Stephen Howard

I  believe there is a divine purpose in the work you do (and hopefully we facilitate). James 1:27 states that “Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress…” That happens to be my faith, but similar instruction runs through many of the religions of the world, and many who eschew organized religious institutions still embrace this as a moral ideal. I believe there is nowhere else in business that this is accomplished better than in the life insurance industry.

In the past, the biggest “PR” obstacle to overcome seemed to be the tenaciousness of the life insurance salesman-being trapped in an elevator with one portrayed as a thing of mock horror. Today our industry seems under attack as a greedy, uncaring, elite club benefiting only a rich and powerful clientele. Sound bites from the administration and many elected officials either subtly or directly seem bent on swaying public opinion to an “us against them” perception of the insurance industry-particularly evident most recently in the PR battle surrounding the Affordable Care Act. Although I have my own bias and set of fears surrounding Obamacare and its potential mutant offspring, relevant to this particular rant is the fact that party line pontificating most often sounds something like “We are no longer going to let your insurance company…”followed by whatever litany of perceived sins seems most appropriate for the mob they are seeking to inflame. Seldom if ever is the word “health” inserted immediately preceding “insurance company.” While I just as strongly object to the demonization of health insurers, my point here is that there is a trickle down (perhaps “torrent” would be more apropos!) to all forms of insurance, life insurance included.

Underlying this vulnerability is what I consider objectionable anti-capitalist dogma and a host of damaging suppositions becoming more widely treated as truths. Predominately that profit is inherently evil, rather than the fuel by which goods and services are able to be delivered. The natural extension of this is that those who have more are evil, jealously hoarding wealth while callously ignoring the needs of the less fortunate, rather than those who have worked hard, innovated, and justly deserve the fruit of their labors for their own use and to improve the lives of their heirs.

I harbor little delusion that my philosophy is fraught with its own set of inconsistencies, ignorance and faulty premises, but the question I pose is how do we as an industry combat what amounts to class warfare and reinforce the core benefit that only life insurance can provide: help to families in need due to the premature loss of a primary breadwinner. I’ll bet many if not most of you have had the bittersweet privilege of delivering a death claim to a grieving widow (or helping someone who’s become disabled or requires long term care file claims and receive those benefits). Few if any of those recipients view those policies as unnecessary, ill-advised or naively helping to feed a predatory, monolithic institution. But despite the best efforts of the Life Happens organization and others using real life examples of the benefits of insurance to sway the public to action for the benefit of their families and to change public opinion about life insurance (and disability income), these voices pale in comparison to the reach of ill-considered phrases broadcast on virtually all mainstream media outlets.

Every dollar that can be sent to Life Happens directly helps (www.lifehappens.org). But what else? On the company side, a shift back to consumer advertising focused on serving families in times of crisis rather than wealth accumulation and retirement security couldn’t hurt. What about you and your practice? Do you seek out middle and lower income individuals to help them protect their families from need and see their wishes for their children’s futures realized?

You have a responsibility to feed your own family and the right, I believe, to grow a legacy through hard work and dedication to service for your clients. Policies for the less affluent yield lower commissions, naturally, and the time commitment to see them through from prospect to application to issue is time that invariably could be spent more profitably. Some wholesalers have term platforms for agents that can help with these concerns, our friends at Broker’s Service Marketing Group and their tioTERM platform, to name just one. Those working diligently in worksite sales impact a great number of these less affluent consumers. But these things aside, the more pressing question is: Do you as a life insurance professional have a responsibility to seek out these prospects and work to find them coverage?

In contrast to the picture I believe many would paint of our industry and those working in it, I have found most agents, wholesalers and carriers I have come in contact with to be very generous in their support of a variety of charitable causes. I just returned from the BSMG charity golf tournament where their carriers, staff and agents raise an average of $70,000 per year to divide among several local charities in the Providence, Rhode Island area. I’m confident many of you are not slow in showing monetary support and likely volunteer time for causes you embrace. Many may tithe to your faith-based organizations to support the good work they do. Some churches and religious institutions have found that technological solutions, like Tithe.ly, have made it easier for their congregations to support them monetarily.

