Collecting monthly insurance premiums from door to door in all weathers is now too time-consuming, inefficient and expensive. Salesmen earn substantial salaries, and are no longer willing to travel from door to door on a bicycle, equipped with a battered brown attache case. In many areas collecting cash from door to door is downright dangerous.
It is now much more efficient to collect premiums electronically from a bank or building-society account, and the costs of operating policies after deducting the salesman's commission swallow an excessively large proportion of the premiums. In a cost and competition conscious world where insurance providers are obliged to show the charges they take out of insurance funds, and they are increasingly judged by their skills in building up cash values, the traditional door-to-door sales methods are increasingly poor value.
The Co-op now employs the largest direct salesforce, with 5,800 door- to-door agents. The Prudential, which was the largest single provider of industrial life policies, no longer sells cash-collection policies, but still employs 1,250 salesmen and women to go round collecting premiums on existing policies.
Most policy-holders now have bank or building society accounts, but many families have more than one policy with different maturity dates to meet specific needs. An estimated 45 million policies are still in existence, and provide a lifeline for families who regard an insurance policy as the traditional way of saving money for special occasions and buying life assurance to help cushion the loss of a bread-winner.
Until now however it has been impossible to change the method of payment while maintaining an existing policy. New government proposals will make it possible for policy-holders to pay by direct debit or standing order and to pay at less frequent intervals. Insurance companies that operate industrial life policies would also be permitted to pool their industrial life policy funds with other policy premiums and manage them more efficiently.
Policy-holders who still prefer to have their premiums collected will not be obliged to alter their payments, but the changes are expected to lead to a sharp drop in the number of new policies sold and a fall in the numbers of salesmen employed. But the man from the Pru does not necessarily face redundancy, a spokesman said. Most will be redeployed in office work.Reuse content