This was the question posed to two different panelsone consisting of agents and the other of life insurer CEOs–here at the annual meeting of the American Council of Life Insurers.
One of the concerns common to both groups was the aging agent force and the smaller numbers of new, younger agents coming into the business. As Michael R. White, president of GAMA International, put it, “Were not developing new growth in the agent force. The norm is taking experienced agents from other companies.”
White pointed out that in 1982, the average age of agents in the field was 37. Now it is over 52, he said.
Seymour Sternberg, president, chairman and CEO of New York Life, called the shrinking agent force “the most serious issue. Fewer doors are being knocked on.
“Fewer insurance companies are willing to make the commitment to recruit new agents,” Sternberg said. But there was another reason for the problem, he continued, which is that some years ago agents were being told they didnt need their company and were being encouraged to join producer groups.
“I called it a sirens call back then,” Sternberg said, “and were paying the price for it now.”
Bruce Boyea, president, chairman and CEO of Security Mutual Life, said his company spent “a fair amount of time recruiting new agents, but its a big investment if theres no commitment from the agent to stay with the carrier.”
Dermot Healy, an independent agent from Maine who is chair of the Life and Health Insurance Foundation for Education, said a major concern of his was that “agents face something new every day.
“We sell money for future delivery,” he said, “and we wonder whether those promises will be delivered on.”
Randy Kilgore, president of the National Association of Insurance and Financial Advisors, was similarly concerned. “What will the industry look like in 20 to 30 years,” he said. “Will it be able to keep its promises?”
Another concern common to both groups was that the middle markets life insurance needs were not being served well. David Woods, NAIFA CEO, said surveys show that 60 million people say they need life insurance, but only 10 million policies were sold last year. “We have to assume theyre in the middle market.”
Kilgore tied this into the shrinking agent force. “We dont have enough foot soldiers out there getting to people,” he said.
Thomas M. Marra, president and COO of Hartford Life, said a lot of his companys products “have been built for the upscale market. We have to get back to basics and need to do some rethinking on this.”
Part of the problem regarding the middle market was with agents, said Healy. “Everyone wants to be in the upscale market from the start and hit a home run right off the bat,” he said. “But when I started in the business, I went after middle market clients.”
Furthermore, he continued, “we leave ourselves vulnerable to legislation if we say were trying to save COLI, for instance. Congressmen say were not serving the middle market but using our products to make the rich richer. We have to show that our products are there for widows and orphans, not just the rich.”
In response to a question as to whether it was hard to make money in the middle market, White said it was hard in the individual middle market. “We have to help agents build businesses around their entire market, not just the upscale.”
The do-not-call regulations put out by the Federal Communications Commission concerned most panelists. “This will hurt younger agents,” said Kilgore.
Sternberg also predicted that do-not-call would have a “serious impact.”
Getting the industrys message out was another common thread. For instance, Sternberg said he was stunned to learn that a prominent senator with whom he spoke had no idea “of the role of the life insurance industry in long-term capital formation.”
Its important “for Washington to understand the industry,” he continued. “We need to educate Washington, we cant walk away from it.”
Picking up on that point, Boyea said, “We need an advocate in Washington so we can be the solution, not the problem, in the face of the huge budget deficits.”
Sternberg added that “it is vital for CEOs to participate in the process.”
The increasing cooperation between the ACLI and the agent groups “is a good sign for getting the message out,” said Marra.
But on his panel, Healy said, “There appears to be a lack of interest among CEOs about educating the public on risk products. Theyre not supporting LIFE, which is taking the story to the public and the middle market.”
Summing up for the agent panel, Woods said the discussion revealed concerns that the future of the agent distribution system is “in great peril. Theres a feeling that the essential role that risk products play and the passion that producers and the rest of the industry feel is starting to disappear.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 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.