The old model needs an update. Business as usual isn’t cutting it any more, and continuing to do things the way they’ve always been done will surely erode the reach and effectiveness of the independent life insurance brokerage distribution channel.
That was an underlying message spoken time and time again at last week’s annual meeting of the National Association of Independent Life Brokerage Agencies (NAILBA) in Hollywood, Fla., and seemed to be a particular focus of the “State of the Industry” panel discussion during the meeting’s opening general session last Thursday.
The panel discussion, featuring Garth Garlock, North American Company for Life and Health Insurance; Jim Kerley, LIMRA; Melinda Meyer, ValMark Securities, Inc.; Kent Sluyter, Prudential; and Michael Tessler, Brokerage Unlimited, Inc.; and moderated by Gene Koster, DCG Corporation, tackled a variety of high-profile issues facing the independent channel.
Among them…
• The financial services industry has done a marvelous job of talking about the need for retirement planning, but unfortunately has been missing the opportunity to talk about the need for life insurance as part of that plan. As a result, LIMRA estimates 58 million households in the U.S. are underinsured, and 7 in 10 families with children under 18 would be in financial jeopardy if the primary wage earner died.
• While 60% of consumers still say they prefer to work with an agent or advisor for their life insurance needs, today’s consumers are doing more research online. How can the channel adapt, rethink how it develops products and presents them to consumers to continue to add value and remain relevant?
• How the industry can do a better job of reaching the elusive middle market.
• How to bring in new talent to replace the aging agent population.
• Exploring the potential of emerging distribution channels, such as banks and RIAs.
Here are some of the highlights from the remarks at Thursday’s opening general session from NAILBA 33:
Adapting to today’s consumer preferences: “Our ability today to embrace what the consumer wants will be the key to our success – not protecting the old models,” Kerley said. He adds that while there are new ways consumers are getting information (online/social media), the advisor can still maintain a crucial role. “As the consumer, you can be informed, but you still may not understand. The advisor helps you understand,” Kerley said. “And when the advisor gives advice and recommendations, consumers buy more. Statistics back it up.”
Michael Tessler, president of Brokerage Unlimited, Inc., in St. Louis, provided perhaps the most impassioned plea for change during Thursday’s “State of the Industry” panel discussion. Tessler said there is a huge opportunity regarding the middle market. How will we seize that opportunity and take it someplace different? We need to start considering a different way to deliver what we deliver. This routine that we go through is not serving us well anymore. Maybe we need to shake it up,” Kessler said.
He went on to summarize the problem, drawing the only spontaneous applause from the opening general session crowd, in this way: “There’s no way the consumer would say, ‘Let’s devise the most complicated product and buy it from a guy who can’t explain it to me, that involves an accountant and an attorney and an actuarial person.’ There is no way Mr. Consumer woke up one morning and said, ‘Give me that, give me a product that is so unforgiving that if I pay my premium 15 minutes late, it completely deteriorates the product.’ Somewhere along the way we have to listen to these people and figure out how to develop what they’re actually looking for. This isn’t working that well. It’s time to change.”
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Exploring alternative distribution channels: The industry’s biggest opportunity lies in selling current products into new distribution channels, such as banks and RIAs, says Kerley, president of LL Global Services and Chief Membership Officer of LIMRA, LOMA and LL Global. Out of 159,000 independent insurance agents, Kerley told the NAILBA audience that only 17% place more than five policies with a company.
Replacing the aging agent population: Kerley told attendees LIMRA research indicates that 52% of advisors have more than 25 years of industry experience, and 41% of them are over the age of 60. Only 9% have between 3 and 9 years in the industry. When it comes to replacing retiring agents, Kerley says the industry needs to develop a passion about bringing in new blood. “We just need to do it,” Kerley said.
NAILBA Chairman Barbara Crowley, during her Chairman’s Address that preceded the panel discussion, stressed the need to step up recruiting efforts. “We need carriers, insurance organizations, marketing groups, and NAILBA members to find ways to encourage the younger generation to enter our most admirable profession,” Crowley said. “It must become a priority for all of us. Our country is grossly underinsured for life insurance, disability income, and long-term care. Advisors are now relying on our firms when they venture outside their comfort zone, and we have to be prepared to assist them in many ways the days of old did not bring.”
Reaching the middle market: At the root of the problem with advisors ignoring the middle market, Kessler said, is that many advisors simply aren’t interested in talking to people who don’t have some wealth in the first place. “Nobody wants to talk to people that don’t have half a million dollars,” Kessler said. “The advisors that most of us deal with now can’t afford to work with clients that don’t have money, because the advisor can’t make money off them. We have to figure out a way to reach the people they don’t want to deal with.”
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