Limra: Premiums From U.S. Individual Life Insurance Sales Drop 26% in First Quarter

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June 11, 2009 Thursday 02:22 PM EST

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Limra: Premiums From U.S. Individual Life Insurance Sales Drop 26% in First Quarter

Fran Lysiak

WINDSOR, Conn.

The year 2009 is off to a weak start for U.S. individual life insurance, as premiums from sales dropped 26% in the first quarter, according to Limra International.

Earlier this year, Limra reported new individual life insurance premiums dropped 14% in last year's fourth quarter and ended the year with a 7% dip (Best's Review, June 2009).

In the first quarter, variable life products fared the worst, with premium declining 61%, according to the organization's U.S. individual life insurance sales report. No companies increased variable life sales and all declines were severe, Limra said.

Limra does not release premium numbers but growth rates only.

A year ago, universal life was the only product that showed strong growth and kept overall individual life insurance sales afloat, the organization said. But in this year's first quarter, sales fell 33% -- the third straight quarter of double-digit declines, Limra said.

Whole life, which is issued mostly by mutual companies, was less affected by the turmoil on Wall Street, but the product line, nevertheless, was down 5% from a year ago, Limra said. Whole life had posted positive growth during the last three quarters of 2008, the group said.

The more affordable term insurance saw the smallest decline, dropping 4%, Limra said.

"Historically, recessions have had little effect on individual life insurance sales; however, it appears the severity of this current economic downturn has impacted sales dramatically," said Robert Kerzner, president and chief executive officer of Limra, in a statement. The last time quarterly sales dropped this much was in 1943, he said.

Overall policy count, meanwhile, continued its downward turn, dropping 8%. All product lines saw declines, with variable life and variable universal life dropping the most, at 23% and 51%, respectively, Limra said.

The recession has made the jobs of insurance agents and financial advisers tougher. Client portfolios have eroded and fewer people are willing to buy. At the expense of finding new customers, many insurance professionals have been spending more time helping shell-shocked clients understand what has happened and how to respond (Best's Review, June 2009).

Most experienced advisers are likely to weather the storm. "A person who has been in the business for five or 10 years is going to fare better than a new agent," Walton Rogers, president of the Million Dollar Round Table's executive committee, said in the June issue of Best's Review magazine.

"A new agent who has no base has to prospect harder and smarter and will have a tougher time. He doesn't have any relationships to prospect from, none to spring off or upgrade with. That's the person who is really hurting" (Best's Review, June 2009).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

June 12, 2009