Agent Training Method

Welcome To

Promoting Professional Excellence

Organized By

Academy of Learning Limited

Date: June 27, 2015 & Time : 11:00 am to 02:00 pm.Venue: Academy of Learning Ltd.Baitul Abed, 53 Purana Paltan, \

Dhaka-1000.Presented by

Mohammed Alamgir KabirHead of Academics, AOL.

Workshop on Training Methodology on

Pre-licensing Education of Agents

The insurance rules 1958, Insurance law 2010 sction 124 (4) and Bangladesh Bima Niti-2014 clause 1.4.2 explicitly endorsed 72 hour the pre-licensing education for Financial Associates . To educate the insurance agents/Financial Associates we need to identify the following areas to address.

Pre-licensing education for Agent

1 . INTRODUCTION TO INSURANCE 2. INSURANACE AGENCY AS A CAREER 3. PRINCIPLES OF INSURANCE 4. PREMIMUM AND BONUSES 5. INSURANACE PRODUCTS6. UNDERWRITING 7. INSURANCE DOCUMENTS 8. POLICY CONDITIONS/SERVICING 9. CLAIMS

10. GROUP INSURANCE11. MICRO INSURANCE12. TAKAFUL/ISLAMIC INSURANCE13. LAW & REGULATIONS14. FUCNTIONS OF IDRA15. MARKETING16. ORGANIZATION STRUCTURE17. ACTUARY18. THE ETHICS

Who is a life insurance agent?An insurance agent is a person who has been given authority by a company to represent the company in the following ways:

a) Soliciting application for policies;b) Describing its policies to prospects and applicants

and explaining how such policies may be purchased.c) Collecting at least the initial premiums for policies;

and d) Providing services to prospects and policyowners.

SolicitingExpress authority is the authority an insurer intends to –and actually does, in fact –give its agent in the contract of agency. For example, an agent has the express authority to solicit insurance application for the company.

Implied authority is authority not expressly granted, but which the agent is assumed to have in order to transect the insurer’s business. For example, an agent’s contract may not specifically state that he/she can print business cards with company’s name, but the authority to do so is implied.

Implied Authority

Apparent authority is the appearance of, or the assumption of, authority based on the actions, words or deeds of the insurer or because of circumstances the insurer created. For example, by providing an individual with a rate book, application forms and sales literature, a company creates the impression that an agency relationship exists between itself and the individual.

Apparent Authority

Significance of Authority-whether express implied or apparent – is that it ties the company to the acts of its agent. The public has no way of knowing exactly what authority the contract of agency grants the agent; thus, the agent may be held legally responsible (and the company too) for any acts – even beyond the agent’s authority – if the public can resonably assumed that the agent had authority to take such action

Significance of Authority

In where case the tort is involved, the company may be sued for actual damages. In such cases the agent may also be sued for punitive damages also called “malpractice” or “errors and omissions”

Tort is a civil wrong for which the remedy is common law action for unliquidated damages, and which is not exclusively the breach of a contract or the breach of trust or other merely equitable obligation. - Prof. Salmond.

Bangladesh insurance law 2010 requires that people who sell insurance have a license from the Government of the Peoples Republic of Bangladesh. Before IDRA will issue such a license-whether it is a prospective agent –the candidate must undergo 72 hours training from an recognized institute. The license is renewable in every two years interval.Furthermore, agents needs to continue his/her education to keep the license active.

Agent Licensing

Prohibited PracticesWhile the standards of ethical and unethical behaviour varies, but certain practices have long been punishable in nearly every jurisdiction: twisting, mispresentation, misuse of premiums, replacement and rebating.

RebatingRebating occurs when the buyers of an insurance policy receives any part of the agent’s commission. An act of rebating also takes place when the agent gives anything of significant value as an inducement to purchase a policy which is a obvious form of discrimination. Any agent who is caught rebating to an applicant or policyowner is subject to punishable. The person who receives a rebate also may be subject to punishment.

Twisting is the act of persuading a policyowner to drop and replace an existing policy by misrepresenting the terms or conditions of another policy. Typically twisting is done without regard for potential disadvantages to the policyowner. The Term twisting is not to be confused with replacement. Law may not prevent a policyowner from replacing one policy with another, provided the agent handles the transaction according to required procedure. The unlawful twisting occurs when an agent indulges in a misrepresentation or an incomplete comparison of policies in order to make a sale.

Twisting

Agents must be on guard continually against making misrepresentations of any kind to prospects and clients. There are several forms of misrepresentations, each is serious breach of ethics and a violation of law. An agent who offers any written or oral statement that does not reflect the truth about a policy’s terms or benefits has committed policy misrepresentation. A agent who makes an incomplete comparison between two or more policies also is guilty of policy misrepresentation. Usually, the purchaser of insurance is not familiar with policy terms and provisions and has a right to know precisely what the policy does and does not promise.Penalties for misrepresentation range from fines to imprisonment according to Bangladesh Insurance Law 2010.

Misrepresentation

The insurance law of many countries provide minimum standards regarding replacement of life insurance and annuities. As you will learn, certain kinds of life insurance policies and annuities build in value over the years, and to interrupt these policies these policies by replacing them with others could create serious financial loss for the policyowners. Consequently, where replacement is permitted, there are minimum replacement standards to protect prospective purchasers from unfair methods of competetion and unfair or deceptive acts of practices in the business of insurance.

