The Future Of Wholesaling Is At A Crisis Point
BOSTON -- Insurance wholesalers have long been a critical link between insurers on one side and consumers on the other.
As the insurance industry goes through a revolution of sorts, the future of wholesaling is somewhat in doubt. Can those middlemen and women adapt to the new insurance order, complete with regulatory and technological pressures?
The industry pressures start with technology integration and regulatory changes, but how those things shake up the distribution channels is causing further uncertainty for carriers and executives at the top of the chain.
As a result, carriers were eager for more information and a status update of sorts, said Patrick Leary, corporate vice president for LIMRA.
"A lot of things were coming together and we were getting a lot of requests as we talked to companies on wholesaling and wholesale models and how trends were going to be changing as some of these things came together," he explained.
So LIMRA decided to update a study it had done previously in partnership with Ernst & Young. The study is sure to come up this week at the LIMRA 2019 Annual Conference.
"This is a study that we’re doing in across the U.S. and Canada and we’re serving advisors, we’re serving external wholesalers and we’re also doing one-on-one interviews with senior distribution executives at both carriers and distribution firms just to get an understanding on where they see wholesaling evolving," Leary said.
The study results are revealing the evolution of a theme researchers saw "bubble up" in their initial study, Leary said.
"But it truly is kind of central now and it’s kind of the product moving from being the differentiator to other things being differentiator, like value-added services, practice support, new technologies," he said.
That trend is really being driven by regulators at several different levels rushing to adopt best-interest sales standards. The National Association of Insurance Commissioners hopes to present a tentative best-interest model law to its full committee at an early December national meeting.
The rush is being fueled by several individual states who are adopting their own best-interest standards. Likewise, the Securities and Exchange Commission has a best-interest standard aimed at brokers.
"What all that does is it means the conversation really needs to change," Leary said. "It can’t be 'Okay you have to sell my product, it’s the best product.' It’s got to be more than that.
"The conversations are more around how the product can help the advisor better meet the needs of the client – how what the wholesaler is offering can help an advisor grow their practice and better serve their clients."
In addition, leveraging new technology for the same ends remains a growing influence on wholesalers. And it's already being felt on the ground, Leary said.
"Companies are starting to use data analytics and predictive analytics to help map territories and identify advisors that they should be visiting," he said.
In the past, companies had very imprecise data to try and identify the advisor population. People working the phones would then try to schedule visits. It was an inefficient system, Leary said.
All of the trends and changes are leading to the same place, Leary said. That place is part of the larger theme of the conference.
"It’s about relationships, and sales management and communication technology," he said. "It’s moving away from a product-centric discussion model towards more of a relationship-based model that leverages technology."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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