One New Year's Resolution the Industry Must Act On

The National Association of Insurance and Financial Advisors has partnered with the Million Dollar Round Table and GAMA International in a project dubbed Task Force For Our Future. The organizations are exploring ways to reverse trends–notably the consolidation of insurance distribution channels and advisors' increasing focus on the high net worth–that have left the middle market underserved.

To help new, mid-market oriented financial planners, State Farm Insurance, a Bloomington, Ill.-based multiline insurer that caters mainly to this demographic, is co-sponsoring with the Financial Planning Association, a residency program for State Farm agents who are pursuing the certified financial planner (CFP) mark. Through role-playing and case studies, the week-long boot camp helps new planners "learn the art of the profession."

Other carriers are heightening their focus on consumer education and technology upgrades. Anne Katcher, a senior vice president of product life cycle management at AXA Equitable, New York, says the company encourages affiliated agents to "disturb" client prospects with stories about the consequences of not owning life insurance. On the tech front, the carrier is leveraging new digital underwriting tools to speed application processing and sales.

Moving Beyond the Margins

These are all worthy measures. But to significantly reduce the number of uninsured in the middle market, more has to happen–and at the carrier level.

Since transitioning from mutual to stock-owned companies, too many life insurers eliminated their direct/career agent channels to cut labor and distribution costs. As a tactic to please shareholders focused on near-term profits that perhaps made sense.

But such disinvestment harms the industry and the very people carriers hope to serve. Fewer agents receiving basic sales skills from carriers–forget about BGAs, who mostly recruit experienced advisors–translate to a smaller pool of life insurance professionals to sell to (and win) middle market clients.

So closing the coverage gap really is about the carriers extending their time horizon on business objectives. What steps, they must ask themselves, can be taken to boost long-term shareholder value? As regards better serving the middle market, the answer is clear: restart (or expand) direct sales channels; give new recruits the training they need to survive in the early years; and help them build mature businesses in later years without having to move up-market. Nothing less than these three action items will suffice. Be it so resolved!