InsuranceNewsNet Magazine - August 2022

THIS MONTH: THE DIVERSITY ISSUE Life • Annuities • Health/Benefits Financial Services • Multiline AUGUST 2022

The performance of a lifetime — with Scott Thompson PAGE 20 RILAs: One way to keep the ‘risk on’ in retirement PAGE 30

he t g I n i v DE o : M le on 6 S U 1 PL need AGE P

m r o f n t a a l s p r e A t off pply u a s h t less ED I d F n e UALI S L Q f A o ERR F E R

AUGUST 2022

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IN THIS ISSUE

View and share the articles from this month’s issue

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AUGUST 2022 » VOLUME 15, NUMBER 08

FEATURE

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Moving the needle on DEI

By Susan Rupe

What progress is being made on increasing diversity, equity and inclusion in the financial services industry?

INFRONT

By John Hilton and Susan Rupe A crumbling insurance empire, big data in insurance, and the end of the public health emergency.

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20 T he performance of a lifetime

By Susan Rupe Scott Thompson brings his theatrical background to the speaker’s platform as he educates advisors on how to find success by believing in themselves.

LIFE

26 6 pitfalls to avoid in selling final expense life insurance

By Joshua Jones Final expense prospects add a few new dimensions to insurance sales, but they are an underserved market.

INTERVIEW

10 Beyond Success — With Dan Clark

Dan Clark believes that too many of us equate success with superficial things.

In this interview with publisher Paul Feldman, the author and professional speaker describes how discovering your higher purpose leads to a life of greater significance.

ANNUITY

30 R ILAs: One way to keep the ‘risk on’ in retirement

By David Blanchett Registered indexlinked annuities are gaining interest as other investments carry higher risks.

INSURANCE & FINANCIAL MEDIA NETWORK PUBLISHER EDITOR-IN-CHIEF MANAGING EDITOR SENIOR EDITOR VP SALES

Paul Feldman John Forcucci Susan Rupe John Hilton Susan Chieca

CREATIVE DIRECTOR GRAPHIC DESIGNER SENIOR CONTENT STRATEGIST EMAIL & DIGITAL MEDIA SPECIALIST TRAFFIC COORDINATOR MEDIA OPERATIONS MANAGER

HEALTH/BENEFITS

34 How brokers can ease the pain of high health care costs

By John Thornton Three developments in the benefits world can help employers provide greater access to care while keeping a handle on costs.

ADVISORNEWS

38 How your client’s health impacts their wealth

IN THE FIELD

6 What’s in the news?

online

www.insurancenewsnet.com/topics/magazine

By Robert Pokorski More adults are living with chronic medical conditions — and that can affect their retirement planning.

MULTILINE

42 Remodeling boom builds opportunities for agents

By Cathy Allocco and Sarah Jacobs Many homeowners don’t weigh their insurance needs when updating their homes.

BUSINESS

44 Is your office adapting to the flex culture?

By Sharon Emek How your practice can thrive in the era of remote work.

INSURANCE & FINANCIAL MEDIA NETWORK 150 Corporate Center Drive • Suite 200 • Camp Hill, PA 17011

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NATIONAL SALES DIRECTOR NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR DATABASE ADMINISTRATOR

Sarah Allewelt Brian Henderson Dominic Colardo Mark Ciszak Sapana Shah

Copyright 2022 Insurance & Financial Media Network. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 125, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein. Address Corrections: Update your address at insurancenewsnetmagazine.com.

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InsuranceNewsNet Magazine » August 2022

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WELCOME LETTER FROM THE EDITOR

Looking for our retirement safe harbor during an economic storm

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he last time the U.S. experienced inflation above 8% and an unemployment rate below 4% was the early 1950s. According to former U.S. Treasury Secretary Lawrence Summers, every time inflation has exceeded 4% while unemployment was below 5% over the past 75 years, the U.S. has fallen into a recession within two years.

For many of us moving closer to retirement, the worries of the turbulent market, high inflation and a possible looming recession have shaken our confidence in our retirement plans. A writer and a teacher, my wife and I are not in professions that are known for high incomes, but we have a couple of things going for us: 1. We’re good at saving money.

2. My wife will have a pension.

We’ve been salting away money and working with financial advisors over the years to help provide for a secure retirement. As we hit our 60s and the market was strong, we had confidence in our planning. While we know that we’ve done the right things, followed our advisor’s advice and stayed the course during previous economic storms, this moment feels different.

The tide already seems to have turned in terms of the dark mood of investors, the gloom of the bear market and concern about recession. No matter how much you’ve saved, the thought of your money depreciating in buying power in the face of 8% inflation is daunting.

There have been numerous studies looking at the consumer confidence levels plummeting and the large number of people who have been forced to dip into savings — even their retirement accounts — to meet their normal living expenses.

I imagine their confidence in their retirement plans has been badly shaken.

My wife, Lisa, and I both have planned to work at least until we’re 67, but now we’re wondering if we’ll be working longer

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than that if the economy continues in a downturn for an extended period. We’ve also began to realize that longevity is an enormous factor in our planning.

We recently published an article on the InsuranceNewsNet website: “Study finds Americans worry about the wrong retirement risks.” Essentially, we Americans aren’t factoring in the cost of living longer, especially the potential long-term-care costs that often accompany longer lives.

Many of my relatives made it to their late 80s or early 90s, while Lisa’s relatives have lived as long as a century. So that’s begun to color our retirement thinking as well.

A great positive during these stressful times is having confidence in your financial advisor. Providing strategies to your clients is only the business side of the relationship you have with those who are looking for your guidance in these turbulent times. Just as important are the personal relationship you have with your clients and the trust that they place in you to help them remain calm and weather the storm.

We’re fortunate in that we have that type of relationship and trust with our advisor.

How are your clients reacting in this climate? Are they coming to you in a panic? Are they worried that their retirement plans are in jeopardy? Have they planned

InsuranceNewsNet Magazine » August 2022

for their possible longevity and LTC costs?

Many of the stories we’ve covered in recent months both in this magazine and on our website have highlighted the state of retirement advising and planning as the economy has hit rough weather.

We’ll continue to cover the economy and its impact on the financial advisor community and their clients. In the coming months, we’ll be digging deeper into how your clients are reacting under this pressure, the strategies you’re providing and how you are working with your clients to keep them on a steady course despite the headwinds. I’ll continue to share my thoughts on how my wife and I are reacting to the changing economy as we plan for retirement.

As you work with your clients and provide strategies — and comfort — I’d like to hear from you. What advice would you give your peers in financial services? What can you share with our audience that will help them provide service — and confidence — to their clients? Please reach out with your thoughts and advice for your peers: editor@insurancenewsnet.com.

John Forcucci Editor-in-chief

We know an original when we see one...

InsuranceNewsNet.com posts dozens of fresh exclusives, interviews and how-to articles every month, including our special topic series like Big Data, The Great Unwinding — How the End of COVID Will Affect Health Insurance, Next-Generation Annuity Products and more!

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Original, authentic, and fresh, just like you.

Read up on the latest exclusive content, only at insurancenewsnet.com.

INFRONT

What’s In the News on InsuranceNewsNet.com A crumbling insurance empire, big data and the end of the pandemic.

[Editor’s Note: These are some of the major stories to which we are devoting ongoing coverage on InsuranceNewsNet.com]

Regulators try to clean up Greg Lindberg’s broken insurance empire

by John Hilton The mysterious inner workings of the receivership process are details that no insurance agent wants to be forced to learn.

If they do require that education, it likely means they have clients with policies in limbo. Bobby Cogdell found himself in that situation after Bankers Life Insurance Co. ended up in a receivership overseen by the North Carolina Department of Insurance.

Greg Lindberg

Bankers Life is one of four insurers owned by troubled billionaire Greg Lindberg. After three years of the rehabilitation process, Cogdell said he is getting frustrated for his clients.

Cogdell, who runs Cogdell Insurance Agency in Lexington, Tenn., matched “about 30” clients with policies sold by Lindberg’s Bankers Life.

North Carolina regulators allowed hardship withdrawals, with approval, and a onetime $10,000 payment upon request. His 6

clients need more than that, Cogdell said, citing an 80-year-old policyholder with a history of cancer who has $250,000 tied up in a Bankers Life annuity contract.

“At this rate, the only way they’re going to get [their money] now is by dying, and to win by dying is not winning at all,” Cogdell said.

Lindberg’s four insurers — Bankers Life, Southland National Insurance Corp., Southland National Reinsurance Corp. and Colorado Bankers Life Insurance Co. — have more than 262,000 policyholders combined, state insurance regulators have said.

Only Southland had been referred to liquidation as this issue went to press. Regulators were expected to petition the court to place Bankers Life in liquidation in July, according to a source with the insurance department.

Liquidation proceedings must happen for policyholders to access guaranty association funds, a backstop that reimburses policyholders up to $300,000 in most states.

Of the nearly 84,000 Southland policyholders, all but two are expected to receive their full policy value, thanks to state guaranty associations. The two policyholders owed more than that will be covered up to $300,000, court documents say.

Mansions, money and prison

Lindberg won a big court victory in June, when a federal appeals court tossed out his

InsuranceNewsNet Magazine » August 2022

convictions on federal funds bribery and honest services fraud due to judicial error.

Lindberg is two years into a seven-year prison sentence. The appeals court ordered that he be retried, although the government can still appeal that ruling.

A May court victory should help. A North Carolina judge ordered Lindberg to cede control of his private companies to a special board that would use them to salvage the four financially troubled insurers. Court documents describe “hundreds” of affiliated companies covered by the ruling.

Lindberg’s legal issues began with an alleged promise to donate millions of dollars to the North Carolina Republican Party. In exchange, Lindberg was to receive more favorable treatment of Global Bankers Insurance Group by regulators, investigators allege.

In March 2020, Lindberg was found guilty of conspiracy to commit honest services wire fraud and bribery.

Cracks in Lindberg’s business empire emerged well before he was indicted. The Yale University graduate came to the insurance industry after establishing Eli Global, a private equity firm. In 2014, Eli Global made its first insurance acquisition, when it purchased a burial-policy insurer based in Alabama.

In the ensuing two years, Lindberg acquired more insurers and grouped them together as the Global Bankers Insurance Group. Insurance profits soared and ultimately enabled Lindberg to funnel $2 billion to Eli Global, according to a Wall Street Journal report.

That made North Carolina regulators nervous. They feared Lindberg was not reserving enough funds in his insurers to be able to make the payments due to the policyholders.

To read more on this story, visit bit.ly/lindberg2022

IN THE NEWS ON INSURANCENEWSNET.COM INFRONT

How will ‘The Great Unwinding’ impact health insurance?

by Susan Rupe The COVID-19 pandemic led to a swath of public health declarations and emergency coverage mandates as officials tried to get a handle on the crisis. Those moves were always meant to be temporary, and now the time has come for them to be gone.

The Great Unwinding is how the Centers for Medicare & Medicaid Services refers to that difficult process.

According to an analysis by the Kaiser Family Foundation, an estimated 5.3 million to 14.2 million people could lose their Medicaid coverage when the COVID-19 public health emergency ends.

Under the public health emergency declaration, more Americans became eligible for Medicaid. In addition, states

were required to provide continuous coverage for those who were enrolled in Medicaid on or after March 18, 2020.

Further complicating the Medicaid unwinding is the fact that each individual state will develop its own time frames and approach for unwinding the Medicaid continuous coverage requirements, Kinda Serafi, Manatt Health partner, told InsuranceNewsNet. In addition, the states have up to 12 months to re-enroll the impacted Medicaid recipients.

“The potential for coverage loss is really significant,” she said. “And it’s for a number of reasons. It’s because many people haven’t had their coverage renewed in over two years, they haven’t

updated their contact information with their state Medicaid agencies, and so they might have moved, they might have changed their phone number. Then when states go to reach out to them to renew, they’re not going to be able to find them.”

There will be “a huge volume” of renewals at the end of this public health emergency, Serafi said, adding, “And depending on how fast or slow a state takes to sort of move through the backlog of pending renewals — that will really determine whether we’re going to see a significant and disproportionate loss of coverage.”

To read more on this story, visit bit.ly/unwinding2022

Insurers grapple with big data privacy hurdles

by John Hilton It’s no secret that insurers fancy Big Data and all the possibilities it represents. The ability to market and price products with pinpoint accuracy brings the promise of an industry revolution.

But it also comes with baggage that concerns both consumer advocates and regulators. Specifically, discrimination and invasion of privacy. Those concerns are being debated by regulators and legislators across the country.

The expanding efforts for data privacy regulation are seeing major developments on three main fronts: • Legislators in five states passed data privacy laws, and nearly two dozen states are working on similar efforts.

California sprinted out of the gate first with the “gold standard” in data privacy protections, as one law firm put it, but other states are taking a more business-friendly approach. Especially where financial services is concerned.

• The National Association of Insurance Commissioners created an entirely new committee, the H Committee, to study data, technology and cybersecurity issues. It is the first letter committee created by the NAIC since 2004.

• A bipartisan group of House and Senate members released a draft proposal earlier this month for a national data privacy bill, called the American Data Privacy and Protection Act, which aims to establish a framework for better protecting consumer data privacy and security.

Not surprisingly, the most activity is taking place at the state level. Legislators in Utah and Connecticut passed new data privacy laws, while Colorado and Virginia passed versions last summer.

But unlike California’s, these laws exempt financial institutions, explained Drew G. Wegner of Cooley, an international law firm based in Palo Alto, Calif.

The laws “effectively exempt almost all insurance carriers,” Wegner added.

California passed the first data privacy law, which contains the broadest consumer protections. The state passed two separate laws: the California Consumer Privacy Act, which took effect on Jan. 1, 2020, and the California Privacy Rights Act, passed in November 2020 and taking effect on Jan. 1, 2023.

In a second significant departure from the California standard, new data privacy laws in Utah, Virginia, Colorado and Connecticut do not include a private right to sue. California allows lawsuits,

but limits damages to $750 per violation proven in court.

“This is where the plaintiff attorneys got quite excited,” said Heidi Lawson, partner at Cooley and formerly an insurance underwriter. “If you insure 100,000 people in California, and you violated the law consistently … that definitely adds up very, very quickly to an incredibly high amount straight out of the gate.”

It is a significant priority for financial services to avoid a “patchwork” of different laws across state boundaries coast to coast, Lawson explained. Often what happens is companies will “default to the strictest standard,” she added.

To read more on this story, visit bit.ly/dataprivacy2022 InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@ innfeedback.com. Follow him on Twitter @INNJohnH. Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com.

Follow her on Twitter @INNsusan.

August 2022 » InsuranceNewsNet Magazine

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oday’s consumers are more aware of the need for estate planning.* Life experiences, such as millennials acting as caregivers both for children and for parents during a pandemic, and baby boomers preparing to pass down wealth, have created a greater demand for these services. As a result, estate planning seminars are achieving record-high attendance numbers — which is great news for estate planning attorneys, but how is it relevant to financial professionals?

Once clients take the step to work with an estate planning attorney, the process can reveal a client’s lack of asset protection and retirement income planning. Many estate planning clients don’t know how the estate plan they are creating will be carried out. They need someone who has financial skills and expertise, who has access to products that can accumulate and preserve wealth, and who can ensure they leave the legacy they envision. Being able to tie in the financial planning component to ensure the success of an estate plan is oftentimes the most important goal and outcome a consumer wants.

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*2022 Wills and Estate Planning Study. Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey. Accessed June 24, 2022.

