Most independent agents write business through a wholesale brokerage entity, such as a brokerage general agency (BGA). After all, an effective BGA partner can add much-needed resources to agents in the areas of administrative support, underwriting assistance, large case design – even leads and training – so that agents can focus more of their attention on growing sales and taking care of clients.
So, how valuable do agents find the support they receive from their BGA partners? This is a vitally important question not just for agents and the BGAs they work with, but for the entire insurance industry. The Agent-BGA relationship is the linchpin of independent brokerage distribution, which is still the primary pipeline for consumer life insurance and annuity sales in this country.
When we posed the question in National Underwriter’s Independent Producer Study, 54 percent of respondents stated that the support they receive from their primary wholesale brokerage agency is “very valuable,” and 42 percent said “somewhat valuable.” (See chart 1) Only 4 percent of respondents – just 1 out of every 25 agents – said the support they receive from their BGA is not useful at all.
That means 96 percent of responding agents find the support they are getting from their BGA to be at least somewhat valuable. That’s pretty darn strong, right? This must bode well for the future of independent brokerage distribution. Well, not exactly.
In a follow-up question, we asked agents to characterize their current relationship with their primary wholesale brokerage agency. Little more than half (52 percent) of agents said they are pleased enough with the support they receive that they have no plans to move their business to a new BGA. (See chart 2) What about the rest? Well, they are either definitely planning to move their business (6 percent) or would do so if a better offer were to come along (43 percent).
This means that, at any given time, roughly half of the independent agent population is up for grabs for BGAs with the newest shiny product offer. That’s good news if you’re a BGA trying to grow your agent distribution force; bad news if you’re a BGA trying to keep your existing agents from leaving to chase the latest lead offer or commission bonus.
Just last week I met with the recruiting team at a BGA trying to find ways to offset an eroding market share. What keeps them up at night? Anemic retention rates. They are certainly not alone.
The general openness of agents to move their business to a new BGA if the right opportunity presented itself is reflected in the incredible amount of churn at this end of the brokerage distribution channel. And just as problematic, that churn diminishes efficiency and increases costs, costs that are ultimately passed down to consumers.
So, if you’re a BGA and your agents don’t find your products, service and support to be “very valuable,” they’re likely to be chasing mirages of greener grass with your competitor.
In my next blog, I will explore key areas of focus for BGAs looking to enhance their value proposition and increase agent retention rates.