Taking a Leap: Life Insurers Attract New Agents Seeking to Make Career Moves
Many are changing their careers in search of the flexibility, freedom and control that comes with being a life insurance agent. Here’s why.
- Lori Chordas
- September 2021
- Help Wanted: The number of agents needed in the life insurance sector is expected to grow in the coming years.
- Examining Retention Rates: But many of the new recruits that will come into the industry won’t stay, as retention rates among agents are significantly low, especially after three years on the job.
- Coming From Nontraditional Places: While life insurers look at young talent and those within the financial services to help fill the impending talent gap, professionals from outside the industry, such as firefighters, teachers and accountants, also are aspiring to become agents and make a career change into the sector.
Nurses, teachers, accountants, construction workers, sports coaches and others from all walks of life are increasingly making their move into life insurance. They're changing their careers in search of the flexibility, freedom, control and ability to help others that comes from being a life insurance agent.
They're joining the ranks as life insurers work to recruit new agents from both inside and outside the sector as the industry finds itself at a crossroads. The impending retirement of baby boomers over the next decade and low retention rates are challenging recruiters to keep pace with the growing demand for agents.
In the case of Primerica, nearly 90% of its life insurance advisers have come from outside the insurance industry into a career that CEO Glenn Williams said allows them the opportunity to use their entrepreneurial skills and create their own businesses, earn a living and help clients prepare for the future.
He expects that number could climb even higher as COVID-19 is reinvigorating individuals to seek career changes that won't tether them to a desk from 9 to 5, giving them something different than their current post.
Primerica isn't alone. While the largest subset of industry agent candidates is typically drawn from financial services, LIMRA data comparing April to October 2020 to the same period the prior year found candidate testing for field sales positions increased 31%, driven by prospects from hospitality, health care, transportation, construction and IT.
Nearly 90% of Primerica’s life insurance advisers have come from outside the insurance industry.
Filling the Need
The industry is finding ways to replenish its ranks because of a high agent turnover rate. Nearly 90% of agents across various lines of insurance, including life, quit within three years, according to life insurance agency management system provider AgencyBloc. Rising competition from direct and digital channels, the challenge of finding new prospects and the threat of rejection all have a hand in that trend.
In addition, industry experts say relatively flat life insurance sales in recent years and a 3% decline in new business annualized premium in the U.S. last year, according to AM Best data, are also creating some concerns for agents whose livelihoods are largely dependent on commissions from sales.
The exodus of agents from the industry is also a costly blow to life insurers and financial services organizations not only in terms of the loss of valuable talent but also in terms of the time, resources and technology that they're investing to get a new agent through their first three years on the job.
Kathy Reid, vice president of talent solutions at LIMRA, said, “if an insurance company hired 100 agents and has 22 still under contract at the end of three years, their investment in each of those 22 agents, according to LIMRA data, is approximately $102,600.” She noted that about a quarter of those who leave insurance companies do not leave the industry.
The exodus couldn't come at a worse time. COVID-19 and the more than 4 million global deaths left in its wake has forced individuals to confront their mortality, raised the awareness of life insurance and heightened the need for more agents.
Since the start of the pandemic in March 2020, the number of Americans working with financial advisers climbed to 38% from 29% before COVID-19, according to Northwestern Mutual's latest Planning & Progress Study.
But as the need for life agents intensifies, the industry last year—particularly in the early months of the pandemic—saw its number of agent recruits fall 6%, according to LIMRA.
The number of affiliated or career life insurance agents contracted to sell policies for a single insurer also has been steadily declining over the past two decades. The growth in the number of independent agents, who continue to make up the bulk of the sector's producers, has slowed in recent years, increasing only slightly from 190,000 in 2013 to 197,000 in 2018—the latest year of data available from LIMRA.
Life insurers are pulling out all the stops to change that.
Agent recruitment and development is part of Primerica's lifeblood, and Williams said the company has a number of programs and initiatives in place, such as networking, in-house licensing training and building a diverse workforce, aimed at creating that success.
Northwestern Mutual is focused on building up its agent force by offering prospects tools such as an enhanced digital client experience, extensive training programs and teaming arrangements that provide support and “an appealing entry point for new advisers who, for whatever reason, don't want to start on a purely independent model,” said Tim Gerend, chief distribution officer.
LIMRA has long assisted life insurers on their candidate journeys and helped them redefine and recalibrate their processes toward what agent recruits and companies value most, Reid said. In July, LIMRA launched RightChoice to help companies tailor the way they assess sales candidates to align with their goals.
“Because companies are looking for a one-size-fits-all solution to recruiting and selecting new producers, RightChoice allows companies to build out a process that works for them,” she said. “Hiring managers can form an assessment program suited to their sales culture, creating an engaging, well-rounded experience that examines multiple dimensions of a candidate.”
As technology increasingly makes its home in nearly every corner of the life insurance sector, it's also become a critical part of the agent recruitment process with tools such as virtual recruiting, used extensively during the height of the pandemic, and social media.
“Something like LinkedIn is a far better driver of quality agent candidates than general job boards where people may not know anything about the industry or the job,” Reid said. “Social media, if done correctly, allows companies to fine-tune their ideal candidate profile, getting it down to almost a science to find candidates with the right competencies and skill sets they're looking for.”
Among those competencies, noted Guardian Life's head of field recruiting Katie Martineau, are resiliency, perseverance, interpersonal skills, and an entrepreneurial spirit.
The rest, she said, is trainable.
That's good news for new agents who may be coming from other industries with little or no knowledge about insurance.
According to LIMRA, 33% of candidates with nontraditional backgrounds come into the industry knowing “nothing or very little” about a financial services sales career, compared to just 17% of candidates with traditional financial backgrounds.
“But that's the beauty of this career,” Martineau said.
“There is no specific education required for agents, and life insurers can really stand out from their peers competing for the same talent by training new hires about the industry and their products, helping them identify leads and teaching them how to build their own businesses,” she said.
Life insurers can really stand out from their peers competing for the same talent by training new hires about the industry and their products, helping them identify leads and teaching them how to build their own businesses.
The Road Ahead
As life insurers work vigorously to fill newly created and vacant agent posts, some left open by the pandemic and individuals' moves into other professions, the demand will only continue to intensify in the coming years.
Today, the average age of a career agent in the U.S. is 44 years old; that increases to 62 for an independent agent, LIMRA's Reid said.
That means that in the coming years, experts say, life insurers could stand to lose half of their agent forces to retirement.
But many are hoping to fill that gap with young talent and professionals like military veterans, who, in recent years, have increasingly been transitioning into agent roles.
Northwestern Mutual's Gerend also expects a continued influx of what he calls “occupationally disturbed” career-changers moving from nontraditional backgrounds and sales roles in other industries into life insurance.
As technology and automation from AI and other tools continue to take over many facets of the industry, it's raising concerns about the need for life insurance agents. But Gerend said that need has never been greater.
As a result, he said, insurers will need to increasingly focus on diversifying the industry and their talent pipelines to fill that need.
As life insurers rely on both traditional approaches and new ways to recruit talent and build up their agent forces, David Duford, of Duford Insurance Group, offers them these relevant words of advice: “Don't sugar coat anything.”
“Agents don't want to be told this business is easy. They've heard that enough in their prior jobs,” said Duford, who has created a website and sales and marketing systems to recruit and train new and experienced insurance agents to become top producers. “They want to be told the truth, and companies that do that will succeed in building a large, diverse constituent of agents who will be successful and dedicated to their employers and careers for a long time.”