Hedging its bets, Hartford Financial Services Group Inc. plans to increase life insurance sales by focusing on developing relationships with independent financial advisers, as opposed to the big-bank channel.
Historically, the Connecticut insurer has developed most of its life insurance business through "megabanks," said Brian D. Murphy, an executive vice president in its individual life division, but sales through these companies have fallen in recent years.
"In the life insurance space, sales through financial institutions really only accounts for about 10%," he said. "The independent space is really the blue ocean. We want to enter that blue ocean."
On a commissionable weighted-premium basis, Hartford's individual life division's sales declined 26.4%, to $201 million, last year. That said, Murphy believes his new strategy will produce double-digit growth this year and for years to come, and he said he anticipates that Hartford will succeed in becoming one of the top five individual policy carriers.
"We got double whipped last year," he said. "The life insurance business was hit hard, and the financial institutions suffered. We needed to change our focus."
Murphy said the company also plans to increase sales through regional banks. To keep up with these initiatives, Hartford plans to increase its wholesaling force by 10% to 15% annually for the next three to five years. It now has 200 wholesalers spread among 20 offices nationally.
"Most competitors sell their products to independent advisers through third-party aggregators," he said. "Our strategy now is to take our products directly to advisers. … We don't want to be commoditized. We think we can stand out by going directly to advisers."
The strategy has begun paying dividends. Murphy said he initially hoped to sign up 200 advisers by June and 400 by yearend, but the company added 140 in January alone.
Analysts said that Hartford will still face competition from life insurance providers that are well-established with independent advisers, including Pacific Life Insurance Co.
Burton Greenwald at BJ Greenwald Associates in Philadelphia said that Hartford has lost traction with larger institutions and is forced to take this route. The company could face significant pitfalls, he said, however, especially as its parent continues to look to repay its government aid.
"Hartford has been going through a very challenging period and has faced a lot of issues surrounding its financial stability," he said. "A lot of larger institutions have questions about Hartford's long-term stability."
Murphy said he is confident that Hartford can succeed with independent advisers. It is focused on those with more than $1 million of life insurance production, he said. "Independent advisers typically have a much shorter shelf of providers than a large financial institution," he said. "We are talking about two to three core carriers. If we can get on the shelf, we are confident we can gather significant share of assets."