What life products are currently seeing the best sales in your agency? What other lines are significant parts of your business?
Rosen
Obviously, term insurance is always in the mix; guaranteed universal life sales continue but we see lots of growth in the “mortality-type guarantee” products as well. These tend to offer significant guarantees with projected cash value benefits and a strong projected death benefit. In addition, variable life, indexed life, and whole life continue to play a role in our firm. It is very important to note that addressing a long term care need for clients is a major concern and life insurance products with a long term care or chronic illness rider or the various linked products are playing an important part in this discussion and driving significant sales.
Umekubo
We are seeing more and more GUL with riders (chronic illness and long term care) and one with a “longevity / income” rider being more receptive. Index UL has gained more acceptance with some of our brokers, but we tend to be a more conservative group, so we prefer the IUL with longer or even lifetime no-lapse guarantees. We will gladly take less “upside” for more guarantees.
No matter what changes the industry brings us, people still have the same three problems: Dying too soon, getting sick along the way, or outliving their retirement nest egg. Good news is we have the solutions and tools to solve those problems. All insurance is, at the end of the day, leveraged money bought with pennies on the dollar.
As far as other lines of business, we are a “full-service” BGA and we provide long term care insurance, annuities, disability income, chronic illness and Medicare supplement insurance to our brokers. All lines are very important to our firm. We are a rural-based agency and want to be a true “one-stop shop” for our brokers, plus it gives us a broader revenue stream for our agency.
Wall
We aren’t seeing a significant shift in the percentages of term to perm, however, as it relates to those two lines, what we are seeing with those product lines are:
Term. We’ve been telling the story of “product differentiators” for some time. Perhaps as a result, we are seeing, especially with experienced producers or producers who are doing long term planning, a renewed focus on products that offer conversions to the carrier’s entire product line—for the entire convertibility period; those producers will use products with limited conversion opportunities but only as a last resort.
Permanent. Most of our permanent life insurance cases remain death benefit driven, very few are supplemental income driven; that being said:
- We’re seeing more current assumption product sales, either general account crediting or indexed crediting, sales using products that offer the ability to guarantee the death benefit for a long period of time and that will then project coverage thereafter.
- We are also seeing less interest from producers in products that, while offering guarantees to age 121, have little flexibility. By that I mean products that, should a premium be skipped and never be repaid, will lose less of the guarantees than another product will lose.
- When we do work on a case involving cash accumulation, we prefer to use carriers that have a formal program in place that will automatically, whether during the accumulation phase or the distribution phase, do policy performance re-calculations and will make suggestions on how to catch up on the originally projected values.
One line of business that we’re optimistic about, and which is becoming a greater part of our business, involves products designed to pay for “care.” In 2018, as an industry, we are blessed to have so many products at our disposal that can be used to pay for care—we have:
- Traditional long term care insurance;
- Linked benefit products (based either on a life insurance or an annuity chassis); or,
- Hybrid products (life insurance with long term care or chronic illness riders).
As BGA’s, we need to make these products available to our producers, but, more important, to educate them as to where each product works the best.
Impaired risk business is widely considered responsible for the growth of the brokerage industry. Where do you see underwriting headed in the future and how do you see BGAs providing significant value to producers going forward?
Rosen
As access to underwriting data becomes better and faster, and with accelerated underwriting programs expanding, I don’t see impaired risk playing the same role in the more routine BGA business as it has in the past. However, for larger and more complicated cases, having available expertise for both medical and financial underwriting issues will become more and more important and will remain a key differentiator for firms.
Umekubo
We always try to get a “second opinion” on cases that are issued other than applied for. We also have on retainer an independent contract underwriter with many years of high-level, carrier executive level experience for us to try to do the very best job for our brokers.
Underwriting is still of great value to our brokers and we try to know where each of our carriers “play best” when it comes to impaired risks or financial / business underwriting. One of our cases had to do with financial underwriting for a company ESOP buy-sell and most of our companies really didn’t “understand” the nature of the risk, but with my involvement with a senior underwriter at one of our “partner” companies, we were able to get the full amount of coverage for the applicant.
Wall
Especially as it relates to transactional term insurance sales, we stress efficiency and profitability.
As to our carrier friends, I think that’s what they are attempting to do with their simplified underwriting programs. I believe that we’ll see more carriers entering that arena and as they go forward, we’ll see higher death benefit amounts offered through those programs. Hopefully, as they gain more confidence in the results they are getting from these programs, we’ll see more carriers offering underwriting without the need for fluids.
As an agency, we are using the ApplicInt “drop ticket” platform to help us to increase efficiency and profitability for both our agency and our producers—and at present we have eight carriers on that platform. We would like more of our lower premium term business submitted thru that platform—which in turn will free us up to devote more time to larger, complicated or impaired risk cases for our producers.