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INTERVIEW

Beyond success

Dan Clark explains how finding meaning changes everything An interview with Publisher Paul Feldman

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InsuranceNewsNet Magazine » August 2022

BEYOND SUCCESS — WITH DAN CLARK INTERVIEW

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an Clark is a motivational speaker, leadership trainer and author of more than 20 books, including The Art of Significance: Achieving the Level Beyond Success, which focuses on his 12 Highest Universal Laws. He believes it is superficial to build careers and personal lives around amassing money, bigger houses and fancier job titles. He believes that many outwardly successful people feel empty without having a higher purpose and a path with more significance.

Clark is also a primary contributing author to the Chicken Soup for the Soul series of books. He has been the closing keynote speaker at the Million Dollar Round Table annual meeting, he has spoken at most of the major life insurance carriers’ events, and he was the keynote speaker for the third time at the National Association of Health Underwriters national convention in Austin, Texas, this year.

insurance industry and why he thinks it is a noble profession, his flight to the edge of space in a U2 reconnaissance aircraft, what lessons he’s learned from the adversity he has faced, and why he believes in service and living in the moment.

Paul Feldman: You have had an interesting experience with the insurance industry. Can you share that?

Dan Clark: My dad started and owned his own insurance company, and my older brother owns his own insurance company as well. When my dad died, I was there the day the death benefit check was delivered to my sweet mother. I love this industry.

I honor it. There’s no more noble profession than insurance. I say that everywhere because I’ve seen both sides. I understand the magnitude of the products and the impact your industry makes in the lives of families that no products outside of insurance can do.

fame and fortune. But because his inner voice and true purpose in life were misaligned with what he was doing, he would never enjoy a life of significance and he would die with his music still in him.

We need to do something with our life that makes a difference. You need to focus on doing what you need to do so that you live a life of significance.

Feldman: What is the difference between success and significance?

Clark: Success is about focusing in on the moment, which is not to be discounted.

We have to be successful.

Let me give you an NFL example about focusing in the moment. Last year, the last four divisional championship games played in the National Football League all came down to the final play.

There’s not an actuary on the planet who could have predicted that. In one specific game between the Kansas City

“You’ve never been this old before — and today you’ll never be this young again — so right now and every right now matter.”

He accepted a scholarship in football and baseball to the University of Utah, where he majored in psychology. During a tackling drill, Clark cracked a vertebra in his neck and severed the axillary nerve in his right shoulder. He eventually recovered and was invited to speak to local high school kids about his recovery. Clark then was invited to speak for former first lady Nancy Reagan’s “Just Say No” campaign, beginning his long career as a motivational speaker.

Clark has earned the highest Certified Speaking Professional designation in the National Speakers Association, was inducted into the Professional Speakers Hall of Fame, and has been named one of the Top 10 Motivational Speakers in the World. Dan discusses his links to the

Feldman: Tell us how The Art of Significance impacts those in the insurance industry.

Clark: I’m a storyteller. I don’t believe we remember the facts and figures. We remember the interpretation of the facts and figures. So let me tell you a quick story. I played American football for 13 years. And my buddy was drafted into the National Football League in the second round by the Philadelphia Eagles. And after two years with the Eagles, he’s traded to my Oakland Raiders. And after four years in the league playing in a Pro Bowl, one day he walks out of practice — quits — never to play again. Why? He loved being a football player, but he hated playing football.

He loved the celebrity perks and the

Chiefs and the Buffalo Bills, there were two amazing quarterbacks who have the ability to create that moment, which have that quiet mind that allows them to just focus in on what they can do right now: Patrick Mahomes for the Chiefs and Josh Allen for the Bills. Because of their ability to find that present moment and stay in that process, they collectively scored 25 points in the last two minutes of the game.

Mind-boggling.

Bills go ahead. Chiefs go ahead. Bills go ahead. Chiefs go ahead. Bills go ahead. If you are living in the past, you’re never going to be able to rise to the occasion under the pressure.

You fall to the level of your training. If the quarterback is trying to focus on “I’ve got to score a touchdown! I’ve got to score

August 2022 » InsuranceNewsNet Magazine

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INTERVIEW BEYOND SUCCESS — WITH DAN CLARK a touchdown!”, he’s never going to be able to execute.

If he’s living in the past, thinking “Oh no, I can’t do this. I don’t want to do this.

Why did I pick the most stressful job on the planet?”, then he will fail.

But he lives in the moment.

Had Patrick Mahomes and his 10 teammates not been able to focus in on the present moment and been successful right now to get what they want, they would have never been able to enjoy the significance of the winning to advance in the playoffs.

So, what we must understand is that you first must be successful before you can be significant. We can enjoy and create significance in our life so that we don’t die with our music still in us.

Feldman: How did you come up with the 12 Laws of Significance?

Clark: The backstory is that on Oct. 23, 2010, I was invited to soar to the edge of space in a U2 reconnaissance aircraft.

I’ve given more than 350 speeches to the United States military. I’ve been downrange eight times in Iraq and Afghanistan firing up our troops. I honor and love our military, and I support their families. I volunteer and donate my time, my speeches, my talents, whatever I have.

I’m a Pentagon appointee serving with the National Civic Leaders Board of the United States Air Force. I’m in the halls of the Pentagon, and I’m walking down the hall and I run into Gen. Paul McGillicuddy, who had been the commander at Maxwell Air Force Base, Montgomery, Alabama Air University.

He stops me. “Dan, I just got a new assignment. I’m the commander at Beale Air Force Base. Will you come and speak to our troops?” I said, “Absolutely. If you’ll give me a ride in a U2 reconnaissance aircraft.”

He says, “I can’t do that; you’re a civilian.” I said, “What?” He says, “Yeah. It will require a presidential signature.” I said, “OK, go get it.”

A couple of weeks later, he calls me and says, “I can’t believe we got [President] Obama to sign off on this.” So, for the next two months, I trained. I lost 37 pounds.

I show up at Beale Air Force Base. I go through another full day of training.

So, I’m 70,000 feet above the Earth’s surface. You see two-thirds of the state of 12

California; at 80,000 feet you see mapped outlines of America. And at 90,000 feet, you feel like you can reach out and touch the face of God. It was a spiritual experience I wish everyone could have.

And for five hours, I sat in the sounds of silence looking at the curvature of the Earth, gazing in the endless blackness of the universe pondering eternity and my place in it. I’m looking around thinking, “If we’re the only ones here, this sure is a lot of wasted space.”

In that environment, I became a curious student of astronomy. I became a curious student of how organized the Earth and the universe really are.

And when we landed, I started studying astrophysics. I interviewed astronomers. I read everything that I could get my hands on, including by Wernher von Braun, the father of NASA, and Leonhard

make our sojourn here and mortality on our earthly experience the easiest, the most meaningful path that we can walk as we live life from birth until we take our last breath.

For example, if you don’t obey the law of gravity and step off a 20-story building, you will die. So, obedience is the highest law in the universe because all other laws are governed by it.

We must use our free will agency to choose to obey and walk on higher ground. Otherwise, we will suffer the specific consequence of disobedience.

If we want to be the best version of ourselves personally, professionally we need to surround ourselves with people who choose to obey, who choose to be self-disciplined enough to wake up every morning with a routine focused in on service before self.

The Twelve Laws of Significance Law 1: Law 2: Law 3: Law 4: Law 5: Law 6: Law 7: Law 8: Law 9: Law 10: Law 11: Law 12:

Practice Obedience Instead of Free Will Agency Exercise Perseverance Instead of Patience Proactively Stretch Instead of Change Trust Predictability Instead of Hope and Faith Know the Whole Truth Instead of Believing What You Think Focus on Winning Instead of Team Do Right Instead of Seeking to Be Best Experience Harmony Instead of Forcing Balance Accept Others Instead of Judging Them Love and Be Needed Instead of Romanced and Used Establish Covenants Instead of Making Commitments Forgive Instead of Apologize

Euler, whose 18th-century theorem allowed us to successfully bring the astronauts and their space capsules back through the atmosphere.

Over the next year, I quantified that there are only 12 highest universal laws (Obedience, Perseverance, Stretching, Trust, Truth, Winning, Doing Right, Harmony, Acceptance, Being Needed, Covenants, Forgiveness).

Feldman: One of my favorite parts of your book — and I’ve never heard it said just like this — is your first law: “Practice obedience beyond free will agency.” Can you talk about that?

Clark: Law No. 1 is Focus on Obedience.

It’s learning the laws of the universe and then putting them into play to

InsuranceNewsNet Magazine » August 2022

Some think “I can do whatever I want,” but, oh, no you can’t. We must choose to obey. We must use our free will agency to choose to obey and walk on higher ground. Otherwise, we will suffer the specific consequence of disobedience.

If I can take it one step further, to guarantee free will agency tests our obedience.

To guarantee that we will always have a free will choice, the master organizer of the universe has given us an opposition in all things. We must have darkness to appreciate the light. We must have justice to appreciate mercy. We must have sickness to appreciate health.

We must have wisdom to appreciate knowledge because wisdom is the application, the practical application, of knowledge. We must have death to appreciate the sanctity of life.

BEYOND SUCCESS — WITH DAN CLARK INTERVIEW did we learn? Adversity introduces us to ourselves. No one will ever know how strong we are until being strong is our only choice. Is your current belief strong enough, deep enough, true enough to empower you to respond to rapid change?

And if not, why not?

Feldman: What enabled you to deal with those challenges?

And then because we’re human and we know we’re going to misuse our free will agency because of the opposition in all things, every person born into this world was born with an inherent ability to discern right from wrong, truth from error.

It will behoove us if we want to be the best version of ourselves personally, professionally to surround ourselves with people who choose to obey, who choose to step out of the crowd and walk on higher ground. People who choose to be self-disciplined enough to wake up every morning with a routine focused in on service before self.

Feldman: A big part of what you talk about in your book is how powerful having a true “why” drives a life of significance and success. Everyone thinks they have a why, but it’s usually not defined.

What are some strategies to define your why, and how that should look?

Clark: What we have to do is simplify it.

Make sure we can do it. The classic example is having a mission statement or a vision statement. Every company has one. The classic example of the simplified, straight-to-the-point purpose statement comes from The Walt Disney Company.

Their mission statement says, “Entertain, inform and inspire people,” essentially to make people happy. Bam. End of discussion. Let’s define what that means.

If you’re working at Disneyland or Disney World or an amusement park and your job is a groundskeeper, your job is to keep that amazing amusement park perfectly clean because it is the happiest place on Earth. And if you’re walking in the midst of trash, suddenly it’s no longer the happiest place on Earth.

Eliminate distractions. Why do you do what you do?

Let me share my own personal story.

I played football for 13 years. One day in practice, the dream ended. We had a tackling drill. Coach blew the whistle. Two of us ran into each other at full speed. We slammed to the ground.

My right side was paralyzed, my arm dangled helplessly at my side. I couldn’t talk. Fast-forward: I recovered completely, but for 14 months I was paralyzed, physically and emotionally. When I was paralyzed, I lost my identity. I thought I was a football player when, in reality, football was just what I did. It’s not who I was as a man.

Every culture is created. Fortune 500 companies, family-owned business, an insurance agency — it does not matter.

Every culture is created between the strongest belief — the highest expectation and the best behavior that the leader lives by — and the weakest belief — the lowest expectation and the worst behavior that the leader tolerates.

So, if you want to up level the culture in your organization, in your insurance agency, what we have to do is shrink the distance between the highest belief, highest expectation, best behavior and what we’re not willing to tolerate. And as we shrink that distance in our organizations, we create what I call a culture of significant partner leaders, where our “why” is bigger than our “why not” — where we hold ourselves accountable, where everybody leads, those with and without a title.

When I was paralyzed, I thought I hit rock bottom. But here’s what happens.

Nobody ever hits rock bottom. We hit rock foundation. We hit rock belief. We hit the baseline core values on which we were raised. During COVID-19, what

Clark: What took me so long to change?

What took me so long to recover? What took me so long to recalibrate?

I was asking the wrong questions. I was asking the doctors how to get better when I should have been asking myself why I needed to get better. And once we answer why, figuring out the how to becomes clear and simple. We still have to do the hard things. We still must have the mindset on a daily basis to push ourselves intellectually, physically, emotionally, spiritually, financially to the next level.

We need to ask ourselves: Why do you do what you do? What is your true purpose?

And here’s how that happens. You have to understand the significance of making sure our own personal why aligns with the why of our agency, the why of our profession. And therefore, our why has to be bigger than our why not.

Feldman: I want to circle back on your family’s experience with life insurance, because it’s touching.

Clark: My dad owned an insurance company, and he died in 1990. Because of the financial advisor my dad had in his company, an insurance agent showed up at my mother’s doorstep after my dad’s death.

The agent couldn’t fix the fact that my dad died. He couldn’t have taken away my dad’s six-and-a-half-year battle with cancer. But he could make sure that my mother could sustain her lifestyle, that she’s still would have enough money to stay in her home and invite her grandchildren, that she could keep my dad’s legacy of love and leadership alive.

To create an environment where she and my siblings and I could continue to tell the stories of my dad, my hero — horseman, legislator, Air Force officer, orator and extraordinary human being. That’s what this amazing insurance and financial advisory industry does for the world.

August 2022 » InsuranceNewsNet Magazine

13

NEWSWIRES

QUOTABLE

Consumer confidence drop hints at recession risk

Consumer expectations have been driven to the lowest point in nearly a decade, dragged down by fears of inflation, particularly in oil and gas prices, according to the latest Conference Board Consumer Confidence Index.

“Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by year-end,” said Lynn Franco, senior director of economic indicators at The Conference Board.

The Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, decreased sharply to 66.4 in June from 73.7 in May and is at its lowest level since March 2013.

Fewer people expect business conditions to improve, with only 14.7% expecting improvement, down from 16.4%. Three out of 10 consumers think business conditions will worsen, with 29.5% expecting deterioration, up from 26.4%. And although the labor market has been strong, consumers were a little more pessimistic about it, with 16.3% expecting more jobs to be available, down from 17.5%, and 22% expecting fewer jobs to be available, up from 19.5%.

PANDEMIC CRACKED MANY RETIREMENT EGGS

The pandemic has shifted retirement planning for Americans, with many dipping into retirement savings and extending their employment, according to the 22nd Annual Transamerica Retirement Survey.

The good news is that most Americans are saving for retirement, but the notso-good news is that more than a third have had to dip into that money, the survey found.

Thirty-five percent of workers have taken a loan or an early withdrawal from their retirement accounts. Employed workers (39%) are more likely to have ever dipped into ret i re m e n t savings, with 39% doing so, compared with 22% of DID YOU

KNOW

?

14

self-employed and 21% of unemployed workers.

FED: INFLATION WON’T FALL TO 2% FOR 2 YEARS

Cleveland Federal Reserve Bank President Loretta Mester said it will take two years for inflation to fall to the central bank’s 2% target. Mester added that inflation will be “moving down” gradually from the current level. However, she said she was not predicting a recession despite slowing growth.

A surge in inflation, which is at its highest level in 40 years, led the central bank to announce its biggest rate increase in more than a quarter of a century.

“We do have growth slowing to a little bit below-trend growth, and we do have

I would be surprised if there were a recession without much job loss.

— Gregory Mankiw, a Harvard University economics professor.

the unemployment rate moving up a little bit. And that is OK — we want to see some slowing in demand to get it in line with supply,” Mester said.

