Life Personnel: Module III

Once you've decided to sell Life insurance in your agency, using one option or another, you'll need to recruit and/or train the staff necessary to make your operation profitable. And, you'll need to know how to assign responsibilities within the department and how to compensate your people for carrying out those responsibilities. You'll want to know how to properly motivate and supervise those people so that your operation continues to be profitable. That's what this 'Life Personnel' module is all about.

You'll find the information in 'Life Personnel' divided into six distinct areas: recruiting, interviewing, compensation, training, supervision, and motivation.

In the 'Recruiting' section, you'll find information on:

• sources for Life producers
• methods for attracting Life producers to your agency
• desirable traits to look for in Life producer candidates
• undesirable traits in a Life producer
• general recruiting tips

You'll also find a 'Recruiter's Report' that you can use to evaluate candidates.

'Interviewing' provides you with an interview process and questions and includes an employment application, interviewer's evaluation form, and other forms useful in the interviewing process.

'Compensation' is the largest part of this 'Life Personnel' section. Compensating your people for Life production, or any production for that matter, is a very individual and personal part of your agency's plan. Your compensation plan must suit your agency's philosophy and personality. That's why we don't propose here that the recommendations we have made are set-in-stone, 'must-implement' plans for every agency. What we have done is make suggestions, and provide models, for compensation plans under the various options you have for your Life operation. You'll find information on compensating both producers and CSRs, and we have provided sample broker and producer agreements and commission schedules.

The 'Training' section will present guidelines for training your staff to sell Life insurance, and for determining 'who does what.' Finally, the 'Motivation' and 'Supervision' sections give you the information you need to implement and continue a follow-up program in your Life insurance operation.

INTRODUCTION

Unless you use only your existing people to sell Life insurance in your agency, you'll need to recruit Life producers. Even if you start out using P/C people to sell Life, you may need to develop your department further in the future with a new producer. How to find just the right person for your agency is what this section is all about.

The recruiting process should be ongoing in your agency, and it takes time and effort. The energy you put into this endeavor will pay off. There's nothing more expensive than hiring and training someone, only to have to start all over again in three or four months because the person wasn't right for your agency to begin with. Following the techniques outlined here should help you avoid this situation.

In this section, you'll learn how to find the right person for your needs, using six basic concepts in recruiting:

• the distribution system
• background of the applicant
• critical issues
• how to assess the producer
• where to look for the right producer
• the reservoir of 25

Statistics show that the average Life insurance producer writes 55 applications a year and spends 80% of his or her time prospecting. If this is so, you may ask, how are you expected to fulfill the Rule of Fifty, which states that, given 50 qualified leads to start with and 25 qualified leads per week after that, a Life producer should complete two sales per week? (The Rule of Fifty and its application in setting up a Life operation was discussed fully in the previous 'Marketing Plan' section of this Agent's Guide.) You should expect to be able to fulfill this rule because your Life agent won't need to spend so much time prospecting.

Today's Life agents know that they must spend more time selling and less time prospecting. While they used to rely on renewal commissions to provide a large part of their income, now, as obsolete policies lapse, renewals are disappearing and they must sell new, sophisticated policies in a more competitive market. Projections show that the number of Life producers will be reduced by up to 50% in the next five years. That means, to succeed, a Life producer will have to work harder and be smarter-and won't want to spend a lot of time prospecting. As a P/C agency filled with leads, you offer a valuable opportunity to a Life producer. So, your chances of finding a good producer are positive.

Where do potential Life producer candidates for the P/C agency come from? They can come from a captive Life company, from an independent Life agency source (personal producing general agents, or PPGAs), or from a multi-line background.

Captive Life agents sell almost exclusively for the company that hires them-they are not encouraged to write business with any other carriers. A captive agent receives training, security, renewals, products, and nearly everything else required for sales from this one company.

There are advantages to recruiting captive Life agents. They almost always receive excellent training. Captive companies are known for training people well, and the result is agents who really know the Life insurance product. Another advantage is that captive agents are accustomed to following instructions. Most of them have supervisors who train, motivate, and supervise them on a weekly basis. In short, they are accustomed to being managed.

Disadvantages to captive agents, however, include the fact that they only know one company's products. They usually haven't been encouraged to learn about any competitors' products.

Another possible disadvantage: Captive agents who go into a P/C environment where there is little or no direct supervision will tend to flounder. They are more likely to succeed if they receive proper guidance and weekly supervision (which this Agent's Guide can help you provide-see the 'Supervision' and 'Motivation' sections).

Another recruiting source is independent Life agents (PPGAs), who deal on their own behalf with customers, and more than likely represent more than one insurer. The advantage of recruiting such people is that they are already knowledgeable about the marketplace. These people have made conscious decisions to exchange security for freedom-they want to represent customers and be able to choose those companies that will best satisfy those customers' needs, much like the independent P/C agent. Independent Life agents have market savvy.

