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Life Health > Life Insurance

I Want to Appoint You! (Maybe)

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As the economic recovery continues, albeit uncertainly, companies are revisiting plans to appoint independent agents to meet pent-up demand for life insurance products and financial services. But the question is, are they actually recruiting?

The picture is decidedly mixed. Some insurance executives interviewed by National Underwriter, including those at brokerage general agents, independent marketing organizations and carriers that sell through independent agents, are proceeding apace to beef up their ranks of producers. Others, however, insist that recruitment remains depressed because of uncertainty about the strength of the rebound in the wake of the Great Recession.

Representative of the latter is Howard Stern, a brokerage manager at Selario Agency, Pittsburgh, Pa. In his view, the chain of cause-and-effect is clear: Fewer people are able to buy insurance products in the current economy, which means fewer agents can sustain a viable practice.

“The economy has absolutely impacted my business.” says Stern. “My activity level this summer has dropped off in terms of income calls and quote requests from agents. That’s why I’m now looking beyond life producers to expand our market.”

Tom Rivers, an insurance recruitment specialist at Summit Search Group, Vancouver, B.C., believes that recruiters themselves are holding back. While observing an uptick in sales activity in the independent channel, he notes that many companies remain cautious about hiring. The candidate vetting process often takes three months or longer before a firm will agree to ink a contract with a new producer.

“There is a continuation of the trends that I observed during the downturn,” says Rivers, noting that recruiters are taking a long time to make decisions because they are fearful of making mistakes.

“Whereas in earlier years, a producer might be interviewed by one manager, now they’re talking to two or three,” Rivers says. “The delays and heightened scrutiny of candidates represents an opportunity for firms that are prepared to recruit more aggressively.”

Case in point: BGA Insurance Services. The Newport Beach, Calif.-based brokerage-general agency boasts some 300 active producers, most of whom market solutions–life, long-term care, disability income and annuity products–to an affluent clientele requiring advanced planning.

The agents under contract are nearly triple the number the company employed only a year ago. To boost its ranks, says BGA president Barry Zimmermann, the company increased its home office staff (including recruiters) to 20 from nine. And it ratcheted up outreach efforts.

These include weekly “lunch-and-learn” events the BGA hosts to help acquaint advisors with the company’s services. BGA also relies on referrals from affiliated producers, cold-calls, e-mail blasts and direct mail, as well as new social media tools, to generate producer leads.

“We’re using Facebook and Twitter as part of our outreach,” says Zimmermann. “The results up to this point aren’t much to measure. But these online tools help to increase our brand awareness.”

The company is betting that a new compensation structure for its home office employees, begun this year, will aid in the marketing effort. Shawn Bragdon, a senior vice president and partner of Zimmermann, adds that BGA now ties a portion of its staff’s compensation to production. They get paid when cases are completed.

To meet his own agency recruiting goals, Selario’s Stern says he leverages techniques employed by BGA. And he’s marketing to more than independent life agents: P&C agents, CPAs and attorneys who are licensed to sell life products now are among the 150 to 200 active producers affiliated with the company. To help attract these non-traditional reps, Stern is planning to roll out a turnkey marketing initiative this year.

The program features a website offering client prospects online tools to facilitate sales–a needs analysis, product quotes and insurance request form–and that producers can private-label for their own practice.

“The aim here is to offer the non-traditional agent a low-cost way to secure new life business,” says Stern. “A lot of these producers don’t do these apps because they’re not oriented to life products.”

Other producers are, but they’re not generating enough business for their carrier, BGA or IMO to justify keeping them on board. These less active agents represent key prospects for Houston, Tex-based Insurance Perspectives. Fielding more than 1,000 reps nationwide, the agency recruits a broad spectrum of producers–from part-time agents to full-service registered investment advisors–many of whom Insurance Perspectives appointed after they got the boot from a competitor.

“Some carriers and BGAs do us a favor every six to 12 months by terminating contracts with agents who haven’t written an app in that period of time,” says Insurance Perspectives President Bill Sessums, Jr. “This pool provides a constant source of recruits for us. Recently, we’ve been seeing a lot more of these folks.”

In other cases, producers have been fleeing carriers whose balance sheets–and once-sterling credit ratings–have been battered by the recession. So says Charlie Wood, a senior vice president and chief marketing officer of Columbus Life, Cincinnati, Ohio, who notes that the exodus has benefited carriers with strong financials, like Columbus Life.

The company’s healthy capital reserves, he adds, aided its recruitment drive over the past year. Working through regional marketing directors, each charged with hiring independent producers in a specific geographic area, Columbus established 97 offices, topping its 2009 goal of 80.

In total, Wood estimates, the various offices employ between 300 and 500 agents. And the company is looking to double its field force in the year ahead by setting up another 80 offices nationwide.

In contrast to carriers that chiefly do business through BGAs and IMOs, Columbus Life contracts (in most cases) directly with advisors or personal producing general agents. A PPGA channel is advantageous, contends Wood, because it allows the carrier to establish close and long-term relationships with affiliated producers; and to exercise greater control over the training and support agents need to properly represent the company’s products.

“We want to have a direct relationship with the people who are writing the business with customers,” says Wood. “In a BGA or IMO model, a carrier can lose sight of the challenges that producers face in bringing solutions to market.”

But like many of the BGAs and IMOs with which Columbus Life competes for talent, the company is particular about the producers it contracts with. The carrier, says Wood, wants agents who have a minimum of three years of experience, work full-time in the business and generate a minimum of $25,000 in annual premiums.

Not all companies in the independent channel measure recruiting success in terms of producer headcount. For Transamerica Corp., Los Angeles, Calif., the key benchmark is market share.

With a view to increasing its market share, the insurer tailors resources and tools to align with its partners’ target demographic audiences, according to Michael Babikian, a senior vice president and chief marketing officer at the company.

Why work through intermediaries? Babikian says the issue is partly one of cost. By teaming up, the carrier can do without expensive distribution and compliance systems that the partners–particularly large IMOs with which multiple BGAs may be affiliated–are heavily invested in.

Underpinning Transamerica’s strategy, too, is the belief that the insurer has to allow agents maximum flexibility in procuring product if the company is to gain a greater share of producer sales.

“If an independent producer goes onto a Transamerica technology platform, they don’t necessarily have the ability to sell other carrier products using the same system,” says Babikian. “They would have to go to proprietary system from proprietary system. And therein lies the difficulty.

“So we rely on partners with distribution capabilities to create multi-carrier platforms for their producers,” he adds. “That said, while we sell product mostly through IMO and BGA distribution, a PPGA or direct channel does handle a minority of sales.”


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