Agent - Training

  • Mr. Higgins agreed that there was a problem with lack of education of the agents.

1993-4, NAIC Proceedings

  • If your training process for your agents is to sell at target premium, for example, and target premium carries the policy to maturity at a 7 percent rate, if you’re only crediting 6, it’s not making it there.
  • So keep an eye on how you’re training your agents to sell your products and try to avoid problems up front in the product performance before they become a premium risk problem.

--  Joseph E. Paul, Clarica Life Insurance Company, Vice President and Pricing Actuary

2001 - SOA - Investment Strategies to Maximize Investment Yield, Society of Actuaries - 25p

  • Mr. DeAngelo said he did not recall seeing incorrect or misleading training materials, so this is somewhat a theoretical question.
  • Mr. Hanson responded that he had seen misleading materials in market conduct examinations.
  • What the regulators really want to say is that the agent training materials should not be misleading or incomplete.

1999-4, NAIC Proc.

  • (p18) - The home office people who came to the Sioux City, IA, office said:
    • Don't try to become a Ph.D. in variable life insurance; just learn enough to sell it and go.
    • This is what they told the whole office, and this was how I trained any new men that I hired:
      • Just sell it; do not worry about it.

--  Jerry C. Keating, Training Manager, John Hancock, Iowa

1993 0525 - GOV (Senate) - When Will Policyholders Be Given The Truth About Life Insurance?,  Howard Metzenbaum (D-OH)  ---  [BonkNote]

  • Training - you train for this <Universal Life> as you would train for any other product.
  • Actually in some ways it is simpler.
  • You do not have to talk about a lot of different products, you merely talk about the policyholder providing a sum of money, whatever he likes one to provide us with, and we make certain deductions and the balance is accumulated.

-- Alan Richards -  (fellow of the Society of Actuaries and is Chairman, President and CE0 of the Life Insurance Company of California, soon to be known as the E.F. Hutton Life Insurance Company.)

1980 - SOA - Product Innovation - Response to Consumer Needs in the 1980's, The Society of Actuaries - 14p

  • (p460) - Jay Shaffer, Subcommittee Counsel: 
    • Advertisements for agent training materials appear frequently in the National Underwriter magazine.
    • One such ad states, "Selling is 98 percent understanding human beings; 2 percent product knowledge."
      • Wouldn't you agree that a salesman should put more than 2 percent of his effort into understanding the product?

1978 0807, 0814 and 0815 - GOV (House) - Life Insurance Marketing and Cost Disclosure, John Moss (D-CA)   ---  [BonkNote]

 

  • Mr. DeAngelo responded that the New Jersey Unfair Trade Practices Act on false advertising is only one paragraph long and the department has been criticized for not telling the industry in its regulations what is false and misleading, for example.
    • No other regulators spoke in support of the ACLI suggestion, so it will not be included in the next draft.
  • Mr. DeAngelo said there had been a suggestion that Section 2A(1)(c) be revised.
    • He said if materials for agents are misleading or incomplete, then agents may in turn mislead the public.
    • He asked if regulators were interested in deleting the language that says "which is designed to be used or is used to induce the public… ."
  • Mr. Hanson said he would like to see all training materials included and Mr. Burch said he was also in favor of deleting the language.
  • Mr. DeAngelo said he did not recall seeing incorrect or misleading training materials, so this is somewhat a theoretical question.
  • Mr. Hanson responded that he had seen misleading materials in market conduct examinations.
  • Diana Marchesi (Transamerica) said this language would then be broad enough to include material designed to inspire agents to sell more for the company.
    • All of the information in the regulation would then need to be included in that inspirational brochure.
  • Mr. DeAngelo asked if there is a middle ground, such as requiring the regulation to apply to material that describes to the producer the features, advantages or disadvantages of an insurance product.
    • The regulators agreed that was an appropriate compromise.
  • What the regulators really want to say is that the agent training materials should not be misleading or incomplete.
  • Mr. Burch said that he has been convinced that the requirement for agent training materials should be deleted and the rest of the regulators agreed.

1999-4, NAIC Proc. - Unfair Trade Practices 

  • (p13-14) - Prudential's efforts to ensure that its agents understood and explained to consumers the effect of the change in dividend practices were largely unsuccessful and may have resulted in many cases, in an expectation that illustrated dividends would be paid. 
  • (p15) - A review of company records reveals· that the company, through its internal complaint system, knew of cases of alleged misrepresentation and other improper sales practices by its agents, and in many instances failed to adequately investigate and impose effective discipline. 
    • Prudential is responsible for the behavior of its agents and managers and, therefore, where misrepresentations have resulted in harm to its customers, the company should provide appropriate compensation commensurate with the nature and amount of the harm and  misrepresentation.
  • (p17-18) - Given the fact that it is difficult to ascertain who was harmed and the extent of that harm, the company concluded that the best approach to remediation would ·be to reach out to all potentially affected policyholders. Prudential, therefore, is prepared to contact 10.7 million policyholders nationwide.... 
  • (p173) - There appeared to be little if any awareness of guidelines and any consistency in agent training. 
    • Prudential must issue written directives to appropriate staff which would establish the following improvements to its training program:
  • (p222) - Training shall also cover areas of potential misrepresentation.

1996 - Report of The Multi-state Life Insurance Task Force and Multi-state Market Conduct Examination of The Prudential Insurance Company of America