The need for speed — With Sammons CEO Esfand Dinshaw

Born in Pakistan, Esfand Dinshaw had a talent and interest in math that set him on a journey that landed him studying actuarial science in Des Moines, Iowa. Four decades later, that journey has taken Dinshaw to the top position at Sammons, where he sees math — and artificial intelligence — as the keys to providing instant underwriting decisions that can pave the way for more consumers to purchase life insurance. “If we can change underwriting from a six-week process that is medically based and turn it into something that is relatively instant, that is going to be the biggest change for the life insurance industry probably since its inception,” he said.

Dinshaw is also bullish on registered index-linked annuities — a relatively new area for Sammons. While Sammons has been selling annuities for about the past 25 years, and selling life insurance for more than 115 years, “our target today is to invest capital about 50/50 in both life insurance and annuities,” he said.

In this interview with publisher Paul Feldman, Dinshaw said, “The insurance business is a calling. You’re doing so much for your clients, giving them financial security — and peace of mind.”

Paul Feldman: How did you get your start in the industry?

Esfand Dinshaw: I grew up in Pakistan, wanted to be an actuary and ended up at Drake University, which is a small college in Des Moines, Iowa, that has an undergraduate degree in actuarial science. My background is as an actuary. 

I worked at three different publicly traded companies before joining Sammons in 1999. I had the opportunity to join a great leader, Jon Newsome, in building an annuity business here and replaced him when he retired. Then when Mike Masterson, who ran Sammons Financial Group, retired, I stepped into those shoes. What I will tell you is that for somebody who grew up in a developing nation, America is the only country where you can have an opportunity like this and be allowed to succeed and do what you love to do. I’m a big fan of the American culture and how we encourage and build businesses here.

Feldman: It’s fortuitous or lucky that you ended up in college in Des Moines, because West Des Moines is now the annuity capital of the United States.

Dinshaw: It is, and a large amount of credit goes to Jon Newsome, who started Sammons. He was involved in two other annuity operations. One was a company called American Life and Casualty that was ultimately acquired by Conseco, now known as CNO. The other one was USG Annuity and Life, which was acquired by ING and is Voya now. He was involved in three of them, and a number of people who came out of the businesses he built have gone on to do different things and build annuity operations.

Feldman: How has your experience of being born and raised in a different country impacted the way you do business here and the way you look at the industry?

Dinshaw: Certainly the way I look at the industry here is probably different because we are all bound by our experiences, and we have different views based on those experiences. The one thing that is consistent here is a belief in financial security. Americans need financial security, and insurance companies and financial services firms provide that. At Sammons, our mission is to provide financial security products, services and solutions to all Americans, and that is a piece that is not available in Third World countries. 

The second piece, I’ll just add to that, is how the demographics in the United States support this. There are more people who are getting wealthier. There is more wealth in individual hands than they can use for retirement security. And the population approaching retirement is also increasing. Both of those factors point toward this being a great industry to be in.

Feldman: You’ve been in the insurance industry for four decades. What are some of the changes you’ve seen in the industry during that time?

Dinshaw: Four decades is a long time, and you can see how life in America has changed in four decades. The biggest diference is technology. Technology changes how the consumer is buying the product, how they’re educating themselves about it, and how they’re communicating with insurance companies and their advisors and agents. That is dramatically different than it used to be. 

Funny story: I remember when the fax machine came out in the 1980s — that’s the four decades in the business — and always wondered who would use a fax machine. And today, faxes are old, right? We don’t use fax machines; we send images online and we communicate very effectively. Technology has changed, and it’s going to change with AI. That’s the new change for this year, and we can certainly talk about how we think that can change the industry. So one difference is technology. 

The other one, and I was very fortunate to be part of this, was the evolution of index annuities. I remember going back into the mid-1990s and working on annuities that were — today we would call them plain fixed annuities — and that changed into index annuities. And that is a big part of the market today, whcih has happened over the past 25 years. So I’ve had a chance to kind of watch that business grow. I’ve been here at Sammons Financial Group for over two decades, and that has become a big part of providing financial security for Americans.

Feldman: Sammons is reporting that you have nearly twice as many life insurance policies as you do annuity contracts. We’re wondering what’s behind that and where you see your future growth coming from.

