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Does the need for certainty kill innovation?

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As the saying goes, there are only two things that are certain: death and taxes. For the last decade, we weren’t quite so sure about the second one.

Now that things are settled around estate taxes, advisors can help their clients plan, gain confidence, get off the dime, and all those other neat things that come with knowing the exemptions, tax rates and all the relevant rules.

Advisors and attorneys all over the country are breathing a sigh of relief in this newly restored state of certainty, as indicated in this quote:

“The nice thing about the laws that were passed on Jan. 1, 2013, is that there were no built-in sunsets, reversions, or expiration dates. For the first time in 12 years, things in this area of the law are settled and permanent unless Congress decides to change the law.” — Jason Walker (estate planning attorney)

Many of us thought there was an equal likelihood of permanent repeal. Had a few things been different (candidate choice? votes? the timing of a hurricane?), the sighs may have sounded different.

Why think about this, Debbie Downer? Well, as Gilda Radner, used to say, “It’s always something.”

In the life insurance industry, it is always something. We are always fighting some tide. If it is not estate tax uncertainty, it’s threats to inside buildup. If it’s not inside buildup, it’s the possibility of taxing death benefits. Or it’s commission disclosure or low interest rates. I can hear Rosanne Roseannadanna rattling these off in her bow-tie blouse and big hair, ending with, “I thought I was gonna die!”

We keep fighting these battles with the hope of actually winning them. Are we winning or just pushing off a loss? I’ve often wondered if it is the best use of energy.

I can tell you this: fear of loss is not a good ingredient for innovation. When we try to bring things back to a state of familiarity or certainty, we either lose that certainty eventually or the world changes around us, and we fail because we define our business by the way it looks today.

The buggy-whip industry has become the poster child for an industry gone obsolete. The reason? It neglected to define the business broadly enough to contemplate the next wave. It defined the business as making whips, not as transportation. The same thing happened to the music industry. While the record companies were fighting against Napster’s model to allow music downloads for free, Apple was cooking up a new way to distribute music and now owns the industry. Record labels defined their business as making hits and selling albums. Apple defines it as enabling people to have personal, portable soundtracks to their lives.

So what does this mean for the life insurance industry? Maybe we should stop defining our business as life insurance. Maybe it should be defined as the lifestyle continuity business. Estate planning fits in that definition because it contemplates lifestyles beyond one generation. But what else opens up if we were to define it that way?

See also: The New Mutuality

The nature of risk and how people deal with it has changed over the decades. Risk is much more controllable today than it was 50 years ago. Life insurance serves an important purpose that surrounds the event of death and is a source of living benefits, too. But does it contemplate everything that could mess up a client’s plans for the near and long term? Does it contemplate only the significant risks or the things that may cause annoyances or inconveniences as well?

With this broader definition, maybe we would have invented roadside assistance, iPhone insurance and protection against identity theft. Maybe we would have created new kinds of agents that could give advice about a host of risks that have not even fully emerged. Maybe we would be less dependent on certainty and would use the uncertainty to find new unmet needs.

One thing is for certain, when you find unmet needs in the market and successfully fill them, that’s innovation. If you could redefine your business today, how would you do it? What new opportunities could arise if you did?

For more from Maria Ferrante-Schepis, see:

Who’s afraid of the big bad annuity?

Do we know what business owners want?

Is Infertility Killing Independent Distribution?