The distribution of life insurance has taken different courses over the years; the direction often dictated by the distribution method employed by the issuing carriers generating most of the industry’s volume. Now that virtually all the major name brand companies have embraced variable cost distribution, they’ve discovered the efficiency of having their products more widely distributed and by a broader range of insurance producers.
As a result, an issue arises for insurance producers seeking to access one of these carriers and their products. While the logical reaction for producers would be to contact the carrier whose portfolio or product they are looking to sell, most often they are directed to a wholesaler who has a general agency contract. The dilemma the producer faces is: Which one to use?
Issuing insurance companies will often have a hybrid distribution scheme, wherein the contract is held by both traditional brokerage agencies and single-carrier agencies specializing in one’s company’s products. The client for whom the producer is seeking a solution is best served by a multiple company solution search. So, from the standpoint of timeliness and efficiency, as well as customary current practice, the agent is often best served by using one of the country’s hundreds of multiple company brokerage general agencies. But, again, the question is, which to use.
It is important to use the correct criteria in choosing where and how to access carriers and products, some apparent and some not so apparent.
Breadth of offerings
The producer obviously needs to be sure the agency being considered has access to a broad list of carriers. In today’s information-rich marketplace the producer is faced with competitive landscape that demands he or she thoroughly research alternatives for the client. Doing so in one location makes for a significantly more efficient process. However, there are three caveats to address:
? Volume–Does the agency generate enough business through its carriers for both to be important to each other as business partners?
? Knowledge–Do both the marketing and the case management staffs in the agency have a thorough understanding of the products and processes?
? Direct/Indirect–Is the insurance company’s inclusion on the agency’s carrier menu the result of a direct contract or as the result of a third-party agreement? An indirect connection often negatively affects both the volume and knowledge question.
Background and expertise
There are hundreds of wholesale brokerage general agencies across the country and many have all the “right” carriers on their menu. The majority of them are not large publicly held corporations, but instead closely held corporations with fewer than 15 employees. Their principals are usually experienced insurance professionals, many of whom are second generation agency owners.
Unfortunately, the average producer does not often have the opportunity to work directly with the principal but with the staff. The experience and capabilities of this front line staff is critical to any sale process. The producer needs to know the agency principal has surrounded himself with experienced people who have an affinity for the agent’s priorities and conduct their business with professionalism and, as importantly, a sense of urgency.
Pre- and post-sale issues
Locating an agency with the aforementioned pedigree is doable. Once that has been accomplished, the producer must determine that the agency of choice knows what’s “on the shelf.” Usually, the producer has a client, and is seeking the “best” solution.
The agency’s sales staff should be able to have a dialogue about the case and, based on agreed upon benchmarks, sort through the company and product list for appropriate alternatives. Warning flags should go up when agency personnel only seem to gravitate to one or two carriers and a too short an array of products.
Once the sale is made and applications submitted “in good order” the case management process should be exactly that, a process. Hallmarks of successful processing include timely communication both with the producer and the home office, anticipation of issues and potential problems, and a keen sense of urgency.
While nearly all agencies have a local area network-based agency management system, adherence to the process ensures consistent results with well documented correspondence and timely case turnaround. An agency with on-site medical underwriting expertise is always going to provide an advantage for the astute producer.
Working successfully with a multiple carrier brokerage general agency requires both parties to treat each other as business partners. Beyond meeting the previously mentioned criteria, the general agency must bring something more to the table.
The agency principal and staff should be attentive to producers’ varying needs and understand how they conduct their practice. By tailoring the responses and fitting the agency’s capabilities and strengths to the needs of the agent, a good brokerage general agency becomes an important business partner.
Just providing product isn’t good enough. By serving as a resource for insurance industry knowledge, ideas and innovations, the agency also becomes a valuable resource for the producer.
Today’s insurance sales environment
The general insurance buying public has access to more information, products, rates and solicitations than ever before, thanks to the Internet. With more access points for the consumer to obtain insurance than ever before, the marketplace is as competitive as ever, if not more so.
Today’s agents need to not only arm themselves with the best resources but also portray objectivity when presenting solutions to clients. Today’s consumer has come to expect it and the producer needs to respond appropriately while also being mindful of the competition, real or imagined. Finding the right independent brokerage general agency to partner with can be an invaluable resource in today’s competitive market arena.
Jim Medici is senior vice president of marketing at Zenith Marketing Group, Charlotte, N.C.
He can be contacted at .