Strategic advice on developing a net world
The German government intends to introduce an upper limit for the commissions paid for the sale of life insurance. This cap will result in a 30-50% reduction in commission proceeds per policy for agents. It is hardly possible for agents to provide professional advice to customers at break-even point under these conditions. The gross pay per hour of work would then fall below the minimum wage for many agents. Experts are thus expecting a sharp decline in the number of agents.
What is the solution?
The commission cap will force agents to switch to selling net policies for a fee. An independent agent will either start charging fees or stop working as an agent. As this is extremely challenging in practice, only few German insurance companies have been successful with a net policy to date.