The Importance of Young Agents Helping Innovate Insurance

By Joseph Peters

Millions of insurance agents are transitioning out of the business. Will there be enough young agents to replace them? Yes, but they must work hard at becoming successful.

It’s a well-documented problem that insurance agents are aging out of the business, and not enough younger replacements are coming up. For instance, the 2020 NUPC/PIA Independent Agent Survey found that only 8.7% of independent agents working today are 39 years old or younger, while 76% are between 50 and 65 or older.

This is a big concern because unless a new generation of agents emerges in the property-casualty and life and health industry segments, today’s clients may soon lack agents to sell them insurance or service their existing policies. Some portion of those underserved consumers will begin buying insurance directly from insurance-company websites with the help of artificial intelligence and bots. But those with complex life or health insurance needs or large or unusual commercial-insurance requirements may be out of luck.

Equally problematic is that not having enough younger agents (i.e., under the age of 40) may hamper the industry’s ability to digitize its operations. That’s because young people know more about technology because they work with it more often and enjoy doing so. Younger producers also know the power of technology and want their industry to modernize to serve Generation X and Z consumers better. Unless the percentage of young agents increases, the insurance industry may have trouble migrating to a 21st-century technology business model.

A Positive Story

Although this may sound like a doom-and-gloom story, the opposite is true. The insurance industry is well-positioned to bring more young agents into the fold. According to the U.S. Census Bureau, the average insurance agent salary in 2019 was $74,272. This is $18,748 more than the national average wage of $55,524. Young people looking for a job that pays well will find many opportunities in insurance sales.

Insurance agent jobs are projected to increase 5.49% by 2029 compared to overall job-market growth of 3.71%, according to the U.S. Bureau of Labor Statistics (BLS).

According to Insurance Journal’s 2021 Young Agents Survey, young people selling insurance today are strongly optimistic about their careers and prospects. They’re satisfied with their commission income and overall compensation package. They appreciate how their flexible schedules allow them to spend time with their families and their passions. They appreciate the opportunity to work at home yet still receive on-the-job training and coaching from their agencies. They enjoy interacting with other agents and their agency support staff. And perhaps most importantly, they love being able to educate and help their clients, making a big difference in their lives.

For all of the above reasons, both financial and non-financial, insurance selling is an excellent career path for America’s young people.

Making the Opportunity Work

It’s one thing to have a career opportunity; it’s quite another to make it work.

Start by preparing a plan for entering the business. Your agency will likely provide you with a road map, but if it doesn’t, here are the steps you’ll need to follow.

• Decide whether you want to be a captive or independent agent. (Read our articles on each type of insurance career.)
• Determine whether you want to work with consumers or with businesses. Your choice will determine the types of insurance to sell and your marketing and sales approach.
• Based on your market, decide whether you want to sell life and/or health insurance policies property & casualty (P&C) insurance.
• Identify your state requirements for becoming a licensed agent.
• Attend pre-licensing classes, either online or in-person. This will typically involve eight to 40 hours of instruction.
• Sit for your state’s licensing exam (usually offered online by a third-party testing company).
• Once you pass your license examination, file a license application with your state insurance department.
• Pass your state’s mandated background check.
• If you want to land a captive-agent position, file applications with local agencies that represent career-agency insurance companies. After you get hired, complete your agency’s training sequence.
• If you’re seeking an independent agent or broker career, schedule interviews with insurance marketing organizations (IMOs) or financial marketing organizations (FMOs), which will provide marketing and administrative support to help you succeed.
• Once you’ve nailed down your intermediary support firm, submit your license to that firm. It will help you get appointments with insurance companies.

If you handle the above process steps well, you’ll be on the right path to becoming a high-performing insurance agent. But you’re not there yet. Now you’ll need to build a robust marketing machine to help you identify a high volume of prospective customers.

Creating a Marketing System

Building a solid marketing system is essential. It will generate the names of prospects you’ll be meeting with to close sales. Your business will stall right out of the starting block unless you get enough names.

