InsuranceNewsNet Magazine - November 2019 by InsuranceNewsNet

2019 TECH GUIDE Special Section • P. 29

The Fighter: David “Birny” Birnbaum Advocates For Insurance Consumers PAGE 38

Millennials Need Your Help, Not Your Boomering Insults PAGE 44

Cybersecurity’s High-Stakes Gamble For Firms and Clients PAGE 56

November 2019

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IN THIS ISSUE

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NOVEMBER 2019 » VOLUME 12, NUMBER 11

FEATURE

ANNUITY

20 The Battle For The

48 A mericans Fear Coming Up Short In Retirement

Dashboard

By Jean Statler Why following a retirement income plan is better than following a retirement savings plan in the postemployment years.

By Steven A. Morelli

Insurance technology’s long road to an Uber-like experience.

INFRONT

8 C limate Change, Life Insurance and Socially Responsible Investing By Susan Rupe and Cassie Miller A pair of articles delving into the issues of how climage change is affecting the life insurance and investment industries.

HEALTH/BENEFITS

52 Be An Employer Resource By Knowing Paid Family Leave Laws

29 The 2019 Tech Guide

Future-forward digital innovations that give consumers unprecedented access to products, services and information.

IN THE FIELD 38 T he Fighter

By John Hilton Consumer advocate David “Birny” Birnbaum may appear to be a foe of insurance products. But that is far from the case.

LIFE INTERVIEW

44 Millennials Need Your Help, Not Your Boomering Insults By Maxime Rieman Croll Non-intrusive ways to approach millennials on why certain insurance products and financial planning are necessary, and to help them understand how such purchases can be made affordable.

10 How to be A Distraction-Free Advisor

Paul Kingsman, Olympic medalist turned financial planner, describes the formula for taking control of your time and making room for the important things in your life.

online

www.insurancenewsnetmagazine.com

By Kate Wilkinson Benefits brokers can perform a valuable service for their clients by keeping up with the spread of paid family leave laws.

ADVISORNEWS

56 Cybersecurity: A High-Stakes Gamble For Firms And Clients By Cassie Miller What firms can do to protect themselves and their clients from a data breach.

INBALANCE

60 If You Can’t Say What You Mean, You Won’t Mean What You Say By John Hilton Anyone can learn to speak comfortably before a crowd. Here’s how you get started.

BUSINESS

64 Prioritize vs. Delegate: Identifying Your Gifts By Mike Walters Identify the tasks that fuel your practice and leave the rest to someone else.

INSURANCENEWSNET.COM, INC.

275 Grandview Ave., Suite 100, Camp Hill, PA 17011 717.441.9357 www.InsuranceNewsNet.com PUBLISHER Paul Feldman EDITOR-IN-CHIEF Steven A. Morelli MANAGING EDITOR Susan Rupe SENIOR EDITOR John Hilton ADVISORNEWS MANAGING EDITOR Cassie Miller VP SALES Susan Chieca

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InsuranceNewsNet Magazine » November 2019

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WELCOME LETTER FROM THE EDITOR

Learning To Balance

knew I was going to crash. I was on a new 10-speed bicycle heading into a curve when I willed myself to fall off the bike. I was already nervous because I was on a bicycle way too tall for a 12-year-old. In those days, you graduated from a banana-seat, Schwinn wannabe with streamers flapping from the high handlebars to something that was meant for the Tour de France. The bike seemed designed to get the rider’s posterior high enough to propel it over the rider’s head as soon as the dime-wide wheel hit a hole. Of course, that’s what happened on that afternoon. I saw the curve and thought that would be a likely place to crash, allowing me to see the arc of my trajectory play out in my imagination pretty much how it actually occurred. It took me a few decades more to know that nearly every endeavor was won or lost in my head before it was even ventured. I still learn that every weekend when I think about getting to the gym that week. “Of course I’m doing it,” means I’ll do it; “I’ll fit it in” means I don’t even have to bother setting the alarm for hitting the gym before work. In this month’s interview with Publisher Paul Feldman, Paul Kingsman tells us that we all need to time-block our days to be successful. But he also says that is a waste of time if we don’t know why we are doing it. Why do we want to be successful? Seems like a goofy question, especially if we have been on autopilot all our lives, either just heading for the next thing or drifting until we hit something else. That is how we arrive at dissatisfaction: “I don’t know what I wanted, but I know this isn’t it.” Here is a map based on Kingsman’s advice:

Set The Course

What do we need to accomplish by next year to get to that point in four years? What needs to happen in the next 90 days? What do we need to do now?

Set Your Days

Kingsman believes we have to time-block our days to achieve our goals. In the interview, he explains how time-blocking helped him win an Olympic medal in swimming.

Set Your Timer

It takes just 25 minutes at a time. Kingsman believes pushing beyond that makes us ineffective. We can probably test that by keeping an eye on when we start picking up our phone or cruising over to the internet. Certainly, studies have shown that it is healthier to get up and move around often during the day. An important element in Kingsman’s plan is imagination. For this, he asks us to envision ourselves a year from now. What will we be happy about at this time next year? Kingsman even suggests writing it out by answering key questions. Imagine it is the end of 2020 and finish these statements. 2020 has been an awesomely successful year because: » (Partner’s name) and I … » (Children’s names) and I ... » Health-wise, I achieved ... » Spiritually, I grew through ... » In my business, I ...

Set The Destination

Kingsman talked about setting a goal of where we want to be in four years. The first question is why we want to be there. If it is still the destination with that answer, then break down the journey.

InsuranceNewsNet Magazine » November 2019

He specifically put business last because we need balance. Seeing and inhabiting our success is key. The best way to win is to have already won in our heads. Yes, many a meme and sports legend quote has been made out of that sentiment — that’s because it works. The same process applies to our main feature this month, technology. That is an overwhelming subject to many people, particularly those of us who were not born into a tech world (“digital native” is actually a thing). But where do we want to be in four years? For many of us, that is a seriously tough question because if we think we can just do what we have been doing and remain successful, well, check out the Beanie Babies and Betamax market these days. If we see ourselves in a happy retirement in four years, let’s plan for it now. If we see a thriving business, what does it take to get there? Most likely, it involves getting comfortable with tech. No more paper apps. The first step is to read the information we have in this magazine. The second is to plan long-term , medium-term and shortterm. Third is to realize we will get to our best future one smart step at a time. What we plant in our heads will grow into reality. When we see the curve ahead, see how we will make it in a smooth arc. And as I learned all those years ago, don’t tighten up with you see the bumps coming. Keep it loose and you will glide right over them. Or fall. But just get back on the dang bike again.

Steven A. Morelli Editor-in-Chief

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INFRONT

Climate Change Gets Life Insurers’ Attention Climate change has the potential to affect human life expectancy, which is one reason why life insurers must examine the possible consequences of a warming world. By Susan Rupe

fter several years of record-setting hurricanes and wildfires, the property/casualty insurance industry has been made acutely aware of how climate change affects claims and risk. Now the life insurance industry is beginning to pay attention to climate change as well. In EY’s latest insurance industry report, “How Insurers Must Change In A FastMoving World,” researchers said climate change is one area that insurers must address as they look to the future. In addition to the potential of causing multibillion-dollar losses through nat- Majkowski ural disasters such as hurricanes, climate change has the potential to affect human life expectancy, which is one reason why life insurers must examine the possible consequences of a warming world, said Ed Majkowski, EY’s Americas insurance advisory leader. Life insurers “are still in monitoring mode” as their leaders begin to take a long-term view of how climate change will affect their industry and the clients they insure, Majkowski said. “Climate change isn’t a ‘holy crow, I have to do something right now this quarter,’ thing for life insurers,” he said. “But as data and models improve, life insurers will continue to quantify future long-term risks, and make strategic longterm decisions about their book of business and their customer base.” 8

Life insurers’ boards are asking company leaders what steps they are taking to examine the short-term and long-term trends of climate change, Majkowski said. “A lot of boards are asking insurers what are the key questions you are asking relative to who you insure, what do you insure, what geographic areas do you insure? “Insurers need to look at what are the lives you are insuring? Where are they?” Majkowski said. “Are they in areas that are more susceptible to climate change

insurers to disclose how they plan to address climate change, Majkowski said. “They are asking life insurers and annuity writers to make sure they have something built into their plans to assess these risks.” Not only are life insurers compelled to address climate change, but “the investment industry is forcing every industry’s hand to talk about climate change and explain how they are going to deal with it,” Majkowski said. “Every company is being asked questions about it: what’s in your investment portfolio and have you

“Every company is being asked questions about it: what’s in your investment portfolio and have you assessed the risk to that investment of climate change or other sustainability measures?” impacts, whether in California because of the environment that causes wildfires or along the coastal areas that are impacted by rising sea levels?” Life carriers need to examine the data they have about climate change to determine what changes they need to make to their mix of business in response to climate change, Majkowski said. Many insurance companies sell P/C as well as life and annuity products, so they already are more focused on the ways climate change affects the risk of insuring properties in areas that are more likely to experience disasters such as hurricanes, flooding and wildfire. Majkowski said the life side of the industry will need more data and analysis to determine how climate change will affect matters such as health and life expectancy. Regulators also are leaning on life

InsuranceNewsNet Magazine » November 2019

assessed the risk to that investment of climate change or other sustainability measures?” The life insurance industry has always taken a long-term view of planning, and climate change will be part of that planning, he continued. “It’s hard to worry about what’s going to happen over the next 100 years unless you’re looking at climate change,” he said. Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

INFRONT

Has Politics Permeated Socially Responsible Investing? By Cassie Miller

uring a recent House Financial Services Committee meeting, Rep. Katie Porter, D-Calif., confronted SEC Commissioner Hester Peirce, a Republican, on critical remarks she had previously made. Peirce had called environmental, social and governance investors “shrill,” “self-appointed” and “self-righteous.” Porter demanded an explanation of Peirce’s comments and questioned whether the Securities and Exchange Commission shared those same sentiments. The exchange is as follows: Porter: Commissioner Peirce, you’ve compared ESG disclosures to scarlet letters, in the vein of the high school novel, The Scarlet Letter, in which an unwed, pregnant woman named Hester is marked with a red letter ‘A’ for adulteress. You’ve said and I quote, ‘As with the scarlet ‘A’ the ESG letters over-simplify complicated facts.’ Do you remember making that comparison between ESG disclosures and The Scarlet Letter? Peirce: I do. Porter: You actually said, and this is colorful, ‘We ought to be wary of shrill cries from a crowd of self-appointed, self-righteous authorities even when all they are crying for is a label.’ So, in your opinion those who support ESG disclosures, the requirement that companies give investors information about, for instance, their environmental impact or their gender diversity — those people are shrill, self-appointed and self-righteous.

Why Are Investors Interested In ESG?

56%

of investors say they want to support companies that support the same causes they do.

51%

said ESG investing makes them feel they are using their money for good.

The conversation raises a question: Is there a division over socially responsible investing similar to other areas in American life? Many advisors with ESG offerings describe such investing as a way for investors to “democratize their values.” In late September, Greta Thunberg, a 16-year-old Swedish climate activist, spoke at the United Nations, calling on its members to address global climate change. Thunberg has no stake in American politics; she simply finds value in addressing the issue. That same week, 200 major investors with $6.5 trillion in assets under management urged 47 publicly traded U.S. corporations to align their climate lobbying with the Paris Agreement. Reaction to these events tended to fall along political lines. Socially responsible investing is closely linked to values like few other areas in investing. An Allianz study found that the main reason investors cited for getting onboard with ESG investment strategies was to support companies that support the same causes as they do (56%). Fiftyone percent of respondents said ESG investing made them feel they were using their money for good and 31% said that the strategy adds necessary diversification to their portfolio. None of the investors surveyed said that it furthered their political interests. Despite the demand for SRI, many

SOURCE: Allianz Investment Management

Some wonder whether the financial services industry has a political bias toward environmental, social and governance investing.

31%

said it adds diversification to their portfolio.

firms and advisors have yet to adopt the approach, dismissing it as “fad.” “From a business perspective, companies need to pay attention to the fact that ESG is not some passing fad,” said Todd Hedtke, chief investment officer for Allianz Investment Management. “Companies that view this as an opportunity to make changes are likely to realize a positive impact in both the near- and long-term.” When investing becomes politicized, important considerations such as fiduciary responsibility and portfolio performance fall to the wayside, said Zach Conway, a financial advisor and Forbes contributor. Conway believes advisors acting in a fiduciary capacity should consider values-based planning as part of their fiduciary standard, removing any political leanings one way or the other. Advisors following a holistic approach will also need to see the values and motivators of the whole person to fulfill their obligations as an advisor. A d v i s o r N e w s Managing E d i to r Cassie Miller may be reached at cassie.miller@Adnewsfeedback. com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.

November 2019 » InsuranceNewsNet Magazine

How to be A

DistractionFree Advisor ... and make more money than you ever thought possible

An interview with Paul Kingsman by Publisher Paul Feldman

InsuranceNewsNet Magazine Âť November 2019

HOW TO BE A DISTRACTION-FREE ADVISOR INTERVIEW

o you have what it takes to be an Olympic athlete? Most people would probably say, “No.” Others might say, “Are you crazy?” And some might even say, “Yes.” Those yaysayers probably have a secret weapon — two, actually: a plan and a schedule. The plan is the four-year map broken down into next year, next quarter and next month. The schedule is how you do it, day in and day out. That is how Paul Kingsman got into the Olympics and won a bronze medal in swimming. And he says that is the way you can become a Distraction-Proof Advisor, which happens to be the name of his book. In the first part of this interview in the October edition, Kingsman described how he journeyed from the Olympics to the world of advising. He started with Morgan Stanley in 2001, jumping into the financial services pool at one of the worst times in U.S. history. But he kept focused and persevered not only to be successful, but as a speaker, author and sales coach, he also helps others develop focus and planning skills. He still advises clients, as well. He realized that his ability to plan and focus was his superpower. But just how does he do it? Can you do it? Well, do you have 25 minutes? That is all it takes to get on track. Of course, there is more to it, but not that much. Although the answer is simple, it is not necessarily easy. In this interview with Publisher Paul Feldman, Kingsman shows how you can get in the pool every day and win in the Olympics in four years. FELDMAN: We all struggle with distractions. How can advisors improve their focus? KINGSMAN: Advisors often go to the other extreme where it’s like, “OK, I’m not going to get up out of this chair for the next two days.” No, don’t do that either. I start off each day with a timer on my phone that’s just 25 minutes on, five minutes off. For 25 minutes, there’s no checking email. There’s no messing around. There’s no hitting the timer and thinking, “What am I supposed to do next?” and blowing

away three minutes without thinking about it. I just start small with 25 minutes on, five minutes off. One of the misconceptions that people have about high-performing athletes is that they hear about all the training and think it is impressive. But they don’t realize that in a two-hour workout, we’re doing maybe five or six different sets of activity over those two hours. Nothing is really lasting. Most times, it’s not much longer than a half an hour. Then we’re on to something else. The next set might be a kicking set, so your arms are getting a bit of a breather. Mentally, you’re getting a change in scenery. Your head is up a little bit.

11-hour flight. Fortunately, for the moment, you can’t get on the phone. Then we come back to this: “How have you set your clients’ expectations? Were you clear with them when onboarding?” Did you say to them, “By the way, in coming on board with us, sometimes you’re not going to be able to reach me directly. Chances are while you and I were meeting, there were people calling into my office. And just like there’s no way I’m going to interrupt this meeting that you and I had, the same thing might happen down the track when you’re calling. So here’s how we manage that. You can either call directly into Cindy’s number or you can email Cindy if it’s something urgent and won’t wait for 90

Kingsman at the start of his 1988 Olympic medal-winning backstroke.

