Insurers And Agents Face A Risk Of ‘Missed Opportunity,’ Panel Agrees

The financial services industry does not lack for risk as 2021 comes nearer to a close.

But perhaps the biggest risk is the risk of lost opportunity, a LIMRA panel suggested today. The panel -- Executive Perspective: Shaping Our Industry for the Future -- noted that the COVID-19 pandemic has consumers eager to better plan their financial future with protection products.

"I think the risk, or the missed opportunity, would be if we don't pull that through to the permanent side of protection, and over time, to decumulation," said Kweilin Ellingrud, senior partner with McKinsey & Co. "That would be a missed opportunity."

The LIMRA virtual annual conference wraps up Thursday. The trade association released its third quarter annuity sales figures Wednesday morning, confirming that consumers are looking for retirement protection and income. Year-to-date, annuity sales increased 19% to $191.4 billion, representing the highest sales in the first nine months since 2008.

"Consumers, when they think about their retirement savings and their life and risk-related products, confidence and trust is really, really, really important," said Neal Baumann, global insurance leader with Deloitte.

Tech Concerns

The panel discussed a number of other disruptions to the industry, including technology. Incorporating technology can do wonderful things for both insurers and consumers. For example, the John Hancock Vitality is a high-tech health incentive program that encourages life insurance policyholders to take good care of themselves.

John Hancock initially offered the Vitality program only to new policyholders but opened it up to all policyholders in 2018. The program allows some policyholders to get a Fitbit or Apple Watch to record their workout history in exchange for premium discounts.

But insurers need to be careful with technology going forward, Ellingrud said.

She offered the example of a big data finding that a consumer buys and eats arugula, a leafy green plant that contains essential nutrients that help keep the heart and bones healthy.

"On the face of it, that might tell me that you take very good care of your body that you're very healthy and probably a very good life insurance risk," she said.

Sounds harmless, right? Not so fast. Buying arugula is also highly correlated to very rich neighborhoods, Ellingrud noted, and very white neighborhoods. In other words, some underlying discrimination that regulators are taking a hard look at.

"So while on the face of it, arugula is not a racist, classist metric to look at, when you dig underneath and get inside that black box of analytics, that may, in fact, be leading to outcomes that we are not collectively comfortable with," she said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected] Follow him on Twitter @INNJohnH.

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