Insurance Insider News February 17 2010
NEW PRODUCTS l ANNUITIES l INDUSTRY EVENTS l LIFE SETTLEMENTS
CALIFORNIA l HEALTHCARE l FINANCIAL PLANNING
New Products
New Business Development Program
The Hartford Financial Services Group Inc. is launching a new business development program to help financial advisors serve businesses that sponsor retirement plans. The program helps identify businesses that may need help improving their retirement savings plans. The program helps financial advisors craft strategies that best meet the needs of retirement plan sponsors and their participants. For more information, visit www.thehartford.com.
Flexible Universal Life Product
American General Life introduced a universal life insurance product that offers affordable death benefit coverage with secondary guarantees and flexible features that allow for customization. Policyholders select the amount of coverage, the duration of the death benefit guarantee, and the length of time to pay premiums. For more information, visit www.americangeneral.com.
Agent Learning Centers
Liberty Mutual Agency Markets introduced comprehensive online Agent Learning Centers for agents appointed with its commercial lines regional companies. The Agent Learning Centers are one-stop training and development resources for agency partners to grow their businesses. Appointed agents can register for classroom workshops and participate in virtual or self-paced online programs. They can access professional development courses, many of which qualify for continuing education credits. Courses cover general insurance topics, sales, product, and office productivity, consultative selling skills, and agency management. An Agency Manager Toolkit is available to help agency owners or principals in hiring and developing new producers. For more information, contact Mr. Ed Kula, director, Distribution and Product Training, Agency Markets Learning Services at 206-473-4042 or e-mail edward.kula@libertymutual.com.
Term Insurance
Nationwide Financial is launching Nationwide “YourLife Term II.” It gives clients the ability to convert the base policy and the spouse and children’s term life insurance riders from temporary to permanent. Nationwide added a 15-year term option, which can be a perfect fit for clients who have a mortgage loan that would need to be paid off in case of an unexpected death. Clients have the option of a 10-year, 20-year, or 30-year term. For more information, visit www.nationwide.com.
Simple Term
Farm Bureau Financial Services is launching simple term life insurance. Signing up usually involves answering a few questions online, generally without a medical exam and with minimal paperwork. Minutes later, the clients can have a death benefit that can help cover their mortgage, vehicle payments, college tuition or personal loans. For more information, visit www.SimplifyMyInsurance.com.
Living Benefit Rider for Annuity Product
The Penn Mutual Life Insurance Company enhanced its growth and income advantage benefit -- one of the living benefits riders offered on variable annuity products. Clients get increased accumulation potential and the ability to manage risk while providing security for retirement savings under dynamic economic conditions. For more information, visit www.PennMutual.com.
Fixed Annuity
Allianz Life Insurance Company of North America launched a fixed index annuity, which provides protection, guarantees, and a bond index allocation strategy with the power of annual reset. For more information about “Allianz Pro V1, “ visit www.allianzlife.com.
Annuities
Fixed Indexed Annuity Sales Continue to Rise
Fixed indexed annuity sales continue to climb, with fourth quarter sales totaling $7.6 billion, representing a 3.2% increase over the previous quarter, according to Beacon Research and the Insured Retirement Institute.
Total fixed index annuity sales for 2009 were $30.2 billion, posting a year-to-year increase of $3.5 billion. Total fixed annuity sales were $105.1 billion in 2009, just 2% less than the record high in 2008.
However, fixed annuity sales for the fourth quarter were $20.4 billion, down slightly from $22.1 billion in the previous quarter, representing an 8% decline.
Year-to-year sales were down marginally, from $106.7 billion in 2008 to $105.1 billion in 2009, posting a 1.5% decline.
Fixed annuity sales in 2009 were second only to the record-setting prior year. The year saw strong demand for secure retirement savings and income alternatives despite financial pressures on consumers and other challenges. For more information, visit www.IRIonline.org.
Industry Events
Long Term Care Conference
The 10th Annual Intercompany Long Term Care Insurance Conference will be held from March 14 to March 17, 2010 at the Sheraton New Orleans. For more information, visit www.ILTCIconf.org.
Voluntary Benefits Show
On March 24th & 25th “Workplace Benefits Renaissance 2010” will be held in Downtown Nashville. For more information, visit workplacebenefits.org.
Life Settlements
Life Settlement Industry Loses Market Opportunities
The life settlement industry is losing major market opportunities by failing to communicate the value of life settlements, according to a report by the Insurance Studies Institute (ISI) and The Carlson School of Management at the University of Minnesota. Consumers are not familiar with life settlements or they have negative perceptions. In order to grow, the life settlement market has to gain consumer acceptance.
The maturation of the life insurance secondary market has attracted considerable focus from regulators, legislators, and the media. Insurance companies, the government, financial advisors, and the media all have agendas for the life settlement market, and are disseminating conflicting information to support their disparate causes.
But life settlement market stakeholders have not provided a well-constructed and consolidated message.
There is no consistency in how life settlements have been positioned to seniors. References to life settlements portray them as everything from a valuable resource for seniors to betting on death. For example, the life settlement market often aims to tout life settlements by challenging the credibility of insurance carriers and the wisdom of owning a policy. This message does not resonate with consumers for two reasons: first, they know little about the secondary market option and they don’t want to feel like they made a mistake when they purchased the policy from a trustworthy insurance carrier. Also, no clear communication of value has been made to the consumer, according to the report.
