Property & casualty agents have seen an extended soft market, agency and carrier consolidation, a cost shift from carrier to agency, increased technology expenses, tighter contingency agreements, and an overall reduction in profit margins.
While all of this has been taking place in the property & casualty world, the world of life insurance distribution also has been changing. The average age of the independent life agent is mid-50s, and that will continue to increase over the next decade; the industry is not enticing younger people to its ranks. However, as the independent sales force declines, the number of families needing professional life services will increase, creating a perfect storm of opportunity.
Research has consistently shown that Americans want professional help when making their insurance decisions. Studies by the Life Insurance and Market Research Association (LIMRA) show that six in ten Baby Boomer households prefer to buy life insurance face-to-face. Half of U.S. households (58 million) say they need more life insurance—the highest level ever. However, almost eight in ten American households do not have a personal life insurance agent or broker.
Future distribution of life-related products will shift to those institutions that have the data to identify the appropriate prospects and to develop profitable marketing programs to serve the needs of their clients—brokerage firms, banks, and property & casualty agencies. If you are an agency owner or principal looking for ways to expand (and who isn't?), then the financial services field offers exciting potential. Here's how to get started.
1. Know Your Book: Identify your volume and percentage of agency production in the personal lines and commercial lines areas. Do not assume that if you bring in a financial services marketer, he will be arriving with a substantial book of business.
2. Know Your Capabilities: Consult with your IT professional to determine your data mining capabilities. Can you create the appropriate fields to identify financial services prospects? Do you have email addresses for all of your clients? 3. Understand the Basics of Cross-Marketing: Marketing financial services in a property & casualty agency does not revolve around the selling of life insurance products. Marketing financial services in a property & casualty agency is merely an extension of the services already being provided to your clients. Too many agencies attempt to enter the financial services marketplace by focusing exclusively on a product approach, not a servicing approach.
4. Consult an Experienced Professional: This step can get a bit tricky. Identifying a true professional in property & casualty cross-marketing involves much more than meeting with a successful life insurance salesperson. Many independent life producers have come from career distribution companies where they were properly trained to sell life and annuity products. That does not mean, however, that they have been properly schooled when it comes to understanding the mentality of your end of the business. There are substantial differences between the two markets and there is a right and a wrong way to approach your valued clients. Speak to a life brokerage general agency (BGA) that has a successful history of providing marketing support to property & casualty agencies or another agency that is successfully marketing financial services.
5. Ask the Right Questions: Recruiting the right person to head a financial services department is quite different from recruiting a new property & casualty agent to your agency. Ask him if he understands how you do business. Has he ever worked in an agency before? How would he approach your clients? Ask him for personal credentials and professional designations—and then verify them. Remember, you do not have to hire a full-time person to head a financial services department. A qualified life BGA should be able to refer you to someone who will work with you on a contractual basis.
6. Test the Water: Ask your potential marketer to consider you a prospect of the agency—the first client he counsels will be you. This approach will provide you with an understanding of his knowledge of the business, his bedside manner, and his ability to provide solutions to your financial services needs in a professional manner.
7. Build the Plan: Think "octopus." Your marketing plan should have multiple tentacles or action plans specifically designed to market your services. It is all right to start slowly by implementing a few simple programs. The ultimate success of your plan will be determined, however, by your ability to market your services to all clients, particularly business owners and high-net-worth clients.
8. Execute With Commitment: Be patient and committed. Too many agencies attempt to enter the field of cross-marketing financial services without commitment. If you are going to do it, then do it right. Build your financial services marketing plan into your overall agency plan and then stick to it, even if it appears not to progress as quickly as you might like.
9. Evaluate Results: While you should see some simple term sales early on, business and estate planning programs will take substantially more time to mature. Work with your financial services marketer to determine the appropriate times to evaluate all of your action plans. As the business units develop, reduce the resources put into underperforming programs and increase your commitment to the successful ones.
10. Think Long-Term: Although you may be evaluating your business plan on a quarterly basis, consider the need to project your plan several years into the future, particularly if you are adding financial services. Determine your financial goals in years one, two, and three, then build and modify your action plans to meet your goals.
A strategic window is now open for property & casualty agencies to add financial services to their menu. Your clients are looking to you to provide the solutions to their life insurance needs. Get in the game; don't create your own competition. Good luck and good selling!
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