NU Online News Service, Nov. 20, 9:03 a.m. — New York

Life insurers can improve their results by working harder to sell value, according to Robert MacDonald, chairman of Allianz Life Insurance Company of North America, Minneapolis, a unit of Allianz A.G., Munich.

MacDonald warned here at a global leadership conference organized by the American Council of Life Insurers, Washington, that, over the past 15 years, life insurers have gotten away from selling value. “We need to get back to selling value and get away from price and tax leverage,” he said. “When you give value, then you can make profit.”

To deliver value, MacDonald recommended that life insurers focus on simplicity, “real-time” service and long-term thinking.

Today, he argued, many insurance products are too complicated because insurers equate value with bells and whistles. “Many long term care products look like Christmas trees,” he observed. “You have no idea what it is.”

MacDonald suggested that the life insurance industry could do better by offering products that respond more effectively to consumer concerns, such as concerns about the additional expenses associated with getting sick in old age.

If, for instance, an annuitization feature in a variable annuity paid out $5,000 under normal circumstances, but paid out $8,000 in the event of illness, that would bring value to consumers, he said.

Real-time service also brings value, MacDonald maintained.

A consumer can check the status of his brokerage or checking account online, but can that consumer find out the status of an annuity online? MacDonald asked.

Life insurers also need to return to long-term thinking, develop products that are long-term products, and retain control of critical parts of the business, such as distribution, MacDonald said.

If a life insurer is going to outsource distribution, it should evaluate the risk, and then make sure that there is guaranteed access to shelf space, MacDonald advised.