Critical Issue Report

AARP opens its doors to agents

Members prefer the advice and counsel of a local agent

By Phil Zinkewicz

Twenty-five years ago, the AARP-branded auto insurance program from The Hartford was rolled out amidst predictions from insurance industry solons that the independent agency system was breathing its last. Pat Borowski of the National Association of Professional Insurance Agents (PIA National) remembers it as a time when numbers of transformations that challenged independent agents were going on in the marketplace—particularly in personal lines.

“The Hartford situation sat within the scope of other experiments with which carriers were engaged in personal lines,” says Borowski. “Taken all together, it was a disconcerting time for our member agencies. A good many of our members had senior citizens as clients. To add to the problem, AARP kept lowering the age for membership and, therefore, eligibility in the program. It started out as 65 and older, then 62 and older, and kept going down until today when it’s down to 50 and older.

“Nobody in the agency system liked what was going on, and everyone was concerned,” she continues. “We realized that no amount of running around and yelling would stop what carriers were doing, so we had meetings with carrier CEOs, including The Hartford, to safeguard the agency’s place in personal lines auto.”

Well, the independent agency system did not breathe its last but, rather, emerged stronger than it had been. Recently, The Hartford announced that it is now offering AARP-branded auto insurance through “select, authorized independent agents.” Previously, the insurance was only available directly from The Hartford by phone, Internet or mail.

“The decision to expand through the agent channel was based on strong customer feedback, pilot testing and new research revealing that the majority of the nearly 40 million AARP members prefer the advice and counsel of a local agent when making decisions about their auto insurance,” says Michael Concannon, Hartford senior vice president.

“For 25 years, the industry-leading AARP-branded auto insurance program from The Hartford has been extremely popular, growing to almost 3 million policies in force. Much of the success of this program is due to innovative product features and a commitment to truly understand and support our customers. We are thrilled to now be able to offer these innovative products and features to the many AARP members who prefer to purchase insurance through an independent agent.”

By the end of this year, AARP-branded auto insurance will be available from The Hartford through select, authorized local agents in as many as 20 states. As of July 18, specially authorized agents in Georgia, Ohio, Virginia, Colorado and New Mexico started selling the product. Select agents in Connecticut, Oregon, Pennsylvania, Wisconsin, Indiana and Missouri will begin to participate by the end of the year. Last year, The Hartford successfully piloted the offering in Arizona, Tennessee, Minnesota and Illinois.

Concannon said the AARP-branded insurance program is designed specifically to meet the needs of Baby Boomers and older adults, utilizing the expertise of The Hartford Advance 50 Team, a group of in-house gerontologists focused on creating innovative products and services for the 50-plus market. Some characteristics of the product include:

• Lifetime continuation—assures that the customer’s insurance policy will not be dropped as long as a few simple requirements are met.

• RecoverCare—helps customers pay for assistance with daily errands and responsibilities such as cooking, cleaning, shopping, dog walking, transportation and yard work if they are injured in an auto accident.

• Standard 12-month rate protection—vs. the traditional six-month policies offered by most companies.

According to Concannon, independent agents who applied were authorized after satisfying a number of eligibility requirements, which included completing a training program designed to highlight the needs of the 50-plus population and empower agents to sell a product that truly meets a customer’s needs, meeting a high-level of business and ethics standards, and demonstrating a commitment to community service. Not all Hartford agents are authorized to sell AARP-branded products, he said.

And, apparently the move is good for those agents specially selected. “We have had clients come into our office with the direct mail pieces that The Hartford and AARP have put together and asked whether we are a qualified AARP agency,” says Mike Stansbury, principal of Elite Insurance Solutions in Brentwood, Tennessee.

“And, with great joy, we’re able to say ‘yes’ and close business on account of the direct mail pieces that are part of the program,” he reports. “It is very valuable to us and we’re very proud to be able to say that we’re associated with the program.”

Lou Rotta, owner of Quantum Insurance Group in Downers Grove, Illinois, has this to say: “We have competed with programs in the marketplace that we can’t get access to. For years, we have lost business to AARP. Now, to be on the same team as AARP is huge, and I think that goes for anything. And, we’re grateful that now we can participate with the brick and mortar, and with professional people who are long-term employees here, and to give that personal service, that personal conversation and the intimacy of the sale.”

And, there is June Taylor, owner of Wilkinson Insurance in White House, Tennessee: “We’ve represented The Hartford for about 50 years in our agency, but it’s been very exciting to have The Hartford as partner, to allow the independent agents to be able to use its affiliation with AARP in our presentation to our clients. This has been a great benefit to us. We feel it just gives us a lot of credibility and some new selling opportunities.”

There have been a good many developments in the last 30 or so years that have harbingered the death of the independent agency system. Time and again, carriers have experimented with various alternatives to that system. Time and again, those experiments have either fallen by the wayside or opened up to include independent agents.

What does that say? It says that, when it comes to something as essential and as complex as insurance, people want someone who can explain all of the variables to them. It is to the credit of both AARP and The Hartford that they are listening to what their customers are saying. n

The author
Phil Zinkewicz is an insurance journalist with more than 30 years’ experience covering the international insurance and reinsurance arenas. He was the insurance editor of the Journal of Commerce for a number of years, handling all their domestic and international supplements. In addition, he regularly writes for a number of London publications.