On a side note—while we expected the drop ticket platform to be used only for lower premium cases, we’ve found that once a producer is comfortable with the platform they are also submitting larger premium and face amount cases (so much for what I think).
Do you see producer comp on life products changing, and if so, in what way(s)?
Rosen
We don’t see anyone clamoring for “levelized commissions” at the moment, so for most of our agents I would expect the industry maintains the status quo. However, more and more of our business is coming via fee-based and fee-only advisors and I expect that fee-based insurance product opportunities will pick up steam. Effective distribution of these products will, however, continue to depend on availability of a life insurance specialist, and it will be imperative for carriers to build a comp model to address this reality.
Umekubo
Well, I don’t remember in the last 30 years of being a partner at Producers XL having our compensation increased, both first year and renewals (which are nearly non-existent). I’ve heard about levelized commission over the last 40 years (forever). While levelized or semi-levelized commissions make sense in many ways, a new broker to our industry would have a tough time on levelized commissions. Perhaps that will change, I really don’t know. What we’ve done is increased our agency’s revenue sources from strictly heaped or first year life revenue to more “recurring” revenue markets like Med Supp, DI, LTCI and chronic illness insurance to make up for the loss or reduction of life insurance renewals.
Wall
Total compensation, be it commissionable targets, renewals, bonuses, etc., has been going down ever since I got in the business
in 1982 and I don’t see that changing now.
Regarding permanent products, I don’t think that going to levelized commissions on death benefit driven products would work. I wouldn’t be surprised to see our carriers go to levelized commissions on cash accumulation focused permanent products—and that might not be a bad idea if trails, assuming they’re vested, are included in the compensation structure.
As to term, I don’t want to put any ideas in our carrier’s heads about that so I’ll keep my mouth shut on that one.
What do you see as the role of the BGA in attracting new talent to the insurance industry? What do you do to help new agents become successful?
Rosen
It will continue to be hard for BGA’s to solve the “lack of agents” dilemma. However, we can build distribution in a variety of ways. First, there will be those that get involved in point of sale support and have the insurance sales/agent expertise on staff to assist other advisors that are not life insurance savvy. This could be by working with financial advisors in the wire-house world or with property-casualty firms or benefit firms. I believe this will separate into two distinct approaches: One where we take on our traditional brokerage agency role, and another where we actually market ourselves in a way that allows us to act as “agent” on the application. We can split agent-level comp with advisors or property-casualty firms and increase our margins, but we will need to have the “agents” on staff to get it done. In addition, some BGAs have gone down the direct to consumer marketing road and I believe this trend will continue as well. Bottom line, lots of opportunity—but as always, we must be open to change.
Umekubo
Recruiting new and younger talent to our industry is a very tough proposition it seems. More and more of our newer brokers are the sons and daughters of our existing agents. The career companies are still bringing in new talent to our industry, but as a BGA it is very hard to recruit and train “green peas” based on our compensation model.
What we do to make brokers more successful is to focus on prospecting, problem solving and presentation skills. Frankly, product training is last on the list. If you can’t do the first three well you are not going to be very successful in our business, and all the product knowledge in the world won’t equate to lots of sales. It really is that simple. We are blessed that the principals of our firm have all been in personal production. We know what it takes to prospect, problem solve and present a solution. People don’t buy “insurance,” they buy answers to their questions and solutions to their problems. That is the “secret sauce” for our agency.
Wall
I think that we need to be stressing succession planning to our older producers for their business and help them to identify young producers who might be good candidates for their agency.
Many colleges and universities have classes, and even majors, in “Insurance and Risk Management.” If you have one in your area, get to know the staff. If they have Career Fairs for their students, such as we have at one of the universities in our state, attend those and let students know what we do. So many of the Insurance and Risk Management programs are more focused on property/casualty classes than life and health, simply because it’s the P&C carriers and agencies who are supporting their programs and attending the Career Fairs. Thus, that’s all that the students see. As a side note to that, consider hiring interns from those programs to work in your agency during the summer—that will provide you with a wonderful opportunity to identify talent and introduce them to our industry.
For new producers, we attempt to spend time with them on the telephone or in person to simply teach them the basics of products, underwriting, etc.
To help them increase their sales skills, we encourage them to join and attend, based on their business focus, industry associations such as the National Association of Insurance and Financial Advisors (NAIFA) or the National Association of Health Underwriters (NAHU).
Both of those associations have educational courses for the producer. As an example, NAIFA still offers the LUTCF designation. LUTCF is designed to teach fundamental prospecting, selling and practice management skills—which are the basis for the advisor succeeding.
