{"id":124,"date":"2014-08-15T05:21:53","date_gmt":"2014-08-14T19:21:53","guid":{"rendered":"http:\/\/magazine.riskinfo.com.au\/16\/?p=124"},"modified":"2014-08-18T09:51:48","modified_gmt":"2014-08-17T23:51:48","slug":"how-to-embrace-a-changing-world-and-create-new-opportunities","status":"publish","type":"post","link":"http:\/\/magazine.riskinfo.com.au\/16\/how-to-embrace-a-changing-world-and-create-new-opportunities\/","title":{"rendered":"How to Embrace a Changing World and Create New Opportunities"},"content":{"rendered":"
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Riskinfo\u2019s Peter Sobels spoke to MDRT committee member, Ryan Pinney, at this year\u2019s Annual Meeting in Toronto. Pinney shared some critically important observations about how the life insurance conversation between adviser and client is evolving in the US, and what opportunities this may create for risk-focused advisers everywhere\u2026<\/h3>\n<\/div>\n

Ryan Pinney began the conversation by considering the demise of the tied agency system in the United States and the flow-on effects stemming from this trend. \u201cIn many countries you still see the career agency systems where you work for one company and one company only. In the US, that system started to disappear in the 70s and 80s, and by the early to mid-90s, in many instances, it was largely gone.\u201d<\/p>\n

Pinney, VP, Sales & Marketing at Pinney Insurance Center<\/a>, says there remain only a handful of companies that still recruit to the \u2018captive\u2019 agent model. \u201cThis is a very important trend and it has a double-edged effect to it. [Under an independent agency system] you have more people able to offer a wider range of product solutions \u2013 a greater variety, and maybe better able to serve the customer. But because you don\u2019t have the training grounds you used to have in the career agency systems, fewer young advisers are coming into the industry.\u201d<\/p>\n

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He says the down-side of an advice sector that is trending to less captive and more multi-agent systems is that less agents are experiencing the soft skills traditionally taught through the career agency structure. \u201cWhere this manifests itself the most in the US is in a lot of younger agents who are turning to technology solutions to be able to get their messages out and to interact with their natural customer bases.\u201d But Pinney says possessing technical skills doesn\u2019t necessarily equate to being able to \u2018market\u2019, \u201c\u2026and technical skills definitely don\u2019t equate to being able to sell\u201d.<\/p>\n

\u201cSo, the question becomes: how do you take someone with technical skills and teach them the soft skills needed, such as marketing, customer service and selling skills? How do you give them those skills? In the old agency system, that was usually taught by someone who had the experience and mentoring capability. But today\u2019s younger independent agents don\u2019t have that access.\u201d<\/p>\n

The issue of a general down-turn in the ability for new advisers in the life insurance industry to access soft skills training is complicated by changing trends in how people communicate with each other and how advisers are looking to add value to their client relationships.<\/p>\n

Creating new consumer solutions<\/h2>\n

But Pinney and his business have embarked on a journey to address both these challenges. According to Pinney, the answer lies in marrying advice, technology and new styles of life insurance products.<\/p>\n

\u201cBecause of the massive amount of online information now available to the public, the consumer already knows what they\u2019re looking for or trying to accomplish. So how do you arm today\u2019s adviser to have that kind of conversation with the client who has already settled with what they think they want or need?\u201d<\/p>\n

because you don\u2019t have the training grounds you used to have in the career agency systems, fewer young advisers are coming into the industry<\/p><\/blockquote>\n

With the growth of the Internet over the last ten years, and over the last four to five years in particular, Pinney\u2019s firm has focused on how it can help its team of advisers become better marketers and learn better sales skills within this changing consumer environment. \u201cWe\u2019ve taken our learnings from member associations like MDRT<\/a> and NAIFA<\/a>. We\u2019ve taken the best ideas and distilled them down into salient points for our advisers to use. This has worked well, and the brokering side of our business has been doing well because of this changed focus on skills training.<\/p>\n

\u201cPeople are coming back full circle because they realise that kind of training and soft skills capability has been lost, and they\u2019re coming back again. This is of paramount importance for all agencies out there, whether it\u2019s brokerage firms in the US, or an independent agency out of Australia, or career agencies in Singapore – they all need the marketing skills to pass to their advisers to help them do their jobs. Those tools are there, not to replace the sales person, but to augment them.”<\/p>\n

\u201cOur direct sales are also growing,\u201d says Pinney, often via advisers who conduct \u2018direct\u2019 insurance selling. \u201cWe sold 20,000 direct insurance policies last year and we\u2019re seeing that part of the market grow. We have advisers that work with our firm in a brokerage capacity, several of whom are generating a couple of hundred policy sales each month for themselves. That means they\u2019re selling a thousand or two thousand policies each year. And they are just individual brokers using the same direct marketing tools. So, those guys have become marketers, not just \u2018sellers\u2019 in the traditional sense. It\u2019s just a change in mind set.\u201d<\/p>\n

Pinney says his firm\u2019s team of advisers who undertake direct sales utilise full, \u2018retail\u2019 life insurance products as well as direct insurance products. \u201cOver the last couple of years we\u2019ve gone from where 90% – 95% of our business was fully underwritten, \u2018traditional\u2019 insurance, to today where that number is now probably more like 60%. And we average between 35% – 40% of our business that is \u2018simplified underwriting\u2019 [meaning no medical examinations are required].<\/p>\n

