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.