NAILBA Changes Reflect Changing Membership

By Cyril Tuohy InsuranceNewsNet

By Cyril Tuohy

InsuranceNewsNet

Looking to stay current with the changing business models of its membership, the National Association of Independent Life Brokerage Agencies (NAILBA) has broadened the definition of who qualifies as a member, the association announced.

NAILBA represents independent brokerage general agencies (BGAs) that distribute health, life, annuities, long-term care and disability coverage. The association reduced the number of membership categories from six to two: regular members and emeritus members.

“The world’s changing in all capacities and in all industries,” NAILBA Chairman Ray Phillips, said in an interview with InsuranceNewsNet. In the past, he said, NAILBA has sometimes suffered from a misperception that it only represented life brokerages or general agency wholesalers, but that is not the case anymore.

Phillips said the changes reflect the organization’s commitment to the brokerage model of insurance distribution, “which encompasses a wide variety of organizations.” The changes, Phillips also said, will strengthen NAILBA’s voice in the industry.

Over the past 20 years — as life insurance, retirement coverage and long-term care needs for an aging marketplace have changed — so have the economic models that brokerage general agencies rely on to keep them in business.

Jack Chiasson, NAILBA chief executive officer, told InsuranceNewsNet: “Over time, our average member is doing business a little bit differently than in the past. They are doing different things. They are trying to broaden the range of services to people they are working with.”

As a result, NAILBA leadership had begun to wonder about the continued relevance of the membership model. “It’s important to us that our model accurately reflects the changing face of brokerage,” Chiasson said.

While the bulk of revenues for BGAs come from life, health and annuity products, many have branched out to secure income from other sources — and are doing very well by it.

A December 2008 membership survey found that 70 percent of NAILBA agencies reported revenues of between $1 million and $10 million, and 14 percent reported more than $10 million in revenue.

As much as 43 percent of members said they market their services to between 1,000 and 5,000 agents on a semi-regular basis, and 70 percent said they hold direct reporting contracts with between one and 20 life and health insurance companies, the survey found.

NAILBA, based in Fairfax, Va., is unique in that it represents independent agencies and wholesalers of all stripes. It is founded on the belief that consumers are best served when insurance distributors are independent, and has represented BGAs since 1981.

The new qualifications for an agency’s acceptance into NAILBA as a regular member are that the agency is an appropriately licensed independent brokerage agency, that the agency derives its primary income from brokerage distribution, and that the agency is free to place business with any insurance carrier.

The agency also must have a brokerage general agent’s contract with at least three brokerage carriers, commit to promoting and advocating the independent brokerage system, and agree to comply with NAILBA bylaws.

Qualifications for the member emeritus category, reserved for retired principals from a member agency, or for an agency principal who no longer qualifies for membership as a regular member, remain unchanged, NAILBA said.

Phillips said the changes to membership criteria will send a “loud and clear” signal that all NAILBA members are welcome, even in an era of changing business models and revenue streams.

“We have members that are primarily health insurance distributors, so now, loud and clear, you’re all welcome,” he said.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].