales employees of insurance companies at the end of 2021. There were 5.907 million agency sales personnel in the whole industry, a decrease of 2.521 million over the end of 2020. Compared with the same caliber, at the peak of 9.12 million at the end of 2019, the number of agents decreased by 3.21 million, a decrease of 35%.
according to the Chinese reporter of securities times, the number of registered insurance marketers of more than 50 small and medium-sized insurance companies decreased by nearly 500000 in the first quarter of this year. The listed insurance company with the largest number of agents did not disclose the agent data in the quarterly report, but according to the internal exchange data, it is speculated that the loss of agents in the whole industry in the first quarter has reached 1 million
It should be noted that the number of registered agents officially disclosed each year is the net value after the offset of in and out in that year. If only the people who leave the insurance industry are included, this figure will be much larger. It is roughly estimated that the loss of insurance agents has reached 4 million since the outbreak at the end of 2019.
Among the listed insurance companies, 1.65 million individuals left the insurance team in 2021. Compared with the peak period around 2019, the number of agents of Ping An, Guoshou and PICC has been halved (Table 1).
in the first tier cities where the insurance giants are fighting for every inch of land, most of the agents who once spent a lot of money to recruit still failed to retain
Taking Ping An Life Insurance Shenzhen Branch as an example, there were more than 40000 agents during the peak period in 2018, which dropped to 15000 at the end of last year China Life Insurance Company Limited(601628) in a business department in Shenzhen, there were more than 1200 people in the peak period in 2020, but now there are only about 300 people left.
Agents in insurance companies, also known as the field, earn commissions on performance and are not employees of insurance companies. Corresponding to the field work is the internal work, which is the employee of the insurance company and provides backstage support for the field work. After the reduction in the field, the relevant internal staff are also facing layoffs. It is reported that a large life insurance company plans to reduce internal work by 20% this year.
The reduction of internal and field staff has also brought about a change: the business outlets of insurance companies have been withdrawn, transferred and merged. In consideration of cost, the insurance company will evaluate the required workplace area according to the number of agents in the next few years. Considering the shrinkage of business outlets, the workplace leases in some business areas will not be renewed after they expire.
In 2020, Ping An life began to merge business districts with less than a certain number of agents in some cities. From more than 50 business areas in 2020 to more than 40 last year, Ping An Life Shenzhen Branch has been further reduced to more than 30 this year.
in order to understand the situation of the whole country, the reporter counted the administrative approval data of local banking and insurance regulatory bureaus on the cancellation of business outlets in 2020. In 2020, a total of 617 replies were revoked, and the number increased significantly to 1158 in 2021. As of April 22 this year, there were 244 replies. In terms of regional distribution, Hebei, Jiangsu, Zhejiang, Hubei and Sichuan are the top five with the largest number of replies to revoke business outlets (Figure 2)
personnel turnover upward conduction
As the world’s second largest insurance market, 70% of the premiums of China’s insurance industry come from life insurance, while 60% of the premiums of life insurance come from personal agency channels. The growth curve of China’s insurance industry is highly related to the development curve of the agent team.
what kind of interest relationship adjustment has been caused within the insurance company by the decline in the number of agents? How will it affect the basic market of the industry? The basic law on dismantling insurance companies can be seen more clearly
In 1992, AIA first introduced the personal agent system into China, opening a new era of life insurance marketing in the mainland. The essence of the personal agency system is a set of basic laws for the performance evaluation, promotion and salary payment of agents.
The basic law of Chinese insurance companies is roughly similar. Agents are usually divided into salesperson, supervisor, manager and director. Each level above supervisor is further divided into junior, middle and senior levels. The job structure of most insurance companies is called “pyramid level 9”.
Salesman is the first level of agent after employment. When the salesman reaches the company’s performance indicators, he can be upgraded to a supervisor. The supervisor can recruit new people, which is the basic unit of organizational development. He can obtain organizational benefits such as staff increase allowance, management allowance, education allowance and so on. When the supervisor reaches the corresponding premium and staff increase indicators, he can be promoted to manager, and the senior manager can be promoted to director.
The agent’s income is mainly divided into two parts: one is the direct commission, that is, the Commission obtained from the sales of insurance policies, and the other is the indirect Commission, which is the management allowance and rank allowance obtained by the supervisor due to team management. In general, the larger the team in charge, the greater the proportion of indirect commissions from management allowances (Figure 3).
