Role, responsibilities of the insurance sales rep
Introduction:
This article is intended to provide an understanding of the role and responsibilities of the insurance sales representative in the local insurance market place. It will also briefly describe the legal and regulatory regime governing such activity.
The importance of insurance in modern economies is unquestionable and has been for centuries. Insurance provides safety and security against loss on the occurrence of a particular event. In the case of life insurance, payment is made when death occurs or the term of insurance expires. {{more}}Similarly, an insured property is secured against loss in the event of a fire by fire insurance. In other types of insurances, security is provided against loss at a given contingency. Insurance also provides safety and security against the loss of earnings at death, to loved ones or in oneâs golden age.
Distribution of insurance is handled in a number of ways. The most common is through the use of insurance intermediaries such as sales representatives. These intermediaries serve as the critical link between insurance companies seeking to place insurance policies and consumers seeking insurance coverage. Traditionally, the insurance sales representative provided information on the products offered by an insurer with the aim of soliciting business on behalf of the insurer. Over the past few years, many insurance companies have developed products and services that have gone beyond the realm of traditional insurance products. Accordingly, the role of the insurance sales representative has also evolved to the extent that they are now classified as advisers. Insurance sales representatives now offer services such as evaluation and implementation of alternative means of funding for potential losses, risk management strategies and comprehensive financial planning.
The Insurance Sales Representative:
An insurance sales representative is responsible for the sale of a companyâs insurance products/services. Insurance sales representatives represent the insurer and usually operate under the terms of an agreement with the insurer.
By law, the insurance sales representative is required to obtain a licence from the regulatory authority which, in St Vincent and the Grenadines, is the Financial Services Authority (FSA), to conduct business of behalf of an insurance company. Certificates of Registration are issued by the FSA to all insurance sales representatives authorized to conduct insurance business under the Insurance Act, Cap. 306 of the Laws of St Vincent and the Grenadines, Revised Edition 2009. Section 81 (1) of the Insurance Act requires all persons duly registered under the Act to produce their certificate when requested to do so by an actual or prospective client or by any person during the course of business.
Responsibilities of the Insurance Sales Representative:
Given the changing dynamics of the insurance market, insurance sales representatives are expected to have a broad knowledge of the insurance marketplace including products, an acute sense of the needs of the insurance purchasers and a general understanding of the laws and regulations that govern the operations of insurance companies and intermediaries. Insurance sales representatives therefore, have to be knowledgeable and professional in order to fulfill the unique roles and responsibilities that are entrusted to them.
As insurance options have multiplied, customers ought to be made aware and understand the different types of policies that are available, which will enable them to make informed decisions.
When selling insurance, sales representatives have a responsibility to help their clients see the âbig pictureâ. For example, how will their life insurance policy fit their overall financial goals? Do they need to make adjustments to their policies because of financial or family related changes? An insurance sales representative should be able to provide appropriate responses these questions.
When making long-term financial decisions, most people like to consult with experts, indeed this is usually the recommended action, as such decisions affect livelihoods and future well-being. The insurance sales representative must be able to demonstrate that he/she is knowledgeable about what they are selling. He/she must be able to provide accurate facts and figures.
Insurance sales representatives are therefore valued by the insured and insurers as an essential element of the insurance market place. It is for the above mentioned reasons, why it is critical that persons licensed as sales representatives are suitably qualified. Insurers must ensure that sales representatives are fit and proper and meet the necessary training and educational requirements in order to be properly qualified and experienced to conduct their authorised activities. Ideally, licences should only be issued to applicants who complete specified pre-licensing courses and who pass qualifying examinations covering insurance fundamentals and insurance laws and regulations.
Changing Regulatory Environment:
As the insurance regulatory landscape evolves, it will become mandatory for insurers to ensure that they have in place at all times, adequate policies and procedures to screen insurance intermediaries, particularly sales representatives, for suitability prior to authorization, including ensuring that they are fit and proper to perform their roles and responsibilities. The onus would also be on insurers to monitor the activities of such individuals after they are registered, including the quality and suitability of any advice and products sold by them and to ensure that they do not engage in any misconduct. Finally, insurers should ensure that the insurance sale representative comply with the requirements of the Insurance Act and Regulations, and the requirements of insurer in the conduct of their duties.
The FSA in its oversight of the insurance sector will also continue to regulate and supervise the insurance industry, including sales representatives, in accordance with governing legislation inclusive of the Insurance Act, the Financial Services Authority Act and AML/CFT legislation.
Comments