DESPITE RECESSION FEAR, THE GREAT RESIGNATION CONTINUES

The Great Resignation is still in full swing, according to economists, although there are some signs of a slight slowdown. Job openings and voluntary departures remain extremely high, while layoffs are near record lows — conditions that are favorable to workers. But it’s unclear how long it will remain a job seeker’s market, given the Federal Reserve’s move to raise borrowing costs and fears of a looming U.S. recession.

U.S. Department of Labor data shows that the Great Resignation is still going strong as the labor market remains hot.

And where are those resigning workers going? For the most part, workers are shifting to better jobs, lured by factors like higher pay, according to economists. Wages in May jumped by 6.1% versus a year earlier, the biggest annual increase in more than 25 years, the Federal Reserve Bank of Atlanta reported.

36% of U.S. employees with salaries of $100,000 or more are living paycheck to paycheck.

InsuranceNewsNet Magazine » August 2022

Source: Willis Towers Watson

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COVER STORY

Moving the needle on

DEI

Progress is being made on improving the industry’s diversity, equity and inclusion efforts. How far have we come?

By Susan Rupe 16

InsuranceNewsNet Magazine » August 2022

A

long-standing joke among women in the financial services industry is that there’s never a line to enter the women’s restroom at an industry event.

The industry has recognized that there is a lack of diversity among the advisor force and is taking steps to bring in more women and minorities to the business. But are those efforts paying off? What progress is being made to increase diversity, equity and inclusion? Several industry leaders who are on the front lines of the fight to improve DEI told InsuranceNewsNet there are hopeful signs that financial services is moving toward becoming more inclusive.

More resources going toward DEI

More money and resources are going toward DEI initiatives, and that’s driving an effort to encourage a more diverse population to consider a financial services career.

Gandy

That’s the observation from Chris Gandy, president and founder of Midwest Legacy Group in Chicago. As co-chair of the National Association of Insurance and Financial Advisors DEI Council, Gandy has been an advocate for ensuring that Americans have a choice of advisors with whom they can relate.

Gandy pointed to The American College’s HBCU Student Scholarship Program, which was established in 2020, and offers students from historically Black colleges and universities the ability to learn about the financial services profession and get a head start in their

MOVING THE NEEDLE ON DEI COVER STORY careers. Students who have completed their sophomore year and are enrolled and in good academic standing at any four-year, bachelor’s degree-granting HBCU are eligible to apply for an HBCU Scholarship. Full tuition scholarships are available for the Retirement Income Certified Professional designation, the Chartered Financial Consultant designation and the Certified Financial Planner certification education program.

In addition, The NAIFA Foundation for Financial Security announced in May that it is launching a program to promote and support the recruitment of diverse advisors to the industry. The foundation will award diversity scholarships to current or recently graduated college students who are members of under-represented populations in the industry. The diversity scholarship is a two-year program that will provide support and training to help launch the careers of these prospective advisors.

“We’re seeing marketing dollars that traditionally don’t go to DEI initiatives now moving to that arena,” he said. “We’re starting to see a concerted effort on the part of top-line managers and owners, the insurance companies and the investors.”

But whether these efforts bring results remains to be seen, Gandy said. “Is it going to be, ‘Hey, we’re going to throw some money at [DEI] and see what happens’ or will it be a focused and intentional effort?” he asked.

“So we’re waiting to see what that’s going to look like.”

Some hopeful signs that Gandy said he sees are the efforts to increase the number of diverse candidates in the advisor pipeline and greater awareness around DEI. “Just acknowledging that we need to do things in the DEI space is a big step,” he said.

In addition to making strides to increase DEI among the advisor force, Gandy said the industry is making progress in serving a more diverse consumer audience, although, he added, more work needs to be done.

“The companies that are going to win this game are the companies that embrace DEI and start tapping into those markets that traditionally have not been tested,” he

said. “Every company wants to know how they can add revenue. They reduce expenses and grow profitability. But one of the ways to add revenue is to direct some of the assets they are already spending and use them to tap into new markets.”

‘Diverse talent is everywhere’

Companies are doing more than paying lip service to increasing DEI — they are actively seeking diverse talent and supporting the diverse employees they already have, according to Angela White.

White is northern complex recruit-

White

ing director for Equitable and is based in Indianapolis. In her position, she works with 40 hiring managers to assess the company’s current recruiting strategy. She also creates training and support for recruiting diverse talent. Along with Gandy, she is co-chair of NAIFA’s DEI Council.

When it comes to finding diverse talent, “All you have to do is open your eyes and look. Diverse talent is everywhere,” she said. “Ask yourself where you would want to go to find a certain type of candidate and that’s where you go.”

As an example, she cited an organization in Indianapolis called Inclusive Network. The group holds a Women’s Equity Brunch to bring together women and discuss issues that impact women.

“It’s a lot of women sticking together, helping each other rise to the top and supporting each other,” she said.

White said she got one of Equitable’s vice presidents involved with the organization. “So now we have a presence, we’re talking about our commitment to DEI at these events, and we’re engaging in meaningful conversations with the participants,” she said.

August 2022 » InsuranceNewsNet Magazine

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COVER STORY MOVING THE NEEDLE ON DEI She also became involved with the Indy Rainbow Chamber of Commerce, an LGBTQ business organization serving the Indianapolis area. “It’s all about getting company executives active and engaged in their communities, and actively seeking organizations where diverse talent can be found,” she said.

White said she sees more companies forming employee resource groups, or ERGs, which are voluntary, employee-led groups whose aim is to foster a diverse, inclusive workplace aligned with the organizations they serve.

At Equitable, she said, the company developed metrics around hiring diverse talent.

“Around 2020, we decided that DEI is more of who we are and that we really want to represent the markets that we serve,” she said. “And so we put together different DEI initiatives on attracting and recruiting diverse talent. Then we put different metrics in place. Each one of our managers has recruiting goals that they have to hit every year. But we also track all of our diversity hires as well, because we want to make sure that not only are we having conversations and actively pursuing diverse talent, but we’re getting that diverse talent into our organization, and through our selection process.”

White said that Handshake, an online platform aimed at helping college students find jobs, is a popular place to recruit diverse talent. She also created a virtual recruiting event for Pride Month in June, titled “How To Be Equitable,” which is a play off the company’s name and in which she talked to LGBTQ members in the industry about how they started their careers and what their community means to them.

“It’s about more than posting jobs on job boards, but actively going out to find diverse talent,” she said. “We do a lot of training and a lot of development around how to find that diverse talent and how to have effective conversations with those folks.”

In her volunteer role with NAIFA, White said she is seeing more financial services organizations working toward increasing DEI. “Everybody understands why bringing diversity in your organization makes sense — from a monetary standpoint, from a diversity of thought standpoint,” she said. “I think we’re rounding that 18

corner of understanding why diversity is important. And I’m excited to see so many organizations putting together ERGs and different types of support for their diverse advisors.”

It started with a pledge

If a diverse workforce feels included in the organization, the organization will be more successful. That ideal is what led Ameritas CEO Bill Lester to sign a DEI pledge in 2020, said Lined Mason, Ameritas vice president, policy services. Mason has been at the forefront of Ameritas’ diversity efforts over the past two years.

Mason Ameritas developed a strategy to support a diverse workforce and that strategy began with creating an Inclusion and Diversity Leadership Council, Mason said.

The council is made up of senior leaders at Ameritas. “I am one of the members on the council and I made this commitment because I want to make a change,” Mason said. “Our job is to counsel the senior leadership on DEI issues. Those issues can be anything from facilitating training, working with marketing on our branding and public image, working with human resources and with recruiting and hiring.”

Mason said Ameritas surveyed its employees and associates to determine which areas of diversity were most important.

From there, four associate resource groups formed, and some of them have included the word “bison” in their group names, to reflect the bison image that is part of Ameritas’ branding.

Bison Pride is the group representing Ameritas associates from the LGBTQ community. “This group is all about creating a welcoming and safe environment

InsuranceNewsNet Magazine » August 2022

and helping to facilitate a network of allies while supporting the community,” Mason said.

Bison Strong represents Black associates. This group’s activities include recording a series of “fireside chats,” where members can speak about issues such as building a personal brand and developing their individual strengths.

Ameritas associates who have disabilities are represented by their own group, People with Disabilities. Mason said this group is aimed at raising awareness of disabilities while focusing on learning and advocacy.

NextGen Bison is the group representing young associates or associates who are new to the company. “They’re trying to figure out things like: Is this a company for me? Is the role that I’m in one that I want to be in forever? What does my future look like at Ameritas?” Mason said. “It’s a place for them to mentor each other and share experiences.”

Ameritas also launched a group for its female financial professionals called Ameritas Women Elevated, or AWE. “It’s a place for empowering and mentoring women in this profession — a place where they can thrive, help each other out, explore ways to attract and retain women in the profession,” Mason said.

Another group within Ameritas is Ameritas Growth Leaders, financial professionals who have been in the industry for 10 years or less. “They meet a couple of times a year,” Mason said. “They get mentored by field advisors who have been in the industry longer and can show them ways to be successful in this industry.”

Now that these groups have been established, Mason said, the next step is to measure whether the DEI efforts are resulting in more diverse employees and advisors joining the company. Mason said that information is incomplete but that Ameritas’ female advisor force currently makes up about 19% of its total advisor headcount. “Back when I started 30 years ago, women made up about 2% of the advisor force,” she said. “So we are making some progress. But now we can see whether we can make that percentage go higher.”

Singing with many voices

The industry field force is not the only place that has lacked diversity. Look at any industry conference agenda. Where are the

MOVING THE NEEDLE ON DEI COVER STORY women? Where are the people of color?

Why are their voices not being heard from the conference stage?

Earlier this year, Sonya Dreizler and Liv Gagnon launched Choir, a diversity certification program for financial services conferences. Dreizler has spent 20 years in the industry, including serving as a broker-dealer and RIA executive. She has been a longtime advocate for greater racial and gender equity in the industry.

Gagnon is a media relations specialist who focuses on social values.

Choir’s mission is to make industry events more representative of the U.S. population, Gagnon told InsuranceNewsNet. Choir’s proprietary algorithm uses hundreds of data points to assess the prominence and visibility of women, nonbinary people, and people of color on conference stages — setting the first industry benchmark for conference diversity, the Choir Certification. Choir then uses this data to provide leadership teams and event organizers with actionable guidance to maintain diverse and increasingly representative speaker lineups year over year.

Choir conducts an assessment of an organization’s most recent conference and calculates a score based on how well that conference represents women and people of color — and specifically women of color — on stage in comparison to their representation in the U.S. population.

In addition, event sponsors, attendees and speakers can go to the Choir website and sign the pledge to attend only conferences that meet the following standards: 1.

At least one of every three keynote speakers is a woman or person of color.

2. Every panel with four or more people

includes at least one woman or person of color as a non-moderator expert.

3.

Women of color are represented throughout the agenda in expert sessions, not only sessions about diversity, equity and inclusion.

4. There is an enforced policy against harassment of all kinds.

“It has been lovely to work with conferences that are trying to acknowledge how important representation on stage is, and are looking for more resources, and are actively working on that,” Dreizler said. “And then reviewing those conferences after they’re completed to see how they’ve done and give feedback on opportunities for increasing representation the next year. And to know where they’ve done well — all of this has been great and successful.”

The next step, which will launch later this year, is Choir Voices. This will be a listing of diverse speakers who are available to present at conferences, so that conference organizers can find them and learn about their areas of expertise.

“We wanted to create a place to remove the excuse of ‘I can’t find anyone diverse to speak at my conference,’” Gagnon said. “We want to connect with organizers and speakers at all levels to bring them into Voices.”

The next step: accountability

More people in the industry are aware of DEI but the next step in the journey is accountability, said the founder of a community made up of women in financial services as well as the male allies who support their efforts.

Sheryl Hickerson is CEO of Females and Finance, which was founded in 2018 with the goal of providing a support network to hire, mentor, train and advance 100,000 women in the profession by Jan. 1, 2025.

“I think the awareness part [of DEI] is there,” she said. “And I do think the next step is the accountability part of it, where people are starting to stress themselves against diversity, equity and inclusion metrics.”

Diversity is about more than race or gender, Hickerson said. “Diversity is about all the other little subtleties as well: where someone comes from, the specific talent that they have, their education, what specialty market they work in. Diversity tends

Hickerson to be something that people tend to silo into things that are so obvious, like skin color and such. But there is such a wide array of being diverse.”

During the time of unrest following the death of George Floyd in 2020, Females and Finance sponsored a number of online talks focusing on economic and social issues facing the Black community and what those in the finance industry needed to understand.

“This was a chance to offer more opportunities for people to actually learn human skills, language skills — you know, understand those kinds of soft skill things because they really do matter,” Hickerson said.

DEI efforts are ongoing, Hickerson said, adding, “I think all of us are still learning.

We need to get into spaces that feel inviting because everybody needs an invitation to the party. And they need to be invited to dance. It’s not just the invitation to show up; it’s the invitation to participate.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

August 2022 » InsuranceNewsNet Magazine

19

the Fıeld

A Visit With Agents of Change

W

Scott Thompson found success by believing in himself.

Now he encourages other advisors to do the same.

E

BY S U S A N R U P

20

InsuranceNewsNet Magazine » August 2022

hen you see Scott Thompson on stage speaking at a Million Dollar Round Table event, you would have a difficult time believing he once was a shy kid. Thompson is a financial advisor based in Oakmont, Pa. During his high school days in Florida, Thompson found that performing in plays helped him overcome his bashfulness and allowed him to bask in the spotlight.

But his father, who spent much of his life in the U.S. Air Force, had other ideas for his son. He hoped his son would follow his footsteps into a military career.

“I had all the nominations lined up for the U.S. Air Force Academy. But then, I finally said, ‘Nope. I don’t want to fly a plane. I want to be an actor.’”

Thompson said his father wasn’t happy with the decision but supported it the best he could.

After two years studying theater at a junior college in Florida, Thompson moved to California to study at San Francisco State University. An acting teacher gave him some advice that would change his career direction.

“The teacher told me point blank, ‘In today’s day and age, you need to be what they call a triple threat. You have to be able to sing, dance and act.’ I was OK on acting.

I could dance. But I could not sing. So my teacher asked me, ‘Why don’t you learn theater technology?’ And that’s when I learned stage lighting and design.”

After graduating from college, Thompson returned to Florida and married his high school sweetheart, Dottie, who is a singer.

“We did a lot of local community theater, but I had to get a real job,” he recalled.

He and Dottie formed an entertainment company called Side by Side Entertainment that provided music for weddings and other special events.

Dottie sang while he worked as a DJ and master of ceremonies. He even led line dances and other wedding dances for the crowd.

Thompson also worked for an appliance retailer during this time. But when he injured his back while delivering a washer and dryer, he decided it was time to find a career that was less physical.

THE PERFORMANCE OF A LIFETIME — WITH SCOTT THOMPSON IN THE FIELD

‘Surprised they didn’t throw me out’

A local insurance company recruited him.

“I went in for the interview and told them I’d try it,” he recalled. “But for my first 15 years in the business, I’m surprised they didn’t throw me out.”

Thompson admitted that in those early years, “I didn’t care what I sold or who I sold to as long as I got a paycheck. And I didn’t know what to do other than get a paycheck.”

But he wasn’t satisfied with continuing on that path.

“I finally said to myself, ‘I have to believe in me if I’m going to make a career out of this.’ And I finally started believing in myself,” he said.

But it took more than a change of mindset to move Thompson’s career forward.

He said his sister was diagnosed with pancreatic cancer around that time.

