Dan Sullivan, coach to the financial services industry and president of Strategic Coaches, Inc., sees the producer group--a large, independent sales and marketing organization that is committed to several companies--as the new distribution model in the insurance industry.

"The producer group will be independent and will operate with minimum requirements," he told a meeting of the General Agents and Managers Association. "There will be a cutoff point below which you cannot be part of the agency. That will lend the necessary elitism. They'll do business with five or six different companies; they'll have their own accounting services, their own legal services; they will be complete selling units." Sullivan predicted that in ten years there will be 2,000 producer group agencies with an average of 40 agents each.

"Producer groups are consumer-focused rather than company-focused," he added, citing a study that covered the reasons agents wanted to become part of these groups. Among those reasons was agents' desire to be part of an elite group. "These agents don't want to show up at the same meetings with low producers," he said. "They absolutely hate being at production meetings with low producers."

Some companies, he predicted, will approach the general agents in their own career agency systems and suggest that they create new marketing companies.

One company, Sun Life of Canada in Wellesley, MA, is making Sullivan's bureaucratic-to-entrepreneurial switch. As reported in National Underwriter (May 26, 1997), Sun Life executives initially coined the term "bragent," to describe their new relationship with their former career agents. Now more like brokers, these agents will meet minimum production levels and will continue to receive services from Sun Life such as training, underwriting, marketing, and the chance to participate in sales and incentive conventions. They also will be free to contract with other insurance companies. But Sun Life will no longer provide their health insurance, overhead, or retirement benefits.

Sullivan said using this new distribution approach could save companies 60 percent of their operating costs--money that could then be used to "sweeten the pot" for the surviving high-producers with more or better trips and bonuses.

"This will require negotiation and it will require bloodletting," Sullivan warned. "Because I believe the current system supports mediocrity."