Some disadvantages of independent Life agents: Number one, they are independent and are probably used to working with certain carriers. There may be a conflict if they come into a P/C agency where carriers' production requirements must be fulfilled before other business is sold. Another conflict can arise over ownership of contracts. If your new producer has been successful with one or two carriers, he or she may want to bring those carriers into the P/C agency, as holder of the contract. As the independent agent, you, of course, also want to hold the contracts. Another disadvantage is the very fact that this individual is independent-used to working alone-and this might preclude acceptance of close supervision (this, of course, depends on the individual). Close supervision of Life personnel is something we believe must occur in the P/C agency, particularly with new producers, if you are going to be successful.

The third category is multi-line producers, who represent particular companies, but are responsible to write both P/C and Life-related products. The advantages of securing the services of such producers are obvious-they will be able to round out the account immediately and can service all aspects of it.

The disadvantages to recruiting multi-line producers are similar to those inherent in recruiting captive Life agents. Multi-line producers generally only know and understand one company's products. They will have to be reeducated to sell the products the agency wants sold with those carriers the agency decides it wants to use.

Exactly what experience has the applicant accrued? You'll find that most of your producer prospects share four common areas of background:

1. They are producers writing Group Health, employee benefit plans (small group), Life insurance, business Life products, and so on.
2. They are managers who have decided to go back into personal selling.
3. They are brokers or wholesalers. They might have represented a manufacturer, market, or company, securing the services of agents who would write that product.
4. They are company specialists. This includes marketing representatives, pension experts, and specialists who go into the field on behalf of the company and write that company's business with the agencies interested in using their services.

Following is a discussion of the important elements of each of these four basic back-grounds. The discussion should provide you with a starting point for your questions and observations when interviewing candidates.

You need to find out exactly what types of products producers have been selling. You'll find several major emphases, including Group Health and employee benefit plans, individual Life products, and Business Life insurance products.

Group Health and Employee Benefit Plans-It will be difficult to get producers who have primarily been selling these products to sell Life insurance. The transition between these products and Life insurance is almost as tough to make as the transition from P/C sales to Life sales. In many agencies, the Group Health and employee benefit sale tends to be written by the P/C agent simply because it lends itself to call-ins, a lot of quote work is involved, and it's more of a demand product. It 'looks and feels' more like a P/C sale than a Life sale. We don't recommend hiring a Group Health person to sell Life.

Individual Life-The individual Life producer is a person involved in selling family Life insurance who probably hasn't had much Business Life experience. If you have a predominant percentage of Personal Lines business in your agency, this is the kind of person for whom you are probably looking.

Business Life-If you have a predominantly Commercial Lines organization, you need a producer who understands and has worked successfully in the business market.

If management has been the primary occupation of your candidate in the past, find out why he or she wants to go back into personal production. It's not uncommon to find people who started selling with captive companies, moved into management, and became disillusioned, for whatever reason. They then choose to go back into personal production. When this happens, there is usually a period of time where the ex-manager is trying to establish sales disciplines and relearn the products. This process can take a long period of time, and you should be aware of that if you want to hire such a person. You may have to provide training.

Brokers/wholesalers should have extensive product knowledge, particularly about the companies they represent. However, such people may not have been at the point of sale for a period of time. They may be responsible for a lot of premium, but you need to find out exactly how much of that premium has been personally produced. If they haven't been selling personally, you'll have to reestablish discipline, selling systems, and supervision.

Company specialists usually represent an insurance company and go out into the field as trainers. They may have a certain area of expertise. Here are your major concerns when recruiting and interviewing people with primarily this type of experience:

• They have probably made only certain types of calls. Make sure these calls represent the customer base in your agency.
• They are not accustomed to prospecting. Premium volume may be high, but they have probably not been involved in prospecting for these sales at all. If this is the case, it should be a red flag. Know full well that this person will need support in the area of prospecting.

There are three of these:

• Prospecting/Point of Sale
• Case Rate
• Malleability

Applicants should understand that they will be aggressively prospecting your database. Of course, this doesn't mean they will just go through the files choosing those on which they want to call. You are going to provide leads on a consistent basis (see the 'Marketing Plan' section for more information). They will be responsible for calling those prospects and lining up fact-finding interviews (unless your CSRs are calling for appointments).

Check on what kind of point-of-sale presentations this individual has been making-have they been one-call or two-call sales? Our research in P/C agencies tells us that the ideal system involves two calls (more details can be found in the 'Sales and Marketing' section of Volume 2). Briefly, a two-call system involves a Life producer calling on an existing P/C account for a fact finding session. The Life producer takes the information back to the agency to review, analyze, and study. He or she prepares a presentation document based on that individual person's needs and makes the presentation in the second call. If your candidate has made primarily one-call sales, be aware that he or she may take more time to adjust to your system of selling.

You want an individual who is able to develop a rapid Life insurance case rate per year. The Rule of Fifty (a case-rate standard explained fully in the 'Marketing Plan' section of this Agent's Guide), calls for two sales per week for the first six months, and then three sales per week every week thereafter-well over a hundred cases per year. Your recruits must understand that this is your expectation level. If they have performed at this level in the past, your task in getting your Life operation going will be easier.

