The hallway chatter at insurance industry meetings is comparable to a high-end focus group.
True enough, some of the buzz may entail little more than titillating anecdotes, tall tales or too-unique-to-use strategies. But other parts of the buzz contain nuggets of incipient product trends or problems worth exploring.
The following are a few such nuggets gleaned from insurance industry meetings this fall, plus some thoughts on each.
–A few fixed indexed annuity carriers plan to bring out registered indexed annuities–and soon.
That’s right. Even as the FIA industry at large is seeking legislation to prevent their product from ever being classified as a security, some carriers are deciding to play it safe and have a product portfolio for all seasons, so to speak.
Does that mean these carriers believe the FIA product will eventually become a security? Not necessarily. It does mean that they plan to have a registered product ready if that event ever happens, just as the variable annuity carriers back in the late 1980s rolled out the modern version of VAs at a time when equities were out of favor, so they “could be ready when the market turns up.”
It also means that these carriers are thinking they just might pick up some registered indexed annuity sales from broker-dealers right now. These would be B-D firms that just don’t want to continue keeping tabs on reps who are handling fixed indexed annuities–i.e. to be sure those sales are in compliance with FINRA Notice 05-50 regarding indexed annuity sales in the B-D environment.
–Whole life is once again selling well.
The uptick by no means represents a tidal wave. But the sales are definitely turning heads.
That’s according to the hallway chatter and also according to some recent industry statistics. In particular, researchers at LIMRA, Windsor, Conn., recently reported that individual WL sales “surged” by 12% in the third quarter 2009 compared to the same year earlier period.
This happened even as sales in other life products declined to the point that total individual life sales fell 11% in the quarter, year over year.
Considering that individual WL has been widely viewed as a little-noticed niche product for the past two decades at least, it’s easy to see why people are talking about its seeming renaissance.
What’s the reason? LIMRA Senior Analyst Ashley Durham attributes it to the product’s “simplicity, premium and cash value guarantees and low risk.” The hallway chatter says the appeal is the safety and predictability that WL affords, and also its simplicity. If it’s dividend-paying, all the better, the chatter says.
Points worth noting:
1) This resurgence is happening with no special effort by carriers to re-invent the product or promote it aggressively. What would happen to these sales if carriers added new features and marketers started active promotion?
2) The sales are coming at a time when new insurance agents know little or nothing about WL, so marketers who want to ride the WL wave will probably have need to do some WL training.
3) Mutual companies have two-thirds of WL sales, according to LIMRA. So does that mean the stock companies are going to let this product “surge” pass them by?
–Guarantees still spur sales, even now that the stock market is slowly rising.
In fact, some brokerage general agencies are saying they are having their “best year ever,” despite the recession. The hallway chatter cites many reasons for this, but the most commonly mentioned is that “we focused more on marketing to our core producers, and we kept a lid on expenses.”
Significantly, very few attribute this growth to sales of a hot new product. That’s not surprising, given that 2009 was not a year for many hot new product rollouts.
Where products were a factor, the chief pull appears to be the guarantees–not only in WL but also in no-lapse guarantee universal life and living benefit guarantees in annuities, and fixed-interest products.
Put another way, the hallway chatter just doesn’t stop, where guarantees are concerned.
Naturally, buzz at industry meetings or anywhere else is not market research. One needs to swallow it with more than the proverbial grain of salt.
Still, as another old saying has it, where there’s smoke, there’s fire. It’s worth checking out whether that smoke of buzz at industry meetings is coming from a friendly fire that can help warm up sagging revenues or a smoldering fire that is burning out.