Here are some of the marketing tasks you’ll need to complete:

• Determine your value proposition. This will describe what you hope to do for your clients and which types of buyers you plan to specialize in.
• Create an agent website. This platform will entice people to learn how insurance can help them and how you can help them select the right type and amount of protection. Your website should feature several pieces of cornerstone educational content that answer prospects’ most important questions about insurance. Your content should be SEO optimized so that Google will place your information high up on its search engine results pages (SERPs). Once your site begins generating traffic from your content, it’s time to convert that traffic into leads. You have a couple of different options here:
• Use an old-style inquiry form for the person to contact you with a request for information or an appointment. You can also install a scheduling app that lets prospects check your schedule and book an appointment on a self-service basis.
• Use your website as a hub for sharing your content. By posting links to your content on social media, you’ll attract inbound traffic from whom you can collect contact information. Using marketing automation software, you can continue to use content to build engagement with interested site visitors, slowly moving them down the sales funnel until you can schedule a meeting or phone call, assess their needs for insurance and close the sale.
• Deploy instant quoting technology.  This allows you to collect information from prospects to generate a product quote in real-time. It then forwards you the leads to make personal contact with the prospect.

Establish a Presence on Social Media

To succeed as an insurance agent today, you need to be where the people are . . . and that’s on social media. Building out your presence on Facebook, LinkedIn, YouTube and Twitter should be high on your to-do list during your first few weeks in the business. 

Split your social-media activity into two pieces: organic marketing and paid advertising. Organic marketing refers to your everyday participation on the platform: posting thoughts and comments, sharing links to articles you’ve written on your website, offering user guides and insights about insurance needs and products. Providing useful organic content will help establish your brand and attract people to your social media platforms and through them to your website.

Paid advertising involves the development of messaging and graphics that the social-media service streams on the feeds of user types you’ve deemed to be good prospects for your products and services. Unlike traditional advertising, social media ads allow for micro-targeting. The services give you an extraordinary amount of control over your audience, spend, and ad format. They also provide copious data on how your audience reacts to your ad. If your ad isn’t performing well, you also have the ability to edit it in real-time.

What are the odds you’ll get sued at some point in your career? Insurance agent or broker liability is commonly framed quite narrowly (more on this later). But if you’re unlucky enough to get sued and lose your case, the financial impact can be devastating. For this reason, going without E&O insurance is ill-advised.

What’s more, even though state insurance law makes it challenging for clients to allege malpractice against insurance producers, you still have to defend yourself against every lawsuit filed against you, even nuisance allegations. If you don’t have E&O insurance to pay for a defense attorney, that can be expensive.

Watch Your Soft Skills

To make the opportunity work, you need to focus on the soft skills that build credibility and customer loyalty. These are things such as:

• Dressing the part
• Organizing your calendar, so you never miss a client appointment
• Behaving professionally at all times
• Caring about your prospects’ and clients’ personal lives (families, hobbies, etc.)
• Being a good listener
• Being ethical (selling what your prospects need, not what you need)

Finally, to succeed as an insurance agent, you need to care about the people you serve. You must want to help them and try hard to steer them in the right direction when it comes to buying insurance. If they understand through your actions and words that you are trying to serve their best interests, not your own, you will likely have won a client for life.

One More Thing: Protect Your Assets with E&O Insurance

Even though courts often view insurance agents and brokers as order takers, it’s common for their behavior during the sales process and afterward to nudge them into a higher standard of care. In such cases, if their mistakes harm a client, resulting in litigation, it will be crucial to have E&O insurance to cover their legal costs.

What is E&O insurance? It’s an agreement between you and an insurance company in which the insurer agrees to cover your professional liability claim costs in return for you paying an insurance premium. If you get into a client dispute and get sued, the insurer will cover your legal expenses, preserving your business and personal assets.

How does E&O insurance work? It will cover you if you make a mistake or forget to do something important that financially harms a client. Based on the policy’s insuring clause, the insurer will:

• Provide you with a vetted defense attorney at no expense to you
• Assign a company E&O claims adjuster to investigate your case and manage the process of resolving your claim
• Pay for your attorney’s retainer fee and administrative expenses related to your case
• Pay for an expert witness to strengthen your legal defense
• Cover arbitration, mediation or other alternative dispute resolution services
• Pay for court administrative expenses

In short, because the insurance sales opportunity is so great, you must plan for the possibility that your work will allow you to build substantial personal wealth. However, to protect those assets against client litigation, you’ll need to purchase E&O protection from a provider you can trust.

Having E&O insurance is essential for an insurance agent or broker risk-management program. Learn more about the 360 Coverage Pros Errors and Omissions (E&O) insurance program.