Episode 27 – Distribution Panel, “The Future of Distribution for the Life Insurance Industry.”

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Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

Beyond the Challenge podcast is sponsored by Exactuals, perfecting payments and the data driving them.

Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

Sandy: Welcome to Beyond the Challenge. We have spent the last year talking to some of the most influential and forward-thinking leaders in the insurance marketplace.  Their perspectives have been very well received by our audience and we thought it was time to put together some of our favorite guests to see what they thought about some hot topics.

Sandy: In this episode you will hear from Nick Lane, President of Equitable. Richard DeSousa, SVP, Strategic Partnerships at SCOR. Nicolas Lance, global insurance executive and consultant. Bruce Parker, President, Global Life Insurance at Pan-American Life, and Tim Ash, CEO at Ash Brokerage.

Kevin: During our During our interviews, we asked our guests what they thought about the future of distribution for the insurance industry. Let’s start with what Nick Lane had to say.

Nick: We hit on that a little bit. I see a continued focus on advice. I think the last 18 months, if you look back in this period of dislocation, the importance of advice, the importance of a humanistic touch remotely delivered will continue to be the trends going forward. When you look at all the change that is occurring out there, you have change potentially in tax policies, you have change in the way consumers want to receive and digest information, so the value to me is about delivering solutions, delivering portfolios. Products can be commoditized and that’s why you have to focus on innovation, you have to focus on needs, and you have to focus on advice.

Sandy: So, Nick thinks that carriers need to continue to focus on advice especially during times of disruption like with the Covid pandemic.

Kevin: He also talked about focusing on innovation to help advisors meet their client needs. Let’s see what Richard DeSousa thinks.

Richard: So, twofold. Number one, I think what we call traditional distribution, so face-to-face agent, career agents, you know, like the hometown distributor who knows everyone and is selling them insurance and they’re the trusted advisor, unfortunately, I do think that that’s going to continue going down and we’ve known it’s continued going down for years and not enough entrants are coming into the marketplace. Then you have groups that have tied career agents and they’re actually bringing in some younger folks but some of the more independent financial adviser model, I think, is going to continue having strain. However, where I do think that there’s some emergence is with all of the digital platforms that are available, with all of the direct-to-consumer platforms that are coming out, with the reality that we’re seeing that, unfortunately, even if there is a direct-to-consumer platform there, that if a consumer doesn’t know they need insurance to begin with, well, you’re not gonna get as much traction. You’re getting some traction but, you know, there’s still a delta there. But it also allows for what we can call digital distributors so literally folks who are part-time agents who are using these platforms, who could have their own business but can also make supplementary income as an agent the same way that they might make supplementary income driving an Uber on the weekends. And so that could be a way to start getting back into the, call it the small town distribution, but not necessarily using an independent financial adviser who only does that on a full-time basis.

Sandy: Richard thinks that the face-to-face advisor client relationship is going to continue to go down with not enough new agents coming into the industry.

Kevin: That’s right, he thinks that we will see more direct to consumer platforms and more of what he called “digital distributors” who are agents using these platforms to help sell insurance. Let’s hear what Bruce Parker had to say.

Bruce: We’ve always said that the distribution is aging and that’s true. However, there is a lot of new agencies, non-traditional style agencies, that are recruiting thousands and thousands of new people to our business and we’re seeing that grow. We’re seeing new distribution companies come around. We’re seeing private equity invest in independent distribution in the life insurance industry. And these agencies are really recruiting a lot of new blood to the industry. So, I actually looked at what’s happening in the independent space for the first time and see them bringing new producers to our industry that the career systems that are in place today. One, we don’t just have enough career systems anymore. We have some very, very good ones there but we just don’t have the volume we used to have. So, what I’m seeing is that that independent agency structure is adding more and more people to the industry and that’s very, very important. The key to those agents succeeding is the way — that never changes. You’ve gotta have an agent who can get in front of enough people on a favorable basis and have a good product to sell that covers the need of that individual. And some of these agencies have done a great job there with lead generation, selling systems, those types of things that actually are making it much easier sometimes, or maybe easy is not the right word but giving that agent a much better chance of success by some of the tools that they’re giving them. So actually I’m very encouraged with the future of the distribution of our business. Of course, it is evolving and I’m seeing some really good trends.

Sandy: Bruce sees a lot of new distribution coming in through private equity investments in independent distribution but a continued slowdown in the career channels.

Kevin: He also agrees with most of our panel guests that technology platforms can be a huge tool in helping producers with lead generation and selling systems. Let’s see what our final guest, Tim Ash had to say.

Tim: The future of distribution as we know it today is going to change dramatically. The insurance companies that we, you know, that we interact with are going to find it more and more challenging to be dealing with smaller organizations that don’t have the technology, don’t have the linkage, and so we’re going to see, I believe, a consolidation take shape in the distribution space. Whether you consider us a brokerage general agent or an independent marketing organization, doesn’t matter the label, we think there’s going to be significant consolidation. We’re also seeing it within banks, broker dealers, RIA firms that they want to work with fewer and fewer firms because of the complexities with new regulation and compliance, the requirements for privacy and security, understanding data, and they want to have one source and one resource for us to provide those services and many smaller firms have not invested to be able to provide that level of service. So we’re seeing that today. I think in the next three to five years, you’re gonna see dramatic consolidation.

Sandy: Now with Tim being the CEO of the largest private BGA, he believes we are going to be seeing a lot of consolidation with the smaller distribution firms.  That technology and linkage are going to become more important to the carriers.

Kevin: He also sees large carriers, banks and RIA firms looking to work with fewer distributors based on the complexities of new regulations and compliance for data and security.

Sandy: One of the repeating themes I heard from many of our guests was that insurers need to look at innovation from a customer experience perspective which includes innovations for the agents.

Kevin: I really enjoy going back and listening to our past interviews.  I always find something new that I missed the first time and today was no different.

Sandy: I agree, I always pick up at least one more tip that I missed the first time. Thanks until next time.

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