Dinshaw: I believe the number you’re looking at is in-force policies. We’ve sold life insurance for a long period of time. We have two insurance companies, Midland National Life Insurance and North American Company for Life and Health. Both of them have been in operation since the turn of the last century, so you have companies with about 100 years of experience in selling life insurance. You can say that there is a big in-force block that sits on the books. Annuities are relatively new. The organization started selling those in late 1999, so I know that’s 25 years. I will say that our target today is to invest capital about 50/50 in both life insurance and annuities.

Feldman: Sammons branched out into the registered investment advisory space in 2021, and you continue to make inroads there. What are your goals and the company’s goals as far as moving into the advisory space?

Dinshaw: Think of our mission, going back to financial services, which is financial security products, and then delivering them into the consumer. You can be involved in manufacturing them or in delivering them, and we are doing both of those. We do sell our products through registered investment advisors, and we have now taken two steps there. 

One is Beacon, an asset manager that provides financial security asset management on these registered investment advisory platforms. We purchased that.

The second one was the partnership we have with North Rock, which is directly selling through registered investment advisors into the space. We continue to believe that we will have a presence in a range of products that are structured around financial security, as well as all distributions that fall into third-party distribution. We have partnerships with different distributions. We may end up owning some of it at some point, but they’re all third parties in the sense they’re not captive. They’re writing for other carriers as well.

Feldman: Let’s talk about some products. I want to talk about the LiveWell Dynamic RILA. It has been in the marketplace for about a year and a half now. How has it been received?

Dinshaw: RILAs, as you know, started a handful of years ago. RILAs are now about a $45 billion market. We entered the space with the LiveWell product. We are enhancing that product, and we will have another product in that space coming out as well. We really are bullish on the registered index in the RILA product market. We want a bigger share of that market than what we have today, and so we remain bullish on it. LiveWell is sold through registered reps. We’re very excited about that, and it is a core competency for us because it is in the index annuity space.

Feldman: One of the things that has been in the news and really impacted all of our readers and the people we do business with are interest rates, which have been going up. We were wondering how that has affected your product mix and your sales strategies.

Dinshaw: I’ve been part of the annuity business going back to 1990, and I’ve seen all kinds of interest rates and equity markets rates go up. They come down. A few years ago, we were talking about interest rates being very low, and spread compression and the value to the consumer was low at that time. Then this year the interest rates have spiked up, equity markets have gone down and the yield curve has inverted. A lot of these value propositions are seen in a different light. 

For example, hearing again about laddered certificates of deposit, which I used to hear a lot about it back in the ’90s, and they disappeared for the past 20 years or so. So those are back as well. 

Our strategy is to have a range of products in the marketplace. If you think about financial security, we have traditional fixed annuities, multiyear guaranteed annuities, index annuities, life insurance products, ROP products, and we also have noninsurance products as well. So irrespective of what interest rates do and what equity markets do, we will have a product out there for the consumer to buy and plan their own financial security.

Feldman: How do you think AI and technology will play a role in life insurance in the future?

Dinshaw: It’s early in the AI evolution to know exactly how AI will change our lives. But if you have been on ChatGPT and see what that can do for you, you will get a flavor of how this technology is going to change the way we operate. We have a task force and they’re looking at all kinds of use cases, but it will improve the communication between an agent and a client and us. It will allow for easy recovery of data, easier analysis of data — of any kind that you can think of. And all of this is data-driven. 

You can apply it to review contracts; you can apply it in IT programming as the first cut. You can apply it in terms of sales where somebody asks a question, and the machine has a ready answer for you. It will dramatically change how we operate. It won’t replace the trust of an advisor or agent that still is needed by the end client, but it will dramatically improve the effectiveness of the sale and the advice that is provided.

Feldman: Do you think AI might make it a little easier for consumers to buy life insurance? Because we’ve all heard of the coverage gap. People say they’re interested in buying it, but they don’t get around to doing it because they think it’s going to be too difficult, they don’t want to go through medical underwriting or they think life insurance is going to be too expensive. There are all kinds of barriers in people’s minds. Do you think AI might help break down some of those barriers?

Dinshaw: It will improve communication. The biggest barrier that can be changed in the life insurance space is underwriting and the concept of instant underwriting. The technologies are there. There are some regulatory challenges. How do you widely accept AI and look at the results that are coming from it? If we can change underwriting from a six-week process that is medically based and turn it into something that is relatively instant, that will be the biggest change for the life insurance industry probably since its inception.

Feldman: Let’s talk about your distribution force and how you recruit producers. Are you having any difficulties finding talent?

