Yearly Archives: 2019

Entering A New Era For Life Insurance

When words like “innovation” and “technology” are the main points of discussion, life insurance isn’t usually the first topic that comes to mind. But as I look at the landscape for the life insurance industry in 2019, it’s these terms and their potential impact on our business that have me more excited than at any previous time in my 25 year career.

At Allianz Life Insurance Company of North America (Allianz Life), our focus on innovation within fixed index universal life (FIUL) insurance is helping us to meet client demands concerning flexibility, portfolio diversification and a desire to include insurance solutions in more holistic planning efforts. For too long, life insurance has been viewed as only a “protection” product, but the innovations available through FIUL products provide a number of compelling additional advantages customers are looking for, including accumulation potential, a level of protection from market losses and income-tax-free supplemental retirement income through policy loans and withdrawals.1

However, it’s the innovation behind the policies and implementation of new technology within the application process that has me excited about the future. As with many other areas of life, the entire insurance industry is moving toward a completely digital end-to-end experience and FIUL is no exception.

Innovations behind the policy
Customer-focused enhancements are being made in a number of areas, most notably electronic applications and submissions through our ApplyNOW system that both simplify and speed up the application process.

In the short time since we’ve implemented this digital processing system we’ve seen a number of benefits, including: A decrease in the amount of time needed to complete an application from 60 minutes by traditional mail to only 12 minutes online; a decrease in the application submission process from four-to-five business days to instantly via one click online; a reduction in incoming calls for status from an average of two calls per application to less than one call per application; and an increase in “good order” applications from 15 percent to 90 percent.2

The significant increase in “good order” applications is not only great for the financial professionals that work with us, it’s also great for the policyholder since it results in faster processing and quicker coverage.

Other technology-based enhancements the industry is embracing include electronic delivery of policies, which saves time for the policyholder, and also new digital tools that allow faster communication about any policy changes between agents and clients.

A better underwriting experience
Innovations related to accelerated underwriting are also having a significant impact on increasing customer satisfaction. With no exams or medical records required, customers can receive coverage much quicker and with none of the hassle/inconvenience associated with things like paramed exams, collection of labs/fluids, and Attending Physician’s Statements (APS).

As with ApplyNOW, customers are already seeing real benefits from these enhancements to the underwriting process. Under the old process with paper application/worksheet, full underwriting could take up to 33 days. With accelerated underwriting, that time has been greatly reduced to 12 days or less, and as little as three days in some cases (accelerated underwriting is subject to specific eligibility criteria). An easier process for insurers means a better overall experience for policyholders, which is crucial in order to meet the high level of consumer expectations that exist in the digital age.

The positive effect of InsurTech
Innovation within back-end operations of the life insurance industry is also carrying over to the bigger picture affecting the future of our business. Perhaps the most exciting thing happening in the life insurance industry today is the investment many insurers—including Allianz Life—are making in new ideas and new technology that have the potential to impact both the way we do business now and what the insurance industry of tomorrow may look like.

The InsurTech space has been blowing up in recent years, offering a fresh perspective on a variety of insurance and financial planning topics. Our Allianz Life Ventures team, which is a part of Allianz Life, is engaging with a number of these groups that are bringing a real sense of energy and excitement into the industry—taking innovative approaches to existing challenges and also helping to form how we approach our current lines of business.

For example, we’re investing in companies that are looking to streamline the traditional life insurance purchasing process in ways that can help people calculate their insurance needs, review products, and purchase an appropriate amount of coverage, all with minimum hassle. As we become more digital, Allianz Life has the opportunity to learn from these new business models and apply some of that knowledge to improve the FIUL experience for our customers.

Other companies we’re supporting are embracing app-based technology to offer their customers innovative new ways to purchase life insurance and combine that experience with other financial planning needs. This approach can teach traditional insurers a great deal about speed, flexibility and effective ways to combine products and services that consumers find compelling.

Beyond innovations within the life insurance space, we’re also working with companies that are building new ways for people to access financial planning help—and easier ways for financial professionals to connect with their clients. The efficiencies these businesses are working to develop within the financial planning landscape are not only good for the financial services industry, they are also inspiring to companies like Allianz Life as we determine the best ways to make our products and services more relevant to today’s consumers.

While “innovation” and “technology” may not always be top of mind in connection with life insurance, that dynamic is rapidly changing, bringing a world of possibilities to the future of our industry. As we listen to new ideas and embrace different ways of doing business, we enhance our ability to evolve and adapt to a constantly changing environment.

