Winter Will Fade

Winter is starting to recede, and with it one of the worst periods in American history.
I don’t recall when I have wished for spring more, even after some deep winters in central New York.

To be truthful, I have to say I did not have a horrendous 2020. It was not wonderful, but I was able to save some money and enjoy the quiet, an introvert’s preferred state. It was far too much solitude, but it had its pluses. None of my elderly close relatives got COVID-19, and I did not have to struggle with school-age children going to remote learning, back to school and then back to remote again.

The year was actually good for quite a few people. I heard from many advisors and marketing organizations that were having a banner year.

But those of us who did OK or even thrived last year cannot breathe a sigh of relief. We are not separate from all the people out there gasping for air, literally and figuratively.

The life insurance and financial services industries have extraordinary power to help in some of the key crises this nation faces. In fact, those problems have a lot to do with our national crisis — retirement, for example.

Some of the states that are hurting the most used to have strong manufacturing and union presence, such as Michigan. Blue-collar workers earned decent money, benefits and retirement funding that ensured people never had to worry about an income after they stopped working.

Deep despair, with unemployment, opioid addiction and grinding poverty, haunts cities and crawls up the spine of the Appalachian Mountains.

More Than ‘Widows And Orphans’

The financial services and life insurance industries talk a good game of serving the public. I remember, early in my tenure at InsuranceNewsNet, hearing the phrase “widows and orphans,” as in “shield us from taxation — we protect the widows and orphans.”

That is an old one, but we have a more updated version of how we cover 75 million households in America. Commendable, yes, but life insurance ownership has been dropping in proportion to the population for a half century.

Why do fewer people have life insurance? I have heard lots of guesses. For example, one is that fewer people have it as a group benefit and they are not buying it in the individual market. The reason that seems consistent is that there is a lot more money in the bigger cases, so why bother with all the smaller ones and do more work for less money?

I have been inspired by agents who believe they are protecting their clients. Their passion was evident, and their practice reflected that outlook. I have also heard plenty of people who spoke about selling to prospects as if hunters considering their prey.

Those more mercenary examples have prompted regulators and consumer advocates to install guardrails such as the Securities and Exchange Commission’s effort to regulate fixed indexed annuities with Rule 151A and, more recently, the Obama-era Department of Labor’s Conflict of Interest rule, aka the fiduciary rule.

Rule Wars

Both of those regulatory efforts failed, but some version may return with the Biden administration and a Democratic Congress. In this month’s feature, Senior Editor John Hilton discusses the likelihood of new regulations popping up in the next few years.

This tug of war has been going on for decades, and consumers — who are more in debt and more unsure about their retirement years than ever before — are stuck in the middle. Half of Americans over age 55 don’t have any retirement savings. Even people with some means are routinely wiped out by long-term care expenses.

As boomers enter their frail years, everybody will be paying for their care. I assume that we will not just let them suffer and die in the street or in dark corners.

The life insurance and financial industries rally well when regulations are proposed. It was those efforts that brought down SEC 151A and the DOL fiduciary rules. Both of the rules had their considerable flaws, despite good intentions. This is what happens when one “side” makes a rule while excluding the other.

We could all do better by keeping the eye on the real issue, retirement and family security. In our industry, as in politics, we have our own us-against-them problems: fee vs. commission, planning vs. selling. It is yet another struggle in America with one side wanting to bash the other out of existence.

Some marketing organizations get it. They offer a wide array of services and bring on a diverse agent and advisor force that attracts clients from across the spectrum of races and riches. They are using tech to scale up their businesses and give the sales force the benefit of efficiency.
The more we have of these examples, the more likely this sector can serve as a model.

What we can’t do is assume that the nation’s problems will stay in “that” part of town. The election of Donald Trump was possible because of people who have suffered in marginalized rural areas, ignored by politicians until they were rattled for a vote.

The Riot This Time

Rural poverty was a problem that came home to roost in horrifying ways, and no one is insulated from the effects; Democrats and Republicans alike huddled in the bowels of the Capitol while marauders stalked the halls looking for somebody to punish.

Many of our worst impulses and ancient sins came together on Jan. 6 and erupted in front of our disbelieving eyes. Trump just happened to be the match that ignited that anguish.

What does that have to do with us? After all, we are just selling insurance and providing investment advice. But this industry cannot hide behind the facade.

We say we protect Americans. Well, right now America needs us more than ever.

As this deep winter melts into spring, what will we grow out of this ground?

Steven A. Morelli
Editor-in-Chief

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].