The recruitment of new advisors into the insurance industry remains an ongoing and rising concern among MGAs and insurers.

The Retail Brokerage Report published by Investor Economics (IE) in late 2008 states that "the recruitment of green advisors is limited by the cost of training and the fear that, once trained, an advisor can be easily lured away."

Meanwhile the recruitment of experienced advisors is more and more challenging than in the past when MGAs could recruit advisors from large career sales forces.

Now, "this pool has largely dried up as a source of producing advisors and the alternative has been to turn to advisors of other MGAs," states the report. Most of the 18 MGA firms who participated in IE's study indicated they do not "actively recruit from competing firms, partly as a result of the emergence of rules and conditions imposed on MGAs by some insurance companies."

Some MGAs and insurance companies are working together to try to address the lack of recruitment. Rick Forchuk, Vice President, of retail distribution at Empire Life, says his company has been active in partnering with MGAs to try to bring new blood into the insurance industry through an incentives program, which has enjoyed success for both the MGAs involved and the insurer.

"Empire's New Advisor Program has, since inception in 2005, seen 235 never-before-licensed advisors enter the business spread over 21 different MGAs, producing at total of $1.2 million of first year commissions, or an average of a little over $250 thousand a year of FYC."

Increased partnership
Mr. Forchuk observes that by sharing mutual difficulties, such as recruitment and other issues, insurers and MGAs have been strengthening their relationships as partners over the past few years. In particular, the 2008 market crisis and increased regulatory interest in insurers and MGAs has helped build stronger bonds between the two groups. "Regulation and difficult times has brought us together instead of pushing us apart."

A few years ago, MGAs often had complaints about downloading by insurers onto MGAs of various services and other demands. Paul Brown, President and CEO of Worldsource Insurance Network, agrees that the relationship is improving and insurers and MGAs are working more closely together. "Absolutely. In terms of sales development, there's definitely been an increase in partnership between MGAs and insurers to build their businesses."

An example is funding from insurers to put on events such as business conferences for advisors, he adds.

Goshka Folda, Senior Managing Director, of IE has also witnessed an improvement in MGA-insurer relationships. Back in 2002 when she researched a previous MGA study, she heard "some very strong opinions" especially about responsibilities. During research into the MGA channel in 2008 and 2009, this situation was significantly more positive. "Many issues, such as who is responsible for what, have been resolved to greater satisfaction. There is more clarity to the partnership model and I think that has resulted, overall, in better relationships between MGAs and insurance companies."