Independent insurance agents and wholesalers stand at a crossroads
This year, the life insurance industry has made quick and crucial pivots as the global COVID-19 crisis accelerated certain long-standing trends. Over time, those trends will turn out to have a long-term impact on many areas – and that may include the relationship between Canadian wholesalers and independent insurance agents.
Based on a survey conducted just before the global pandemic hit, a new report titled Redefining Wholesaling: The LIMRA-EY Canadian Wholesaler Study found that the predominant mode of communications among wholesalers and independent insurance agents was through in-person, face-to-face interactions, with just 2% of wholesalers meeting with independent agents via video conferencing.
But as noted by Laura Murach, associate research director, Distribution Research at LIMRA: “Recognizing that face-to-face could include virtual as well as in person started prior to the pandemic, but shelter-in-place completed the process as virtual became the only option for face-to-face communication.”
When asked to give reasons why independent insurance agents need an external wholesaler, half of wholesalers (49%) and 60% of independent insurance agents cited product expertise, making it the top factor. However, wholesalers also realized their effectiveness depends on going beyond product expertise with value-added services; that’s supported by 75% of independent insurance agents who said that wholesaling adds value to their practices.
The survey highlighted data analytics as a central pillar of value for wholesalers, as the technology allows wholesaling organizations to best determine how and where wholesalers spend their time. Independent insurance agents, for their part, can leverage data analytics in prospecting, marketing, and certain selling activities.
More than 70% of independent insurance agents predict that data for prospecting and market segmentation will take on greater importance in the near future, and a higher proportion of wholesalers foresee a rise of data analytics use in the practices of independent insurance agents.
“In the pandemic environment, technologies developed for cost savings and enhancing customer reach, such as e-app, e-delivery, e-policy disbursement, and e-claims, have become necessities,” Murach said. “These simplify the process of doing business.”
As regulators increasingly focus on the fair treatment of customers, the wholesaling approach is set to give way to a more consultative approach that goes beyond product, tax, and legal expertise, LIMRA said. The industry appears to be on its way, as 94% of external wholesalers and 53% of independent insurance agents agree that wholesalers are trying harder than ever to understand the needs of brokers and advisors, as opposed to just trying to “push product.”
Still, the perception of wholesalers as product experts appears hard to shake for independent agents, with 42% saying they prefer a specialized wholesaler – where product expertise is dedicated to individual products – compared to 19% who preferred a consultative/generalist wholesaler. Wholesalers as a group are more ambivalent, showing a roughly even split between the ones who prefer to act as specialized wholesalers (38%) versus consultative wholesalers (36%).
“We believe the trends that were already underway pre‑COVID-19 will continue post‑COVID-19; most importantly, the trend in wholesalers pursuing a consultative approach with independent insurance agents,” Murach said. “How wholesalers communicate, the technologies they use, and the data analytics expertise they utilize will redefine the wholesaler model going forward.”
Read the original article at https://www.lifehealthpro.ca/rss/