Should You become an Insurance Sales Agent?
Dunbar’s number suggests that one could only maintain 150 meaningful social relationships at the same time. Around 5 of them would be insurance sales agents if you lived in Hong Kong.[1] Given the low barrier of entry, it is not surprising to see many people to have considered working as an insurance sales agent at some point in their lives, especially when they were left standing at the crossroads in their career paths.
The insurance companies have welcomed many flight attendants on board as sales agents when the aviation industry have made them redundant. The total number of insurance sales staff based in Hong Kong increased by 5 per cent in 2021. In fact, the insurance industry was no better than the aviation when the pendamic hit. With mainland visitors being one of the most significant revenue sources for the insurers, the closed border has posed an unprecedented challenge to the insurance industry. In 2020, mainlanders spent 84 per cent less and the total sales of new policies was dropped by 22.8 per cent.[2] What made the insurance industry more resilient than others was the minimal additional overhead. Majority of the insurance sales agents do not receive base salary.
The massive recruitment has prepared the industry for a quick bounce back. The industry is expected to grow at a compound annual growth rate of 6.6 per cent, and more than 5 per cent over 2022.[3] It seems to offer a promising industry prospect.
Should you join the troop? Here are a few points on both sides of the argument aim at giving you an all-rounded perspective.
Why you should consider working as an insurance sales agent:
1. Lucrative business opportunity – A recent survey shows that almost two thirds of mainland Chinese residents of the Greater Bay Area are interested in buying insurance products in Hong Kong.[4]
2. Low entry barrier – education background is not a point of concern when becoming an insurance agent. The three papers that constitute the Insurance Intermediaries Qualifying Examination have a passing rate of 70 per cent and the examination fee would usually be covered by the employer.
3. Flexible lifestyle – the job offers the highest possible flexibility and is ideal for those who desire more autonomy in life. It also provides alternative means of income for slashies who want to experiment some side hustles.
4. Passive income – the way commission was released could generate a stream of passive income for many years to come.
If these reasons resonate with you, don’t jump on the first job advert you see. Look for the ones providing adequate training and support, especially those help navigate the mainland clientele. Explore companies offering premium financing products for this is a wealth management tool with rising popularity. [HCM1]
Not everyone is suitable in becoming insurance sales agent. Here are the reasons why it might not work for you:
1. High burnout rate – insurance sales agent has a notoriously high burnout rate. Survey in the US reveals an attrition rate as high as 90 percent within the first year and the rate was increased to 95 per cent when extended to five years.[5]
2. Unique product nature – Life insurance appeals to the altruistic side of people and is against the human nature of instant gratification. It is purportedly one of the most difficult products to sell.
3. Competitive field – insurance policies are not exclusively sold through insurance sales agents. Sales agents must compete with relationship managers at retail banks as they are usually the first point of contact for customers as financial need arises.
4. High operating cost – socialising expenses with prospects could be a pain when no new business emerges at the horizon.
If these reasons make your heart sinks, you might as well explore alternative career options that allow you to tap into the growing insurance market. Some positions in retail banking such as relationship manager or general banking officer may offer you similar exposure but with more security.
[1] There will be 1 insurance sales agent in every 32 people. The calculation is based on the total number of labour force in HK (3.77 million https://www.censtatd.gov.hk/en/scode200.html) divided by Insurance licensee (117,977 as of 31 Aug 2022 https://www.ia.org.hk/en/infocenter/statistics/statistics.html ).
[2] https://www.scmp.com/business/banking-finance/article/3125253/hong-kong-sees-second-worst-ever-slump-life-insurance
[3] https://www.cityam.com/hong-kong-life-insurance-market-value-to-exceed-73bn-in-next-four-years/
[4] https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/financial-services/deloitte-cn-fsi-gba-insurance-outlook-en-220721.pdf
[5] https://www.investopedia.com/insurance/becoming-life-insurance-agent/#:~:text=More%20than%2090%25%20of%20new,when%20extended%20to%20five%20years.