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

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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.

Related: The competitive advantage that every insurance professional needs

Producer compensation

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.”

The one constant over the years, he adds, has been the primary focus of NAILBA’s educational content — how to deliver more value to life insurance producers. Hence popular topics like those getting top-billing at the Dallas meeting. Among them:

    • “How to reach today’s agent: Marketing tech for 2016 & beyond.”

    • “How to motivate, reward and retain producers, including millennials.”

    • “Arming your agents & softening the beaches.”

There has, to besure, been an evolution in the backgrounds of agents and advisors served by NAILBA’s members. A growing number of the producers, says Tessler, did not “cut their teeth” in insurance, but rather other niches of financial services, including investment-advising and financial planning.

“Many of these people have had very limited life insurance training,” says Tessler. “But more of them are now doing life insurance-funded advance planning, such as wealth transfer and business succession planning. And so they’re turning to NAILBA members to help facilitate product sales.”

Related: Attracting the future producer: millennials

Many of these financial services professionals also are accustomed to working on a fee basis, their revenue received as a percentage of assets under their management. Despite their growing representation in NAILBA’s ranks, Tessler is skeptical that the producer compensation will shift markedly from commissions — the predominant model today — to fees.

“The fee-based model has come in and out of vogue perhaps two or three times during my career,” says Tessler. “But life insurers are still putting most of their development dollars into commission-based products.

“Until you can demonstrate that a non-commission-based product is more beneficial to clients, we’re not going to see big changes anytime soon,” he adds.

Joining a big team

Also unlikely to change is a trend among independent brokerages to affiliate with a consortium of companies. The benefit of these alliances: access to carrier products they wouldn’t otherwise have, as well as access on more favorable terms.

To illustrate, Tessler cites LifeMark Partners, an independent marketing organiztion that unites some 35 brokerage general agencies (including Tessler’s company), and more than 20 insurers, availing the members of tools and resources for marketing, sales, case design and underwriting support.

“LifeMark Partners is the number one producer for probably 6 out of the 10 largest insurance companies I do business with,” says Tessler. “That obviously puts my company in a more favorable position for securing product, services, training and support.”


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