Today’s independent distribution channel faces a strategic inflection point over the next five to seven years. For the first time, a dramatic dearth of new agents entering the business is seemingly outside of the control of the industry’s distribution channel, and firmly in the hands of the carriers.
The primary reason is, BGAs cannot put resources into recruiting agents in the traditional model because they may or may not be loyal. As a result, the only recruiting right now is happening on the captive side while the independent channel seeks non-traditional ways to grow (wire houses, financial advisors, etc).
With fewer life insurance agents entering the industry and more existing producers slowing down, the market for the attention of ever fewer agents is increasingly competitive. BGAs have had to pay higher commissions while focusing on consolidation and volume.
When our market changes fundamentally, we must change with it. As our ancestors did, we too must adapt or risk extinction.
We, in the brokerage general agency channel, do not have the resources to recruit new independent agents en-masse if the agent may or may not be loyal. There then seems to be two alternatives: we recruit W-2s, or we hope carriers will recruit more.
But won’t the latter increase the likelihood that we are decimated as a channel since they, too, will want to ensure loyalty through captivity? If we are to stay relevant, we must take a proactive approach to continuing to own the distribution channel – there is no other option. If we are to have product manufacturers and retail remain independent, then we must become retail, otherwise manufacturers will become retail out of necessity.
Technology has already helped GAs to identify, value, and buy producers’ blocks of business proactively to take ownership of the client relationship and the inforce policy. That process allows independent distribution to remain deeply relevant as agents retire – in fact, to become even more relevant as the current sales force retires, rather than less relevant.