Career Agents, LTC Seen As

Growth Areas: NAILBA Members

BY

Brokerage general agencies say growth over the next 2 years will be most driven by career agents and sales of long term care insurance, according to a study conducted by the National Association of Independent Life Brokerage Agencies, Fairfax, Va.

The study, done in October 2003, was an internal look at what members thought the business would look like going forward, says Joseph Normandy, executive director.

Following career agents, CPAs/banks, independent broker-dealers and wirehouse broker-dealers were named as distribution channels that were seen as most effective in growing business over the next 24 months.

Disability income, variable life insurance and critical illness insurance were also named by NAILBA members as products that will be most important over the next 24 months, according to the NAILBA survey.

Ninety-seven percent of NAILBA members said independent agents were their primary customers. Next came brokerage houses at 28%; then CPAs, 24%; banks, 22%; registered representatives, 4.5%; and, property-casualty agencies, 4.5%, the survey found. Multiple responses were provided by some respondents.

In order to best offer product, NAILBA members listed services that are important to their agents. Case management ranked the highest with 91% citing this as extremely important.

Other services cited as extremely important in order of their importance include: running of proposals (73%); and case preparation (69%). Regarding policy service, 48% said it was important, while only 39% said that about consumer marketing pieces.

The survey also took the pulse of what distribution channels placed what kind of business for NAILBA members. The survey showed that 28% of independent agents place 11-20% of their business and 23% place 6-10% of their business for NAILBA members.

Among brokerage houses 26% placed 11-20% of their business, according to the survey. And, 33% of banks placed 11-20% of their business, while 27% placed 6-10% of the business, data from the survey showed.

Of the CPAs, 25% placed more than 50% of their business with the NAILBA member with whom they were under contract, the data found.

When NAILBA members were asked what percentage of business different distribution channels represented to their company, CPAs again headed up the pack, with 38% of respondents saying that the group accounted for 76% to 99% of business.

The other groups, independent agents, brokerage houses and banks fell within the same range with a respective 28%, 26% and 27% accounting for anywhere between 51-99% of the business.

When asked what percentage of their total revenue was comprised of renewals and recurring fees, 24% of the respondents said the percentage was between 21% and 30%. After this, 19% of respondents said 6-10% of their business was so comprised. Only 9% said that between 31% and 50% of their business was comprised of renewals and recurring fees.


Reproduced from National Underwriter Edition, April 2, 2004. Copyright 2004 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.