Insurance companies and marketing organizations typically reduce their sales ranks until a recession subsides. But in recent months, some are going the other direction. They’ve started ramping up the sales force, not the other way around.
We’ll explore the reasons why, but first some examples:
o Combined Insurance, Chicago, says sales opportunities at the company continue to rise, despite the challenging economic climate. Larry Kwalwaser, director-staffing and employee development, attributes this to the perpetual need for insurance, particularly supplemental insurance (which his company offers). Such need becomes greater for many consumers during difficult economic periods, he contends.
o Colonial Life & Accident Insurance Company, a Columbia, S.C. voluntary benefits insurer, reports “record recruiting and new business sales.” In 2008, new salespeople grew by 28% and in the first 2 months of 2009, by 37%, Colonial says.
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o Midland National Life, a Sioux Falls, S.D., member of the Sammons Financial Group, announced in early February that it is putting plans in place for an aggressive expansion of its personal producing general agent/regional sales director system. This includes a larger emphasis on expanding distribution and growth of life sale.
o Northwestern Mutual, Milwaukee, Wisc., says it recruited 2,089 new full-time financial representatives in 2008. This is the second consecutive year the insurer has recruited reps “in record numbers,” the company adds, noting that many of the new recruits were seasoned professionals who were changing careers or recent college graduates who had participated in Northwestern’s internship program.
o Allstate Insurance Company says it plans to sign on at least 150 new agency owners in Texas by the end of 2009. Earlier notices detail similar goals for other regions. The Texas announcement says it is targeting professionals who have been caught in the recent waves of layoffs and pay cuts.
o Futurity First, a young independent career agency organization based in Rocky Hill, Conn., says it plans to open 30 more branches in 2009, bringing its total agency force to over 800. By 2012, the firm is targeting 150 branches and 3000+ agents in 48 states. In 2008, its first year of operation, the firm says it set up 28 branch offices with 300 agents.
o Sheryl Moore, president of Advantage Group Associates, Inc., Des Moines, Iowa, reports she is now receiving 4-5 calls a week from new agents who are seeking help understanding indexed annuity and life products. That’s up from roughly 1-2 such calls a month before 2008. Many if not most callers are experienced workers from other industries who took insurance appointments after their previous businesses or occupations failed, she says.
One explanation for these surprising developments is that firms are promoting products that are in demand in recessionary environments. To distribute those products, they are adding sales reps.
In fact, one health insurer has reportedly said it cannot hire and train new employees fast enough to keep up with the recent spike in private health insurance enrollments, according to BestHealthcareRates.com, Arroyo Grande, Calif. That spike is economy-related, the health information firm indicates.
Due to unemployment and loss of group health plans, the California firm explains, “thousands” are scrambling to find alternative ways to cover their families, including with individual plans. So, to meet the demand, health insurers are signing up more reps.
Equal Health, a 7-year-old Arlington, Texas health insurance agency licensed in over 40 states, is also expanding distribution, and recession-friendly products are central to the effort here too.
The firm says it more than tripled its in-house sales team in 2008. It attributes this to various changes, such as use of a new client retention team and a website overhaul. But a key factor was “availability of more affordable products,” says firm spokesman Billy Rudolph, noting that such products have done well in today’s recessionary climate. The products include discount health plans as well as a competitively priced traditional health insurance.
The results? Policyholder count grew by 42% over last year, says Equal Health.
The link between recession-friendly products and new recruits is not only occurring at health insurance firms.
Colonial Life, for instance, reports that new business sales rose nearly 60% from the new reps who joined in 2008, and by 75% from new reps who joined in the first 2 months of 2009. Those sales involved voluntary benefits. In a statement on the results, the company indicates that it views this growth as a sign that the market needs voluntary benefits now more than ever.
Others are seeing that life and annuity products are becoming increasingly attractive to financial reps who have been hurt by the recession. “The steep decline in securities values means reps’ assets under management are down and their commissions are down,” observes Douglas Mishkin, president and CEO of Algren Associates, a New York brokerage general agency.
So, in response, reps are looking to branch out into the life insurance business, he continues. They believe these products will help them meet the needs of “clients who are looking for safety, especially with fixed annuities,” Mishkin says.
In recent months, his firm has been receiving more inquiries about this from planners and also from some traditional life agents, he notes. “It’s not a lot, but it’s more than before the recession,” he says.
That jibes with Algren Associates’ business plan. For the past 24 months, Mishkin notes, “we’ve been working to grow our business with distribution channels such as financial planners, banks, stockbrokers, wirehouses, attorneys, CPAs, and internet marketers.” Why? “To offset the declining number of traditional agents and brokers.”
So the recession is giving that initiative a boost. The demand for safe products is drawing advisors the firm wants to sign up.
In his view, the new distribution channels have hardly been tapped by the traditional insurance sector, “so this is a good time to pursue them.”
That’s the case in the broker-dealer channel, too, indicates Bing Waldert, a director at Cerulli Associates, Boston.