Actually, it’s a detail that I’m now figuring out how to work into another talk because it’s important for people to recognize. It’s not rocket science. It’s just 25 on, five off. If you’re in the middle of something so critical, stretch it to 30 minutes but then walk around for five minutes. Get a glass of water. Do something to break that up. That’s the time every two hours to check email. There’s this whole myth around, “There’s no way I can’t check email for two hours. What if a client wants me?” What if you’re on a plane from San Francisco to New Zealand? It’s an

minutes. Otherwise, just leave me a message and I’ll return it immediately after my meeting.” You’re managing expectations. That way, you can then time-block even when you’re in your office and not worry about, “I’m not going to be picking up that phone for the next 50 minutes.” FELDMAN: What kind of resistance do you get from advisors on time-blocking? KINGSMAN: The pushback I get is, “If I try to time-block out my day, very quickly that’s going to get trashed by the urgent

November 2019 » InsuranceNewsNet Magazine

INTERVIEW HOW TO BE A DISTRACTION-FREE ADVISOR call that comes in wanting me to transfer cash from a checking account to a brokerage account or things like that. So it’s just a waste of time doing it.” What many of them fail to realize is, you’re not so much doing it to live out an ideal situation. We all know that often by 8:30 in the morning, what we’d like as an ideal day has now gone out the window. But it’s having something to revert back to in order to get back on track at the first moment. That’s where oftentimes they just won’t commit to that. The problem then is what they’ve actually said is, “My time and attention and focus are up for grabs,” because they’re not tracking to any specific plan. They complain on the one hand about, “Why can’t I get this done? This should have taken me half the time. Somebody down the hall got this done in two days where I’m on my second week now.” Yet

going to get me from 5:30 in the morning until 8 because I was in the pool. They understood that and they learned that. It’s taking responsibility for that time. One of the things I talk about is being ruthless with it. FELDMAN: How do you establish priorities? KINGSMAN: Another example I give to advisors, and we did this in the priority section of my pursuit for an Olympic medal — we identified four key areas. In identifying those four key areas, if we believed and could validate, “Hey, if I execute these four flawlessly, I’m going to win an Olympic medal and be one of the top three in the world.” And we knew that was going to work. If somebody came to us with a fifth idea to work on, that was a total waste of

to get into that routine. KINGSMAN: It is. It is really hard to get into that routine. I’ll be totally transparent with you: This is still an area that I can still struggle in from time to time because you get bumped out of that routine and then you justify a couple of other things that really weren’t critical. Then it’s just harder to get back into it. Yes, in our industry in particular, there’s so much coming at us. Obviously, we’ve got to stay abreast of changing legislation. We’ve got to stay abreast of what’s happening from a compliance perspective. But again, without a structure to fall back on, when are you going to read these particular articles? “I’ll do it when I get a spare moment,” instead of recognizing, “No, from 4:30 until 5, three days a week, this is when I’m going to be

Distraction-Proof Steps 1. Be clear about why you’re doing what you’re doing. 2. Make time to record your vision in writing or visually. 3. Keep a clear picture of your goals on your mind to keep you pointed where you want to go. on the other hand, they won’t take responsibility for taking care of their time. For instance, when I was swimming, the day was really simple. My day was up at 5 in the morning and to the pool by 5:30 and swim for two hours and home, breakfast, bed. Up in the middle of the day, go to the gym for two hours, lift weights, light snack and then to bed. Back at the pool by 3:30 and swim for another two hours, sometimes two and a half, and home, dinner and bed. When people hear that day, most of them are admiring it. But secondly, some of them fail to see the point that I’m highlighting until I make it blatantly obvious. It was a time-blocked day. If a radio journalist wanted to interview me, that was fine. They weren’t 12

time and it was a pure distraction. There might be total validity in that fifth point, and it may work for 20 other swimmers, but for us, we’ve identified, here’s how we’re going to do this thing. This comes back to when we initially started talking about having a process, time-blocking. Again with advisors knowing, “Here are the activities that we’re going to pursue and here are the metrics that we’re going to use to track and to tweak as we go.” FELDMAN: There’s security and safety in repetition. The most successful people have routines. When you were an Olympic athlete, you had a routine that you did every single solid day. And yet for advisors — and for almost all business owners as well — it’s hard

InsuranceNewsNet Magazine » November 2019

reading the articles I’ve downloaded or printed off that have come through my email this week.” This is true in my personal life. For instance, on Thursday afternoons, my wife and I date. We’re married for 29 years next month. One of the best pieces of premarital counseling advice we got was to date once a week. I tell advisors this, too. It doesn’t have to be expensive. In fact, it doesn’t even have to cost a cent. From 4:30 onwards every Thursday afternoon, that is our date time. Interestingly, yesterday, we couldn’t do that because of two conflicting appointments for a new home that we’re in. But we moved the date to today at 4:30. It’s a seemingly simple thing as I talk about it — simple, not easy.

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Clients can lock in Access to different loan Opportunity for a A death benefit that’s potential index interest options and competitive guaranteed interest generally income-tax-free anytimeFor duringsales materials loan amounts.3 and an illustration, For sales materials illustration, bonusan rate up to 40% (with for beneficiaries. the index period, prior to and call the Case Design Team, 800.950.7372. 1 Life a 1% annual asset charge) the policy anniversary. call the Life Case Design Team, 800.950.7372. plus more opportunities for 2 diversification. 1 The index value used to determine interest credited may be higher or lower than the index value at the time of request. The index lock feature is available with select

sed to determine interest credited may be higher or lower than the index value at the time of request. The index lock feature is available with select index allocations.

2 Refer to product sales materials for all allocation options and interest bonus details. Bonused products may include higher surrender charges, longer surrender periods, caps, or other restrictions that are not included similar products thatproducts don’t offermay a bonus. There higher is no guarantee that charges, a policy willlonger be credited with anperiods, interest ales materials lower for all allocation options and interest bonusindetails. Bonused include surrender surrender everynot year as it is based on the growth of anthat index. er restrictions bonus that are included in similar products don’t offer a bonus. There is no guarantee that a policy will be credited with an interest as it is based3 on theloans growth of an index. Policy and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. Withdrawals in excess of premiums paid will be death subject benefit to ordinary income Additional premium be required to keepagainst the policylapse. in force. In the event withdrawals will reduce the available cash value and and maytax. cause the policy to payments lapse, ormay affect guarantees of a lapse, policy to loans in excessincome of unrecovered cost basis will be subject to ordinarymay income If a policy a modified endowment contract (MEC), xcess of premiums paid outstanding will be subject ordinary tax. Additional premium payments betax. required to iskeep the policy in force. In the event policyinloans and withdrawals will becost taxable as ordinary to to theordinary extent there are earnings policy.isIf aany of these features are exercised prior(MEC), to age 59½ nding policy loans excess of unrecovered basis will be income subject income tax. Ifinathe policy modified endowment contract on be a MEC, a 10%as federal additional tax may be imposed. laws areearnings subject to in change and you Ifshould a tax professional. withdrawals will taxable ordinary income to the extent Tax there are the policy. any consult of these features are exercised prior to age 59½ Products aremay issuedbebyimposed. Allianz Life Tax Insurance of North 5701should Golden Hills Drive,aMinneapolis, MN 55416-1297. 800.950.1962 www.allianzlife.com federal additional tax lawsCompany are subject to America change(Allianz), and you consult tax professional.

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backed byofthe financial strength and claims-paying abilityHills of Allianz Insurance Company of North America. by Allianz LifeGuarantees Insuranceare Company North America (Allianz), 5701 Golden Drive,Life Minneapolis, MN 55416-1297. 800.950.1962 www.allianzlife.com 1

The index value used to determine interest credited may be higher or lower than the index value at the time of request. The index lock feature is available with select

For financial professional use only – not for use with the public. cked by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. index allocations. Product and feature availability may vary by state and broker/dealer. ssional use only – not for use with the public. 2 (8/2019) P64339 e availability M-7277-A may by state broker/dealer. Refervary to product sales and materials for all allocation options and interest bonus details. Bonused products may include higher surrender charges, longer surrender periods,

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INTERVIEW HOW TO BE A DISTRACTION-FREE ADVISOR Everybody understands my training day. It’s very simple to understand. It’s just not easy to execute. That’s a tougher one, actually putting out the action, especially when initially there’s nothing coming back for it. Often, it’s like going to the gym where initially not only is there nothing coming back, I still look the same and I feel worse. But it’s hanging through that. When I was swimming, I was not an incredibly talented athlete. I was only 6 feet. I have size 11 feet. Our son is 6-foot4. He’s got size 15 feet. I would have killed for his physique. I used to race guys who

That’s when it gets calendared. That’s when you’ve got to be brutally honest with yourself and say, “Hey, while it can happen, am I prepared to pay the price for that?” As I mentioned with swimming, I saw people far more talented than me — I’m sure it’s the same in every field. There are advisors out there where you meet them, and you think, “How are they doing so well?” But they do the work. They’ve got a system and they follow it. Coming back to becoming distraction-proof, first, you’ve got to identify the distractions. What tips me upside down

athletes. You see that motif a lot. When newspapers are writing about college athletes, they’ll mention them as student athletes. We resented that and we never referred to ourselves as student athletes. We were always athletes. If you go back to the original meaning — the Greek meaning of the athlete — they were well-rounded in everything. They were polite. They were courteous. They were gentlemen. They were brave. They were compassionate. They were tough and rigorous when it came to their particular sporting code. The character there ran deeply.

Dream + Goal + Distraction = Frustration If you are not clear about what you want from your business, you’ll be distracted by any or all of the following:

• New ideas

• Self-doubt

• Responding more than planning

• Client requests • Servicing nonideal clients

Great results don’t just happen. They are a culmination of detailed, consistent, honest, focused planning and actions, directed toward a very clear objective.

were way taller than me. I learned how to listen, and I learned how to grind it out and persevere. In our culture today, we’re so quick to flit from one thing to the next to the next that we develop a habit of not being able to concentrate over a long period of time. FELDMAN: What are some steps that advisors can start to become distraction-proof? KINGSMAN: Start small and recognize that the first step, regardless of how small you may think it is, is the first step. That’s the one to take because the second step doesn’t happen unless that first one does. The other aspect to realize from that is it’s only small comparatively. That means it’s only small when you compare it to what others might think. I encourage advisors to sit down and figure out, “OK, if I’m saying this is where I want to be in four years, this is where I need to be by this time next year. What needs to happen in these 90 days to move that forward? What’s the first thing now that needs to happen?” 14

when I should be doing activities that I have total capability to do? And not only have total capability to do, I know that if I execute on them well, I will go where I want to get to. Obviously, that’s working from having the clear picture of where it is they want to get to. That goes back to that picture to start with: “Is that what I want to build here? If it is, OK, what do the foundations need to look like?” There are a number of really good coaches out there. Find somebody who knows the business enough to know how advisors can fool themselves and work with them on, “This is what I need to do for the next 90 days and I need accountability here.” That’s another angle to consider. FELDMAN: There’s so much more to writing more business than the tactics and strategy. There is more to being an advisor. KINGSMAN: It’s funny you say that. When I was swimming at UC Berkeley, oftentimes we were labeled as student

InsuranceNewsNet Magazine » November 2019

— Paul Kingsman

One of the comments I made about changing the broker-dealer role or the fiduciary role is that we’re never going to stop people trying to short-circuit the system because you can legislate ethics. You cannot legislate character. People fall into a bigger trap when they think, “Ok, now we’ve finally closed up every loophole.” Nope. Somebody will find another one. It comes back to that holistic mindset of being a complete person, of not only being ethical, but it goes far deeper than that. It’s having the utmost character to do the right thing, the best thing at every opportunity.

Out of the Box Thinking: A Gift of a Lifetime Most people put life insurance in a mental box. They think of it as income replacement in the event of the death of the primary wage earner, a way to pay off a mortgage or provide an asset base for loved ones. Whole life insurance, however, has many other potential uses. One of the most effective ways to use whole life insurance is to purchase a policy for a minor as a way fund a child’s yet-to-be-defined aspirations and secure that child’s financial future with: A guaranteed amount of life insurance protection to help protect the child’s family. A financial resource, with guaranteed growth, available for important life events, like paying for college, funding a wedding, making a down payment on a house, or starting a business. Also, unlike popular college savings plans, like 529 plans, the policy’s cash value is not considered for financial aid determinations. Cost effective coverage with optional guarantee of future insurability. Many whole life insurance policies for minors offer additional insurance riders, which may be purchased for an additional cost. Life insurance purchased for a minor doesn’t fall neatly into people’s preconceived notions, so it requires the dispelling of assumptions and educating clients on the many lifetime benefits whole life insurance has to offer. Whole life insurance on a minor has some unique considerations which you should explore before presenting to clients: Special Considerations when writing a whole life policy on a minor Face Amount. The amount of insurance allowed on a minor child is determined on a case-by-case basis and may be limited to a proportion of insurance coverage on the lives of the child’s parents. In families with multiple children, each should carry equal coverage unless circumstances warrant otherwise. Ownership. Because minors lack legal capacity to enter into a contract, the donor could own the policy and then decide at some future date, to gift the policy. Other common forms of ownership include custodianship for the child under the Uniform Transfers to Minors Act or putting the policy could be into a Minor’s Trust or Irrevocable Life Insurance Trust.

Premium payments. Typically, the intent is to satisfy all premium obligations and not leave the child with future financial obligations, making 10, 15 or 20 pay scenarios most attractive. Ability for enhanced performance. The average age of whole life purchases is between 35-55, which gives a policy on a minor a 35-year head start to enjoy the power of tax free compounded growth. Therefore, when illustrating juvenile life insurance, the cash value over time paints a compelling picture. The policy, however, has the potential of performing even better than illustrated. Here’s why. Most juvenile applications qualify for non-medical underwriting and receive juvenile health ratings. When the child reaches age 18 and subject to underwriting evaluation, he or she may be eligible for an upgrade in classification. A rating improvement allows future dividends to be earned on a more favorable basis than currently. If your clients want to help their children or grandchildren reach their dreams, encourage them to think outside the box by exploring the lifetime benefits whole life insurance has to offer. Massachusetts Mutual Life Insurance Company (MassMutual) helps brokers keep their clients covered through local support services, a wide array of high-quality insurance products, estate and business planning expertise, and a relationshipbased approach. For more information about MassMutual Brokerage, visit www.fifthavenuefinancial.com

Melissa Teixeira, ChFC, CLTC a Vice President at Fifth Avenue Financial who has nearly 20 years’ experience assisting financial service professionals help clients establish the financial security they want for themselves, their families and their businesses. mteixeira@fifthavefinancial.com 212.642.4829

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NEWSWIRES

The Headlines Made Me Do It! Advisors tell investors to stop

Gen Bias

The BeFi Barometer 2019 survey results suggest that vulnerability to specific behavioral biases varies by client age. The advisors surveyed say they observe that the following biases are most prevalent within each generation:

paying attention to the news if » Millennials: Framing bias (making decisions they want to avoid committing based on the way the information is prethe No. 1 investing mistake. The sented): 54% BeFi Barometer 2019 Survey of » G eneration X: Recency bias (being easily financial advisors showed that influenced by recent news events or experiences): 64% when clients are easily influenced by recent news, play it »B aby Boomers: Anchoring bias (a tendency to focus on specific reference point when overly safe and seek information making investment decisions): 75% that reinforces their established » S ilent Generation: Familiarity/Home bias (a perceptions, they are likely to preference to invest in familiar/U.S. domiciled make bad investing decisions. companies): 84% “With the prospect of inSource: Charles Schwab Investment Management creased volatility and lower returns on the horizon, advisors who understand the psychological or emotional factors that predispose investors to behavioral biases can differentiate their services in what is becoming an increasingly competitive environment,” said Omar Aguilar of Charles Schwab Investment Management, a co-sponsor of the survey. Advisors say the best way to help investors counter unconscious biases when making investing decisions is to take a long-term view (62%). It’s also important to develop a system for investing(52%) and use goals-based planning (47%) for mitigating the risks to a client’s long-term financial goals.

STATES SUE SEC TO STOP REG BI

The fight against the Regulation Best Interest rule rages on as seven states and the District of Columbia sued the Securities and Exchange Commission, saying it failed to protect consumers in its Regulation Best Interest rule. The suit, filed in the Southern District of New York, includes New York, California, Oregon, Connecticut, Delaware, Maine and New Mexico. The complaint alleges that the final rule undermines protections for retail investors, increases confusion about the standards of conduct that apply when investors receive advice, and makes it easier for brokers to market themselves as trusted advisors. The states said they are harmed because bad investment advice leaves consumers with less money to spend, and thus they collect less in taxes.

SENIORS STILL IN THE WORKFORCE

If it seems you are seeing more older Americans sitting behind desks or walking the shop floor, it’s because more Americans are staying in the workforce long past the traditional retirement age of 65. A ValuePenguin.com study showed one in six senior citizens is working past 65, and the percentage of the workforce over the age of 75 nearly doubled over the past 20 years. The labor force participation rate for the 65-74 age group increased by nine percentage points — from 18% to 27% — in the past 20 years. For the 75-and-older group, the labor force participation rate nearly doubled over the same time period. Men are much more likely than women to work into traditional retirement years. In 2018, nearly 32% of men between the ages of 65 and 74 were in the labor force. Yet only 23% of women of the same age were employed. Seniors are delaying retirement

DID YOU

KNOW The average national credit score in the U.S.

hit an all-time high of 706 this year.

InsuranceNewsNet Magazine » November 2019

Source: FICO

QUOTABLE A once in a lifetime opportunity that we are missing because of ‘Boneheads.’ — President Donald Trump, who wants the Fed to slash interest rates to zero

because they need to work longer in order to save enough for a comfortable retirement. Some seniors opt to keep working because they believe they need to keep their minds sharp and increase their mobility. But many industries depend on older workers as well. Professions such as embalmers, funeral attendants, repairmen, religious organizations and animal production have as much as 47% of their workforce aged 65 or older, raising the question of the survival of these industries once these seniors retire.

TRUMP PROMOTES PRIVATE MEDICARE COVERAGE

President Donald Trump jumped into the health care debate, signing an executive order to expand private Medicare Advantage health plans. This action took place as Democratic presidential candidates continue to call for a greater government role in health care. Trump pledged to defend the private health care system as Democrats want to dismantle the current health insurance system in favor of some version of government-run health coverage. Officials at the Centers for Medicare and Medicaid Services said the Trump order would beef up Medicare and its Medicare Advantage that is run by private plans. The order would bolster telehealth services — which would reduce the need for visits at the doctor's office — and the supplemental benefits Medicare Advantage plans offer. Trump’s order also directs the federal government to expand Medicare Advantage beneficiaries' access to tax-advantaged medical savings accounts. It also calls for CMS to propose ways for Medicare Advantage enrollees to receive cash rewards or rebates as a perk for saving the government money when they receive quality care.