“The doctors told her she had between six months and a year to live. She and I were very close. As we went through the next year and a half together, she told me, ‘I’m tired of letting life live for me. I’m going to live for life.’ What she was telling me was, ‘Don’t give up.’ That was my turning point. And I’m proud to say that 20 years later, she is still walking this earth.”

Thompson’s career turned around when he took his sister’s words to heart. He qualified for MDRT each year for 16 years and qualified for Court of the Table for the fourth time this year.

His parents retired to their hometown in western Pennsylvania, and Thompson and his wife eventually moved to the Pittsburgh suburbs to live closer to them.

He went to work for a bank, doing investments, then became an independent financial advisor, describing himself as “a one-man show.”

“I’m housed inside a property/casualty agency, and I rent space from them,” he said. “I do everything from soup to nuts.

I do life insurance, health insurance, Medicare, investments, disability insurance. I do the whole thing. The agency feeds me referrals from their auto and home insurance customers. But the meetings, applications, all of those things, are handled through me.”

Thompson said most of his clients are age 50 and older.

“For those clients who are 50 to 65 years

Scott Thompson gave a lively presentation on “Believe in Yourself” at the 2018 MDRT annual meeting.

old, I help them with getting ready for retirement and with planning for their family’s needs,” he said. “For the clients who are 65 and older, I help them with their Medicare and with their investments.”

‘It taught me to be me’

Thompson said his involvement with MDRT helped to bring out the best in him as he worked to be the best advisor for his clients.

“MDRT taught me to be me,” he said. “It taught me to realize that no matter how good you are, no matter how good you think you are, we all need help. And when I say help, I mean that we all need support.

“We all need people who will let us bounce ideas off them. We need people who can say, ‘When you are down, I’m here for you. When you are up, I’m here for you.’ Going to the MDRT annual meetings has given me that energy and support.

And I’ve made lifelong friends as well.”

Thompson’s degree in musical theater helped him become a motivational speaker on behalf of MDRT. “I did a little bit of speaking here and there during my first couple of years in the industry,” he said. “But speaking became too much with trying to work. Later, as I kept progressing at MDRT, people in the organization would say to me, ‘Scott, you have a message. Deliver it.’ I finally said, ‘Maybe I do have a message.’”

He began speaking at some MDRT events and some of the agency leaders who heard his presentation invited him to speak to their own agents. He spoke at the 2022 MDRT Annual Convention in June on “The Four Keys to Success,” a presentation that was geared toward motivating agents to unlock their hidden potential by discovering their true inner selves. He will make his third speaking trip to Asia in August, speaking to agencies in Malaysia, Singapore and Thailand.

August 2022 » InsuranceNewsNet Magazine

21

the Fıeld

A Visit With Agents of Change

Scott Thompson eschews the standard suit-and-tie speaker outfit in favor of something that lets his outrageous side shine through.

Thompson said that his vow to begin believing in himself is the core message that he delivers in his presentations.

“My message is about being yourself and believing in yourself,” he said. “I title my speech on my motto, which is ‘Believe to Achieve.’ If you don’t believe in yourself, you are going nowhere. But if you do believe in yourself, you will soar to new heights.”

Thompson said that when he speaks to agents, “I’m not here to talk about product. I’m not here to talk about company.

I’m here to talk about you because if you don’t believe in yourself, nobody else will.

After all, your clients are buying you, not the product. The product is just secondary. They are buying you.”

He advises his audience to find a way to individualize themselves. “We all sell the same product, so why would someone come to you as opposed to coming to me or to the guy down the street? Because they have a connection with you and because you found a way to individualize yourself.”

‘You can be outrageous’

Thompson doesn’t always wear the standard business suit and tie when he speaks.

He lets his theatrical side shine through.

His ties are one example.

“To this day, 32 years in the business, you’ll rarely see me wearing a conservative tie,” he said. “Most of my ties are comical. They could have Mickey Mouse, Donald Duck, Tasmanian Devil, whatever on them. Because that’s me.”

He said he wants to show his audience 22

“that you can be outrageous — as long as you are being true to yourself.

“That’s where my theater background comes in, that I can feel comfortable on stage and be able to present,” he said.

In one of his presentations, he appears onstage wearing a gold wig, large-framed glasses, a crazy-patterned jacket and a gold dollar sign on a chain around his neck.

“My message was about being yourself and not trying to become someone else,” he said.

“I would start off the talk with saying, ‘My elementary school teacher told me if I wore a gold wig, I’d be successful. But that didn’t help me.’ And I’d throw the wig off.

I’d say, ‘My junior high teacher told me if I wore rock star glasses, I would be the best person on stage, but that didn’t work.’ So I took the glasses off. I’d say, ‘My baseball coach told me that if I wore a wild jacket, people would notice me immediately, but that didn’t work.’ When I took the jacket off, I realized that was me. And what I had left was the dollar sign. So if you believe in yourself, you are going to be successful.

Don’t go by what someone else tells you.

Go by who you are.”

In addition to speaking, Thompson mentors several agents.

“A lot of them need help with trying to explain something to a client, trying to understand a particular product, learning how to move forward when they are feeling down,” he said. “I’m there as a sounding board of experience. And from the beginning, I say to them, ‘I’m never going to tell you that my answer is always the right answer or that it’s the only answer. What I’m going to share with you is what has worked for me.’”

Susan Rupe is managing editor for I n s u r a n ce N ews N et .

She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.

Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods.

Additional agreements may be available. Agreements may be subject to additional costs and restrictions.

Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements.

SecureCare III may not be available in all states.

Product features, including limitations and exclusions, may vary by state.

SecureCare III includes an Acceleration for Long-Term Care Agreement and an Extension of Long-Term Care Benefits Agreement. These two agreements are tax qualified long-term care agreements that cover care such as nursing care, home and community-based care, and informal care as defined in the agreements.

These agreements provide for the payment of a monthly benefit for qualified long-term care services.

These agreements are intended to provide federally tax qualified long-term care insurance benefits under Section 7702B of the Internal Revenue Code, as amended. However, due to uncertainty in the tax law, benefits paid under these agreements may be taxable.

Please ensure that your clients consult a tax advisor regarding long-term care benefit payments, or when taking a loan or withdrawal from a life insurance contract.

The death proceeds will be reduced by a longterm care or terminal illness benefit payment under this policy.

The return of premium options affect the amount available upon full surrender of the policy. This amount varies based on the return of premium option selected in the application, and premiums paid at the time of surrender. Please ensure that your clients consult with a financial professional regarding return of premium options.

These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products.

The purpose of this material is the solicitation of insurance. An insurance agent or company may contact you.

Policy form numbers: ICC20-20212, 20-20212 and any state variations; ICC21-20220, 21-20220 and any state variations; ICC21-20221, 21-20221 and any state variations.

Insurance products are issued by Minnesota Life Insurance Company in all states except New York.

In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer.

Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

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InsuranceNewsNet Magazine » August 2022

securian.com 400 Robert Street North, St. Paul, MN 55101-2098 ©2021 Securian Financial Group, Inc. All rights reserved.

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LIFEWIRES

Life insurance new premium continues to grow, LIMRA finds Total U.S. life insurance new annualized premium increased 17% in the first quarter

SOURCE: LIMRA’s U.S. Retail Individual Life Insurance Insurance Sales Summary

of 2022, representing the fifth consecutive quarter of double-digit premium growth, according to LIMRA’s First Quarter 2022 U.S. Retail Life Insurance Sales Survey.

Indexed universal life (IUL) new annualized premium jumped 39% in the first quarter. Although two-thirds of carriers reported increases in IUL premium, most of the growth stems from the top 10 carriers, representing more than 80% of the IUL sold in the quarter. Policy count increased 8% in the first quarter. IUL premium market share was 28% in the first quarter of 2022.

Fixed universal life new annualized premium rose 2% in the first quarter. While current assumption products drove the overall growth for fixed UL (up 24%), growth was stunted by lifetime guarantee UL sales, which fell 27%. Despite the gains in premium, fixed UL policy sales fell 9% in the first quarter, and its market share decreased to 7% of the total U.S. life insurance market.

Variable universal life (VUL) new premium surged 50% in the first quarter, with 89% of the premium coming from the top 10 carriers. This is the 18th consecutive quarter of premium growth. Policy sales grew 28% in the first quarter. VUL held 13% of premium market share in the first three months of 2022.

NEW LAWSUIT OVER BAD IUL SALES NAMES SHURWEST, MINNESOTA LIFE

Another lawsuit in Arizona bankruptcy court adds to the woes facing Shurwest and Minnesota Life over a sketchy IUL sales strategy.

Plaintiffs Eleanor and Rocco Ciofoletti, of South Carolina, and Larry Stospal, of Texas, say they purchased Minnesota Life IUL products from Shurwest producers. According to their lawsuit, the Ciofolettis and Stospal were sold IUL policies accompanied by a future income payments (FIP) feature.

Using various marketing efforts, agents allegedly targeted pensioners with the FIP strategy by offering them a lump sum in exchange for a portion of their future pension payments.

Scammers pushing FIP allegedly used brokers and insurance producers to find investors — often retired veterans, DID YOU

teachers and firefighters.

Unknown to many investors, the future pension payment terms required them to pay what often equated to an annual interest rate exceeding 100% over a fiveyear term.

The Ciofolettis and Stospal both accepted Minnesota Life’s offer of rescission and return of premiums paid, but they have not signed any document waiving claims against any defendants, court documents say.

Their lawsuit seeks classaction status, a request that must be approved by the court.

Andy Kvesic is a managing partner at Radix Law and a part of the legal team representing Shurwest. Opposing attorneys representing the Ciofolettis and Stospal are “forum shopping” a proposed class action that was rejected by a Minnesota court, Kvesic said.

QUOTABLE Nearly half of life insurers reported premium gains in the first quarter, but the majority of the growth came from the top 10 carriers.

— John Carroll, senior vice president, head of insurance and annuities, LIMRA and LOMA.

WISCONSIN REGULATORS FIND A HOME FOR INSOLVENT TIME POLICIES

Wisconsin regulators are looking for anyone who purchased specific life insurance products and annuity contracts from the insolvent Time Insurance Co. In June, regulators filed a motion to approve an assumption agreement between Talcott Resolution Life and Annuity Insurance Company and Time, where Talcott will assume the life insurance policies and annuity contracts it reinsures as direct policies.

Talcott has reinsured this block of business since 2001, and many policyholders in this block have already regularly received communications from Talcott. Therefore, “this assumption is determined to be in the best interest of policyholders and cause the least disruption for the affected consumers,” Wisconsin officials said.

Talcott’s assumption of some of Time’s life insurance business and annuity contracts went into effect on July 1. Approximately 48,000 policyholders are covered by this block of business.

When employers were asked if they were considering adding

KNOW benefits in the next two years, 27% said they were very/

?

24

extremely likely to add insurance benefits.

InsuranceNewsNet Magazine » August 2022

Source: LIMRA Benefits and Employee Attitude Tracker

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— Tom Morgan, Vice President, Agencies

For information about a vested independent contract with Kansas City Life Insurance Company, call Tom Morgan, Vice President, Agencies, 855-277-2090, or visit www.LongevityTermKCL.com

LIFE

6 pitfalls to avoid in selling final expense life insurance Final expense is not an easy market, but avoiding these classic pitfalls will help you build a successful business.

By Joshua Jones

T

he insurance industry is vast and wide, but one of the easiest niches to pursue is final expense.

Leads are easy to come by, premiums are high, underwriting is simple, commissions are great and you get paid within days, but you are dealing with a different type of prospect on top of the difficulty of starting and successfully running your own business. There are many ways to get tripped up, but if you can avoid these six pitfalls, you will soar above the competition.

1. Plug into The Matrix and never pull a Neo

Final expense is one of those niches where you really need a system to plug into, a mentor to follow and a platform to replicate. Life insurance is built on a hierarchy for a reason.

You need an upline that has blazed the path before you. You should have scripts, 26

presentations, underwriting guides, objection rebuttals, etc.

The internet is awash with voices.

Coaches and gurus are clamoring for your attention. Use this lead, ask these questions in the home, but you need to block out all the other voices and focus on the system you’re plugged into and chug away.

2. Buy leads and invest the difference

That’s not quite what Dave Ramsey would say, but final expense is a very lead-driven business, so you must be able to cash flow your leads each week.

So before you pay your phone bill, before you shell out cash for your mortgage or even drop some coins on your car payment, make sure you have bought leads for

the week. Leads are the lifeblood of any business, but this is especially true for a final expense agent. Learning how to create a budget, giving every dollar a name and living below your means are skill sets that will make or break a final expense agent.

3. You control the clock, so you better punch it

While there’s no foreman making sure you’re clocking in for 40 hours, you better give your boss a pep talk if you’re slacking. Guess what? You’re the boss! People become insurance agents for all sorts of reasons, but the flexibility and freedom have to rank near the apex.

Learning how to create a budget, giving every dollar a name and living below your means are skill sets that will make or break a final expense agent.

InsuranceNewsNet Magazine » August 2022

6 PITFALLS TO AVOID IN SELLING FINAL EXPENSE LIFE So you have to be careful, or it will be easy for you to stay up late and hit the field even later. Maybe a grumpy prospect turns your head game into mush and you decide to go home early. This may sound elementary, but create a schedule and stick to it.

4. He doesn’t have two pennies to rub together

I’m sure you’ve heard to not judge a book by its cover. This is definitely true while navigating the shallow waters and cat-infested houses of the average final expense prospect. Sure, they don’t have a lot of money, and they’re probably renting the couch you’re sitting on, but they have you out there for a reason. They don’t want to leave that burden to their daughter when they pass away.

So make sure you’re showing them premiums that are high enough to cover their funeral. They’ve been around the block a time or two. They know this isn’t a free government handout. They’ll have to pay the piper so their kids don’t have to pass the plate. So show them $60, $80 and $100 options. You can always walk back, but you’ll never be able to go up. Their family will thank you, and so will your pocketbook.

5. To be or not to be, that is the question

Hamlet may be required reading in some schools, but your average final expense prospect hasn’t heard that soliloquy in decades. There are still some very important questions that need to be asked.

Why are you there? You have to uncover the need before you go into anything else.

Unless you’re cold door knocking, you got in that door because the prospect responded to some type of lead source.

There was something that pulled at their heartstrings when they read the advertisement. Most folks respond to the advertisement because they have absolutely no insurance and they just have to get something in place. Or maybe they have a little bit of insurance, but they know they need more. Or maybe they have all that taken care of, but they want to leave a little something for the kids, their church, a

charity, etc.

“Which one of those reasons is why you have me out here, Mrs. Mary?” Don’t move on until you get a clear and concise answer to this question. They will define their hot, button issue. Now you know what problem it is that you’re trying to solve. If you don’t get them to disclose this concern, you will hear the dreaded “I need to think about it” objection at the end.

6. All my bills are paid on the 15th of the month

Not this bill. Final expense prospects, by and large, are on Social Security or government-funded disability. The government can’t balance its budget, and it takes them years to do anything, but they always get seniors their money on time.

Seniors on Social Security or disability receive their monthly payments like clockwork on the same day each month. When you suggest they should have their payment come out on the third of the month, they might object. “Can we have it come out on the 5th? I just want to make sure the money is in there.” Simply put, they are telling you a tale. What they’re really saying is that they want to spend all their money first, and if they have money left over, they’ll pay their insurance bill for the month.

Don’t give them the option. Assume the sale. Tell them when the draft is coming out. If you don’t make it a big deal, it won’t be a big deal. If they object, hold the line.

If you don’t, expect that commission to chargeback next month.

