Life insurance companies are going to have to work a lot harder in future if they want to win business from financial advisers.
Life insurance companies are going to have to work a lot harder in future if they want to win business from financial advisers.
At least that is the opinion of Lumley deputy managing director Frank Smith, who says the life insurance industry is far too insular and must learn how to relate to its customers and the agents who talk to their customers. If life offices fail to commu-nicate effectively with agents, they will suffer in terms of lost revenue and in-creased claims costs for products such as income protection insurance.
Smith told the recent Rice Kachor risk products seminar that life companies often treated the agents who distribute their products with disdain.
“(Agents) know we don’t trust them. They know we don’t like them. We treat them like salesmen and then complain when they sell products,” he said.
“And I know this is controversial; but we steal their clients. I know a case where a life insurance agent was brought his son into his business by selling him his re-newal income stream. The life office then told the agent’s son that he had to buy the clients from the life office. The perennial question over who owns the client is not a dead issue.”
Lumley has strong ties with its agents which are predominantly from its partially owned subsidiary National Partnership. Smith says the group worked closely with its agents to produce a solution to the industry-wide problem of profit margins within its income protection product lines.
Once the agents were brought in on the problem, they were able to assist in devel-oping a product which would be both appealing to customers and stop the profit slide. The Optimal product was developed which removed all the bells and whis-tles these products have developed over the years but offered quality basic cover at a cheaper price. Optimal now accounts for a third of Lumley’s income protection product sales and has been a major driver in bringing the portfolio back into profit-ability.
Smith says this is only one example of the kind of results that can be achieved if life offices and agents work together on these kinds of issues.
“Agents are by and large highly professional people. I would suggest to everyone that they get out and mix with their agents and build profitable partnerships.”
