Hong Kong insurers will soon follow a worldwide trend by reducing their reliance on agents, according to Cigna Worldwide Insurance chief executive Tim Oliver. The United States-based life and health insurer, which had 200 agents, last month became one of the first companies in Hong Kong to abandon the use of agents. Mr Oliver said the move would allow Cigna to use more cost-effective multiple sales channels. Instead of relying on sales by agents who received a commission, the company would put more resources into expanding its direct sales team, using salaried staff to sell products to clients by telephone. Mr Oliver said direct sales already represented 70 per cent of Cigna's total sales. Besides direct sales, Cigna would reach clients through independent financial advisers, who represented clients and not the insurance companies and were able to offer a wider range of products and services. 'As consumers are demanding more value for money, they like to deal with the more independent financial advisers who are acting on behalf of clients' interests,' Mr Oliver said. For insurance companies, paying fees to independent financial advisers was cheaper than sharing commission with their own agents, he said. In more mature markets such as the United States and Britain, the number of agents had declined substantially. In Britain, for example, the number of agents had dropped from 230,000 to 70,000 in the past 10 years, or by 69 per cent. This was largely the result of insurers using independent financial advisers, of which there were about 11,000 in Britain. In the US, the number of agents dropped from 244,345 in 1983 to 190,350 in 1998, or by 22 per cent. In 1983, 62 per cent of individual life insurance premiums were generated by agents; this had dropped to 47 per cent by 1997. During this same period, new business generated by independent advisers increased from 36 per cent to 50 per cent. In Australia, companies such as Eagle Star, Transamerica and Regal Life all shifted their sales focus from agents to independent brokers in the early 1990s. Mr Oliver said Hong Kong had begun to follow the trend, with the number of local agents dropping by 16 per cent last year to 33,776. The drop was mainly due to the introduction of a new examination system by the Insurance Authority in January last year. Prospective agents must pass the examinations before they can enter the industry. 'This has made it more difficult for insurance companies to recruit agents,' he said. 'This will encourage more Hong Kong insurers to shift their focus to use other channels to sell.'