life insurance applications down

[Robert L. Barney]

I am curious as to why board members think life insurance application activity is down. I personally think there are three reasons:

1. The number of active agents is dropping.
2. Replacement activity is going down quickly.
3. More and more agents are waiting for the business to come to them.

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/03-02-2007/0004538505&EDATE=

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MIB Life Index Reports North American Life Insurance Activity Down 7.4% in January

WESTWOOD, Mass., March 2 /PRNewswire/ -- North American application activity for individually underwritten life insurance declined -7.4% in January year-over-year, according to the MIB Life Index(SM). Applications were off -3.3% when compared to December 2006. Historically, January activity has lagged that of the previous December in five of the last six years.

U.S. application activity declined -6.9% in January year-over-year, all ages combined. Applications were off across all three age groups: ages 0-44 down -7.6%, ages 45-59 down -5.9%, and ages 60+ down -5.7% compared to the same period last year. Applications by age group versus last month's activity (Dec. 2006) show more mild decreases: ages 0-44 down -3.7%, ages 45-59 and 60+ down slightly at -0.8% and -0.5%, respectively.

Canadian application activity declined -11.2% in January year-over-year, all ages combined. This was the largest January decline since the Index's inception in 2001. Declines across all three age groups were more pronounced in Canada: ages 0-44 down -12.7%, ages 45-59 down -8.2%, and ages 60+ down - 10.2% compared to the same period last year.

Monthly Percent Change vs. 2007

January '07 vs. Jan. '06
U.S. -6.9% ---- Canada -11.2% ---- Total -7.4%

December '06 vs. Dec. '05
U.S. -2.7% ---- Canada -8.3% ---- Total -3.4%

Monthly Percent Change vs. Previous Month

January 2007
U.S. -2.6% ---- Canada -9.2% ---- Total -3.3%

NOTE: The methodology for determining application activity by country has been modified effective January 2007. From this point forward, U.S. and Canadian activity is based on the location of the insurance carrier's underwriting operation versus prior methodology which used "Territory Code" (an indicator of the location of the applicant) as reported by the MIB member company. All comparative figures used to calculate the MIB Life Index have been restated to assure data consistency. Visit http://www.mib.com/lifeindex for more details.

About MIB Group, Inc.

Headquartered in Westwood, Massachusetts, MIB Group, Inc. is the premier provider of Internet-based applicant fraud detection services and knowledge services to the risk management market space in North America and is a leading facilitator of electronic insurance commerce. MIB Group, Inc. companies include MIB, Inc. and MIB Solutions, Inc. For more information visit http://www.mib.com.

Contact:
David O. Aronson
MIB Group, Inc.
781-751-6136
info@mib.com

[Brad Howard]

There are 2 reasons in my mind this is occuring.

The demise of the agency system.

Carriers do not want to be in distribution anymore. They want to be in product development and then support of IMOs who in turn have been charged with recruiting and agent support. This is a tough time for IMOs who are challenged by the rapid industry changes along with reason number 2.

Privacy Laws.

It's more and more challenging for new agents to build a practice because of dwindling agent support (reason #1) and circumventing privacy laws that keep them from making contact with may prospects. Most of these folks are Middle America, the ones the seasoned agents don't pursue. Successful agents simply build their current customer's product portfolio. They don't need new prospects. So we have a drop in new agents left to serve a growing Middle America that can't be contacted.

It's a tough challenge, but one with opportunities I think.

The timing of this article is interesting with the recent AIG acquisition of Matrix. Many carriers see these as ONE solution to penetrating Middle America and it solves both issues above. Number one, they acquired a distribution system and number two Matrix generates its own leads (permission marketing) so all contact is made easier (and legally) and marketing to Middle American can resume.

Interesting stat I read recently. Guess what percent of AIG's business on the brokerage side is done in some direct marketing method? It's a staggering 40%and climbing.........

[Todd Simpson]

I agree with Brad's comments. I have commented in other forums that agent recruiting and training is way down because of the reasons Brad writes about - the companies don't want to be in that business. Training is not there for agents to really learn the business so the agent force is uneducated and prospecting incorrectly, then you add the inability to call, fax or email clients due to privacy laws and you can see why new agents aren't making it. Don't get me wrong, I'm the first to complain when I get a marketing call during dinner at night, but somethings got to be done. It's not like you can open an Insurance Agency downtown and fill the place with clients like a department store. Ask any Allstate or State Farm agent, they all have store front type offices and they are not thriving in the Life Insurance or financial planning arena.