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Life Health > Health Insurance > Life Insurance Strategies

The Importance Of Stewardship

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Two weeks ago I watched the six-part series on PBS by Ken Burns covering the formation and development of our national parks. It was a great tribute to John Muir, the inspiration for the parks, and Stephen Mather, the first superintendent of the National Park Service. Both were instrumental in arousing the national interest in preserving many of our wonderful natural resources. Mather used much of his own personal fortune to buy land to be preserved and pay employees since there were no federal or state funds available for such purposes.

But there were plenty of opponents–lumber barons in California harvesting valuable redwood trees thousands of years old and Sam Cameron of Arizona who thought he owned the Grand Canyon and could exploit its mineral resources at will. There were many others–ranchers in Montana and developers in Florida to name a couple–opposed to the idea of public use of land that could be used for commercial purposes. It was a bloody fight with violence often applied.

Fortunately, the good guys won. Muir, Mather and hundreds of committed people saved these precious resources. Gladys and I have visited over 40 of the 58 parks and many of the national monuments as well. Each time we walk through the redwoods or sequoias we offer up a silent prayer of thanks to the people who fought for these trees.

Today there is a new sense of stewardship in the lumber industry towards the redwoods. Companies like Pacific Lumber, Humboldt Lumber and Green Diamond focus on long term growth of new trees and selective cutting rather than the clear cutting of the past. Such responsibility should result in redwoods, even on private land, being available in perpetuity. Though late in coming, it is the kind of stewardship that should permeate all lines of business.

Our own business has at times become endangered by the acts of those more interested in quick profit than preserving a tradition of public usefulness. Lawmakers invariably react to such activities in ways that often restrict the use of our products.

How well I remember being lectured by an irate congressman when I was testifying against a particularly onerous proposal. He was a congressman important to the industry but he warned, “The United States Congress is not going to regulate the insurance business on a policy by policy basis.” He further cautioned that if we continued to open new loopholes every time one was closed, Congress would have to apply a broad brush solution affecting all products.

This warning was precipitated by some of the then current activities with respect to so-called investment-oriented products. Anyone who has been in the business more than six months knows the nature of, and purpose for, any tax concessions our products receive. It is not a deep dark mystery. What seems incredible to me is the lack of concern for the downside risk inherent in the exploitation of these tax concessions by some. The warning I received from the congressman happened in the summer of 1987, but it could just as well have been given today, for the principle still applies.

Also, some years ago, I was a participant in a discussion regarding a piece of legislation that would have curtailed an activity then a matter of some controversy in our marketplace. One of the other participants, a company executive, observed that his company had no interest in the particular marketing activity, but he asked, “What right do I have to deny other companies the right to market the product, even though it might be a stupid thing to do?” I was reminded then, and again today, of Dante’s observation, “The hottest places in hell are for those who preserve their neutrality in a crisis.”

The notion that we can remain neutral while others are engaged in practices that reflect poorly upon our business completely ignores the issue of stewardship. I have always believed that everyone engaged in a particular enterprise is charged with a degree of responsibility for nurturing the enterprise, as opposed to exploiting it. It also seems to me that the degree of stewardship one is required to exercise expands in direct proportion to a person’s span of control. That is one of the prices of leadership.

It is important to recognize that not everyone agrees with this. This is best illustrated by a conversation I had with several insurance company executives in Hong Kong (a decidedly laissez faire market). The company people said they were not able to join the local life underwriters association because they could not adhere to the association’s pledge to put the client’s interest before their own. They stated that no company officer could be placed in the position of putting the client ahead of the company interest. The idea that insurance is “affected with the pubic interest” seems not to prevail in Hong Kong.

However, it does prevail here and has for a long time. This then raises the question of where does the public interest really lie. Is the tax treatment of life insurance intended to serve the widest possible public base, or simply the top of the economic pyramid, or both? It seems to me that the downside risk of questionable products or strategies almost always targets the top of the economic pyramid, but when broad brush legislation ensues it affects everyone.

Lumbermen finally came to the realization that if they did not protect the redwoods there would eventually be no future for them. In like manner, if we do not exercise a strong measure of stewardship over the design and marketing of our products and services, our own future may be clouded.


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