Ethical sales practices in the insurance industry: balancing customer needs and commission incentives

Insurance has a significant role in providing financial protection. However, the sales practices in insurance have always been criticized for ethical concerns raised by the tensions between customer needs and commission-based incentives. The present review has explored the controversial subject of ethical sales practices and the commission-based incentives that run the insurance industry. The study aimed to identify key challenges and suggest effective recommendations aligning with sales incentives and customer needs. A detailed examination of current sales practices, dissecting ethical considerations and their impact on customer trust, and suggested novel sales models and strategies promoting ethical sales practices were done. The review highlighted that the fee-based consulting/advisory services and outcomes-based commission structures increased customer satisfaction and trust and improved loyalty by eliminating conflict of interest in commission-based pay operations. Further, the study emphasized that aligning the sales incentives with customer well-being and promoting a culture of ethical sales are found effective in prioritizing customer needs. Lastly, the review highlighted that the existing regulatory framework's limitations governing the sales practices need improvement, necessitating more stringent enforcement structures. In general, by fostering the highest standard of transparency, fiduciary duty by insurance agents, and ethical sales practices, the insurance industry would be one the most consumer-trusted, assuring long-term sustainability as an important financial protection and security.