American National Insurance Company

    It’s Time to Rotate the Crops. My father passed away recently, during which time I reflected on my childhood and the wonderful times I had growing up in a small community where my grandparents were vegetable farmers. During planting season, I remembered the previous year we planted corn where we were now planting potatoes, and where we planted potatoes last year, we were planting another crop. It then hit me that we did not plant the same crop in the same place more than two years in a row. When I inquired as to why we did not plant crops in the same place each year, my grandfather educated me on the need to rotate crops in order to keep the soil fertile and, thereby, ensuring a successful harvest, assuming  Mother Nature cooperated.

    At this point you are probably asking yourself what this has to do with the future of the brokerage insurance industry. To put it bluntly, a majority of advisors and brokerage agencies are planting the same crop in the same place year after year and now are seeing diminishing returns on their efforts. The soil is not fertile. Let’s take a look at several examples.

    Life policy review has been the only “crop” for many advisors and agencies for more than 10 years. Why are we not seeing the results previously generated? Let’s face it, the market is shrinking. The vast majority of high-end consumers have already been offered a life policy review. Also, clients are growing older, which naturally means health challenges will make it more difficult to replace a policy originally issued at a preferred classification with a standard or substandard classification.

    Another reason for the diminishing returns is that many advisors and agencies have become lazy, utilizing a spreadsheet of rates as a solution for every client problem. Look at your last 10 sales. Were all made using a spreadsheet as a solution to your clients’ needs? Did you truly solve your clients needs, or just offer to reduce premium and/or increase coverage for the same amount of premium paid currently? If you said “yes” to these questions, it is time to expand into other opportunities before it is too late.

    What happened to the days when developing a customized solution to solve a client’s needs was the first and foremost priority? After the client’s needs were met, product competitiveness was then considered. Using a spreadsheet is easy, but does it solve the client’s needs?

    If an advisor or brokerage agency is to survive going forward, expansion into new, value-added marketing niches is a critical ingredient to increase sales opportunities with existing and new clients.

    If you want to grow, you must change. Many brokerage agencies and advisors are concerned about the future because they have relied far too long on the ability to replace existing coverage and spreadsheet everything without placing thought behind the sale to determine which products and features are the best solution for the client. An example of this is buy/sell planning.

    When faced with a client needing a solution for buy/sell planning, many just spreadsheet term and sell the cheapest rate. Is that the best solution for the client? Was value added other than “I shopped the market to find one of the lowest premiums”?

    In many instances a permanent product with an accelerated benefit rider (ABR) is a much better solution for the buy/sell client. The contract value can assist in the buyout or supplement retirement while the ABR covers chronic, critical and terminal illnesses. What happens if your client/business owner has a heart attack or stroke while actively at work? This is “living death” for a business owner who needs cash flow to keep the business running during the illness. Does a term policy offer the benefit of accessing the death benefit prior to death if such an illness occurs?

    The bigger question is, are you liable as an advisor for not offering the ABR solution as an option? Is the brokerage agency liable for not educating the advisor on the ability to cover such illnesses with ABRs? This is a solution which should be offered and explained to the client. A solution such as this will not be found on a spreadsheet of rates. Going forward, advisors and agencies must offer solutions like ABRs to fully meet clients’ needs.

    Advisors and agencies must change their methods or risk losing existing clients and thereby dramatically reduce the ability to maintain their current standard of living. Here are other examples of profit center niche opportunities which should be considered now.

    Would you like to access the largest single employer in the United States? If so, why are you ignoring the federal employee market? Many companies like American National Insurance Company (ANICO) offer a turnkey package to access this lucrative market.

    If you work with small business owners, would you like to increase your income by six figures each year from existing clients? You should offer a pension plan review. At ANICO, we call this concept Retirement Plan Review (RPR). RPR is a “life policy review” opportunity for pension plans. This is a huge, untapped market.

    Have you considered simplified issue for your business clients? Did you realize your business clients with 10 or more employees may qualify for up to $250,000 in life insurance on each employee with only three health questions?

    Are your margins too thin on small case permanent applications? Why are you sending smaller applications through antiquated new business processes which take 45 to 60 days to issue and 90 days to receive your commission? Utilize express underwriting programs available which can issue in good order applications within three days without requiring a medical exam, blood or urine. An express underwriting program leads to shorter cycle times, less overhead expense, higher client satisfaction and greater profit margins.

    The sales opportunities previously mentioned are being ignored daily but would have a dramatic impact on bottom line profitability. In 2012, growth-oriented advisors and brokerage agencies will begin to “rotate crops” by looking for non-spreadsheet, value-added niche marketing opportunities which mesh seamlessly into their existing practices, driving additional sales with existing clients while attracting new clients. Those who do not adapt will continue to see diminishing sales and revenue. Time to rotate crops! [CWK]

    Craig W. Klenk, CLU, ChFC, MSFS, Vice President Brokerage Sales, American National Insurance Company