Relax, Things Are Better Than You Think
Last December there was an excellent article in The Washington Post by Arthur C. Brooks. The title of the article caught my eye as I was scrolling through my newsfeed—The World Is Doing Much Better Than The Bad News Makes Us Think. Encouraged to find positive news, I read it and shared it with friends and family, thinking that others might be in need of an uplifting read as well. In short, the article talked about how, as a rule, we tend to believe that the world is getting worse, when it actually is getting much better. The author posits that this is a result of eons of evolution that draw our attention to negative stimuli as a means of survival. We like nice things, but “bad things can be deadly, so [we] focus on them.” That attention bias applies to news as well, so since negative news = attention = clicks/ratings = revenue, it’s easy to see why we view the world through an unnecessarily negative lens. As an aside, I recommend the article, as it does have an uplifting message and some welcome good news. The reason I bring it up here is that the same bias applies to news about our industry. And much like the world around us, things are actually getting much better, despite all the clickbait to the contrary. In fact, as we head into 2020, things really are better than you think.
We have more and better product offerings than at any point in our industry’s history. Carriers spent most of 2019 repricing, redesigning and filing their product portfolios to incorporate the 2017 CSO table. This was not only an enormous undertaking by the carriers, but also by the state Departments of Insurance, which had an avalanche of product filings to review in a relatively short period of time. As is always the case, our industry stepped up and our clients benefitted. They now have access to updated products that often provide more death benefit for their premium dollar, while still providing cash value for flexibility and valuable living benefits for the “what ifs.” Yes, some cash value driven policies saw some marginal decreases, but the overall value that many of these policies provide has never been greater, the opportunities for distributors have never been more plentiful and our industry’s core mission—to help people at the worst times in their lives—has never been more fulfilled.
We are helping more people than ever and have a potential impact on society that is second to none. According to the 2019 ACLI Life Insurers Fact Book, Americans purchased $3 trillion of life insurance death benefit in 2018 and total life insurance coverage in the United States at the end of 2018 was almost $19.6 trillion. Individual life insurance comprised over $12 trillion of that total. While the numbers in 2018 were down slightly from the previous few years, that total is staggering and its potential impact cannot be overstated. However, that’s just the tip of the iceberg. For example, in 2018 alone, in addition to paying $80 billion in death benefits, life insurers also paid $35 billion in cash surrenders and $15 billion in dividends to policyholders. When you include annuity benefits and health insurance benefits paid by life insurers, it’s clear that our industry does a lot of good for clients, for communities and for society as a whole. I have said for years that one of the reasons I love my job is that, most days, the work I do is going to help someone I don’t know and will never meet. That’s a great reason to get up in the morning.
We are getting more efficient every day. Not a day goes by that we are not reminded in some form about the challenge of a persistent low interest rate environment. It puts pressure on yields, which in turn puts pressure on product pricing, which in turn puts pressure on sales teams and on distributors. How will we survive? The way we always have—through innovation and increased efficiency. I know that “innovation” and “insurance” aren’t words that we would normally place in the same sentence, but we innovate in our own way. That may sound sarcastic, but it really is not. Sure, innovation in insurance used to be illustration software on floppy disks, but this isn’t your parents’ insurance industry anymore. State-of-the-art administration systems that enable e-application processes and automated underwriting processes are becoming the norm, increasing efficiency in the home office and the field and improving the customer’s experience. All of these came from the need to lower costs, improve profitability and make our products easier to buy. We constantly hear that no one has ever seen an interest rate environment like the one we have now. I would also bet that there was a time when no one thought that we would get to a point where a client could get a fully underwritten policy at preferred best rates without a blood test and medical records. So, low interest rates will continue to apply pressure on carriers, on product pricing and on distribution? Good! I can’t wait to see what we think of next!
I am just as excited about the prospects we have at Mutual Trust. We put our product plan for the 2017 CSO in place more than two years ago, introduced our first 2017 CSO product in October 2017 and haven’t stopped introducing new and improved products since. The result is the best and the broadest portfolio of products that we have ever had—all filed, approved and ready for sale with months to spare. We are using that portfolio to help more people than we ever have as well. In fact, in addition to record growth in sales in 2019, we also set a record for the highest amount of death benefits issued in our company’s history. You better believe that we are celebrating both! Finally, our efforts to improve efficiency never end. 2019 brought the first automated underwriting program to Mutual Trust. 2020 will bring an improved licensing and contracting process, an e-application process and another new, competitive product for our clients and distributors.
Thank you to all of our valued distributors for a record-setting 2019! Here’s to another great year in 2020—it’s going to be even better! [LC]