Inside Products: Keep The Product Fires Burning

Think back over the past few decades. In the late 1970s and early 1980s, traditional whole life insurers saw sales falling as consumers turned toward vehicles paying the higher interest rates. Rather than fold their tents, many insurers, led by newer companies but followed by older-line companies, began selling universal life insurance, complete with credited interest rates that tracked more closely with the broad interest rate environment.

Similarly, the meltdown of the stock market in the late 1980s and recession in the early 1990s saw people giving the stock market wide berth. But, as it turned out, that was the period that gave rise to the modern variable annuity. VAs had debuted in a simpler form several years earlier, of course, but they werent big sellers. Rather than bid them adieu, however, the players retooled them–right in the heat of the late-1980s downturn–in hopes they would sell when the market rebounded. As you know, it did and they did.

Another example: In the mid-1990s, interest rates were lagging and as a result, sales of fixed-rate insurance products were languishing. But that is the very time when some insurers began rolling out a new type of fixed interest product, the equity indexed annuity (and later equity indexed life policies). Now, six years later, EIA sales have hit a quarterly record industrywide.

Some very sensible people nix the idea of rejuvenating or developing new products when sales slide. “That takes too much time and money,” they say. “Its safer to make cutbacks and sit tight.”

The argument has logic. But, as you have seen, people and companies can and do find ways to rise to the occasion. Practical ways. Here are a few:

–Reassign staff. If you have talented staffers whom you do not want to let go when you do your cutbacks but who have time on their hands due to the slowdown, reassign them to renew/new development efforts. They may be your key to revitalization.

–Choose a course of action and set priorities. As in the good times, during periods of slowdown, it pays to focus on one or two growth areas or a planned sequence of same. Trying to do it all at one time saps energy, resources, and focus.

–Keep everyone informed. To reduce anxiety and increase productivity, keep workers apprised of whats happening. Yes, some will hear your reports as bad news and jump ship. But others will pitch in and help, because now they know why its necessary. Besides, if you dont fill them in, the rumor mill willand not to your liking. I know of many insurance and financial firms that have learned this lesson the hard way.

–Find the money. Firms that commit to the long haul somehow find the money to grow products, even in leaner times. Theyll restructure loans, partner with collaborators, sell assets that arent mission critical, etc. This takes fortitude, humility, and openness, plus lots of midnight oil, but those who do it say its worth the effort. P.S.–if you have a sound business plan, youll find lenders are less resistant.

–Lead, lead, lead. This wont be easy, because youll be offering enthusiasm when many are dejected; hope when some feel despair; and vision when others see darkness everywhere. But if youve done the other four things, youll be able to speak with conviction.

That can make a huge difference. As Walter Lippmann, the widely read 20th century political commentator, noted, the final test of leaders is that they leave behind in others “the conviction and the will to carry on.”

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 3, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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