Insurers look to improve distribution productivity to meet customer needs

A LIMRA and Boston Consulting Group study revealed profitable growth as the most important priority for C-suite life insurance executives. A follow-up study explored the best practices that leading carriers use to measure and improve life insurance productivity.

Given the competitive nature of the life insurance industry, carriers must focus their strategies and initiatives on increasing the productivity of their financial professionals. Leading carriers align their strategic goals with key performance indicators used to evaluate financial professional productivity. They are also taking a systematic approach that includes continuous monitoring of production, identifying top performers and creating initiatives to help boost financial professionals’ productivity to help drive profitable growth.

Measuring performance is fundamental to the overall strength and health of life insurance companies. Regardless of the distribution channel, the most common KPIs used to monitor productivity of financial professionals are the numbers of policies and premium — both total and per policy. Additional metrics used include placement rates, persistency rates, policy retention rates and policy size by product. 

Aligning strategies with the company’s distribution channel is key to increasing life insurance productivity. Carriers with affiliated distribution can benefit from a holistic approach and cross-selling. Independent distribution uses wholesalers who can help increase life insurance productivity. The service and support wholesalers provide to the financial professionals they work with is critical to a carrier’s success. Leading carriers are investing in technology and easy-to-use tools to increase the impact of wholesalers. Those carriers that can strategically define, measure and monitor wholesaler productivity that impacts sales and increases financial professional production are better positioned for growth.

Substantial investments are required to continue to generate growth. The research revealed that carriers are investing in sales support, both financial professional and customer-facing technology, and wholesaling to drive productivity. The ease of doing business is also top of mind for executives, and they are investing in making it easier for financial professionals to sell. Investing in data collection processes and analytic tools to track financial professional performance will also help drive growth. Carriers that rely on wholesalers are investing in the tools and technologies to help them better support the financial professionals they work with.

Improving distribution productivity is widely recognized as a significant driver of market growth. It is important for carriers to focus their initiatives and investments on growth — not only for their own success but also that of their financial professionals. 

According to the 2024 Insurance Barometer Report by LIMRA and Life Happens, almost 4 in 10 American adults say they need (or need more) life insurance, which represents a life insurance need gap for about 102 million American adults. The top three reasons for not owning life insurance (or more of it) are, 1) It is too expensive — although the research shows consumers vastly overestimate the cost, 2) They have other financial priorities, and 3) They’re not sure how much or what type to purchase. In the research, almost half of adults say they would experience a financial hardship within six months if a primary wage earner were to pass away. 

Aligning strategic goals with key metrics to measure productivity will help maximize growth, which can lead to greater success for both the insurance companies and financial professionals. Having companies increase their distribution’s productivity is important because it ultimately means more Americans will get the individual life insurance they need to protect the ones they love.

Laura A. Murach, ACS, ALMI, LLIF, is associate research director, distribution research, LIMRA. Laura may be contacted at [email protected].