By Ron Sussman
Dear Life Insurance Carriers,
We have been friends and business partners for 36 years. Over that time, our relationship has been both prosperous and painful, not unlike many long-term unions.
In the beginning, I was young and naive and you were a guiding and benevolent force. I quickly learned, with your assistance, the products we sell help families in their time of need – many times, during loss, divorce or death.
As a young professional, I embraced the sales model you espoused, did my best to understand the complex calculations behind your products, steeped myself in industry acronyms and sales concepts, and did my best to encourage others to embrace your value proposition.
My naïveté led me to believe that you, as seasoned participants in a risk-shifting industry, had my clients’ best interests at heart. I believed you would honor your commitments and support those who helped advance your message and mission.
Fast forward more than three decades in this industry, and my perspective has completely shifted. Unfortunately for well-intentioned industry professionals and their clients, you are fundamentally flawed and institutionally unprincipled.
Where We Went Wrong
A long period of low interest rates has exposed your sometimes-rotten underbelly. Of course, we’re a for-profit industry and naturally, insurance carriers must have revenue growth to survive. I understand - I’m a business owner myself!
But remember – just like my company, without satisfied clients, we cannot exist.
Since 2008 when interest rates dropped to historic lows, you have been in perpetual panic mode. Stock companies slashed overhead, changed products and disrupted long-entrenched distribution systems to boost earnings. Most egregiously, some carriers increased insurance costs on older policies without substantiating legitimate mortality-related losses. This caused policyholders in their 80s and 90s to surrender at the worst possible stage in their lives.
We both know reverberations from this seismic attitude shift – favoring stockholders over policyholders – will have a negative impact on the buying public’s perception of our industry. This will lead to loss of business and revenue for everyone.
Yet, you perpetuate and defend this behavior.
To make matters worse, you treat policyholders – the individuals who pay for your products – as if they should be grateful to work with you, while service at many major carriers remains a disaster. Representatives are poorly trained and disrespectful. Obtaining in-force policy data is nearly impossible and often inaccurate. And you really don’t seem to care.
As an industry professional working for my clients’ best interest, my requests are usually met with a nonnegotiable “no.” No, you won’t invest money into reliable, user-friendly systems. No, I cannot speak with a representative. No, no and more no.
If I sound cranky, it’s because our relationship has been strained to its limits. We need to work together and my clients’ interests come first. We clash because I expect the highest standards and, despite your promises, you seldom meet them. We are no longer on the same page, but we stay together because we have no choice.
If insanity is repeating the same behaviors and expecting a different result, our industry has has lost its mind.
Every other service industry acknowledges the value of repeat customers. Other industries strive to evolve and improve the customer experience. Insurance carriers seem to make the customer experience worse! Treating policyholders like second-class citizens is a losing game, and unfortunately, we’re both on the wrong side of the scoreboard.
I’m concerned about our future and our livelihood. Your bad attitude is beginning to attract attention and soon, the buying public will fight back against the poor treatment and service you’ve dealt them for too long. And you’re bringing honest, hardworking professionals down with you!
Your push towards indexed life products proves you’ve shifted risk to clients, when you should be in the business of absorbing risk for individuals who pay you to do so!
You have also promised to be a good steward of client funds, which includes reporting. In-force illustrations are not a battleground for market share, but rather, a necessity for every policy owner. Your products have become so contingent on interest, time and markets, that a payment made two weeks early can, with some older guaranteed universal life products, cause a significant loss of benefits.
A Plan for Change
Fortunately for both of us, it’s not too late to change course. Interest rates eventually will rise. Our industry is too large to pack up its tent and walk away. It’s time for a little introspection. Maybe, as the banking and securities industries have realized, you too, should focus on some industry-wide technology standards to allow clients easy access to accurate data.
Maybe your current model – allowing agents to determine which products they sell based on their commissions – is not working. Maybe you need to be the adult in the room and take responsibility for your products and their performance.
Maybe. Nothing is impossible. But if past results are indicative of future performance, we are all in trouble.
Ron Sussman is founder and chief executive officer of PolicyAudits.com and CPI Companies. He counsels high-net-worth individuals through risk management analysis and life insurance planning strategies. Ron may be contacted at [email protected]
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