【4 Examples of Orphan Policy Pitfalls】If your insurance Agent resigns, who will look after your policy?

Insurance Agents are the bridge between insurance companies and policyholders, providing customers with sales advice and after-sales service. However, once an Agent resigns, all policies that they have followed up on and which remain in force unfortunately become what are commonly known as “orphan policies”.

The attrition rate among Insurance Agents is not low. According to data from the Vocational Training Council in early January 2021, more than 3,450 employee Insurance Agents had left their jobs in the preceding 12 months, representing a turnover rate of 5%. The Insurance Authority’s Regulatory Communication mentioned that it had received multiple complaints involving orphan policies, covering service and operational issues, and even serious misconduct. The following are four examples of complaints:

A medical insurance policyholder’s Agent left after providing several years of service. Although the insurance company subsequently assigned a new Agent to provide services to the policyholder, the new Agent never contacted the policyholder, including to inform them about medical insurance upgrade offers. As a result, the policyholder missed the opportunity to upgrade their coverage and suffered a loss.

When an Agent left, a new Agent was assigned by the insurance company. However, when the policyholder asked whether she could appoint another servicing Agent, the insurance company informed her that she could only make such a choice by purchasing a new policy from that Agent.

Although the insurance company subsequently allowed her to choose a new servicing Agent without purchasing a new policy, confusion over the assignment resulted in sensitive information relating to the policyholder’s claim being passed between the initially assigned Agent and the new Agent.

A service Agent left the company, but a general insurance company failed to properly notify the policyholder, resulting in issues and delays when the policyholder renewed their motor insurance policy, and almost causing a gap in cover.

An Agent terminated his agency agreement with a life insurance company but continued to impersonate an agent of the insurer and collect premiums from his former clients. The misappropriation of premiums continued for several months until it was uncovered when the newly assigned servicing Agent contacted the policyholders.

The Insurance Authority emphasised that insurance companies must make every effort to ensure that orphan policies are properly serviced. This includes recommending that insurance companies adopt multiple notification methods (such as post, SMS, email or telephone) to inform policyholders that their current Agent has left the company; issue a clear message to policyholders introducing the new servicing Agent (including their name, licence number and contact details, etc.); and explain the reasons. 

In addition, insurers should also take into account the track records and complaints of new servicing Agents, and require them to contact policyholders within a reasonable period after being assigned. 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.

Finally, the Insurance Authority considers that insurers can leverage technology to serve policyholders through different mechanisms, such as online self-service portals, allowing policyholders to choose the communication channel that best suits them.

If your 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 request to the insurance company in writing. If you do not have anyone in mind, you can use the 10Life insurance adviser matching platform to find a licensed insurance Agent who suits your needs.

Note:
1. This article was prepared by 10Life based on market information collected from various sources and is for general reference only. It does not take into account any individual needs or suitability and should not be regarded as sales advice. Before taking out a policy, you should discuss insurance solutions that suit your needs with a licensed insurance adviser and refer to the information provided by the insurance company.
2. Last updated: 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.