As Americans develop a better understanding of their need for protection and the many ways life insurance can help them achieve their financial goals, it’s crucial that insurers are able to connect with them when, and where people choose—and not only meet, but exceed consumer expectations throughout the entire process. [JW]

Allianz Life Insurance Company of North America offers insurance and annuities in all states except New York. In New York, products are issued by Allianz Life Insurance Company of New York.

Notes:

1. Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10% federal additional tax may be imposed. Tax laws are subject to change. You should consult a tax professional.
2. Internal statistics are from 4/1/2017 to 4/20/2018.

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”—Winston Churchill

Churchill’s quote could be seen as applying to our industry this year more than most. On one hand, we are facing a rapid onslaught of challenges that would make it easy to be pessimistic about the next few years—increased regulatory scrutiny, volatile equity markets, rising but still low interest rates leading to spread and margin compression, and changing consumer preferences led by the rise of online immediate shopping and instant gratification. On the other hand, it is easy to see these as opportunities for the right organization – those with scale, capital to invest in technology, innovative leadership to explore new markets, and the willingness to challenge the status quo. The first list is clearly for the pessimist —there is difficulty in every opportunity we seek. The second list is for the optimist who can see the opportunity to rise above the crowd because of these very challenges.

At Columbus Life, and through our parent organization Western & Southern Financial Group, our culture allows us to see the opportunities in the difficulty. First and foremost, our solid balance sheet, with a capital-to-asset ratio near the top of the industry, enables us to weather market volatility, invest in technologies of the future and look for strategic acquisitions to bolster our business. This is evident in our multi-year transformation plan that has resulted in multiple millions of dollars invested in back office technologies. Finally, it allows us to be diligent and early adopters of new regulations without significant business interruption.

Columbus Life has enjoyed another year of significant growth and success. In 2018, our life premium increased by more than 30 percent over the prior year and our policy volume increased over 15 percent, representing both a true underlying growth in unit volume as well as the attractiveness of our product offerings to larger sales. This caps a now six-year run of more than 22 percent life premium growth per year.

Of course, we have not been without our challenges. Market volatility and continued low interest rates tested our return rates in our industry-leading IUL product and margin compression required a reprice of our GUL portfolio. But we believe these challenges were prudent decisions with the long term in mind—decisions we believe will allow us to continue our more than century-long commitment to the life and annuity space and our independent distribution partners. In these tumultuous times where many companies have been forced to make tough decisions about which businesses to continue and which ones to exit, we believe prudent financial decision making will allow us to honor our long-term commitment to the marketplace and be a partner that distribution can count on.

But we know the future can’t just be about product design. To compete in the future—both with companies in our industry and with new potential entrants—we must recognize and face changing consumer demands. The “Amazon effect” has changed consumer preferences forever. We are all accustomed to finding and purchasing any product we want with only a few touches of a screen. Most often those products are then delivered to our doorstep in just a day and sometimes less (and sometimes at no delivery cost). Furthermore, consumers are accustomed to 24-hour real-time data regarding their products and service providers. When they purchase a product they expect immediate acknowledgment and real-time status updates.

For these reasons we continue to invest in sales cycle technologies—mobile apps that provide real-time data on the status of pending business, electronic application and policy delivery methods that make new business more efficient and faster, and accelerated underwriting programs that shorten the policy acquisition time. While adoption is just starting to really grow in these areas, we believe it is foundational to meet the needs of current and future consumers and the distribution that serves them.

We must also continue to develop new methods to reach underserved markets’ profitability. For years the industry has touted the opportunity that exists in the underserved middle market. The unspoken reality is that, while the marketplace is large and clearly underserved, the ability to serve the market profitably is a continual challenge. Distribution often finds the middle market a challenge due to the volume of policies needed to be sold to meet income targets. Carriers find it a challenge as the amount of advertising investment, direct-to-consumer infrastructure and underwriting efforts can be expensive in comparison to the average sale.
But this is again where opportunity knocks. Distribution partners are becoming more innovative at methods to reach this market. Direct-to-consumer efforts are progressing via insurtech efforts. But the speed and effectiveness of all of these efforts will need to increase if we want to truly penetrate the middle market.

For more than 110 years Columbus Life has been committed to independent distribution in the life and annuity space. We have a long tradition of helping our producers build their business and helping our clients preserve and protect the vitally important things they have worked so hard to build. We have also remained deeply committed to continuing our legacy of consistent, profitable financial performance and financial integrity.

As we look ahead to 2019 and beyond, we will continue to build upon our rich heritage while consistently investing in innovative technologies and exceptional experiences that make doing business with us faster, easier and more rewarding for all. [SS]

Columbus Life Insurance Company, Cincinnati, Ohio, is licensed in the District of Columbia and all states except New York.

