Life insurers in the US still rely heavily on intermediaries, tied and independent, to distribute their products. Deloitte’s Rick Berry provides Charles Davis insight into what producers expect from insurers and the areas where he believes delivery is falling short of expectations.
Insurance producers remain the most vital cog in the US life distribution channel, but many are not getting the resources and support needed to maximise their businesses, according to a new study by professional services firm Deloitte Consulting.
To gain insights into what carriers can do to better meet the needs and preferences of producers, Deloitte’s Voice of the Producer: Life and Annuity Producer Survey talked to almost 650 US-based life and annuity producers on a variety of issues.
These issues included the outlook for their business, their level of satisfaction with the support they receive from carriers, and the factors that drive their selection of a carrier when placing new business.
Deloitte director Rick Berry, one of the authors of the study, tells LII that sales support, speed of underwriting and policy issue, and carrier brand are the top factors influencing a producer’s decision to place business with a specific carrier.
“On issues they believe are most important to sales, 40% of producers aren’t satisfied with the support they currently receive,” Berry says.
“To be in the game with an agent, your products need to be competitive, your compensation needs to be competitive, and then you can begin to differentiate between your level of support.
“Through the research, we see meaningful differences between producers – the agent who cares about speed of underwriting is a different agent than the one who cares most about lead production.”
With more than 80% of their total compensation coming from two favoured carriers, there is room for improved producer loyalty and sales through better support, Berry says.
The survey details several opportunities for carriers to create new relationships with producers since many are seeking stronger support or are looking to add or drop carriers.
Roughly two-thirds of producers surveyed expect to change carriers within the next 12 months.
Twenty-nine percent plan to add carriers and one-third expect to both add and drop carriers. As a result, carriers must develop strategies to attract producers seeking new carriers while retaining current ones, Berry says.
“If they want to retain current producers and attract new ones, carriers should develop a strategy that targets them according to their sales priorities and growth potential while offering practical solutions aligned with their market approach and client base,” Berry adds.
From its study Deloitte identified four common producer personas – Speed Merchants, Consummate Sellers, Volume Sellers and Brand Aficionados.
Getting to know which type of persona carriers are dealing with is one way that companies can better segment the agent market to deliver competitive support aligned with producer priorities.
The personas – based upon account producer demographics, practice characteristics, career stage, attitudes, intermediary relationships and business attributes – differ in every respect, and can be seen as one way to slice a diverse market.
“Historically, insurers have looked at and managed their agents with particular emphasis on relationship building and management,” Berry explains.
“This is still really important, but that emotional relationship needs to be complemented by a more disciplined approach to understanding agent differences and how to approach them with what they need, from their point of view, from where they are in their career.”
Speed Merchants, not surprisingly, rate speed of underwriting and policy issue as a top placement factor and value a carrier’s ability to issue a policy quickly as a selling point with clients.
Speed Merchants base their business on producing large numbers of policies with smaller premiums and therefore value an easy process for new business and rapid turnaround in policy issuance.
Consummate Sellers place a premium on carriers that offer strong sales support in proposals, advanced underwriting, and assisted wholesaling.
Consummate Sellers tend to have more complex sales processes because they sell primarily investment products to older, more affluent clients.
Carriers targeting Consummate Sellers should consider upgrading call centres with better technology, increased staffing, and expanded hours of operation to enhance producer support, the study said.
Volume Sellers are relatively new to the insurance business and are focused on building their book, and so they have a keen interest in teaming with carriers that can send them high quality leads.
Carriers targeting this producer segment should invest in predictive analytics and data mining applied to demographic and financial data.
Brand Aficionados, finally, are producers who place high importance on the brand when choosing a carrier. They demand significant investment in marketing and advertising to increase the likelihood that their brand messages are widely and effectively communicated to consumers.
When designing incentives for Brand Aficionados, carriers may consider rewarding producers for driving potential customers to marketing and sales events held by the carrier, which will help sustain brand awareness.
Focus is vital
Berry says the need for focus on the producer has never been more urgent, given changes in the US insurance market.
“History says that, in the US, this is a slow-growth, stable industry, in terms of premium, but in the last 20 years, the shift in business coming from independents has really grown,” Berry says.
“So, the competition for producer attention is stepping up, and you must tailor support to what is really valuable to the individual producer.”
Success ultimately depends less on simply having contracts and far more on becoming one of the favoured carriers that receive the bulk of a producer’s new business.
In the survey, 60% of producers said they have appointments/contracts with six or more carriers but said they place 61% of new business with their top carrier and 21% with their second carrier.
Carriers not in the number one or two spots tend to receive little or no production.
“It begs the question, at what point is a producer ‘your’ producer, especially when they are individual agents being targeted by wholesale intermediaries,” Berry says.
“If they have just signed a contract but never brought you a policy, then there is real potential there.”