Is your agency benefiting from the following?
- The demutualization of some of our nation's largest, oldest mutual Life companies, and announcements that more will follow. In contrast, others are declaring that they will defy the trend and not demutualize.
- Introduction of Critical Illness Survivor coverages to the United States, after landslide acceptance in other key countries.
- Equity Index Annuities, a means of profiting when the stock market rises, with a built-in cushion protecting profits when Wall Street 'adjusts' downward.
- Long-Term Care (LTC) insurance.
- New rates and new concepts in Life, Health, and Group insurance.
- Life carriers' problems in retaining producers, recruiting new agents, and improving sales, which have been largely flat for years.
Each of these items, taken alone, represents a potentially lucrative marketing and sales opportunity for P/C agencies. A combination of any two or three of them should call for a serious marketing campaign. Put them all together -- today's situation, never to be repeated -- and you're looking at golden opportunities begging for serious attention.
But there's more. Add these current events:
- The ongoing -- some say permanent -- soft P/C market
- Reduction or elimination of contingency income as we once knew it
- P/C agencies' profit squeeze
- Merger/acquisition/cluster movements
- Banks in insurance
- The return of one-stop financial services, with more clout than ever
- Online availability of pre-insurance, products, and services
Agencies need to show profit and -- at least as important -- the capacity to develop even greater profit. The ability to cross-market and develop new business is what makes an agency attractive to a potential buyer, merger, or acquisition prospect.
Cross-marketing growth starts with Life production, which in turn leads to many other possibilities. But it isn't enough to point to improvement in Life production from 5% of the agency's bottom line to a new 'high' of 15%.
These are typical results in the P/C world. The minimum goal should be 50%. In other words, at least half the agency's bottom-line profits should come from Life sales. This includes annuities, health, benefits, and payroll-deduction products.
This goal is not out of reach by any means. In the typical independent P/C agency, the book of insureds is already spending $1.5 million in Life products for each $1 million in P/C premiums. And most of those existing Life products are obsolete or at least subject to serious improvement, if reviewed by a competent professional. And this is only the first step. It doesn't address important new products such as LTC, Critical Illness Survivor, and Equity Index annuities, three products whose potential sales have yet to be realized.
Any P/C agency in business today is able to support at least one full-time, fully committed Life producer. Anything less shortchanges the agency's future and its clients.
The professional Life agent need not be an expert in all aspects of the Life, Health, annuities, benefits, payroll deduction and equities worlds, any more than a P/C producer must be expert in all aspects of the Property, Casualty, Surety, Aviation Inland Marine, and Ocean Marine worlds. But producers must be able to identify the prospect's needs and know where to get the appropriate expertise to supplement their own. In today's marketplace, such expertise is widely available. There's no reason for a P/C agency to be hesitant about committing to serious Life production. On the contrary, the real dangers lie in failing to commit to Life.
The first danger: Losing clients to other agencies' Life producers who bring their P/C associates to your accounts. The second danger: E&O claims by beneficiaries who show that your 'all-lines' agency failed to address or update the Life needs of your P/C insureds. After all, not everyone will have a Property or Liability claim (we hope!). But each will certainly have a death claim and with it a potential questioner about the decedent's Life insurance -- and perhaps even some critical inquiry about why the coverage wasn't better. Can your agency defend its role in that kind of inquiry? Do your files show reasonable efforts to handle your insureds' Life and Health needs as diligently as their P/C needs? If not, why not? Will the reason satisfy a beneficiary or hostile lawyer?
I don't mean to dwell on the negatives; the positives far outweigh them, just as the coverages far outweigh the exclusions in your policies. But they shouldn't be ignored.
In sum, a solid Life operation in your agency can double your profits; lead to creation of other profit centers; make you a more attractive candidate for acquiring other agencies, being acquired, blending into a cluster, or joining a bank; make look good to P/C carriers because of client retention, profit, and ability to attract P/C producers and fund agency growth. Some companies find that the P/C loss ratios improve when agencies sell more Life. And increased Life production will of its own momentum bring additional P/C business. Various agencies have proven each of these points in actual experience.
Now here's the test: Write down whatever reasons you feel are keeping your agency from building Life production to account for at least 50% of a larger gross profit. Include every imaginable factor. Are you going to let those factors strip away your future? I doubt that there's anything on that list, singly or collectively, that can't be swept away if addressed seriously, leaving the door open to meaningful Life production and all the benefits that come with it.
There's no question that your agency can be a serious Life producer. And what better time to start than now?