Life insurance products are not bank products, are not a deposit, are not insured by the FDIC, nor any other federal entity, have no bank guarantee, and may lose value.

Deploying New Strategies to Address the New Market Paradigm

There has been a paradigm shift for insurance carriers closely tied to the nation’s changing demographics. We are seeing the once largest generation, the Baby Boomers, being replaced in size by the Millennials. They are becoming the largest sector of America’s workforce projected by Brookings Institution to comprise 75 percent of the global workforce by 2025. How carriers like Amalgamated Life Insurance Company, now in its 75th year, bring their products to market must also evolve. We are continuing to reach employers and their employees using a distribution model that includes broker partners and our own sales team. Our marketing and sales strategies are changing to reflect the new workforce and our goal is to more effectively bring our insurance solutions to underserved and emerging markets. These strategies reflect an understanding of the attitudes and needs that prevail within these sectors.

Attitudes and Latitudes
Enter a number of disparate workplaces and you are likely to see Baby Boomers (Born 1946-1964, 54-72 years old) ready to retire, alongside Generation X (1965-1980, 38-53) and the Millennials (1981-1996, 22-37), as now defined by the Pew Research Center. In speaking with members of each group, it is clear that they have different attitudes about life and insurance—which products are most meaningful to them, and how they want to purchase them. While Baby Boomers show a clear interest in critical care insurance, accident or disability insurance holds a higher interest among Generation X and Millennials. Whereas Baby Boomers may be more comfortable with receiving an in-person sales approach, the younger generations are less intimidated by online insurance purchases. That is unless they are presented with a better way, which we, at Amalgamated Life Insurance, believe is bringing insurance solutions right to them at the worksite and having knowledgeable product specialists on hand to answer questions and build the employees’ insurance literacy.

It is not lost on us that insurance sales have been growing slower in recent decades than years past. McKinsey & Company reported that the U.S. life insurance industry’s average annual growth over the past ten years has been less than two percent, despite the fact that there exists a large untapped market. Specifically, McKinsey cited that individuals in 57 percent of the estimated 68 million U.S. households do not own individual life insurance. Of those that do, many only have a basic group policy. The reason frequently given for not purchasing insurance is a lack of product understanding. This is not the only obstacle for carriers.

Mitigating Obstacles, Maximizing Opportunities
It is definitively more challenging to sell insurance today than it was in the preceding five decades. We now have different generational attitudes and digital technology disruptors (i.e., e-commerce sites, apps and data analytics presented in various social channels) to address. There are also some of the perennial obstacles that insurance marketers face such as a lack of understanding and misconceptions about cost. The recently released LIMRA Insurance Barometer 2018 found that 63 percent of consumers do not buy or do not buy more insurance because they perceive it to be too expensive. The same LIMRA report also found that 44 percent of Millennials overestimate the cost of life insurance by five times the actual cost. Uninformed cost perceptions also exist among the other generations. So what are we at Amalgamated Life doing about it? Our marketing strategies have made insurance literacy a top priority along with a distribution model that includes selling voluntary products at the worksite, expanding our voluntary product line, building our brand, and streamlining our processes.

Promote Insurance Literacy
To better educate consumers, we have developed communications, blogs and product literature that are written in more laymen’s terms, and which clearly convey a product’s features, terms and role in supporting their financial security. Our product sheets are easily accessed on our website which was redesigned this year to be more consumer and mobile friendly. In the near future, we plan to produce short educational product videos as another layer in our insurance literacy strategy. We market our voluntary products at the worksite where there is a product specialist on hand to explain the product and its value proposition. Our product sheets are also offered for employees to take home with them so they can discuss a product with their spouses or other family members.

Cater to the Underserved Middle Market and Emerging Markets
Like the industry as a whole, we have identified a large underserved middle market that consists of consumers with annual household incomes of above $75,000 and accumulated financial assets of no more than $150,000 (Ernst & Young), or the consumer segment with $100,000 to $250,000 in investable assets (McKinsey). These consumers are represented across many of the multi-employer, Taft-Hartley and single-employer customers we serve. The strategies we are deploying to build insurance literacy are designed for this group, perhaps more than any other category. Typically, the higher skilled and/or professional workers have accountants, insurance professionals, lawyers and, in the case of the highly compensated worker, financial advisors to help them navigate various insurance and financial instruments. The middle-market consumer does not. These consumers do, however, want financial protection and seek out insurance at critical life stages coinciding with such events as marriage, new home purchase, birth of a child, caretaking of a parent, and retirement. We recognize the middle market is not a “one-size fits all” category. There are multiple generations represented from 25-year-olds to early-to-mid-60s (pre-retirement), each having different financial goals. When bringing our voluntary products to the worksite, our product specialists are sensitive to what may be important to an individual based on their life stage and take a personalized approach.

