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May 1st, 2000 Edition
Extra! Extra!
IMMEDIATE CLIENT PREPARATION FOR A LIFE INSURANCE EXAM -
RiskTutor is providing,
on a complimentary basis, a Guide for Preparing a Client for a Life Insurance
Exam. It contains practical and important information that every
agent should know before his or her client undergoes a medical examination for
life insurance. In addition, agents can e-mail the guide to
clients (just click on the button at the top of the guide and fill
in the client's e-mail address along with your comments).
RiskTutor
The Agent's Advantage in Underwriting Substandard Cases
RiskTutor, Inc.
(http://www.risktutor.com)
The Leader in Underwriting Knowledge Tools
818-591-3882 818-591-0512 (fax)
Industry News
FROM LIMRA - Individual life insurance sales made modest gains in 1999, with new premiums up 3% over 1998 and face amount increasing 8%. Unfortunately, for the 16th consecutive year, the number of policies sold was less than the year before...just over 11 million policies were sold in 1999, the fewest number sold since 1970. Average policy face amount was $127,000.
TOUGH STAND - In a proposal to revamp disclosure form ADV, the SEC says that most advisers who take such payments have a "serious conflict of interest with clients." According to an article in the 4/24 Investment News, the SEC stance came as a shock to many commission-based advisers, since "the new ADV form would require advisers to disclose all conflicts of interest, including 'soft dollars.' They would also be required to say how they deal with the conflicts and would have to state how much clients pay for brokerage fees, fund expenses and other costs."
HIDDEN RIVERS OF INCENTIVE - This is an article with the
subtitle, "How agent commissions affect your insurance shopping," and is
a must read. File it in the "know thy enemy" category. You can find the
article at
http://www.insure.com/gen/agentcommissions.html.
Speaking of incomes, while at Insure.com, you might want to check out
http://www.insure.com/gen/salaries/index.html.
It is a bit dated, but will give you the 1997 incomes of most of the major
insurance companies' top executives.
ZURICH VS. MICROSOFT - Adding to Bill G's plummeting stock price
woes is a new lawsuit filed by Zurich. The insurer has asked a federal
court to issue a ruling that coverage it wrote the software giant doesn't
apply to damages or settlement costs in private antitrust suits...Microsoft
faces nearly 140 private lawsuits that seek damages caused by Microsoft's
alleged anti-competition behavior.
NEXT - In a move to get better access to capital for growth and
keep up with its competitors, Phoenix Home Life Mutual announced its intention
to convert to a stock company. Same reason as all the other mutuals and former
mutuals. No date as yet. Prudential is still working on its
demutualization plan, tentatively scheduled for the middle of next year.
CONSECO WATCH - Conseco shares are now over 80% off their
52-week high, but the company says its stock is undervalued, does not
reflect the strengths of its business operations and first quarter
premium collections rose by 25%. Further, the company plans to sell
Conseco Finance (formerly Green Tree Financial), which it acquired for
$6.7 billion two years ago. The problem is that some analysts believe
Conseco will be able to get only about $1.5 billion for it. There
are other concerns. Among them is the fact that Conseco made
$576 million in loans to directors, officers and other
employees to finance purchases of Conseco stock. The loans are
now in doubt, since the borrowers' shares are worth a fraction
of what they paid. In addition, the company's diving stock price
has prompted the filing of at least nine class action lawsuits
and the company and its CEO, Stephen Hilbert, are coming under increasing
scrutiny (e.g., "Opulence amid calamity tests
Conseco credibility," Investment News, 4/24/2000).
ZURICH LOOKING - Zurich Financial Services announced plans
"to be a consolidator in an industry which is consolidating very fast
and the U.S. market is probably the most attractive in terms of
doing deals." The money will presumably come from the legal
fees, etc. they will save by not having to defend Microsoft in their
antitrust related lawsuits.
CASE SETTLED - Nationwide Insurance has agreed to
settle a "redlining" discrimination case by paying a fair-housing
group $17.5 million and improving service to minority and inner-city
customers.
E-COMMERCE - Where is all this going? Quotesmith has been moved from "top pick" to "buy" by some analysts, despite estimates that it will continue to lose money (albeit less for fiscal years 2000 and 2001). Quotes, however, were below projections. But Insweb really got hammered. Its stock dropped 55% one day after State Farm decided not to renew its contract with the company, with shares currently trading in the $3 range (compared to a 52-week high of $44). As the Motley Fools put it, Insweb "has discovered to its chagrin, getting the separate worlds of insurance and the Internet to tango is about as hard as getting Al Sharpton to swing dance with David Duke."
