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Milliman Survey Reveals Re-pricing of UL Products Among Insurers

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Nearly half of life insurers polled in a new survey state they have re-priced universal life with secondary guarantee products during the year past.

Milliman Inc., Chicago, published this finding in a new study, “Universal Life and Indexed Universal Life Issues.” The report explores issues relative to universal life with secondary guarantees (ULSG), cash accumulation UL, current assumption UL and indexed UL (IUL) products.  

Fourteen of 31 respondents to Milliman’s fifth annual comprehensive study of universal life and indexed universal Life issues reported they re-priced their UL with secondary guarantee in the last 12 months.

The study notes that nearly all the respondents reported that premium rates on the new basis versus the old basis increased.

Modifications to secondary guarantee products are anticipated by 15 participants in the next 12 months. Such re-pricing and modifications, the study says, may be driven by the fact that only nine of the survey respondents met their profit goals in 2010 and through the first nine months of 2011.

This percentage is the same as that reported for 2009 in the prior Milliman survey. The primary reason cited for failure to meet profit goals continued to be interest earnings. 

Since 2009, the ULSG market share gradually increased, as the cash accumulation UL share gradually decreased and the current assumption UL share remained flat.

The product mix since 2009 changed significantly for many of the survey participants, but many of the changes were offsetting when considered as part of overall survey results. Ten participants reported movement away from ULSG products, with four of the 10 discontinuing sales of ULSG. Seven participants reported movement to ULSG products, with four of the seven discontinuing other UL products. 

The study found that total indexed UL sales and total accumulation IUL sales were higher in the first three quarters of 2011 than in all of 2010. The level of sales reported for both periods was higher than sales reported for the two preceding calendar years by survey participants.