The 20th Century in Review - Flocks follow paths of early leaders

A premium on professionalism: Insurance group formed 50 years ago to shake 'peddler' image

By Jonathan Knutson
The Forum

Life insurance agents today pride themselves on being professionals. That wasn't necessarily the case 50 years ago.

Agents were known then as "peddlers, and that's just about what they were, too," said C. Les Wagner, a longtime Fargo-Moorhead agent, now retired.

New agents would receive minimal training, then "get a rate book and be told to hit the streets," he said. Small wonder "many people didn't regard (the life insurance business) as being very professional."

The Fargo-Moorhead Association of Life Underwriters was formed in 1949 to change that. The group is celebrating its 50th anniversary this spring and summer.

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This Ancient Order of United Workman of North Dakota policy is from 1947. The Fargo Company is now known as Pioneer Mutual Life.

The association seeks - among other things - to promote ethical standards in the insurance industry and to help its members become more knowledgeable professionally.

Flocks follow paths of early leaders

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In 1950 Pius XII appointed Muench nuncio, or ambassador, to Germany. But it was difficult for Muench to accept the order once the country was on its way to recovery. He wanted to return to being a bishop in Fargo, but the pope said the church needed his talents in Germany.

After the death of Pius XII in 1958, Pope John XXIII named Muench a cardinal. Although it was a great honor, Muench's appointment led to what he most dreaded: retirement in Rome.

Coleman Barry, a Catholic historian and scholar who wrote Muench's biography, said "Muench lacked enthusiasm for his new position ... He appeared to those around him to be unaware of his power and influence, oblivious of the power a cardinal has in Rome. His advice was not asked and he did not proffer it."

At the same time Muench suffered from hardening of the arteries, an affliction that sometimes rendered him incoherent in public.

Muench died Feb. 15, 1962. After services in Rome and Milwaukee, he was finally buried in Holy Cross Cemetery, Fargo.

The local group, which has about 300 members, belongs to the National Association of Life Underwriters. The national group was founded in 1890 and has about 130,000 members.

Many members of the local association have taken advanced training and earned professional designations such as life underwriter training council fellow and chartered life underwriter.

In contrast to the poorly trained agents of 50 years ago, newly hired agents today receive extensive training - sometimes for as long as two years.

It's estimated some companies spend as much as $20,000 to train a new agent.

"That's not the way it used to be," Wagner said. "New agents would get maybe 30 days of training."

Lorrie Carlson, executive director of the F-M association, said many insurance companies are hiring fewer new agents because of the cost of training them.

Extensive training is needed, in part, because life insurance agents today offer far more products and services than their counterparts of 50 years ago.

Once, most agents sold basic collect-if-you-die insurance policies and little else.

Today, many agents offer a wide range of products such as annuities, Keogh retirement plans, 401(k) group plans, and individual retirement accounts.

"You really need training to keep up with all the products," Wagner said.

Life insurance costs far less today than it did 50 years ago. Back then, for instance, a $10,000 policy typically carried monthly premiums of $25 or $30. In some cases, the life insurance "peddler" showed up at the policyholder's front door each month to collect the premium.

Today, a consumer can get a $250,000 policy for roughly the same amount of money.

Why has coverage increased while rates haven't?

"Computers," Wagner said.

Thanks to computers, insurance companies can better analyze the risk of the policies they issue. Having a better handle on risk - i.e., potential losses - gives insurers the ability and confidence to hold down rates.

That better handle on risk also means insurers today seldom turn away people applying for a policy. The applicant may be charged a hefty premium, but a policy will be issued.

Fifty years ago, insurers struggled to assess the risk of many applicants - and consequently rejected those applications.

"Companies used to turn down quite a few people. That just doesn't happen much now. It's a change for the better," Wagner said.

To be sure, life insurance companies sometimes come out on the short end of a policy.

Wagner remembers one client who took out a $500,000 life insurance policy and paid a $160 premium. The client died a few weeks later - and his beneficiaries collected the $500,000. The insurer even returned two-thirds of the premium.

Life insurance agents face challenges today that agents of 50 years ago didn't, Carlson said.

Insurers that operate primarily or exclusively on the Internet are grabbing a few customers from flesh-and-blood agents.

More significantly, at least for now, banks and brokerages are expanding into the insurance business. That means more competition for traditional life insurance companies. Many life insurance agents, in turn, are offering products that once were confined to banks and brokerages.

One thing hasn't changed in the past 50 years, Wagner said: The need to insure the financial security of your family if you die.

Experienced agents know what it's like to give a death claims check to grieving survivors, Carlson said.

"Whenever you deliver one of those," she said, "you remember why you're in this business."

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