The Importance of Independence in the Life Insurance Industry

It was a 70 degree-plus-day in January in Charleston, SC—just what I’d ordered up. I’m motivated even on a bad day, but today I had that extra kick in my step. My schedule was full but flexible, with new people to meet, new ideas ready to pop into my head, and an incredible industry filled with opportunity to explore.

My first appointment was with an insurance agent I’ve known for years. She’s a friend of mine. She has a lot of experience and she’s good at what she does. I knew she had recently switched employers, and I was looking forward to really catching up with her.

Besides catching up, my goal was to learn about her work and to let her know about the life insurance brokerage business—have an exchange of ideas and maybe arrange to do some work together. And there we were, sitting outside a local Charleston coffee shop, taking in the ocean air. By now the temperature must have been 72, with a slight breeze.

After some small talk and coffee, we began to chat about her practice. This woman really has a good thing going. You could hear in her voice how much she cares about her clients, how focused she is on helping them implement solid financial plans. Not many advisers are willing to put in the hard work of talking through planning with their clients, but she is.

Then she said something that made me forget about that glorious Charleston weather.

“Mark, it is so great to see you, catch up with you, and talk about business. But I want you to know, at my company, we can only sell life insurance products that our employer creates.”

I was stunned. How can she care so much about her clients—as I know she does—and not help them explore all their options?

“What happens if a client is declined by your employer?” I asked.

“Mark, there is simply no other option,” she said.

“What if your company isn’t a good fit?” I argued. “Can you at least shop other carriers for your clients, to make sure they are getting the best the market has to offer?”

But no, she couldn’t do that, either. And my questions were starting to make her defensive. I was getting upset, too. I might as well have been sitting in a dusty little office with no windows and the air conditioning stuck on cold, I felt so crummy.

I realized there was little opportunity for me to do business with this agent—a bit frustrating, but okay, you can’t get everyone as a client. But what really bothered me is that this company makes their agents biased towards their products. This, absolutely and without question, makes the market a worse place for everybody. Consumers can’t get the accurate information they need to make their own decisions and carriers don’t get the accountability they need to improve. Perhaps I am on a high horse, but I want what is best for the client, for my business, and for the market.

I recognize that my friend might not have a choice about following her company’s policies. At a lot of places, even if the company has a policy against shopping around, individual agents can explain that they need independence (freedom and flexibility) in order to give excellent service and get an exception—but maybe she did ask and they said no. Maybe there was some other reason she was working at that company to begin with, instead of somewhere she would have had real independence. I don’t know.

What I do know is that I would not choose to work where I couldn’t do my job well by giving unbiased information to my clients. And if I were buying insurance and my agent told me I could only buy from a single company, I’d go find a different agent.



Image of the Broad Street, Charleston SC was taken by the Khanrak under the Creative Commons Attribution-Share Alike 3.0 Unported license