Ominous Signs Loom for Life Insurance Sales
July 21, 2017 by Jay Cooper
The sales environment for the life insurance industry could remain challenging, a leading indicator of industry wide sales shows. The MIB Life Index fell again in June and for the year-to-date period is down -3.2% compared to the first six months of 2016.
The MIB Life Index score is determined by the number of searches MIB life member company underwriters perform on the MIB Checking Service database. It tracks roughly 90% of life insurance application activity in the U.S. and Canada and is typically a good three- to four-month leading indicator of placed life insurance business.
“It’s the most timely measure of individually underwritten life insurance activity and serves as a leading indicator of U.S. sales activity,” explains Stacy Gill, executive VP of MIB, in a mid-year update on the index.
Right now, all signs for sales activity point down. For the month of June, the index dipped -2.6% from the same month last year. For the quarter, the index is off -1.8% from the second quarter of last year. The index has fallen in each of the last four quarters.
To an extent, disappointment should be tempered by the fact the index is declining from all-time high index values established in the middle of 2016, Gill says. Index losses in 2017 essentially erase gains achieved by the index in the first two quarters of 2016, and give back roughly a third of the total gains recorded in the 2015-2016 expansionary period.
A silver lining in the index value: The pace of falling index levels has slowed. In the first quarter of 2016, the index was down 4.5% from the same quarter in 2016, a much steeper drop than this quarter’s loss.
“It will be interesting to observe whether the impact of the industry’s continued adoption of accelerated underwriting platforms generates industrywide improvements in these numbers,” Gill says in the video.
All three age groups tracked by the index experienced a decline in June application activity. Activity for the age 60 and over group was down -4.1% from June 2016. The 0-44 demographic was off the least at -0.9% compared to June last year, while the 45-59 segment was off -5.0%.
For the year-to-date period, application activity is down -2.3% from the same time last year for the age 0-44 segment. Activity is down -2.1% for the 60 and over category and down -5.5% for the age 45-59 segment. It’s been a prolonged decline for the latter age group.
“When you dig deeper into the data, the slowdown in application activity in age 45-59 ties back to as early as the second quarter of 2016,” Gill says.
