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.

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.

During the recession, B-Ds have been learning more about consumer needs, he points out, and this is leading them to bring in more types of products–securities, life insurance, college savings plans, etc. But it is also spurring them to sign up advisors who can establish holistic relationships with clients using these products, he says. That, in turn, requires B-Ds to make multiple products available, he says.

Clients, meanwhile, are demanding fewer and more holistic relationships with advisors, and more products, Waldert continues.

All of this is contributing to making the recruiting of new sales reps a critical issue, at least in the B-D channel, he suggests. In fact, in a February 2009 Cerulli report, Waldert notes that independent B-Ds who were surveyed rated recruiting as the most important factor in the future growth of their firms. But, due to the “stagnating” number of advisors, this “has turned into a battle for market share,” he continues.

As a result, “B-Ds are increasing their efforts to get their share of the shrinking (advisor) population,” Waldert tells NU.

B-Ds are especially interested in attracting experienced advisors, he says, “but with fewer people available to attract, the competition is greater.”

Recruiting is at a point where some firms are actually hiring laid-off people who have no (direct) experience at all, he adds. “It may be they are taking any port in the storm right now.”

At insurance companies, some new hires are coming on board not to be advisors but to support advisors who deal with specific product lines. For instance, John Hancock Retirement Plan Services recently announced a 15% increase in the number of individuals who support advisors selling 401(k) plans.

This followed Hancock’s fairly recent addition of 2 new distribution agreements–with Morgan Stanley last fall, and Ameriprise in early 2009.

The new hires include 8 regional vice presidents and a new internal sales desk with 10 sales associates.

A review of employment opportunities for “insurance sales agents” at the Bureau of Labor Statistics reinforces the idea that hiring of sales agents will be increasing.

The report, Occupational Outlook Handbook, 2008-2009, suggests the ranks of insurance sales agents might increase by 13% for the 10-year period starting in 2006. BLS attributes some of this to “sharply” rising sales of health insurance and long term care insurance that should occur as the population ages.

Like the experts quoted earlier, BLS predicts that such growth will be linked to access to products.

As industry consolidation increases and as client demand for more comprehensive financial planning increases, the federal agency says, “insurance sales agents will need to expand the products and services they offer.”

“We should be seeing more feet on the street right now,” contends Rod. P Hansen, regional vice president, Pacific Life, Boca Raton, Fla. Insurance and financial professionals have “an incredible opportunity to go out and help people address the economic realities they are facing….

“That’s what these (insurance and financial products) are for–the ‘what if,’ the economic tsunami,” Hansen says.

Companies should be priming the pump for future sales, Hansen adds. “If you withdraw too much, consumers will forget you” once conditions improve.

Personally, however, he says he has not heard of, or seen signs of, lots of carriers actively expanding distribution.

Some firms have been enhancing distribution, he allows. For example, many are offering new web and education services to producers or spending to get more shelf space. The enhancements help keep customers happy during difficult economic times, he says, and they help companies get ahead of competitors that are currently in a weaker financial position.

Still, if a company has capacity–for example, if it did not suffer significant capital loss last year–”it might be moving forward now,” Hansen says.

He does see definite interest in more risk management and in sales of protection products. This is coming from banks, B-Ds and wirehouses, he says.

“There is also more interest in voluntary products. This is from workers who are shell-shocked by the economic crisis and who are now asking, ‘how can I protect myself?’ Small business owners who have seen their business values drop in the last year, are also asking, ‘what do I do now?’”

Companies are seeing all this, Hansen says. “And, if not handcuffed by losses of their own, they will be making sure they have adequate resources (to meet the demand) and enough people on the street to provide high quality support and service….

“In the end, the Golden Rule always applies–do unto others…”

If firms wait to sign up new producers until the market bottom is over, he cautions, “how long will it take them to ramp up their newbies to sell?”