Is there a new role for the erstwhile life agent?
by Bob GaydosMr. Gaydos is CEO & Founder, Pendella Technologies, a technology company that exists to make the financial protection of individual life and disability insurance available to all people, regardless of age, health status or income level. Visit https://www.pendella.com.
HR personnel in the insurance industry struggle to motivate and retain employees more now than ever. Around 90% of HR leaders are increasingly concerned about employee turnover and the resulting understaffing. After all, nearly nine out of ten insurance agents quit within the first year.
Yet while 73% of insurers in the life/health insurance segment plan to hire on additional staff over the next year—in part to try to solve the understaffing problem but also to allow greater business expansion—recruitment for insurance agents continues to be slow and retention nearly impossible.
If carriers are going to retain agents for more than 12 months, insurance leaders need to significantly change how insurance agents fulfill their role in the industry. Here are some of the top pain points pushing insurance agents out the door and how technology and innovation can help relieve the burden and redefine what it means to be an insurance agent.
Finding the Right Leads
Two of the top pain points for insurance agents are the inability to find good leads and the administrative burden of managing policies. Let’s start with pursuing leads.
Finding and pursuing leads costs time, money, and effort. Insurance agents often spend their own money to buy leads and then spend hours on the phone trying to talk to prospective clients, many of whom will hang up at the mere mention of insurance. Compensation for most insurance agents is based on commissions, so every bit of this wasted time cuts into their overall compensation for a day’s work.
There are two main ways insurers are working to solve these issues. The first is through salary-based compensation. Many insurers already offer salary compensation for the first year to motivate insurance agents to make it to their second year. Maybe that’s why so many agents quit after the first year, because after that their compensation may be based on pouring huge amounts of effort into chasing and managing leads. If insurers really want to retain agents, they should decrease commissions and instead increase salary and benefits in the first three years at least.
The second way insurers are trying to solve the lead issue is by generating leads in house, rather than expecting agents to pay for leads generated by an external call center. Insurers that get in the marketing lead generation business will get a better return on their investment and increase the chances of their agents’ success. For example, insurers can partner with employers, many of whom already provide group insurance and have all the data necessary to fuel instant decision underwriting. If insurers market insurance directly to a select pool of employers and their employees, they can make use of employers’ databases for underwriting and simultaneously reduce time spent tracking down data and chasing leads. This would also enable insurers to work with thousands of agents currently stuck in call centers and bring them in-house to do the real work of developing relationships with businesses.
Of course, it would be easier to take the time needed to keep up those relationships if there wasn’t such a great administrative burden on insurance agents. Independent insurance agents who may work with multiple carriers have to do all their own administrative work, unless they hire an assistant. Agents that work for a particular carrier still often have to deal with vast amounts of paperwork. Agents may also have to collect medical data for medically underwritten life insurance policies. And the list goes on.
Thankfully, technology has come a long way in easing the administrative burden for agents. Self-service portals on some insurtech websites allow clients to easily obtain a quote or even obtain an instant-decision policy online in minutes instead of weeks, with a minimum of paperwork. These are of particular benefit to lower-to-middle income households that can only afford small premiums, because with less expensive underwriting and instant-decision policies, the overall cost of policy processing can decrease even while ROI actually improves for insurers.
Other insurtechs have partnered with employers to provide data-based medically underwritten individual policies to employees with a minimum of paperwork and no medical exam. These insurtechs use AI and machine learning to process health and financial information from employers, provide risk assessment, and offer personalized individual insurance policies for employees.
Also, technology in the form of chatbots can help speed the approval process along by obtaining certain information when a potential client first contacts an insurer. Chatbots have improved far beyond the initial low-level AI that could do little more than answer a couple scripted questions or direct the client to a human representative.
Now, conversational chatbots lend a personal touch to the interaction, while high-level AI can process more complex questions from clients and deliver precise answers. These chatbots have virtually taken over what used to be an inconvenient part of an insurance agent’s job.
Redefining the Role of the Insurance Agent
The eventual goal of many agencies is usually to have agents that can rely on their own initiative to pursue leads and produce results. However, that goal has been producing a lot of dissatisfaction and stress for agents, plus leaving thousands stuck in call centers rather than serving clients. Those with no solutions for these pain points can easily get disillusioned in a fast-paced, relatively low-paid, paperwork-heavy environment. Instead, the goal should be to help agents be successful and more efficient in every way possible.
So perhaps the best changes insurers can pursue to redefine the role of life insurance agents is through defining a role that is salary-based, focused on partnerships with employers, and reliant on cutting edge technologies.
When you hire an insurance agent, they should be able to expect salary-based compensation, training on how to obtain those coveted referrals, as well as training on how to use technology to ease the administrative burden. When that happens, the insurance industry will change for the better.