Overcoming sales challenges in the personal insurance industry

There is about 80 000 insurance agents in Canada. Each year 20 000 of them have invested a tremendous amount of time and efforts in this profession and nevertheless decide to abandon.

The environment of Insurance Agents in their industry
The Insurance Industry looses about 75% of its talents after three years. In average it is about 25% of losses per year but it would not be surprising to reach 30% of turnover the first year. In Canada, this situation would translate into 20 000/80 000 insurance agents who invested tremendous amount of time and efforts in this profession and nevertheless, each year, decide to abandon their profession.

There may be a wide variety of reason why insurance agents abandon but we can also explain this situation with simple observations and calculations.

The prevailing culture of the insurance industry is to screen all of the contacts a new agent can bring and afterward, if the agent cannot renew its contacts base efficiently all by himself, he/she abandons; the insurance agency focus then to hire new candidates who own a new contact list.

This business structure brings results but is not as efficient as it could be in times where the Inbdustry as a whole is in need of talents. It is an expensive business process, structure and culture: each agent lost represents 70 000 in sales lost and 35 000 in credits. 100 agents lost would represent losses of 7 million dollars in sales.

For Insurance Agents candidates, either they perform 2 contracts per week or they abandon sooner or later. Insurance Companies often use Talent Management Systems to manage their talent pool; so we'll use the words "talent pool" to represent the pool of candidates to the job of Insurance Agents. Here is the simple calculation explaining why so many talents abandon each year:

• If a talent wanted to make 90 000$ in revenues, he would need to sign 153 insurance contracts per year;
• To sign 153 contracts, it would mean over 3 contracts per week;
• To sign 3 contracts per week it would mean to meet 10 prospects per week;
• To find 10 prospects per week it would mean to make 250 calls per week (4% success rate);
• Each call would take 5 minutes so it would take 20 hours;
• The "talent" would spend 2 hours in meetings with each of the 10 prospects + 45 minutes of transport per prospect: 20 hours+ 7.5 hours=27.5 hours ;
• He would make 2 meeting of 2 hours with the 3 clients+ 6 times 45 minutes of transport=12 hours + 4.5=16.5 ;
• He would spend 3 hours making proposals and reports = 3 ;
• He would spend 3 hours of administrative work at the office=3.

So in this scenario we are now at 70 hours and we are not even sure the talent would perform as planned.

In addition, to get involved and get trained, the talent would need to sacrifice probably 4 months of the year and he would have a dept to recover. Some candidates can go through this process; most don't. This is a terrible lost of talents.

It is true that some exceptional agents can make 300 000$ in revenues because they are exceptionally good or they have purchased their client base from an other agent.

In reality the average agent makes 35 000$ and generates about 70 000$ in sales.
Often, the average agent does not make its 35 000$ in revenue the first year.

So for a sales talent with a family, it does not make sense to pursue this scenario. But there is other ways to attract and keep talents.

This way of business consisting of recruiting a lot of agents and skimming their contacts in the very short term is one way but not the only one. The Insurance Industry has already recognized the talent crisis and started cooperation between its members to attract and seek the engagement of more.

Retain the equivalent of 1000 insurance agents from those 20 000 who abandon each year;

What if the industry was adjusting its ways and attracting more talents for a longer period of time?

Challenges

1. Increase insurance agents retention;
2. Increase recruiting efficiency,
3. Increase sales efficiency

Objectives

1. Increase Insurance agents retention by 2%
2. Increase recruiting efficiency by 2% each year;
3. Increase sales efficiency by 0,5% each year

Expected results

126 million dollars in sales:

• 70 million dollars in sales : 1000 Insurance full time jobs filled each generating 70 000$ in annual sales;
• 28 million dollars in sales: Increase recruiting efficiency by 2%: 2% x 20 000 agents abandoning=400 x 70 000$ in annual sales;
• 28 million dollars in sales: 80 000 insurance agents increasing their annual sales by 0,5%= 80 000 x 0.05% x 70000$ in sales

Information Technology Solution

• A Talent management suite integrated with
• A Talent Exchange solution enabling to create a talent pool dedicated to technical sales agents integrated with
• A Sourcing Solution helping to increase the pool of talents across the globe linked to
• An Opportunity Management System to follow up business opportunities and to report performance metrics.

Estimated annual costs of Information Technology Solution

• Approx 3440$ per business user;
• Free for Sales Agents ,

Pilot projects
Each insurance company can start with pilot projects.

Two pilot projects could be explored:
1. Part time Job project
To recruit 240 agents who abandoned or are about to abandon and offer them an environment to work part time. This pilot project would generate about 2 million dollars in sales; the equivalent of 30 full time agents. This pilot project could lead to a pool of talents driven in the whole industry.

2. Referring program targeting business owners.
This referring program would channel 1500 opportunities to a team of specialists trained and qualified to address complex situations often found with business owners. This pilot project would be based on a referral system and would initially target 1 million dollars in sales. The equivalent of 14 full time insurance agents.

Conclusion
The insurance companies would increase efficiency if they could retain more insurance agents through a part time program. But once an agent is lost from an insurance company, the agent lost is lost for good.

At the same time, the industry is facing an increasing demand and several difficulties to increase and retain sales force. If the idustry was sharing database infrastructures to retain the insurance agents who want to abandon. These infrastructures would enable Insurance agents to work part time.
Once signed up and engage again, these agents would simply be retrieved from the list of agents available.
Each company would therefore benefit from this pool of talents.

Pierre Dumas' background

• Pierre is a channel marketing consultant for business association and companies; he is also an IT entrepreneur ;
• He was president and founder of Fac-simile e commerce systems, a company which became subsidiary of a public company in 2000;
• In the past few months he has preselected near to 26 000 candidates in technologies (mostly engineers) using Monster Worldwide database in North America;
• As an IT entrepreneur he recruited employees in IT for his company;
• As Economic development agent for the Quebec Government he has made several interviews with business owners, preparing information and propositions;
• He developed plans with 4 public companies ;
• He also recruited distributors and representatives in Quebec, Ontario and east, mid-west, Mid Atlantic and South of United States;
• He designed and developed business in two IT projects (Fac-simile, SunCET) ;
• He is currently developing an Opportunity Management System in PHP and prepare partnership for its transition in HRXML as a value added solution TMS;
• He was administrative manager for a medical products assembly plant with over 100 employees;
• He launched and developed a plastic Injection molding company with 40 employees which shows that I know the culture of manufacturing companies and their employees;
• He made a lot of client prospection in IT services and developed a channel marketing approach and reward plan for business associations ;
• He made two conferences in the past few months and wrote several articles about recruiting commercial agents;
• He prepared and participated in a dozen of trade shows;
• He is interested in the mix of HR technologies, sales networks management and sales;
• After starting the recruiting process and training, he worked for over a year to asses the situation in the Insurance Industry ;
• He is familiar with the roles of the Insurance agents, insurance companies and l'Autorité des marchés financiers in the Province of Quebec.