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* Alliance for Lifetime Income, “Protected Lifetime Income Study, Wave 2” (July 2019). Annuities are issued by The Prudential Insurance Company of America, Newark, NJ, and its affiliates. © 2019 Prudential Financial, Inc. and its related entities. 1025942-00002-00

COVER STORY

The

Battle

For The Dashboard Insurance technology’s long road to an Uber-like experience By Steven A. Morelli

PLUS, turn to page 29 to check out our 2019 TECH GUIDE 20

InsuranceNewsNet Magazine » November 2019

sk Doug Massey why it has been so difficult to create seamless and effective insurance technology and he will take you on an Uber ride from hell — metaphorically speaking, of course Massey knows all about the ride because his career has followed the route of insurance tech itself in the early 1990s, when he started a property and casualty quote engine company as a college student. Later, he worked with leading insurance tech companies such as Ebix. Massey is now the executive vice president for sales and relationship management with Insurance Technologies, which, as the name implies, is a key player in insurance tech. And he said the company is finally closing in on a eureka moment when it all comes together into a seamless insurance tech nirvana. But we are in an age when we can get dinner delivered by drone with a click of the thumb, so why is the life insurance and annuity industry’s tech seemingly stuck? Ah, step inside Massey’s exasperating Uber for an explanation. “Let’s assume I’m using my Uber app and I want to do a ride, but it’s the way insurance works,” Massey began. “I’ve got to open up my Google Maps or my Apple Maps. So, I’ve got to find my location. I have to set a pin for my location. Then I say, ‘OK, well I’ve set my pin for my location. Now I want to share that over to this Uber app.’” It is not a simple share. First you open the Uber app and import the location. Then the ride is scheduled and taken. “That’s great and all,” Massey said. “But when the ride is over, instead of just getting out of the car and walking away, now the driver’s like, ‘Well, I dropped you off at a gas station, therefore you can’t use e-signature. The only place I can use an e-signature is if I dropped you off at an airport or a hotel, OK?’” Not OK, actually. Now the driver has to print out a document for the transaction. “’So I got a little printer here,’” Massey’s imaginary driver said. “’I’m going to print it off and I’ll hand you the printed document and then you can sign that and then I’ll take that and put it into my scanner

THE BATTLE FOR THE DASHBOARD COVER STORY and I’ll scan that back in and I’ll email it to you if you want.’” But hold on there. We’re still not finished. “And, by the way, the payment process wasn’t automated,” Massey said. “Every driver has their own Square account, so you have to hand them the credit card they have to swipe that. But they’re not allowed to use Square’s e-signature component; they have a separate e-signature component. So when they do have e-signature, they can’t just use that. They have to log into a separate device and go and have you e-sign the whole thing, right?” Maybe not so right. “If that’s how Uber worked, how many people will really use Uber?” Massey asked. “If you have an Uber driver who has to 25 spend $35,000 on technology to be an Uber driver, how many 20 Uber drivers do you have?”

“So we have a model where we have independent distributors who are selling through IMOs and BGAs and they can’t afford to spend a million dollars on infrastructure just to sell a product,” Massey said. “They have to have a system that’s simple.” One of the systems Insurance Technologies offers is Firelight, “where you can do the pre-sales analysis, you can do quotes, you can do illustrations, you can fund the process, you can apply for the process, you can e-sign for the process and submit it all in one platform,” Massey said.

Not Amazon Yet

Shawn Plummer, who blogs at annuityexpertadvice.com, has a few ideas on why agents might not be eager to use insurance tech. As director of advanced annuity and insurance sales with the IMO Unkefer & Associates, Plummer acts as a conduit for agents. In a sense, he is often the agents’ platform because they are reluctant to use the interfaces. Even though Massey describes FireLight as Amazon-like, Plummer said

InsurTech Platforms By Product

Parts Overwhelm The Whole

19%

16%

20% 14%

12%

16% 10%

12% 6%

5 4% Independent life insurance or annuity sellers often take a ver0 0% sion of that ride when they try t, l al t y ss h e o n e t n n f t t l e i l e v e o u t L a ia in m on A to manage a sale completely /R Tra ers en B u s He ec tire nsi me , P id Sp Re Pe ity , Acc online. , l Ho i t n a b l it y me “Everything that the advisors D i s Li b i ow d Total No. of InsurTech Platforms had for 20 years has been bifurEn Percentage of Total Source: Milken Institiute cated into little teeny applications that do one, little, teeny part of the process,” Massey said. “And Although all of these companies have it does not look or act like Amazon when they’re jumping from 20 different systems made strides in pulling together features he uses it. to try to make it work. It’s an arcane and and functions, they each still have work Insurance tech in general “doesn’t look asinine process.” to do to achieve the one-platform dream. like 2019,” Plummer said. From that perspective, it is no wonder Much of that focus is on the financial When he turns to an e-app in FireLight agents and advisors and even many dis- services space, where carriers hope to po- through another distributor, he fills out tributors have not been jumping into the sition annuities in front of investment ad- what looks like an electronic representatech pool. visors to attract their business. Advisors tion of the paper application. And every Marketing organizations have been are already accustomed to dashboards application is different, rather than havstruggling with an ever-expanding jum- and platforms with different functions. ing a uniform data entry system for many ble of systems and interfaces. If they deal It is, in essence, adding an annuity but- carriers. with 25 to 30 carriers, that is how many ton to what advisors are already using. So, He liked that the system did not adsystems they have to manage while trying in the financial world, it’s a battle for the vance until he filled out the sections adeto stay independent. dashboard. quately, ensuring a complete application. “If they try to buy a core system on their But the life insurance and annuity That’s important because electronic filing side, they’ve got to buy 20 different pieces sphere is different in key ways. cuts the underwriting time by at least half and layer them all together,” Massey said. The main difference is that agents are over paper applications, reducing under“Everything is disjointed and it’s too ex- older and have a tradition of using pa- writing from four to six weeks down to pensive and too complicated.” per applications — and many still do. two to three weeks. That is where vendors like Insurance For some insurance marketers, it is an But it is not like the e-commerce expeTechnologies come in. The company and achievement just to get agents to use a rience in the rest of his life. competitors such as Ebix and iPipeline drop-ticket system. “If this is 2012, this looks modern,” offer integrated solutions. Plummer said. “But it’s 2019. We’re November 2019 » InsuranceNewsNet Magazine

COVER STORY THE BATTLE FOR THE DASHBOARD touching things on phones, and on apps, and stuff like that. This doesn’t reflect that.” Plummer includes Ebix and iPipeline along with FireLight in that description. “They’re still pretty primitive in the way that they look and in the way that they feel,” Plummer said, before turning to an e-app on FireLight, used by many, if not

is set out. I’m comfortable with the issuing process. I’m comfortable with all the administrative process and I don’t want to throw a wrench in that with a new client and fumble it up.’” Not only is the appearance uncomfortable, there is also the problem of having to stop during the process. As Plummer

didn’t have to really learn a new system the process would look like the form which would get producers more comfortable with using it. They were right. Adoption was much higher initially with the forms-based UI than it had been with other systems they had tried.” But that is changing. Agents may be ready to meet the wizards. “Many carriers have now built out wizards, and within the next 12 months I would guess that most of our carriers will support both a wizard and a forms-based UI for their • Identify stakeholders in your orgaFireLight system,” Massey said. nization accountable for the success. But it will be up to IMOs and broker-dealers whether agents • Include risks and barriers. and advisors see one or both options. Some distributors • Communication process for feeddid not want to create a wizback throughout the process. ard within FireLight for their compliance forms. It is not the • Approach for growth strategy technology limiting carriers (incentives, penalties or mandatory). and distributors, Massey said, but the other way around. “So, the point is there are a lot of options and the system — Ken Leibow, InsurTech Express can be as slick and high-tech looking as the agency wants to said, the system does not allow the appli- make it,” Massey said. “Some try to keep cant to skip a section, even with intention things looking old school because the priof returning to it. mary users are old school.” But if there is a question that can’t be immediately answered, the application Two Schools In One Building has to be abandoned until the agent and Christine Cox-West is caught between client get back together. Clients can’t log schools. She is operating in the old school in and complete the app on their own. of life insurance and If companies can reduce the friction, her partners are in Plummer said, agents would be more like- the tech-savvy finanly to expand their product range. cial services school. Plummer’s frustration shows the di- Cox-West and three lemma that Insurance Technologies partners started a finds itself in, according to Massey. The new office this year company’s FireLight product is flexible that combines a registered investment for different user preferences. It is just advisory with an insurance agency, The that some carriers and distributors, like Fortis Agency in Westwood, N.J. the one Plummer is using, bend the tech One of their first orders of business is backward to the old way of doing things. finding a customer relationship manageFireLight does, in fact, have the wizard ment, or CRM, system that can handle interface available for users to answer the whole office at a reasonable price. questions to input data, as Plummer de- They are seriously considering Ebix’s scribed. SmartOffice. “On FireLight, a lot of carriers started SmartOffice probably represents the with a forms-based UI (user interface),” dream for an all-encompassing system Massey said. “They did this because many for insurance agencies. But it is meant for of the producers are older and were used financial agencies, although the platform to the forms. They figured that the reps has added insurance features. Cox-West

Best Practices For A Successful Tech Adoption Plan • Create an adoption plan first. •A ssign a champion responsible for growing adoption. • Market awareness — promotion. • Training (initial and follow-up). • Set measurable goals. • Organize adoption plan in stages.

most, annuity companies. “When you log in, there are several different things you have to do just to get into the application itself. What they are doing right is they’re making it dummy-proof in a way that you can’t really move on to the next step until you complete the first step correctly. So, they’re moving in the right direction but they’re not there compared to other industries using other digital platforms.” The fumbling entry to the form is a problem for agents because of the experience for clients, Plummer said. If clients see their agent, particularly an older one, stumbling through the application process, how much confidence will they have that their agent knows what they are doing? “There are 30 to 50 major annuity companies. They all have different applications, they all look different, they ask the same question in a different way,” Plummer said. “My gut, my opinion, not a fact, is I feel that agents and advisors tend to hone in on one, two or three different annuity products when they all are selling annuities simply for that fact of, ‘Hey, I’m comfortable with the way the application 22

InsuranceNewsNet Magazine » November 2019

COST CUTTERS COVER STORY

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459317

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COVER STORY THE BATTLE FOR THE DASHBOARD

What eApp Platforms Are Available?

Here are three notable annuity eApp platforms on the market today: AFFIRM for Annuities from iPipeline has 30-plus carriers and 30-plus distributors. However, with its acquisition of Laser App, iPipeline is expanding its annuity distributor client base significantly with $25 billion of annuity premium annually and 200,000 annual transactions. AFFIRM for Annuities supports more than 3,400 unique variable and fixed annuity products. In 2017, AFFIRM for Annuities reported 100,000 unique financial advisors using the platform. AnnuityNet by Ebix is a multi- and single-carrier eApp platform that supports more than 1,800 fixed and variable products for 50-plus carriers, more than 250 distributors and 200,000 users. AnnuityNet integrates with SmartOffice CRM and VitalSales Suite. FireLight by Insurance Technologies is a multicarrier platform with 40-plus carriers and more than 60 distributor clients representing more than 150,000 producers. FireLight supports multiple lines of business including annuity, life, long-term care insurance, disability insurance and mutual funds, and supports all product types on a single platform. FireLight provides carriers and distribution self-managing tools and includes the key features producers and firms need to manage a compliant, fully-digital eApp process. AFFIRM for Annuities and AnnuityNet were introduced to the market in the 2005-2006 timeframe. Their initial customers were wirehouses selling variable products. They have since expanded the annuity products offered on their platform and expanded distribution. AFFIRM for Annuities and AnnuityNet

have features such as routing for compliance review and approval, supporting specific brokerage forms, tied-in DTCC services for paying premium from brokerage accounts automatically, netting commissions and includes subsequent premium payments for flexible premium deferred annuity products. These are just a few of the key features offered. FireLight was introduced to the market in 2010 and offers similar features. FireLight is maximized to work on a mobile device, has offline capabilities and has built-in e-signature at no additional cost. Ninety-eight percent of all annuity applications submitted on FireLight are e-signed. Some carriers deliver annuity contracts electronically. The AOE tool can have an opt-in option for e-delivery and then capture the client’s email address. The multi-carrier e-delivery platforms such as eXpedite by Paperless Solutions Group and DocFast by iPipeline have already implemented e-delivery with some carriers. It’s a much simpler process than e-policy delivery for life insurance because there is no money to collect, no upsell for more face amount and typically no delivery requirements to sign except in some cases a delivery receipt which can be easily e-signed during the client’s e-delivery experience. e-delivery for annuities is secure and fast. Additionally, tools including client relationship management systems, illustrations, annuity market research and others seamlessly integrate with eApp platforms for annuities. AnnuityRateWatch, for example, offers product feeds for fixed indexed annuities, multiyear guaranteed annuities, single premium immediate annuities and income rider, quotes for the majority of the independent, bank and broker-dealer distribution channels. ARW feeds will soon be launching directly into Ebix’s AnnuityNet system. — Ken Leibow, InsurTech Express

InsuranceNewsNet Magazine » November 2019

is working with an IMO that features “forward-thinking technology” to help with that end of the business. That tech is important because she struggles with her own Uber ride from hell that Massey described. Further complicating things for her is that after 30 years in the business, she has clients nationwide. Adopting more tech has smoothed much of the process. “In the past, it would be very difficult to take an application over the phone, email it or print it out and overnight it to them,” Cox-West said. “So, from start to end of a case, you’re adding an extra month to five weeks by doing it the old way.” Since switching to electronic systems, she has been able to get disability and life insurance underwritten in as little as five days. If clients want to do an “in-person” meeting, she can do that virtually. Meetings usually run 35 minutes and at the end, she can do an app in 10 minutes with the client, Cox-West said. Another critical aspect that has sped up the process is accelerated underwriting. After more than 10 years of predicting faster underwriting was right around the corner, the industry appears finally to be delivering on that promise. The rule of thumb had been that policies under $1 million, especially around $250,000, could be underwritten without a medical evaluation. Now, she can get up to $5 million of coverage underwritten on an accelerated basis. And she says it’s about time, with all the data that is already available about clients. “A few years ago, a Guardian home office representative posed the question, ‘What do you think is the No. 1 determining factor of mortality?’ And what would you think it is?” Cox-West asked. It isn’t heart disease or being on a particular medication. “So, it’s crazy but the No. 1 determining factor of mortality is credit score,” she said. “And the carriers are not using that information, yet. But artificial intelligence could eventually take over the underwriting process.” Researchers theorize that the extreme stress associated with debt and financial issues is responsible for the higher mortality rates among those with poor credit scores. That is still in the future, along with one system that will do it all for her

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COVER STORY THE BATTLE FOR THE DASHBOARD RIA/insurance agency. “There’s probably more data management on the insurance side and the RIA side is really managing the assets,” CoxWest said. “Somebody writes you a check, and now you’re managing their money. You sign an agreement and that’s it. On the insuring side, though, there’s a lot more case management. If I could find a system that could do it all for me, that’s ideally what I want.”

‘Agents Will Need To Adjust’

Ken Leibow i s head of d i st ribution technology at Colorado Bankers Life Insurance and owner of t he I n su rTech Express website. He helps companies acquire and use tech for distribution, so he sees the full array of options. He is accustomed to adapting traditional preferences for new technology. It is a wide variety because tech vendors are trying to please everybody with a range of budgets and preferences. And sometimes distributors offer many options for their agents because they are dealing with their own range of ability and preferences. “It’s kind of a hodgepodge of tools,” Leibow said. “Because what they’re trying to do is cater to everybody. So John Doe agent says, ‘I love Protective Life. They’re my favorite company. I love their service, I love their platform. I want to use it.’ So the other guy says, ‘I rate with 10 different carriers. I just want to learn one system.’” Consequently, some distributors have a variety of e-apps in a cafeteria style, while others feature a dashboard with everything integrated. Beyond the different needs in insurance is the new world between finance and insurance that Cox-West represents. Although no tech option would offer the perfect blend of both industries, Leibow said SmartOffice has been developing features that serve both well. “It’s one of the most robust systems out there,” Liebow said. “It’s built on top of a CRM but it has a lot of modules.” 26

Like Massey, Leibow said he sees the day coming when the life insurance industry will be more aligned with the tech-friendly finance world. After all, it has happened with property and casualty, why not life insurance? “Right now, if I want to buy auto insurance, I can go to the Geico app and I can apply and do everything on my iPhone,” Leibow said. “Why can’t I do that with other types of insurance? But they are getting there.” Why they are getting there has to do with the point that Cox-West made about faster underwriting. Predictive underwriting will allow life carriers to use more consumer-facing tech as P/C carriers do with auto insurance. But won’t that displace agents? “Agents will need to adjust and go where they have value,” Leibow said. “Look at all the direct marketers for term insurance. If that’s all that agents ever sold, they realized, ‘Hey, we need to get into other lines of business. We’ve got to be able to do other things because this is not sustainable.’”

