Seeking Solutions For The Recruiting Crisis
With agent retention levels at all-time lows, its becoming harder for parties on both sides of the recruiting equation to see an upside.
Say, for instance, someone approached you with an investment opportunity that could provide you with long-term stability and the potential for unlimited income. Would you be interested? Now the catchtheres an 86% chance you wont make it.
Thats the gamble agents new to the business are facing today. Current industry statistics show that four-year retention levels for new agents are hovering around 14%.
Looked at from the other side–from a life insurance companys point of view–the expense to recruit, train and support a new agent is extremely high. Why, many companies have been asking, should they continue to invest so much in recruiting new agents when the expected return is so low?
Consequently, some carriers have abandoned their new agent recruiting efforts and focused instead on the experienced agent. But with the average age for the insurance producer estimated at 54, the question of who will recruit the next generation of producers becomes a pressing issue.
The number of new agents recruited into the life insurance business hit its peak in 1975, with over 50,000 new agents signing on. That figure has steadily declined–leveling out in the last few years. Most recently, 2002 saw 32,000 new agents licensed, a 4% decrease from the previous year, according to officials at LIMRA International. With fewer agents coming on board, retention levels around 14%, and an aging field force, the industry is headed for a shortage in agents.
“The industry is facing a crisis,” states New York Life Senior Vice President, Eric Campbell. “Were not recruiting as fast as people are dying, becoming disabled and retiring.”
One reason the industry finds itself in this predicament is because over the years many general agents and agency managers took their eye off their primary task: bringing new producers into the business, says Maury Stewart, a former general agent, now an executive consultant to Penn Mutual, Philadelphia, Pa.
“General agents in some cases got lazy and didnt conceive the fact that they had to keep putting new people on,” he adds.
These managers stopped recruiting and started to focus more on the business aspects of managing their agencies. As a result, they delegated the recruiting of new agents out to newer, lower level managers who didnt have the training and support to do their jobs, says Eileen McDonnell, senior vice president of individual insurance business development at MetLife, New York.
Partially to blame, continues Stewart, are the career companies. “Companies went away from having really good management development programs where they trained people effectively to recruit and help new people succeed,” he says. “You had a lot of people out there that were trying to do it, but they didnt know how to do it.”
Furthermore, many carriers cut back on their new agent financing programs. “It placed all the general agents in the position that unless they could finance [new agents] themselves, they just cut back,” he says.
As a general agent Stewart did just that–he financed new agents himself. He feels that by doing this today, general agents would be more selective in their recruits, and would be more committed to providing them with the training and support they need to succeed.
“I think people need to get back to understanding that one of the most important things they have to do is to add new people every year and have a net increase in their agent population every year,” says Stewart.
McDonnell agrees, and notes that in order for an agency to be successful recruiting new agents, it is extremely important for the agency manager, or general agent, to be actively involved in the process. “The first line management needs to be engaged,” she says.