Replacement

Misuse of premiums includes diverting premiums funds for personal use. Somewhere it requires that an agent establish a separate premium account if he/she holds such money for any time before turning it over to the insurer. Commingling premium funds with personal funds is prohibited.The rules regarding the handling of premium funds generally are just one part of an agent’s larger fiduciary duty. A fiduciary is a person who holds a position of special trust and confidence. Agents have fiduciary duties to both their clients and the insurer they represent. An agent who accepts premiums on behalf of an insurer or offers advice affecting a client’s financial security is acting in a fiduciary capacity. Acting as fiduciary requires that an agent:

Be fit and proper; Be honest and trustworthy; Have good business reputation; Be qualified to perform insurance functions; Have knowledge of and abide by laws and regulations;

and Act in good faith.

Misuse of Premiums and Fiduciary Duties

Who is qualified to purchase insurance and who is not?The process of answering this question is called risk selection, a function performed by insurance underwriter. Agents are called sometimes “Field Underwriter”.

Firstly, the field underwriter needs to know the profile of the applicant whether he/she is insurable, if so, what type of scheme may be offered and the rate of premium. In this regard two basic questions underwriter seek to answer about an applicant:1. Is the applicant insurable?2. Is the applicant and the insured are two different

people, does insurable interest exist between the two of them.

Field Underwriting

The underwriting process is accomplished by reviewing and evaluating information about an applicant and applying what is known of the individual against the insurer’s standard and guidelines for insurability and premium.Underwriters have several sources of underwriting information available to help them develop a risk profile of an applicant. The most common sources of underwriting information include: Application, Medical reports, an Attending Physician’s Statement, Special Questionnaires, Inspection reports etc.

Underwriting Process

The application form for insurance is the basic source of insurability information. Thus, the agent’s responsibility to see that an applicant’s answer s to questions on the application are recorded fully and accurately.There are three basic parts to a typical insurance application:

Part I – General and Part II – Agent Report.


An agent plays an important role in underwriting. As a field underwriter, he/she initiates the underwriting process and is responsible for many important tasks: completing the application thoroughly and accurately, obtaining appropriate signatures, computing and collecting the initial premium, issuing the provisionary receipt.Submitting Applications and initial premiums to the company for underwriting. As a field underwriters, agents should recognized the importance of establishing a good working relationship with their home underwriter. Agents always should check to ensure that applications are filled out completely and correctly.


What is Ethics?Some years ago, Sociologist Raymond Baumhart asked business people, "What does ethics mean to you?" Among their replies were the following:

"Ethics has to do with what my feelings tell me is right or wrong.“

"Ethics has to do with my religious beliefs.“

"Ethics consists of the standards of behavior our society accepts.“

"Being ethical is doing what the law requires.“

"I don't know what the word means.“

What, then, is ethics? Ethics is two things. First, ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.

What is Ethics?

Get the Facts

What are the relevant facts of the decision making? What facts are not known? Do we know enough to make a decision?Which individuals and groups have an important stake in the outcome?

With the facts and the stakeholders in mind, choose an option that we think might be the best thing to do in this circumstance. Now, evaluate that option from five different ethics perspectives. For each, dragging the slider on the scale to indicate how ethical you think we choice would be from that perspective.

Decision Making Based on Ethics

UtilityDoes this action produce the most good and do the least harm for all who are affected? What good and what harm will or may result?How will I measure a good outcome? Happiness? Financial impact?While the potential harm from this action may affect only a few people, is the harm so great that it would outweigh the good this action might bring to many others?Move the slider to evaluate the option you are considering.


More Good

More Harm

JusticeDoes this action treat people equally or proportionally? Does it give each person affected his or her due?Might I have some prejudice or interest that might make me favor one person over another?Am I treating each individual the same way, or is there a valid reason to treat someone differently?Move the slider to evaluate the option you are considering. More Just

Less Just


Common GoodDoes this action best serve the community as a whole, not just some members? Will this option be equally to everyone’s advantage?Does this action contribute to the conditions of social life that give everyone an opportunity to thrive?How will my action affect the resources everyone must share, such as the environment?Move the slider to evaluate the option you are considering.

Increases Common Good

Decreases Common Good


RightsDoes my action best respect the rights of all who have a stake?Does this action respect the dignity of others?If I take this action, am I treating others simply as a means to an end?Does the action hurt or help others in securing a minimum level of well-being?Move the slider to evaluate the option you are considering. More Respect for Rights

Less Respect for Rights


VirtueDoes this option lead me to act as the sort of person I want to be?What character traits would I be exhibiting if I chose this action? Honesty or deceit? Compassion or selfishness? Prudence or irresponsibility?What habits of character would I be developing if I took this action? What would a person I respect say about this choice?Move the slider to evaluate the option you are considering. More Virtuous

Less Virtuous


Weigh the Perspectives

The five ethical perspectives on our decision. Do some of these approaches seem more important than others for this specific decision?

Utility…………………………………………………Rights………………………………………………..Justice……………………………………………….Common Good……………………………………..Virtue…………………………………………………

In brief, professional excellence comes from the ethical practice of the knowledge and skills.

2020202020

Documents

Agent Training Method