This post is part of a series sponsored by AgentSync.
Life insurance carriers that don’t prioritize compliance and onboarding for their variable lines brokers will lose traction in the life and annuities market over the long term. Making these processes automatic and painless can make the difference in market share and recruiting over time in an industry that’s at an inflection point of regulation, technology, and demographic change.
Annuities, so the saying goes, aren’t bought, they’re sold. This truism reflects a reality of the industry; brokers are the front line of annuity sales in a more particular way than for other lines of insurance.
These products – immediate annuities, variable annuities, fixed annuities, fixed index annuities – are often complex and unknown to people outside of a retirement context. It often isn’t until someone’s sitting in front of a variable lines broker or life insurance producer that they hear enough about these products, and where they fit in a retirement strategy, to even consider them.
This broker-dependent paradigm presents several challenges and opportunities for life insurance carriers interested in keeping or gaining market share over the next decade.
Baby boomer retirements are reshaping life and annuity businesses
The baby boomer “gray wave” is completely upending the steadier dynamic of annuities and securities sales of previous decades.
With such a glut of retirees, brokers licensed to sell variable and fixed annuity products as well as permanent insurance products like variable life are facing a singular opportunity to deploy these products in retirement portfolios. Yet, the paradox created by the retirement boom is that many of the most experienced variable lines brokers in the profession will be sitting on the opposite side of the table, leaving a vacuum for the insurance carriers that have relied on their expertise to sell these products.
The downstream effect is that there’s a coming surge of new brokers entering the workforce who’ll be pushed to handle a historic amount of business per agent. Carriers that support brokers in this “drinking-from-a-firehose” scenario will undoubtedly retain an experienced workforce that bolsters their market share and reputation.
Consumers value seamless tech-and-broker experiences
Some insurance lines have confidently invested in chatbots and anonymized online calculators, assuming that digital is the future of their sales (particularly with lines like auto or home insurance). But something as multivariate and personal as annuities or variable life insurance is likely to retain a heavy human component well into the future.
Consumer preferences reflect that they prefer an integrated bivariate shopping experience – they want to have their cake and eat it, too. What does this mean, practically speaking? It means a consumer wants to be able to begin their variable lines or life journey online, using tools to assess their own income needs and risk tolerance. Then, they may want to ask specifics from a chat bot. But when modern consumers are ready to move beyond self-service tools and get serious about their annuity choices, they want to speak with a broker. Not only do they want to speak with a human broker, but they want their broker to have their information in hand, including their history of asking questions, the products they’ve looked at, and the assumptions they used in their calculations and questions.
Variable lines insurance brokers face heightened regulatory scrutiny
There’s an added layer to the situation for dually licensed brokers who sell insurance and securities (and, by extension, the insurance carriers that use them to distribute products). The Department of Labor ruling on selling annuities that rely on Employee Retirement Income Security Act (ERISA) funds and the National Association of Insurance Commissioners’ (NAIC) Suitability in Annuity Transactions Model Regulation rules place higher restrictions on variable lines brokers than ever. Each new restriction or regulation adds a layer of paperwork and new forms to keep track of.
So, to reiterate and summarize: Consumers have increased expectations of the experience a variable lines broker has to deliver; there are fewer experienced dually licensed brokers and many fresh (inexperienced) brokers; and the amount of time and attention a broker must give each prospective customer is higher than ever.
What does this all mean for carriers and MGAs/MGUs?
Life insurance carriers that lock in operational efficiency for brokers will win in recruiting
The next decade will be the age of operational efficiency. Don’t just take our word for it; Ajit Jain, Vice Chairman of Insurance Operations for Berkshire Hathaway, proclaimed at the giant’s annual shareholder meeting that legacy insurers must spend the next few years condensing their tech systems from hundreds of softwares to tens of softwares.
This operational consolidation will rely on integrations – using source-of-truth data points across all systems – and automations – using process triggers to kick off tasks with little to no human touch. The reality is, integrated, automated tech is the only way for insurance carriers to make the most out of robust systems instead of buying ever-expanding disparate legacy tech tools.
And make no mistake, to discount the preferences of younger brokers and their need to be in front of consumers would be serious mistakes. Annuities sales are currently seeing all-time highs, a result of the historic baby boomer retirement wave and uncertain economic times. This may be a singular opportunity to make moves in this space before the demand for annuities and variable products – at least in their current iteration – ebbs. Trying to take advantage of these trends through increased headcount may temporarily ease your trouble, but will most likely result in a situation where your carrier onboards and trains dozens of operations and administration staffers to manage brokers with both insurance and financial securities licenses only to have to shrink those teams later.
Instead of making your operations a trend-based risk center that expands and contracts with the market, you can maximize your team and your variable lines broker force with better operations solutions.
Streamlined compliance operations also allow carriers and MGUs/MGAs to make the most of Just-In-Time (JIT) appointment provisions in individual states, saving hundreds of thousands on unnecessary appointments while maintaining 100 percent compliance.
AgentSync makes broker compliance an opportunity for cost savings
AgentSync unifies data from the National Insurance Producer Registry (NIPR) and the Financial Industry Regulatory Authority (FINRA) in one comprehensive view. With this crucial information in one place, carriers can decrease the cost of compliance for their internal teams and for brokers in a way that drives back to the carrier’s own bottom line. And with brokers spending less time submitting duplicate information and struggling to verify the data they submitted, your experienced brokers can spend more time with clients and prospects, and fresh brokers can spend more time training and becoming your brand ambassadors.
If you’d like to see what AgentSync’s variable lines support can do to help you streamline your processes for your bottom line, check out a demo today.
AgentSync carriers and MGUs have transformed their onboarding processes from weeks (or months) to days, allowing them the flexibility to meet JIT appointment deadlines with ease.
- Annuity sales will remain high for the next decade but may be a closing window.
- Increased consumer expectations and regulatory standards require brokers to spend more time face-to-face with consumers.
- To best take advantage of the current market, carriers that can help their brokers meet these expectations through operational efficiency will have a singular opportunity to capitalize and profit.
- AgentSync is the answer for forward-thinking carriers looking to solve for compliance and operational efficiency while prioritizing automation and integration.
- Carriers and MGAs/MGUs that use tech to streamline their operations will attract and retain seasoned professionals in a shrinking talent pool.
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