Mad Dash For Advisors

Tech is a key player in another front for annuity sales — RIAs. It is no secret that carriers are trying to get annuities in front

tracks and analyzes the annuity market. Changes in annuity regulation have pressured carriers into the RIA market, because the fiduciary standard or something close to it keeps poking into the annuity space. New York, for example, is now holding life insurance and annuity sellers to a near-fiduciary uniform standard. Fiduciary standard proponents are pushing entities such as the Securities and Exchange Commission and the National Association of Insurance Commissioners to follow New York’s example in establishing a uniform standard that replaces suitability. “If there is a fiduciary proposal, you want your product in the hands of fiduciaries,” Moore said. “And right now that distribution doesn’t really exist for annuities for all practical purposes.” One common requirement of fiduciary standard is helping clients make the best choice for them, giving clients an array of the best options. That requires comparison tools, which Wink offers with AnnuitySpecs and LifeSpecs. The tools allow distributors to offer their sellers a platform to compare the products the distributor sells for the best fit. On the advisory side, RIAs would approach it “fit first, product second.” They would want the client to have the

Benefits Of Annuity eApps • Annuity application submitted in good order. • Commissions paid faster. • Faster and better experience for the client. • eSign annuity applications • Compliance and suitability integrated workflow. • Integration with CRMs, illustrations and annuity market research sales tools. • Automate 1035 exchanges. • Automate brokerage account premium transfers. • Straight-through processing with ePolicy delivery. • Sub-pays on flexible annuity products. • Automate brokerage-specific forms.

of investment advisors and the dashboard is key in that endeavor. “That’s really why there’s such a mad dash for insurtech right now because there’s such a focus on RIA distribution,” said Sheryl Moore, CEO of Wink, which

InsuranceNewsNet Magazine » November 2019

universe of products to choose from. One problem in comparing annuities is the growing complexity of the products, particularly popular indexed annuities. Many annuities have a range of riders, for example. And companies are using

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November 2019 » InsuranceNewsNet Magazine 27 I-30239 02/15/19

COVER STORY THE BATTLE FOR THE DASHBOARD propriety indexes that defy comparison to other indexes. Then they can have different caps and participation rates. It is not like comparing simple single premium immediate annuities. But carriers are trying to woo investment advisors with simpler commission-free annuities that are more compatible with the fiduciary world. RIAs in general cast a wary eye on annuities, but there is a growing understanding that annuities can align with the client’s best interest when it comes to retirement security. In the investment advisory world, it’s the battle of the button, the one on the dashboard that says “Annuities.”

unified technology grow faster and are more profitable. It’s a simple thesis, but we’ve got a significant amount of research and data that we’ve conducted to support that thesis.” The problem has been the systems that align with different aspects of the industry. In a sense, Envestnet hopes to be the Uber that brings together the financial world. “Wealth and management infrastructure and platform have been disjointed for many, many years,” Yackel said. “And we’ve taken that digital divide and said we need to bridge that gap. And the beautiful thing about it is insurance and protection type of solutions are paramount toward

first and product second, advisors are more likely to recommend annuities and work with an insurance professional for help, Yackel said. “We’re breaking really new ground here, combining those two types of ecosystems,” Yackel said. “Planning will be the area that’ll help break down the barrier, so that people don’t see it as just a product line extension. If we wake up two or three years from now and it is just a product line extension so that you can just buy insurance on the platform, I don’t think that’s going to be as successful as saying you’ve tied it toward a comprehensive financial plan.”

“Wealth and management infrastructure and platform have been disjointed for many, many years. And we’ve taken that digital divide and said we need to bridge that gap.”

Envestnet offers annuities through FIDx, which is powered by Insurance Technologies’ FireLight. “So I’m an RIA and I live all day in Envestnet,” said Insurance Technologies’ Massey, speaking from an advisor’s perspective. “Now inside of my brokerage platform I can sell an annuity.” Not only does the system offer uniformity, it is a more accessible route for carriers. Through FIDx, carriers will be able to extend to other venues such as consumer sites without having to keep uploading thousands of business rules. “It used to be expensive,” Massey said. “If a carrier wanted to go to a new market, it’s like, ‘Oh, now I’ve got to go build business rules and databases and everything to go run a consumer site and manage the UI.’” Instead, that all resides in FireLight. “If I can maintain it all in one place and push that out so other places can leverage it,” Massey said, “there are all kinds of places I can go and create a unique consumer or advisor experience where everything is linked and it gives them a cohesive Uber-like experience.”

Those efforts have been making quite a few headlines lately with insurance carriers and advisor tech companies teaming up to make life and annuity products available. One in particular is Envestnet, which acquired MoneyGuide owner PIEtech earlier this year. The deal was momentous because MoneyGuide is the leading financial planning software provider — with eMoney, owned by Fidelity, a close second. Envestnet has an insurance exchange that has lined up several key annuity companies to offer products to financial advisors. Now with MoneyGuide, it will have an even-closer tie with those advisors. Investing and insurance are increasingly collecting under the financial planning umbrella. And Evestnet wants to be the one holding that umbrella. “We’ve conducted a lot of the studies of this,” said John Yackel, Envestnet’s executive managing director of strategic initiatives. “Advisors that use integrated and 28

planning. People, typically, have been doing insurance off-platform, directly with an insurance company, and not part of their wealth management platform. So, when you can bring all of those together into an elegant planning process, and the ability to execute upon it directly with, whether it’s a money manager or an insurance company, the same protocol provides a significant lift to that financial advisor that does not have that ability today.” The question remains whether advisors would seriously consider annuities, even with fiduciary-friendly products in financial planning tools. “When it’s tied to planning, they do,” Yackel said. “Advisors — and we work with, obviously, thousands of them — have a lot of strong opinions, one of which is they are fatigued and tired of having product wholesalers come in and talk about a benefit or a feature of a product, without the proper context of an overall plan.” But spend time talking about strategy

InsuranceNewsNet Magazine » November 2019

Is That The Uber?

Steven A. Morelli is editor-in-chief 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 smorelli@innfeedback.com.

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This year’s Tech Guide covers futureforward digital inventions that give consumers unprecedented access to products, services and information, as well as those that give agents and carriers access to consumers. CONTENTS New Insurance Platform InsureMeNowDirect.com Gets Rave 5-Star Reviews — Bill Levinson of Levinson & Associates.................................... 30 Life Underwriting … In Minutes! — Manoj Sherman of eNoah...............................32 MyBlocks’ Captivating User Interface Revolutionizes Prospecting and Client Education — Tony Leal and Kevin Hughes of Envestnet...................................... 34 Techno-Burden — Jackie Hamilton of NetClaim.......................................................35 Create Systems to Maximize the Value of Your Practice — Equisoft............................36

Technology Issue • Special Sponsored Section

New Insurance Platform InsureMeNowDirect.com Gets Rave 5-Star Reviews

ou probably don’t reflect on the events of August 26. That’s OK. For most insurance agents, there was nothing special about the day. Just another Monday. Business as usual. For those quietly tuning into an invitation-only Levinson & Associates webinar, however, it was a date that will not soon be forgotten. By the three-minute mark, it became clear that the organization and its agents were leaping years ahead of virtually every IMO in the country. Industry firsts are what many have come to expect from the Florida-based national IMO, est 1972. Creating trends instead of following them is how the IMO soared from a couple hundred to more than 17,000 agents in a few short years. But this … this webinar introduced an entirely new level of dominance and firmly established Levinson & Associates as the leader in agent tech for years to come. So what happened? As Managing Partner Bill Levinson put it: “People — especially younger generations — want to buy everything online, insurance too. Not just property and casualty, either. Modern consumers want to satisfy all of their insurance needs online or through an app. That’s exactly what our new platform enables.” The webinar — now viewable following the website at the end — marked the launch of a new agent platform that can only be described as the “Amazon of insurance.” The agent-facing side of the platform is called Sell While You Sleep (SWYS). The consumer-facing side is known as InsureMeNowDirect.com. It’s officially the first agent-to-consumer platform where customers can compare and purchase myriad insurance products (including critical illness/cancer, accident, life, dental/vision, etc.) from an assortment of carriers, directly on an agent’s website. You read that right. Agents can now sell multiple categories of insurance products to new clients directly from the agents’ own turnkey, done-for-you, ready-to-deploy, fully customizable website that the IMO provides. Already have a website? No problem. The IT department at Levinson & Associates developed an easy-to-install plugin that runs on almost any existing website. Everything was designed to make the insurance-buying process easier than ever. With this new platform, there are no third-party calls. No exams. A prospect can browse, compare, click and buy right on your site. And anytime a product is purchased, the agent is given

InsuranceNewsNet Magazine » November 2019

full credit, commission and future renewBill Levinson Experience Podcast als for the sale. It’s a tech breakthrough that even in its infancy is rapidly turning heads. When it launched, SWYS was pre-loaded with more than 10 insurance products from three different carriers. In the short time since, several more carriers and products have been added. Big carriers — names everyone knows and trusts. The best part? Agents using SWYS don’t have to lift a finger or say a word for a policy to issue. Consumers purchasing insurance from Levinson agents, either online or in person, are rewarded with free scholarships — good for one year of tuition and valid at more than 400 colleges and universities nationwide — that can be gifted to their loved ones, with qualifying products. And it doesn’t stop there. Levinson agents don’t just sell insurance, agents can also help clients achieve peace of mind by protecting their most important documents and ensuring that they are delivered to loved ones in the event something happens — thanks to an exclusive alliance with digital asset protection giant Legacy Armour, clients can self-enroll. Of course, having the ability to sell insurance from your website is meaningless if your site doesn’t have traffic. Levinson & Associates has taken care of that too. Thanks to another groundbreaking platform — Agency Automator — agents are given industry-leading turnkey marketing and CRM assets (including 1,000 free prospects/ leads monthly), and the IMO’s own marketing department cleverly redirects all of its web prospects interested in purchasing insurance from insuremenowdirect.com to the website of the agent nearest to them by zip code.

To watch this historic webinar yourself and discover how it could transform your career, as well as how you can sign up for the next SWYS, LSHub, Legacy Armour training session on November 21 at 2 p.m. EST, visit www.GetSWYS.com.

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Life Underwriting … in minutes!

roundbreaking innovation from eNoah iSolution could transform the life insurance industry by providing underwriters with the ability to make informed decisions in minutes. eNoah, a global leader in digital solutions, brings the speed that term life insurance has typically enjoyed to permanent insurance by unleashing the power of machine learning, artificial intelligence, cognitive computing and predictive analytics. eNoah challenges traditional models and adopts innovative tech for ways to speed up the underwriting process and empower underwriters to make informed decisions that help place policies quickly, resulting in faster payout to brokerage general agents (BGAs), brokers and agents, and ensuring customer satisfaction that leads to repeat busiManoj Sherman ness with higher retention. These new advances have the huge potential to improve cycle time by several days and thereby speed up policy issuance. In short, underwriters using eNoah’s software can run full medical history reports — including attending physician statements (APSs) — in about 10 to 15 minutes, rather than the days it typically takes. That shorter wait time has more clients filling out permanent applications and thus handing more agents larger commissions; it also has carriers issuing a greater number of policies while saving time and money in the process. This ensures faster insurance coverage to applicants. In the Q&A that follows, Manoj Sherman, eNoah’s senior vice president, shares an in-depth look at what makes eNoah’s platform eXtract Plus™ so game-changing for underwriting.

Q: What is the biggest challenge for insurance underwriting? Manoj: The capacity to adapt to evolving market needs. Traditional insurance models are severely challenged by disruptive new technologies, and companies need to adopt new models of engagement to meet today’s customer expectations of ease of use and speed of delivery. Insurance at large is one of the slowest sectors to adopt new technologies, as per industry surveys. To survive in this highly competitive ecosystem, there is increasing pressure on underwriting to lower costs while making quick and accurate decisions. That’s essentially a herculean task, because the amount of data in medical histories that underwriters need to review keeps growing. Those histories range from 100 to well over 1,000 pages each, and might include lab slips, medications, EKGs, clinic notes, follow-up notes, surgery procedures, X-rays and other documents. This is a very laborious process as every page needs to be reviewed, case by case, to look for vital conditions that impact the decision. It can take anywhere from a few days to a week for a carrier to make an informed decision on a case. Customers today don’t have the patience to wait that long anymore, even if it means accessing long-lasting coverage that they can use for retirement, loans and emergency cash access.

Q: How do eNoah’s products, such as eXtract Plus™, speed up this process and take pressure off underwriters? Manoj: The job of an underwriter is a very challenging and important one. It requires a lot of patience, attention to detail, and years of experience and knowledge.

Source: The Internet of Things, www.ey.com

InsuranceNewsNet Magazine » November 2019

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Our focus was to create powerful tools to help the underwriter make accurate and quick decisions with minimal effort. With that in mind, we created tools and software leveraging the power of machine learning and artificial intelligence, both of which can —with great accuracy — read through and filter someone’s entire medical history spanning several hundred pages very quickly and provide deep insights to the underwriter to quickly make informed decisions. We are able to extract key data and provide the underwriter with critical decision making data, including health credits, vitals, critical conditions, major illness, medications, lab data, life events, and other pertinent contextual corroborative data in a very unique UI that enables the underwriters to quickly validate and make decisions, all in a matter of minutes. eXtract Plus is a versatile platform that can be used to carve many tools, and it can work in multiple scenarios, depending on what the underwriter is trying to achieve. For example, if an underwriter only needs to check for certain conditions before making a decision, he or she can now run a search and very quickly see what’s happening in terms of medications, labs, procedures, how many years someone has been on a treatment, frequency of drugs taken, and dosages. Even before placing a request for an APS summary, the underwriter can select key criteria that he or she wants to evaluate and see it all very quickly. It can also be used to ensure that the APS an underwriter has procured is complete and accurate. That’s where eNoah’s other tools that focus on error-proofing come into play. We focused on solutions that can quickly capture key information and generate accurate medical summaries, making the entire process fast, easy and, most importantly, standardized. Higher accuracies are achieved by mitigating or eliminating human errors, by incorporating Six-Sigma methodologies of poka-yoke (mistake-proofing) and use of knowledge-based capture screens. eXtract Plus in combination with these tools crosschecks each and every step of the way, ensuring accuracy to the 99th percentile.

Q: How much faster does this make the entire underwriting process?

know what medications a client has taken over their lifetime, or how a medication relates to lab values for certain treatments. You can see and compare any and all pertinent data needed to make a decision in a matter of minutes. It’s already impacting the industry by helping underwriters reduce cycle time and make accurate, informed decisions very quickly.

Q: How easy is it for a company to integrate with and use your software? Manoj: Implementing our platforms is very easy. As a full-service software solution provider, we work with small and large companies. We offer different plans, products and agreements to fit every size organization and budget. As far as using our software, performing a full medical history with eXtract Plus is as easy as using Google. This is a

product based on years of research that has been designed for ease of use and need for speed. It’s that user-friendly interface and experience that has made us a global leader in tech solutions across various industries worldwide. That’s also the reason why this technology is turning so many heads in the insurance industry. Agents know their clients want a policy issued as quickly as possible. They’re looking for carriers with underwriters using our software so they can get their cases issued much, much faster.

For detailed information regarding how eNoah’s insurance and underwriting-focused solutions could give your company a competitive edge in the permanent insurance market, visit www.RapidUnderwriting.com today.

Manoj: While the traditional models of underwriting can take a few days to several weeks, eXtract Plus allows an underwriter to gather key insights that he or she might need to make an informed decision in about 10 to 15 minutes. More than a simple search engine, the software also supplies the underwriters with context. Let’s say I want to

November 2019 » InsuranceNewsNet Magazine

Technology Issue • Special Sponsored Section

MyBlocks’ Captivating User Interface Revolutionizes Prospecting and Client Education Bite-size “blocks” engage and entertain users Envestnet MoneyGuide Chief Growth Officer Kevin Hughes and President Tony Leal talk about MyBlocks, the company’s latest addition to its financial wellness ecosystem, and how the revolutionary software is paving the way for an entirely new approach to financial discussions. MyBlocks puts clients in control to explore various financial topics, while the advisor provides advice and solutions to address their needs and concerns.

Why did Envestnet MoneyGuide see a need for MyBlocks? Kevin: We saw an opportunity to help a much broader demographic, particularly with critical financial questions that go beyond traditional financial planning and work toward comprehensive planning. We created a platform that can help address any kind of financial scenario for multiple stages of life.

What spurred the design and content of MyBlocks?

Kevin Hughes, Chief Growth Officer

Tony: We’ve been doing this for 20 years now, and we knew there had to be ways to make the process more engaging for everyone involved. How do you take three to four minutes and make things bite-size and manageable and still be able to use the data to roll up to a comprehensive plan? That’s MyBlocks. MyBlocks addresses common advisor challenges, including how to simplify complex financial topics, helping investors know where to start, reaching younger demographics like Gen X and Y, accommodating clients with limited time, and motivating clients to Tony Leal, President take action to achieve goals now.

How many blocks are planned?

