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Life Health > Life Insurance

CEOs Ponder Career Agency System

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NU Online News Service, May 13, 2:23 p.m.– New York

Four insurance company chief executive officers gave the career agency system mixed reviews here at a panel discussion organized by PricewaterhouseCoopers L.L.P., New York.

Edward Zore, president and CEO of Northwestern Mutual Insurance Company, Milwaukee, and Sy Sternberg, chairman, president and CEO of New York Life Insurance Company, New York, affirmed their support for the career agency system.

Northwestern gets more than 85% of its business from its career agency system, according to Zore, and Sternberg says New York Life views its career agency distribution system as its “chief distribution system.”

The disastrous end to the do-it-yourself financial services movement of the 1990s has emphasized the importance of the experienced career agent, Zore said.

Although New York Life gets more than 5,000 life applications a week through a direct-marketing relationship with the American Association of Retired Persons, Washington, Sternberg also emphasized the value of career agents.

“By any benchmark, there is no more effective distribution system than a well-managed career agency system,” Sternberg said.

Guardian Life Insurance Company of America, New York, gets 80% of its business from career agents, according to Joseph Sargent, the company’s chairman.

Two-thirds of the career agency business comes from clients with incomes of $100,000 and over.

But Sargent expressed a pragmatic attitude about the value of the career agency system.

“We are committed to general agency distribution in the foreseeable future as long as it provides the growth we seek,” Sargent said.

The career agency system “can be a terribly costly form of distribution if turnover is high and productivity is low,” Sargent noted.

But Sargent observed that career agents appeal to upscale buyers who value trusted advisors, and he suggested that a national drop in the number of career agents presents an opportunity for Guardian.

David Stonecipher, chairman and CEO of Jefferson-Pilot Corp., Greensboro, N.C., the only publicly traded company represented on the panel, said several distribution channels are important to his company.

Jefferson-Pilot is selling at 10 times the rate it did nine years ago, in part because of a reliance on several distribution systems, Stonecipher said.

More than 80% of Jefferson-Pilot’s business comes from its personal producing general agency system or its managing general agency system. Stonecipher noted that Jefferson-Pilot also manufactures products for Vanguard Group, Valley Forge, Pa., and Allstate Financial Corp., Northbrook, Ill.

“We accessed all the systems that we could,” Stonecipher said.

The audience also weighed in on distribution.

Only 6% of the participants said direct marketing was very successful, while 58% said it was not successful.

Only 8% of the participants expected to sell much life insurance directly over the Internet in the next five years. Twenty-five percent rejected the idea of selling life insurance through the Internet. Another 49% conceded that Internet sales might be possible, but they insisted that consumers still want advisor advice.


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