Weak Job Market Sparks Massive Growth of Career Agents at US Life Insurers

Helped by a weak job market and college students eager to find employment, some U.S. life insurers are increasing the ranks of their career-agent forces. But that's not the whole story behind the uptick in company sales forces.

Most mutual companies have career or "affiliated" agents and these companies, in particular, have been touting the new recruits they signed on in 2009.

New York Life said it recruited a record number of financial representatives last year, with 3,618 appointments in the United States, while Northwestern Mutual recruited 2,340 financial representatives. MassMutual recruited more than 2,000.

Mutuals likely have a career agent force that's older than other distribution channels so there appears to be a conscious decision on their part to recruit, said Greg Smith, vice president at Conning Research & Consulting. Northwestern Mutual, for example, is actively looking to hire young people right out of college, he said.

Couple that with the economic downturn, and the opportunity for companies "is irresistible."

MassMutual is continuing to target colleges by "bringing new, young people into the industry" right off campuses, Michael Fanning, executive vice president of the U.S. insurance Group for MassMutual, told BestWire.

The uptick in career agents is good news for the industry, as the number of U.S. life insurance agents affiliated with a specific company is down nearly one third since the 1970s, to 174,000. Affiliated agents declined because more companies expanded their distribution to include independent agents, banks and brokerages, according to industry research organization Limra.

Historically, insurers developed non-career channels to cut costs, said Scott Hawkins, vice president at Conning.

Twenty-nine percent of career agent recruits in 2009 comprised recent college graduates and "other career changers," according to Limra. The latter includes people who were laid off from their job in an industry outside of financial services/insurance.

The "candidate pool is definitely higher than in the past," said Margaret Honan, Limra's senior analyst, distribution research. Former business owners, teachers, real estate agents and professionals from banking, law and accounting are signing on with companies.

Total sales of individual U.S. life insurance declined 15% in 2009, according to Limra. But whole life -- the mainstay of mutuals -- was the only product line up last year -- a 4% gain.

Because of the stock-market chaos that erupted in the fall of 2008, whole life looks attractive now, said Smith. It's a fixed product "so it looks pretty safe."

Twenty-four percent of career agent recruits last year were experienced agents with another insurance/financial services company, according to Limra. Career agent ranks have increased, in part, because many of the mutuals, especially the large ones, "fared much better during the credit crisis," said Terence Martin, an analyst with Conning.

Paula Brancato came on board with Northwestern Mutual in October 2009 as a financial representative in New York City. She said she decided to change careers and sought out the life insurer because of its strength and stability.

Selling life insurance is attractive, she said, because "it's not a product sale; it's about talking to your clients about their future."

Brancato doesn't call herself a life insurance agent. "You wouldn't say -- if you are an NBA player -- that you are a 'dribbler.' It's more than that. I am a financial resource for my clients. I manage money and I manage risk."

Financial representatives aren't employees of Northwestern Mutual, but are self-employed and contracted to sell the company's products. Brancato's earnings are 100% commission "The sky is the limit," she said.

A career agent earned an average of $73,300, excluding financing, in 2008, selling through their primary company, said Honan. "It's safe to say that I can expect to make in the six figures this year," Brancato said.

Some publicly traded companies -- whose primary distribution isn't career agents -- saw gains in this distribution channel.

John Greene, president of agency distribution at Prudential Financial (NYSE: PRU), said the company grew its career force by about 4%, "an increase we haven't experienced since the early 1990's." At year-end 2009, Prudential had 2,447 agents in its domestic career agency system.

"When we meet with candidates, we emphasize Prudential's financial strength," Greene said.

The largest portion of Prudential's life insurance sales are through third-party distribution.

Ultimately, companies must be especially diligent in their agent-selection process, Honan said. "What's going to happen when the economy all of a sudden turns around?" Agents may quit after companies spend money on recruiting and training them.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])