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Insurer CEOs See Continuing Growth In Agency Distribution

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The growth in other distribution networks for the sale of life insurance products may have a lot of critics questioning the continuing viability of agency-affiliated agents, but the message from a panel of CEOs during the GAMA/LAMP convention, held here last month, was that the channel isn’t going away anytime soon.

“We’re certainly bullish on agency-affiliated distribution,” said Bryan Dunn, CEO of Western & Southern Financial Group, Cincinnati, Ohio. “We’re very positive about the future of this channel.”

Michael Davidson, CEO of State Farm Insurance, Bloomington, Ill., agreed, adding: “It’s been proven time and again that clients need an advisor who can comprehensively evaluate their financial situation and prescribe solutions. Consumers who leverage other distribution channels, like the web, generally are looking to fulfill a single need.”

The panelists said they are investing significant resources into rebuilding or expanding their agency-affiliated channels. Davidson said State Farm now has more than 17,000 agents, up from about 16,200 at the start of 2000. Aiding the company in its hiring efforts is an expanded team of recruiters: State Farm boasts 70 agency recruiters across 13 zones in North America. State Farm’s field leaders also prospect for qualified candidates.

The multiline carrier increasingly seeks a culturally diverse work force, a strategy that will help the company pursue the “tremendous opportunities” in underserved markets, Davidson said. In 2002, State Farm established a Corporate Office of Diversity and Inclusion to recruit and support multiethnic practitioners throughout the organization.

The company also sponsors “employee resource groups” that provide opportunities for sales associates to support the company by aligning “diversity and inclusion activities” with business goals. The company also fields a multicultural integration team that, among other tasks, recruits for positions enterprisewide.

As part of their agency-building efforts, the panelists said their companies also are looking to recruit more women. To that end, State Farm secures leads to female prospects by advertising sales opportunities through partnering organizations, such as professional women’s groups, the NAACP and the National Urban League. Most recently, the company sponsored Black Enterprise magazine’s Women of Power Summit, a leadership conference that drew more than 500 professional women.

Securian Financial Group, St. Paul, Minn., has spearheaded an initiative dubbed Women’s Interactive Sales Exchange or WISE. The program connects recruiters with prospective hires for agent and management positions through a referral network. WISE additionally offers female advisors a forum to share ideas and sales practices. Securian CEO Thomas Burns said the company’s immediate goal is to increase the percentage of women in its field force to 25% from 16% currently.

Dunn added that 36% of Western & Southern’s field agents are women; at the managerial level, the figure is 18%. He noted the company aims to boost the proportion of women throughout its field force to 50%, though no timetable has been set. Why the big push?

“[In the aggregate], women’s natural sales style is very much aligned with the way our company sells product,” Dunn said. “That style is consultative and relationship-based.”

He added the company is pursuing a multipronged approach–data mining, identifying candidates among women customers and marketing campaigns tailored to women–to penetrate this labor pool.

Underpinning the company’s efforts to recruit field leaders, he added, is a strong commitment to middle management. While acknowledging this supervisory tier is “an expensive and long-term proposition,” Dunn said the carrier’s investment in middle managers is key to achieving two objectives: (1) recruiting more agents; and (2) grooming people to run general agencies.

One result of the company’s investment in middle management is a more youthful field leadership: The average age of Western & Southern’s middle managers is now 41 compared to 49 in 2000.

Panelists disputed a suggestion that agency distribution will erode as alternative channels–independent agents and financial planners, bank and wirehouse reps–increase their market shares of life sales. While conceding that Western & Southern’s agency-affiliated field force is declining on a percentage basis, Dunn said the channel continues to grow in absolute terms.

The panelists said aging baby boomers are increasingly a focus of their sales and marketing efforts for retirement planning solutions. Securian is releasing three products this year that are expected to appeal to boomers: a long term care solution, an equity-indexed annuity and an equity-indexed life insurance product. Western & Southern also kick-started during the last year a Retirement Income Solutions unit offering advisors specialized training in retirement income planning.

When asked what keeps him up at night, Dunn singled out for criticism the spread of investor-owned life insurance and the extent to which nonaffluent Americans remain underserved.

“I think this investor scheme and our continuing challenge in providing financial security to the middle market are eroding the very roots of what we do,” he said. “If we don’t address those two issues, our products will become something for the elite. And we’ll lose all of [tax] benefits that have fueled our industry’s growth.”