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.

/ The aggregate expenses OF man
| agement Of the vast life insurance
institutions in the country are.
roughly. sl7O,OoO.oOO.
OF this sum the smaller amount
Is paid for general overhead ex-
pense or expense that, in the case
OF a 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 36,o0O.000
Renewed commissions CO.,. $4,000 600
Salaries and other eNpen-
ses Of agents '........ $4,000. ooo
Total ...................S lI4,0 900
In addition 10 this, about 1900
600 is paid for medical fees and in
spection.
a considerable proportion OF the
81 900 600 paid for salaries of Off
GERS and employee; OF nearly ST.
00o 900 for rent and sl3,0OO,000 for
miscellaneous expenses, aggregat-
ing certainly many million dollars,
Is also paid for what Is really the
chief expense OF life insurance viz,
that OF marketing II, as obviously
It's production cost a comparatively
small amount.
II is not 10 be forgotten. of course,
that included in sgency or market
lug expense Is service that eX-
the policy and often after death in
attending 10 the settlement OF tho
policy, and often spreading the pay
ment over a generation TO come. IL
is most superficial 10 assume that
agency expense is solely for Undue.
ing the person 10 pay the first pre-
MUM.
But IL is nevertheless a fact that
the chief expense in life insurance
Is for marketing, not producing II,
and that this expense runs between
S1cO .000. 900 and $4,000, 900 There
fore any reduction in this cost,
though small in ratio must mean a
large saving TO policy-holders.
II 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 no means
overpaid.
Is there an unnecessary wastage
in the selection training OF agents,
in the manufacture" so TO speak,
OF agents? Is II 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 OF
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 great many
companies could not answer some
or all OF these most important but
simple queries, and there were even
some companies that had a record
OF none OF the three. However,
from the reports furnished, the fol
lowing facts for but SO companies
were shown:
Licenses Issued in. 1918. go. iottSe
Contracts in forge Dec. 81, 1919 49,?
Ratio to total licenses. ....... $685.
Contracts made In 1915 $780,. t21So
Ratio To total number In force
CONTRACTS terminated during
1918 for reasons other than
death s5,s0l
Ratio TO number In force 5O.7ss
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
wear ...............,.... .T4s
Number OF contracts in force
Dec. 81 .....s....,...,,. 28,Sba
Ratio 10 total licenses 1...,. 61et
Using the above ratio there were
therefore!
New agents contracted with