Two major challenges are sweeping the insurance shores and it’s the industry’s job to make sense of them. Product professionals can help. Here’s what is happening:
One main trend is that intense public scrutiny is hitting multiple insurance areas, virtually at the same time. The brief, but not exhaustive, tally looks like this:
–Designations: The New York Times published a front-page article skewering misuse of designations in the sale of insurance products like annuities.
–Annuities: The same article spotlighted misrepresentations in sales of fixed annuities. Meanwhile, Nevada is running an ad campaign urging consumers to guard against the “bad animals” who are selling annuities. The NASD and some state securities regulators are continuing to probe fraudulent or troublesome sales involving fixed index annuities.
–Life settlements: Regulators in Florida, Massachusetts and other states are taking steps to curb what they say are abusive practices in the life settlement arena.
–Long term care insurance: Another front-page NYT article, from earlier this year, filleted the industry over complaints about improper LTC claims practices.
–Medicare Advantage: Congressional hearings were held this year on reports of inappropriate marketing of Medicare Advantage plans to the poor and the elderly. Now, Rep. Pete Stark, D-Calif., chairman of the Ways and Means Health Subcommittee, is sponsoring a bill to prevent these plans from charging seniors and those with disabilities more than traditional fee-for-service Medicare.
–Health care insurance: The Michael Moore film, Sicko, released in late June 2007, roughs up the existing health insurance system.
Taken individually, these developments might seem like sucker punches, leaving no more than a black eye that will heal quickly. But taken collectively, they have pummeled the industry’s image, big-time.
Meanwhile, there is the problem of marketplace penetration. Some insurance products just aren’t gaining ground.