The economic downturn, and efforts to cope with the downturn, loomed large at a recent life insurance industry executive conference.

Some of the speakers at the meeting, which was sponsored by the National Underwriter Company and its parent, Summit Business Media L.L.C., Erlanger, Ky., talked about the effects of the slump on sales and marketing.

When an economic crisis hits, advisors have to go to clients, not wait for clients to come to them, said Don Lippencott, an agent for New York Life Insurance Company, New York. In the week after Lehman Brothers Holdings Inc., New York, went bankrupt in September 2008, Lippencott made close to 140 phone calls to clients, he said.

For clients troubled by reduced values of their businesses, real estate and other investments, Lippencott offered this advice: buy cash-value life insurance policies, where returns are guaranteed.

Russ Diachok, president of Geneos Wealth Management, Centennial, Colo., used the recessionary climate to reinforce the living benefits of another product that offers guaranteed returns – fixed annuities.

“Our annuity business spiked dramatically last year,” Diachok said.

Because of the financial crisis, many older clients now understand that they will have to live off their assets in retirement, said Ron Bucchi, a principal at Flores & Bucchi Financial Services, San Antonio.

Perhaps because of that epiphany, more people ages 60 and older are buying life insurance, said Steven Weisbart, the chief economist at the Insurance Information Institute, New York.

In September, he noted, the number of life applications filed by people ages 60 and older was 14% higher than it was a year earlier.

“People need help constructing their own financial safety net,” he said.

Christopher N. Baker, a managing partner at TexIns Solutions Ltd., Houston, a distributor service organization specializing in wealth transfer, wealth management and executive benefits, said sales at his firm have been increasing.

“The bad news: a tremendous increase has been required of manpower and effort,” he said.

Baker criticized insurers for what he called a “shortage of reliable information” about how they are dealing with the financial crisis. “We want to hear them say, ‘We have a handle on it,’” he said.

Dona Kinnaird, president, Swiss Re Life and Health America Inc., part of Swiss Reinsurance Company, Zurich, told conference participants that the recession has proven the importance of life insurance to the economy.

Life insurance promotes economic growth by supporting risk-taking, helping families manage key financial risks and reducing the financial burden of providing safety nets for governments, she said.

American consumers have lost $10.8 trillion since 2007, or roughly 17% of their net worth, she said. In reaction, they have increased their savings rates, focused, on increasing their financial protection and have become increasingly willing to sacrifice yields for certainty–and all of those shifts should be good for the life insurance and reinsurance industry, Kinnaird said.

But the recession has depleted excess capital and cut investment yields in the industry, resulting in a 25% increase in downgrades among life insurance companies and a 55% increase in negative outlooks over 2008 levels, she observed.

There have been no upgrades in ratings among companies in the industry so far in 2009, she added.

Mark Puccia, a managing director at Standard & Poor’s, New York, said outlooks are negative partly because the rating agencies fear that 10.3% of the corporate bonds due this year will default, and that 13.9% of the corporate bonds due next year will default.