Let me float this as a way you can, one prospect and family at a time, both change the perception of our industry and fulfill the divine purpose of the protection life insurance offers: Tithe your time to reach those less-than-affluent families and help them find the protection life insurance offers. [SPH]

How do you tell when a government official who is pontifi­cating about the ACA is lying? His lips are moving.

The Centers for Disease Control and Prevention’s (CDC) National Center for Health Statistics, reporting data from the 2013 National Health Interview Survey, indicated that through the first nine months of 2013, 45 million people were uninsured at the time of the interview, 56 million had been uninsured at least part of the year prior to the interview, and 33.7 million had been uninsured for more than a year at the time of the interview. Figures for adults aged 18-64 over the same period were 20.5 percent uninsured at the time of the interview, 16.5 percent had public health plan coverage, and 64.4 percent had private health insurance coverage. Yes, the percentages add up to more than 100, but any rambling that involves “Mystics with Statistics” needs to start somewhere.

So where does the number of uninsured Americans sit now after the ACA enrollment period? Whitehouse.gov claims that “over 7 million people have signed up for private health coverage”—presumably through the Health Insurance Marketplace. Gallup says that the percentage of uninsured declined from 18 percent in fall 2013 to 15.9 percent through the first two months of 2014. The Rand Corporation estimates a decline from 20.9 percent last fall to 16.6 percent as of March 22—but those numbers reflect only those aged 18-64. Rand suggests that there has been a net gain of 9.3 million American adults with health insurance coverage from September 2013 to mid-March 2014. In their analysis they postulate that of the 40.7 million uninsured, 14.5 million gained coverage, while 5.2 million of the insured lost coverage. Their 9.3 million number represents not only people who enrolled in marketplace plans, but also gains in employer-sponsored insurance (ESI) and Medicaid expansion. They estimate that enrollment in ESI increased by 8.2 million; Medicaid enrollment increased by 5.9 million; and 3.9 million were covered through the state and federal marketplaces, but this last figure does not fully capture the enrollment surge that occurred in late March. Admittedly I can be about as sharp as salad tongs when it comes to assimilating numerical data beyond the scope of my fingers and toes, but there seems to be no way to achieve a clear picture of the actual number of the previously uninsured now finding coverage due to the ACA—a number to which taxpaying Americans should be privy absent the misdirection foisted upon them by their elected officials.

The Rand estimates were extrapolated from a small survey—2,425 adults between the ages of 18 and 64 who responded to both the September 2013 and March 2014 surveys—to the entire United States population, and they admit a margin of error for the newly insured of 3.5 million people. But at least one conclusion that they draw seems quite supportable—the ACA has led to a substantial increase in insurance coverage, not only from new enrollment in the marketplaces, but also from new enrollment in ESI and Medicaid.

That many Americans are being helped is undeniable. The elimination of pre-existing condition denials as well as elimination of lifetime and annual dollar limits stand out immediately. That many will see a substantial improvement in their quality of care seems likely. But in my view, also likely is that the ACA is flawed and unsustainable as it stands without incurring monstrous cost.

As important in this forum is the question of how agents working in the health insurance industry are to find a role that enables them to continue to serve clients valuably and find a way to thrive financially. Diversifying your practice with new markets and products; helping employers work through all plan options both in and outside the exchanges, combined with more in-depth fact-finding about owner and employee coverage gaps in other areas; and voluntary product offerings and wellness programs to increase the appeal of benefits packages seem to be a few of the service-oriented directions most frequently discussed.

Broker World would like to formally thank monthly columnist Jack Marrion and Jeremy Alexander of Beacon Research for their invaluable work in putting together this year’s Fixed Annuity Marketing Analysis. Beacon Research was founded in 1997 by Alexander and sets the industry standard in quality annuity data. They started the industry’s first and only quarterly study to track and analyze fixed annuity sales at the product level, as well as the first credited rate benchmark series, and now include indexed and variable annuities in their database. Beacon offers a suite of products including: AnnuityNexus Market Intelligence—a fixed product and interest rate research, reporting and support tool designed for annuity issuers; AnnuityNexus Sales Support—a fixed annuity support tool created to help wholesalers compare products; the Fixed Annuity Premium Study—fixed annuity industry, company and product-level sales reports and analytical tools; and Variable AnnuityNexus—with variable product profiles, documents and Beacon’s VA Tracker. For more information visit www.beaconresearch.net.

