The year-end totals for life insurance sales will be out shortly. Chances are they will track with the trend line seen at the end of the third quarter–that is to say, flat.
According to LIMRA International, Windsor, Conn., annualized premium for all lines was up just 1% for the first three quarters compared to the same year-earlier period. Face amount was down 2% and number of policies sold was off 6%. By product line, universal life was tops, up 9% for the three quarters. But variable life dropped 13% and variable universal life fell 11%. Term and whole life fell 1% and 2%, respectively.
Looking at those numbers is like watching a swimmer treading water. The industry is doing something but not going anywhere.
In a post-recessionary economy, that’s not what CEOs, managers and investors want or expect to see. They want/expect to see year-over-year leap-frogging. They want/expect to see double-digit gains. They want/expect black, not gray or red.
Advisors want something, too. They want to sell what sells. If life insurance is not bringing in the big bucks, why then, some just might focus elsewhere. “We have to make a living,” they say.
Of course, company executives say something similar: “We have to earn profits.”
This can be treacherous territory. Each side–company and field–is vulnerable to accusations and counter-accusations, with declining morale, productivity and worse threatening to gobble up hope.
Company story: “We’ve got a great portfolio, name and ratings. If advisors would only get out there and sell, we’d be up by double-digits.”
Advisor story: “Our expertise in meeting client life insurance needs is unparalleled. If the companies would only give us new/better/more competitive policies to sell, we’d rake in premiums by the bushel.”
Such complaints percolated all through the early 2000s recession. Like flat sales, they didn’t go anywhere.
Now, blame-game redux hovers dangerously close. If left unchecked, it could hamper the industry’s ability to redirect.
What advisors and insurers need to do is take a hard look at what they can do. Decide not so much “who is to blame” but rather “who is to lead” and “how.” The 2005 numbers are a done deal. Move on, and find a way to move up.
It would help to keep in mind that although sales results are extremely important to industry health–in the field as well as the home office–they are not the only measure. In fact, the wrong kind of sales–i.e., too much business in a risky sector, too much business that results in early deaths, etc.–actually threatens profitability, not increases it.
It is probably no coincidence that the upcoming Life Insurance Conference has a breakout session that will examine some of this. Are measures for successful products “all about sales growth at an acceptable IRR?” asks the session teaser. “How do the top and bottom lines interact?” [Sponsored by LIMRA, LOMA, SOA and ACLI, the conference runs April 3-5 in Lake Buena Vista, Fla.]
This is good timing. The industry really needs a robust airing of the issues.
It would be a pity to pin yesterday’s flat or declining sales only on the actions of companies and advisors. The economy, regulatory environment, compliance trends, privacy issues, competitive and alternate products, and other factors all play a role.
It also would be a pity if industry leaders just ignore the less-than-stellar results of 2005 and keep on going with the same old, same old. The numbers are there. They demand attention.
At junctures like this, someone always pulls out the familiar laundry list of actions that firms can take to spur sales. They include: engage consultants, host advisory counsels, do strategic planning, evaluate complaint trends, target new markets, assess products, increase promotion, expand training and education, beef up the distribution channels, etc.
Will those do the trick? Maybe. But not without some clear-eyed analysis.
This analysis should be broad, not just “by the numbers.” It should be strategic, not just “let’s get some more sales in here.” It should aim at creating a workable, affordable and realistic action plan. And it should name champions to lead that action plan–champions who have the budget and authority to make things happen.
New and enhanced products could be part of this action plan, but new services, new training programs, repackaged products, improved processes and the like might do just as well.
The options are there. What’s needed is the willingness to squelch blaming and spur becoming. If competitors while away their time by pointing fingers and whimpering, so be it. Winners look at options, select the best ones and implement.