The recent run-up in short-term rates taught life insurers in the annuity business a thing or two about independent vs captive agents:

Captive or 'in-house' agents work for the carrier. They typically have a modest base salary and commission paid is lower. Carriers with extensive advertising campaigns have the in-house agent to take the call, answer questions and close the sale. The in-house agent is better aligned with the goals of the carrier too. They offer direct and transparent feedback on products, ad campaigns and market trends. It is up to the carrier to monitor and address productivity and motivation.

From the agent's point of view, leads are free, the base salary reduces the ups and downs of commission sales and they can focus on products the company sells. Captive agents, have no incentive to move their clients from company products to competitor offerings.

The 'independent' agent works for a Managing General Agency or MGA. The MGA and / or the agent absorb most of the overhead that goes with the in-house representative. They advertise and represent a 'one stop shop' for carriers that are establishing a product or brand. Commissions are higher and they tend to focus on the best in market: commission and price or rate. As we've learned since interest rates have been elevated, dependence on independent agents exposes the carrier to lapse. Independents, compensated by commission only, only make money when a new policy is sold, either by renewal or a new policy at a new carrier. Lapse or surrender of policies is higher at carriers that rely on the independent agent.

Agents represent the 'top line' for a carrier. Nothing happens without them. The right balance leads to profit and is an effective risk management tool as well.

“Stopping advertising to save money is like stopping your watch to save time.” – Henry Ford

Both marketing and advertising cost money - lots. Neither guarantee sales but make sales easier. Let's get this straight: sales is hard. Easier sales make a product more desirable to a sales team. This is where advertising can make a big difference but it is overhead so efficiency is important.

We are all familiar with TV, newspaper and magazine ads. Expensive with little feedback or identification of prospective clientele. The internet and social media have fragmented consumer markets. People have more choice of content. This fragmentation has also presented an opportunity: better identification of target markets

“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” – Peter Drucker

At the AQS Insurance Symposium, we presented a segment on omnichannel marketing. Here's a comprehensive piece from McKinsey. This link goes to the chart above - easy to follow. At its core, omnichannel marketing provides business with the information to 'understand the customer'. It's instantaneous and specific to the individual. And the best part? The cost efficiency is a vast improvement over traditional media.