Messaging needs to focus on communicating the life settlement option to seniors rather than the message that life insurance companies are taking advantage of seniors. When advisors present life settlements, they should remove focus on terms, such as “cash,” “lapsed,” and “life settlement,” and de-emphasize the concept that insurance companies are taking advantage of seniors. Seeing a need for the life settlement market to tell its story more effectively, ISI commissioned the Brand Management Enterprise team at the University of Minnesota’s Carlson School of Management to develop strategies to educate consumers about life settlements. For more information, visit www.insurancestudies.org.
In California
Public Hearing on Discount Health Plans
The California Dept. of Managed Health Care has scheduled a public hearing about the proposed rulemaking on discount health plans. It will be held in Oakland on February 22. The rulemaking action titled, “Discount Health Plans” (2001-0024) proposes establishing licensing requirements and standards for discount health plans to protect consumers who purchase discount health products.
The scheduling of the public hearing does not change the closing date of the written comment period, which is 5:00 p.m. on Monday, February 22. For more information, visit http://wpso.dmhc.ca.gov/regulations/ under the heading “Open Pending Regulations.”
Healthcare
Workers’ Comp and Healthcare Markets
to Influence Each Other in 2010
Innovative programs that traditionally focused on the P&C market will be used to control escalating costs in the healthcare arena, according to a study by Avizent, a national claims and risk management service provider. Group captives, which were once primarily an option for large employers, are emerging as a key risk sharing strategy for small to mid-size employers and associations for their workers’ comp programs. New options also allow smaller companies to self-fund captives and use the program to cover health insurance excess, providing opportunities for program improvement and significant cost savings.
Avizet also forecasts the following trends: There will be more coordination between workers’ comp and wellness programs. Traditionally, there has been a barrier between workers’ comp and wellness programs, primarily because wellness is typically considered a group health benefit and workers’ comp falls under P&C insurance. But, a growing number of large employers are using wellness programs to help manage productivity.
Medicare, Medicaid and the State Children’s Health Insurance Program (SCHIP) Extension Act Section 111 will bring new electronic reporting requirements for non-group health claims, including workers’ comp, liability and no-fault claims. With potential high civil money penalties, employers are looking for partners with the expertise and technology to help them ensure compliance.
For more information, visit www.avizentrisk.com.
US Insurers Adopt Platform to Address Medication Use
Dozens of health plans have adopted a unified approach to help consumers use medications appropriately. There is now a common communications platform linking participating insurers to a network of over 25,000 chain, independent, and health system pharmacies across the country. Pharmacists receive alerts and information about patterns of medication use as well as guidance on working with patients and doctors to address potential drug complications. The retailers also receive service fees in order to free-up pharmacist time to perform medication management activities. The move follows increased government emphasis for Medicare plans to offer better medication therapy management programs in 2010.
For more information, visit www.getoutcomes.com
Financial Planning
Investors Don’t know Much About Their 529s
A recent Hartford study reveals the following about 529 investors:
· 13% consider themselves very savvy investors; 32% say they are not at all savvy, and 55% say they are somewhat savvy.
· More than half don’t know how their 529 portfolios are allocated and some don’t know what type of plan they invest in and whether it consists of age-based, static, or individual fund options.
“These findings underscore the need for financial advisors to review the basics of investing for college with their clients,” says Jeff Coghan, director of 529 plans at The Hartford. Based on the survey findings, SMART529 revamped the college savings page on www.hartfordinvestor.com.
Many Defined Benefit Plans Face Unexpected,
Daunting Funding Demands
Many employers with defined benefit plans could face significant unexpected challenges as early as April. Required contributions could more than double this year and funding levels could drop enough to trigger benefit payment restrictions put in place by the Pension Protection Act (PPA) of 2006, according to a report by The Principal Financial Group.
The temporary pension relief from Congress and some market recovery in 2009 have led many plan sponsors to expect a better funded status and lower required contributions than they will actually experience in 2010.
Barry Young, consulting actuary said, “The temporary pension relief from Congress and some market recovery in 2009 have led many plan sponsors to expect a better funded status and lower required contributions than they will actually experience in 2010. Because interest rates have dropped, most plans will need higher contributions in 2010 and 2011. Retirement plan assets have not recovered enough to cover future liabilities. There are no guarantees of Congressional relief in 2010, so The Principal is urging plan sponsors to contact their actuaries so they are prepared.”
He explained that credit is still very tight. An unexpected cash infusion into the plan could force employers to make difficult choices in order to fund their defined benefit plans. But if they find out now what they are facing, it will at least help them plan their cash flows early enough to possibly help prevent restrictions on their plans.
The Principal is offering a tutorial that explains the steps employers can take now to learn potential issues their defined benefit plans could be facing, including:
· Decreases in plan funded status 2010 and 2011.
· Increased required contributions for both years.
· Possible automatic benefit restrictions at the end of their defined benefit plan’s first quarter 2010.
For more information, visit http://www.principal.com.
