With the passage of estate tax reform and the uncertainty around the new split-dollar regulations, brokers operating in the high-net-worth markets are finding many of their clients have decided to put their estate planning on hold, says Jim Aaron, brokerage general agent for Aaron Advantage Agency, Richmond, Va.
“Weve been impacted a great deal by the estate tax,” he says.
But those clients who are going forward with their estate planning are doing so a little differently–theyre planning with the expectation of full estate tax repeal, and thats impacting the type of products theyre purchasing, adds Steven Craig, brokerage manager for Flynn Associates, Encino, Calif.
“People are buying term insurance for permanent needs, instead of buying permanent insurance,” Craig explains. “They really think the estate tax need is temporary.”
And a good portion of this high face amount term insurance is now being purchased online, according to Ron Verzone, president of United Underwriters, Exeter, N.H.
Verzone adds that contrary to the beliefs of many insurance industry observers, online insurance sales are not just small or middle market policies. His agency provides product for a number of Internet marketing firms, and he notes that in the top 10% of sales at those firms some significant term sales are being made. “We have a number of Internet-driven cases pending at any time that are between $5 million and $10 million worth of coverage.”
Another product issue brokers are facing today has to do with the health insurance market, says Jack Dewald, president of Agency Services Inc., Memphis Tenn. “There is an increasing sense of frustration–many brokers are fed up with rate increases and underwriting issues,” he explains. “Its becoming much more difficult to operate in this arena than it has been in the past.”
Furthermore, Dewald adds, there continues to be a “huge exodus of carriers that write health insurance.”
With some insurers getting out of the health insurance market, “the number of carriers I have to choose from to do business with has greatly diminished,” he says.
Reproduced from National Underwriter Edition, April 14, 2003. Copyright 2003 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.