Fortuitous timing perhaps, as our friends at NAILBA have informed us that they have joined with the Coalition for Annuity Awareness, comprised of industry associations who serve consumers by helping them understand annuity products, in declaring June National Annuity Awareness Month. Along with other members of the CAA, NAILBA will provide educational material, webcasts and social media communications to help educate financial professionals and the public on the important role fixed and variable annuity products play in helping Americans save for retirement. [SPH]

Roughly 78 million strong, baby boomers represent the largest population segment in American history, and more than 10,000 of them reach age 65 every day—and will through 2029. Boomers are now between 50 and 68 years old and there is much our industry can do to help them. There is still significant time for many to accumulate assets to fund retirement,  to protect their income during these crucial top-earning years, to make retirement income plans that are sustainable throughout life for those entering the disbursement stage, and to transfer risk in order to protect assets in the event of a critical illness or long term care event. The insurance industry has myriad products designed to help these clients face an uncertain future with relative peace of mind. Six approaches to serving this market are explored by our focus authors in this issue.

Brokerage general agent marketing and study groups trace their roots as far back as 1961 with the formation of the SUB Centers study group, created “to promote high ethical standards and to increase efficiency and cost effectiveness through the standardization of materials and methods. To foster an interchange of ideas that might benefit each member and better serve the life insurance industry through the collective talents of all.” The organization was born at the end of the boomer generation, and I certainly hope they are still active and strong beyond turning age 65 in 2026!

Originally formed as networking groups to advance the best practices, proficiency and professionalism of their member agencies, these study groups also counted advances in agent education, carrier relations and underwriting savvy as early accomplishments. From these roots sprang the marketing groups with the additional member benefit of production aggregation to maximize compensation.

Today’s marketing groups have evolved into much more than simple aggregation organizations. They are not only embracing but driving innovation in product, service and technology to the mutual benefit of carrier, BGA and broker. Marketing groups now, to varying degrees, offer their member/partner agencies not only diverse product offerings but shared marketing expertise, service enhancement and expediency experience, best practices refinement, technology insight and infrastructure, case management and advanced sales support, sales training ideas and assistance, education, processing, and not only internal underwriting consultation, but also assistance through, in many cases, vastly enhanced and extensive carrier underwriting department relationships. Most marketing groups today take great pride in honoring their carrier relationships with consistent efforts to increase both the quantity and quality of business submitted, committed to viewing the relationships with carriers as partnerships rather than vendor/customer arrangements.

In this issue we provide an overview of 24 of these marketing and study groups to provide both BGA and agent a glimpse of each group’s stated purpose and opportunities.

The artist(s) formerly known as the LIFE Foundation has unveiled a new look, complete with a new name and a newly redesigned website. LIFE will now be called Life Happens, aligning the organization more closely with its online presence best known to consumers and the industry—lifehappens.org. The move coincides with the organization’s 20th year of striving to reach the millions of Americans who are inadequately insured and inspire them to take personal financial responsibility through the ownership of life insurance and related products.

“In the 20 years since we were first founded, a lot has changed in how we communicate to, and interact with, the public, and it made sense to align our organization with how people have come to best know us—through our online presence,” said Marvin H. Feldman, CLU, ChFC, president and CEO of Life Happens. The new brand links the nonprofit organization with its strongest assets—the lifehappens.org educational website and social media properties.

The redesigned www.lifehappens.org is mobile-friendly and prominently features a new, interactive planning tool to help visitors find insurance information based on their specific stage in life, as well as easy access to online insurance needs calculators and video stories from real people conveying the emotion behind the reason to purchase a policy.

Life Happens has also created a distinct online destination for industry professionals to make it easier to find the information, marketing resources and customizable tools relevant to them—simply by clicking on the “Company and Agent Resources” button on the home page or via www.lifehappens.org/industry.

In addition to the familiar Life Happens initiative Life Insurance Awareness Month in September, Life Happens also is responsible for Disability Insurance Awareness Month—May. In our April issue we presented a DIAM planning panel, aided in no small part by the Life Happens organization and friends Mike Keenan, Maggie Leyes and Cindy Gentry, whom I thank again. [SPH]

Good News! On Monday, July 12, the United States Court of Appeals for the District of Columbia completely vacated 151A.

