Coronavirus over a city (Credit Lightspring/Shutterstock; Thomas AndreFure/Shutterstock)

Many state insurance agent licensing programs have started to recover from the effects of the COVID-19 pandemic, but many are still functioning poorly.

Glenn Williams, the chief executive officer of Primerica, talked about the problems at agent licensing programs last week, during a conference call the company held to go over its third-quarter results with securities analysts.

Resources

  • A link to a recording of Primerica’s third-quarter conference call is available here.
  • An article that summarizes Primerica’s third-quarter results is available here.

Primerica focuses on selling term life insurance, annuities and other financial services products to middle-income consumers through a large network of agents.

The third quarter started July 1 and ended Sept. 30.

Primerica reported $112 million in net income for the third quarter on $568 million in revenue, compared with $96 million in net income on $521 million in revenue for the third quarter of 2019.

COVID-19 helped Primerica sell more life insurance and recruit more agents, Williams said during the conference call, which was streamed live on the web.

But “the pandemic is also creating headwinds,” Williams said. One of those headwinds, he said, is getting the newly recruited agents licensed as insurance agents.

Licensing Challenges

Executives from other life insurers also have mentioned COVID-19-related problems with agent licensing during their companies’ recent earnings calls, but, partly because Primerica’s strategy involves recruiting large numbers of new agents every quarter, its executives talked more about agent licensing than executives from most other life insurers.

The number of new Primerica agent recruits increased 41%, to 101,861, but the number of newly licensed agents increased just 4%, to 13,138.

Eleven states still are coping with the effects of COVID-19 on training and testing programs by providing temporary agent licenses, rather than having new agents meet full licensing requirements, Williams said.

Getting a permanent license takes longer in most states, and that reduces the percentage of new recruits who pull through and stay in the life insurance sales business, Williams said.

“We are working to keep recruits engaged during this delay with our field training program and the opportunity to refer products that do not require a license,” Williams said.

Agents who start out with temporary licenses are less productive than agents with a permanent license, but Primerica believes that the temporary agent licensing programs improve new recruit morale, Williams said.

When new recruits have a hard time getting any kind of license, “that creates discouragement that leads to people saying, ‘I’m not going to try this now. I’m not interested in Primerica now, I’ll check back at another time,’” Williams said.

Primerica is trying to work with states to speed up the agent licensing process, but states and states’ vendors continue to face problems with application backlogs, fingerprinting processes, and, in some cases, finding enough online licensing exam proctors, Williams said.

“I think it’s going to be beyond year-end before we can say things are pretty much to normal,” Williams said. “But it is improving and moving in the right direction, and we feel good about that.”

COVID-19 and Life Insurance Claims

Williams and Aliso Rand, Primerica’s chief financial officer, also talked about the effects of the COVID-19 pandemic on Primerica life insurance claims:

  • Life insurance policyholder retention was strong. The policy lapse rate was 35% lower in the latest quarter than in the third quarter of 2019.
  • The portion of people who died of COVID-19 who were under age 65 increased to 23% in the third quarter, from 20%, in the second quarter, and that increased Primerica’s exposure to COVID-19-related death claims.
  • Primerica recorded about $8 million in COVID-19-related death claims in the third quarter, and it expects to record $9 million in COVID-19-related deaths claims in the fourth quarter, which started Oct. 1.

Third-quarter COVID-19-related death claims amounted to about 5% of the $160 million in total benefits and claims paid.

— Read Globe Life Is Assuming 160,000 2021 COVID-19 Deathson ThinkAdvisor.

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