COVERAGE.COM - For Sale: "The Internet domain name, coverage.com, trademark and all business assets associated with the e-commerce web site." Asking price? Around $1,000,000...in light of the above, we suggest you pass on this one.
FUNDAMENTAL CHANGE - A new book by the Employee Benefit Research Institute ("The Future of Private Retirement Plans") concludes that "the nation's employment-based retirement system is undergoing fundamental change that could have major implications for the future economic security of millions of American workers and their families." For example, while more workers than ever can expect to have a retirement benefit, the form of that benefit is changing dramatically from employer-provided defined benefit plan life annuities to primarily worker-funded individual accounts (e.g., 401k plans). The irony is that, while the 25+-year-old ERISA was enacted primarily to secure and encourage defined benefit plans, the federal law has instead contributed to the sharp decline in the number of such plans.
AGENT FRIENDLY E-COMMERCE - The Independent Insurance Agents of America (IIAA) is taking steps to see that the Internet is used to assist agents, rather than undercut them. Recent meetings have centered on the Internet and the necessity of new technology standards that would help unlock the potential of new technology for the independent P&C agent distribution system.
RECRUITING ON THE NET - According to LIMRA, recruiting on the Net is
on the upswing. The top five Internet job sites are: AOL Workplace,
Monster.com, CareerMosaic.com, HotJobs.com and CareerPath.com.
And number six? You guessed
it... http://www.fsonline.com! Well,
not really, but the LIMRA article does recommend posting on "sites or
newsgroups for financial planners" and our publications are the
most popular on the Net! Call Bill O'Quin at 512-336-2325 for details.
DON'T MISS THIS OFFER! - LIMRA's Marketfacts just published an article
on what producers feel is the most effective marketing technique...no
surprise, it was referred leads. However, direct mailings did get
a significant % from all distribution systems. According to the
Direct Marketing Association, every dollar spent on direct mail marketing
returned over $11 in sales. ThinkDirectMail can make that ROI
even higher...quality names that used to be as high as 20 cents each
can now be purchased for as little as 1 penny! Not only has
ThinkDirectMail dramatically reduced the cost of prospecting, but
E-News subscribers receive an additional 10% discount on the
purchase of any of their award-winning marketing list products.
To learn more about this exciting offer and to receive their
Direct Marketing Kit CD FREE (a $195 value), go
to http://www.fsonline.com/think/newleads.html now!
SEND IN THE CLONES - This article was an April 20 release from
Financial Planning Interactive (http://www.fponline.com),
which is a great site for planners. We think the title is cute! Anyway,
Putnam Investments is creating a new type of cloned fund that will be
sensitive to capital gains taxes. The clone funds would be created
when an existing fund achieves a high level of unrealized
capital gains. The main difference between the original and the new
fund would be that new investors would not be subject to the unrealized
capital gains already embedded in the original fund.
NOT MUCH LEFT - According to a survey by American Skandia, nearly
30% of Americans see their IRAs as a method to pass wealth to their
heirs. The problem, of course, is the IRAs are taxed as ordinary income
and may be subject to estate taxes. "Investors can lose as much as
73 cents on every dollar they've saved." Planners, however, can offer
several options...not the least of which is a life insurance policy
that grows tax-deferred and with death benefits received free of
federal income taxation.
IHateFinancialPlanning.com - Yes, it is a real site (and a pretty neat one at that) sponsored by Reliastar. According to the company's research, 77% of Americans said they hate financial planning (where are all the do-it-yourself people the e-commerce gurus talk about?), hence the unusual name. Advisers can join the network for $250 plus $100 for every referral. As we see it, the real key to the success of this venture is "teaming up" with ReliaStar's employee benefits business and offering its services to four million customers via an intranet.
VERDICT: INNOCENT - According to a congressional General Accounting Office investigation, the highly-publicized allegations of IRS misconduct and abuse of taxpayers that helped spur 1998 IRS reform legislation cannot be substantiated.
BUY USED CARS (AND INVEST THE DIFFERENCE) - This from planner
Jonathan Pond in an FPI article ("Driving Straight To The Bank";
http://www.fponline.com)...using
statistics from the American Automobile Association, a person with a
40-year working career, a 7.5% annual return on investment and a 3.5%
inflation rate who buys a new car only every 10 years will
have $385,000 more at retirement than the person who buys a new car
every three years. Proof of the Andrew Tobias statement, "That
new car smell is the most expensive fragrance in the world."
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