Brokerage general agencies in the insurance industry need to continue to transform themselves. Historically, they have been processing centers taking orders and spreadsheeting solutions. To remain relevant in the decades to come, a shift to becoming wholesaling and marketing engines is necessary. The reasons for this are many, but at the top of the list would be the exponential technological growth and investment we have seen, and will continue to see, at the carrier level that was put into hyperdrive with the COVID pandemic. Freeing up resources and time for the independent distribution network is a good thing because that means they can focus on becoming more effective in their messaging. Borrowing from our friends at Arby’s and their catchy commercials, an effective wholesale distribution organization needs the MEATS to be successful.
As I look at the factors that lead to a successful wholesale organization, I think of these primary elements:
Marketable Product(s): If you do not have something someone wants to buy, it will certainly be hard to sell it. Typically wholesale contracts for products are acquired three separate ways: Directly with the product manufacturer, under someone else’s contract (sub-contract), or through an aggregation group or professional organization. Without the right products, distribution is difficult.
May I suggest choosing a few primary products, as opposed to trying to be all things to all people with selective messaging? One of the solutions that has emerged as being quite popular is variable universal life (VUL). With the recent changes to 7702, the powerful equities market, along with added pressure on IUL from AG 49-A and a possible AG 49-B on the NAIC’s task force docket which is forcing many carriers to place their IUL sub-accounts within the VUL chassis, all are positive signs for VUL. Here is a stat from the most recent LIMRA article Life Insurance Sales Surge in Third Quarter 2021, December 1, 2021:
Variable universal life (VUL) new annualized premium doubled in the third quarter, up 104 percent, and recorded the greatest growth in terms of absolute dollars. While protection-focused product sales—which have driven growth earlier in the year—increased 46 percent in the quarter, accumulation-focused product sales growth was also strong, up threefold from third quarter 2020 results.
Year-to-date, VUL new annualized premium increased 78 percent. VUL market share was 13 percent in the third quarter, five percentage points higher than a year ago and nearly double pre-pandemic levels.
Experienced Leadership: As with anything, this is critical. If you don’t carry the necessary influence and knowledge to instill the required amount of trust in your partners, doors won’t open.
Access to Distribution: This can be a challenge, especially with registered securities products where there is an authoritative power between you and the agent. This would be the broker-dealer in which the agent is associated. Permission to work in the channel or on the case with the agent can be done either top-down or bottom-up. It is always advisable to gain permission top-down, when possible. Many broker-dealers have become restrictive as to whom their agents can do business with, and you may need to work with the broker-dealer’s back office so they may do their due diligence on your organization.
You may also choose to join a group that already has access points to the desired channels, or your IMO may have an institutional division setup that has done the heavy lifting for you. Sometimes these avenues are not clear, and you may only be interested in working with this agent and not the entire BD channel. In either case, you may attempt to work bottom-up with the agent and the agent’s OSJ, branch manager, or supervisory manager to obtain permission. At The Leaders Group, we have experience working with different broker-dealers. If a particular BD would like an agreement in place, we can help facilitate that agreement and have samples on hand for various arrangements.
Transparency of Sales Force: In the distribution world, having control over the sales force is important from a management standpoint. Are they transparent in the sense that you know what they are doing? Is your sales force separated by geographical territory or by distribution channel? Do you track activity levels and agent touch points? Do they operate with an internal person to assist? Do you train them in what they need to be saying in an agent’s office? They may be none of these things, and you may trust your sales force entirely to do what they think is necessary. Putting total command in the hands of your independent salespeople is also an avenue many organizations take especially in life insurance distribution. If the desired results or production follow, it works.
Sustainable Messaging: In this industry, if you live by the sword, you die by the sword. If you are leading with performance or product first, as opposed to concept or solution-based messaging, you will eventually find yourself at a disadvantage. Whatever that message ends up being, it needs to be simple, relatable, and repeatable for it to be effective.
Simple enough to be understood by any level of agent, the agent must be able to relate to the solution, believe in it, and apply it to their customer base. Lastly, they must be able to turn around and convey the concept to their customers. Turning your agents into extensions of your messaging is an ideal situation and will amplify results.
Keep these elements in mind as you evolve your distribution efforts. It is up to all of us to drive life insurance distribution efforts into the 2020s and beyond. One positive element that came out of the COVID situation has been the massive increase in technology adoption at the carrier level, not to mention it has also enhanced the general public’s interest in life insurance solutions across the board paired with potential tax increases on the horizon.