Final expense prospects add a few new dimensions to insurance sales, but they are an underserved market.

Statistics show us that there will be 10,000 baby boomers retiring every day for the next 15 years. We are blessed with the opportunity to solve a major problem for our prospects.

Joshua Jones is a writer, speaker and coach.

He owns an insurance agency that mentors agents on how to grow and scale successful agencies. He may be contacted at joshua.jones@innfeedback.com.

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August 2022 » InsuranceNewsNet Magazine

27

DIGITAL MONTHLY F CUS Be sure to check out our

NEW MONTHLY FOCUS section, highlighted on our home-page.

The Monthly Focus topic for AUGUST 2022 is:

DIVERSITY

www.insurancenewsnet.com/ topics/monthly-focus For more information about sponsoring the monthly focus please contact a National Account Director. 717-441-9357

ANNUITYWIRES

Americans forced to work longer, use savings

The pandemic has many Americans dipping into retirement savings and extending their employment, according to the 22nd Annual Transamerica Retirement Survey.

The good news is that Has the coronavirus pandemic changed most Americans are Source: Transamerica when you expect to retire? (%) Retirement Survey saving for retirement, but the not-so-good news is that more than a third have had to dip into that money, the survey found.

“A concerning number are dipping into their retirement accounts by taking loans, hardship withdrawals, and/or early withdrawals,” according to the survey report. “Total household retirement savings is relatively low.”

Thirty-five percent of workers have taken a loan or an early withdrawal from their retirement accounts. Employed workers are more likely to have dipped into retirement savings, with 39% doing so, compared with 22% of self-employed and 21% of unemployed workers.

Financial hardship was one factor prompting retirement delay, mostly because of unemployment or large expenses during the pandemic. But people across the employment spectrum have rethought their retirement plans.

DOL ATTORNEYS DEFEND ADVICE RULE IN COURT BRIEF

Government attorneys asked a Florida federal judge to toss a lawsuit challenging the Department of Labor investment advice rule.

The rule took effect on Feb. 1 and the American Securities Association (ASA) sued in the Middle District of Florida.

The ASA lawsuit claims the DOL overstepped its bounds with guidance issued in April 2021.

The guidance indicates that first-time advice to transfer retirement assets out of a federally regulated plan can constitute fiduciary advice, which the rule subjects to a strict standard of care. Issued as a series of Frequently Asked Questions, the guidance essentially created new rules, DID YOU

KNOW

?

28

the ASA claimed in the lawsuit, which are required to go through a notice-and-comment period.

The government dismissed the argument in its response.

“However unclear Plaintiff’s injuries may be in this scenario, its proposed remedy of enjoining or setting aside two of the Department’s FAQs without challenging the underlying, substantive policy that those FAQs embody is downright bizarre,” the court brief said.

SECURE 2.0 PASSES KEY SENATE COMMITTEE

Congress made a quiet move recently that could help Americans shore up retirement savings. With a unanimous 28-0 vote the

Twenty-seven percent of seniors have less than $10K saved for retirement.

Source: The Sagewell Senior Certainty Index by Sagewell Financial

InsuranceNewsNet Magazine » August 2022

QUOTABLE Your clients, their children, the next generation of your clients, are being conditioned to buy through social networks themselves, not even going someplace else.

— Crystal Washington, technology strategist and futurist

U.S. Senate Finance Committee passed the Enhancing American Retirement Now (EARN) Act, which builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and is based in part on the Retirement Security and Savings Act of 2021.

If it meets final passage in both the House and the Senate, the bill would, among other things, encourage small businesses to adopt retirement plans, making it easier for part-time workers to participate in retirement plans, and provide workers and retirees the ability to save more and save longer.

The bill, which has been dubbed SECURE 2.0, also makes changes to allow more flexibility for emergencies, such as penalty-free withdrawals for terminally ill patients, domestic abuse survivors, and people affected by federally declared disasters.

ATHENE INKS THIRD GROUP ANNUITY DEAL WITH LOCKHEED MARTIN

Athene USA closed its third pension group annuity transaction with global security and aerospace leader Lockheed Martin.

Since its first transaction with Lockheed Martin in 2018, Athene has agreed to provide annuity benefits for over 40,000 Lockheed Martin plan participants, totaling $10 billion in pension obligations and related plan assets.

In the latest transaction, Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York agreed to assume $4.3 billion in pension obligations and related plan assets for approximately 13,600 participants of Lockheed Martin’s pension plan who are currently receiving benefits.

Sponsored Content

THE OUTSOURCED INSURANCE DESK: A TOOL FOR ACHIEVING BETTER CLIENT OUTCOMES In this interview, Jeff Waddington, national sales director at Protective, encourages you to consider an outsourced insurance desk and how it can help you better serve clients — especially as their needs evolve.

J

eff Waddington believes outsourced insurance desks (OIDs) are exactly what full-service advisors need to ensure their clients are protected for life. While Jeff Waddington, OIDs have been around for years, they are now becoming more important as distribution firms evolve to serve the needs of today’s advisors.

As securing income for life becomes increasingly important, advisors who provide comprehensive financial planning to their clients cannot overlook the need for insurance products in the portfolio. However, without the proper licenses or understanding of these products, providing clients this coverage might require advisors to refer business away from their firm.

That’s where the OID comes in. An outsourced insurance desk can give BGAs and IMOs a way to provide comprehensive advisors access to products and expertise on life insurance and annuities so they can more easily incorporate these much-needed solutions in their clients’ overall financial plans.

The national sales director at Protective, Waddington has worked with many BGAs and IMOs to design and establish their own OID to serve financial advisors in their networks while simultaneously achieving wider adoption of life insurance and annuity products in the advisory channel.

In this interview, Waddington explains what an OID is and how it can enhance an advisory practice and enable financial advisors to continue to meet the evolving needs of their clients.

What makes OIDs so important for today’s advisor?

As everyone knows, the insurance world is constantly evolving. It’s progressing demographically, and the regulatory environment is constantly changing. Many clients today are choosing to do business with true fee-based advisors, and they are looking for that arrangement for all their financial products and for their entire financial life. For an advisor acting in a fiduciary capacity, providing advice related to risk management products may lead to improved client outcomes. The OID gives the advisor the resources and expertise they need.

Now would probably be a good time to ask you to define an outsourced insurance desk, or OID, for those who are unaware.

An OID, at its core, allows an advisor to access products and expertise in the risk management or insurance world when appropriate for their clients.

This is important from the advisory perspective because in many cases, the fee-only advisor may not have the requisite license to provide insurance solutions or have these conversations with clients. The OID, with the expertise and proper license, can become the risk management arm of the advisory firm that advisors can leverage to benefit their clients.

Which insurance carriers are participating on this platform?

Not every product manufacturer is going to be represented in this marketplace. The key is whether the carrier has the technology infrastructure to manufacture a true fee-based product.

Some product manufacturers are using what I call the “direct OID,” which is the insurance company using its own licensed professionals to provide this service.

A “third-party OID” is also an option, which is what Protective currently utilizes. The advantage, in my opinion, is that it’s a purely independent firm. It’s not focused on one product or company.

You have a variety of “flavors” available to you that span the entire marketplace.

What products and services are available through an OID today?

The independent OID has a wide range of expertise that includes products but also concepts. They understand how best to use the products to generate ideal client outcomes. That could be with annuities; income planning; other insurance, such as using life insurance for estate planning; efficient tax planning with insurance products; providing for long-term care needs; and possibly more. The OID offers services that span multiple areas using insurance for risk management.

How do OIDs fit into Protective’s overarching mission to protect more people?

Ultimately, what we’re striving to do at Protective is give clients better outcomes regardless of market volatility, the cost of living a long life or any other factor that could pose a threat to the vision they have of their financial life. With an OID, advisors and their clients are being given the means to create better outcomes with access to risk management insurance products — for the right clients in the right situations in any stage of life.

Whether you’re talking about guaranteed income, a legacy plan, preparing for the cost of living longer or whatever else might be important in a client’s life, the name of the game is protection.

We’re always asking, what’s the best possible client outcome we can achieve? I believe OIDs play a part in finding the answer.•

Scan the QR code to see how you can tailor your clients’ financial plan to their unique retirement needs with Protective’s fee-based variable annuity.

Jeff Waddington is a registered representative of Investment Distributors, Inc., a Registered Broker/Dealer, member FINRA and wholly owned subsidiary of Protective Life Corporation.

Protective® is a registered trademark of Protective Life Insurance Company. The Protective trademarks logos and service marks are property of Protective Life Insurance Company and are protected by copyright, trademark, and/or other proprietary rights and laws.

Protective refers to Protective Life Insurance Company (PLICO) and its affiliates, including Protective Life and Annuity Insurance Company (PLAIC). PLICO, founded in 1907, is located in Nashville, TN, and is licensed in all states excluding New York. PLAIC is located in Birmingham, AL, and is licensed in New York. Product availability and features may vary by state. Each company is solely responsible for the financial obligations accruing under the products it issues. Product guarantees are backed by the financial strength and claims paying ability of the issuing company. Securities offered by Investment Distributors, Inc. (IDI) the principal underwriter for registered products issued by PLICO and PLAIC, its affiliates. IDI is located in Birmingham, Alabama. Insurance and Annuities are: Not a Deposit | Not Insured by any Federal Government Agency | Have no Bank or Credit Union Guarantee | Not FDIC/NCUA Insured | May Lose Value

ANNUITY

RILAs: One way to keep the ‘risk on’ in retirement A look at how registered indexlinked annuities are gaining interest as other investments carry higher risks.

100

80

Equity Allocation (%)

By David Blanchett

T

hese are difficult times for investors. So far in 2022, stocks and bonds are down, and inflation is up. While this may scare many investors away from investing in risky assets such as stocks, maintaining an exposure to the stock market can be essential for retirees who need to fund income for 30 years or more.

Registered index-linked annuities are one product that has gained an increasing amount of interest — and assets — among investors. Here is an introduction to RILAs, as well as an exploration of some of the differences in individuals who purchase RILAs both with and without a protected lifetime income benefit, or PLIB. This information is based on actual sales data from Prudential Financial, based on their FlexGuard and FlexGuard Income products.

Although RILAs aren’t technically all that new, as they’ve been available for about a decade, they are relatively new as annuities go. RILAs go by a variety of names such as structured annuities, indexed variable annuities or buffered annuities. Although these sound like very different things, the underlying strategy is generally very similar in that an insurance company uses financial options to gain a unique exposure to some type of market/ investment, typically using a “buffer” or a “floor” approach. Buffers are the most common option, where the first amount of loss is absorbed by the product, based on the buffer level, and the investor would suffer any loss beyond that point.

RILAs can be thought of as a riskier or next-generation version of fixed indexed annuities. With an FIA, the annuitant has virtually no downside risk — apart from 30

60

40

20

0

45

50

55

60

65

70

75

80

Age RILA

RILA + Lifetime Income

the insurer’s default or inability to honor its claims-paying commitments, which applies to pretty much any annuity — and relatively limited upside (called the “cap rate”). However, the upside potential of FIAs has declined significantly in recent years as interest rates have fallen, making FIAs less attractive to investors that want more upside potential.

Investors show interest in products with protected income

There is relatively little empirical research on individuals who purchase RILAs and how the RILAs are used. I was recently given access to historical sales data for Prudential’s FlexGuard RILA products, both the accumulation-focused version (called FlexGuard), which I simply refer to as a RILA, and one that has a protected lifetime income benefit (called FlexGuard Income), which I refer to as a RILA+PLIB. For this analysis, I focus only on the products sold since June 18, 2021,

Av erage Target-Date Fund

which is when FlexGuard Income (i.e., the RILA+PLIB) was first available. After applying various filters, the data set consists of over 15,000 policies.

Interestingly, the demographics for those in the RILA and RILA+PLIB contracts are relatively similar across dimensions such as annuitant gender, age, marital status, household income and total wealth.

The most notable difference was in premium size, where the RILA+PLIB annuitants tended be significantly higher (approximately $150,000 versus $100,000).

Additionally, the RILA+PLIB was more commonly purchased in qualified accounts (77% versus 64%).

The fact that wealth levels are similar for individuals who purchase RILAs, but the premiums are larger for the RILA+PLIB version, suggests that investors may be more willing to allocate higher portions of savings to products that offer protected lifetime income.

The risk of adding to the respective RILA to the portfolio had the equivalent risk of adding a simple equity allocation, as estimated.

InsuranceNewsNet Magazine » August 2022

RILAS: ONE WAY TO KEEP THE ‘RISK ON’ IN RETIREMENT ANNUITY

The equity-like risk of RILAs

One thing I was especially interested in exploring in the data set was how the allocation decisions varied across the two products (i.e., those with and without a PLIB).

Estimating the risk of RILAs is tricky, though, given how they are constructed.

In order to estimate the equity-like risk, I used a substitution analysis where I ran a simulation to determine the equity risk equivalent of adding that particular RILA strategy to a portfolio considering four different risk metrics (standard deviation, downside risk, value-at-risk and conditional value-at-risk) for each strategy. In other words, the risk of adding the respective RILA to the portfolio had the equivalent risk of adding a simple equity allocation, as estimated.

For the analysis, I focused entirely on those annuities that only use the available buffer strategies (i.e., aren’t also invested in other non-RILA options within the same contract). What I found is the equity allocations between the RILA and RILA+PLIB were quite similar, but the RILA+PLIB contracts tend to be allocated

slightly more conservative, with allocations that are about 5% lower, on average.

Note, this effect persists even if controlled for demographic attributes in an ordinary least squares regression.

What is perhaps more interesting, though, is not how the risk levels differ from each other, but how they differ when compared to other professionally managed portfolios, such as target-date mutual funds.

The exhibit on the previous page includes information about the average equity allocation for different age groups for the two different RILA products and the average equity allocation for U.S. target-date mutual funds, based on data obtained from Morningstar Direct.

Investors in the RILA tend to have the most aggressive portfolios, followed by the RILA+PLIB, followed by the target-date fund industry average. The risk differences at older ages are relatively startling. The average equity allocations are relatively similar for the youngest cohort, and relatively aggressive, but increasingly diverge at older ages. For example, at age 80, the average RILA

allocation is approximately 70% equities, versus 60% equities for the RILA+PILB, versus 37% for the average target-date fund.

RILAs allow more risk

While the optimal risk level varies based on each client situation, this analysis suggests RILAs may be an attractive way for investors to keep the “risk on” during retirement, to the extent they may not be willing to do in a more traditional portfolio.

Additionally, RILAs (or annuities in general) that offer protected lifetime income may be more attractive to retirees given the larger premium for those that provide the PLIB versus those that don’t, especially considering how similar the other demographic attributes were.

David Blanchett is research fellow, Alliance for Lifetime Income, and managing director and head of retirement research, PGIM DC Solutions. David may be contacted at david.blanchett@innfeedback.com.

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HEALTH/BENEFITSWIRES

QUOTABLE

100M Americans saddled with health care debt More than 100 million Americans,

including 41% of adults, carry some form of medical debt, according to a nationwide poll conducted by Kaiser Family Foundation. The poll showed not only do patients have bills they can’t afford, but they are borrowing borrowing money to pay medical bills as well.

In the past five years, more than half of U.S. adults report they’ve gone into debt because of medical or dental bills, the KFF poll found. A quarter of adults with health care debt owe more than $5,000. About 1 in 5 who have any amount of debt said they don’t expect to ever pay it off.

This debt is forcing families to cut back on food and other essentials, KFF said.

