The New Pandemic Problem: Hot Product Demand Outstrips Labor Supply
The slowing demand for life insurance products was a top concern for the industry for decades, but now carriers are grappling with a better problem: how to deal with a flood of consumers wanting annuities and life insurance.
In 2020, LIMRA and LOMA's yearlong initiative focused on persistent low interest rates. And certainly that year, learning how to sell and run companies remotely was another tough nut to crack. Advisors and companies figured out how to do business in the new environment while interest rates started to tick up from historic lows.
Last year, the problem was handling the rush of business from people appreciating the fragility of life as the pandemic seeped in for the long haul.
Sellers hoped that awareness would stay with consumers and would not just fade as society opened back up. Not only did the consumer interest stick around, 2021 turned into the best year for the life insurance business across the board in about 40 years.
Last year saw 20% life insurance premium growth, propelled by a fiery fourth quarter with a 26% increase, making it the best year since 1983. Annuities had a banner year as well, with a 16% jump in sales, the best since 2008 and the third highest increase in history. And now the bedrock 10-year Treasury crested 3% for the first time since 2018, allowing carriers to offer better rates than they have in years.
The association’s initiative this year takes on a problem all industries are dealing with, people, specifically those who work in the business. LIMRA and LOMA CEO David Levenson plans to fill in more details about The People Imperative during his opening remarks at The Retirement Industry Conference in Boston.
“The theme in 2022 is really about talent,” Levenson said before the conference. “It's about the Great Resignation. It's been tougher to hire people. It's been tougher to retain people. … That also has culture implications, how companies act and behave.”
The industry has had a longstanding anxiety around the aging out of the sales force, which had also lacked diversity. But then the Great Resignation set in.
“It's not something limited to the distribution side of the business,” Levenson said. “I would say, like with many industries, it's across the board. There are certain functional areas that are in very high demand right now, data scientists and people in the IT space. And that has driven up wage inflation in those areas and it is made retention a little bit more difficult for companies that employ those individuals.”
The initiative aims to provide research and insights addressing talent challenges by examining what companies need to do to build or retain their individual work cultures post-pandemic, according to LIMRA. The organization plans to explore how recruiting and retention practices in the home office and in the field need to shift to attract and retain talent, what kinds of skills and expertise are needed to better serve customers, such data analytic and automation, and best practices to upskill current workers.
They have already had a few webinars on the subject. The first one was with three chief human resource officers from three Fortune 500 insurance companies focusing on culture, hybrid work and attracting talent and retaining talent. Besides webinars, the association plans to build surveys around the issue.
On the distribution side, Levenson said the pandemic raised awareness of the value of the industry itself and not just its products. More people saw what the industry can do for individuals and signed up. And although that was welcome with the spike in demand, that influx has not been enough.
“Even though we're seeing the supply on a short-term basis jump up, I don't I don't think it's necessarily keeping up with demand,” Levenson said.
Levenson also said he doesn’t expect to see demand drop any time soon.
“We've been able to help more consumers in the last couple of years,” Levenson said.
“Certainly things like claims are up, but that's what our industry exists for. There's more interest in our products today than there's been in a long time. And I think the pandemic is making people really think through how they would protect their loved ones, if anything were to happen to them.”
Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].
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