The management of insurance companies is, in essence, managing its people. Regulators certainly seem to agree, as evidenced by a series of regulatory documents issued by the general office of the now-abolished China Banking and Insurance Regulatory Commission (CBIRC), including the Measures for the Regulation of Internet Insurance Business, the Insurance Agent Regulatory Requirements, and the Notice of Implementing the Responsibilities of Insurance Companies and Strengthening the Administration of Insurance Salespersons.
Q: What is the scope of salespersons in insurance companies?
A: In late September 2023, the National Administration of Financial Regulation (NAFR) issued the Administrative Measures for Insurance Sales Practices (the new measures), which is set to take effect on 1 March 2024.
The new measures unify regulatory requirements of insurance sales practices, with article 2 clarifying that, “insurance salespersons in these measures refer to: personnel of insurance companies engaged in sales, individual insurance agents and other forms of personnel included in the administration of salespersons”. Therefore, in terms of staff management, insurance companies should interpret salespersons broadly to include all staff engaged in insurance sales.
Q: What does “engaged in insurance sales” mean?
A: According to the new measures, insurance sales practices include: (1) pre-sales practices (laying the groundwork, creating conditions and soliciting the counterparty to conclude the insurance contract); (2) in-sales practices (negotiating on the contract content and making offers or commitments for the conclusion of the insurance contract); and (3) post-sales practices (fulfilling obligations such as policy delivery, return visit and information notification accompanying conclusion of the insurance contract in accordance with laws, regulations and regulatory requirements).
These actions should all be regarded as being “engaged in insurance sales”.
Q: Should insurance companies apply practice registration for clerks?
A: Insurance companies are advised to prudently interpret the scope of persons requiring practice registration, according to article 15(3) of the Measures for the Regulation of Internet Insurance Business, which says that, “marketing materials of internet insurance issued by salespersons shall … be prominently marked with … their practicing licence number and other information”, as well as article 24 of the new measures, which says that, “insurance salespersons who sell insurance products face-to-face shall present their practicing licences to the counterparty; if they sell products in a manner other than face-to-face, they shall inform the counterparty of … their licence number.”
Effectively, this means that all staff involved in internet insurance marketing should apply for registration.
Q: When clerks engage in internet insurance sales, what are the common pitfalls?
A: With authorisation of the insurance company, clerks may participate in internet insurance marketing. In terms of practitioner marketing, the Measures for the Regulation of Internet Insurance Business have raised clear standards.
First, internet insurance marketing should be carried out within the scope of the authorisation. Second, issued marketing materials should all be produced by the insurance company. Finally, practitioners should place the full name of the insurance companies they operate under their own names, licence numbers and other information in a prominent position on the marketing page.
In addition, insurance companies should examine, monitor and check marketing content, and assume primary responsibility for compliance.
In particular, with regard to popular self-media marketing, insurance companies should adopt methods such as personal report, regular self-inspection, keyword retrieval and third-party monitoring to achieve supervision.
Practice registration and administration should be further carried out for practitioners, highlighting their qualifications to engage in the internet insurance business.
Q: How should insurance companies manage training of salespersons?
A: First, establish a vocational training system and formulate entry and on-the-job training regimes, build a professional and stable faculty, and prepare training syllabus and materials.
Second, include laws, rules and regulations, practice standards and professional ethics as basic content of entry and on-the-job training, requiring not less than 30 training hours per year for each individual.
Third, strengthen control of training effectiveness and improve the management of training files.
In online training, identification should first be carried out, with an effective test system in place to assess the results. Practice registration should not be made for staff failing the entry training evaluation.
Q: What is the appropriate length of training time?
A: According to the CBIRC, “for existing salespersons, no less than 30 hours of training time is required per person per natural year; for those entering in the middle of the year, they should first comply with the provisions of entry training, and then, after induction, participate in the company’s established training regime for the year.”
Q: What does integrity management of insurance salespersons involve?
A: This requires timely disciplinary action and internal accountability. For non-compliant conduct, the salesperson should be immediately disciplined and held accountable internally.
In addition, insurance companies should actively explore customer evaluation of salespersons’ practice via technical means, and effectively apply the results to integrity evaluation.
Ensure the accuracy, timeliness and completeness of integrity records. In accordance with regulatory requirements, information on commendation, rewards and regulatory administrative penalties should be entered into the regulatory information system for insurance intermediaries accurately, timely and completely. The relevant integrity record of departing salespersons should also be entered before deregistration.
Strengthen the joint punishment for dishonest salespersons. Support self-regulatory organisations to build an administrative platform and a joint punishment mechanism for dishonesty.
Where a salesperson is found to have serious dishonest practices in insurance sales and other economic and social activities, he or she should be reported to the administrative platform in a timely manner. The matter should be seriously dealt with until termination of the person’s agency (labour) contract, and the person should not be re-engaged within two years.
Yan Bing is a partner and Li Wencheng is an associate at AnJie Broad
AnJie Broad Law Firm
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