Since the economic crash of 2008, insurance sales in the MLEA distribution channel have grown nearly 10 percent. Companies that use MLEA distribution remain in the forefront of the industry with the highest agent retention, a younger field force, large client base and cutting-edge technology.
Yet as the industry continues to evolve, how will MLEA distribution adapt in a constantly changing environment? LIMRA surveyed nearly 200 multiple-line exclusive agents to explore their profile and preferences of current business, as well as their plans for the future. For companies that are forward-thinking and willing to embrace change, the future is bright.
One advantage MLEAs have over other channels is tenure. The average number of years an MLEA has been with their current company is higher than that of agents with other distribution channels. Despite a recent decline, MLEAs continue to be leaders in actual four-year retention.
The aging of the sales force, however, continues to confound the industry. MLEA companies have a slightly younger field force compared to other channels, yet overall there are fewer new agents entering and staying in the industry to replace those leaving or retiring.
Agents’ books of business represent gold mines for additional sales. The average number of clients per agent is 1,480, and only 50 percent of those clients have auto and homeowners coverage with their agent. (See chart.) The first barrier to cross-selling is product awareness. LIMRA research has found that half of the individuals who own life insurance with a company other than their property-casualty company do not even know they can purchase life insurance with their auto insurance company. Companies and their agents who break that knowledge barrier are positioned for great future growth.
Most agents are satisfied with their current companies. But there are outstanding opportunities for companies to strengthen the company-agent relationship.
Currently, companies invest significant financial resources to provide support to the field, but some of those services do not provide enough value to agents. A more prudent approach is to excel at the right combination of services to position the company as truly different and to attract the type of talent that the company desires. For example, companies that invest in cutting-edge technology could align their recruiting and training processes to attract individuals who flourish with advanced technology.
The multi-channel and customer-centric environment has greatly influenced the agent’s practice model. How customers engage in the future will greatly affect how an MLEA will conduct business. Agents surveyed by LIMRA said they expect to increase their use of technology to solicit, acquire and service clients. In the next three years, their use of social networking, Skype services, and video conferencing will more than double, and the percentage of new clients found via social media will triple.
As the director of LIMRA’s MLEA research for the past 18 years, I have a natural affinity to this part of the industry. MLEAs are unique amid the myriad of insurance and financial services distribution channels. Today’s MLEA companies recognize the changing landscape. They are poised to adapt to the realities of multi-channel distribution and to the constantly evolving technology innovations that are part of today’s landscape. Along with all the challenges comes a limitless set of opportunities for growth in this special and distinctive distribution channel.