Millions are going into bankruptcy from medical debt and are in danger of losing their homes.

Debt from health care is nearly twice as common for adults under 30 as for those 65 and older, the KFF poll found. About 1 in 7 people with debt said they’ve been denied access to a hospital, doctor or other provider because of unpaid bills, according to the poll. Two-thirds of those with debt said they have put off care they or a family member need because of cost.

The top benefits cited by surveyed employees included: » Salary: 67% » Medical benefits: 32% » Work/life balance: 32% » Flexible work hours: 28% Source: LIMRA

EMPLOYEES SEEKING MORE WORK/LIFE BENEFITS

A recent LIMRA study focusing on employee benefits found an increasingly diverse workforce is seeking more robust work/life benefits in addition to salary.

With workplace benefits critical to employers’ efforts to attract and retain employees in today’s hot job market, the LIMRA Benefits and Employee Attitude Tracker study asked employees about the most important criteria they look for in a potential employer. Almost one-third (32%) said work/life balance was most important, while 28% said flexible work hours topped their wish list.

When employers were asked if they were considering adding benefits in the next two years, 22% said they were DID YOU

KNOW

?

32

very/extremely likely to add non-insurance benefits.

MEDICARE ADVANTAGE ENROLLEES SATISFIED BUT PRICE-SENSITIVE

Most enrollees who switched from Medigap to Medicare Advantage plans did so because Medigap was too expensive, according to a recent survey.

Almost nine in 10 enrollees were happy with their Medicare Advantage plan, with 88% indicating satisfaction and 86% willing to recommend it to others, according to an eHealth survey in late May. About 27 million Americans are enrolled in Medicare Advantage, or 45% of those eligible for Medicare, according to AHIP, which represents health insurers.

Medicare Advantage enrollees are particularly price-sensitive, with 73% saying they 7% 8%

24%

61%

How satisfied are you with Medicare Advantage compare to other forms of Medicare coverage you’ve had in the past?

More satisfied Equally satisfied Less satisfied I don’t know

If you’re an employer and you’re going to invest in benefits, you must be 100% sure you will get the return you are looking for.

— Tracey Watts, national leader for health care policy with Mercer

can afford only up to $50 monthly. That led many to switch from Medicare Supplement (Medigap) to Medicare Advantage, with 67% saying they did so because of cost.

2ND YEAR OF COVID-19 HURT HEALTH INSURERS’ EARNINGS

Despite the health insurance industry being on firm financial footing in 2021, the industry’s total underwriting gain of $23.9 billion represented a decline of 65% from the previous year, as a more normal level of activity impacted insurers. That’s according to an AM Best report.

Increasing COVID-19-related costs also dampened industry results. The report noted that pandemic-related expenses — including treatment, testing and vaccinations — led to claims costs that significantly exceeded projections across the industry.

Because of the mandate for insurers to cover COVID-19 testing, carriers had limited flexibility to direct members to testing locations with lower costs.

Non-COVID-19-related usage, which dropped sharply in 2020 for elective procedures and office visits, also bounced back from the lows of 2020, although it remained below historical levels.

Premium growth continued across the health industry, albeit with a modest decrease in the group segment. However, this was offset by expansion of individual business sold through the Affordable Care Act exchanges, which saw enrollment grow year over year by 2.5 million to 14.5 million.

2/3 of employers surveyed said they plan to enhance their workplace health and benefit offerings in 2023.

InsuranceNewsNet Magazine » August 2022

Source: Mercer

HEALTH/BENEFITS

How brokers can ease the pain of high health care costs Benefit brokers can be even more of a resource to their clients by offering other services that can help their clients reduce costs while improving employees’ quality of life.

By John Thornton

B

enefit plan sponsors know they can rely on their brokers for many insurance products and voluntary benefits. Brokers, however, also have an opportunity to be even more of a resource to their clients by offering other services that can help their clients reduce costs while improving employees’ quality of life.

From telehealth solutions and specialty drug management services to utilization management programs, these tools are the latest way insurance professionals are better meeting their clients’ needs and strengthening these relationships.

Gaining greater insight and information about these solutions and sharing that information with clients is essential to remaining competitive in today’s evolving market.

3 notable health care trends and developments

There’s little question that the pandemic changed some of the ways Americans receive health care. Telemedicine, in particular, has gained its footing. According to the Willis Towers Watson’s Healthcare Changes Ahead survey, only 2% of Americans had a telemedicine appointment in 2018. In 2021, McKinsey & Co. reported that telehealth use had increased by a factor of 38 times from its pre-COVID-19 levels. Further evidence of the growth of telehealth is the Kaiser Family Foundation 2021 Employer Health Benefits Survey’s finding that 96% of employers offered telemedicine as a benefit in 2021.

High-cost specialty drugs also are having an impact on the health care market.

34

The Centers for Medicare and Medicaid Services estimated that the cost of specialty drugs has been growing by 18% annually since 2014. Based on the AMS 2020 Specialty Drug Trends Report, these pharmaceuticals now consume 51% of total drug expenses in the U.S. despite being used by only 2% of the U.S. population.

Gaining control over spiraling specialty drug costs has become a top priority for plan sponsors. With this goal in mind, plan sponsors are turning to specialty drug cost management services, which are proving to deliver significant results.

Health care utilization management is another resource that has captured brokers’ attention. Health care providers have employed utilization management to reduce the number of preventable hospital readmissions in the past.

But today, plan sponsors — including businesses, unions, trust funds, ERISA plans, state programs and associations — recognize the value of utilization management in containing health care costs.

Not only is utilization management being used to reduce unnecessary health care usage, but also it can empower pharmacy managers with evidence-based, datadriven decision-making.

Focusing on these three areas can help brokers further establish themselves as true partners in managing their clients’ insurance and related health care costs.

Telehealth

Telehealth is now commonly practiced across the U.S. as consumer attitudes toward it have changed significantly since pre-pandemic days. During the pandemic when in-person medical appointments became less desirable, consumers who needed a doctor’s “visit” turned to telehealth. Those who were intimidated by the technology aspects or concerned with privacy and security risks soon realized that a telehealth appointment was a convenient and safe option.

Telehealth platforms have become

InsuranceNewsNet Magazine » August 2022

more advanced recently, and those advancements are winning further support for obtaining health care with this option.

We now have integrated telemedicine and nurse helpline platforms that reduce unnecessary emergency department, urgent care facility and physician office visits.

These platforms enable consumers who have nonemergency medical problems or questions to call into a dedicated tollfree line staffed by experienced registered nurses based in the U.S. The nurse conducts a virtual intake of the caller’s medical problem, recording all relevant information (e.g., contact information, symptoms, concerns). Next, the nurse updates the patient’s electronic health record with all this information and then triages the call.

Either the nurse assists the patient fully or transitions the call through the platform for the next level of support — a physician, specialist, patient health advocate or behavioral health professional.

The physician or other professional then takes over as needed and recommends an appropriate treatment plan.

The benefits of telehealth include the elimination of waiting times to speak with a professional as well as the convenience of 24/7 virtual access to an experienced health care professional.

In addition, with no member copays or coinsurance, telehealth can produce significant savings compared with the costs that are incurred with a visit to the hospital emergency room or an urgent care center. Considering that HealthRx has estimated that 75% of all doctor, ER and urgent care visits are either unnecessary or pose a risk for the patient, this benefit is especially worth noting.

Brokers looking to bring a telehealth solution to their clients should vet the offerings carefully because they are not all the same and can differ vastly in terms of a platform’s features and the experience of the professionals answering the calls.

With HealthCareIT reporting that the

HOW BROKERS CAN EASE THE PAIN OF HIGH HEALTH CARE COSTS HEALTH/BENEFITS

More firms offering telemedicine as part of their health plans

Source: KFF Employer Health Benefits Survey 2021

global telehealth market size is expected to grow to $638.38 billion over the period from 2021 to 2028 — a compound annual growth rate of 32.1% — adding a telehealth solution to your offerings makes good business sense.

Specialty drug cost management

Drugs designed to treat critical or chronic conditions such as cancer, arthritis, multiple sclerosis, Crohn’s disease, hemophilia, cystic fibrosis and psoriasis continue to rise in costs.

The Evernorth 2020 Drug Trend Report found that the cost of cancer drugs increased by an average of 7% in 2020 over 2019, which, given the high cost of these drugs, can be devastating to a health plan.

The average annual cost for specialty drugs, including many that treat cancer and various chronic conditions, is estimated at $85,000, according to AARP’s RxPrice Watch. For rare medical conditions, the annual costs for one claimant can be up to $250,000.

Pharmacy benefit administrative services is one resource that can help plan sponsors better manage high-cost

specialty drugs. These services give patients access to a national network of retail pharmacies that have mail order capabilities. When used in conjunction with a drug cost management service, which gives plan sponsors and their members access to alternate forms of funding for specialty drugs, plan sponsors can achieve significant savings. On average, a plan sponsor could see a 50% reduction in specialty drug spending.

Additionally, plan sponsors can lower or limit their stop loss liability. Tying the specialty drug cost management solutions with medical stop loss can be a good selling strategy.

Utilization management

Just as telehealth and specialty drug cost management solutions enable plan sponsors to reduce the health care costs, so too does a utilization management service. By assessing the appropriateness and medical necessity of patients’ treatment plans and use of different medical facilities, plan sponsors can benchmark for potential cost reductions.

From inpatient admissions and outpatient

visits to ER and home health care visits, utilization management applies evidence-based information relating to various protocols and treatments. Unnecessary services are identified, a patient’s progress is tracked, and resources are evaluated for their medical appropriateness.

Areas for improvements in a patient’s treatment plan are noted along with recommendations for services or treatments that are not needed. As a result, utilization management reduces health care spending and helps mitigate problems such as insurance coverage denials due to unproven treatments, contract exclusions or documentation errors.

By educating their clients about these resources, brokers can help plan sponsors achieve the optimum balance between lower health care costs and higher quality of care.

John Thornton is executive vice president, Amalgamated Life. He may be contacted at john.thornton@innfeedback.com.

August 2022 » InsuranceNewsNet Magazine

35

Financial facts and figures powered by AdvisorNews.com

Study examines 401(k) vs. IRA fees Workers who move their retirement funds into

IRAs hold more than $13 trillion in assets, most of which come from rollovers from employersponsored plans.

SOURCE: The Pew Charitable Trusts

mutual fund IRAs could get hit with significant unrealized fees that would shrink their savings, potentially impacting the quality of their golden years, according to a new study.

In what it said was first-of-its-kind research, The Pew Charitable Trusts highlighted major differences in mutual fund fees in 401(k) plans versus retail IRAs that could cost investors $45.5 billion over 25 years.

Workers typically lose access to their employer-sponsored 401(k) when they switch jobs or retire, rolling their savings into retail mutual fund IRAs. But in doing so they can lose thousands of dollars due to differences in fees.

In its report titled “Small Differences in Mutual Fund Fees Can Cut Billions From Americans’ Retirement Savings,” Pew said households rolled over more than $516 billion in assets in 2018. Higher fees on the mutual fund in the IRA would generate more than $980 million in additional fees in 1 year and a $45 billion reduction in savings over 25 years.

70% of retirees regret not saving more

Regrets, they have a few. About 70% of current retirees wish they had saved more or invested more earlier, according to a recent retirement survey by the Employee Benefit Research Institute. About half (53%) said they did not have a written financial plan or a strategy.

EBRI’s Retiree Reflections Survey also found that retirees believe they fared better when working with a financial advisor and/or having a financial plan.

When asked what they would have changed before retirement, some participants said they would have bought stocks instead of buying trendy clothes or shoes. Some also said they would have saved less for their children’s college education and more for retirement.

But not all reflections were about mistakes. Forty percent of participants said they would not have changed their past financial habits. And what did they think they did right? They took advantage of their

employer’s work-related savings plans and saved in their 401(k) or other matching plans, and some said they did start an IRA.

1 in 3 consumers has high trust in financial services

One in three consumers has high trust in financial services, with health care (42%) and education (37%) as the only service industries scoring higher.

That’s the word from The American College, which also found that three in five (60%) consumers prefer products and services that are easy to understand and use. Consumers’ preference for simplicity 36

InsuranceNewsNet Magazine » August 2022

I DON’T BLAME THEM...

54% of retirees said they are most worried about inflation.

SOURCE: EBRI

More millennials have financial advisors

Natixis Investment Managers surveyed millennials with minimum investable assets of $100,000, and uncovered some interesting findings. For example, 75% of U.S. millennials have a professional financial advisor — a higher percentage than either Gen X (67%) or baby boomers (70%).

Also, according to the survey, financial planning is the professional advice that millennials are the most interested in receiving, no doubt to

help them reach what 86% of them say are clear financial goals, including retiring at age 59. Millennials are diligent savers, putting aside 19% of their income for retirement, on average. And when it comes to making investments, 42% of millennials don’t trust algorithms or artificial intelligence.

When selecting investments, nearly half of millennials (48%) say risk is the most important factor they consider.

They assess risk in a variety of ways, but most commonly define it as market volatility. In fact, volatility ranks the highest on their list of investment concerns, according to the survey. Three-quarters (76%) understand that sudden market swings of 10% are a normal occurrence, and 67% also see it as an opportunity to grow their wealth. However, 60% see volatility as something that undermines their ability to reach financial goals.

outweighed other factors when deciding to use a financial company: fees associated with the product/service (58%), the level of risk (57%) or guarantees offered by the company (50%).

The study found as household income increases, so does trust in all service industries. Millennials have the highest levels

of trust in all types of financial companies (and higher levels of trust across all service industries compared to other generations).

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May 2020 » InsuranceNewsNet Magazine

37

ADVISORNEWS

How your client’s health impacts their wealth Younger generations of adults are less healthy than their parents — and that’s bad news for retirement. • Robert Pokorski

The average number of years a person can expect to live in “full health” without chronic disease or physical limitations is headed in the opposite direction for many people.

L

onger life. Greater well-being. Biohacks that slow aging.

Researchers and health care providers promise all of these advances and more.

But what’s usually not mentioned is that healthy life expectancy — the average number of years a person can expect to live in “full health” without chronic disease or physical limitations — is headed in the opposite direction for many people.

A recent study by the National Center for Biotechnology Information chronicled the number of multiple chronic conditions reported by people of different generations.

Those chronic conditions included heart disease, hypertension, stroke, diabetes, arthritis, lung disease, cancer, high depressive symptoms and cognitive impairment.

Adults ages 51 and older reported more chronic conditions earlier in life than did prior generations. For example, late baby boomers (born between 1960 and 1965) reported more chronic health problems than mid baby boomers (born between 1954 and 1959) reported at the same age. The mid-boomer group, in turn, reported more health problems than early baby boomers (both between 1948 and 1953) said they experienced at the same age. And the early baby boomers said they had more health problems than war babies (born between 1942 and 1947) reported at the same age.

This trend of more people reporting chronic diseases at the same age as the generation before extended back to the beginning of the 20th century. In essence, more people have more chronic health problems than their parents, and the number of health problems is increasing even more in younger people. There is a socioeconomic component to this trend — chronic disease is more common among disadvantaged

38

people — but there are tens of millions of middle- and upper-income adults who are less healthy than their parents.

How can this be, given improvements in medical care? Three reasons.

First, older adults in recent generations are more likely to have conditions that increase the risk of disease, such as obesity, inactivity, unhealthy diets and diabetes.

Second, screening tests identify diseases that would not have been detected in the past. Third, better medical care allows people with multiple medical conditions to live beyond the age when they would have died in the past, thereby increasing the number of chronic conditions among survivors.

have multiple chronic conditions. Here are some of the unexpected risks they face that can impact their retirement.

