Variable annuity issuers should use different branding strategies for different marketing channels.[@@]
Hugh McHaffie, a senior vice president at MetLife Inc., New York, delivered that message here earlier this week at the annual meeting of the National Association for Variable Annuities, Reston, Va.
Selling through multiple channels is a good way for an insurer to mitigate risk, McHaffie said.
But selling through multiple channels can be complicated because, in many cases, channels will differ in terms of factors such as average contract size, persistency, share class structure, and yields and liquidity on fixed accounts, McHaffie said.
McHaffie pointed out that pricing factors also vary by distribution channel. Although distribution expenses may be similar for the career and independent system, average deposits tend to be lower in the career system and persistency tends to be higher, McHaffie said.
There also may be significant differences between the career and independent distribution channels in areas such as rider protection and fixed account utilization, he added.
McHaffie offered experience culled from MetLife’s career and independent networks as examples of these differences.
When McHaffie broke share class election down by distribution channel, he found that career agents sold business set up so that B shares amounted to 68% of the total and bonus shares amounted to 26% of the total.
Meanwhile, B shares made up only 29% of the business of the independent producers and bonus shares made up 36% of the independent producers’ business, McHaffie reported.
In the protection area, only 28% of the clients who came in through career agents bought guaranteed minimum income benefits riders, while 85% of the clients who came in through independent agents bought GMIB riders, McHaffie said.