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• Comparing term is not as easy as it used to be.  Many companies are adding "bells and whistles" to differentiate their products from the competition. Consider CNA's new Viachoice3, a UL with term-like premiums and liberal living benefits.
• Big term seller, Zurich Life, is moving towards a "permanent presence" in the market.
• Other methods of company differentiation are taking on more meaning.  Medical underwriting is one.  Example: CNA is offering a "one-class price upgrade...pay less or get more."
• Another differentiation...time to issue.  Portamedic will be using an electronic application and exam service that will shave an average of 11 days off the typical time to issue (33 days to 22 days).
• And compensation...Travelers now offers stock in Citigroup.  Conseco was a pioneer in this area...remember, stocks do rise and fall.
• Life settlements continue to gain acceptance in the industry.  Coventry First is leading the way by making certain that the policies are bought by a "blind fund," an important point when the seller of the policy is concerned about "reverse adverse selection"; That is being "terminated early"!
• Technology is king.  Virtually all members of NAILBA now do some of their service support on the Net. Expect it to be all soon, as vendors sharpen their IT tools.
• BISYS is still "king of the road," but alliances like the Marketing Alliance and others are keeping the independents competitive with the benefits of pooled resources.
• Unique approach...American General has teamed up with Michigan State University and the Academy of Multidisciplinary Practice to offer an "executive wealth strategy think tank."
• There are a lot of new "players on the block"...New York Life, MONY and John Hancock.  Hancock comes with a very well thought-out and unique "sports marketing" approach, which will play well for top producers.

WEIGHING THE ROCK – There's an interesting article in the December 3 Business Week titled "The Right Price for the New Pru."  If the upcoming Prudential demutualization is of interest to you, check out the article online by clicking here.  

WHO SELLS THE MOST? – According to Best's Review, the GE Financial Assurance group of insurers sold the most "ordinary life" (defined as whole life and term products that are not interest sensitive) in 2000. The total face amount was $83 billion, with GE's First Colony leading the way.
 

AGGRESSIVE ASSOCIATIONS – The Independent Insurance Agents of America (IIAA) and the National Association of Professional Insurance Agents (PIA), representing nearly 500,000 of the nation's insurance agents, have filed a lawsuit in federal court asking that a U.S. Office of the Comptroller of the Currency (OCC) opinion that parts of a West Virginia insurance law are preempted be declared null and void.  "We firmly believe the OCC preemption determination violates not only the letter, but the spirit of the Gramm-Leach-Bliley Act (GLBA), which leaves oversight of insurance activities squarely in the hands of state regulators."

STILL WORKING – Yes, companies are still hiring new agents! Further, LIMRA reports that "nine of the top 10 ranking companies in first-year agent total earnings used the Career Profile System, as did seven of the top 10 in four-year agent retention." Now called the Career Profile+, this test has been continually improved since its introduction in 1983 and is still the industry standard. Selection details at www.limra.com/selection.

MORE M&A AFTER 9/11 – Pricewaterhouse predicts the "insurance industry has entered a period of sustained consolidation, both domestically and internationally, as a result of the September 11th attacks. However, the industry will emerge stronger, but with fewer companies.  Big point: The weak will not survive." We assume the emphasis here is on P&C companies.

ANGRY AGENTS – The National Association of Professional Allstate Agents (NAPAA) has filed a federal lawsuit against Allstate claiming that the company has breached its agreement with its independent contract agents by unilaterally changing its terms. Allstate terminated over 6,000 employee insurance agents and offered them the option to become independent contractors or leave the company. Many employee agents chose the independent contractor option because Allstate promised them a "greater financial interest in the business, more autonomy from the company and increased flexibility in running the business." The suit charges the company "has created new rules, regulations and mandates that, in reality, do just the opposite."

CASH CALL – Lloyd's of London revised its estimated WTC losses upward by nearly 50% this week to $2.68 billion and said it would issue a fresh cash call to members for additional cash to help pay for its largest ever single loss.  Overall insurance industry losses are now expected to reach $70 billion.

WORKFORCE COMMITMENT HIGH – According to Aon's United States Back@Work study, U.S. workforce commitment has gone from a five-year low to a five-year high, climbing sharply and suddenly since the terrorist attacks of Sept. 11, highlighting a dramatic shift in the priorities of the American workforce since Sept. 11.
 

