It seems that every time we come to the end of another year its time to reflectyet againon how the life insurance industry plays out that famous old Chinese fortune/curse: May you live in interesting times.
Ive been covering this business for a long time and Im still fascinated by the periodic convulsions that punctuate the industrys placid exterior and give the lie to the general perception that the life insurance business is bland, boring and as plain vanilla as youre going to get.
In other words, theres always something going on in this business. Just look at all the external threats of one sort or another that need to be deflected so the industry can go about its business.
A lot of the time the pressure comes from government. More and more, recently, it has been Congress meddling with things it knows little about and would be better off staying out of.
The flap over corporate-owned life insurance, dubbed janitors insurance in the media, is a case in point. All too often, trumped up stories grab attention for a while and get Congress thinking it has to do something. Never mind that this kind of business hasnt been written for years. Once the media grab hold of an issue like this, whoever is involved becomes a football. Thus, the enormous amount of energy the industry had to expend so that the entirely proper uses of COLI could be preserved.
Its also Congress that is by and large responsible for how newly energized the National Association of Insurance Commissioners has become as it strains to stay in the game. I cannot remember another time in the past when the NAIC moved so fast on so many issues.
The broker compensation issue is a case in point. At the NAICs winter meeting earlier this month, Diane Koken, the groups president, laid out an agenda for completing work on amending the Producer Licensing Model Act that was so rapid fire it was breathtaking.
This accelerated pace is the result of having to prove its relevance in the face of some gentle and not so gentle pressure from Congress. Here again the industry has to be vigilant toward a group that is under pressure to do something.
Then youve got the Treasury Department and the Internal Revenue Service, which many times cant seem to understand the most basic concepts of the life insurance business, but plow ahead all the same.
And lets not forget the force that has caused the most consternation this yearNew York Attorney General Eliot Spitzer and some of his confreres in other states.
While Spitzer has been preoccupied with broker contingent commissions and bid-rigging on the property-casualty side of the business, its probably only a matter of time until the spotlight turns to the life and health insurance business, particularly in the group and benefits areas. And once that happens, how long before the whole issue of agent commissions comes front and center?
Of course, not all pressure is external. Think of the intramural war going on regarding reserving for universal life policies with secondary guarantees. While it may not be a replay of the Guelphs and the Ghibellines, this turf war caused not a few sparks in the year just ending.
But doesnt mean its all grim. When I think back on 2004, Ill also remember how the industry came together to draw a line in the sand behind an idea called Life Insurance Awareness Month. What it said was that the slide in life insurance sales has gone as far as its going to go. Well done!
And here at National Underwriter Life & Health we had the excitement of redesigning the magazine in March and basking in the near-universal approval of our readers. By any measure, this was the most successful year in our history, for which I thank all our supporters.
So, lets raise a glass to 2005 being “an interesting time” for a business thatwhen all is said and doneis fascinating to cover.
Happy New Year to all!
Reproduced from National Underwriter Edition, December 16, 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.