Tony: We currently have 25 and plan to have 40 by the end of this year. We’re creating a block for couples that are looking to get married, to help them work through financial concerns and establish a dialogue between them on how they feel about and approach money to ensure they have a solid foundation for financial communication. There’s a study that shows the No. 1 issue couples fight about is also a topic many couples avoid discussing, which is money. MyBlocks

InsuranceNewsNet Magazine » November 2019

can help with that, which creates an opportunity for the advisor in helping them assess risk tolerance and goals.

How can MyBlocks keep the planning experience from becoming overwhelming for clients who aren’t close to retirement?

Kevin: We got a lot of feedback that people may want to be able to engage in each one of the topics individually without having to do all of it. The “FastPath to Freedom” block can be customized to work on goals as short as one year and all the way through 10 years. FastPath goals appeal to multiple generations because the block includes paying off credit cards, achieving an experience goal like a trip, establishing an emergency fund, paying off college loans and achieving a purchase goal. You can also reverse engineer your calculations if you need to allocate funds elsewhere and see how it impacts your other goals. A client might now be married and having kids, so they might need money to pay for life insurance premiums, for instance. By using FastPath, when they take a little bit of money away from each goal, they can be surprised that it doesn’t really hurt in the long run to be able to free up some cash flow to get the insurance they need. It’s a great way to add context for someone who thinks they can’t afford an added expense like insurance or savings.

What kind of testing have you put into MyBlocks to ensure usability? Tony: We work with advisors and large enterprise firms to pilot the software and get their feedback. Plus, we’ve used a firm for end-user testing as well. They help us figure out what resonates and what might be confusing. And it’s more than just tester feedback. It’s a sophisticated process of video recording that tracks a user’s movements and facial expressions, so you really know where the sticking points are. We’ve learned that some concepts aren’t easily understood, even if they’ve been around for a long time, such as 401(k) contributions. We’ve adjusted the user-facing language to try to ensure that the concepts are clear for every user. Overall, we put a lot of effort into ensuring that what gets into the advisors’ hands is going to be really useful for them.

What sets MyBlocks apart from what’s out there today?

Kevin: I’ve seen many sites that offer calculators, but they don’t really lead anywhere. MyBlocks gives you something useful even if you only have two minutes, but it also gives

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you the chance to spend more time and get more answers. You can do it all in one session or keep coming back. Plus, the whole user interface is different. This is a format that people see when they use Hulu, Vudu, YouTube, Amazon Prime Video and many other popular consumer interfaces. We understood that just like those platforms, MyBlocks can recommend which blocks the user might want to engage with, but users can still seek out and use other blocks as well. Even if the advisor didn’t recommend the block a client completes, you are still going to get valuable information. And MyBlocks is flexible, so your client can use it on a phone, tablet — whatever. It’s not limited to a laptop or PC to have a good experience.

How does the MyBlocks software help advisors reach clients more efficiently?

Kevin: There’s a digital marketing feature that allows them to put a custom URL anywhere they want, such as on social media, in email marketing to prospects or on the advisor’s website. That URL is specific to the advisor, which is how activity is tracked. The prospect can come and go in the experience as they please, and the advisor gets to see everything they’ve done. An advisor knows who has logged in and which blocks they’ve completed. For instance, if your client completes the life insurance block, annuity block or retirement block, that offers the advisor specific language they can speak to with that individual and hit the points that are fresh on the client’s mind.

How do MyBlocks and its data integration features help advisors?

Kevin: They help in a few different ways. The blocks are integrated with each other. [First,] if a user completes one block and enters data, it will be carried over to other blocks where it’s relevant, so they don’t have to rekey information. Second, if a firm has held data like assets on the book of the firm, that data can come into the block where applicable. And [third], if the client wants to log in and authenticate their credentialed accounts that are at other institutions

— with programs such as Yodlee® or other aggregation software — all of that is leveraged for automated use in MyBlocks.

Is MyBlocks appropriate for large firms as well as individual advisors?

Kevin: Yes, it can be used in a variety of ways. The client can input the information on their own or with their advisor. For FMOs (field marketing organizations) and other firms with back-office teams that support professionals in the field, the back-office team can input data as well. MyBlocks also integrates with Redtail CRM, and we’re working to connect it with other CRM products to help advisors with prospect management. This is a fun, exciting business model that is useful in multiple settings. So, we have bankers in a branch using MyBlocks right there on an iPad with clients, for instance. We have a firm using it in the employer space on their financial wellness platforms and their 401(k) platforms. It’s even being used by property and casualty firms. There are a lot of ways to put this software to use for your clients.

Is MyBlocks easy to use?

Kevin: Yes. It’s 100 percent web-based. An advisor just logs in and is up and running immediately. It’s easy for the end user as well. Using the URL from the advisor, the client opens their MyBlocks account by providing their contact information, age, marital status and gender. Then it’s just as easy as pointing and clicking like most simple digital displays. Tony: We’re on the cutting edge and working on approaches we’ve not seen before. We want to make it easier for investors to understand the value of insurance and annuity products and why the products are even being recommended to them. We know this is an area where the industry wants to improve, and we’re providing tools to help them do that.

MyBlocks engages prospects of all ages and life stages. Find out how MyBlocks can educate and motivate your clients on their financial wellness journey and grow your business. Call 800-743-6938 to set up a demo, or visit MoneyGuidePro.com.

Friendly user interface presents content in an appealing, organized way.

Engage. Plan.

November 2019 » InsuranceNewsNet Magazine

Technology Issue • Special Sponsored Section

Techno-Burden

NetClaim’s unique solution for an aging industry could save carriers a fortune while skyrocketing customer loyalty

t’s no secret the insurance industry is behind the eight ball when it comes to adopting modern, more efficient technology. After all, it’s hard to keep a red-tape-bound $1.2 trillion behemoth abreast of other, more nimble sectors — especially ones that don’t legally require the same compliance standards. But carriers can’t afford to hide behind that “hurdle” anymore — it is costing them money and client satisfaction. With an increasing trend of multi-billion-dollar natural disasters and a client base that demands a greater user experience, the compliance excuse no longer holds water. Every hurricane, flood, wildfire and blizzard painfully reminds carriers just how old-fashioned and fragile their systems are. And who suffers the most? Policyholders waiting on the phone during the most difficult times of their lives. Call centers are overloaded. Claims are slow to process. And because of poor data collection, payouts are often inaccurate.

Real Change Within Your Budget

There’s no doubt change is needed — especially if companies are to maintain their market share in the era of artificial intelligence, smartphones and on-demand access to virtually everything. Insurance at large is one of the slowest industries to adopt new technologies, as per industry surveys. But even for the corporations with the deepest pockets, the prospect of overhauling a decades-old infrastructure to catch up with modern client demands can appear insurmountable. Fortunately, adopting the technology needed to maintain (and even increase) an insurance comJackie Hamilton pany’s market share will soon be well within reach for virtually any carrier. You simply have to know where to start. That’s the message Jackie Hamilton is spreading. Jackie would know. As the director of NetClaim’s Client Technology Management, she is on the cusp of helping carriers revolutionize their processes and navigate the turbulent waters of technological advancement. With the help of NetClaim’s emerging intake systems, those carriers will soon be able to boost efficiency, cut costs and skyrocket customer satisfaction — all at the same time. It’s an industrywide advancement that won’t just be nice to have — it will become fundamentally crucial.

InsuranceNewsNet Magazine » November 2019

Your Techno-Guide

Through a newly formed partnership between NetClaim and Gradient AI, the leading enterprise software provider of artificial intelligence (AI) solutions, NetClaim will soon be able to work hand-in-hand with carriers to develop effective, accurate and agile claims intake solutions that integrate seamlessly with existing architecture. The result will offer companies a modernized process that won’t just meet newer industry or policyholder standards, it will exceed them.

It’s an industrywide advancement that won’t just be nice to have, it will become fundamentally crucial. “NetClaim’s decision to offer Gradient’s artificial intelligence insights integrated with their First Notice of Loss (FNOL) intake solutions will provide claims organizations with a huge advantage.” said Aaron Shapiro, Gradient’s CRO and head of field operations. “Best practices, interventions and more can now be automated from the first moment carriers are notified of a potential claim.” In fact, the results of implementing new claims technology is projected to rapidly pay for itself (in savings and growing customer base) and should excite any chief financial officer or chief marketing officer. For example, innovation in auto insurance claims can already cut expenses by as much as 30% while boosting customer satisfaction by 10-15%. NetClaim’s goal is to help every insurance carrier — regardless of size — adopt affordable and easy-to-use claims intake solutions that eliminate the risk of overloading a contact center in the event of a natural disaster while disseminating, escalating and routing claims automatically to the right channels, saving policyholders time, money and frustration. By utilizing outsourced claims intake specialists like NetClaim, carriers themselves would be free to focus more on their core strengths, rather than intimidating technological innovations.

For more information regarding how NetClaim could streamline your claims intake process, visit www.NetClaim.com.

Technology Issue • Special Sponsored Section

Create Systems to Maximize the Value of Your Practice

What Advisors Need to Know to Ensure a Successful Transition Many advisors are consumed by the thorny problem of what their practice is worth. They mull over multiple methods of valuation, trying to predict what position they’ll be in when the time comes to sell. This is more and more of a pressing issue as the average age of advisors increases with every passing year.

As recent Cerulli Associates research states, the average age of a financial advisor is 51 — and nearly 40% expect to retire within 10 years. Transition is looming for many. Maximizing valuation is mission critical. The truth is, no matter which method you use to put a dollar value on your practice, the best way to maximize its worth is to make it easy for someone else to step in and get the most out of your book. Keep in mind that purchasers will tend to be younger than the sellers, probably more comfortable in the digital environment, and expecting to buy practices that leverage technology and are already optimized. Advisors who have made the effort to create systems and automate workflows will have a big advantage over their competitors. Additionally, the increased productivity realized by optimizing your technology increases revenue and profitability now as well as increases the overall value for a future buyer.

What are systems?

When we talk about systems within a practice, we’re talking about the method in which an advisor conducts marketing, sales and service operations. For many advisors, these activities are handled in an informal way. For instance, when it comes to sales, advisors may send out emails, make calls and attempt to book meetings — as they see fit. But if the process changes each time, results will vary. To ensure consistency, a system is needed. Creating systems shouldn’t be a difficult or time-consuming process.

3 simple steps to creating systems that maximize the value of your book of business 1. Define the steps in each system — The best way to systematize your key processes is to codify what you already do when you are at your best. For the sales process, for instance, list the steps that you take when you are successful in making a sale — from finding an opportunity to closing the deal.

3. Leverage technology — To turn your workflows into automated systems, input into your advisor-specific CRM the tasks that make up each process. The software will automatically prompt you to perform each task at the correct time. This shifts the operations of the business from “ideas trapped in the advisor’s head” to defined, repeatable processes that can be followed by anyone.

Any buyer will be able to see how revenue is generated in the business and how they can seamlessly take over and continue to mine the potential of the book of business.

Wrap up

Defining each of the steps in your sales, marketing and relationship management processes, and then using your advisor-specific CRM to optimize your workflows, will dramatically increase the future value of your book of business. These systems will also save time and effort, maximizing the effectiveness of your sales and marketing efforts today which, in turn, provides an immediate boost to your revenue and profitability. For instance, the most advanced CRMs are integrated with third-party firms, enabling you to trade directly from the platform. Equisoft’s Grendel CRM (www.grendel.com) is an advanced web-based and mobile practice management solution built for financial advisors, broker-dealers, RIAs, and their clients. Grendel’s exhaustive client information management, compliance management, account aggregation, client portal and practice management tools enable advisors to create the streamlined systems that will maximize the value of their practice. A recent analyst report ranked Grendel’s CRM among the top CRM solutions for the North American wealth management market. To learn more about Equisoft’s Grendel CRM, go to www.grendel.com or contact Ge orge Guidotti at +1 888.989.3141, ext. 7116 (george.guidotti@equisoft.com). To learn more about how Equisoft’s 25 years’ experience in the insurance and wealth management industry and its comprehensive set of integrated CRM, financial planning, portfolio design and analytics, and illustration solutions enable advisors to create the streamlined systems that will maximize the value of their practice, go to www.equisoft.com or contact Shawn Gille spie at +1 888.989.3141, ext. 368 (shawn.gillespie@equisoft.com.)

2. Optimize the workflows — Next, consider each of the tasks you perform in each system and determine whether it could be accomplished in a more efficient manner or eliminated entirely.

November 2019 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

AVID BIRNBAUM is annoyed. He’s not angry or emotional and certainly not losing his cool, but the veteran consumer advocate is definitely annoyed with how this particular conference call on insurance disclosures is going. An executive with the American Council of Life Insurers is taking a combative stance on issues raised by the Center for Economic Justice, the organization Birnbaum heads. The bespectacled, amiable Birnbaum, known to all as “Birny,” responds with an uncharacteristically edgy tone. “We appreciate the vigor in which ACLI is presenting its views,” he says calmly. “Unfortunately, in this instance, it’s incorrect on the points that it brings forth.” A quick vote is taken on an ACLI proposal to combine two disclosure documents and it is shot down. Birnbaum’s position carries the call. It’s a win for Birnbaum — a small win, but a win nonetheless. Twenty years ago, Birnbaum left the regulator side of insurance to fight for consumers. He takes wins wherever he can find them. Birnbaum lives in Maine, but he is on the road “more than half of the time.” Much of the remaining time is spent on conference calls and in meetings. The 66-yearold is a ubiquitous presence at National Association of Insurance Commissioners gatherings, always in a plain business suit, round tortoise-shell glasses and tousled hair that has long gone gray. He stands out amid industry executives and regulators in better suits with the polish of financial world success. By contrast, Birnbaum keeps time with a simple Timex wristwatch and prefers a backpack to a briefcase.

R E T H G I F E TH aum is a David Birnbvocating foe in ad formidable rance consumers. for insu TON BY JOHN HIL

InsuranceNewsNet Magazine » November 2019

THE FIGHTER IN THE FIELD

“The way I look at it is that one of me requires several dozen of industry representatives to balance the scales,” he quipped. Consumer advocates are not foreign to the insurance world. There are many different folks representing consumers in health insurance regulatory meetings, for example. But when it comes to issues such as life insurance illustrations and disclosures, Birnbaum is often the only consumer advocate working the room. And he is a formidable foe, said D.J. Powers, a former colleague at the Texas Department of Insurance where Birnbaum was an NAIC liaison. “It’s a combination of unbelievable passion and unbelievable intelligence,” said Powers, now an attorney in Austin. “He’s smarter than anyone else in the room and I’ve never seen anyone with the passion for consumers that Birny has. This is a guy who has devoted his whole life to consumers and gave up what would have been a very lucrative career for it.”

Yet he admires Birnbaum’s approach to his role. “Birny is a fearless advocate for consumers. He is undaunted by the volume or the credentials of his opponents and is perfectly confident to be the lone voice on any issue,” Cameron said. “He conducts himself with respectful professionalism. Even when I have disagreed with Birny, I have found my positions are better when I consider his perspective.” To those he tangles with, Birnbaum can appear to be an opponent of insurance products. But that is far from the case. “Insurance is really sort of a miraculous thing,” he said. “When you look at it as an institution and a set of products, it’s really hard to find institutions or products that

‘A Miraculous Thing’

are more important to the consumers and individuals leading happy and successful lives and sustaining our planet.”

reorganized and renamed Texas Department of Insurance as chief economist and associate commissioner for policy and research. Birnbaum advised the commissioner on insurance issues. After three years, he joined CEJ and returned to representing consumers. At the time, the NAIC had just created the consumer participation program to foster consumer involvement by providing financial assistance to groups that needed it. CEJ receives reimbursement for travel and other expenses. In addition, fees are normally waived for meetings and calls, and NAIC publications and data are provided for free. Birnbaum served as the NAIC coordinator for the Texas Department of

“Insurance is really sort of a miraculous thing ... it’s really hard to find institutions or products that are more important to the consumers and individuals leading happy and successful lives and sustaining our planet.”

Incorporated in 1996, the Center for Economic Justice represents consumers “as a class on economic justice issues, primarily the availability, affordability and accessibility of insurance, credit and utilities.” It is funded via individual donations and foundation grants. Birnbaum essentially is the center, answering to a board of directors. He is passionate about title and credit insurance, availability and affordability, and life insurance disclosures and annuity sales methods. Sometimes that passion results in strong words, but never in a raised voice. “What you’re doing is providing a liability shield to insurers’ misleading practices,” he admonished regulators during a July call on index illustration rules. “Why in the world would you want to do something like that?” Idaho Insurance Commissioner Dean Cameron is philosophically 180 degrees from Birnbaum when it comes to many insurance regulatory issues. A former insurance agent, Cameron often speaks wistfully of small-town agents helping clients and being hampered by rules.

