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  • Writer's pictureDavid H. Kinder, RFC®, ChFC®, CLU®

F.A.Q. #16: Shouldn't my independent insurance professional represent MANY companies?

This question sometimes comes up because of the common refrain from many independent insurance agents: "We represent over 30 companies so we are positive that can get you the best value." It's a high perceived value proposition that you can represent a lot of different companies to "price match" whatever is out there.

(Note: the image I'm using are a lot of logos of companies in the insurance industry including property and casualty companies. This is just a visual example, not a representation of the companies I represent.)

There are a few issues that I have with that.

  1. Primarily for Price Shopping: This is primarily for those who are shopping for coverage based on price, usually looking for the LOWEST price for a given amount of coverage. There's nothing wrong with that, but generally, my primary offering is not about the price of coverage. I'm looking for various contract features, benefits, and policy terms & definitions. The better these are, the price increases, but the focus is usually maximum cash values with a minimum death benefit to maximize the contract's benefits. This isn't a cost comparison, but a benefit comparison.

  2. Contracting and Product Training prerequisite requirements: In order to represent a company, one must apply to have the right to represent that company. In addition, they may have additional product training requirements before being allowed to solicit business for them. One particular company has 8 prerequisite training modules that have to be completed before you can submit business. Now, that's not bad if it's just a couple of companies. However, if I'm representing 10 or more? That becomes a real time management issue.

  3. Maintaining contracting status and access to help service your clients' policies: It is common that each company has a minimum production requirement of some kind. It costs the insurance company money to have an appointed agent and that agent needs to be bringing in business regularly. If they don't submit enough business in a given period, they will terminate their contract with the agent. This is so the insurance company keeps as much profit as possible so they can honor the terms of their contracts. However, this also means that the agent often loses access to their book of business, and therefore it becomes more difficult to help service their client's policies. It's not impossible, but it becomes more difficult.

  4. How can you build expertise by representing dozens of companies? I don't see how that's really possible. Which is why it's a business model that primarily focuses on price for coverage.

For me, my current business model is to maintain relationships with three primary life insurance companies, one annuity company, and then deviate from those companies as the need arises.

I believe that the more focused one's expertise is, the more their business will be pooled with the companies that support that expertise.

My expertise is primarily in utilizing the tax code to help my clients to retire with tax-exempt retirement cash flow and utilizing insurance contracts that will best accomplish this. Each company has different contract terms and provisions that can help accomplish that depending on each client's individual circumstances.

Yes, I am an independent insurance professional. My independence allows me to choose my business model, my marketing messages, the companies I work with, and many other freedoms that many career or "captive" agents may not also have.

I don't need dozens of companies to serve my clients. Currently, I just use four and I'll go beyond those four as the needs arise. And isn't that what we want from our insurance professional: true expertise in their subject matter and the ability to deliver it as best as they can given the client's circumstances? It's what I'd look for. That's my opinion... and it should be yours.



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