AFLAC sales to individuals

TA | January 1, 2010

Q: You say in your information about supplemental insurance that AFLAC is not available to individuals.  This is actually untrue.  Aflac is available to individuals on a direct basis. 

A: Thanks for the correction. We should have specified that AFLAC does not offer direct online pricing and enrollment but will take your personal information online and then route the information as a sales lead through one of their local sales agents to contact you to sell the product directly to individuals. A consumer might smartly ask how much value they are getting from a product that is only available through this type of traditional sales system. Other than the lack of transparent pricing and secure online enrollment, our primary concern about AFLAC is the system of sales adds significant cost to the product. While AFLAC is one of the most profitable insurance companies on a percentage of premiums written basis due to the efforts of its sales force, the company also has a low percentage of premiums paid back to policyholders compared to other supplemental health insurance companies like Basic Health Insurance, Core Health Insurance and Value Benefits. We suspect (and have reported in other postings) that the direct sale agent contributes to a higher level of consumer complaints than products that are purchased directly by consumers without representations of a sales agent. Complaint data is compiled by each state and a summary report published by the National Association of Insurance Commissioners (NAIC). AFLAC's consumer complaint ratio reported by NAIC is disturbingly high. We think this is evidence that the sales and enrollment system could benefit from the automation now utilized by the majority of other insurance companies today. While full disclosure might hurt profits in the short term, it would raise AFLAC's reputation and improve retention in the long run. In general, the more entrenched a sales system is to the culture of an organization, the greater the difficulty in adapting to an automated sales system. This seems to be the issue with AFLAC.

Obviously comments like these make us unpopular with AFLAC sales agents. OnlineAdviser advocates transparent pricing and automated enrollment practices in all financial services and a choice of whether or not a customer chooses to use a sales agent.

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