Life insurance misselling and the influences of client attributes: evidence from China

Abstract

Prior studies have extensively explored factors that drive misselling behavior in life insurance markets, but considered little the influences of attributes of clients (particularly vulnerable clients) on unethical sales. Our study that is based on the neoclassical theory of the firm aims to investigate the relationships between attributes of life insurance clients and unethical selling behavior of salespeople. Applying logit and probit models to a sample of 35,075 observations from a Chinese life insurance company, our study finds that salespeople are more likely to perform unethical selling to ill-educated clients. Further, when salespeople’s sex and education are considered, the result shows that male or poorly-educated salespeople are more likely to make unethical selling. These findings enrich the literature of misselling of life insurance and offer some practical implications for both insurers and regulators to manage life insurance markets and control misselling behaviors.