Insurance Companies Don’t Want Agents
Put yourself into the position of the insurance companies, don’t make it personal. This is about money and agents cost a lot of money.
When clients complain against agents, many agents tell me that they are “too valuable” and there is “no way the company would ever terminate me, I sell too much.” I have yet to see an agent so big that the company wasn’t willing to terminate his or her contract. Sadly, most agents have a very inflated view of their worth to the insurance company.
In reality, companies would love to eliminate independant agents altogether.
Yes, I said it.
Why? Agents are expensive. Every insurance company on the planet is working hard to go direct to the consumer and cut us out completely. Now, they are quiet about it, but if you watch what they are DOING instead of the platitudes they feed us (“We Value Your Partnership”), you see how heavily they have invested in DTC. Don’t blame them, you’d do the same if you ran the company too.
Agents get companies sued.
Eliminating agents, eliminates a lot of liability.
Most agents are good, but that rare bad actor hurts the company not only in the wallet but in the media. Remember with the AIG execs were spending lavishly on prostitutes in Hawai’i? I do. Remember when an agent wrote 700 policies off of tombstones in a LA cemetery? I do. How about the undercover cameras that a news station set up in St. Louis to film an agent giving a MAPD presentation to a woman posing as a prospect. I found what he said passable and definitely not worthy of the department of insurance forcing that company to cease selling in MO for a year. Agents cause headaches that the companies would love to avoid. Can you blame them? We all know the majority of agents are good, but we also all know some terrible agents.
By working on behalf of the company, our behavior binds the company. Imagine having 40,000 kids running around with your credit card. Liability, lawsuits, and damage to the brand the company worked so hard to elevate in inevitable. There are simply too many agents to police all their behavior.
In the MAPD world, the independent distribution channel consistently produces 80% of sales. Against all odds, the feet on the street keep outselling the call centers the carriers invest so heavily in. And I know it doesn’t make them happy.
I was told in 2011 that the FMO role would be obsolete in 5 years. The SVP of one of the largest insurance companies asked me what my plan was, since my current role would go the way of the travel agent. Alas, it feels good to still be here 10 years late — but I agree that, while his timeline was too aggressive, his prediction will come true. Consumers change. Amazon and Covid 19 have both contributed to a massive change in consumer habits. Will retirees one day say, “Alexa, send me Medicare Supplement quotes?” Undoubtedly yes. The question is when.
As consumers become more and more adept with technology, the role of the independent insurance agent will get squeezed until there are very few agents as we know them today. Those agents who survive will find ways to adapt, most agents will refuse (as they are steadfastly refusing to use e-apps right now)to change, and will retire out into obsolescence.
Until that time, and I still think it is years in the future, the insurance companies will bemoan the expense of having an independent sales force. They will begrudge us our antiquated hierarchies and outdated face-to-face selling style, as long as we keep producing the majority of their sales. But the end is near and smart agents are with a long career ahead of them have their eye on the changes that are ahead and will adapt to survive.
Sylvia Gordon and her sister, Rebecca, run one of the nation’s largest health and life insurance distribution offices in the nation. Gordon Marketing trains thousands of agents on Medicare, Health, Life and Annuity sales and represents all the major insurance companies. Both sister are and always have been active agents themselves.