There is also the largely untapped mass market of consumers with $25,000 to $100,000 in investable assets (McKinsey), an emerging market that also requires that we leverage life events that have been found to prompt a life insurance purchase (i.e., marriage and a new baby). By understanding the demographics in any given employer’s workforce, we can be prepared to tailor product presentations accordingly.

A primary strategy we have deployed is to create a comprehensive portfolio of voluntary benefits. This demonstrates to employers that we are a market-responsive carrier that continues to bring high demand employee benefits to their workforce. In addition to our accident, AD&D, critical illness, disability and whole life insurance, we have expanded our line with other voluntary benefits such as dental, hearing, ID theft and credit monitoring, and legal. In 2019 we will be adding a portable term life insurance. With our finger on the pulse of what the different generations, middle-market and mass-market consumers want, we are continually looking for the next product offering. Concurrently, we are building brand awareness with our primary distribution channel, brokers, through institutional advertising in key trade publications. By deploying all of these strategies with focus and discipline, we continue to grow our business while supporting the financial security and quality of life needs of more working people. [JT]

As we begin 2019, the outlook is decidedly more mixed than it was just a year ago. Whether you’re looking at the economic outlook, the regulatory landscape or the political climate, the headwinds have picked up and storm clouds are gathering on the horizon. But at OneAmerica®, we still see plenty of cause for optimism in the new year.

On the regulatory front, we came into 2018 with the DOL fiduciary rule in our rear-view mirror, but we’ve seen the best interest debate continue to evolve. Nationally, both the Securities and Exchange Commission and the National Association of Insurance Commissioners (NAIC) have proposed wise and manageable best interest rules. However, we’ve seen individual states take action to enact their own versions. In particular, New York has passed a regulation that many see as unworkable. Each regulation has different details, making a potential patchwork of best interest standards untenable for the industry. This will be a critical issue to watch in 2019.

In addition to the regulatory uncertainty, we enter 2019 with greater economic uncertainty, fueled by a number of factors ranging from global trade concerns to the U.S. Federal Reserve tightening monetary policy. While rising interest rates were mostly a “better news” story for the insurance industry in 2018, the recent flattening, and even inversion on the short end of the curve, have put a damper on economic indicators as we head into 2019.

It remains to be seen whether these hiccups turn into a chronic case of market heartburn in the new year, but we all know that bull markets don’t last forever. Has this one run its course? Only time will tell.

Despite this increased uncertainty, we remain optimistic at OneAmerica as we set our course for 2019. Why? The products and solutions we provide are built for just such an environment. As always, we remain committed to delivering stable, predictable, guaranteed solutions that stand the test of time.

ABLTC for the long-term
First and foremost, we are fully committed to our asset-based long term care (ABLTC) growth strategy and to maintaining and improving our industry-leading product portfolio. We’re coming off a year of double-digit growth in our ABLTC business, and we expect to realize substantial growth again in 2019 for both our Asset-Care and Annuity Care product lines.

We know 2019 will bring some changes to all life insurance products, including ABLTC, because of the 2017 CSO tables. While changes always require adjustment, we’re viewing them as an opportunity to enhance and streamline our product offering while maintaining our unique product features—including our patented joint solution and lifetime benefit offerings.

We’re also committed to maintaining strong product design and pricing discipline with a focus on the long-term nature of our products. With negative headlines continuing to emerge on standalone long term care blocks of business, it’s imperative to maintain the long-term integrity of ABLTC products so that consumers can continue to be confident in the financial security these products have to offer.

Expanding market
We’re also optimistic because it’s clear that more people than ever before are seeing the value of ABLTC. As more people become aware of ABLTC options, they’re recognizing the appeal of a death benefit if long term care benefits aren’t needed, as well as the guaranteed premiums and peace of mind that come with knowing that retirement income and lifestyle are protected from long term care expenses that might arise.

We’re also seeing ABLTC protection become attractive to a wider (and younger) audience than ever before, prompted by a wider range of payment options. As a recent Wall Street Journal article noted, 10-pay, 20-pay, or even lifetime pay options are broadening the market for ABLTC solutions beyond what was once considered a product for older, wealthy clients.