Unexpected challenges of good health

» Long-term care and dementia. Rather

Those who are in poor health face their own set of financial challenges. But people in good health face different retirement-planning challenges than those who

InsuranceNewsNet Magazine » August 2022

» Longevity risk. Healthy people generally live longer than those with multiple chronic conditions, which increases the risk that their nest egg may not sustain their desired retirement lifestyle.

» Health care costs. On average, annual out-of-pocket health care costs are higher for people with multiple chronic conditions, but a Health View Services report found cumulative costs are higher for healthy people because they live longer. than avoid these risks, retirees who are in good health often simply postpone these events to an older age when the likelihood of needing long-term care and developing dementia is much higher.

HOW YOUR CLIENT’S HEALTH IMPACTS THEIR WEALTH ADVISORNEWS

More people living longer with chronic illnesses Employing useful indicators can help financial professionals ensure that a client’s plan will cover their needs later in life.

Those factors include: • Current age. Younger people have a slightly higher overall life expectancy than older people.

• Gender. Women typically live about two to four years longer than men.

• Health conditions. Chronic conditions can significantly impact how long a person lives, as well as the quality of those years.

Average life expectancy for a 55-year-old, by gender and health status Health Status

Life Expectancy, Male

Life Expectancy, Female

Healthy (no conditions)

87

89

Type 2 Diabetes

77

80

Cardiovascular Disease

84

88

High Blood Pressure

86

88

High Cholesterol

84

87

Tobacco Use

80

83 Source: Health View Services

» Decline of financial ability. Financial ability begins to decline around age 60 and continues to decline for the remainder of a person’s life. A 70-year-old generally has less financial ability than a 60-year-old; 80-year-olds have less ability than 70-yearolds, and the decline is even greater in people who live into their 90s. This is true even for people who are well educated, who manage household finances and who are experienced investors. The result is that older people are frequently the victims of financial abuse and fraud, and they experience suboptimal financial outcomes in households that manage their own finances.

» Widowhood. The likelihood of widowhood is strongly related to age. By age 85 and older, one in three men and three in four women are widowed, according to the American Community Survey. The surviving spouse often has higher expenses, lower income and a higher likelihood of needing paid home care, assisted living or nursing home care because they no longer have a spousal caregiver.

» Financial challenges. Longer life increases exposure to decades of inflation, higher taxes, reduced spending on entitlement programs and unpredictable world

events that can disrupt financial markets and retirement planning.

Points of engagement

Here’s what this means for financial advisors and their clients.

» More people will live longer than

their parents. Some will spend relatively more years with multiple chronic conditions. Those who are in good health face different challenges due to their longevity.

» Some middle-aged people with mul-

tiple chronic conditions won’t be able to work until the normal retirement age, and working after retirement to supplement income may not be possible for some retirees.

» Health care costs will be higher for

many people at the extremes of good (higher cumulative costs) and poor (higher annual costs) health. This alone will increase the strain on retirement nest eggs, but the issue is compounded by underfunding of Medicare. Future retirees should plan on some combination of reduced benefits and greater cost shifting to beneficiaries, higher Medicare copayments, coinsurance and deductibles, an increase in the Medicare payroll tax (for

pre-retirees), and Medicare premium surcharges (income-related monthly adjusted amount) that affect more retirees.

» Retirees with multiple chronic con-

ditions may need long-term care at an earlier age because of the cumulative effect of decades of health problems. Healthy retirees may also need care because they live to an age when dementia and functional impairment are common. Much of this care will be paid for out of pocket because it will not qualify as “long-term care” since the degree of disability will be less than required by HIPAA criteria.

No matter what their health status is, clients must be made aware of all the risks that can endanger their retirement.

Advisors who help clients understand how their health can impact their retirement planning will set those clients up for success in the post-employment years.

Robert Pokorski, MD, MBA, is a consultant and public speaker with expertise in longevity, long-term care, and the decline of cognitive and financial ability at older ages. He may be contacted at robert.pokorski@ innfeedback.com.

August 2022 » InsuranceNewsNet Magazine

39

MULTILINEWIRES More Polices Mean More Lawsuits for Citizens

Florida’s Citizens Insurance deals with swelling lawsuits

Citizens had 883,333 policies as of the end of May, up from 609,805 policies a year earlier and 463,247 policies two years earlier.

SOURCE: Citizens Property Insurance Corp.

Florida’s state-sponsored Citizens Property Insurance Corp. will likely spend about $100 million on attorney fees this year to defend lawsuits, according to the News Service of Florida. And that figure is rising as the insurer continues to add policyholders.

The Citizens Board of Governors — in December, before the Legislature passed the new guidelines — approved $50 million for attorneys to deal with thousands of lawsuits covering disputed claims. A Citizens committee then asked for another $50 million — a request that was to be addressed at a July board meeting.

Meanwhile, legislators are working to ease the number of lawsuits filed against insurers over disputed claims. Insurers have cried out about excessive litigation by lawyers and fraudulent claims from roofers.

New legislation limits an attorney’s ability to charge double or triple their normal rates and eliminates automatic payments for attorneys assigned benefits under a lawsuit against insurers. Finally, it made it tougher for contractors to solicit homeowners to make an insurance claim.

STORM CLOUDS ARE GATHERING

The Pacific Ocean is going to be cooler than normal, thanks to La Niña, which will cause reduced wind shear in the Atlantic, which allows tropical storms and cyclones to develop and become stronger. SOURCE: Verisk

INSURERS BRACE FOR ACTIVE HURRICANE SEASON

Property and casualty insurers are bracing for another year of record losses from catastrophic hurricanes, tornadoes, wildfires, flooding and other natural disasters already unfolding.

Extreme events, in fact, are no longer rare, leaving insurers to ponder whether the losses can ever be stemmed or if the government can provide greater protection in both bracing for catastrophes and contributing financially.

In a recent online presentation for insurers, Verisk officials noted that last year was the sixth consecutive year with above-average numbers and intensity of hurricanes. And another is in the making.

“A number of agencies — government, private and public — that issue

QUOTABLE I’ve been on the bench for 10 years and handled a number of very difficult cases, and this was one of a kind.

— Miami-Dade Circuit Court Judge Michael Hanzman, while announcing the $1 billion 2021 Surfside, Fla. condo collapse settlement terms.

Taiwan and Thailand have now transferred to Chubb. Cigna and Chubb previously agreed to exclude Cigna’s interest in a joint venture in Turkey from the transaction.

seasonal forecasts for the North Atlantic … are predicting 18 to 19 named storms, eight hurricanes — four in a major category or above,” said Dr. Jeffrey Strong, an extreme event solutions scientist at Verisk.

CIGNA COMPLETES $5.4 BILLION DEAL WITH CHUBB

Cigna Corp., a global health services company, offloaded its life, accident and supplemental benefits businesses in six markets across Asia Pacific to Chubb in an approximately $5.4 billion transaction.

“We are proud of what our teams across Asia Pacific have achieved over the years to improve the well-being and peace of mind of our customers, and we know they will continue to thrive with Chubb,” said David M. Cordani, chairman and CEO of Cigna.

Cigna’s life, accident and supplemental benefits businesses in Hong Kong, Indonesia, Korea, New Zealand,

CALIFORNIA BILL WOULD REQUIRE GUN LIABILITY INSURANCE

California could become the first state in the country to require gun owners to be insured against the negligent or accidental use of their firearms.

“Guns kill more people than cars do,” Sen. Nancy Skinner (D-Berkeley) said in a statement. “Yet gun owners are not required to carry liability insurance like car owners must. Why should taxpayers, survivors, families, employers and communities bear the $280 billion annual cost of gun violence?”

The legislation follows a string of gun violence measures that the Legislature has treated with special urgency after the May school shooting in Uvalde, Texas. If the bill passes, it will require gun owners to carry coverage for losses from death, injury, property damage and other incidents.

DID YOU

KNOW The average price of homeowners insurance is up 34% in Idaho

?

40

in the past year, the largest percentage increase in the United States.

InsuranceNewsNet Magazine » August 2022

Source: QuoteWizard

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MULTILINE

Remodeling boom builds opportunities for agents Homeowners who are upgrading their properties must make sure their coverage is up to date, while contractors have their own set of needs that could use some help from an advisor.

78%

of residential contractors believe materials will be more expensive in 2022

Two-thirds

By Cathy Allocco and Sarah Jacobs

W

ith soaring home prices and shrinking inventory across the country, many Americans have opted to invest in remodeling their current homes rather than selling and buying new.

A new survey from Nationwide revealed multiline agents have opportunities to provide needed counsel to both homeowners planning or undergoing renovations and the residential contractors helping them with the work.

Nationwide’s latest Agency Forward survey revealed that 77% of homeowners currently updating their homes have future remodeling plans this year and 71% expect to proceed with those plans despite higher costs, delayed timelines and limited material availability brought on by today’s inflation and supply chain obstacles.

Meanwhile, half of the residential contractors serving homeowners’ renovation needs say it has been difficult to keep up. Most are making changes to their businesses to compete in today’s market, 42

(or more) worry it will be difficult to find materials in stock or the materials they order will be delayed

57%

expect difficulty recruiting new workers

SOURCE: Nationwide

including expanding their services for customers and taking steps to hire and retain workers.

Most homeowners don’t weigh insurance needs when updating their homes

Homeowners are largely focused on voluntary interior remodels aimed at repairing wear and tear, making their homes more enjoyable or refreshing something outdated. They’re also investing significantly in their remodels, but not to increase resale value down the line. In fact, four in 10 say they would not consider selling their homes at all after their projects are complete.

InsuranceNewsNet Magazine » August 2022

What is alarming to us is that the survey found few consumers consider whether their homeowners’ insurance policies include adequate limits to cover the upgrades should an accident occur.

This is a significant gap agents can help them address.

With inflation and supply chain disruptions driving up claims costs across the country, it’s important for agents to check in with homeowner clients to ensure their exciting remodel doesn’t turn into a future headache.

A few topics to emphasize during check-ins with homeowners:

REMODELING BOOM BUILDS OPPORTUNITIES FOR AGENTS MULTILINE

» Insurance needs and policy limits may

change when undergoing major home renovations. It’s important to have adequate coverage to account for upgrades.

» Potential insurance savings could be available for renovating the home’s roof, plumbing, heating, cooling or electrical systems.

6 in 10

homeowners have budgeted $5k or more for their home renovation projects, while 36% have budgeted $10k or more

70%

» As projects are completed, consider

leveraging smart home technologies, such as smoke and water leak sensors, to save on premiums and further protect from common and costly claims.

of homeowners say their homeowners’ insurance policy doesn’t account for the renovations they completed in 2021

» When planning for future projects, be

sure to screen contractors carefully to ensure they have insurance and the skills needed to do the work.

Insurance must keep pace with residential contractors

Since the pandemic began in 2020, 62% of residential contractors have seen increased demand for home renovation work and most have been hiring to keep up.

Many are already booked up well into the next year and the demand crunch has further strained an already reeling construction labor market. To help with attracting and retaining skilled workers, half of contractors say they’ve raised wages while a quarter would like to but can’t afford it.

Another 54% have also expanded the offerings their business provides to clients to meet demand where it’s headed. Of those who expanded their offerings, 42% hired new workers who specialize in those trades, and 35% trained current employees to do the work.

Most residential contractors also faced substantial stresses in 2021 like higher material costs, difficulty finding materials in stock, and delays in receiving materials needed to complete projects. And they expect even greater challenges this year.

As contractors fight to keep up with demand and remain competitive in today’s market, insurance agents can serve a critical role in making sure their insurance protection stays in lockstep with their business needs. Contractor clients could use your guidance on:

» Ensuring they have appropriate limits across all coverage lines as inflation drives

SOURCE: Nationwide

up the replacement cost of equipment and materials. Additional layers of coverage, such as that offered by an umbrella policy, can also help insured clients protect themselves against the impact of social inflation in claims situations.

» Keeping payroll information up to date

as they add more employees and grow. If clients experience substantial increases in payroll or employees, you can make a midterm adjustment to general liability and workers’ compensation lines to reduce the potential for a premium audit payment due.

» Considering inland marine coverage

to protect against costly losses that could occur when transporting or storing tools and equipment for projects. They may also benefit from an installation floater to cover project materials being stored while jobs are underway or being scheduled.

» Thoroughly vetting subcontractors to

make sure they have the proper insurance, proper licensing if it’s needed, and the experience to do the work appropriately.

Residential contractors also should have adequate risk transfer in place, especially if they don’t have a long-standing relationship with the subcontractors.

» Regularly checking in to help understand

and account for any new or evolving exposures their business and employees may be facing and risk mitigation measures to protect against them.

Optimism on the horizon

Despite economic obstacles in 2022, both homeowners and residential contractors are optimistic about their future projects.

Both homeowners and contractors expect to see continued supply chain and inflation troubles as they tackle renovation projects, but only 5% of homeowners say they’ll halt their projects as a result. Seven in 10 residential contractors are also optimistic about the 2022 season.

As home remodeling demand continues to create opportunities and challenges for customers, multiline agents can reinforce their value to personal lines and commercial lines insureds alike with proactive outreach and guidance to help them smoothly navigate their projects ahead.

Cathy Allocco is vice president of small commercial sales and distribution with Nationwide. Cathy may be contacted at cathy. allocco@innfeedback.com.

Sarah Jacobs is vice president of personal lines product development with Nationwide. Sarah may be contacted at sarah.jacobs@ innfeedback.com.

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August 2022 » InsuranceNewsNet Magazine

43

BUSINESS

Is your office adapting to the flex culture?

Success in a hybrid work culture requires a new structure and a new style of management.

By Sharon Emek

F

irst was the rapid restructuring of business and COVID-19 spreading across the globe.

Across all industries, organizations were reshaping how they conduct business. Nearly half of all American workers were working at home during the pandemic, according to a survey conducted by Northeastern University at the beginning of 2022.

More than two years after the onset of the pandemic, business is restructuring once again. However, the reasons why have shifted dramatically. That’s because employees are demanding it: A Prudential Pulse of the American Worker Survey revealed that 87% of workers who have been working remotely during the pandemic want that to continue at least one day a week. A surprising 68% would opt for a hybrid workplace model.

Particularly within the insurance industry, such news could become a competitive advantage when looking to fill open positions. Flexible work culture is a sought-after commodity among job seekers, and a recent McKinsey report stated that the finance and insurance sector has the highest potential for remote success since, as the report states, three-quarters of a worker’s time in that sector is spent on activities that can be done remotely without any disruption to productivity.

The successful flexible culture

With that kind of data as an incentive, agency managers and insurance organizations could well capitalize on the current shakeup brought on by the Great Resignation, which to date has resulted in 33 million people leaving their jobs. The finance and insurance industry needs to fill 313,000 openings, according to data from 44

the Bureau of Labor Statistics. Those same workers are looking for more meaningful work within a more flexible work model.

Yet “flexible” is not limited to where employees work. Remote and hybrid models are indeed part of the flexible work model, but so too is management of the new hybrid workforce. A complete retooling of how a workforce is managed is essential.

Success in a hybrid work culture isn’t measured within the standard 9-to-5 model.

Instead, success requires a new structure and a new style of management.

It could be a tough sell for many. But there is a simple solution: By measuring a worker’s performance on outcomes rather than hours worked, agency managers can ensure that benchmarks are met and that performance is not lagging.

