Speaking to an audience of about 600 life insurance and financial service executives, LIMRA International President and CEO Robert A. Kerzner saw some dramatic changes occurring to the industry landscape over the next few years.
Among the most important outcomes Kerzner predicted within the next 5 to 10 years would be a dramatic shortening of the lead time required for processing a life insurance policy. Advances in both technology and medicine would ultimately make on-the-spot issuance of policies a real possibility, he predicted.
“We expect that improved access to medical information with the universal implementation of electronic health records will finally make instant issue a reality,” Kerzner said. He spoke at LIMRA’s annual meeting here.
That development in turn “could be the catalyst that entices stockbrokers, financial planners and other brokers to sell risk products–an outlet our industry so far has been unable to optimize,” he added. “Not only could this lead to a huge opportunity for new alternate distribution, but it also could help existing carrier field forces become more productive.”
Some health care providers are already converting paper medical documents to electronic records, a development that is laying the groundwork for policy approval in real time, according to Kerzner.
Ultimately, banking institutions, with their advanced record-keeping and networking capabilities could become the repository of medical records of customers, providing instant access when needed to sell life insurance policies, he predicted. Eventually, people may even download their health histories onto electronic memory sticks that they can carry around on a key chain.
Another development that could help shorten the application process is video conferencing, Kerzner said. Although consumers continue to prefer face-to-face meetings with their advisors, a financial planner meeting with a client could use video to link up live with an underwriter or other specialist at the insurance company to determine if a specific type of coverage could be issued.
Another development Kerzner foresees increasing sales for the industry is the increasing popularity of guaranteed living benefits as part of variable annuities. VA sales reached $160 billion last year, and 86% of new VA contracts offered at least one GLB, he noted, citing a recent LIMRA study. When a GLB is offered, consumers will choose it about 75% of the time, he added.
With so much at stake, the industry needs to recruit more producers, particularly in light of LIMRA findings that 25% of existing life insurance salespeople expect to retire in the next 6 years, and more than 40% said they would retire within 10 years.
“When are companies going to take those numbers seriously and start to hire more producers?” he asked. “My hunch is they won’t.”
Instead, insurers will invest in alternate distribution channels, made possible as technological advances cut underwriting time. Those same advances will make it possible to conduct genetic tests to determine predisposition to disease and at the same time will help extend lives, he added.
Other factors already under development that will make an impact on the industry will be new requirements for accounting and reserving, changes in legislation and regulation, and transformation of the nation’s demographic makeup, he said.
In an interview, Kerzner explained that it typically takes 6 to 9 weeks to deliver a life insurance policy, which is one reason more financial advisors don’t want to sell the product. “Stockbrokers, for instance, want instant gratification. They’re looking at annuities and investments rather than life insurance. If all of a sudden you wouldn’t have to wait weeks or months to get a policy, you could put out a product that was competitive.”
If big technology firms like Google or Microsoft get involved in expediting life insurance transactions, “it could change the game dramatically,” he said.
Making life insurance sales more like other financial business could get more people to sell it, including bank representatives, Kerzner said. “They will realize life insurance is something they should be dealing with, and they may start talking with customers more about disability and long term care insurance, too.”