Figure 3: interest structure of personal insurance sales organization
Source: Today insurance, Strategy Department of an insurance company
Although the “pyramid structure” has 9 ranks, it is not “pressed by layers”. Each rank above the supervisor can be added, but the superior of the new salesman is the supervisor and Deputy Supervisor who are “related by blood”, and the agent of higher rank in the team does not participate in the Commission distribution of the new salesman. This design not only encourages the development of the organization, but also takes into account the flat management efficiency.
in the past, insurance companies always liked to “pull heads”, which is related to the guidance of the basic law to encourage supervisors to increase staff. There are not only one-time bonus, but also management allowance and breeding allowance. When the salesman leaves, the supervisor may also get this part of renewal business
Under the bond of interests, the development of human resources has become an important way for agents to obtain high salary and promotion. Over the past years, every major development of the life insurance industry is inseparable from the expansion of manpower.
however, when the vigorous “staff increase movement” becomes “staff reduction movement”, the whole process is reversed: salesmen without new orders and management allowances often leave first, resulting in the reduction of organizational benefits such as commission distribution and management allowances; During the epidemic prevention and control period, it is difficult to recruit new people, and it is difficult to achieve the performance assessment of the supervisor, which is facing the pressure of demotion
The renewal business of the resigned salesman may be subsidized to the superior supervisor to a certain extent, but the distribution methods of this part of benefits are different among companies. Some insurance companies will hand over it to the collection and development team, which will break the relationship with the supervisors.
Dismantling the basic law is not difficult to find that the supervisor is the basic board of life insurance companies. The three-year epidemic has made some executives who have worked for many years unbearable. Even if there is a cushion of renewal Commission, they still can’t maintain a decent income. This is the biggest difference between this round of agent loss and the past.
a supervisor in China Life Insurance Company Limited(601628) told reporters that after the epidemic, he tried to transform the mobile Internet, operated wechat official account and Tiktok to help online transactions and increase employees, but achieved little. “I can’t adapt to the world of young people. I feel that I will be abandoned by the times.”
A few months ago, Wan Feng, the China Life Insurance Company Limited(601628) former president, expressed his concern in an internal sharing activity. He said that the core issue of agents is income. Now there are signs of risk. The first half of 2021 is the loss of salesmen. From the fourth quarter, the loss of supervisors. If the loss of supervisors continues, the life insurance industry team can not stop falling steadily in 2022, and the future prospect is not optimistic.
forced the “basic law” to change
The core of the life insurance industry is the agent, and the core of the agent is the income problem. How to distribute the income is determined by the basic law. In the past, the basic law, which was oriented by increasing staff, has to be adjusted.
The insurance company suffered the largest decline in the history of the epidemic. Taking the industry exchange data learned by the reporter as an example, in the first quarter of this year, the number of employees increased by more than 50 small and medium-sized insurance companies was less than 100000, a year-on-year decrease of nearly 60%. Affected by this, the first year scale premium and the first year standard premium of the above company groups in the first quarter decreased by about 10% year-on-year.
In response to the new situation, Guoshou, Ping An, Taibao, New China Life Insurance Company Ltd(601336) and other companies have stepped up the adjustment of the basic law. The mainstream direction is to change the distribution of interests from encouraging organizational expansion in the past to increasing direct commissions and linking with long-term performance.
In the new version of the basic law in 2020, Guoshou divides personal insurance into marketing team and exhibition team, and strives to improve the quality of the team. As of December 31, 2021, among the 820000 individual insurance sales personnel, the scale of marketing team is 519000 and the scale of exhibition team is Shanghai Hajime Advanced Material Technology Co.Ltd(301000) . This year, China Life Insurance Company Limited(601628) proposed to “drive business development with effective team”.
In 2020, Ping An Insurance (Group) Company Of China Ltd(601318) also optimized the basic law, including three specific measures: reclassifying institutions, layering field agents and increasing long-term investment. Ping An takes the city as the unit and divides the institutions into three types: reform capacity type, balance type and human type. The reform capacity type focuses on capacity improvement, the balance type takes into account the human scale and capacity, and the human type pays attention to the increase of staff with quality to realize differentiated management.
The field agents shall be stratified, and different policies shall be given according to different agents. The subsidy investment for newcomers shall be increased, and the incentive for merit shall be increased, hoping to increase excellence with merit. In terms of long-term investment, it covers three groups: newcomers, high achievers and supervisors, and increases the weight of some long-term indicators.
CPIC life insurance also implemented the revision of the basic law after welcoming Cai Qiang, the former regional CEO of AIA, in 2021. The new version of the basic law implemented on January 1, 2022 emphasizes improving the team’s production capacity, guiding sustainability and encouraging long-distance runners; Link the bonus to the policy continuation rate and set the minimum guarantee value; Link the benefits of the supervisor’s staff increase with the performance of the newcomer in the next three years, and guide the supervisor to cultivate and retain the newcomer.
What people in the industry remember deeply is that Cai Qiang led AIA out of the bottleneck of personal insurance channel reform more than a decade ago. In 2009, during Cai Qiang’s management period, AIA actively dismissed part-time personnel and retained elite marketing personnel with high quality and high capacity in order to concentrate its resources on serving high-end customers. The scale of agents continued to shrink, from 24000 in 2010 to 15000 in 2013. This transformation action against the general trend of the industry made AIA experience the pain of falling premiums, but laid the foundation for growth in the following years. At present, AIA insurance companies are also less affected by the epidemic.
the reform of the basic law is backed by the redistribution of commissions and management interests, which is self-evident for longevity company. It will take time to see whether the reform of the basic law by mainstream insurance companies can be implemented, avoid going back to the old road of “pulling people’s heads” and lead the industry to real long-term ism
bottom question
The past 30 glorious years of China’s insurance industry are the result of “making great efforts to achieve miracles”. Ten years ago, some insurance executives shouted that the crowd tactics of “big in and big out” could not continue, which seriously damaged the credibility of the industry. But at that time, it was not that the insurance companies did not want to change, but the “washing people” model of high staff increase and high loss still worked. The reform meant actively sacrificing and giving up the current market share. It was difficult for shareholders, management and grass-roots organizations to have enough determination to resist the temptation of interests.
