Why Some Insurers Are Focusing On Brokerage Distribution

"Weve always been known for our product development, and for release of a lot of competitive products," he said. But he added that the company is also known for its relationships–for caring about and helping the people with whom it deals.

The decision to work only with NAILBA-type brokerages is helping it emphasize that, he indicated. For instance, the company plans to continue rewarding and offering incentives to its BGA partners, he said.

Lincoln Benefit offers incentive programs "with the intention of rewarding the BGAs for doing business with us," Wraith stressed, "not with the intention of attracting (new BGAs)."

The strategy is part of the companys goal of being known as the company that helps agents grow their business, he added.

Allianz Life Insurance Company of North America Life, Minneapolis, Minn., has also decided on a single-channel distribution focus and no longer uses multi-distribution channels, said Charles Kavitsky, president.

Today, he said, Allianz only distributes variable products through registered reps, and non-registered products through independent agents in the BGA channel. It does not distribute through the Internet, direct mail or banking channels, he said.

"This structure serves us extremely well," he said. "We get the bigger producers, who bring in $5 million to $10 million in personal production, and we focus on products they are most interested in, such as equity index annuities and long-term care insurance."

The structure also enables Allianz to give producers the support they need to run their businesses, Kavitsky said.

In particular, the company is offering these producers help with "practice management," he said. This can range from education on training staffers to answer the phone properly to how to touch the customer after the sale.

"The practice management seminars and materials add value to the products we offer to agents," said Patrick Foley, president and CEO of Allianz Individual Insurance Group.

Lenaburg, of Banner Life, terms his companys strategy a "single-minded" approach–one has been profitable and that has also been "a lot of fun" to execute. "This way, we know what we do and (we) can be good at it," he said.

Banners emphasis on mortality-only products is unusual by todays standards, he allowed. The company does do term conversions (to a permanent product), he added, "but we do it kicking and screaming."

Many insurers prefer to diversify by offering accumulation products, too, he observed. But he said the asset accumulation business is generally less profitable than the mortality business, and companies in that business "have to be huge to be profitable." By contrast, his company has only 350 employees.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 2, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.