Golden Age For Life Insurers Is Just Around The Bend: Analyst

Over the next 10 years, baby boomers, representing $4.4 trillion in assets–some 61% of the current entire mutual fund market–will reach retirement age, he noted. There will be a need for life income products, immediate annuities and long term care products, he continued.

Schwartz said there is a major opportunity for insurers in the LTC insurance market once they get their pricing and assumptions right. Some insurers have assumed higher lapses than currently are being experienced as consumers hold onto their policies, he explained.

LTC products are complex and “maybe the government needs to come in like in Medicare and create 10 policies that everyone understands,” he added.

Mark Thresher, the president and chief operating officer-elect at Nationwide Financial, Columbus, Ohio, also discussed opportunities and challenges.

“We still see the life and retirement savings business as a significant growth business,” he said. Both accumulation and payout products will be opportunities, he told attendees.

And the CPA distribution channel is one that Thresher identified as an opportunity going forward.

Thresher also noted the “threat” to variable annuities of a reduction in the capital gains tax but added that it is important for insurers to cite the “advantages and protections that dont come out of a mutual fund.”

Another challenge facing the industry and one Nationwide is “getting its hands around,” is managing guarantees in variable products, he said.

On industry consolidation, Thresher said a good transaction should complement an existing business and not just provide scale. However, he said Nationwide would look at 401(k) business where scale is important.

Reproduced from National Underwriter Life & Health/Financial Services Edition, January 30, 2004. Copyright 2004 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.