Saturday, July 3, 2010

(No.101) Agents & the agency system: more comments

The previous column on (No.100) presented the opinions of several agents in response to my views (in column Nos. 98 & 99) on the state of the active, selling agency system for life insurance and some of the factors in its decline.

This column presents (below) more commentary on the agency system, prompted by my columns, from writers I have identified because they wrote to me in their official capacity.


1. from Helena Smeenk Pritchard, BA, CLU, an experienced insurance industry salesperson and trainer whose business based in London, Ontario [] involves advanced training of life insurance sales people:

You're bang on again Al ! ...

I too have written about the challenges facing the dually licensed advisors -- especially those whose first love is investments. Asset sales and insurance sales are diametrically opposed -- one being right brain the other requiring left brain. ...

My challenge as you know is getting advisors to pay out of their own pockets for their training. The MGAs [managing general agents] tell me their margins are too skinny (yup, because they've used comp[ensation] to lure existing advisors from other MGAs).

Insurance companies tell me "the comp pie is finite -- and we're paying max comp to the MGAs/National Accounts". BUT there does seem to be light at the end of the tunnel.

My results have captured the interest of a couple of carriers and as you know they have other (than comp) budgets to draw from for priority initiatives. However the insurance industry is still fighting ... an uphill battle because the [Mutual] Funds industry spoiled the advisors like crazy with FREE and splashy events like McKenzie University and the like.

But as I said -- we're getting there.

2. from William H. Rabel, Ph.D, FLMI., CLU, John & Mary Louise Loftis Bickley Endowed Teaching Chair in Insurance & Financial Services, The University of Alabama, Tuscaloosa, Alabama:

Al, point well taken. The industry is committing suicide slowly. But help may be found in strange places ...

As you know we are developing a strong program in Insurance & Financial Services (IFS) at the University of Alabama. Students who have an interest (and they are many) are strongly encouraged to go into the sale of life insurance (or into P & L insurance agency/brokerage).

An important new development, just coming on stream, is a partnership between our insurance program and the sales program. That's right -- a sales program. You may be aware that many top universities offer marketing programs but they eschew ( a great word -- you can just spit it out) "sales". The philosophy underlying this position is the same one that has driven risk management and insurance education from many top schools -- supposedly it's trade school stuff, bereft of intellectual underpinnings.

Fortunately, despite being a perennial competitor for "top sixty" b-school honors ("top 35" among public schools), The University of Alabama has avoided the herd mentality of many in its peer group. The UA faculty feels that both "insurance" and "sales" are college-level subjects, the former worthy of being a specialization within Finance, the latter within Marketing.

I feel it is important for our insurance grads who want to go into sales to actually know how to sell something. Thus, I strongly encourage them to take as many sales courses as possible. By the same token I think it is helpful for people in sales to have a product. Therefore, if sales students are able to take three insurance courses in their curriculum I will give them an incentive to do so through a generous scholarship of up to $1000 per semester.

We have been pretty successful in placing our students with top [life insurance] companies. ...
Hopefully as we increase the numbers who have an education in both insurance and sales we will make our students even more sought after. In the meantime I receive a great deal of personal satisfaction in knowing that I am helping to place grads with good values into careers where they can have an important impact on the lives of many people.

At some point I hope you'll find a way to get your readers to check out the Canadian and U.S. schools that offer education in insurance and risk management. A list can be found at The university courses I am aware of are fully the equivalent (and often harder) than the justifiably respected professional courses such as FCII,CLU,FLMI,CPCU, etc. It stands to reason that a grad who has the equivalent of three professional courses would have a head start over and produce more than one who did not.

Ironically, insurance companies often offer generous encouragement to incent their employees to pass professional exams but may not even recruit insurance grads from a nearby school that offers a rich program -- much less give the new recruits the benefits they would have given employees.

This is irrational behavior!


Alastair Rickard