It’s been a bumpy ride. Slow economic recovery and low interest rates have pounded the industry for five years. Carriers, advisors and customers are in it together, and we face common challenges. But our industry has proven its resiliency in the past, and 2014 can be a year of growth and profitability if we apply basic principles that have stood the test of time.
As the CEO and chairman for the companies of OneAmerica and a former advisor and general agent with 40 years in the industry, I have a unique perspective into our business, what lies ahead and how we might respond to these lingering challenges.
A swirl of litigation, regulation, tax reform
The ongoing effect of the sluggish economy and persistent low interest rates on the life insurance industry is evident in the following Bloomberg statistic: At 1.6 percent, the real gross domestic product in June of this year was just a tick above the 1.1 percent GDP in March of 2008.
The financial crisis has left a hostile legal environment behind in its wake. The life insurance industry as a whole is feeling the pinch of increased litigation. Further, proposed regulations such as the fiduciary standard rules by the Department of Labor and Securities and Exchange Commission have the potential to change the distribution landscape for some products.
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All the while, the impending threat of tax reform has carriers teaming up with the American Council of Life Insurers to educate Washington about the value of our industry and keeping the precious tax benefits of life products off the table as a way to raise revenue.
The competitor landscape is also changing. Companies have adjusted prices on products or have limited or eliminated them altogether. Carriers have had to tighten the belt on expenses yet another notch and some may still settle for lower enterprise profits.
Achieving growth amid these challenges has been difficult, but our resolve to overcome them has never been stronger.
Life industry a major player, opportunity awaits