[4 Examples of Orphan Policy Pitfalls] If an Insurance Agent Resigns, Who Will Follow Up on the Policy?

Insurance Agents act as a bridge between insurance companies and policyholders, providing sales advice and after-sales services to clients. However, if an Agent resigns, all active policies they managed unfortunately become what are commonly referred to as "orphan policies."

The turnover rate for Insurance Agents is not low. According to data from the Vocational Training Council in early January 2021, over 3,450 employee Insurance Agents left their positions in the past 12 months, representing a turnover rate of 5%. The Insurance Authority's Regulatory Newsletter mentions receiving multiple complaints related to orphan policies, covering issues ranging from service and operational problems to even serious misconduct. Below are four examples of such complaints:

A medical insurance policyholder's agent resigned after providing services for several years. Although the insurance company subsequently assigned a new agent to serve the policyholder, the new agent never contacted the policyholder, including failing to inform them about medical insurance upgrade offers. As a result, the policyholder missed the opportunity to enhance their coverage and suffered a loss.

When an Agent resigns, a new Agent is assigned by the insurance company. However, when the policyholder inquired about the possibility of changing to another servicing Agent, the insurance company informed her that she could only make such a change by purchasing a new policy through the new Agent.

Although the insurance company later allowed her to select a new servicing Agent without purchasing a new policy, due to the confusion in the assignment process, sensitive information related to the policyholder’s claim was transferred between the initially assigned Agent and the new Agent.

An agent resigned, but a general insurance company failed to properly notify the policyholder, resulting in issues and delays when the policyholder attempted to renew their car insurance policy, nearly causing a coverage gap.

An agent terminated their agency contract with a life insurance company but continued to impersonate as an agent of that company, collecting premiums from their former clients. The misappropriation of premiums went on for several months until it was uncovered when a newly assigned service agent contacted the policyholder.

The Insurance Authority emphasises that insurance companies must make every effort to ensure that orphan policies receive proper service. This includes recommending that insurance companies adopt various notification methods (such as through mail, SMS, email, or phone calls) to inform policyholders that their current Agent has left the company. Additionally, a clear message should be sent to policyholders to introduce the new servicing Agent (including their name, licence number, contact information, etc.) and to explain the reason for the change. 

Furthermore, insurance companies should consider the past records and complaints of the new servicing Agent and require them to contact policyholders within a reasonable assigned timeframe. They should also ensure that the Agent remuneration system encourages new servicing Agents to provide services for orphan policies and imposes penalties when service standards are not met.

Lastly, the Insurance Authority believes that insurance companies can leverage technology to serve policyholders through various mechanisms, such as online self-service portals, allowing policyholders to choose the communication channel that best suits them.

If your insurance policy unfortunately becomes an orphan policy, there is no need to worry excessively. You can first communicate with the newly appointed Agent. If you wish to appoint another Agent, you can make a written request to the insurance company. If you have not yet decided on a suitable candidate, you may consider using the 10Life Insurance Advisor search platform to find a licensed insurance Agent that meets your preferences.

Note:
1. This article was compiled by 10Life using market information collected from various sources. It is intended for general reference only and does not take into account any individual needs or suitability. It should not be considered as sales advice. Before purchasing insurance, you should discuss with a licensed insurance advisor to find a suitable insurance plan for yourself, and refer to the information provided by the insurance company.
2. This article was last updated on: 12 April 2022.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.