April 25, 2024

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How Independent Brokerage Insurance Companies Are Destroying the Insurance Dinosaurs

Watching the independent brokerage insurance companies become the universal kings is like watching an old Godzilla Movie. The captive career companies long ago saw their power start to weaken like an insurance dinosaur. Their greed and want of total industry dominance, allowed the independent brokerage companies to capture their key warriors.

For well over 100 years, Insurance Career Companies have reigned as profitable financial giants. Unfortunately, to them, financial profits meant power. Power that could be used against the writing insurance reps to control almost every one of their actions. This is still used on captive career agents. They try excessively hard for a year to please the company and earn a meager living. After agents fail, the Captive Insurer pounces in and takes over all the policyholder premiums for themselves, with the former agent totally deprived.

The scales of justice have tipped.

Agents eyes were opened widely when one of the largest and best independently financially rated insurance companies suddenly, started failing. Without the assistance of an enormous bailout program by the federal government and taxpayers, virtually countless thousands of United States policyholders could be left stranded. Insurance reps no longer believe the big insurers when they brag about their ratings.

Hundreds of thousands of life and health insurance reps have decided to go independent. This means giving up the golden egg renewal benefits the Insurance Providers could give as long as the insurance rep stayed with the company. However, a progressive Independent minded insurance company can now provide even higher renewals, plus the renewals are lifetime vested (with minor renewal requirements). Giving it up, to cut the career company strings and gain freedom means a new, profitable insurance career life for many agents. This means that the gains outweigh the security anchor of their former career agency.

As agents become professional, they need a professional income. It means receiving up to 60{b5271943e17dd97dcded82632e818dabbc62c3d3bd5fa50d83532f0f6a236ecb} more pay using a “brokerage” insurance company, than the career insurance one. The new movement has also stopped the career insurer from being king in another way. This is the semi-independent agent who still writes some cases for his career company, but often the majority for a brokerage company.

This has brought about masses of niche independent brokerage life insurance companies to change their way of obtaining business. They offer unique specialty products to independent or semi-independent sales agents. Other insurers remain almost entirely career orientated, while buying out another insurance company for distribution of independent contracted products.

With semi-independent and independent insurance reps now representing over 45{b5271943e17dd97dcded82632e818dabbc62c3d3bd5fa50d83532f0f6a236ecb} of the agent force the companies must take notice. As these agents tend to be the more professional, they are currently writing nearly 80{b5271943e17dd97dcded82632e818dabbc62c3d3bd5fa50d83532f0f6a236ecb} of the insurance premium written by all licensed life and health insurance agents.

While this does not signal that the Insurance Company Kings are totally dead, it proves they had to change their tactics to slow down loss of market share. They can no longer captivate the activities of high ranking producers, by treating them like pawns with sub-par commissions. The companies still have hundreds of thousands of agents under their control. However when only 8{b5271943e17dd97dcded82632e818dabbc62c3d3bd5fa50d83532f0f6a236ecb} of fully captive agents endure lasting 4 years you, certainly do no earn bragging points.

Unless the insurance company kings can wise up on better agent retention, they have to start giving up more profits for agent training, true prospecting leads, and higher commissions.

Today’s independents that survive the critical first few years quickly become smarter than the insurance company that hired them. The green dollar grass is certainly more plentiful for the skilled insurance reps on the other side of the fence.