Navigating the Coral Reef of Intermediary Distribution

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Author

Erin Bowler, MBA
Senior Analyst, Distribution Research
LIMRA and LOMA

February 2025

Imagine the financial distribution landscape as a vast, interconnected ecosystem, much like a coral reef. Just as coral reefs support a diverse range of marine life through symbiotic relationships, brokerage general agencies (BGAs) and independent marketing organizations (IMOs) create a thriving environment for independent financial professionals, insurance carriers and consumers. This ecosystem is undergoing a transformative period, driven by mergers and acquisitions, growing independent producer networks, technological advancements and evolving consumer expectations. At the heart of this transformation are BGAs and IMOs, which play a crucial role in connecting independent financial professionals, insurance carriers who offer a wide range of financial products and consumers who are increasingly seeking holistic financial solutions.

The Changing Landscape

The financial distribution ecosystem is rapidly evolving, with BGAs and IMOs adapting to new market dynamics. A significant majority of organizations are affiliated with national marketing organizations (NMOs), leveraging these partnerships for better compensation, shared services — including underwriting, marketing and advanced sales — and to remain competitive.

These strategic alliances enable organizations to optimize their marketing efforts and enhance their market presence. As a result, intermediaries can focus on their core competencies while benefiting from the extensive resources and industry knowledge provided by NMOs.

Producer Networks and Growth Strategies

BGAs and IMOs are heavily reliant on their producer networks and other distribution partners to drive sales and revenue. These networks are expanding rapidly, driven by ongoing mergers and acquisitions within the industry. This consolidation is fueling significant growth and strengthening the overall network size. On average, these intermediaries expect their networks to grow by 24 percent over the next three years.

Another promising growth strategy is leveraging partnerships with other distribution channels. These partnerships significantly enhance intermediaries' sales and revenue streams. In 2024, 82 percent of intermediaries reported having established relationships with various financial institutions. Notably, registered investment advisors and property and casualty agencies are experiencing the most substantial growth. By collaborating with these entities, intermediaries can tap into new markets and customer bases, driving innovation and expanding their reach.

To support this growth, organizations are financially investing in various sales and practice support initiatives. Advanced sales support/underwriting, wholesaling support and acceleration of e-capabilities are among the top areas of investment. Additionally, there is a strong emphasis on marketing support, with seminar presentations, brand development and social media support/training being prioritized.

Embracing Technology and Innovation

Technology is a key driver of change in the financial industry, and BGAs and IMOs are no exception. A majority of organizations are making significant investments in technology to enhance their operations and support their producers. Areas of focus include customer relationship management (CRM) systems, data analytics and digital delivery platforms.

One notable trend is the increasing interest in artificial intelligence (AI) and machine learning. A significant portion of organizations are currently using AI tools like ChatGPT, while others plan to incorporate these technologies in the near future.

Figure 1. Do you plan to incorporate ChatGPT and AI into your business model?

Filter the data in this chart by clicking on a color bar in the chart legend.

ChatGPT and AI are being used to streamline underwriting processes, improve customer service and enhance marketing efforts. This growing adoption of AI and machine learning is transforming the industry, driving efficiency and modernization. As more organizations integrate these advanced technologies, they are poised to gain a competitive edge and deliver superior value to their customers.

Preparing for the Future

As BGAs and IMOs look to the future, they are focusing on several key priorities to ensure continued growth and success. Succession planning is a critical area, with many organizations having formal plans in place or they are in the process of formalizing their plans. This is essential for maintaining business continuity and ensuring a smooth transition of ownership.

Another priority is expanding the range of services offered to clients. In addition to insurance planning, there is a growing demand for retirement income planning, estate and trust services, and financial planning. Previous LIMRA research found that 70 percent of clients appreciate the value of a holistic approach to financial planning when it is employed by their financial professionals. Organizations are responding by diversifying their product offerings and enhancing their expertise in these areas, ensuring they can provide comprehensive, integrated solutions that meet the evolving needs of their clients.

Just as a coral reef must adapt to changing ocean conditions to thrive, BGAs and IMOs must continuously evolve to navigate the complex and rapidly changing financial landscape. By focusing on strategic partnerships, investing in technology and expanding their service offerings, BGAs and IMOs are well positioned to thrive in the future. As they continue to adapt and innovate, they will play a crucial role in shaping the future of financial distribution, ensuring that consumers have access to the products and services they need to achieve their financial goals.

To read the full report by LIMRA and NAILBA, please visit Inside the Intermediary 4.0 - BGA and IMO Survey Results