Now, the grey rhinoceros in the insurance industry has come to every employee. Young people’s willingness to enter the insurance industry is declining; The rise of inclusive insurance such as Internet insurance and Huimin insurance also makes it more difficult to sell traditional insurance.
In 2021, the premium income of the insurance industry was nearly 4.49 trillion yuan, with a year-on-year increase of 4.05%. The new policy premium data of the whole industry is not disclosed, but according to insiders, the new policy premium fell for the third consecutive year last year, which means that the time for the insurance industry to climb out of the bottom is still prolonged.
If the premium is the face of the industry, the value of new business is the inside. The new business value rate is an index to measure the profit margin of new insurance policies. In 2021, the new business value rate of the five listed insurance companies accounting for 60% of the life insurance market decreased by more than 20% (Table 2).
At the beginning of 2021, some branches of large insurance companies still formulated double-digit growth plans according to the situation of previous years. But at the end of the year, I had to bow to reality and apply to the head office for reducing the performance target. At the beginning of 2022, when the company made plans at the headquarters level, it set the goal of “what percentage of the maximum loss is allowed”. It is understood that one of the business objectives of a large life insurance company this year is to control the decline in the value of new business within 24%.
“Seizing the opportunity to adjust the business structure and formulate a reasonable negative growth plan is also the right way of development.” Wanfeng appealed to insurance company managers that the business development of life insurance companies is a slow work that needs continuous cumulative development. The so-called “leapfrog development” and “unconventional development” are all digging holes for themselves. With the return of insurance to security and the shift of products to pension and health insurance, the rearrangement of industry seating will come.
The slogan of the transformation of the insurance industry has been shouted for many years. As the epidemic enters the critical stage, has the worst time come for the industry? When can I see the bottom?
The indicators for observing the bottom of the performance of insurance companies are as follows: first, the bottom of the decline of manpower; Second, the per capita production capacity increased. When the increase of per capita production capacity can make up for the reduction of new orders caused by the reduction of manpower, it means that the premium of new orders has stabilized, the quality of the retained team has improved, and has the initial strength to get out of the trough.
reporters learned from interviews with personnel of several life insurance companies that the decline of agents of various companies continued in the first quarter of 2022, and there was no sign of reaching the bottom
However, as insurance companies vigorously promote the transformation of sales force to specialization and professionalism, the signal of per capita production capacity improvement has appeared. In 2021, the per capita first year premium of Ping An Life insurance agent channel increased by more than 22% year-on-year, the monthly per capita first year insurance business income of CPIC life insurance agent increased by 42.3% year-on-year, and the monthly per capita comprehensive capacity of New China Life Insurance Company Ltd(601336) increased by 4.1% year-on-year.
However, some insiders pointed out that the per capita production capacity of different types of life insurance products is not comparable. For example, indemnificatory products are different from financial products. Each company’s main products are different, and the per capita production capacity will be different. This difference is not caused by the sales capacity, but by the characteristics of the product itself. The per capita capacity index still needs to be treated with caution.
Another noteworthy phenomenon is that the threshold for increasing the number of insurance companies is changing.
a business director of Ping An told reporters that not long ago, two young people with excellent basic conditions wanted to join Ping An Life Insurance. Both the supervisor and manager had passed the interview, but they were rejected in the company’s interview because of “poor supervisor ability”. This reason surprised many business partners, but the business director believes that the recruitment conditions set by the company are reasonable. Some problems are not exposed in the early stage, which will cause greater losses to the team later
Zhuang Meijie, director of Taiping Life Insurance Shanghai Xuhui Branch, told reporters that when recruiting business partners, her team valued whether the other party had a certain income level before joining the company. Such newcomers can do business with a more calm and pure attitude, better connect with customers with economic strength and be easier to retain.
“The insurance industry really doesn’t need so many people.” Zhou Chongzhi of Ping An Life Insurance Jiangsu Branch believes that what the insurance industry needs most at present is a group of people with self-esteem, self-confidence, self love and a sense of awe for the industry to join in and rebuild the image of the industry.
The essence of insurance is mutual assistance. In this epidemic, many insurance companies’ internal and field work went to the front line of anti epidemic and practiced the industry value of “everyone for me, I for everyone”. Wei Zhengxi, an old insurer who has worked for more than 20 years, said that from the perspective of “not forgetting the disaster and not wasting the crisis”, every insurer should think about what he can do in the face of the disaster. The insurance industry should pool its strength and give full play to its due value in the face of disasters.
As people in the insurance industry often say, “we have run too fast in the past 30 years. It’s time to wait for our soul.”
