Opportunity exists but life insurance industry’s issues hamper sales

The middle-class and the family business markets in Canada are not being served well. Yet, Canadians say they want — and lack — life insurance. It’s also a well-known problem that the industry’s talent pool is aging and shrinking. 

At the same time, a steady decline in the number of policies sold in Canada is failing to keep pace with population growth. Premiums are higher, on average, but the number of policies being sold is reportedly declining. This was the problem hashed out by a panel of industry executives in a recent Canada Sales Congress panel, held on Sept. 30, in Toronto, and organised by the Insurance Journal Publishing Group.

If the industry were to shift its focus from the high net worth (HNW) market, they say the insurance gap and the commensurate opportunity is notable: today, 31 per cent of Canadians are either uninsured or under-insured, says Cathy Hiscott, president and CEO of PPI.

“We have a huge market opportunity,” she says. “We’ve more access to be able to offer the solutions to Canadians; 31 per cent say they want some or more insurance. We have the opportunity right in front of us.”

The panel acknowledged, however, that the industry’s talent pool is not large enough to meet this demand. They also note that the industry doesn’t exactly make it easy to join its ranks.

Barriers to entry  

Although seasoned agents, high producers in particular, know that help in the industry is generally a phone call away, this is not always true for new entrants, many who often find the business to be lonely. As George Sigurdson points out: “There’s no other industry in the world that says here are all of my sales ideas,” says Sigurdson, president and financial security advisor with Sigurdson Financial Group Inc. “That’s why this business is so unbelievable.” 

More, Shawn Redford, chief business development officer with Experior Financial Group, says there’s a disparity in the services agents receive at different firms. “There’s a bell curve. The top 10 per cent of agents at most organizations are treated like gold. They’re paid top compensation. But at the other end of the spectrum, they’re left on an island to themselves. They’re isolated. They’re alone. And they’re burning out because all the revenue opportunities are on their shoulders.”

He adds that only eight per cent of agents last seven years in the business.

“The demand for our services is on the rise, and the number of advisors is declining. We need to do better,” says Barry L. Dayley, chair of the board of trustees with the International Association of Registered Financial Consultants (IARFC) and president and network director at Money Concepts. “We need a way to transition young people to enter our industry and give them a good experience and to integrate (them) and share ideas with current professionals.”

The insurance industry’s problems 

Even if it is acknowledged that the industry needs to attract more young agents into the business by making it easier to enter the profession, the industry’s next challenge might be the fact that it takes a specific personality type to thrive.

“To pretend for a second that anybody can do this is mistaken,” says speaker and coach, Jim Ruta. “This is not an easy job. That is the issue. We want people who believe in this job, who believe in essential financial security.” 

He adds that insurance sales is also not just a job. “You’ve got to love your prospects. You’ve got to have a passion for people, a passion for helping. You’ve got to love this business. Everybody doesn’t.”

Added to this challenge is the fact that Canadians generally think life insurance is more expensive than it is – for several reasons. Among them, Hiscott says the industry itself can take credit for this misunderstanding because agents chasing larger commissions are leading with complex solutions when these should sometimes be simple.

Redford says most managing general agencies (MGAs) themselves are not paying attention to the mass market either. “I was guilty of it myself in personal practice – as my business got more successful, I kept raising the bar in terms of the clients I was seeing,” he says. “You’ve got to meet them where they’re at and, unfortunately, we don’t have enough people to meet the majority of Canadians where they’re at.”

Worse is a push on the part of some companies to focus solely on harvesting production from producers.

“Everybody’s focusing on the HNW, the whole life opportunities. Those are great stories. But who’s talking to consumers about their debt problems, their cash management needs or the term life insurance policy that a single mom needs to protect her family? It’s not profitable, right? For most people that are experienced in this industry, they’re not going to focus on that market,” Redford says. 

As agents become more experienced too, there is also a natural inclination to start selling investments, as well – a cross-training opportunity which doesn’t seem to go both ways, again, for a few reasons.

In addition to the demeanour needed for insurance sales which doesn’t necessarily exist, even among those seasoned in the sale of investment industry products, an agent already chasing assets under management (AUM) is not likely to put some of that effort on the shelf for the work involved in making a life insurance sale. 

“When I started as an agent in 1991 with MetLife, I was taught that the most important thing that we do is holistic planning. Unfortunately, holistic planning seems to be turning into investment planning,” Hiscott says, adding that making sure uncontrollable events such as death, disability and illness are taken care of, can sometimes take a backseat.

What advisors say  

“The reason application counts are dropping in Canada, and the United States is because it’s too difficult to sell. It’s too much of a process. That’s what advisors say,” Hiscott says. “I have to do as much compliance for $100 a month as I do for $1,000 a month. So, a paradigm shift was that many insurance-focused advisors moved into the investment industry.” 

She adds that advisors have asked for instant issue products that are more like selling a mutual fund, without a long application process, saying this might help close the insurance gap.

Bringing back the 100 Club (and other solutions) 

Among the other solutions discussed, Sigurdson recommends bringing back programs like the ‘100 Club’ to recognize volume producers. “Recognize people for doing 100 applications a year. I think that’s a start. People need to fall in love with this product,” he says.

As for why, Sigurdson points out the product differences that warrant recognition. “Easy sales, selling mutual funds. You just take an order. But to do life insurance, you have to go and see people,” he says. “You can never stop going to these kinds of meetings.”

Another solution presented is notable for its simplicity: Tell your producers that life insurance sales are a priority.

At Money Concepts in the United States, Dayley describes the moment when he realized the firm’s sales force wasn’t focused on this priority, at all.

“Four years ago, I looked at the production numbers and we were growing as a company, about 30 per cent a year, which is healthy. We were gathering assets like you wouldn’t believe and our advisors were doing really well. But I looked at the numbers, the production numbers, and only two per cent of the revenue was coming from the sale of life insurance – two per cent. So, we brought it to everyone’s attention,” he says. “We put together a program and even created an award they could receive if they did certain things to sell more life insurance. Just by bringing it to their attention, four years later, that number is up to 15 per cent. I wish it were higher but 15 per cent is a lot better than two.” 

He adds: “A lot of financial professionals are so focused on gathering assets for the long term, recurring revenue that they can bring to their business, that they overlook the powerful, the significant strategic power of using life insurance in different ways.” 

Collaboration needed  

While banks and captive agencies have committed to support and service and training for new agents, the same cannot be said of other players in the industry.

“I think we need to leverage partnerships. I think it also starts with my peers at other MGAs,” says Hiscott who says companies need to look beyond competition to collaborate on the problem at hand. “I also think our carrier partners play a very important role,” she says.

“Business has to figure this out. We have to come together and bring in the right people and train them the right way,” Ruta adds. “We have to find people with passion and love for this business.”