Here's a letter I received recently:
Dear Dave:
I work for a $3.5 million P/C agency with about 60% Commercial and 40% Personal in premium volume. One in-house Life producer handles Commercial and Personal lines, sometimes with outside help. But she doesn't write any Disability policies at all; she considers Disability insurance a specialty that she doesn't want to sell. Should I try to talk her into it, pressure her into it, or just let it go? I don't want to add another full-time Life agent unless he/she would become profitable early on; it took two years for my present Life agent to reach profitability. What are my alternatives?
Ohio Agency Principal
Dear Ohio Principal:
If it's any consolation, your Life producer isn't alone in avoiding Disability Income production. In the early days of my career, I was a producer in a large P/C agency emphasizing Life/Health products. One of the leading P/C producers was an award-winning Life producer who also disliked Disability and Medical Expense policies. He asked if I'd write those lines for his clients on a 50/50 basis.
I was pleased but surprised; Why wouldn't he write those lines? 'I don't want to risk losing the account because of a sticky claim situation,' he replied. 'But you may have sticky claims in P/C,' I countered. 'Yes,' he said, 'but I can handle those. I'm not comfortable with Health claims.' He demanded only that my work not be an embarrassment nor jeopardize his relationship with his insureds. His arms-length referral served us both well; it kept other agents away from his clients while filling Health insurance needs with his benign approval, even as he was insulated from potential flak. For me, it served as an advanced course in Health insurance production without prospecting. And as it turned out, there were no hairy claim situations which would have caused grief. Still, he was happy with the peace of mind he got in the deal.
In your case, try to get specific about why the Life producer doesn't want to sell Disability coverage. Is she writing Medical Expense policies? If so, she'll be dealing with claims not unlike Disability claims. Is she wary of the technical nuances in Disability policies? Has she experienced bad luck with regard to marketing, claim, or company involving Disability Lines? Does she want outside expertise that's not available in the area? By pinpointing the problem, you're closer to finding the answer.
If, despite all your persuasive efforts, the producer still won't write Disability coverages, you have several alternatives:
1) Set up a Disability producer in the agency. The producer should not take more than a few months, if that long, to become profitable. (The two years that your Life producer took to reach profitability is much too long.) A $3.5-million P/C agency may be large enough to support a Disability producer, especially if he or she handles personal and professional clients, as well as group clients. Disability is a neglected gold mine in most agencies.
2) Get an outsider to write Disability business. Some companies have strong specialists available for such assignments on a full-commission basis, and others on a split-commission basis. Similarly, some managing general agents (MGAs) can provide product and producer on varying commission bases. Or an individual personal producing general agent (PPGA) may be available. In all such cases, insureds must be sold quality products professionally; the principal, the Life agent, and at least one other friendly expert should evaluate the case. (Since your Life agent is cold on selling Disability, she may not know the product lines well, but she could have input about the carriers.)
3) Develop a specialist from existing agency staff. If you're lucky, a customer service representative or P/C producer may like Disability sales. Take extra care to see that their work is overseen by someone competent in Disability; this might be a company or MGA source.
At a recent Life Insurance Marketing & Research Association (LIMRA) Health insurance forum, one session addressed the class of Life producers who don't want to write Disability. The suggested solution: Partner them with a Disability producer. In Life-only circles, the choices and the answers may be relatively simple; Life-only agents may feel free to sell Disability or to pass. But for P/C agencies representing themselves as selling all insurance forms, the obligation to sell Disability may be more pressing. People will have accidents and sicknesses, after all, as a near-certainty. When disability strikes, insureds will look for proper insurance. If they don't have it, they'll want to know why the agency didn't sell it to them, especially if it's the sole provider of all their coverages. Don't leave yourself vulnerable in such situations.
Your duty to offer Disability coverage also equates to a vast marketing opportunity. Explaining its potential should help in attracting the right producer. You're wise in spotting the omission in the Life producer's production, and in wanting to fill it.