So, what does this mean? It means that the court effectively settled 151A. As far as the judicial branch is concerned, there is not sufficient evidence to suggest that indexed annuities should be regulated as securities. The court also reissued the entire ruling with the new language.

Here is language from the court’s order: “Having determined that the SEC’s Section  2(b) analysis is lacking, we grant the petitions insofar as they assert the SEC failed properly to consider the effect of the rule upon efficiency, competition, and capital formation…We therefore order that Rule 151A be vacated.”

Is the securities status of indexed annuities settled for good? According to Sheryl Moore, Advantage Group Associates, Inc., “No. Remember, the Securities and Exchange Commission first questioned the securities status of indexed annuities in 1997. They did so again in June of 2008 with their proposed rule 151A. If we want to ensure that indexed annuities will be regulated as fixed insurance products indefinitely, we need to continue our current legislative strategy.”

NAFA is indicating that if the Harkin Amendment passes (which it looks like it will), the law will legislate out the existence of 151A (meaning that the SEC will not have the power to pass regulations deeming FIAs as securities). [SAC]

Jerry L. Thomas
1925–2010

The brokerage industry has lost another icon — Jerry L. Thomas, founder and chairman of J.L. Thomas & Co., Inc., Cleveland, OH, passed away July 5.

In 1950, after graduating from the University of Pennsylvania Wharton School of Finance with a degree in economics, Thomas began his insurance career with Prudential, joining his father Willis B. Thomas, a Prudential agent for 40 years, in Pittsburgh, PA. Jerry received his CLU in 1953, presented by Dr. Solomon Huebner, founder of The American College and Thomas’ economics and insurance professor at Wharton.

Thomas moved to Cleveland in 1962 to manage the Acacia Mutual Life office, then joined State Mutual in 1964, where he was a very successful brokerage manager and assistant general agent. He and a partner started a brokerage agency from scratch in 1970. He bought his partner out and renamed the agency J.L. Thomas & Co., Inc., in 1979.

Many brokerage agencies are family firms, but few if any can claim to have three sons working together for more than 30 years. Michael, David and Craig, who run the agency today, claim that accomplishment as a testament to the fact that their father always treated them equally—evidenced by even the absence of titles on their business cards. The brothers attribute their success to values their father passed down to them— honesty, integrity, experience, work ethic and knowledge—combined with the fact that their father believed in life insurance in his heart. A staunch believer in the independent brokerage distribution system, his entrepreneurial mantra was “Free to Succeed or Fail.” A son-in-law, James Kelly, also contributes at the agency, as does grandson Jerry Thomas, who joined the firm in January.

In addition to the CLU, Thomas’ industry accomplishments include being a member emeritus of the Society of Financial Service Professionals, having been a member for more than 50 years; past president and board member of the Cleveland CLU chapter; 50 year member of NAIFA and its predecessor NALU; charter member of NAILBA; and past president of SUB Centers. The agency is a charter member of the NAILBA Charitable Foundation and a partner in LifeMark Partners.

At Jerry’s direction, J.L. Thomas & Co. contributed to many local charities and community sponsorships; one was the J.L. Thomas baseball team, which was sponsored from little league into the players’ college years.

Described by his sons as truly a great father and husband, Jerry was preceded in death in July 2009 by Larna, his beloved wife of 58 years. He is survived by his daughter Jane Ann Kelly and husband James; Michael and wife Michele; Craig and wife Stella; and David and wife Paula.

An accomplished trumpet player, he passed his love of music on to several of his eight grandchildren. He enjoyed spending winters golfing in Naples, FL, and his summers bass and muskie fishing at the family’s cottage on Crane Lake in Ontario. Bought through tenacious bidding at a Canadian government land auction, it became his favorite place in the world for more than 40 years—in large part because all members of the family have shared the best times of their lives together there.

Thomas proudly served his country in World War II in France and Germany with the 89th Infantry Division of the United States Army, yet never spoke much about it despite receiving seven decorations and citations, including two bronze service stars.

We say goodbye to another of the brokerage industry’s great men and a member of “Our Greatest Generation.” Rest in peace. [SPH]