Complacency or self-deceit can undo much good, and it can kill potential.
Too often I speak to P/C agency principals who say that they're doing just fine, thank you, in Life production. They have no complaints, there's production, so why look any further or make changes?
On closer inspection, however, I find these typical scenarios:
a) Three Life producers in a $30-million P/C agency, each having great potential but not generating profit in five years;
b) One producer in an $18-million agency-very profitable for the Life producer but an actual loss to the agency for three years;
c) One Life producer covering a chain of four agencies, producing very little business but on an endless draw;
d) Life/benefits profit of $225,000 in a $32-million P/C agency; or
e) Gross Life-commission income of $58,000 in a $4-million P/C agency; Life producers and overhead are paid, leaving no profit for P/C house.
In all these cases, the P/C agency principals thought they were doing as well as could be expected, considering all the tales they'd heard about the difficulty of establishing Life production in P/C agencies. But no P/C agency has to settle for such failures or shortfalls. It isn't enough to want Life production. It isn't enough to charge one or more persons with Life production.
It isn't even enough to see a profit, unless the Life activity and profit bear a reasonable return. Even a profit of $225,000 to an agency is no cause for complacency if the agency's book of insureds represents expenditures of more than $45 million on Life and Life-related products. A general rule is:
For every $1 million of P/C premium passing through an independent P/C agency, those insureds are spending about $1.5 million on products in the Life family.
Work on the conviction that your Life operation has room for improvement; identify those potential improvements. If this isn't done now, dire results will soon follow.
It is possible for P/C agencies to write decent volumes of Life insurance consistently. In the past year, LifePLUS has interviewed several P/C agency principals with successful Life operations, and no two of them do it the same way! Yet only a small percentage of P/C agencies are coming close to realizing their potential in Life production. Try to identify the various pockets of potential within the agency. How many insureds does the agency have in the Personal Lines book? Is that enough to keep a Life producer busy? Do you have a Life producer dedicated to Personal Lines prospects?
Look at the Commercial Lines book. Is a Life producer addressing this market? If so, is he or she comfortable and competent in that market and all the tangent products it leads to? This includes Key Person insurance and payroll-deduction products such as equities; executive plans; buy/sell and stock-redemption plans; retirement and deferred-compensation programs; Group Medical, Life, and Long-Term Disability insurance, and related products. Has someone contacted the white-collar employees of all Commercial accounts to handle individual needs?
How about gray-collar mid-level executives and blue-collar employees? In the Commercial Lines potential alone, there may be one or more Life-profit centers. Are you satisfied to leave that potential to what the P/C producers may write? Do you have a mom-and-pop Personal Lines producer addressing that complex market? Think about all the premiums the Commercial accounts are spending elsewhere, and consider your agency's job incomplete until most of those premiums are written through your agency.
I have never seen a P/C agency ready and able to address its full Life potential. That includes the two agencies in which I worked as a producer, and the one I owned-and all three were seriously focused on Life production! In practice, there's always more potential than can be handled, even if systems are in place. That's why it's disappointing and troubling to see so many agencies satisfied with submarginal production.
Avoid complacency in Life production. Be dissatisfied in a positive way, identifying each separate pocket of potential-Personal, Commercial, equities, and their sub-specialties-and addressing them systematically.
Agents may ask, isn't some Life production better than none? No. Consider that some companies are requiring Life sales to maintain a P/C contract, and results generally have been favorable not only for carriers, but also for agents. (LifePLUS strongly favors voluntary Life production without threat of penalties and prefers bonuses for those who produce; however, some companies claim that desperate times demand desperate steps.) Don't be complacent just because none of your agency's P/C carriers has demanded Life production. Times change. More importantly, Life production can perform many wonders on the P/C side of the ledger and on the agency bottom line.
Unless your agency's Life production is beyond improvement-be honest in that assessment-don't be satisfied that the present system should be left unchanged. It may not be broken, but don't be lulled. Break it! Address potentials. The rewards are worthwhile.
WHAT IT MEANS TO YOU
Has your P/C agency fallen into a complacent rut when it comes to Life sales? Little or no profit means the agency is not living up to its potential. Life activity and profit should bear a reasonable return on the potential. Be dissatisfied with the agency's Life production in a positive way.