The ability to change and adapt to different situations is extremely important. A new producer must be flexible-he or she must adapt to your organization and the needs and wants of your agency. Hiring someone who wants to change your organization to suit the way he or she does business won't work.

People who have been in the business between two and five years are most likely to be malleable. They are young, energetic, and want to be appreciated, and they will follow suggestions and accept supervision.

When deciding which producers to recruit for your agency's Life operations, consider these seven major areas:

• Qualification
• Determination
• Compatibility
• Chemistry
• Referrals
• Revenue
• Performance/Consistency

Find out if your recruits are qualified to work in your agency. They may be Million Dollar Round Table qualifiers, but still not be right for your agency because their backgrounds do not match your agency database. For example: You may find a person who qualified for the Million Dollar Round Table and made a substantial amount of money selling family policies-but you have a Commercial Lines agency.

You would have to retrain this person in Business Life insurance to sell to your client base.

Determination means having the 'horsepower' to actually do the prospecting and selling, and being able to establish a rapid case rate. You can find out if your candidates have this quality by asking about their past and presenting in very clear terms what will be expected with regard to prospecting and case rate in your agency.

Is this person going to be compatible with not only you, the agency principal, but also with the rest of the people in your organization? Compatibility means pace. You don't want a producer who works at about three levels higher than your group. Conversely, you don't want someone who naturally works at a pace much slower than that set in your agency. Pace must be compatible.

Do you like the individual? You should respect, get along with, and like your new producer. It's a fact that performance levels don't always remain high. When performance is down, you must constructively criticize the job. You'll have a higher probability of successfully doing so if you like the person whose job you are criticizing. If the chemistry isn't there, when times get rough you won't want to perform necessary management responsibilities.

Get at least three referrals about your recruit. When you call a business referral, say: 'We are presently talking to [NAME], a former employee of yours. He gave your organization as a reference. I'm simply calling to find out if there is anything you can tell me about him, since we are interested in putting him on as a Life Producer with our agency. Is there anything that you could share with me about this individual?' You may get good information, but you may also find that it is company policy not to discuss the employee, but only to confirm employment.

Find out what recruits have been earning. Determine what they earned in first-year commission, how many cases are represented by that first-year commission, and exactly what kind of cases they were; e.g., individual Life, annuities, Health insurance, and so on.

To discover recruits' true sales performances, try to obtain a copy of daily planners or sales records-wherever it is that written cases are recorded. A good salesperson will keep an annual record that shows how many cases are written on a monthly basis, the size of the cases, and what type of insurance was sold. This will indicate to you past performance and how it matches up with the performance you will be demanding.

Persistency is important, also. If the cases written are staying on the books, business written for you is likely to stay on the books, also.

In addition to these seven major areas for assessing your recruits, we suggest looking for the following 'warning signs' when going through resumes and gathering information on your recruits:

1. Unfamiliarity with area: This person doesn't have a natural market in the area and doesn't have any contacts. As simple a matter as knowing the way around town can make a difference in selling.
2. Personal problems: Drug abuse, alcoholism, and other personal problems may affect job performance.
3. Job need: If the applicant appears to need a job desperately, this could suggest a problem-he or she may have had trouble staying in a job, or may grab too quickly at a job opportunity that isn't right.
4. Lack of insurance ownership: If the candidate doesn't have any Life insurance, it's likely he or she is not doing the best job for customers.
5. Instability: Beware of a candidate who has a number of recent job changes in a short period of time. This may indicate he or she is easily bored with a job, lacks commitment, or quickly irritates employers.
6. Weaknesses: Ask the candidate, 'What are some of the areas of job discontent you have had in the past?' If each time the person has changed jobs there's a pat answer as to why, such as 'the boss was an idiot,' or 'the other agents didn't like me,' weed this person out.

In addition to considering the above warning signals, you should also look for the following positive qualities:

1. Responds to adversity: Find out if the person has had any areas in his or her life in which it was necessary to overcome a challenge. For example, in the first interview, you might ask such questions as, 'In the last three years, what was the biggest obstacle you had to overcome?' (You'll find more information on questions to ask under 'Interviewing' in this 'Life Personnel' section.)
2. Success pattern: Is there a pattern of success in the applicant's background? Ask what his or her greatest achievements were. Look for answers along the lines of 'When I went into the organization it was at X premium volume and when I left it was three times that.'
3. Money-motivated: A money-motivated person paid on commission basis should make an excellent salesperson.
4. Attitude toward commission: If the candidate has been on salary, find out how the person feels about commission income. Look for someone who has enough confidence to go on straight commission after a set amount of time.
5. Work ethic: Selling Life insurance is hard work and can mean long, irregular hours. Test the person by asking if there's any time he or she is unwilling to work, such as Saturdays or evenings. You want someone who is willing to