Recently, I had dinner with a few leading experts in insurance asset management, and their views on the prospects for our economy, especially over the next several years, was both fascinating and chilling.

The good news is that lending conditions for large companies are so good right now that they are borrowing huge amounts just to lock in favorable rates. This gives corporate leaders enough capital to invest in better equipment, new facilities, and most importantly, hire more people. With unemployment hovering just under 10%, that last part is seen as the key to getting the economy truly going again. Federal stimulus money is just a Band-Aid. The real solution is the private sector doing what it does best: building value.

The problem is, a lot of corporate heads are not liking what they see on Pennsylvania Avenue and on Capitol Hill in terms of reform packages and economic policy. Taxes remain a hot-button issue to be resolved, and with good reason. After all, despite a depleted Treasury, the government still needs to fund two ongoing wars, healthcare and financial reform. And as we enter what promises to be a savage midterm election cycle, neither Republicans nor Democrats seriously intend to cut spending any time soon.

Fresh revenue has to come from somewhere, and more than a few CEOs know that the mountain of treasure they are sitting on could just as easily become the government’s with a few deft pen-strokes. This, more than anything, is keeping corporate purse-strings closed tight. And until they open, we cannot expect our economy to get going again. In the meantime, consumers will take at least five years to pay down their personal debt amid a bleak jobs market, which all adds up to maybe 1-2 percent annual growth – not even the rate of inflation – for the economy until things turn around.

I bring this up because it looks like we are still in the first half of a “lost decade” economically, and while getting through such a prolonged doldrum is bad enough, it makes me wonder what kinds of lasting impact it will have on the life and health industry. Typically, during tough times, people turn to insurance to protect what they have. But that’s on the P/C side, where what needs protecting tends to be physical. People can appreciate losing their office, house or car. They can’t appreciate losing themselves nearly as much, and gut-wrenchingly low life insurance numbers prove it. People already feel life insurance is too expensive; what will they think when they have gone five hard years without it? At what point will they feel they have enough to protect to justify paying life premiums?

The situation seems even worse for the retirement planning sector. While huge numbers of Americans are underprepared for retirement, five years of simply paying the bills and trying not to go backward financially adds up to zero retirement planning. That’s long enough for an entire generation to get the notion that maybe retirement is the kind of thing only rich people can do. The moment that concept takes root in the heads of the public, this industry faces quite a crisis.

It doesn’t seem too late to address any of this, of course. It’s easy to write ourselves off, but the truth is, our economy is still five times that of China’s, and it’s not like we have suffered the ruination of war or famine. We’re just hung over, and as anybody who’s gone through one knows, there is no instant fix. Just the certainty that it will end. Hopefully, we’ll know better than to drink so much next time.

Bill Coffin

Editor in Chief