Switching Sides

Birnbaum has a master of science in management and a master of city planning from the Massachusetts Institute of Technology. His career took off when he was named chief economist at the newly created Office of Public Insurance Council under progressive Texas Gov. Ann Richards in 1991. Birnbaum and Powers were among staffers who represented consumers before the state board of insurance. For the young, idealistic Birnbaum, it was a couple of years filled with tremendous change in insurance regulation. “We were really active,” Birnbaum recalled. “There were new things going on in terms of auto and homeowner’s insurance ratemaking (and) title and credit insurance ratemaking. OPIC participated in a number of rulemaking proceedings and industrywide rate proceedings, and I was one of the expert witnesses, often the only expert witness.” In late 1993, Birnbaum joined the

Insurance, which gave him an intimate familiarity with the inner workings of the organization. “Over the years, I’ve worked on pretty much every type of issue that’s come up,” Birnbaum said. “In the ’90s, we worked on small face life insurance, genetic testing and credit scoring. In the aftermath of the financial crisis, we were involved in changes to accounting and reserve practices for life insurers. I’ve been active on availability and affordability issues from the get-go, particularly on risk classifications.” Birnbaum took a two-year break in 2008, focusing on national/federal issues, particularly force-placed insurance and the development of the Consumer Financial Protection Bureau. He has been back as an NAIC consumer advocate for the past decade. At times, Birnbaum conceded, he is significantly outnumbered and out-resourced in these policy discussions. “I don’t have nearly the success in getting consumer-friendly outcomes as I’d like,” he said. “I think that regulators sort of listen to what I say, but the fact of the matter is that the insurance industry just

November 2019 » InsuranceNewsNet Magazine

IN THE FIELD THE FIGHTER

as I get,” he said. “There are some times when I get really frustrated because stuff seems really obvious to me and it becomes hard for me to understand why regulators will side with industry on an issue that affects consumers.” But whatever the deficiencies the state insurance regulatory system has, Birnbaum remains supportive of it — to a point. “One of the strengths of the organization is that you get perspectives from every part of the Birny Birnbaum, right, joins regulators at a June 2018 “summit” in Kansas City country, from small states to large to consider important insurance issues. He is joined here on a big data panel by states,” he said. “We’ve got a big Robert Helfand, attorney with Pullman & Comley of Hartford, Conn. country and a lot of different viewpoints on stuff. has a lot more influence. And that influence comes from a lot “Getting people to a consensus or a majority agreement takes of places.” some time. Sometimes it involves some compromise where you have to give up what you think is the best approach to improve The Insurance Economy what the current situation is.” For many parts of the country, insurance is an economic develHe would like to see more states combine insurance and secuopment tool, Birnbaum explained. Many annuity sellers are head- rities regulation under one roof. New York has done that with its quartered in Des Moines, Iowa, for example. Vermont is home Department of Financial Services. Federal oversight of insurer to the captive insurance industry, with the state even creating a solvency is another idea worth exploring, Birnbaum added. website to showcase its more than 1,100 licensed captive agencies. “Given that, there’s lots of scrutiny by the governor and others ‘Issues Are Too Important’ on what the insurance commissioner will do” in a given state, Birnbaum’s big goals are numerous. He wants to improve the Birnbaum said. delivery of clear and factual information from insurers to conThese days, Birnbaum is heavily involved in annuity sales and sumers. He sees plenty of work to be done in the areas of risk clasdisclosure regulations being debated by several NAIC panels. sifications and insurers’ use of big data. And his passion remains He is participating in the Annuity Suitability Working Group’s with insurance affordability and availability issues. effort to create an annuity sales model law. He is engaged with “There are some real failures on the part of state insurance the Life Insurance Illustration Issues working group on its efforts regulation,” Birnbaum said. “Most notably, in the areas of credto create a “policy overview” to accompany life insurance sales. it-related insurance, private mortgage insurance, title insurAnd he is vocal with the Annuity Disclosure Working Group’s ance, consumer credit insurance and workplace insurance.” effort to regulate indexed annuity illustrations. Birnbaum has no plans to slow down. His daughter is grown Birnbaum is on the short end more often than not. and his son was killed in a 2012 car accident. There’s “nobody “Some days I take it in stride and other days, I give back as good else” working on the issues he works on, Birnbaum noted. “I’ll keep doing it until either all the battles are won or I get out, one or the other,” he said. “The issues are too important to be ignored.”

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InsuranceNewsNet Magazine » November 2019

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

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Percent of indexed universal life sales with accelerated underwriting

LIFEWIRES

QUOTABLE

NAIC Looks At Accelerated Underwriting Accelerated underwriting is a hot

SOURCE: Milliman

topic in the life insurance industry, and the National Association of Insurance Commissioners is taking notice. The NAIC formed the Accelerated Underwriting Working Group, and that group is getting down to business, having its first meeting in October. The working group is charged with looking at the use of data and analytics in accelerated life underwriting and drafting guidance for the states if appropriate. The group agreed to take things slowly, starting by hearing from academics, stakeholders and states “to gain a better understanding of accelerated underwriting in life insurance and the different perspectives on the pros, cons and concerns,” according to its work plan. Consumers say they like accelerated underwriting as it makes the life insurance application time shorter and puts fewer hurdles in the way of their getting coverage. Insurers are hearing the message. Milliman found that 24.6% of indexed universal life sales were made with accelerated underwriting for the fiscal year ending Sept. 30, 2018. That figure is up from 16.8% during the fiscal year 2017.

2Q LIFE INSURANCE SALES STRONG

WORKERS WANT LIFE INSURANCE

Life insurance sales showed double-digit increases in the second quarter. Wink’s Sales & Market Report showed strong sales in several product lines, particularly whole life, which racked up a gain of 16% over the previous quarter and sales of $1.1 billion. Indexed life 2Q sales were up 12% over the previous quarter, but nearly flat when compared to the same quarter last year.

1Q19

$1.03 billion

2Q19

$1.1 billion

SOURCE: Wink’s Sales & Market Report

Speaking of indexed life, Pacific Life moved into first place in indexed life sales, with a 15.3% market share. National Life Group, Transamerica, Nationwide, and Global Atlantic Financial Group rounded out the top five, respectively. Transamerica Premier Financial Foundation indexed universal life was topselling indexed life insurance product, for all channels combined. DID YOU

KNOW

Workers say they want life insurance, and they want to get it through their workplace. That’s according to a survey conducted online by The Harris Poll on behalf of OneAmerica. Nearly three in 10 Americans workers have voluntary group life insurance through their employer. Almost half of workers who do not have voluntary group life insurance through their employer (47%) said it’s because their employer does not offer it. But 59% of that group said they would be likely to purchase it if they had the option to do so through their work. When asked why they have voluntary group life insurance through their employer, 53% said peace of mind; 44% said it’s to protect family/loved ones from future financial hardship; 39% said it is to pay off debts and final expenses in the event of their death; 23% to leave an inheritance for children or grandchildren, and 21% to replace a spouse/ partner’s income in the event of their death.

I would expect that third-quarter sales [of indexed life] will continue to be strong, and there will be a fire-sale mentality near the close of the year. — Sheryl J. Moore, CEO of Wink Inc.

MILLENNIALS MOST AT RISK

When is the best time to buy life insurance? When you’re young and healthy. So why aren’t millennials locking in a good premium rate while they’re in their prime? Clarity Benefit Solutions looked into why millennials are the most at-risk generation when it comes to life insurance. The researchers found that millennials are struggling with managing student loan debt while saving for future events such as buying a home or retirement. As a result, buying life insurance is put on the back burner. Employers can come to the rescue of those young adults who need to work life insurance into their financial plans, the researchers said. Workplace-based life insurance can be a good place for millennials to get coverage at affordable rates while addressing this age group’s special needs — such as student loan repayment — and providing financial wellness tools such as budgeting tools and seminars. In addition, employers can ensure millennials obtain coverage that best suits their individual needs, including the providing affordable life insurance options, addressing financial issues (offer a student loan repayment plan), and giving them with additional wellness tools (budgeting tools and seminars). The researchers also recommended employers offer health savings accounts to help workers save for unexpected expenses.

New York fined American Progressive Life $260,000 for rescinding certain life insurance policies without the consent of policyholders. Source:New LIMRA Source: York State Department of Financial Services

InsuranceNewsNet Magazine » November 2019

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LIFE

Millennials At Risk $100,000 is what they have in coverage

$452,000 is what they need $352,000 coverage gap

Millennials Need Your Help, Not Your Boomering Insults Financial insecurity is a major hurdle in convincing millennials to buy coverage. By Maxime Rieman Croll

he insurance industry has consistently been confounded by how to reach the millennial generation. Consisting of those born (roughly) between the mid-1980s and the late 1990s, this is the generation that grew up just as the internet was exploding on the scene. It’s also a generation that’s highly skeptical of many of the traditional business tactics the insurance industry employs. Part of the difficulty with selling insurance to millennials has to do with this generation’s very real feelings of financial insecurity. A recent Wall Street Journal article points out that millennials are behind in key areas versus previous generations, such as income, homeownership and starting families. Because the generation came into adulthood just as the economy turned south from the housing market crash, many millennials feel financially insecure.

That financial insecurity ultimately leads to less spending on anything that may seem unnecessary in the short term, especially insurance products. Still, it’s possible to get millennials to understand the value of insurance products, or the need for secure retirement planning. There are simple, non-intrusive ways to approach millennials on why certain insurance products and financial planning are necessary, and to help them understand how such purchases can be made affordable.

and many may not realize the cost and cost-saving benefits of life insurance and health insurance. You can broach the subject of insurance products with millennial prospects based on an assumption that they understand money and its value. Many are also open to and willing to accept the idea that insurance and retirement savings are valuable but may not believe their financial situation makes such financial decisions possible.

Understanding Millennials Helps

With millennials delaying marriage longer, buying houses later (if at all) and having fewer kids, you will need to change your product focus. For example, single millennials will have a hard time seeing the value in many life insurance products. However, many millennials have an immense sense of social responsibility. You might find that millennials are interested in charitable giving riders, which pay an additional small percentage of the policy’s amount to charity. You’ll also want to put more emphasis on lower-cost term life insurance products over whole life policies. Many people in their 20s and 30s may not realize that the monthly cost for a life insurance policy can be as little as $23 per month. As a general rule, no matter the investment area, target your products and your sales strategies to your customer.

It would be a big mistake to underestimate the maturity and skepticism of the millennial generation. Note that millennials are often aware of how much their generation has been maligned. There’s a near-constant barrage of news articles about everything millennials are killing, millennial self-entitlement or millennials’ over-sensitivity. What rarely gets attention, however, are the positive news articles that point to the fact that people in their 20s and 30s actually work hard, save their money well and are incredibly complex, positive and open to change. These positive factors are something to take to heart before interacting with millennial prospects and can be used as a starting point for conversation. Millennials are distinctly interested in financial SOURCE: New York Life 2019 Life Insurance Gap Survey. planning and retirement,

10% of millennials say they have enough life insurance in place. 44

InsuranceNewsNet Magazine » November 2019

Product Focus More Realistic

Talk To Them, Not At Them

The millennial generation has developed a very strong dislike and distrust of

MILLENNIALS NEED YOUR HELP, NOT YOUR INSULTS LIFE corporations, big businesses and traditional sales tactics. That skepticism makes millennials difficult to sell to, especially for insurance agents. It’s not impossible, however, particularly because millennials vastly appreciate agents who talk to them as a person and appear approachable. That may mean ditching any scripted sales pitches you’ve used in the past, and re-inventing the way you talk about insurance products or retirement investments and savings.

Consider This Approach

When you hit a Google search to look for information, what articles do you find to be the most trustworthy? You’ll most likely trust those articles that get right to the point, discuss a topic conversationally and offer practical advice without making a sales pitch — instead of focusing on what’s known as the “call to action.” This approach works when trying to interact with millennials for insurance, as well. Instead of selling, be informational. Instead of trying to instruct them about the value of insurance or investments, have a conversation. Don’t deliver the sales pitch until you feel the prospect is interested. And when you do deliver it, don’t be aggressive. Millennial clients need to feel comfortable with the decision, and too much pressure means they’ll be quick to walk. Here are a few examples of phrases you might use for this conversational style: » “Tell me about yourself.” » “Let me tell you about myself.” » “What aspects of your life make you feel the most insecure? Which make you feel secure?” » “What would you change about the insurance market or industry?” » “How do you feel, or what do you know about insurance (or investments)?” Absolutely avoid phrases such as, “When I was your age.” These can appear condescending, and it’s important to remember that millennials are adults. Additionally, avoid trying to throw trendy slang into your conversation. Millennials seek agents who interact with them

authentically, and a forced approach may have a negative impact.

Focus On Financial Security And Affordability

Knowing that many millennials work hard but often feel financially behind, it’s important to focus on financial sustainability with millennial clients. They’re often quick to spend money on experiences and products, but extremely hesitant to spend money on something that’s seemingly intangible. However, security is important to them, so you’ll need to help them understand two key things: » The value that insurance and investments bring to financial security. » How such products can be made affordable at different income levels. You’ll want to approach these areas with some sensitivity. Don’t be afraid to directly discuss income with potential millennial clients, but be conversational and understanding. Most are open to sharing their financial status and financial insecurities, but many feel trapped by them. Navigating that insecurity with them can help them see the benefit in insurance products, especially if you find a way to focus on affordability with a cost-benefit analysis.

Ditch The Phone Calls

The fact that millennials are digital natives is important to remember. Many rely on technology and prefer digital methods of interaction. A recent article in Forbes said that millennials, more than any other generation before them, strongly dislike phone calls. If your communication fallback has been phone calls, it’s probably time to change. Switch to LinkedIn or other social media messaging, text messages or even email. You can use any of these communication methods to make yourself more accessible to millennial clients, and more approachable. Maxime Rieman Croll is product manager at ValuePenguin. Maxime may be contacted at maxime.croll@innfeedback.com.

November 2019 » InsuranceNewsNet Magazine

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ANNUITYWIRES

Continued Sales Increases Predicted For FIAs

Annuity-watchers looked at the tea leaves and predicted fixed indexed annuity sales will continue their upward trend. FIA sales hit a new record in the second quarter of 2019, and will keep on climbing, Beacon Research reported. FIA sales reached a new high of $20 SOURCE: BEACON RESEARCH AND MORNINGSTAR INC. billion in 2Q, 13% higher than the $17.7 million in the year-ago time period. Along with FIAs, income annuity sales and market value adjusted annuity sales had double-digit increases over the same time last year. Income annuity sales were $3.3 billion, a 13.8% hike from 2Q 2018 while MVA sales increased 20.9% over 2Q 2018 sales of $4.3 billion. Total annuity sales hit $60.7 billion in second-quarter 2019, 6.7% higher than 2Q 2018 sales of $56.9 billion.

NAIC LOOKS AT ANNUITY SALES RULE

WHY AREN’T MORE PEOPLE BUYING INCOME ANNUITIES?

People are living longer in retirement and State regu la- traditional pensions are going the way of tors returned the dinosaur. So why aren’t more peoto a potential ple buying income annuities to help fund land mine in debating whether in-force their retirement? A Brookings Institution policies will be covered under any annu- study found some answers. ity sales model law sent to the states One reason people don’t buy annufor adoption. The Annuity Suitability ities, the research found, is that they Working Group wants to present the overestimate their ability to invest their model to the A Committee during the retirement funds wisely on their own. National Association of Insurance They fear that if Commissioners’ fall meeting in they don’t live WHY THEY DON’T BUY Consumers cite three reasons for shying long enough, the December. After roughly 18 months of away from income annuities. annuity won’t be meetings, the group is in tentative 1 Think they can manage investments worth the cost. agreement on a best interest stanConsumers are on their own. dard for annuity sales. It articulates 2 Worried they won’t live long enough also confused a best-interest standard through over the various for annuity to pay out. the following four obligations: care, types of annuities 3 Confused over various annuity types. disclosure, conflict of interest and in the market. SOURCE: Brookings Institute documentation. The study’s Whether to regulate in-force authors recompolicies roiled other stakeholders during mended strategies for improving conpast meetings, with Steve Toretto, for- sumers’ acceptance of lifetime income mer associate general counsel for Pacific products, including better access to annuLife, telling regulators the idea “is going ities in workplace plans and better underto cripple and terrify” the industry. standing of the role of lifetime income in a stable retirement. DID YOU

KNOW

QUOTABLE

FIA SALES SKYROCKET IN 2Q

Unlike other annuities, which are so complex even math teachers can’t understand them, single premium immediate annuities are pretty straightforward. — Howard Gold, financial columnist with Market Watch

INSURERS PAY NEW YORK $1.8M OVER ANNUITY SALES

Six life insurers will pay New York a total of $1.8 million to settle allegations that they violated state law covering transactions in which deferred annuities were replaced by immediate annuities. The six companies are: Companion Life, Guardian, Northwestern Mutual, Penn Mutual, Prudential and United States Life. The insurers will pay a total of $1.15 million in restitution and $673,000 in penalties. The New York Department of Financial Services charged the carriers with failing to properly disclose income T H ANK comparisons and suitabilYOU! ity information to consumers. This caused the annuity-holders to exchange more financially favorable deferred annuities for immediate annuities.

Pacific Life became the first carrier to offer a fixed indexed annuity at TD Ameritrade.

