What Has Become of Us?
April 8, 2020 by Sheryl J. Moore
When I heard about my grandfather’s experience paying his first death claim, I KNEW what a noble profession being an insurance agent was. Protection. Security. Safety. These values motivated me to serve the life insurance industry, beginning in my early 20s.
Working for a mutual/career agency company marketing participating whole life, and transitioning to a stockheld company that distributed non-par products via an independent agent distribution, had a strong influence on my beliefs about what the business of insurance should be about. When I was first learning about insurance, it wasn’t hard to see that the customer came FIRST. We had to provide valuable products that were there, to offer benefits, when they needed them. The salespeople were the lifeblood of the business. We had to invest in their knowledge and success, for they were the reason we had our customers to begin with. Above all, it was important to do “what was right.” Integrity mattered.
So many of the changes I have seen in the insurance business, since, are deeply disturbing to me.
Insurance companies’ competing in the illustrations “arms race,” and raising Cost of Insurance (COI) rates, years later, leaves me asking if it is now okay to mislead customers if the result is increased market share?
When product manufacturers “buy business” via ultra-competitive annuity living/death benefit riders, and later ask to be released from those riders’ benefits, should that be an acceptable means of improving the bottom line?
Is the customer experience so unimportant that insurers should get a “pass,” when outsourcing the servicing of their business to a Third-Party Administrator (TPA)? After all, the business is “already on the books,” right?
And along those same lines, when did it become okay to reduce the inforce renewal credited rates/caps on life insurance and annuity contracts? Is this just the cost of doing business now?
How about the creation of absurdly complex product features that the salesperson won’t understand, much less the client? Is it okay to proactively search for product “innovation” to this end, as long as it provides a means of marketing a relatively unattractive product in a low-interest rate environment?
When does selling closed inforce blocks of policies, to organizations that don’t have the shared values necessary for the insurance business, suddenly get scrutinized?
And this isn’t even all-encompassing of the changes that I’ve seen, which are breaking my spirit. I believe in this business! I love this business, and the products we offer; how we protect families.
The low interest rate environment, coupled with onerous regulation, has pushed the limits of many in the life insurance and annuity business. The cost of business is expensive, and it is more and more difficult to make a profit, whether we are talking product manufacturers, distributors, or salespeople.
That said, we cannot forget why we are here: protection, security, safety.
We must do better. The implications that lie ahead, if we don’t, will have crippling effects on this business.
Sheryl Moore is President and CEO of the life and annuity market research firm of Wink, Inc. Her company provides competitive intelligence, market research, product development, consulting services and insight to select financial services companies. She may be reached HERE.