All this spells good news for financial professionals, too. In addition to the much-heralded Baby Boomer opportunity, the overall market for financial planning continues to grow. By 2020, nearly 140 million people will be 45+, up from an estimated 133.5 million in 2016.¹ As the population ages, the need for pre- and post-retirement planning does as well.

The uncertainty in the overall economic environment also presents increased opportunity. In an environment of increased volatility, people will be more inclined to seek stability and guarantees. ABLTC, as well as other “fixed” life insurance-based planning strategies, will once again become more attractive as uncertainty grows and more people understand the power of these solutions as part of their overall retirement strategy.

Last, but far from least, at OneAmerica we’ll continue to focus on improving our operations to support our growth through “people, process and technology.” Throughout our business we’re taking a deep dive into all our processes, looking for ways to go faster, improve quality, and perhaps most important, improve communication and service with each and every interaction. At every level of our organization we’re focusing on people—with more training, development and increased empowerment—so they can focus on and deliver a great customer experience with an “outside-in” perspective.

So, amidst the heightened uncertainty entering 2019 lies plenty of opportunity. As clients seek calm during the storm, the increasing awareness and appeal of ABLTC remains a growing opportunity to provide peace of mind to your clients and grow your practice. [DM]

OneAmerica® is the marketing name for the companies of OneAmerica. Products issued and underwritten by The State Life Insurance Company® (State Life), Indianapolis, IN, a OneAmerica company that offers the Care Solutions product suite. Asset Care form number: L301 and R501 and SA31. Annuity Care form number: SA35, SA34 and R508. Not available in all states or may vary by state. All guarantees are subject to the claims-paying ability of State Life.

Reference:
1. “Demographic Turning Points for the United States: Population Projections for 2020 to 2060,” U.S. Census Bureau, accessed Dec. 7, 2018, at https://www.census.gov/content/dam/Census/library/publications/2018/demo/P25_1144.pdf

The start of 2019 represents new opportunities and an increased focus on what we do best at Ohio National—create and deliver valuable protection benefits for our policyholders.

We have rounded out our recent five-year strategy, which led us to renew our focus on our historic strengths in life and disability income (DI) insurance. As we prepare for this coming year and beyond, our mission remains unchanged: To make a difference in the lives of our policyholders by providing financial security and independence today and for generations to come.

As a mutual company, the decisions we make are for the long-term best interest of all our policyholders. This is in perfect alignment with our field partners’ desire to partner with a company that will best help them meet their clients’ needs.

In addition to focusing on life and DI sales, we are also expanding our presence in Latin America and continuing to offer a diverse portfolio of investment products through ONESCO, our retail broker dealer. From a product offering perspective going forward, we made the decision to no longer sell retirement plans and annuities. We will continue to service and support our existing customers.

Life insurance will always be a primary product focus for us. It is the foundation that protects holistic financial plans and a hallmark for us. With 110 years of experience providing quality life insurance products, including term, whole life, universal life (UL) and indexed universal life (IUL), as well as one of the leading DI products in the industry for individuals and businesses, our value proposition is unique and will continue to attract new distribution partners to our company.
Our increased focus on life and DI will also enhance our organizational agility. Our strategy is strengthened by new leadership and an organizational structure that aligns and integrates all strategic operations—everything including recruiting and onboarding new distribution partners, sales and marketing, underwriting, policy issue, service and claims. Greater focus also increases our long-term financial flexibility to invest in growth opportunities to support our policyholders, customers, business partners, associates and communities in which we operate.

Looking ahead to 2019, I believe our future is bright. We’ll be delivering new whole life products and enhancements and updates to our already competitive DI offering and have continued focus on expanding our distribution channel. Our energy is revitalized in fulfilling our value proposition to our field partners, helping them achieve their business goals by supporting their diverse needs and business models.

What’s new for life and DI
Because all products have to be updated with the 2017 mortality table, we have taken that opportunity to review our whole life portfolio. This review includes the introduction of Prestige 20-Pay, a fifth whole life product, adding depth to our already competitive portfolio.

While offering lifelong protection, Prestige 20-Pay focuses on providing competitive long-term values through guaranteed cash value accumulation and strong dividend potential. This product is ideal for those looking for flexible ways to supplement their retirement income and a preferred loan feature helps policyholders maximize the policy’s potential cash flows.

We’ll also be announcing additional enhancements to our portfolio of whole life, UL and IUL products in the months ahead.

Our life insurance strength is also bolstered by our average face amount, which is one of the industry’s highest for life insurance at $676,976, and our average annual whole life premium, which is the highest in the industry at over $13,100 per policy.¹

We are also pleased to maintain the same dividend interest rate for participating whole life insurance policies for 2019. We estimate the dividend total will exceed $100 million, its highest level ever.

