ARs: Choosing the right licensee

ARs: Choosing the right licensee | Insurance Business

ARs: Choosing the right licensee

The burgeoning Authorised Representative (AR) market is changing the face of insurance in Australia. But what should an AR consider when picking the right licensee partner?

Koert Slik, managing director of Chiswick Consultants, who have been providing consulting advice to the insurance industry on AR modelling in Australia for the past 15 years, gives his view….

“Recall those very early days when life insurance organisations invested heavily in product research and development, advertising, sales training and marketing then grew a sales distribution model that resulted in thousands of individuals being employed as sole agents for the purpose of delivering products to the doors of prospective clients?

At that time the criteria agents considered when aligning with a particular organisation included, brand name and reputation, market position, training, development and career opportunities and relevant commission scales paid to the agent for products and services they sold in the market.

These organisations provided a socialised environment where sales professionals worked together in large decentralised offices, shared ideas, experiences and no doubt frustrations. In addition to high quality and ongoing training programs, younger agents aspired to mirror their performance to the more seasoned and experienced sales professionals who demonstrated consistently high levels of success.  These environments were effectively the training ground for many younger sales professionals to develop their own strategies for long term and sustainable growth.

Consider several insurance organisations in Australia today and you will see how times have changed.

The “Agency” sales distribution model in the life insurance industry has provided many pointers for the general insurance industry.  As AR distribution models evolve among general insurance licensees, the range of (AR) member offerings provided will begin to reach a higher degree of parity. 

In other words, competitive market forces will influence licensees to offer similar levels of service, infrastructure support, technology and commission split levels. Those unwilling to establish more competitive value propositions will result in ARs seeking better deals from competitors. However, merely offering to better ones commission split from sales generated will only satisfy one component of the election criteria for an AR when they choose the licensee that offers an “Overall Best Fit” value proposition.

Sales coaching and training, developing geographically exclusive markets / industry sectors and workplace environments where socialisation and consultative decision making processes are the norm, will increasingly become key drivers that influence an ARs decision when choosing an appropriate licensee.  Cost effective commission metrics where an AR chooses the support framework best suited to them so they can invest in their own infrastructure as they grow, is becoming more relevant.

As the AR distribution model continues to evolve, the future candidates whom may consider the AR role as their next career move will be those who experience continued mismatch of reward mechanisms offered under an employer/employee arrangement, lack of career progression, gender biased promotion opportunities and lack of flexible work arrangements that address work life balance.  For existing ARs, they will increasingly consider alternative models where a values based culture aligns with an ARs personal need to having a sense of belonging with an ability to contribute to the licensee’s consultative decision making framework.

One could argue that future successful AR distribution models will be those which have a clear strategy that incorporate a humanistic element to the AR value proposition.  A holistic values proposition that ensures ARs overall needs is fully matched. When an AR needs the support of their licensee at the most critical times, do they experience the supportive framework that would reflect such a holistic value proposition?”