When Marketing Insurance Products—Being Better Beats Being Bigger

From the look of things, the golden era of the truly independent marketing organization (IMO) may rapidly be coming to an end.Born as a child of change 30 years ago when companies began a mad dash to reduce expenses by distancing themselves from a captive distribution system, the IMO became a home for displaced agents and a clearinghouse for virtually all of the industry’s individual fixed business. From a few agencies carving out a niche by offering specialty type products to organizations that produce billions in collected premiums, some IMOs became even more successful than the very companies they represented.

About 10 years ago, a few insurance companies recognized the inherent risk in having their production controlled by an independent distribution organization. In response, they began to procure ownership interests in many of the larger IMOs. As more of these organizations were procured and ultimately merged together into supersized organizations, they, of course, lost the essence and spirit of their independence.

The emergence of these supersized IMOs that are controlled and backed by the power of the insurance companies not only made a sham of the title of “independent,” but actually began to be the death knell of opportunity for new IMOs to emerge. One would be hard put to identify an extremely successful independent marketing organization that has been formed in the past five years. Recognizing this environment, the obvious question is whether or not it is possible for smaller, truly independent marketing companies to compete against the giant company-owned IMOs. The answer is yes, but only if one recognizes that being better beats being bigger.

In fact, one could argue that a well-run smaller marketing organization actually has an advantage over the larger company-owned organizations. Success for the smaller marketing organizations rests with the ability to add personal, value-added service and support to the producer.

Recognize that when these large marketing organizations come under the ownership and control of a large bureaucratic company, a complete change in operating mindset takes place. Soon, the attitude is not what’s best for the producer, but what’s best for the company. Rather than being led by an entrepreneur who has a financial stake in the success of the producer, these company-owned operations are most often run by an employee who has never even sold a policy, earned a commission check, or had their own money at risk. While these may be well-intended and good people, the fact is they are under the control of the insurance company, not the producer. Soon the stifling bureaucracy of many large companies seeps into the management of these marketing companies. Support wanes while service suffers, and the focus of the organization turns from the producer to controlling expenses and meeting budgets.

There is a subtle but significant difference between company-owned and truly independent marketing companies. Those hired to run the company-owned organizations receive their paychecks even if agents don’t receive commission checks. With an independent marketing company, the owner does not get paid until after the agent is paid. As an independent producer, which type of organization is more likely to have your interests at heart?

This situation creates a unique opportunity for the truly independent marketing organization. With a smaller marketing organization, there is a parallel of interests between the individual building the organization and the agents who are the key to the success of the organization. One is not successful unless the other is. This parallel is often lost in company-owned IMOs.

This advantage for the smaller IMO can be leveraged with a concerted effort to build personal relationships with producers, the unfettered freedom to offer products from multiple companies, personalized support for the producer, and a clear tie between the mutual success of the producer and the marketing company. The implementation of this approach will prove that being better beats being bigger

(This article bylined by Bob MacDonald was originally printed in Insurance Marketing, the premier source for marketers of life, health, and financial products.)

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3 responses to “When Marketing Insurance Products—Being Better Beats Being Bigger

  1. Pingback: Insurance News Aggregator » When Marketing Insurance Products—Being Better Beats Being Bigger

  2. Michael Yopp

    I think one aspect of these IMOs or FMOs, or whatever they are called today, that you left out is the fact that the intent of the “entrepreneurs” that found these organizations is not to help the career of a bunch of lowly insurance salespeople but is in fact to build up their sales force numbers with the intent of attracting the large carriers with hopes of being bought out. I can’t imagine there are many IMO execs losing sleep over the welfare of their recruited sales force beyond how much money will they make for me today and when can I sell these guys off and move to my new McMansion. Just my opinion anyway.

  3. start with your employer. if you skirte out, get referrals from friends & family. if that still doesn’t work -grab a phone book & make some calls.References :

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