“I do not believe there is a current system
that could accomplish what the BGAs do for the
industry,” said Butch Britton, retired CEO of ING
(now Voya) U.S.’s Insurance Solutions and past
Mooers Award recipient.
or potential clients would never
complete filling it out,” he noted.
“If life insurance could only be
purchased online, it would leave
more people underinsured or un-
insured,” Leibow said. “They could
buy term insurance online, but peo-
ple with medical conditions would
be unable to find the best priced
products. After buying, people
might wonder if they got the best
deal. Without outside professional
guidance, they would not find the
right products for their situations.
Remember that life insurance is not
just about the death benefit. It is an
essential part of estate planning. A
financial planner can help with that
but not with underwriting. Affluent
clients would get help, but Middle
America gets sick too and might not
find affordable insurance.”
Reducing cycle time is another
benefit of technology to BGAs. “The
longer the cycle time, the lower the
placement ratio,” said Leibow. “I
can sell all day long but how many
actually get placed? It depends on
whether the policy gets approved at
a certain price and how quickly it
8 perspectives SUMMER 2018
gets approved and paid for. By offer-
ing solutions on their own websites,
BGAs can speed things up by making
it easier for agents to do business
with them.” He said the BGA’s web-
site can’t just look like a billboard
to be effective. It needs to display
many carriers and many solutions all
in one place while offering e-apps
and e-policy delivery to save time.
“The technology for online life
insurance issuance exists, but will
someone build out a business model
to do this?” Leibow questions. “It
would be a bold effort. Maybe some-
thing like this will happen a few de-
cades down the line.”
What BGAs do now
While agreeing that BGAs are an es-
sential part of the distribution strat-
egy for life insurance companies,
NAILBA Board member Jason Lea,
CFP, who is Chief Executive Officer
of Brokers’ Service Marketing Group,
questions whether they are efficient.
“Do we provide a mechanism that
not only provides profitable distri-
bution results but also growth?” he
wondered. “The challenge we have
as distributors is maintaining our
relevance as a key growth driver of
life insurance sales or the carriers
will look elsewhere, either by hiring
their own agents or going online.”
Lea points out the importance of
recognizing BGAs as the distributors
and carriers as the manufacturers.
He is concerned about how much
work in the transactional market-
place is being duplicated by BGAs
and carriers and he wants to see
changes in that process. Currently
only 20 percent of all transactional
business is done on an e-platform.
Eighty percent of the time there is
lots of paperwork moving back and
forth, as well as gathering medical
records and lab test results, and
then having human underwriters
review everything manually at both
the BGA and the carrier. “If you
ask BGAs, they say they do all the
heavy lifting, but the carriers will
say they also do it,” he said. “The
reason BGAs are involved in the
case management of transactional
business is because the process is
terrible, involving complex medi-
cal information and administrative
tasks that can take 60 to 90 days
before a policy can be issued. Each
carrier is working on accelerated un-
derwriting. Our task is to help them.
Brokerage will cease to exist if we
don‘t do that. If we become mired in
processing applications, we’ll never
get there.
“The way we maintain relevance
is by making sure we are distribu-
tion companies and not only service
entities where we’re grinding out all
of the effort it takes to sell, process,
and put in force a traditional life in-
surance policy,” Lea added. “BGAs
have become service entities for
high volume policies like term insur-
ance which consume a lot of staff
resources but provide limited reve-
nue. The question for BGAs is how
can we become better distributors
by working with carriers to allow
them to control the process?”
In the time since brokerage be-
gan, the life insurance business has
changed. Outside factors, including
low interest rates, the shrinking
agent population, and low awareness
of the benefit of life insurance at the
consumer level, which is caused by
having fewer agents to serve more
customers, have made life insurance
sales harder, Lea noted. He is also
concerned about people who serve
as financial advisors but don’t help
their clients with their risk manage-
ment needs, seeing themselves only
as wealth managers.
“Fifty years ago, 20 million new
life insurance policies were sold
every year and now there are only
10 million because there are fewer
sellers, a bad process, and the no-
tion that the group policies they
get at work are adequate,” said Lea.
“We should be selling much more to
middle income mainstream America.
BGAs need to get financial advisors
to talk to their clients about the
importance of life insurance. But
we can’t ask them to have clients
fill out a 45-page application, take
a medical exam, get blood drawn,
and wait for their medical records to
be gathered. All of this can take 60
days or more before they get a car-
rier decision or can see the policy.
We’re going to work with financial
advisors and talk with them about
the importance of risk management
so they can share that information
with their clients. This process
needs to be easier and BGAs can be
the reason why that happens.”
Lea believes BGAs are not talking
to financial advisors enough right
now. “The problem we need to solve
is making it easier for advisors,” he
said. “Every financial planner meets
with two to three clients most days.
How are they not selling life insur-
ance to more of those clients? Be-
cause there’s not enough money in it
to justify putting the client through
the horrible process and risk losing
them as clients as a result.”