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The difference between a Universal Life Insurance policy's total death benefit and its cash value. A difference between these two amounts is required to exist by the Internal Revenue Code (IRC) in order for Universal Life to qualify as a Life insurance policy according to IRC definition and receive the favorable tax treatment such policies are given. The death benefit increases automatically when the policy's cash value reaches the initial face amount of the policy under Option A.
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Dedicated Agency ManagementAgencies are usually managed in one of two ways. Either by a “seat of your pants” philosophy, which in many agencies is more successful than anyone at the Harvard Business School would ever believe, or by dedicated management. Dedicated management is almost always required once an agency reaches a certain size. The point at which an agency needs a dedicated manager varies significantly, but once an agency reaches that point, 95% of agencies find a manager with experience from one of two sources: an agency (usually their own) or a company.
There are pluses and minuses to hiring from either source. Important accommodations specific to each must be made for either choice to be successful. Agencies facing this decision will find greater success by understanding these issues.
Managers with Company Experience
Ex-company employees are potentially a good option because many have lost their jobs in the last few years and they often have formal management experience/training. When hiring a company person though, the agency has to recognize the cultural differences between companies and agencies are gigantic. Agents often recognize these differences but company people often do not. They rarely understand or accept they may not have the right personality characteristics for running an agency.
Understanding and handling these differences from the beginning can help diminish problems down the road. Here are a few issues I've seen when fitting a manager with company experience in an agency.
Sales Ability
A significant issue with former company people as agency managers is that most are not salespeople. At best, some can take over books and even keep those books intact, but maintaining renewals versus making sales are two very different things. The problem with having an agency President that cannot sell is that the President is disconnected from the lifeblood of what makes a successful agency. Simply increasing profits by cutting expenses is not a sustainable business strategy.
Additionally, it has been my experience that producers do not respond really well to management that cannot sell. People like to follow “can-do” leaders, leaders that don't ask others to do things they themselves cannot do. When a person that cannot sell puts pressure on the producers for not selling, the tendency is to not give the person or the message nearly as much respect.
Building Relationships
Another common trait I find among former company people is they are much more “numbers” oriented than “people” oriented. This is certainly a benefit in the right position, but it has its limitations and it behooves agency owners/partners to recognize this early. Either help the person understand the importance of forming relationships with company people, clients, staff, advisors or place them in positions where personal warmth is not as important. For example, have someone else attend company functions or always have someone attend social settings with them.
Successful agency owners have the ability to easily make friends, make strangers and acquaintances feel welcome, and build relationships quickly. These agency owners understand just how important being proactive at constantly building relationships is to their success. If you hire an ex-company person, be sure they too have this talent and are proactive using it, or do not place them in positions where such a personality is a necessity.
Ban the Red Tape
Agencies, even large ones, often operate adequately without excessive paperwork and “red tape”. Companies, as all readers know, tend to deluge themselves in paperwork and red tape, so when hiring an ex-company person to run your agency, do not let them bring this attitude with them. It will bog them down and keep them from taking action quick
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