For DI, we continue to experience success with the Multi-Life Guaranteed Standard Issue (GSI) market, which is the fastest growing area of DI today according to LIMRA. Multi-Life GSI provides field partners the ability to quickly grow their client base and revenue. We expect the multi-life area to become 40 percent of our overall DI sales in the coming years.

We continue to find ways to provide operational efficiencies with a new online life/DI combo application that saves time and accounts for half of our applications submitted online today. We also are looking forward to our partnership with Disability.

Management Services, Inc., to manage our DI administrative and claims management services. This partnership will ensure our DI customers continue to receive the quality customer service they expect.

Latin America updates
Ohio National’s Latin America unit achieved several important milestones last year. Life sales grew 4.4 percent and total production rose 28 percent year-to-date through November, 2018.

Most notably, we launched our initial life product administration platform in Peru. The online illustrator gives field partners a tool that is at the forefront of the local market and allows Ohio National Peru to formally enter the individual life market. Future rollout phases of these systems will bring full automation to the finance and accounting platforms, in addition to the capability for mass consumer products.

Ohio National Peru also formally entered the Peruvian individual life market with our first issued UL policy, an important milestone for our local subsidiary. We are the only current U.S. individual life company with a presence there. We are committed to building the life portfolio to scale and sustainability in this important emerging market in Latin America.

Ohio National Chile has successfully bid to participate in the sixth installation of the national disability and survivorship program, where we expect to help protect millions of families. Ohio National Peru is also continuing its participation in its national SIS program, having successfully bid to stay on risk through year end 2020.

Distribution updates
Last year was one of considerable growth for our distribution footprint with the addition of 24 new builder general agencies (GAs), 375 career agents and 359 brokers in the career channel and more than 1,000 producing general agents (PGA). Many of these independent producers joined us because of our competitive IUL and DI products. We have consistently grown our distribution over the past five years in numbers of producers and builder general agents as well as paid and submitted premium.

We continue to find success by offering a wide variety of contracts to best fit a general agent’s business model and agency objectives. Very simply, we support the entrepreneurial approach of all our distribution partners—it’s their vision, their business, we’ll help.

This philosophy has been important in attracting female financial professionals. In 2018 a record number of more than 340 new female field partners joined our career and PGA distribution networks. I am also honored and excited to be Ohio National’s first female president.

While we’re certainly undertaking efforts to support and celebrate diversity—which is critical to the success of our business and industry—some of the most exciting developments are coming from the bold vision of our financial professionals as well as diverse leaders in our home office. This seems particularly true for our female field partners. For example, we launched a new women’s study group to share ideas and make connections and plan to offer more in 2019. We are also actively involved in other organizations supporting diversity such as Women in Financial Services and the Conference of African American Financial Professionals.

Ohio National continues to attract top industry producers as evidenced by our company MDRT ranking, which is #7 of U.S. companies.

Our individual life sales were also strong with our traditional agent distribution selling more than $110 million of new premium through November. 2018 also marked the first full year of Ohio National offering IUL. This product has been very well received by our field partners and we were very pleased to have exceeded our first year sales goal by 33 percent.

Ohio National also continues to break company records in DI. We’re excited by the continued growth of our DI sales, which was supported by the 2017 introduction of ContinuON Income Solutions II®. This new product grabbed the industry’s attention with an impressive balance of strong protection features, design flexibility and competitive pricing.

2018 also marked nine consecutive years of DI sales growth, including our life/DI combo sales. DI sales are up 18 percent over 2017 as of November, 2018.

Looking ahead, I’m very excited about the strategy we’re rolling out and our distinct value proposition. We continue to offer high quality products with the benefits and protection our customers need. We are here to help our field partners best achieve success and ensure that they are delivering value to their customers.

I am honored to be part of a company with such a strong vision and clear path for the future. [BT]

1. Reference: LIMRA 2018

It’s been nearly a year-and-half that I’ve had the privilege to lead National Western Life as its Senior Vice President and Chief Marketing Officer and I’ve come to one conclusion: Much progress has been made and yet there is much left to do. That is equally applicable to National Western Life and the industry at large.

2019 will be a year of opportunity for our company and distributors. National Western Life expects to be up to the challenge of maximizing that opportunity.

