The Detroit times., 1916-07-12
Sixty Thousand Per-
sons Annually Pass
Out of Business
PROPER TRAINING
OF AGENTS NEEDED
Woods Supplies Tables
of Statistics to Bear
Out Theory
BY EDWARD A. WOODS.


agement of the vast life insurance
Institutions in the country are.
roughly, S170.000,OO0.
OF this sum the smaller amount
Is paid for general overhead ex-
pense or expense that, in the case
OF Il manufacturing concern, might
be called the expense OF producing
the article rather than that OF mar
keting it.. The following amounts
are paid for what might be called
chiefly selling or marketing ex-
pense:
New commissions .......s 3e 100000
Renewed commissions o.. 35,UOO,00O
Sa larlcs and other cNpcn-
sc- OF agents, .......... fa,uoO, 600
In addition TO this. about s. 800
600 Is paid for medical fees and in
spection.
A cons iderable proportion OF the
81 .0O0.000 paid for salaries Of Off
GERS and employees. of nearly 81
000 900 for rent and $l3.000,000 for
miscellaneous expenses, aggregat.
ing certainly many million dollars,
Is also paid for what il really the
chief expense OF life insurance: viz,
that OF marketing II as obviously
It's production cost comparatively
small amount.
IL is not to be forgotten. of course.
that included in agency or market
lug expense is service that eN-
tends during the entire lifetime of
the policy and often after death in
attending TO the settlement of tho
policy. and often spreading the pay
ment over a generation 10 come. IL
il most superficial TO assume that
agency expense is solely for Undue
ing The person 10 pay the first pre-
MUM.
But II Is nevertheless a fact that
the chief expense in life insurance
Is for marketing. not producing il,
and that this expens runs between
s1c00n0. 900 and $4,000, 900. There
fore any reduction in this cost,
though small in ratio, must mean Il
large saving to policyholders.
1t will not be claimed by those
familiar with the subject that the
average successful life insurance
salesman Is overpaid. II is true that
in this, as in every other business.
there are some conspicuous success
es: but the name of the life insur-
ance agent Is by no means synony-
NOUS with wealth and prosperity. The
place therefore, for saving does not
appear to be in reduction of the
compensation OF the average sue
cessful agent. already by nc means
overpaid
Is there an unnecessary wastage
In the selection training of agents,
In the manufacture so 10 speak.
OF agents? Is IL true Of life insur-
ance. as II is Of so many other lines.
trat the wastage Is not in the sue
cesses but IN the failures?
For the purpose Of ascertaining
the number of failures in life In
surance, an inquiry was sent TO
every life insurance company In the
United States, asking the number
of contracts made last year; the
number terminated for causes
other than death. and the number or
contracts in force Dec. 81, 1915.
Eighty.three companies responded
to this inquiry. giving sufficient data
to establish conservative ratios for
the entire country.
II is significant that a great many
companies could not answer some
or all OF these most important bur
simple queries, and there were even
SOME companies that had record
OF none OF the three. However,
from The reports furnished. the fol-
lowing facts for but SO companies
were shown:
Licenses issued in 1915. -. .1otsss
Contracts In force Dec. 81, 1915 ep.Ssh
Ratio to total licenses. ....,.. 66.Sge
Contracts made in 1s15..... ta,i50
Ratio to total number In force .o.
Contracts terminated during
1918 for reasons other than
Ratio To number In force. a.. 50.7c6
Every state In the United States
was asked the number Of life H.
censes issued during the year. All
but one reported. Estimating the
number of agents in one state not
reporting shows
Licenses issued during last
year ,....... 49, 49, -. 'le"''f 70
Number Of contracts in force
Dec. 81. ......... ..... Il ~, Joy
Ratio to total licenses ........ $50
tIsinR the above ratio there were
therefore:
Nsw agents contracted with