NAIFA Flees Political, Financial Muscle in Baltimore

Baltimore

If any of the more than 2,200 producers attending the annual conference of the National Association of Insurance and Financial Advisors had doubts about NAIFA’s renewed political and financial clout, then the highlights of this year’s meeting, held here Sept. 11-14, should have dispelled them, NAIFA executives said.

Among the happenings: an appearance by actress and author Marilu Henner, the 2005 national spokesperson of Life Insurance Awareness Month; a first-ever bus trip by 1,000-plus NAIFA members to Capitol Hill to promote the organization’s legislative agenda; and a presidential report attesting to the organization’s return to financial health.

“Two and a half years ago, we had to borrow $1 million from sister organizations to make payroll,” said NAIFA Immediate Past President C. Robert Brown. “Today, because of fiscal discipline and agreement by our members to a dues increase, we’ve turned the financial ship around. We now have a fully funded reserve.”

NAIFA’s 2004-2005 annual report records “a positive change in net assets” (before a pension liability adjustment) of $2.1 million on revenues of $16.3 million for the fiscal year ending Aug. 31, 2004. Preliminary internal consolidated financial results through June 2005 show that NAIFA will “once again exceed its budgetary goals for the 2005 fiscal year.”

Comprised of 800 state and local associations, NAIFA is leveraging those entities–including $34,200-plus raised at the conference for NAIFA’s political action committee, IFAPAC–to achieve objectives in the areas of advocacy, membership recruitment and CEO outreach, member benefits, governance, and administration.

The Life and Health Insurance Foundation for Education (LIFE), of which NAIFA is a sponsoring organization, is also funding consumer education, including a program that now reaches 25% of high school juniors and seniors nationwide. NAIFA CEO David Woods said the initiative has been well received, resulting in a $400,000 federal grant to produce a similar program for students at community colleges.

LIFE also is investing more than $400,000 annually in a public relations campaign focusing on the top 50 markets. That program is generating from 2 to 3 television and radio “exposures” per week in these markets.

Capping the media blitz is Life Insurance Awareness Month. LIFE is addressing the public’s need for information and education about life, health, disability and long term care insurance through Marilu Henner, LIAM’s national spokesperson. The actress and author is appearing in radio and televisions ads and talk shows nationwide throughout September.

The public relations effort is needed to reverse an alarming trend: the growing number of uninsured and underinsured households. Citing “alarming” statistics from market research and consulting firm LIMRA International, Woods noted that in 2004 the industry sold 10.5 million policies to 110 million households. That compares to 17.1 million policies sold to 97 million households in 1984.

Over the same 20-year period, the industry suffered a 29% real dollar decline in new annual premiums. And during the prior 30 years, the business sustained a 31% decrease in the number of career agents, dropping to 170,000 from 250,000.

“The fabric of America is strong, but it’s beginning to fray and show signs of wear,” said Woods. “Unless something is done, the financial security industry in this country will become a relic of the past. The American people will have to look to neighbors, relatives, friends and the federal government to provide for their families and small businesses at their premature death, disability or retirement.”

Woods attributed these downward trends in part to “massive demographic and economic changes” that have lowered profits margins for insurance manufacturers and producers; and that have made risk-based insurance products more difficult to sell than alternative capital accumulation vehicles.

Woods also flagged the “demutualization” of insurance companies, which has forced CEOs of life insurance companies to shift their planning horizon from long-term to short investing and the quarterly results that Wall Street demands. Result: cuts in expenditures on things that manufacturers’ marketing reps most value– recruiting, training and the support of career and independent producers.

To address the challenges, NAIFA’s Task Force for the Future is exploring “mechanisms” that will permit improved coordination among NAIFA and sister organizations, including the Association for Advanced Life Underwriting, Falls Church, Va.; the Association of Healthcare Internal Auditors, Onsted, Mich.; GAMA International, Falls Church, Va.; the National Association of Independent Life Brokerage Agencies, Fairfax, Va.; and, The American College, Bryn Mawr, Pa. Woods compared such coordination to a pinwheel, with the insurance manufacturer positioned at the center of the wheel and the various industry bodies occupying the spokes.