Middle Way Might Be Route
To Higher-Quality Disability Sales
How can carriers pump energy back into disability insurance sales?
Brokerage general agents say one answer might be for carriers to do more to support the middlemen.
In the last few years, disability insurers have started to realize that having good intermediaries might make the difference between profiting by protecting more American workers against financial catastrophe and fighting tooth and nail to take money-losing clients from other carriers.
Too many disability insurers fell into the trap of thinking that looking at premium volume was the best way to assess distribution channels, says Brian Lauber, a vice president for independent distribution at Principal Life Insurance Company, a unit of Principal Financial Group Inc., Des Moines, Iowa.
“It?s not all about premium,” Lauber says. “That’s just one component.”
Lauber, who appeared last month at a disability insurance conference in Bonita Springs, Fla., organized by John Hewitt & Associates Inc., Portland, Maine, spoke at a session on independent disability distribution.
Lauber emphasized that insurers have to get back to basics and perform detailed reviews of how brokerage general agents, career agency systems, direct marketing operations and other channels stack up when it comes to factors such as loss ratios and costs per unit of coverage sold.
“You should be able to look at your persistency by channel,” Lauber said.
The unit cost of selling through brokerage general agencies tends to be low, but insurers have to be sure they are rewarding the brokerage general agencies that bring in high-quality, loyal customers, he said.
Lauber and another speaker at the independent distribution session, George Davidson, president of SecuraDI Consultants L.L.C., Minneapolis, emphasized that good brokerage general agents face fierce competition for the attention of the producers who bring in great clients.
Back in the 1980s, insurers tried to keep manufacturing and distribution in-house. The best disability insurers gave disability agents and disability sales managers the equivalent of a master’s degree in disability insurance.
“Brokerage was basically taboo,” Lauber recalled.
Today, every major carrier allows brokerage, and the typical independent agent sells 7 products, Lauber said.