NAILBA: A bit player no more in the life insurance industry

Among the changes that have overtaken the industry in recent decades has been the phenominal growth of independent distribution for life insurance products.

Notable beneficiaries of that evolution, member companies of the the National Association of Independent Life Brokerage Agencies, are increasingly influential players in the industry’s continuing transformation.

So it should hardly surprise that the leading providers of protection products will be keeping close tabs on NAILBA’s 35th annual meeting, taking place in Dallas, Nov. 17-19. Their aim: to gain insight into trends and best practices that will drive sales in the independent channel in the years ahead.

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Humble beginnings

The association’s current clout would likely have been hard to predict in 1981, when NAILBA got its start.

Back then, says Michael Tessler, a past NAILBA chairman and president of Brokerage Unlimited Inc., few life insurers marketed through brokerage general agencies.

That’s true no more.

“In the association’s early years, carriers that absolutely wouldn’t have thought about being involved in a conference like this because they didn’t see independent distribution as a part of their strategy are now at NAILBA,” says Tessler. “Among the conference’s biggest sponsors today are major insurers.”

Why are more life insurers — and, indeed, other industry stakeholders — joining the NAILBA bandwagon? Tessler credits the growing value that carriers attach to the independent channel. As brokerages and affiliated advisors redirect their focus from product sales to holistic planning — a shift that could accelerate in the wake of the U.S. Department of Labor’s fiduciary rule — the ability to source product from multiple manufacturers is increasingly a competitive advantage.

“The need for objectivity is driving a growing numbers of agents and advisors to source product from distributors that are not focused on specific carriers, but on which provider can best meet the client’s objectives,” says Tessler.

He adds there is also cost factor underpinning the NAILBA’s enhanced industry prominence, namely, the independent channel’s reliance on variable compensation. Independent brokerages and affiliated producers only get paid after closing a sale. They thus aren’t a fixed expense for product manufacturers.

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Former National Association of Independent Life Brokerage Agencies chairman Michael Tessler is skeptical that the producer compensation will shift markedly from commissions — the predominant model today — to fees. (Photo: Thinkstock)

Conference growth

As carrier participation has increased, the conference has expanded in size, scope and attendance. The gathering now caters to a wider range of brokerage staffers, including top executives, managers, underwriters and (to a degree) compliance professionals.

“The conference has become much bigger and more elaborate over the years,” says Tessler. “Attendance is far greater now than it was in prior decades. NAILBA is now considered one of the more important industry meetings in terms of bringing together significant players in independent distribution and product manufacturing.”