It is rare to get a second chance after missing an opportunity, but life insurers are getting just that, according to Robert MacDonald, an industry leader who is founder and CEO of LifeUSA and retired chairman and CEO of Allianz Life Ins. Co. of North America, Minneapolis.
Income planning “may be the last chance that the life insurance industry will have to once again become a dominant player in the financial services industry,” MacDonald asserts. That position was lost because the industry forgot to respond to the needs of consumers. And, that need was to meet the economic costs of living as well as of dying, he explains.
But with 60-70 million baby boomers moving toward retirement, there will be a tremendous need for income planning, he emphasizes. “Very few people know how to take an asset and make income out of it,” he notes.
Toward that end, MacDonald says, he will be heading up a new company, Allianz Income Management Services, Inc., a unit of Allianz Group, Munich, focusing solely on income planning.
The company, launched in August 2006, will pattern itself after the business model of LifeUSA. It currently has approximately $100 million in premium from contracts it has issued, he says.
That model includes a shared ownership between the company, its employees and field representatives, MacDonald says. So, he continues, producers would be compensated both with cash commissions and between 15-20% of common stock in the AIMS. “Instead of being peddlers, they also get to be partners,” he adds.
The new company will attempt to be the first in the insurance industry to operate virtually wireless and paperless, according to a company release. Contacts and transactions of policyholders, field representatives and employees will be done electronically via the Web, according to the company.
MacDonald says that there will also be an emphasis on creating new products that truly are income planning products, not accumulation products that are adapted for the purpose of income planning.