But before I share my carrier and industry forecast please allow me to share with you what National Western Life accomplished this past year:

• Had another record year in life sales spurred by our industry leading SPUL, Lifetime Returns Select.
• Introduced two market relevant fixed indexed annuities, the Dynamic and Revolution series.
• Expanded our presence in the financial institution channel in partnership with select distributors.
• Established a foreign national underwriting program (more on that later).
• Conducted several direct to agent/advisor events like NWL Now regional meetings, our Elite Producer and Marketer Forum and our Flash Calls online.
• Agreed in principal to acquire Ozark National Life, a venerable life insurance focused carrier to expand our periodic premium base.

And that leads to the forecast for 2019. It should be another very good year for sales growth of both annuities and life insurance for NWL and the industry. It all comes down to demographics. There are more and more people every day that need our products and services. Folks are retiring at record pace, creating an immense need for retirement products. The population at large is woefully under insured for life protection. We’re in a business where demand for our products and services has never been higher!

But here’s the demographic dilemma for carriers. While the need for our offerings is growing, the number of agents available to address the needs of consumers is declining!

So the focus of National Western Life will be to expand our “mindshare” and “premium share” among distributors and agents through outreach, relevant products, technology and service.

Outreach
We are committed to getting our message to every agent under contract. Our Sales Desk is making thousands of outbound calls a month. The external sales team is not only touching our distributors on a regular schedule but engaging downlines as well. NWL will be conducting roadshows across the country with special emphasis on California and Texas, two states where we have introduced new products. We will conduct another Elite Forum event in August in Chicago for leading advisors across the country.

Relevant Products
NWL expects our two new annuity product series, Dynamic and Revolution, to gain traction through 2019. We are working furiously to “fine tune” those products to offer the best possible accumulation, lifetime income and guarantees that we can. For the Financial Distribution Channel, expect a product specifically designed for it in 2019. To provide additional value to consumers, we’re close to introducing a bespoke index with broad appeal for upside potential with downside protection.

Life insurance will not be overlooked. We are retooling our portfolio to account for the 2017 Commissioners Standard Ordinary (CSO) Table for mortality improvements. Some products will be left behind but those that remain will be even better. Along with that we will be introducing a brand new fixed indexed universal life product, the NWL® Assurance Advantage, which promises to be a next generation FIUL with flexibility for protection and alternative retirement income.

Hand in hand with relevant products are additional markets. One of those markets to which we are fully committed is the foreign national market. National Western Life has a robust infrastructure for foreign national business due to our expertise in International markets. While we left the International marketplace in 2018, we will pursue many of those same customers but underwrite them here in the United States. We will establish a foothold in the middle market, often overlooked by other carriers, with easy-to-meet nexus requirements. Under the capable leadership of Dr. Carlos Martinez, NWL expects to make an impact here.

Technology
The pace here is dizzying but NWL is keeping its balance. We continue to upgrade our technology both internally and with the field. Two improvements that will be welcome—and help spur business—will be a comprehensive illustration system for annuities and an e-app platform from the same provider. This integration will allow straight-thru processing that promises to be In Good Order.
NWL also expects to allow for more consumer transactions to be done online and give agents more of the customer management tools they need to manage their business with us.

Service
Technology is essential for the “do-it-yourself” crowd and NWL always wants to provide that option. But our business still requires person-to-person interaction and to that end we have increased our staffing, especially in the call center, to reduce wait times to seconds to talk to a live person. Transaction processing has been given priority as well and dispersal of funds is well within industry standards.

NWL will also seek to give a one-of-a-kind agent experience with particular attention to speed-to-issue. E-app will certainly help here but the human element will be given significant attention too.

While opportunity abounds, challenges come hand-in-hand. Here are some considerations for industry observers:

Regulation
While many of us breathed a sigh of relief with the demise of the DOL Fiduciary Standard it did not take long for another regulatory threat to emerge—consideration by the National Association of Insurance Commissioners to introduce a Best Interest Standard to the Suitability in Annuity Transactions Model Regulation. National Western Life believes that Suitability, in its present form, has worked extremely well. We are also completely in favor of disclosure. But rewriting regulations that already work will place a burden on agents, distributors and carriers that ultimately becomes detrimental to consumers. Access to the skills of an insurance professional could be limited as agents leave the business due to the cost of compliance. No one wants to be counterproductive but the effect of these proposed changes could lead to that.

Pricing for Guarantees
Even for those entrenched in the fixed product realm, the variable annuity market has served as bell cow for our industry. Actions by some carriers to manage their annuity business with income and death benefit guarantees might serve as a cautionary tale. The moral is that sound actuarial practices, conservative investment philosophy and reasonable product features will serve you and your customers well. Those are practices employed by National Western Life to deliver upon the long term promise of our products.

