Like so much of the insurance business, product distribution is evolving. New channels are coming into play, and traditional ones are changing in profound ways. Amid this change, the career agency system finds itself holding an ever-shrinking slice of the pie. This raises a thorny question: As the career agency system shrinks, who will develop tomorrows producers?
Conventional wisdom has long held that insurance producers begin their careers as “captive agents,” committed to one company that, in turn, accepts the responsibility of professionally developing the new agent. Only later, after developing core skills and knowledge, would some agents make the personal decision to become an independent producer. In return for the independence to write business with any company, brokers gave up the right to expect home office-provided training and development support.
What would happen if the career system could not keep up with the demand to develop new producers? That is the issue facing our industry today, as more and more companies turn to non-career distribution channels. The new dynamics of product distribution requires a new way of looking at how our industry develops the producers of tomorrow. The answer seems clear enough–companies that use independent distribution channels must step up to fill the gap.
As more insurers turn to independent distribution channels, the competition for business from the independent producer is certain to heat up. Companies will look for ways to distinguish themselves. Competitive rates and commissions are important, but companies will look for ways to offer more. Some companies are discovering that supporting the producers need for training and education is one way.
More Training Is Needed. It is not a question of the need for training and education, but rather, who should provide it. The need for producer training education is irrefutable for several reasons:
There continues to be a need for human involvement in the sale of insurance. The Internet has not replaced the professional insurance producer in the sale of advanced life and health insurance products, and seems unlikely to do so for the foreseeable future. As long as life insurance remains a product that is “sold, not bought,” our industry will need knowledgeable people to do the selling. These people must be trained and educated.
Insurance is a complex subject that is continually evolving in response to product, political, regulatory and tax law changes.
Its the law. Virtually all states today require resident and, in some cases, nonresident producers (whether agent or broker) to keep up with continuing education requirements. The penalty for failure to comply may result in license forfeiture.
Career agency companies figured out long ago that good training builds loyalty as it develops successful producers. Done right, an insurers producer training program can even reduce its exposure to some degree of producer liability.
Producers, certainly new ones, feel the need for training and education. They may not know what they need, but whether its to strengthen a skill, learn a new product line or comply with a CE law, they know they need something. The company that meets that need is going to grab a producers attention.
Heres an opportunity to add value to the business relationship between company and broker, and at the same time help fulfill the industrys obligation to train and educate those who would sell its complex products and services.
Different Models Meet Different Objectives. There are several different models available to insurers that want to make this part of their distribution program. This gives a company considerable freedom in fashioning a program that is unique and matched to its sales objectives.
1. The CE Reward Model. This model works well for companies that want to keep the program simple and tracked to sales. This is a sales motivator; companies reward producers who meet sales goals with courses that can be used to meet CE requirements.
This model is simple because it uses CE-approved shelf products, either in print or online form, offered by any of several different course providers. Courses are usually awarded in the form of certificates (or PINs, in the case of online courses) that the producer presents to the course provider to acquire the CE course. The course provider is responsible for creating, distributing and even tracking course use, keeping it simple for the insurer.
2. The Custom-Developed Model. This integrates proprietary product information with general industry knowledge. A custom-developed program is especially attractive to companies that want to strengthen the producers knowledge of their products, especially if the producer is new to that line. Seminars, online courses, and old-fashioned manuals can all play a role in training and education.
Provided the course is not too heavily slanted to sales or marketing information, it is usually possible to obtain state CE credit for custom developed courses (though at some cost in time and expense). If the course is to be made part of a companys firm element training, approval by the National Association of Securities Dealers is required.
3. The Combination Model. This is probably the most comprehensive model, which combines features of the first two. To meet CE needs and generally help producers keep a sharp edge, readily available CE-approved education courses are awarded to those who meet certain production criteria. This serves as the motivational aspect of the companys program, since courses can be awarded based on production. To attract producers, these same companies offer custom-developed programs that help producers become more knowledgeable in their products.
Training Best Provided By Carriers. Some might argue that in the new world of distribution it is the brokers manager who should be responsible for providing the training and education. This is as inefficient as it is impractical. Imagine each of the thousands of insurance distribution groups, bank distributors, and independent brokers all trying to conceive, develop, and implement their own comprehensive education program. This is an expense and a burden too few managers are willing to incur. Only the companys executive office has the resources and scale needed to do this both effectively and efficiently.
This is not to say distribution points cant be asked to share some of the cost of providing training and education. There are plenty of reasons and ways to split training expenses between insurers and the field managers. But for all practical purposes, the initiative will have to start at the corporate level.
, CLU, ChFC, FLMI, is owner of CommunicationWorks, an insurance training, education and marketing resource development firm located in Chicago, Ill. He can be reached at firstname.lastname@example.org.
Reproduced from National Underwriter Edition, March 17, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.