InsuranceNewsNet Magazine » November 2019

Source: LIMRA Source: SRIPacific Life

Choosing Between Protection and Growth Is So Yesterday Introducing FutureMark Fixed Indexed Annuities SM

Why make your clients choose between premium protection and growth potential when FutureMark℠ Series FIAs have it all? Brought to you by Americo Financial Life and Annuity Insurance Company and Legacy Marketing Group®, FutureMark℠ FIAs feature: No-cost BeneBoosterSM enhanced death benefit:* • Increases the death benefit by up to 25% of contract gains at no additional cost. • Issues through age 85! • No underwriting or waiting period. NEW BuilderBlend options: • Build the Accumulation Value through a 50/50 blend of pre-bundled index strategies. • Lock in allocation and competitive rates for five years. • Simplify diversification and the renewal conversation. SM

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And you receive an outstanding street comp of 8% in all approved states.†† FutureMarkSM 10, 10 LT (Contract Series 416/4416). BeneBoosterSM guaranteed minimum death benefit rider (Rider Series 2182). Products are single premium deferred fixed indexed annuities underwritten by Americo Financial Life and Annuity Insurance Company (Americo), Kansas City, MO, and may vary in accordance with state laws. Products are designed and exclusively marketed by Legacy Marketing Group®. Some products and benefits may not be available in all states. Certain restrictions and variations apply. Consult contract and riders for all limitations and exclusions. Legacy Marketing Group® and any licensed insurance agent/agency shown on this ad are independent, authorized agents/ agencies of Americo. The Optimizer administrative fee of 1.00% will be deducted from the Accumulation Value at the end of each contract year, including the first. * May not be available in all states. ** Available upon death, surrender, or annuitization, less any withdrawals, surrender charges, and applicable premium tax. Rate on contracts issued in 2019. † Rating for Americo Financial Life and Annuity Insurance Company (Americo), September 2018. Americo Financial Life and Annuity Insurance Company has a financial strength rating of A (Excellent, 3rd out of 15 rating categories). A.M. Best’s rating is assigned after a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance, and business profile. A.M. Best uses a scale of 15 ratings, ranging from “A++” to “F.” †† GA level, issue ages 0-75. See Compensation Schedule for details.

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ANNUITY

Americans Fear Coming Up Short In Retirement Studies show Americans are anxious about running out of money in retirement, but few have made an effort to determine their income needs. By Jean Statler

not-so-funny thing happens to many Americans on the way to retirement — they save and accumulate money for retirement, only to realize that when they do get ready to retire, they’re not sure that their saved money will last. Unfortunately, many retirement savers have been conditioned to think only about saving a magic lump sum number from which they can start withdrawing money each year after they retire. Little attention is paid to calculating how much actual income they’ll need each month to live on and if that money will last throughout retirement. The Protected Lifetime Income Index study, a recent survey of 3,119 adults by the Alliance for Lifetime Income, shows that a mere 28% of non-retired Americans have made an effort to determine their likely monthly income needs in retirement — perhaps the single most important thing people should be planning for. Even among those closest to or in retirement — Americans between 55 and 74 years of age — only 43% have made such a calculation. If people don’t know what they’ll need, how will they know if they’ve saved enough to last throughout life? It’s no wonder that the survey showed 80% of us are anxious that our savings may not be enough to live on or last through retirement.

Spending In Retirement

The study shows that two-thirds of Americans look forward to their retirement with hope and optimism, seeing it as a long-awaited opportunity to pursue 48

their personal interests. Many survey respondents said they look forward to this next step in life and believe they will be more adaptable, more spiritual and have more free time to pursue their varied interests. While spending on restaurants, travel and the like are technically discretionary expenses, they are nevertheless a staple of retirement living for most Americans. After all, these are the experiences many retirees have waited their entire working lives to enjoy, and the main reason why most of us indicate in the study that we’re optimistic about retirement.

$1,388 for retirees and $817 for spouses is used, with adjustments to 2019. Other nondiscretionary costs — housing, transportation and food, for example — have a significant impact on the cash flow of many retirees. For example, even if one’s home is paid for, the costs of utilities, maintenance and possibly larger home repairs are not insignificant, especially when including the cost of inflation. Finally, a study by David Blanchett, Morningstar’s head of research, shows that retirement spending doesn’t always follow a straight path. Instead it’s more of a smiling curve, where we spend more money in

How anxious are Americans about their retirement money?

20% not anxious

36%

26%

somewhat moderately extremely anxious anxious anxious

When it comes to nondiscretionary spending however, we must begin with understanding the rising costs of health care, especially as we age. A July 2019 study sponsored by the National Association of Plan Advisors found that a healthy 65-year-old couple retiring in 2019 is projected to spend $369,000 in today’s dollars ($551,000 in future dollars) on health care over their lifetime. In addition, expenses at age 85 are estimated to be 250% higher than at age 65. The study further estimates that a healthy 67-year-old retired couple is projected to spend 39% of their pre-tax Social Security benefit on health care in 2019. This estimate is based partially on the December 2017 average monthly pretax Social Security benefit at age 65 to 69 of

InsuranceNewsNet Magazine » November 2019

18%

Percentage of Americans who believe their retirement savings will last a lifetime

71% 42% retired non-retired Source: Alliance for Lifetime Income

our early years of retirement, gradually decrease, and then our spending is high once again toward the end of our lives, thanks in large part to the rising costs of health care. Whether it’s discretionary or nondiscretionary spending, the bottom line is that Americans should be calculating their estimated expenses for both those categories in retirement, all while anticipating living a longer life. Unfortunately, the studies indicate that most of us are not.

Developing An Income Plan

Only 42% of non-retired Americans believe their savings and sources of income will last their lifetime, according to the Protected Lifetime Income Index study. This backs up the statistic that running out of money in retirement is their

AMERICANS FEAR COMING UP SHORT IN RETIREMENT ANNUITY No. 1 fear. And there’s good reason for that concern. Today, 63% of Americans are unprotected for retirement, meaning they have no guaranteed source of protected lifetime income — such as a pension or annuity — other than Social Security. A June 2019 World Economic Forum report estimates that a 65-year-old American today could outlive their retirement savings within nine years. One of the reasons many Americans experience an income shortfall in retirement is because, when preparing for retirement, they follow a retirement savings plan when they should be following a retirement income plan. Regardless of how your client saved for retirement, a first step in developing an income plan should be to make a realistic budget based on their financial obligations and lifestyle interests (discretionary and nondiscretionary) in retirement, and then accounting for their various sources of income. Equally important is considering the real possibility that they will live for 20, 30 or more years in retirement.

Since Social Security on average only covers about 40% of pre-retirement income, for many Americans this exercise will likely reveal a gap in guaranteed income — income your client can count on

Non-retired Americans who have protected income in the form of a pension or annuity

DO DO NOT

31%

69%

Source: Alliance for Lifetime Income

receiving each month or year for the rest of their life. That’s the income that could give retirees peace of mind by covering all or part of those nondiscretionary expenses, while the other retirement savings can go to work covering the discretionary ones. With the dramatic decline in pensions, today’s pre-retiree is faced with only one way to fill that guaranteed income gap: an annuity.

Annuities Fill The Income Gap In Retirement Plans

With millions of pre-retirees facing the high probability of running out of money in retirement, it’s incumbent on financial advisors and the broader retirement planning industry to educate and help consumers develop truly diversified retirement income plans. These plans must take into account those nondiscretionary and discretionary expenses, and then determine whether a guaranteed income gap remains. Any persistent guaranteed income gap should be addressed by action in the best interests of retirement savers by protecting them with lifetime income they can count on from an annuity. Only then can they lead the life they want in retirement, however long that may be. Jean Statler is the executive director of the Alliance for Lifetime Income. Jean may be contacted at jean.statler@innfeedback.com.

November 2019 » InsuranceNewsNet Magazine

HEALTH/BENEFITSWIRES

More Are Going Without Health Insurance The number of Americans without

Americans Without Coverage

QUOTABLE

13.3% 7.9%

8.5%

health insurance rose for the first time in a decade — by about 2 million people in 2018, according to 2013 2017 2018 the U.S. Census Bureau. This represents 8.5% of the population in SOURCE: U.S. Census Bureau 2018, up from 7.9% in 2017. The percentage of uninsured in 2018 is still lower than the 13.3% who had no coverage in 2013, before the Affordable Care Act took full effect. But 2018 showed the first year-to-year increase in the number of uninsured since 2008. Why did so many people go without coverage? Census officials said most of the drop in health coverage was related to a 0.7% decline in Medicaid participants. The number of people with private insurance remained steady and there was a 0.4% increase in those on Medicare.

HEALTH INSURANCE REBATES HIT RECORD HIGHS

SOURCE: Kaiser Family Foundation

A provision of the Affordable Care Act is expected to net all-time high rebates for health insurance customers in 2019. A Kaiser Family Foundation analysis estimates rebates will reach $1.4 billion for 2019, and $800 million of that will go to customers from the individual market. In 2018, insurers across the country paid out nearly $707 million in rebates to nearly 6 million consumers. The figure is based on insurer revenue for the previous three years and was the highest payout since 2012. Since 2012, health insurers have been required to give customers medical loss ratio rebates each fall if the company

Rebate Rise

$1.4B 2019

$707M 2018

DID YOU

KNOW

does not spend 80-85% of premium dollars on health services. Ultimately, the goal of the MLR provision is for insurers to set premiums at a level that will make the rebates unnecessary. What complicates the issue is that insurers set premiums a year in advance and they are not always able to accurately predict the number of plan participants and claim costs.

There isn’t one system that works. Lots of different kinds of systems can protect patients from high costs. — Thomas Rice, University of California at Los Angeles health economist

give when they enroll in state-approved medical marijuana programs. But little is known about which parts of marijuana are helpful and whether the intoxicating effects of THC can be avoided.

WATCH OUT FOR ‘TRUMPCARE’

Consumers looking for health insurance are finding plenty of ads for plans called “Trumpcare” that cost as little as $59 per month. But there’s no such thing as Trumpcare and many of these plans offer bare bones coverage that could leave consumers on the hook for thousands of dollars in medical bills.

U.S. TO SPEND $3M ON CBD PAIN RESEARCH

Can marijuana relieve pain? The U.S. government plans to spend $3 million to get an answer to that question. The National Center for Complementary and Integrative Health awarded a series of research grants to determine whether cannabidiol, or CBD, is effective as a pain reliever. CBD has become a trendy ingredient in a number of cosmetics and foods. None of the research money will go toward studying THC, the part of the marijuana plant that produces a high. Even though the federal government still regards marijuana as an illegal substance, more than 30 states allow its use for a variety of medical problems. Chronic pain is the most common reason people

Fewer than half of employers offer benefits to gig workers. Source: Associated Press

InsuranceNewsNet Magazine » November 2019

Source: LIMRA

The term Trumpcare usually refers to short-term plans or fixed indemnity plans that offer little to no coverage for serious illness or injury. “It’s impossible to expect consumers to discern between the good guys and the con artists,” said Sabrina Corlette, a health insurance researcher at Georgetown University. “And it’s not the good guys that pop up on the first page of your Google search results.”

INSURANCE INVESTMENTS RETIREMENT

Long-term care needs may be unpredictable … … but SecureCare Universal life is a product clients can count on for: • Customizable coverage • Cash indemnity LTC benefit • Guaranteed protection1 Addressing your prospects’ top concern can mean sales success for you.

Get your SecureCare Sales Success Kit today – Call 1-888-900-1962 1. SecureCare offers guaranteed protection by providing a guaranteed death benefit, guaranteed long-term care benefit and guaranteed reduced paid-up nonforfeiture benefit. Insurance policy guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements. SecureCare may not be available in all states. Product features, including limitations and exclusions, may vary by state. SecureCare Universal Life Insurance includes the Acceleration for Long-Term Care Agreement. The Acceleration for Long-Term Care Agreement is a tax qualified long-term care agreement that covers care such as nursing care, home and community based care, and informal care as defined in the agreement. This agreement provides for the payment of a monthly benefit for qualified longterm care services. This agreement is intended to provide federally tax qualified long-term care insurance benefits under Section 7702B of the Internal Revenue Code, as amended. However, due to uncertainty in the tax law, benefits paid under this agreement may be taxable. Please ensure that your clients consult a tax advisor regarding long-term care benefit payments, or when taking a loan or withdrawal from a life insurance contract.

The death proceeds will be reduced by a long-term care or terminal illness benefit payment under this policy. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products. The purpose of this material is the solicitation of insurance. An insurance agent or company may contact you. Policy form numbers: ICC17-20103, 17-20103 and any state variations; ICC17-20111, 17-20111 and any state variations. Insurance products issued by Minnesota Life Insurance Company. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

HEALTH/BENEFITS

Be An Employer Resource By Knowing Paid Family Leave Laws As benefits brokers take on more human resources duties for their clients, it pays to keep up with paid leave laws. By Kate Wilkinson

Being A Resource

Having a solid understanding of current paid leave benefits trends is important to help set the stage for building your clients’ own programs. The political dialogue has cast light on employees’ needs for more robust benefits offerings. This conversation is being driven by members of both parties, and especially by presidential candidates, increasing the odds that tangible action will occur on the issue.

making it a core component of their election platform. Despite the varying degrees of proposed legislation, many of these proposals can serve as a guide for employers looking to provide effective paid benefits programs. By keeping up with current trends surrounding paid family leave benefit legislation, you can provide your clients with a solid understanding of what is needed to accommodate shifting employee needs. This understanding also

aid leave benefits have become infinitely more complex to understand because of wildly varying policies across municipalities, counties and states. Because of this variance, understanding and building the right amount of paid leave coverage for your cliSix states and the District of Columbia have enacted paid family leave, and legislation to ents’ employees can prove establish it has been introduced in several more states. challenging, but ultimately crucial to ensure employee health and happiness. With a patchwork of policies to navigate, brokers have to provide guidance on the right mix of benefits while staying compliant with current laws. Although most employers offer a baseline of traditional paid leave benefits, such as paid time off and short-term disability, additional benefits can give employers the leg up they need to attract and retain top talent. Workers’ individual and family needs continue to evolve, and more employees than ever are usStates where paid family leave States that already have enacted ing paid time off for things legislation has been introduced paid family leave like taking care of a newborn SOURCE: Association of State and Territorial Health Officials or an elderly family member. As a result, employers and In the 2019 legislative cycle, several can encourage clients to consider ademployees are starting to think about states have had some version of a paid ditional paid leave benefits that may benefits differently. By sorting through the policy noise and family and medical leave bill introduced attract top talent. Proactively updating understanding all available options, you in either chamber of their legislature. clients on new regulations and providing can help your clients select the right com- Additionally, both Democrats and recommendations on how to best acponents of a paid leave benefits program Republicans in Congress may continue commodate employees is the first step to while staying competitive and compliant to introduce paid leave legislation, with creating robust paid leave programs that some candidates having gone so far as help retain employees. with current laws. 52

PAID FAMILY LEAVE SPREADS NATIONALLY

InsuranceNewsNet Magazine » November 2019

BE AN EMPLOYER RESOURCE HEALTH/BENEFITS

What’s Trending

Paid family leave is a key benefit for many employees to have, as it helps balance the demands of work and family without sacrificing income while creating economic security. The workforce is comprised of a variety of different ages and demographics. Many employees may be starting families or joining the sandwich generation, in which they are also caring for aging parents. Additional paid family leave benefits that supplement and go beyond the traditional benefits can prove crucial for employees needing to care for aging parents or starting their own families. By keeping tabs on current trends, you can understand what your clients’ employees may be looking for in a benefits program. In fact, an MSN/Business Insider poll showed 93% of Americans agree that mothers should receive some form of paid leave after a baby arrives, and 85% of Americans believe the same about paid paternal leave. This widely supported notion of paid parental leave is just one major trend. Some of the most common and crucial paid state family leave trends include: 1. Increased income replacement levels for lowest-income earners. 2. Expanded family relationships, like “chosen family.” 3. Increased focus on portability of benefits, like not having to re-serve waiting periods when moving from one covered employer to another. Outside of the traditional Family and Medical Leave Act, several proposals have been introduced in the 116th Congress that aim to expand paid leave options, such as the Family and Medical Insurance Leave Act (FAMILY Act), which proposes the creation of a national wage insurance program for persons engaged in family caregiving activities or for their own serious health conditions. The reinvigorated FAMILY Act, which allows 12 weeks of paid leave for family and personal medical needs and is funded through a 0.4% payroll tax split between employers and employees, is becoming increasingly popular among politicians of both parties. Additionally, the New Parents Act, which allows parents of a new child to

receive Social Security benefits for parental leave, has also been reintroduced. Congressional Republicans introduced the The Child Rearing and Development Leave Empowerment (CRADLE) Act, which would allow both natural and adoptive parents to receive one, two or three months of paid leave benefits in exchange for postponing the activation of their retirement benefits for two, four or six months.

The Importance Of Robust Leave Benefits

The consequences of employees not having the resources they need for family and self-care are becoming clear. Because paid family leave benefits can be difficult for employees to understand, some have resorted to “leave stacking,” where a worker stacks multiple paid time off and benefits options – like sick time and vacation, plus short-term disability – to maintain their income while taking care of their family or themselves. This needlessly complicates things for workers, since they have to spend time and energy micromanaging their benefits because there’s not an all-encompassing solution. As an advisor, you can help clients review their paid leave programs to determine how their current plans compare to proposed legislation in states where they have employees. No matter what paid benefits your client offers, you can help them find the crucial information needed to build a robust paid leave program that is competitive and compliant. You can be there every step of the way to help your client understand proposed legislation, choose the appropriate benefits to offer and assist them in implementing the appropriate programs. Kate Wilkinson is senior director and assistant counsel for The Standard. She also has worked as the human resource director for a large grocery store chain. Kate may be contacted at kate.wilkinson@innfeedback.com.