Regardless of where the stock market is when you read this, 2019 could be a record breaking year for those of us in the retirement and life protection business. National Western Life is bullish on its prospects. I hope you are with yours. [RBW]

What’s Your Story?
When we speak with agents and agencies about their growth goals, the number is usually in the 10 to 20 percent range. Yet LIMRA projects that life insurance sales will grow by only two percent in 2018 and, through November 2018, MIB said that application activity was actually down 0.9 percent in 2018. In what is a slow growth industry by any measure, it is difficult to reconcile those expectations with the results that we are seeing, which begs the question: How do we get the growth that we need from a market that is barely growing at all? I think that we need to begin with the story that we tell.

For many years now, the stories that many in our industry have told sound remarkably similar. “Zero is your hero.” “Market upside with no market downside.” “Guaranteed death benefit for the cheapest guaranteed premium.” Make no mistake—those are good stories and they have value for the client and for agents, but when everyone is telling some version of the same story it’s hard to stand out. From a client’s perspective you sound like the three financial advisors that were there before you and the three that will follow you. The same applies to an agency trying to recruit agents. You probably do have a great marketing system and some of the best products in the marketplace, but so do the three agencies that called before you and so do the three that will call after you. It’s hard to differentiate yourself under those circumstances. It’s also hard to grow.

One way to stand out is to tell a different story. One way to tell a different story is to add different products to your offering as well. This is where Mutual Trust can help. We are The Whole Life Company and our competitive portfolio of participating whole life products brings a lot of new stories to tell.

“The first day is the worst day.” Whole life provides guaranteed cash value, guaranteed cash value growth and guaranteed death benefits. Those are contractual guarantees and not dependent upon interest rates or market returns or caps or participation rates. What your client sees in the policy is what they get. The only way it can change is if the company pays a dividend and then the policy changes for the better. For the client that uses the dividend to purchase paid up additions, that dividend increases the guaranteed cash value and the guaranteed death benefit. When’s the last time you saw a client’s policy increase on the guaranteed side of the ledger? With whole life, the first day of your policy is the worst day it will ever have. How many of the products that you currently offer can say the same thing?

“Instead of whole life or IUL, why not whole life and IUL?” There’s a quote that has been attributed to Aristotle: “Probable impossibilities are to be preferred to improbable possibilities.” This piece of advice was for writers and poets on how to elicit the very best emotional response from their audience. In short, reasonably believable stories are better than those that, while not impossible, are highly unlikely to happen. When put another way, the same concept can elicit a positive emotional response from many of our clients: The probable is preferred to the possible. These clients, who are looking for something that’s guaranteed (the probable), have instead been presented only “market upside with no market downside” or “zero is your hero,” as if those are contractual guarantees and there is only a binary choice to be made. When you use both whole life and IUL, you have a plan that grows when the market is down (whole life guarantees) and a plan that can take advantage when the market is up (IUL returns).

“Are you 100 percent sure that you’re going to have a great retirement, or do you have some doubt?” There is no shortage of retirement savings and distribution options in our market. Many are excellent and provide value to our clients, but most have one thing in common: They do nothing to address one of the biggest obstacles to all retirement savings plans—debt. Do you have clients or agents that would be interested in a program that helps clients tackle their debt, that significantly decreases the amount of interest that they pay and that captures the interest they do pay to make it work for them? We have a program and a product that will help your agents and your clients do just that.

“The Power of Renewals.” Many of the most successful agents in our business got into the business because of the possibility of ongoing income from their renewal streams. However, many agents today are earning renewals of less than two percent on much of the business that they write. If the client pays a premium every year, shouldn’t the agent earn a respectable commission every year as well? Our answer is yes. With products like Horizon Guarantee and Horizon Blend, our newest addition, we provide price-competitive alternatives to the guaranteed UL products in the market, with the additional flexibility that guaranteed cash value growth provides and a renewal commission that far exceeds what most guaranteed UL products pay.

According to LIMRA, whole life was 37 percent of the life insurance market in 2017 and is projected to have the highest annualized premium sales in 2018 and 2019. At Mutual Trust, we see a lot of opportunity in 2019. As it has been for well over 100 years, our focus will continue to be on participating whole life—the guaranteed benefits and the guaranteed growth it provides to clients. We will continue to share the whole life story and the opportunities for growth that it offers for agents and agencies. What will your story be? If you’re looking for something new, and if whole life isn’t a significant part of your production, take a new look at an old friend and let the team at Mutual Trust help you write a new story in 2019. [LC]