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Life Health > Life Insurance

LIMRA Head Sees Opportunity

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NEW YORK — Despite the shaky economy, life insurance sales are moving upward and consumers’ confidence in the industry is slowly returning, according to LIMRA International Chief Executive Officer Robert Kerzner.

Kerzner spoke here at LIMRA’s annual meeting.

In October 2008, the proportion of consumers who told LIMRA researchers that they had confidence in the insurance industry had dropped to 12%, from 32% in July 2008, Kerzner said.

Earlier this month, the Windsor, Conn., organization found that the consumer confidence level has rebounded to some extent, but only to 18%.

“We must restore trust and confidence among those we serve,” Kerzner said.

Shrinking sales capacity remains a key issue for life insurers, requiring them to increase the number of producers and to find new channels of distribution, he said.

But sales have stagnated, partly because the number of independent producers declined 7% between 2004 and 2007, Kerzner said, citing new LIMRA research.

Meanwhile, he said, competition will remain intense. While some companies may be reevaluating the individual lines of business they are in, others will be entering new markets.

To maintain sales, it is increasingly important to convince members of Generations X and Y–those born between 1965 and 1995–to buy more life insurance, he said.

Today, “60% of universal life buyers are over 65,” Kerzner noted. “Many of them let it drop. We’d better start getting sales from younger people.”

Another challenges facing the industry is that, as a result of the economic crisis, many companies were shown not to have inadequate capital.

“Not having adequate capital when you need it most is now seen as the biggest challenge” for the industry, he said.

Efforts to change accounting rules could have a far-ranging impact on carriers, by changing the risk and pricing models the carriers use, he said.

A proposal now being debated by the House Financial Services Committee that could impose a “fiduciary duty” standard of care on broker-dealers, including those in the insurance industry, is another cause for concern, Kerzner said.

“Change like this could limit our ability to recruit new producers,” he warned.

But there are opportunities for the insurance business, too, and some of them have been created by the recession, he said.

Many boomers are now less prepared for retirement, due to a decline in the value of their savings. They need to save systematically to rebuild their assets, Kerzner said.

Evidence that people are generally living longer is another factor that can cause consumers to view risks differently, he said.

“The whole issue of longevity is the reason we should be talking about life insurance again,” he said. It might be time, for instance, for first-to-die policies to see a renaissance, he suggested.

Increased longevity also increases the need for lifetime income, and the recent market turmoil has shown that “asset allocation alone is not the answer to guaranteed income in retirement,” Kerzner said.

Producers should be telling consumers they need to have a percentage of their assets in a single-premium income annuity, so they are assured a check in the mail each month, Kerzner said.


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