Conference looks at ways to boost agent retention rates
If life insurance companies want to boost their abysmally low 4-year agent retention rates, then they would do well to pair inexperienced producers with people enjoying their golden years: semi-retirees.
This was one of several recommendations that analysts with Deloitte Consulting, New York, advocated during an audio Web conference on July 26. Titled “The Shrinking Insurance Workforce: Why a Skills Management Strategy is Essential,” the presentation explored trends in the U.S. labor force and the growing need for insurers to leverage effective strategies for identifying, acquiring and retaining talented workers.
“There will be a higher demand for jobs during a time of continually shrinking supply,” said Michael Evangelides, a principal of human capital at Deloitte Consulting. “The trends highlight the importance of talent management for all industries in the U.S. economy.
“The effect of the labor shortage will be even more pronounced in industries requiring high-skilled workers,” he said. “We believe insurance is one of those industries.”
Data from Deloitte and the Bureau of Labor Statistics forecast a shortfall of 10 million workers by 2010. From 2000 to 2010, the economy is expected to add 600,000 more jobs than during the prior 10-year period. Even when accounting for increased worker productivity and jobs going offshore, the labor shortage peaks at 3 million in 2012.
Add to this the impact of an aging workforce. By 2012, the presence of workers age 35 to 44 will fall by 9%, according to Deloitte’s forecast. Other age groups will witness a percentage gain, with the largest rises projected for those above 55. Individuals age 55 to 64 and 65-plus will see increases of 44% and 19%, respectively.
The aging effect is mirrored within the insurance field. Deloitte pegs the average age of producers at 47; nearly 60% of insurance professionals are over 45. And a plurality of agents (29%) falls within the 45 to 54 age group.
Also of high concern to life insurance companies are high attrition rates. Of Deloitte survey respondents, 30% said they consider attraction and retention of qualified producers the biggest distribution challenge.
After four years, only one in six agents remains with the average insurance company, according to Deloitte. Yet, the cost of developing one agent (including recruitment and training expenses) ranges from $100,000 to $200,000. Upshot: a 5% increase in retention can translate to a 15% savings in training costs.
To address the dearth of qualified insurance professionals, the industry has to take steps beyond traditional recruitment, training and retention strategies, said Andy Liakopoulos, a senior manager of human capital at Deloitte Consulting. While, for example, computer-based and instructor-led training are useful in rapidly imparting skills to new recruits, they contribute less to producers’ long-term success.
Among the recommended measures: identifying “critical workforce segments,” (i.e., individuals who contribute disproportionately to an organization’s value). Companies then can “create a pipeline of critical talent,” in part by using “human capital programs” that connect producers to more experienced colleagues.
“Learning is social in nature,” says Liakopoulos. “[Producers] learn more when they’re collaborating with their peers and, in particular, more senior people. They’re also more committed to the learning when they’re tested in ways that matter.”
One avenue for life insurers to explore, he added, is to reintegrate semi-retired insurance professionals into their workforces, linking them with younger colleagues to provide on-the-job training and mentoring. To attract these semi-retirees, Liakopoulos suggested companies offer flexible work hours and, depending on the job requirements, the option of working from home, equipping them with remote office IT solutions, performance measures and an organizational structure that will permit them to work productively.
By collaborating on client cases with semi-retirees and other colleagues well positioned to mentor, producers gain valuable lessons that can’t be had through conventional training. They also, said Liakopoulos, come to “feel like they’re part of the fabric of the organization” and participating in a supportive “social network.”
Insurers, he added, also should develop an online knowledge base (data archive) for storing insights that successful producers have acquired on the job, thus rendering this information easily accessible to less experienced colleagues.
He noted also that insurers can enlarge their pool of applicants by more aggressively advertising to ethnic groups that are underrepresented within their field forces and to talented college graduates who, in recent years, have been drawn to fields perceived as more sexy and lucrative, such as high tech.
“Insurance is a well established, very conservative industry,” said Evangelides. “To the extent that insurers are competing against high-tech firms for talent, they need to think about how they can differentiate themselves to become more attractive to graduates.”
‘Learning is social in nature. Producers learn more when they’re collaborating with their peers. They’re also more committed to the learning when they’re tested in ways that matter.’