Just as Starbucks had a basic understanding of what the customer wants, so, too, does the insurance industry need to take a fresh approach and reach out to solve the needs of the average American, according to Fred Jonske, president and CEO of M Financial Group, Portland, Ore.

Jonske’s remarks followed a panel he participated in during an annual insurance seminar by Standard & Poor’s Corp. here. The panel focused on life distribution issues.

It is the ability to reach out and understand what consumers want that makes it possible to sell a $4 or $5 cup of coffee, he continued. Beyond that understanding, CEOs in the industry must be willing to take the chance and move upstream if necessary to reach the average consumer, he says.

During the panel session, moderator Kevin Ahern, a director with S&P, noted the opportunity that insurers have for providing consumers with continued income.

And Jonske noted that products such as those that have secondary guarantees are being driven by market demand and not by distributors.

Mark Schwarzmann, president of distribution with Ameriprise Financial, Minneapolis, noted that an emphasis on financial planning is one way to make sure that demand is met in a suitable way. Suitability is built into a system such as Ameriprise Financial’s because of a one-on-one relationship in which “producers’ heads are in the right place because there is not a quota system in which they have to look for the next sale,” Schwarzmann said.

Even so, the burden of compliance has increased, he said.

Another factor Schwarzmann attributes to diminishing suitability concerns is a real effort to train producers better.

When asked by a member of the audience about the transparency of variable annuity products, Schwarzmann said it is difficult to compare products with different subaccounts and different mortality and expense charges unless one can find a way to normalize different company contracts within the distribution system.

But Schwarzmann said insurers are in a good position to provide consumers with the option of an income guarantee. The industry will need to show consumers why products with guarantees are valuable as opposed to other asset accumulation products that do not offer guarantees, he added.