At American National (ANICO), 2013 was a great year. Based on published results through the end of the third quarter, ANICO experienced a 37 percent aggregate growth in recurring life premium. The brokerage division alone experienced a 270 percent growth in recurring life premium for the same time period in 2013. We owe a great deal of this success to focusing our efforts on those individual marketing organizations (IMOs) and a select few national marketing organizations (NMOs) which understand the ANICO value proposition and want to be a partner with ANICO.
For 2014, ANICO will continue to focus on building partnership relationships with IMOs and a few NMOs. The reason we continue to focus on IMOs and not brokerage general agencies (BGAs) is the typical BGA offers little value other than access to multiple insurance company product rates through spreadsheets, while a true IMO deploys a forward-looking value proposition that offers independent agents sales ideas, education and access to markets or market access strategies. The value of being able to spreadsheet a sale will continue to be diminished as virtually every agency on the face of the earth has a similar stable of insurance companies in their portfolio. Few NMOs offer value propositions to their members such as sales ideas, education and market access strategies. Many are simply commission aggregation clubs which increase insurance company expenses, reduce margins and bring little more than additional bonus compensation to its members.
In addition to the continued focus on IMOs and NMOs, ANICO will continue the process of reducing the total number of top level contracts across the country, thereby increasing the value of having an ANICO contract. ANICO is not a fit for everyone, but those agencies that understand our value proposition are being rewarded with a partner who truly understands what it takes to grow their businesses.
On the product front, the news will continue to be dominated by indexed universal life (IUL) sales. Advisors cannot ignore this product going forward due to the sales momentum over the last several years and continuing tough market conditions for fixed rate products.
ANICO will continue to focus on a simple, easy to understand, easy to present product design with minor competitive modifications in 2014. The combination of IUL and accelerated benefit riders (ABRs) makes good financial sense for many consumers. ANICO has had ABRs on all of its life products, including term, for more than two years, and you should expect to see those insurance companies without ABRs to begin adding them to their products in 2014.
The challenge to anyone offering ABRs from multiple insurance companies is understanding the vast differences between the riders from insurer to insurer. A chronic illness rider with one insurance company can be vastly different from the chronic illness rider with another insurance company. It is important to pay special attention to the fine print regarding the true benefits of ABRs from each insurance company. Many ABRs are very restrictive in their application, access and amount available to the consumer.
Speaking of ABRs, it looks like the debacle in California is not over. As many of you know, California has allowed only a handful of insurance companies to have ABRs approved for sale, while declining access to the majority of insurance companies wanting to add ABRs to their products.
The ACLI has done an excellent job of pushing through a new bill that should allow all insurance companies to add ABRs to their products while complying with California DOI’s requirements. After all, allowing additional insurance companies to offer ABRs to California consumers is what is in the best interest of California consumers. As I am preparing this article, the word on the street is that California has backtracked in allowing the admission of new ABRs for all carriers and will favor those few carriers that were already approved. If this is true, this will penalize the consumers in California by continuing to limit a consumer’s choice as to insurance company and coverage options. We can only hope California will move forward with allowing their consumers a choice.
One industry dilemma is the shrinking advisor population, which will continue to have a negative impact on agencies and insurance companies alike. During the last NAILBA convention in Dallas, there were many side meetings regarding recruiting the next generation of advisors.
A working group of several insurance executives was established at the LIMRA brokerage committee meeting while at NAILBA. I am honored to represent ANICO on this work group. We hope to develop and implement strategies that will begin the process of stabilizing the number of advisors in our industry. The working group will begin brainstorming in January 2014 and will work closely with the NAILBA task force assigned to this issue. It is clear that the industry does not have a comprehensive answer at this time for solving the shrinking number of advisors dilemma.
Along the same lines is a huge concern regarding successor ownership for independent agencies. This is on the minds of every insurance company that is in independent distribution. Many NAILBA members have no successor ownership in place and are looking for ways to transition into retirement over the next five years. I am thrilled to see that NAILBA has established a “next generation” group to share ideas and strategies for successful agency succession. Congratulations to NAILBA for continuing to tackle the tough issues facing our industry.
Last, I hope you have one more space left for a 2014 New Year’s resolution. That would be to make more money by bringing your clients and prospective clients quality products and innovative solutions from ANICO. Whether it is our ART term product, which can be converted to a 20-year level term (both with ABRs—except California); our simple-to-present IUL, a simplified issue opportunity for as few as five lives; or our retirement plan review program for updating existing 401(k) plans in the small business owner market. Hopefully you will experience the value-added relationships, product and sales concepts available to you from ANICO in 2014.
Everyone at American National Insurance Company wishes you the best year ever in 2014. Let us know how we can help make your resolutions come true. [CWK]
