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As traditional approaches to distribution change, Bhat methods are U.S. field operations to gain the competitive edge?
Given the assignment to address the subject of alternative distribution systems in the insurance industry, you would think I would have elected the safest, softest approach.
Clearly the easiest route would have been to search the archives for all the numerous articles on how insurance companies are using alternative distribution methods other than that of producers with the typical incentive plans. The next step would have been to cull the information from those articles and present my findings. Instead, I took a general agent point of view and defined "alternative distribution" as the methods other general agents and managers are employing to distribute life insurance products through the agency system outside of the traditional incentive formulas.
It seemed logical that there might exist more take-home value if I presented ideas that my peers currently use. To accomplish this task, I relied on members of the US. Research Agency Group of LIMRA International (of which I am a part), Minnesota Mutual general agents, and other industry associates. The question I posed was, "Do you know of any agency that has successfully developed a unique method to place its producers into new markets and/or to position them well within existing markets?"
ENIGMATIC QUESTION
What I discovered (which I guess provides some solace) is that this question stumped nearly everyone asked. There were two basic reasons for this:
1. Traditional methods - i.e., using LIMRA's Project 100, direct mail, and such - do indeed still work.
2. As field managers, we have been lazy regarding the most challenging aspects of selling our products and creating prospects for our producers.
In my opinion, there exists an overcapacity to produce product and an undercapacity to distribute it. Therefore, it is urgent that we become more dedicated to developing markets for the people we recruit, train, and supervise. If we do not facilitate our producers' abilities to better position themselves in markets, they will first be tempted - and then forced - to seek other avenues that do not include us. This may be the top reason why producer groups have become the threat to the agency system (which I believe they...