Contradictions Rule In How Many Products Have Been Selling
Numerous product consultants have told National Underwriter that, as 2003 ends, inquiries for their design services are up.
Company executives speak of plans for debuting new products fairly soon.
Producers say product guarantees have saved the day for them all year long, so they are wondering whether these features will continue to sell well in 2004.
Marketers everywhere also are wondering how new legislationfor example, Medicare reform, do-not-call and even the CAN-SPAM Act that the President just signedwill affect their fortunes.
That is a snapshot of the insurance product scene as year 2003 comes to a close. It was a year when product sales and development were sluggish in many lines but where there were bright spots, too. In sum, a confusing year for product trend watchers.
For example, 3rd quarter variable annuity sales hit $31.3 billion, and year-end sales should surpass last years total by 10%, according to The VARDS Report, Roswell, Ga. Also, equity index annuity sales, though slowing in the 3rd quarter, should surpass the 2002 total of $11.5 billion, says Advantage Group, St. Louis, Mo.
Even individual life sales edged up 2% in the 3rd quarter, according to LIMRA International, Windsor, Conn. The surging 3rd quarter sales of universal life (up 36%) and whole life (up 8%) accounted for much of this, LIMRA says.
But at many shops, sales of other product lines did not bring home much bacon. These include variable life insurance, traditional fixed annuities, disability income insurance, individual long term care insurance and critical illness insurance.
However, some marketers did have unique success with one or more of the more sluggish lines. So, it was a somewhat confusing product year. Interviews with executives in various sectors confirm that.
For example, at Randy Kilgore & Company, Colorado Springs, Colo., sales were strong in ULs with guaranteed death benefits. But the principal, Randy Kilgore, says “we also sold a lot of term life insurance.” This growth occurred, even though industry wide term sales were flat all year, according to LIMRA.
Why the disparity? One reason, suggests Kilgore, who is the current president of National Association of Insurance and Financial Advisors, is that people in his area are changing jobs rapidly, especially in the tech sector.
“Some lose their term insurance at their former employer and may not have the same coverage at the next employer,” he says. “Others are leaving jobs to become entrepreneurs, because venture capital for that is starting to come back in this area.”
The result is people there are buying their own term insurance to make up for what they lost when leaving the employer, Kilgore says.
Yet, over in New York, the life market went a different direction. Following 9/11, “we had term fever here,” says Jay L. Scheiner, a principal partner at Agent Support Group, a Great Neck, N.Y., brokerage. This demand lasted through 2001 and 2002.