Today, many Main Street Americans are being squeezed economically and face significant financial security challenges, yet their need for life insurance protection has never been greater.
While carriers are working hard to insure the nearly 60% of middle-market households that lack individual policies, they must contend with another significant challenge -- a shrinking distribution base exacerbated by an aging agent population.
Fewer life insurance agents means less help for consumers who want to talk with financial experts. With so many Americans already underinsured or uninsured, the industry and the nation can't afford this additional hurdle.
Today, 70% of independent agents are over 45 years old, according to LIMRA, and every five years or so, the industry loses approximately 20% of agents to retirement or other opportunities. Those who leave are not being replaced at the same rate by full-time agents, creating an even deeper void. The number of agents has been steadily decreasing over the past decade. Since 1985, the total number of affiliated agents has decreased from about 245,000 to 184,000, again according to LIMRA.
This challenge is not going away anytime soon.
So what are forward-thinking carriers doing to make certain that more Americans have the opportunity to choose from many well-trained agents, any one of whom can help them provide for what they value most in life?
Some are doing things to enhance recruiting efforts, retain agents and also help create proper succession plans for agents nearing retirement, such as rolling out new educational efforts designed to simplify and streamline the life insurance process. They're also rolling out new tools and services to make the selling process more straightforward and less arduous.
At Genworth Financial, for example, our Life Quick Request platform offers a simple intake form or "ticket" -- once the financial need of the customer has been determined, the ticket takes only 10 minutes to complete with a client. Through client phone interviews leveraging reflexive questioning, we speed the process even further and only ask for information relevant to that applicant. As a result, we've significantly reduced the need for APSs, cycle time is 10 to 14 days faster than the long-form paper application, and distributors are placing 8% more business.
Some carriers have also developed laser-focused knowledge of the factors most predictive of mortality. From our research, we know that, when it comes to underwriting, height and weight are no longer paramount, and common pre-existing conditions, such as asthma or sleep apnea, if mild and well-controlled, in many cases should no longer penalize a consumer who wants to obtain life insurance. Employing this knowledge, a carrier is positioned to provide better rate classes to applicants, meaning more affordable premiums for the consumer, and to take on smart risk, helping to ensure the long-term stability of the business.
Changing the rules
A true game-changer, however, involves taking a wider view of this challenge and revamping the model for selling life insurance in order to help a new community of producers reach the vast, untapped group of Americans who are either uninsured or underinsured. While independent and career agents will always remain critical to the long-term success and viability of the industry, as their numbers shrink, more consumers are looking to other types of professionals for their insurance and financial planning needs.
They are asking their other financial professionals -- financial advisors, property/casualty agents, stock brokers and even CPAs -- for advice and support. Yet, many of these financial professionals are not well-versed in life insurance.
Smart carriers see the opportunity here. They understand the need to change their way of doing business to match this new consumer behavior. So what should they do? How do they reach these nontraditional producers? The key involves reaching and serving these producers through an intermediary such as a brokerage general agency (BGA).
The emergence of brokerages as mainstream distributors began a few decades ago and continues unabated. Originally, these brokers acted as impaired-risk specialists, helping career agents find coverage for hard-to-insure consumers.
Over time, however, these specialists became more traditional. Today, smart carriers know they need to work more closely with BGAs to find and serve new groups of producers -- that historically have not sold life insurance -- in order to reach consumers where the advisors are actually doing business.
As a first step, the savviest carriers are educating BGAs and providing them with better tools, so they can, in turn, reach out to independent financial professionals who have sold little or no life insurance in the past. Those BGAs with significant size and scale have access to a wide swath of financial professionals and their clients, who have varied and, in many cases, significant insurance needs. With BGAs and carriers supporting them, those producers who are given the tools and resources to sell life insurance have the ability to drive growth throughout the insurance value chain.
Carriers can take the next step by offering producers things like value-added tools and programs through their BGAs. These tools should offer producers the opportunity to enhance their business models and effectiveness, create stronger, more loyal relationships, and create higher referability.
They can also help BGAs and producers expand their marketing capabilities and create customizable sales ideas to help drive new opportunities. At Genworth, we offer our BGA partners and producers a number of value-added services and support -- such as Life Quick Request, underwriting enhancements, practice management programs and consumer-driven marketing programs -- to create growth and drive loyalty. This subtle shift in how we do business today creates new opportunities for producers, the BGAs, and consumers -- and simply drives growth at every level of the value chain.
Anthony Vossenberg, CLU, ChFC, RHU, has led life insurance sales at Genworth Financial since 2008, and last year, assumed the role of acting SVP, BGA Distribution, responsible for life, LTC, annuities and senior supplemental products. He spent the first 16 years of his life insurance career in various roles including agent, agency manager, head of BGA and national accounts distribution. In 2003, he joined the Hartford to build BGA distribution and ultimately became head of Independent Distribution.