By basing productivity measures on performance, your organization can quickly identify issues that individual employees may be having and can just as quickly set up mentoring or additional training or accommodations to help those employees improve results.

The payoff

Making the effort to adopt a better work and management style is a great move for the insurance industry. Flexible work arrangements make employees happy. Owl Labs research found that employees who work remotely at least once a month are 24% more likely to be happy and productive than their in-office counterparts. Likewise, 86% of workers say that working remotely reduces their stress, says FlexJobs data. An Owl Labs survey found that 84% of remote workers say they are happier, 79% say they feel less stressed, and 79% also say they feel more trusted and that their employer cares.

That has translated into higher productivity. In fact, a number of studies have shown a significant increase in productivity when workers are working remotely.

Stanford University research shows that employee performance increased by 22% when employees were able to work from

InsuranceNewsNet Magazine » August 2022

home. Employees are seeing it too — 90% of them report being at the same productivity level or higher working remotely when compared to in-office work, an Owl Labs study found.

If that’s not enough, here’s the real payoff: Offering flexible work attracts job seekers. A LinkedIn Global Talent Trends report found that organizations received 35% more engagement when a job posting mentioned flexibility. Companies have taken notice of what employees want, as well: Since 2019, there has been an 83% increase in job posts that mention flexibility.

For the insurance industry, that kind of data could help stanch the talent bleed.

Creating a flexible workforce

That makes the job of keeping some of those employees on the job and attracting new hires critical to the agency’s success. Agency managers must shift their thinking away from traditional management styles that are best suited to in-house staff and adopt new strategies that address the unique challenges remote workers face.

Employee management is no longer limited to the workplace. The successful organization attracts and retains employees by focusing on the entire work-life cycle. Issues to consider include establishing truly flexible work models and better productivity measures, as well as prioritizing employee mental well-being, stronger relationships and improved communication.

Ditch the 9-to-5

Do you really believe that requiring your employees to be at work for a set number of hours nets more productivity? When Microsoft Japan tested the idea of a fourday workweek, the company saw employee productivity boosted by 40%. The company’s sales-per-employee figures rose 39.9%.

An added bonus: Utility costs and printing costs dropped 23.1% and 58.7%, respectively.

Likewise, allowing your employees to work when they are most productive pays off in additional productivity. At WAHVE,

IS YOUR OFFICE ADAPTING TO THE FLEX CULTURE? BUSINESS

Financial services a good fit for remote work

inability to focus while at work, and 34% say financial pressures have caused absenteeism or tardiness in their employees.

Working with your employee to get them the resources they need — and giving them support — can help improve their well-being, which in turn will improve their performance at work.

delivering it? Do you require cameras to be turned on in your videoconferences?

Build a plan that details how you and your employees will communicate, how often you will check in, how you will measure performance and how you will resolve performance issues.

When you give performance-related feedback, follow up with your employee. Work with them to set goals or give them access to additional training or mentoring. A performance report without the tools for improvement nets nothing. Feedback should help your employees overcome issues.

That feedback should be a two-way communication. Employees should have the ability to alert you to problems, ideas or concerns easily. A clearly defined feedback loop — email, online suggestion box, even in weekly meetings — gives employees the ability to reach out instantly.

All of this additional communication means your agency management team must revamp its approach to employee engagement. Build a regular feedback loop into the workday. Check in with your employees every day in some way.

Acknowledge their performance milestones, their birthdays and other events. Be accessible. Ask if they need anything. Set their success as your goal.

A culture of relationships

Flexing forward

Source: McKinsey & Co.

our employees work at hours that best meet their needs. As long as the work is completed, the employees are free to make their own hours.

Measuring success

With the right productivity measurements, your organization can easily measure each employee’s performance. We recommend agency managers build a process that includes regular individual meetings with each employee. Those meetings should be used to help the employee set goals, to discuss productivity issues or challenges, and to talk about whatever is on their minds, including personal details such as financial pressures or upcoming milestones.

Keep a shared folder with your employee with notes on your discussions. Employees should be able to refer to the folder, which helps them check their progress. Should they feel they’re falling behind, encourage them to reach out.

The whole employee

That same advice applies to challenges your employee may be having in their personal life. As mentioned previously, your worker may have pressures on them that could disrupt their productivity. For example, an International Foundation of Employee Benefit Plans survey found that 76% of employers say an employee’s financial issues have resulted in increased stress, 60% say the issues have contributed to a worker’s

A focus on building collaborative teams is another investment that can improve your employees’ well-being. Start with weekly team meetings. In general, meetings should be short, have a stated purpose, and allow for feedback and issue discussion.

Let employees in charge of each department drive the meetings. Invite feedback.

Brainstorm to solve problems. Encourage team participation and idea sharing in all discussions across the organization.

A healthy work culture is one in which employees have fun together. Make sure to celebrate milestones, to reward achievements, to call out success. And even if your employees can’t meet in person, they can still meet for happy hour. Hold virtual parties, enjoy a cocktail hour together, and hold game events with prizes to make everyone feel connected.

Communication at the forefront

All of this involves an increased focus on communication. How are your employees getting job feedback? How are you

Today’s workforce model continues to evolve to meet employee and job seeker demands. With a heavy emphasis on flexibility and communication, the flex culture is an intentional approach that strengthens and improves your agency’s culture.

Dropping the traditional beliefs of how employees should be managed is fast becoming a necessity in order to compete in a red-hot labor market. Removing the boundaries of where employees work creates new challenges, but savvy organizations that embrace the new business model can build a healthy model for managing remote and hybrid workforces. It’s a move that can help agencies win the talent war, improve productivity and create a successful work culture that retains your best employees.

Sharon Emek, PhD, CIC, is founder and CEO of Work At Home Vintage Experts.

Sharon may be contacted at sharon.emek@innfeedback.com.

August 2022 » InsuranceNewsNet Magazine

45

INSIGHTS

The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.

Winning over the reluctant prospect The key is to make sure your clients understand what the policy is about, and why you’re recommending it.

By Brian Walsh

A

large part of our job is providing clients tailored product recommendations based on their needs and on market trends. However, the various complexities that go into more specific insurance policies — such as disability, critical illness or long-term care — can deter clients from purchasing them.

Although these policies are just as crucial as life insurance, many consider them an extra expense, which often makes clients reluctant to purchase them. By equipping clients with a personalized, in-depth understanding of the policies early in the purchasing process, you can help to win them over and ultimately set them up for long-term financial security.

Breaking it down

The key is to make sure your clients understand what the policy is about, and why you’re recommending it. When working with clients who have doubts about locking in certain insurance policies, try providing them with a precise, easily digestible definition of the policy first. For example, you could define long-term care insurance as the policy that aids further asset protection, as it is used to protect their other assets from being used up on longterm care costs.

Then share more in-depth background information about the policy they’re unsure about, and why you’re recommending it. Describing the policy in depth will shed light on what benefits and protections they can receive from it. Try making the information you provide engaging and relevant to their lives. The more they can connect the dots between their own lives and the policy you recommend, the 46

more they will understand the basis of your recommendation. Educating clients on the policy that you’re recommending will also reassure them that you’re making this recommendation on behalf of their best interests.

A good time to bring this up is when you first meet to discuss a financial plan, or during their annual review. For example, I always speak to my new clients about disability income insurance and longterm care insurance — and the importance of each with regard to their future.

Bringing these policies up during initial client meetings can help to showcase the relevance of the policy and why it’s urgent for them to consider it.

Making it relevant

The likelihood of needing certain policies can seem far off to many clients, especially to younger ones. It’s important to help your clients see that their future selves are more likely than not to need these policies. I like to showcase scenarios where disability insurance may be needed by reminding my clients that anyone who has an income they’re dependent upon is reliant on disability policies. You can help clients better visualize the situation by asking questions like, “Imagine if you had no money coming in — how would you pay for all your expenses?” This will make the gravity of the situation more apparent.

Another way to help clients relate the recommended policies to their needs is to walk them through past client examples.

Let’s say you had a client who acquired a disability at an early age but didn’t have the proper policies in place to support them after they could no longer work. Without a consistent stream of income, they potentially could be unable to afford their necessities. They would be reliant on a disability policy to support them, although they don’t have access to one.

Those lived experiences become a reality check for most clients. Offering a real-life example that they can relate to will help

InsuranceNewsNet Magazine » August 2022

them come to terms with what they may need in the future.

Stay up to date

Your clients rely on you to steer them in the right direction and provide them the most accurate recommendations. To give them the most accurate, beneficial advice, it’s important to stay up to date on all aspects of what you’re recommending and how it works. And to best help your clients navigate more complex policies, you should always educate yourself as best as you possibly can or lean on other experts within that area to help you.

One of the best resources I’ve found has been fellow professionals at MDRT. MDRT has connected me with fellow members who I can call and ask questions of to further my own understanding about evolving policies and meeting client needs. When you have a network to support you, and you take the time to learn as much as possible, you will strengthen your financial advice.

Keep in mind, after all is said and done, we provide these recommendations to our clients because we care about them and their financial security. Stand by your recommendations to provide your clients with best-in-class, tailor-made advice — even if they’re initially a little reluctant to pull the trigger on a policy. Reassure them that you know that this is the best plan for them long term, and that they’ll see the value of it later in life. This sense of security can help you cultivate more long-term, trusting relationships — and keep your clients secure for years to come, no matter what life throws at them.

Brian Walsh, CLU, ChFC, RFC, is the co-founder of Walsh & Nicholson Financial Group and has more than 29 years of experience in financial services. Brian is a 28-year MDRT member with nine Top of the Table qualifications. He may be contacted at brian.walsh@innfeedback.com.

INSIGHTS

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

Political advocacy doesn’t take a recess The annual legislative recess is a great time to connect with elected representatives on their home turf.

By Lawrence Holzberg

A

s insurance and financial professionals, it is important for us to advocate on behalf of our clients and communities. Laws and regulations have a profound impact on the financial success of the families and businesses we serve. Advocating for policies that help us help our clients is a crucial part of working in their best interests, just like recommending the right products and services.

Now that it is August, we have a great opportunity to amplify our profession’s grassroots advocacy voice and help build meaningful relationships with members of Congress. Our senators and representatives will spend much of this month on their annual legislative recess, also known as their “state work period.” It is when they return to their home districts and spend time meeting with local constituents.

Why meet with lawmakers in-district?

The common phrase, “All politics is local,” is true. When you meet your representative in-district, they recognize that you are a constituent, not just someone up on Capitol Hill walking in as a lobbyist. They understand that you are there to discuss matters that impact your clients, friends and neighbors, all of whom are also their local constituents.

Another important factor is that in-district meetings tend to be more relaxed than those on Capitol Hill. Lawmakers won’t be interrupted by committee meetings, legislative votes and other types of Hill business. They are home specifically for the purpose of meeting with people like us — the voters they serve. The

district offices are less hectic. You may get more face-to-face time with your senator or representative, which is important for building relationships.

In fact, on two occasions recently I went to meet with a lawmaker in our home district, and he said, “Let’s go grab a cup of coffee.” So we were able to discuss issues important to my clients and his constituents in a comfortable and informal setting. Meetings on that type of personal level are more meaningful and often have a greater impact. That’s when lawmakers start to see you not only as a constituent, but as someone they can rely on for advice and counsel. It becomes a much more personal relationship when you can do these things in-district.

Relationship-building is key

Meeting in-district is vital to building relationships, which in turn is important for increasing our influence. If you have met with a lawmaker in Washington, such as during NAIFA’s Congressional Conference or National Leadership Conference, meeting again during the recess shows you’re not just there for one day and that you’re building a relationship based on an ongoing concern for what we do for their constituents.

And building that relationship is vital.

It’s sort of like building a relationship with a client. They may not get the message the first time or the second time. But the third or fourth time you communicate with a lawmaker in a friendly way, they start to appreciate what you’re talking about. I am

a firm believer in driving our advocacy message home through repetition. Also, like working with our clients, it may take some time and repeated encounters to build up trust and comfort.

Take advantage of this opportunity

Meeting with your lawmaker in the district is easy. It might require just a short drive to the district office. NAIFA is helping agents and advisors set up in-district meetings during this recess and we have a goal of scheduling more than 300 in August. You can find more details on the NAIFA website, www.naifa.org.

For the sake of your business and for the sake of your clients, I encourage every financial professional to take advantage of this once-a-year opportunity. Our influence is crucial to the financial success of the families and businesses we serve, and there is no time like now to make our voices heard.

Lawrence Holzberg, LUTCF, LACP, is NAIFA’s national president. He may be contacted at lawrence. h o lzb e rg @ in nfe e d back.com.

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August 2022 » InsuranceNewsNet Magazine

47

More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

INSIGHTS

Automated underwriting eases the pain of applying for coverage Some life insurers are looking to speed up the accelerated underwriting process even more.

Goals of Accelerated/Automated Underwriting

By Kevin Tewksbury

I

t’s no surprise that traditional life insurance underwriting historically has been an unpleasant process for applicants. After filling out a life insurance application, prospective insurers often would require blood or urine testing, a step that many consumers might find invasive. After applicants put time and effort into the application process, it would often take a matter of weeks to render a decision on their policies. New advancements in automated and accelerated underwriting represent a golden opportunity for life insurers to flip the script and make their newest customers extremely happy.

In its most basic definition, “automated underwriting” is a tool or system that reduces underwriter involvement in the approval of insurance applications. On one end of the spectrum, it can simply support the traditional full underwriting process.

On the other end of the spectrum, it can be the foundation of an accelerated underwriting process.

“Accelerated underwriting” refers to programs that can either replace certain medical requirements (such as blood or urine testing) with alternative data sources, or just remove those requirements altogether.

One of the biggest benefits that comes with an automated or accelerated underwriting program is decreased turnaround time, the time between policy application and issue.

A recent LIMRA survey of life insurance found that the vast majority of insurers with automated underwriting programs were specifically aiming to reduce the amount of time it takes to issue a policy. A total of 82% of companies surveyed said they were able 48

Source: Automated and Accelerated Underwriting: Life Insurance Company Practices in 2021, LIMRA, 2022

to reduce turnaround time using automated or accelerated underwriting.

Life insurance companies often have the consumer in mind while developing their automated underwriting programs.

Four out of every five companies with automated systems have specific goals related to the purchasing experience of their applicants. They have seen quite a bit of success in meeting consumer expectations and increasing applicant satisfaction. Interestingly, those accomplishments have not necessarily guaranteed short-term success in meeting sales goals. That said, it is possible that the goodwill generated by increased customer satisfaction will have longer-term positive effects on sales growth.

Looking to the future, some life insurance writers are interested in implementing fully electronic processes. The goal of straight-through processing is to take up a policy application, aggregate all the relevant data, and issue the policy without any human intervention at all.

The speed of these types of applications can be dramatic. Some applicants can measure turnaround time on a stopwatch

InsuranceNewsNet Magazine » August 2022

rather than on a calendar. One out of every three companies already have a fully electronic process that requires no human touch, and more than half of life insurance companies are planning to implement straight-through processing sometime in the future.

Consumers are accustomed to receiving products on demand. Conveniences such as streaming services, two-day delivery and curbside pickup are the norm. In an industry where customers have historically waited days and weeks to determine whether a policy is right for them, some companies are differentiating themselves by offering products that can be sold within minutes. Shoppers are noticing the change and seem to appreciate the update. It will be interesting to follow the next great innovations in life insurance underwriting.

Kevin Tewksbury is assistant research actuary, LIMRA Research Data Services. Kevin may be contacted at kevin.tewksbury@innfeedback.com.

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