Dinshaw: We are not a captive shop, and we do not build our own distribution. We are going out into independent distribution and connecting with them. What we have seen is an increase in agents and advisors who are working with us. We also see many younger advisors in this business, which is great. It is great to see younger people entering this space. 

The recruiting and training of advisors is left in the hands of the third-party distributors, the independent marketing organizations, the broker-dealers and the registered investment advisors. They’re the ones who are going out and recruiting people and training them, and we are interacting with them as a manufacturer and they’re the distributor.

Feldman: I think it’s encouraging that you see more younger people in the business. Why do you think that is?

Dinshaw: At the end of the day, the younger people will go where there is opportunity. And there is opportunity, and the mission is great: You’re going to go and earn somebody’s trust and provide financial security for them. It’s a great calling, and it attracts a number of people.

Feldman: And we know that you have an employee stock ownership plan, and that business model is unique in this industry. Can you tell us some more about that?

Dinshaw: We are owned by an employee stock ownership plan, or ESOP. To my knowledge, we’re the only financial services firm that is owned by an ESOP. The history goes back to Charles Sammons, who in the mid-1930s started an insurance business and then went on to buy a whole range of different businesses outside the financial services space. When he died in 1988 and his second wife died in 2009, they gifted all their stock to the ESOP plan. So all the company stock sits today in this ESOP plan and the employees of all controlled businesses in the United States will participate in the ESOP. 

So the biggest benefit of this is that it puts a significant amount of retirement dollars in the hands of our employees and unites all the employees toward one singular goal, which is growing the organization and growing the company. And if you think about a company like Sammons Financial Group, which is 2,000 employees, you need that North Star to guide everybody and say, “If we succeed, you succeed.” 

We have had tremendous success over the past number of decades, and this concept of behaving like an owner rather than an employee is a message we deliver on a regular basis to our employees.

Feldman: Let’s switch gears. Let’s talk about something else that’s been in the news: the Department of Labor fiduciary rule. I know it’s something that’s on the minds of the leadership of Sammons. Can you give us your thoughts on the new rule proposal?

Dinshaw: We have a team looking at it. There are some areas that are ambiguous. What we do know is that it is highly intrusive and is increasing costs. And our concern is that it’ll make the sale even harder to do, and it will move advisors away from this business or increase the cost so much that they cannot get to the everyday person who needs financial advice. 

Let me just add that since 2016, when the Department of Labor first put out a fiduciary rule that was ultimately defeated, there has been big change in the industry. We now have a Securities and Exchange Commission rule that regulates suitability at the point of sale. The National Association of Insurance Commissioners model annuity suitability regulation is in almost all states. About 44 or 45 states have adopted that. We already have a standard at the point of sale, and this is just one other layer on top of that, which increases the cost. We think it is very similar to the regulation that was passed in 2016 that was ultimately defeated by the courts. So we’ll see how all of this plays out.

Feldman: Where do you see Sammons Financial Group going in the future?

Dinshaw: We are going to continue to grow in the space of financial security, and you can look at that in a number of different ways. You can look at it as security against premature death. You can look at it as security against living too long. You can look at it as security against not having enough assets at retirement. But you can put all those pieces together and we will continue to offer products and services solutions in that space.

Feldman: I like to ask people how they got started in the business, because almost everyone in this business has a really interesting story.

Dinshaw: I grew up in Pakistan, and you might ask, how did I hear of actuarial science? There are a number of different professions you can enter if you’re good at math. That’s where I was in high school, and this was one of those opportunities. I was really intrigued and fascinated by it. Ultimately, I was admitted to Drake University in Des Moines, Iowa. I didn’t know where Des Moines, Iowa, was, except for looking at it on a map. So that’s how I ended up in Des Moines. And I have lived here for most of the past 40 years, and I have called it home, and have loved it and really enjoyed it. The insurance business is a calling, at the end of the day. You’re doing so much for your clients, giving them financial security — and peace of mind. 

Paul Feldman started the website InsuranceNewsNet in 1999, followed by InsuranceNewsNet Magazine in 2008. Paul was a third-generation insurance agent before venturing into the media business. Paul won the 2012 Integrated Marketing Award (IMA) for Lead Gen Initiative for his Truth about Agent Recruiting video and was the runner-up for IMA's Marketer of the Year, a competition that includes consumer and B2B publishing companies. Find out more about Paul at www.paulfeldman.com.