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Who Drives the Life Insurance Marketplace?

The life insurance distribution system is rather interesting.

Carriers work with master general agents, who work with general agents, who work with brokers and agents.

Consumers will find these brokers and agents in various sales channels:

  • Some will be on their own and represent multiple carriers.
  • Some will be affiliated with one main carrier.
  • Some will be housed in a financial institution that has a favored relationship with several carriers.
  • Some will essentially be an employee of a carrier itself.

In my opinion, the independent brokers are the ones who can get the most consumers the best rates.

We can represent a wide variety of carriers and find the one that is most suitable for each candidate.

Who’s writing premiums?

The buying American public apparently agrees, because independent brokers have been getting most of the life insurance business in recent years.

Here are the results of a new industry report showing what percentage of new premium is written by each distribution channel:

  • 49% by independent brokers
  • 40% by carrier-affiliated agents
  • 7% by financial institutions such as banks
  • 4% by carrier direct

The report also mentions that the number of carrier-affiliated agents has reduced dramatically over the decades.

I am sure that some of them have left the business altogether.

Others have gone the route of forming their own independent practice.

This raises the question about the extent to which our country can encourage and promote small business development.

What is your opinion of the current business climate?