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ECONOMIC STIMULUS LEGISLATION – While Congress continues to bicker over the contents of an economic stimulus package, economists are beginning to speculate that the economy will recover just fine, thank you, without help from Washington.  One provision that both sides of the Congressional aisle do appear to favor is a "payroll-tax-free" month, during which neither employees nor employers would have to pay the 6.2% Social Security payroll tax.  Needing something to argue about, however, the Democrats want December as "the month," while Republicans are pushing for January, when payroll taxes kick back in for those who made above the $80,400 Social Security maximum in 2001.

BROAD MARKET FOR FINANCIAL SERVICES – Wealth management products and services are typically associated with high net worth households, which make up under 5% of the population, but hold almost 50% of the total U.S. wealth. However, Meridien Research says that, "The high net worth market is saturated and offers limited potential to new entrants," and "In our opinion, financial institutions should instead target retail consumers with under US$1 million in discretionary assets." New technologies in broker productivity and portfolio management are making penetration of these markets very attractive. An executive summary of "Wealth Management: Getting Downright Personal" is available at www.meridien-research.com.

BOOMERS UPSIDE DOWN – America's largest generation ever may be headed for a financial crisis, as Baby Boomers have saved, on average, only 12% of what they believe they will need to meet basic living expenses during retirement (one-third of Baby Boomers plan to use Social Security as the bulk of their retirement income); and unless this challenge is addressed, they will be burdened with significant debt and financial obligations in retirement. This from Allstate's "Retirement Reality Check" survey.  An executive summary of the survey can be found by clicking here.  

ANOTHER REALITY CHECK – The stunning demise of Enron Corp. has highlighted the danger of over-investing 401(k) funds in an employer's stock.  Enron stock, which was trading at about $90 a year ago, is now trading at less than $.50 a share and all Enron employees can do is watch their retirement savings evaporate.  While experts recommend that no more than 10% to 20% of a 401(k) account be invested in employer stock, the average is over 39% with some employees investing up to 100% of their 401(k) assets in employer stock.  It's time to help your clients make a reality check of their 401(k) allocations and, if needed, to better diversify their 401(k) portfolios.

BEST PRACTICES STUDY – The 2001 Best Practices Study from the Independent Insurance Agents of America (IIAA) finds that technology is playing an ever-expanding and critical role in the success of agencies. (From our observation, the same can certainly be said about financial product agencies as well.) This study is available at www.reaganconsulting.com for a mere $59.95.

EMPLOYERS' BIGGEST CONCERNS – Despite corporate layoffs, employers view employee retention as their most important benefits-related priority, followed closely by cost containment. This from the "2001 MetLife Study of Employee Benefits Trends" by Harris Interactive. The results show that 78% of employers view "employee retention" and 73% view "controlling health/welfare benefits costs" as their most critical benefits objectives, with "attracting employees" a distant third at 51%.

WHO BUYS WHAT AND WHERE – According to LIMRA, Los Angeles now leads New York and Chicago in terms of new individual life insurance premiums. Chicago was number one in policies sold.  Other information gleaned from LIMRA's U.S. MarketMap:

• Percent of premiums sold by age: Under 18 - 4%, 18 to 24 - 4%, 25 to 34 - 17%, 35 to 44 -25%, 45 to 54 -24%, 55+ -26%.
• Top 10 metropolitan areas by premium (millions): Los Angeles, CA - $569.6, New York, NY - 478.7, Chicago, IL - 453.9, Philadelphia, PA-NJ - 257.8, Houston, TX - 251.8, Boston, MA - 250.6, Washington DC-MD-VA - 228.0, Atlanta, GA - 210.7, Dallas, TX - 203.7 and Detroit, MI - 170.5.

DEFINED CONTRIBUTION HEALTH – According to Conning, health insurance, now delivered by employers on a defined benefit model, seems to be moving toward a defined contribution model, in which employees have much more choice in selecting their coverage and employers make a defined contribution irrespective of employees' choices. Employers, insurers and employees all have something to gain from this shift because it stands a good chance of controlling the runaway cost of healthcare for the first time. The Conning study, "Defined Contribution Approaches to Health Care Benefits: The Long Awaited Answer?," is available at www.conning.com for $575.

INTERNET FUND – Just over a year ago, ING Pilgrim worried about its Internet fund getting too big and announced it would close the fund when assets reached $500 million in order to keep it "nimble."  Today the assets are valued at $19 million, about 10% of its all-time high and the fund is being folded into ING Pilgrim's Global Information Technology portfolio.