There are encouraging signs that 2010 will see progress for life insurance companies, despite the continuing challenges they face as they recover from recent financial blows.
Part of the reason I am heartened for the industry is that the recession has made Americans fiscally sharper. Yes, they are spending less as their confidence in the economy continues to falter. But they are saving more, too.
Other reasons to take heart:
–More consumers realize they need to assure their financial well-being in a world where economic comfort can be short lived. That will make them more receptive to products such as life insurance, critical illness and long term care insurance, which help assure their welfare.
–The life-annuity insurance industry is developing fundamental plans to improve strategy and execution. Insurers are building more rigorous risk-management abilities and stronger internal controls.
–Insurers have also seen the recent period of lagging sales as an opportunity to tune up company technology and communications, as evidenced by improved Web sites and updated agent management and compensation systems.
–Companies are repricing and reducing risks in variable annuities, a product on which they took a beating when the equity markets tanked.
–They are placing an increased emphasis on cost-effective ways to market to consumers, including e-marketing, direct mail and work site selling.
–They increasingly have shifted away from merely offering products to providing support with tools and ideas to help producers position themselves as problem solvers to wealthier consumers in such areas as estates, trusts and income protection.
Certainly, the industry has been put to the test in the past couple of years. Life premiums were down about 15% in the U.S. in 2009 compared to the year before, a new analysis by Swiss Reinsurance Company finds. That comes after a decline in 2008 of about 4% from 2007 levels.
Still, worldwide, there are signs of strength. New life premiums were up in a number of industrialized countries as well as in many emerging market nations. In fact, globally, 2009 life insurance premium sales were 2% below the year before, following a decline of almost 6% in 2008 from 2007, Swiss Re found.