March 7, 2014 INN Exclusives

It’s Not All-About-Comp Anymore: LIMRA

By Linda Koco InsuranceNewsNet

A common thread in insurance circles is that compensation is what it takes to get on the shelf of independent agents, but LIMRA’s Patrick Leary has data that says otherwise.

Conventional wisdom is that “it’s all about compensation or ‘who’s going to pay me more money,’” Leary said during LIMRA’s recent distribution conference in Wesley Chapel, Fla.

But a recent LIMRA survey of nearly 1,000 independent insurance professionals found that, while compensation is a factor, it is not the only factor. In fact, a greater percentage of professionals agreed on other factors, said the assistant vice president for distribution research.

For instance, more than 90 percent of those surveyed said the criteria they use when selecting carriers to include on their shelf include: meeting client needs, ease of doing business and financial strength.

More than 80 percent named product selection, underwriting flexibility and brand.

Compensation came in after that, with only 67 percent of the professionals naming it as a carrier selection criterion.

It’s about other areas

“So it’s not all about compensation any more. It (competing for shelf space) is about other areas and issues where companies can really differentiate themselves,” Leary said.

Differentiation from competitors is becoming a critical issue in today’s environment, he said. That’s because more and more independent advisors are “shortening their shelf” with fewer companies. They are also placing business with fewer companies, he said.

In this environment, those other areas on the list are places for carriers to consider stepping up their differentiation strategy.

Insurance companies are not just competing for shelf space with other insurance companies, the executive pointed out. “One half of today’s independent agents say they prefer to place business with brokerage general agents and insurance marketing organizations.”

This issue doesn’t concern only agents who identify themselves as independent agents. It applies to career agents, too, he said, since career agents also place business independently with others.

It’s critical that companies get it right because agents and advisors are dropping carriers that don’t meet their criteria.

To illustrate, Leary recounted a comment by one agent who had said his firm likes to work with carriers that provide service to the agency and its clients. What about carriers with slow service and that are not very customer friendly? “We’ve eliminated them,” the agent said.

Another agent told researchers that the companies that straighten out their errors quickly and in the best interests of the client are “the ones we have a tendency to go back to.” Still another told of how he “hates” finding a brochure left on his chair by a wholesaler that had stopped by the agency.

Four areas of differentiation

LIMRA has identified four areas where carriers can provide meaningful differentiation, he said. These areas are new business processing, tech support, marketing and remote support.

For example, 84 percent of agents say they want help with new business processing. But only 23 percent said they are getting enough support in this area.

Similarly, 63 percent want tech support but only 39 percent said they are getting enough of this.

These are the “new differentiators” for carriers, Leary said, predicting that leveraging these areas will help companies drive products through their distribution channels.

The young professionals

Taking a long-term view of the lifetime value of a financial professional also helps differentiate among carriers, he said. Carriers need to help the young professionals who come into the business “embrace the career and have a passion for it,” he said.

In reference to today’s heightened competition for young sales talent, he said the research shows that “no generation is better suited to come into our industry with what we are offering.”

Generation Y wants to have impact, help people, have a meaningful job, be part of a team, grow as a professional and see how they fit into the big picture, he said. “We provide that opportunity but we need to do a better job of aligning our value proposition with what the young professional is looking for.”

The must-haves for the next generation of agents and advisors are connection, influence, stability and variety, he said.

As for sales training, “it’s not block and tackle” that works today.

“It sales effectiveness — through building relationships, listening, trustworthy selling, leveraging more mobile technology, helping agents build their own direct-to-consumer strategy, and helping them grow and protect their practice value.”

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda may be reached at linda.koco@innfeedback.com.

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.