NAILBA Perspectives Perspectives Summer 2018 - Page 8

“I do not believe there is a current system that could accomplish what the BGAs do for the industry,” said Butch Britton, retired CEO of ING (now Voya) U.S.’s Insurance Solutions and past Mooers Award recipient. or potential clients would never complete filling it out,” he noted. “If life insurance could only be purchased online, it would leave more people underinsured or un- insured,” Leibow said. “They could buy term insurance online, but peo- ple with medical conditions would be unable to find the best priced products. After buying, people might wonder if they got the best deal. Without outside professional guidance, they would not find the right products for their situations. Remember that life insurance is not just about the death benefit. It is an essential part of estate planning. A financial planner can help with that but not with underwriting. Affluent clients would get help, but Middle America gets sick too and might not find affordable insurance.” Reducing cycle time is another benefit of technology to BGAs. “The longer the cycle time, the lower the placement ratio,” said Leibow. “I can sell all day long but how many actually get placed? It depends on whether the policy gets approved at a certain price and how quickly it 8 perspectives SUMMER 2018 gets approved and paid for. By offer- ing solutions on their own websites, BGAs can speed things up by making it easier for agents to do business with them.” He said the BGA’s web- site can’t just look like a billboard to be effective. It needs to display many carriers and many solutions all in one place while offering e-apps and e-policy delivery to save time. “The technology for online life insurance issuance exists, but will someone build out a business model to do this?” Leibow questions. “It would be a bold effort. Maybe some- thing like this will happen a few de- cades down the line.” What BGAs do now While agreeing that BGAs are an es- sential part of the distribution strat- egy for life insurance companies, NAILBA Board member Jason Lea, CFP, who is Chief Executive Officer of Brokers’ Service Marketing Group, questions whether they are efficient. “Do we provide a mechanism that not only provides profitable distri- bution results but also growth?” he wondered. “The challenge we have as distributors is maintaining our relevance as a key growth driver of life insurance sales or the carriers will look elsewhere, either by hiring their own agents or going online.” Lea points out the importance of recognizing BGAs as the distributors and carriers as the manufacturers. He is concerned about how much work in the transactional market- place is being duplicated by BGAs and carriers and he wants to see changes in that process. Currently only 20 percent of all transactional business is done on an e-platform. Eighty percent of the time there is lots of paperwork moving back and forth, as well as gathering medical records and lab test results, and then having human underwriters review everything manually at both the BGA and the carrier. “If you ask BGAs, they say they do all the heavy lifting, but the carriers will say they also do it,” he said. “The reason BGAs are involved in the case management of transactional business is because the process is terrible, involving complex medi- cal information and administrative tasks that can take 60 to 90 days before a policy can be issued. Each carrier is working on accelerated un- derwriting. Our task is to help them. Brokerage will cease to exist if we don‘t do that. If we become mired in processing applications, we’ll never get there. “The way we maintain relevance is by making sure we are distribu- tion companies and not only service entities where we’re grinding out all of the effort it takes to sell, process, and put in force a traditional life in- surance policy,” Lea added. “BGAs have become service entities for high volume policies like term insur- ance which consume a lot of staff resources but provide limited reve- nue. The question for BGAs is how can we become better distributors by working with carriers to allow them to control the process?” In the time since brokerage be- gan, the life insurance business has changed. Outside factors, including low interest rates, the shrinking agent population, and low awareness of the benefit of life insurance at the consumer level, which is caused by having fewer agents to serve more customers, have made life insurance sales harder, Lea noted. He is also concerned about people who serve as financial advisors but don’t help their clients with their risk manage- ment needs, seeing themselves only as wealth managers. “Fifty years ago, 20 million new life insurance policies were sold every year and now there are only 10 million because there are fewer sellers, a bad process, and the no- tion that the group policies they get at work are adequate,” said Lea. “We should be selling much more to middle income mainstream America. BGAs need to get financial advisors to talk to their clients about the importance of life insurance. But we can’t ask them to have clients fill out a 45-page application, take a medical exam, get blood drawn, and wait for their medical records to be gathered. All of this can take 60 days or more before they get a car- rier decision or can see the policy. We’re going to work with financial advisors and talk with them about the importance of risk management so they can share that information with their clients. This process needs to be easier and BGAs can be the reason why that happens.” Lea believes BGAs are not talking to financial advisors enough right now. “The problem we need to solve is making it easier for advisors,” he said. “Every financial planner meets with two to three clients most days. How are they not selling life insur- ance to more of those clients? Be- cause there’s not enough money in it to justify putting the client through the horrible process and risk losing them as clients as a result.”