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Insurance Agent Interests   11/11/2022

Why Insurance Agents Fail

By Joe Peters

Why Insurance Agents Fail

Success as an insurance agent takes work. Read on to learn about common challenges.

Investopedia says more than nine out of ten life insurance agents leave the industry in their first year. The property-casualty insurance business also has dismal agent retention. Why do so many new producers fail? It’s complicated.

Reasons for Insurance Agent Failure

Selling insurance is one of the best careers in America. It offers financial rewards, the ability to run your own business and the opportunity to make a difference in someone’s life. For the right person, selling insurance produces the financial independence and satisfaction most other careers lack. But…there’s a “but.”

To succeed, you must invest years of hard work, follow a prescribed system and have adequate support from family, professional mentors and others. Many new agents enter the field initially but lack the talent or resources to succeed long-term. Despite their ambition and dreams, they can’t sustain themselves long enough to beat the odds.

Specifically, there are dozens of reasons why people wash out of insurance sales. Here are some of the major ones:

  • Succeeding in insurance takes years of hard work– Many experienced agents remember “the grind” of their early years: long hours calling for appointments, tireless networking, learning how to counter objections and more. The good news? After a few years, their first-year commissions grow, as does their renewal income. A decade or more later, many agents have such significant residual incomes they no longer need to book new sales.
  • Many new agents have a short-term view of progress– They expect to succeed right away or after a few years of work. They quit when they see their income growing slowly (or not at all).
  • Viewing insurance sales as a job, not a calling– Some people just want to put in their time and collect a paycheck; they don’t want to invest more than that. Successful agents understand selling insurance is a career. They’re prepared to do whatever it takes to build their business. If they have to work 60 hours a week, so be it. They’ll work extra hard to master their product portfolio or sales presentations.
  • Lack of family or spousal support is another failure trigger– When an agent’s spouse constantly questions the need to work long hours or speak with clients at night or on the weekend, it can wear an agent down. If a lack of support persists for weeks or months, new producers may bail to maintain peace in the family.
  • Absence of professional support– Ideally, agents should have a mentor to show them the ropes. They need guidance on which markets to target, what sales language to use and how to shepherd new policies through underwriting. If this support is missing, they may lack direction and lose momentum. Left permanently to their own devices, green agents often fail.
  • Not using a structured selling system is a problem– Agents must identify an attractive target market and use powerful lead-generation tools, approach scripts, sales presentation tracks and more. When new agents sell without enough structure, they won’t target an attractive market or close enough sales.
  • Some agents launch new businesses without crafting a value proposition– As a result, they can’t easily describe what they bring to the marketplace and how they differ from competitors. Without a value proposition, it’s tough to attract prospects or close sales. Without prospects or sales, the game is over.
  • Others don’t understand the role marketing plays in establishing an insurance business– Today, digital marketing is essential, not just traditional marketing. Unless new agents leverage modern digital tools— social media, email, websites, search engine optimization (SEO) and search advertising— it will be difficult for them to gain traction.
  • Dealing with constant rejection can be a downer– There’s no way around it: Selling insurance exposes agents to negativity. Not only do most prospects refuse to speak with them, but most who agree to an interview will never buy. Plus, some prospects can be insulting or abusive even if they decide to meet (and purchase). Developing a thick skin is an essential survival strategy for new agents.

Agent recruits fail to gain traction in the business for many other reasons. They range from external factors— such as dealing with a lousy economy— to having insufficient financial resources to being uncomfortable selling insurance to friends and family.

Success Lies Ahead

These challenges lead to a great deal of turnover in an industry known for its fair share. But that doesn’t mean everyone will encounter each of these reasons for failure, nor does it mean that those who experience some or a few of these reasons will fail in this industry and depart. The insurance industry is certainly not alone in many of these factors that can lead to failure—these reasons and variations of them affect the vast majority of sectors and small business efforts.

At the end of the day, there’s little doubt that some people just aren’t cut out for the challenges of selling insurance. They may lack the temperament, persistence or energy to make it work. They’re not bad people, just individuals who haven’t yet found a suitable career. But for many people, the insurance agent industry is right for them. With a workforce of over 500,000 Americans and median annual wages near $50,000 (and opportunity for much more), it shows that success is obtainable.

Insurance sales can be an enriching career for anyone with the determination and motivation for it. Becoming a pillar in your local community and being able to take pride in helping friends, family and acquaintances safeguard their assets or livelihood is something not many other careers offer.

Take these potential reasons for failure as a guide for navigating your profession, not as reasons to be discouraged from continuing onward on your path. Avoid these pitfalls, and you’ll be sailing smoothly towards a successful career in the ever-growing world of insurance. For the right person, the sky is the limit.

Having errors and omissions (E&O) insurance is a good option for all agents— new or established. Learn more about our insurance agent E&O program on BCS’s website.