Question And Improvement Of The Insurance Agent System In China

Since1992, most domestic insurance companies which have personal insurance approach began to implement personal agent marketing system which had already been taken the lead in the domestic life insurance market by American International Assurance Shanghai Branch. The rapid development of personal agent marketing system played an active role in the exploration of China’s life insurance market and the popularization of the concept of insurance. By the end of2010, there were more than2500professional insurance agencies and nearly200,000part-time agencies. The number of personal insurance agent reached more than3,300,000. The whole domestic insurance industry’s premium income achieved10,991billion yuan only through insurance intermediary, which occupied75.8%of the total premium income. Compared to the same period of2009, the annual growth rate reached20%.Insurance agents act as a bridge connecting the insurance companies and the applicants which plays an important role in the communication of each other’s supply and demand as well as the expansion of insurance industry. However, the implementation of the insurance agent system is just based on the principal-agent theory. The inconsistency of the inherent utility function between the principal and agent also exists in the insurance agent system, which exposed various problems in our domestic insurance agent market in recent years:short-term conducts of the insurance agents, severe misleading conducts, frequent violations, the growth rate of the agent team, unsatisfactory loss rate, and ineffective warranty of the applicants interests and so on.While the emergence of these problems relates to the low quality of the whole agent team, the real root is the perfection of the motivation supervision system for the agents in the principal-agent relationship. Our current insurance agency system means the signed business agreement between the insurance agents and the applicants. The insurance agents get some commission in terms of their performance; the company does not provide them the basic salary or the welfare. Under this kind of agency system, the relationship of the principal and the agent is only a loose economic interest one:the applicants are unable to realize the reasonable and effective motivation and supervision, which leads to the distortion of the goal in order to pursue their own maximum interests. This paper, on the basis of previous studies, conducts the empirical study by selecting the relevant figures of this year’s Shanghai agent market. Three parts have been divided:the first part is the overview of the Shanghai agents market; the second part is the analysis of the observable agent behavior including the agent productivity, activity rate, retention rate; the third part is the summary of the reform direction of our domestic agent system reform as well as some enlightenment through the empirical comparison of some motivational variables which will directly influence the agents’conducts such as income, tax, welfare.Through theoretical analysis and empirical research, this paper finally obtains the insurance agency system reform proposal:one is to encourage insurance companies to establish the "employee" agents, which need to further rationalize the agent’s legal status through a variety of ways; the second is to defer or partial reduce the business tax of the life insurance agent; the third is to reform the system of agent commission; the forth is to solve the endowment and medical security problem for the insurance agents; the fifth is to establish and perfect the external supervision and control mechanism; the last is to create a good occupation development outlook for the agent team. This paper mainly focuses on theory and empirical data at hand, and lessens the quantitative analysis through establishing a mathematical model. Therefore, in the future research, the author will do more in-depth study in optimize data and establish diversified index model and try to quantify the various factors in the principal-agent mechanism in order to put forward a more accurate and feasible proposal.