AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
PERFORMANCE OF LIFE INSURANCE INTERMEDIARIES: CASE OF LITHUANIA
a
VYTAUTAS JUŠČIUS,
b
EGLĖ LAURIŠONIENĖ,
c
EVA KOIŠOVÁ
a,b
Klaipėda University, Herkaus Manto St 84, 92294 Klaipėda,
Lithuania,
c
Alexander Dubček University of Trenčín, Študentská
3, 911 01 Tre
nčín
Email:
a
vytautas.juscius@ku.lt,
b
nepaite.egle@gmail.com,
c
eva.koisova@tnuni.sk
Abstract: The paper examines the influence of work methods (adaptive selling,
customer orientation, active listening) used by Lithuanian dependent life insurance
intermediaries and their personality traits (self-efficacy, emotional intelligence) on
customers’ decision to purchase life insurance. The purpose of this research is to
evaluate how these factors determine the performance of life insurance intermediaries,
which in this study is measured by the average number of life insurance contracts
concluded by intermediaries per month, the average premium of the signed contracts
and the average amount of commissions received for life insurance intermediation.
Keywords: life insurance, insurance intermediaries, consumer behaviour, personal
selling, sales performance.
1 Introduction
In the structure of the economy of the economically developed
countries, a significant position is occupied by the financial
services sector. The sphere of life insurance services, as one of
the components of this sector, is being rapidly developed, and its
importance is constantly increasing in the social and economic
context of the state. Analysing the trends of the development of
the global market of insurance services, it can be noted that the
success of life insurance companies is determined by the
knowledge of the needs and expectations of the users of the
chosen segments of insurance services. It is equally important
that the customers of these services would understand not only
the terms of the contract, but also the essence and importance of
a product, its benefits and potential losses related to the invested
capital. In such contexts, in life insurance market there emerges
the importance of insurance intermediaries as they not only
provide the policyholders with information that enables them to
make informed decisions, but they also disseminate innovative
practices that deepen and extend life insurance market. Insurance
intermediation, currently serving about 80 percent of insurance
operations in the developed countries of the world, is a sphere of
activity which is rapidly developing in the Lithuanian insurance
market. Assessing the practices of many Western countries, it
can be noted that a very small number of insurance policies is
concluded without insurance intermediation. According to
Lezgovko and Jastrebova (2015, p. 99), the role of insurance
intermediaries in the financial services sector is unique. These
people facilitate the insurance purchase process and provide
insurance companies and their customers with services that
simplify the insurance selection process. It should be noted that
intermediaries are well aware of the trends in the insurance
market and the specifics and prices of its products; they know
the needs and expectations of insurance customers. In the narrow
sense, the main task of insurance intermediaries is quality sales
of insurance services. In the broad sense, the activity of
insurance intermediaries have a positive impact on the overall
economic development of the state, both at the national and
international level (Lezgovko and Jastrebova, 2015, p. 99). It
should be noted that the increased awareness of policyholders
about the insurance services increases the demand for such
services and the improved quality enables to increase insurance
premiums. Life insurance intermediaries play a peculiar role in
the market; they relieve it and provide additional benefits not
only to policyholders but also to insurers. Compared to the major
Western countries, life insurance market is not developed in
Lithuania and, therefore, has a high potential for development. In
the general insurance market of the state, life insurance
intermediaries have a significant impact on customers’ choice in
life insurance services. In this context, it is important to
investigate more thoroughly the impact of personality traits and
work methods of intermediaries of the Lithuanian life insurance
market on their performance results.
2 Literature Review
Although life insurance is dealt with in many different aspects in
the scientific literature, the problems of this theme still remain
relevant. The peculiarity of the activity of life insurance
intermediaries, their functions and significance in forming
insurance market, the importance of knowing customers’ needs
have been analysed by Mass (2006), Cummins and Doherty
(2006), Goel (2006), Leary et al (2014), Wookjae et al. (2017),
and others. Pascal Osta (2014) has investigated the process of
providing services by distinguishing the peculiarities of services
in life insurance business. Arndt et al. (2014) have highlighted
the importance of building credibility during encounters with
customers, Pelham (2010) has emphasised the importance of
salespersons’ ability to present high value of a product, while Yu
et al. (2016) have assessed the relationship between life
insurance intermediaries and customers as a means to increase
sales and customer loyalty. In the studies on the processes of
selling life insurance, a number of factors determining the results
are analysed: socio-demographic characteristics (Turner, 2008),
self-efficacy (Byunghwa et al., 2011; Fournier et al., 2010);
emotional intelligence and work methods based on the principles
of customer orientation, active listening and adaptive selling
(O’Boyle Jr. et al., 2011; Kidwell et al., 2011, 2012; Wisker and
Poulis, 2015; Chakrabarty et al., 2014; Hughes et al., 2013;
Homburg et al. 2011, Pelham, 2010; Verbeke et al., 2011).
Life insurance is also studied in the works of Lithuanian
researchers. Kindurys (2008, 2011) has described in detail the
peculiarities of life insurance market. Concentration and
competitiveness of the Lithuanian life insurance market have
been analysed by Ulbinaitė and Šiaulytė (2014); the current
situation of the market in the context of other Baltic states, its
growth and the trends of development have been analysed by
Jakaitytė and Marcišauskienė (2015), Lezgovko and Lastauskas
(2008). Aidukienė and Simanavičienė (2010), Danilevičienė and
Macutkevičienė (2017) have evaluated the theoretical elements
of the insurance structure; they have also identified the factors
that determine the formation of this sector and difficulties that
insurance market participants had to face during the economic
crisis. The peculiarities of the process of selling insurance
services have been investigated by Lezgovko et al. (2014).
Lezgovko and Jastrebova (2015) have evaluated the theoretical
and practical aspects of activities of life insurance
intermediaries. The aspects of insurance consumer behaviour
have been analysed by Ulbinaitė (2010, 2013), Ulbinaitė et al.
(2011, 2013), Ulbinaitė and Kučinskienė (2013), Ulbinaitė and
Moullec (2010).
3 Theoretical Background
In the financial services market, due to complication, complexity
and high level of individuality of the products, personal selling is
one of the most acceptable means of providing support. It is a
unique element of marketing communication. Unlike advertising
or sales promotion, which focus on increasing consumer
awareness of the existence, the availability, price, and essential
features of goods and services, personal selling enables to
provide customized information tailored to the specific needs of
each customer. It should be noted that this kind of presentation is
required due to the uniqueness and specificity of the product of
life insurance. According to Olumoko et al. (2012, p. 148), the
communication method of personal selling is usually directed
towards particular segments of the market and plays a significant
role in marketing exchange as it covers all the elements of the
marketing mix. Marketing exchange can be described as a
process of creating value for both the organization that meets the
needs of a customer and customers themselves through
interaction between the buyer and the seller. Leary et al. (2014,
p. 33) notes that, despite the fact that insurance companies in
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