Pru Program Lets Agents Earn Ownership In Their Book Of Business
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"We've been keeping this quiet because we feel it's a real competitive advantage," says Thomas Crawford, president of Prudential Retail Distribution, Newark, N.J.
What Crawford is referring to is Prudential Life Insurance Company's recent introduction of a new premier producer program which, among other producer benefits, gives agents an ownership position in their book of business.
"One of the problems with a career agency system is the agent doesn't have any ownership," he says. "Now, ownership is in the hands of the agent."
Under the new program, agents have the opportunity to buy or sell their book of business to another producer. For a negotiated price, agents can transfer their book of business, making the renewal streams payable to a successor agent, says Crawford.
"We talk about business succession planning every day," says J. Stan Montgomery, a veteran Prudential agent from Montgomery, Ala. "Now we can apply it to our own firm."
Succession planning for life insurance professionals has been a real problem, industry experts say, adding that most producers have no formal succession plan.
Montgomery tells an all-too-familiar story of a former mentor whose book of business was neglected upon his death. "I had a friend who had built his business for 35 years, and after his death his business evaporated," explains Montgomery.
"This is a shame for the client, a shame for the company, and a shame for all the hard work he had done building that business," he continues. "Now, everyone can win with a succession plan."
Crawford feels that the steps Prudential has taken will be followed by others.
"This is a very unique program," says Crawford. "When you develop something that's successful, you're going to get some companies following it."
According to Crawford, Prudential "wanted to do something that would help the consumer, help the agent, and help the company."
Typically, when an agent dies or leaves the business, the client becomes an 'orphan,' and is assigned to another agent.
"The biggest benefit to the client is the continuity of service," says Montgomery. In the past, servicing orphan business was a moral obligation, he says. Under this new program, agents will be compensated for servicing the business. "Now clients will be working with someone who knows the product, knows the company, and gets compensated for working with them," he says.
"This will benefit any client," says Montgomery. "Especially those with more sophisticated needs and programs. These clients will always have somebody there."