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\u201cBut there are still medical questions and several databases that are checked, such as the US Medical Information Bureau or prescription checks, as well as motor vehicle records. So there\u2019s still underwriting, but its automated and virtual.\u201d<\/p>\n

Developing a hybrid life insurance product<\/h2>\n

One of the great innovations being explored by Pinney\u2019s firm is the development of a new, hybrid life insurance product, inspired by a gap he and his colleagues have identified in the market, positioning it between a fully-underwritten retail product and a minimal-to-nil- underwritten direct insurance contract.<\/p>\n

\u201cBecause of the volumes we produce we get taken seriously by insurance companies. And if we get this right, then it can be a game-changer for us because we\u2019re going to have a product that meets the needs of what we see an under-served market \u2013 the mom and pop middle America.\u201d<\/p>\n

Pinney says this hybrid product has been designed for the family that earns around US$50,000 to $60,000 annual income, \u201c\u2026 not necessarily living pay check to pay check but being very frugal with their funds.\u201d Pinney believes this huge sector of American society has been under-served because the client in this segment may typically pay an annual insurance premium of around US$800 – $1,000. \u201cIt can be really expensive to work with that kind of client if you\u2019re a \u2018traditional\u2019 broker and if you have to drive across town to meet with the client, have multiple meetings and do all the paperwork and invest the time it takes to do that. And by the time you add up your costs that\u2019s probably at least US$500 \u2013 $600 of your time.\u201d Given the lack of financial attraction to that kind of client business, Pinney reasons this middle-American family client has become significantly under-served.<\/p>\n

there\u2019s still underwriting, but its automated and virtual<\/p><\/blockquote>\n

\u201cBut we think that with the right product and the right marketing, we can \u2018attack\u2019 that market place and deliver a good service to those clients and do a better job of helping people who need insurance the most.\u201d<\/p>\n

The only way Pinney sees this proposition working \u201c\u2026 is if we simplify and automate the process and then bring it into a more virtual environment.\u201d<\/p>\n

Pinney points out that music is mostly purchased today by downloading the song to a mobile phone for 99 cents. \u201cA lot of things we do in life have moved to that kind of process,\u201d he says, \u201c\u2026 press a button and ship it to me and it\u2019s all done.<\/p>\n

\u201cI believe we can deliver life insurance in a very similar capacity, but still provide all the information and background and all the paper that\u2019s needed along the way. But you have to make sure you set the client expectation on the front end: \u2018Here\u2019s what we\u2019re going to do. Here are the steps we\u2019re going to help you go through along the way.\u2019 And that comes back to soft skills \u2013 that\u2019s informing the client and providing the \u2018salesmanship\u2019 that\u2019s needed. I don\u2019t necessarily think that has to be done face-to-face. It can be done virtually.\u201d<\/p>\n

Pinney referred to recent research that supported his drive to create and deliver virtual life insurance advice systems. At least half the survey respondents said they would be willing to buy life insurance online \u201c\u2026 and about a third said that they ONLY want to buy online.\u201d<\/p>\n

Combining traditional services with new systems<\/h2>\n

Within the Pinney Insurance Center model, the client, although served remotely, will still have an adviser to represent their interests at claim time. \u201cDirect insurance, in my mind, doesn\u2019t mean the client is abandoned. If you\u2019re buying direct from an insurance company and you have no advocate, I agree with the argument. We\u2019re using that same direct selling process, but we\u2019re doing it with a qualified adviser. We\u2019re positioning ourselves in the middle, facilitating the process and facilitating the service. And at the end of the day, we\u2019re responsible for service at time of claim [Pinney does not charge a fee at claim time], as well as for change of address, change of bank account; they don\u2019t go to the insurer.\u201d<\/p>\n

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Almost exclusively, the client finds Pinney Insurance, rather than the other way around. \u201cWe do some proactive marketing but mostly the client finds us through Internet search engines. We\u2019ve tried to optimise our website for those key insurance words. But that\u2019s just the beginning of the process.<\/p>\n

\u201cSales and marketing has seen a big shift in recent years. We\u2019ve used all the knowledge we\u2019ve gained over time, and in the last five years we\u2019ve changed our website several times to keep up to date and answer the question: What is the consumer here to do?<\/p>\n

\u201cThey want information and to be educated and once they\u2019re educated, then they want pricing. We\u2019ve changed our website to engage with the client in the early stages of the process rather than only at the later stage when pricing their options, and have built nurturing campaigns to assist them through the process.\u201d<\/p>\n

Pinney believes that \u201c\u2026 if you\u2019re sincere about what you do, the client will know it and they will follow your advice.\u201d He also strongly advocates continuous learning: \u201cYou can\u2019t stop learning, and you can\u2019t stop changing. You have to stay current.\u201d<\/p>\n

Pinney is proud of the services that he and his colleagues deliver, and are seeking to deliver in future. \u201cPeople hear that you\u2019re in insurance sales and I say, yes, I sell insurance. But that\u2019s a by-product of what I do. What I really do is protect families. That\u2019s the most noble profession in the world, in my opinion.\u201d<\/p>\n

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Ryan J. Pinney is a five-year MDRT member with five Top of the Table qualifications. He is recognised for using innovative technologies to drive insurance sales, streamline the application process and speed up underwriting. Ryan leverages his experience in social media and online marketing to help agents and agencies create their online presence and profit from it.<\/p>\n<\/div>\n