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November 2019 » InsuranceNewsNet Magazine

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NEWSWIRES

Single Women Are Reshaping The Economy

American women have a lot of buying power. In fact, working women contribute more than $7 trillion to the U.S. economy, according to American Progress. As the number of single women in the workforce continues to grow, experts believe it will have a profound effect on the economy. In 2018, single women made up 41% of working women ages 25-44. And while women have always been the principal shoppers in their households, single women outspend married women, according to Morgan Stanley research. By 2030, 45% of working women in the same age range will be single, making it the largest share of that demographic in history. Some sectors of the economy are expected to grow as this demographic continues to grow. Apparel, footwear, personal care and electric vehicles are all likely to feel a boost from single women’s spending, the research found. Specifically, single women spend more than married women on personal care. Morgan Stanley said Sephora and Ulta Beauty could benefit. Morgan Stanley expects more women will buy cars in the future than they do now. At the moment, men represent a bigger group of buyers, but over time, the male-female split of auto buyers will even out, which could give car sales a big boost. The bank’s top pick in that segment is Tesla.

NOW HIRING: ROBOS

Millennials are much more comfortable than older generations with technology handling their money, a Global X ETFs survey of high-net-worth investors found. The survey honed in on key differences in financial tendencies between generations. It uncovered that 19% of millennials were comfortable with robos managing their money and investments vs 11% of Generation X and just 3% of baby boomers. Millennials might be the generation most comfortable with these tools, but that comfort still remains with a small segment of the population. Robo or not, millennials were also the most likely to seek out the help of a professional in the event of a major life change. In the event of a large purchase, 37% of millennials surveyed said they would seek out a financial advisor compared to just 13% of boomers.

$$$ HOME SWEET DEFAULT?

It’s cringeworthy news, but the default rate of mortgages has increased for the first time since the 2008-2009 financial crisis, according to a report from Black Knight Mortgage Monitor. The second-quarter 2019 national default rate increased to 3% from the same quarter last year. Experts are pointing to the rise in natural disasters as a possible explanation. States that saw the largest increase in defaults were Nebraska (26%), South Dakota (18%) and Montana (15%). All of three states saw severe flooding earlier this year. To that end, states such as California and Florida saw a decrease

DID YOU

QUOTABLE We’re watching cryptocurrency. — Jennifer Bailey, vice president of Apple Pay

in their default rates, rebounding from wildfire and hurricane recovery in the previous two years. The study also found that default rates seemed to follow a geographic pattern, with the highest default rates being seen in the southern U.S. and the lowest being seen in the north and west.

GENDER GAP APPLIES TO BILLS, TOO

We knew that women typically earned less than their male counterparts, but they are also less financially secure than men, one study found. According to CompareCards. com, women are struggling to pay their bills and are less likely than men to pay their full credit card balance. Twenty-eight percent of women said they paid their credit card’s monthly statement in full in all of the last six months compared to 32% of men. Shockingly, 31% of women said they paid their credit card’s monthly statement in full in none of the last six months. For men, that number is just 10%.

KNOW ESG assets accounted for $11.6 trillion among money managers in 2018. Source: LIMRA

Source: US SIF

InsuranceNewsNet Magazine » November 2019

Annuities can be pivotal for a well-diversified portfolio. Clients can live well today, knowing they have the opportunity for guaranteed income for life for tomorrow. Refresh your perspective at transamerica.com/annewities

Before investing, consider a variable annuityâ&#x20AC;&#x2122;s investment objectives, risks, charges, and expenses. Go to transamerica.com for prospectuses containing this and other information. Please read carefully. All guarantees, including optional benefits, are based on the claimspaying ability of the issuing insurance company. Variable annuities are long-term, tax-deferred vehicles designed for retirement purposes and are subject to investment risk, including possible loss of principal. Annuity fees and charges include mortality and expense risk fee and administrative charge, surrender charges, annual fee, and investment option management fee. Additional fees may apply to optional benefits selected. Annuities issued in all states except New York by Transamerica Life Insurance Company, Cedar Rapids, Iowa, and in New York by Transamerica Financial Life Insurance Company, Harrison, N.Y. Annuities are underwritten and distributed by Transamerica Capital, Inc., 1801 California St., Suite 5200, Denver, CO 80202, FINRA member. References to Transamerica may pertain to one or all of these companies. Ad may not be approved for use in all states. 126512

Cybersecurity: A High-Stakes Gamble For Firms And Clients Understanding cybersecurity means understanding what’s at stake for your business and your clients. • Cassie Miller

ata breaches happen to companies and organizations all the time. The most recent, a data breach at Capital One, left as many as 100 million customers wondering whether their personal and financial information was compromised. Data breaches like this one make a serious dent in the credibility and trustworthiness of businesses and firms, even large ones like Capital One. Other financial institutions like J.P. Morgan Chase, Equifax and Scottrade have all been victims of cyberattacks. So, what can firms in the financial services world do better to protect their businesses and their clients’ personal information? It starts with understanding what’s at stake.

Ramifications To Businesses

The cost of a data breach has risen 12% globally over the past five years and now costs $3.92 million on average, according to a Security Today study. These rising expenses reflect the multiyear financial impact of breaches, increased regulation and the complex process of resolving criminal attacks. The financial consequences of a data breach can be particularly severe for small-to-midsize businesses. According to the study, companies with fewer than 500 employees suffered losses of more than $2.5 million on average — a potentially crippling amount for small businesses, which typically earn $50 million or less in annual revenue. Data breaches in the U.S. are particularly expensive, costing companies an average of $8.9 million in 2019 alone. The U.S. has the highest cost globally for data breaches, according to an IBM-Ponemon Institute study. 56

What Firms Can Do To Protect Themselves And Their Clients 1. Identify vulnerable areas. Assess where the firm is vulnerable and outline ways to f ix g a p s i n s e c u r it y. Knowing where a data breach is mostly likely to occur can give firms a good place to start when implementing new cybersecurity plans. 2. Have an incident response team. Create an incident response team to help min imize costs of a potential data breach and test the data breach response plan. Having a team ready to act when an incident occurs gives firms the ability to contain the fallout from the breach quickly and establishes protocol for resolving breaches efficiently in a simulated scenario. 3. Invest in technology that can detect/contain a data breach. The faster a data breach is identified and contained, the lower the cost of fixing the damage. Security automation is a good way to gain visibility and improve operations where needed. 4. Invest in governance, risk management and com pliance programs. Having an internal framework for evaluating risk across the company, tracking compliance and making recommendations for improvement is a proactive approach to dealing with cyber security. 5. Minimize complexity of IT and security environ ments. System complexity, compliance failures and cloud migration can all contribute to thirdparty data breaches.

InsuranceNewsNet Magazine » November 2019

The study found that lost business was the biggest contributor to data breach costs, accounting for an average of $1.42 million lost. For a small firm or business, numbers like this can be devastating, resulting in layoffs or even closures. A Kaspersky Lab survey on data breaches found that 32% of data breaches resulted in layoffs. Take, for example, medical billing company, American Medical Collection Agency who filed for bankruptcy after a data breach and cut its staff from 113 to just 25 employees. The company said “enormous expenses” were to blame for the company’s bankruptcy.

Time Is Money

Not only do data breaches cost an exorbitant amount of money, they also tend to linger, dragging costs out over years. On average, it takes 279 days for a data breach to be identified. According to IBM, the lifecycle of an attack from breach to containment is an average of 314 days, but it doesn’t stop there. The residual effects of a data breach can linger for years. In fact, only 67% of costs are incurred in the first year of a data breach. Twenty-two percent arise in the second year after a data breach and 11% occur after two or more years, according to the IBM study.

The Impact On Financial Services

While the health care field has the highest industry average for the most costly data breaches, the financial services industry came in second at an average of $5.86 million. For financial services, the average cost per record breached is $210. J.P. Morgan Chase understands the potential costs of having a data breach. In 2014, the company was hacked, compromising the data of millions of customers. In his annual letter to shareholders, CEO Jamie Dimon said the company spent almost $600 million on cyber defenses in 2018.

CYBERSECURITY: A HIGH-STAKES GAMBLE FOR FIRMS AND CLIENTS

threat,” Peikin said. “That crosses not just this building, but all over the country.” The SEC has seen an increase in investigations involving cybercrime, Avakian said, and as a result, has been steadily gathering statistics about cybercrimes to identify larger, market-wide concerns. “I think we will see the cyber threat continue to emerge,” Avakian said. SEC Chairman Jay Clayton agreed with Avakian, saying in a statement, “The Commission is focused on identifying and managing cybersecurity risks and ensuring that market participants — including issuers, intermediaries, investors and government authorities — are actively and effectively engaged in this effort and are appropriately informing investors and other market participants of these risks.” Clayton, who had previously told the Senate Banking Committee that “companies should be disclosing more” and that there should be “better disclosure about their risk portfolios and sooner disclosures about — Steven Peikin, SEC intrusions,” created the SEC’s Cyber Unit within the commission’s Enforcement Division. The Cyber Unit is tasked with “targeting cyber-related misconduct.” Since the Cyber Unit’s inception, the SEC has brought two enforcement actions against victims of breaches. Not long after, the agency issued a substantial report suggesting future enforcement against victims of breaches that are not in compliance with certain safeguards. In April 2018, the SEC issued its first enforcement against a company for failing to disclose a breach, exemplifying the commission’s position and urging firms and companies to be in compliance with SEC safeguards. The SEC is not the only agency concerned about cybersecurity in the financial industry. In 2015, the Financial Industry Regulatory Authority identified where firms are most likely to be vulnerable and recommended some proactive steps to make their firms cyber safe.

“The greatest threat to our markets right now is the cyber threat.”

While the costs to be proactive can be steep, it pays to keep your clients’ information safe, the IBM study concluded. The global average of customer turnover rate was 3.9%; in financial services that number climbs to 5.9%, well above the global average. Dimon, who previously referred to cybersecurity as an “arms race,” said that “the threat of cyber security may very well be the biggest threat to the U.S. financial system.”

FINRA And The SEC

Private and government agencies are not sitting this one out, either. In the last decade, numerous financial agencies have stepped up their cybersecurity procedures and have even created groups whose sole focus is on cybersecurity. Stephanie Avakian and Steven Peikin are co-directors of enforcement at the Securities and Exchange Commission. Since coming into that role, Avakian and Peikin have made cybersecurity a major enforcement priority. “The greatest threat to our markets right now is the cyber

AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@ Adnewsfeedback.com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.

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November 2019 » InsuranceNewsNet Magazine

INBALANCEWIRES

Optimism Does Your Heart Good “Always look on the bright side of life,” sang the comedy troupe

Monty Python. While you’re trying to get that ear worm out of your head, learn what researchers had to say about optimism and your heart. Studies conducted by the Icahn School of Medicine showed that the optimists had about a 35% lower risk of major heart complications, such as a cardiac death, stroke or a heart attack, compared to the pessimists. In fact, the more positive the person, the greater the protection from heart attacks, stroke and any cause of death, the studies showed. Why are the optimists healthier? The researchers concluded that optimists tend to have better coping skills and are better problem-solvers. They are better at proactive coping, or anticipating problems and then proactively taking steps to fix them.

WASH THOSE GERMS RIGHT OFF OF YOUR HANDS

We’re approaching the cold and flu season, and although health experts say frequent handwashing is a good way to keep viruses at bay, just how do you get those invisible nasties off your hands? It’s not enough to put your hands under running water and hope for the best. Here’s what the Centers for Disease Control has to say. Turn on the water and lather up with soap. Warm or cool water works fine, and either antibacterial or plain soap will do the job. Now, turn off the water so you don’t waste it. Scrub your hands for 20 seconds, making sure you wash the backs of your hands and between your fingers. Rinse your hands and dry thoroughly with a towel or an air dryer.

EVERYONE

Won’t hand sanitizer do just as good a job as soap and water? Hand sanitizer is better than nothing when you’re in a situation where you don’t have access to a

sink, the CDC said. For best results, rub the sanitizer on clean, dry skin for about 20 seconds until the product evaporates.

EAT BEFORE YOU DECIDE

We’ve heard the saying that you should never go grocery shopping when you’re hungry, but researchers have determined that you shouldn’t make any decisions on an empty stomach. Hunger clouds people’s decision-making abilities, said Dr. Uma Naidoo, director of nutritional and lifestyle psychiatry at Massachusetts General Hospital. More specifically, it’s ghrelin that’s the culprit that interferes with making decisions. Ghrelin is a hormone made in the gastrointestinal tract that affects the brain. It is released when the stomach is empty. Once a healthy person eats, the hormone’s action stops. A study from the University of Dundee found that hunger messed up a person’s decision-making processes. Hunger made the study participants more impatient and more likely to settle for a small reward that arrives sooner than a larger

DID YOU

QUOTABLE We found that eating plant-based diets was associated with, on average, 23% reduction in diabetes risk. — Dr. Qi Sun, associate professor at the Harvard T.H. Chan School of Public Health

reward promised at a later date. In other words, what the research appears to show us is that we seem to make poorer, more reckless choices when we are hungry.

BEDTIME READING BOOSTS HEALTH AND WEALTH

Ending your day by curling up with a book at bedtime benefits you in numerous ways, a study revealed. Mattress and sleep product review site Sleep Junkie asked people if they read in bed. Eleven percent of survey takers read one or two nights a week, 12% read three or four, 7% read five or six, and 8% read every night. Of those who read five or more nights a week, the average time spent reading comes out to 43 minutes. Nearly three-quarters of bedtime readers said they would have trouble falling asleep if they didn’t read, and 96% said they would recommend the habit to others. The readers said they slept more and had a better quality of sleep than the non-readers. The bedtime reading ritual benefited other areas of their lives as well. The survey respondents who read before bed made an average income of $39,779, while nonreaders made $36,094. Bedtime readers are 12% more inclined to eat a healthy diet, 14% more likely to engage in “healthy recreation” and 8% more likely to keep regular medical appointments than their non-reading counterparts.

KNOW Only 52% of Americans said they plan to get a flu shot this season. Source: National Foundation for Infectious Diseases

InsuranceNewsNet Magazine » November 2019

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INBALANCE

If You Can’t Say What You Mean, You Won’t Mean What You Say Public speaking is the key to overcoming the fear of public speaking. By John Hilton

vividly remember the moment when I became a confident public speaker. I had been a member of my local Toastmasters club for many months, dutifully delivering my share of speaking parts. But my personal breakthrough remained stubbornly elusive. My mind remained susceptible to random whiteouts when I locked eyes with an audience member. I would fumble over words as my mouth raced ahead of my brain like a drowning man desperate for oxygen. This condition is no doubt familiar to anyone who struggles with public speaking. The National Institute of Mental 60

Health reports that public speaking anxiety, or glossophobia, affects about 73% of the population. The fear is so great that many people just avoid it like the seafood section of a buffet. That would be a mistake. Various studies show that unpolished or nonexistent public speaking skills can cost you promotions and raises. And besides, wouldn’t it feel better to conquer that fear rather than surrender to it? I’m going to cover some strategies for doing just that, along with some speaking tips.

A Jackie Story

But first, let’s get back to my story. On the night in question, in March of this year, I was delivering a five-to-seven-minute talk on the great Jackie Robinson. On April 15, 1947, Robinson broke Major League Baseball’s color barrier when he suited up for the Brooklyn Dodgers.

InsuranceNewsNet Magazine » November 2019

I have been a baseball fan since I was old enough to read the back of a baseball card. The speech was going well. Then I told this anecdote, reprinted here from my speech draft: During Jackie’s third year in the game, one scary incident took place when a man threatened to shoot Jackie if he took the field in Cincinnati. Everyone was very nervous in the clubhouse before the game when Gene Hermanski spoke up and said “I’ve got it. We’ll all wear No. 42 and nobody will know which one of us is Jackie!” It’s a cute and funny story, made better by the warm message it carries. I nailed the funny line perfectly and scanned the room. People were laughing all around me, and not the forced laughter my supportive Toastmaster friends sometimes give. I realized later it was not my topic or my speech skills that made me feel good talking that night. It was my confidence

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Public speaking anxiety, or glossophobia, affects about 73% of the population.

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that lifted me up — confidence I had earned through hard work and repetition. Simply put, I tackled my fear, got knocked down, got up and repeated the scene. Eventually I didn’t have to pick myself up anymore.

to start. Just remind yourself that nobody is going to die. Otherwise, speak elsewhere, too. You might get random offers to speak at work, or the Rotary Club or at your child’s school. Yes, yes and yes — accept them all.

Take The First Step

3. Preach It

This has been a lifelong bugaboo for me. So if I can speak comfortably in front of a crowd, I really believe that anyone can. Here are three general strategies to get started:

1. Find A Toastmasters Club

Th is is not a com mercia l for Toastmasters. Any speaking organization will suffice; I am just not aware of any others. The idea is to find a space where you can find your voice. Toastmasters uses the Pathways program for communication and leadership. You fill out a questionnaire and design your own path. The important part is the supportive audience willing to listen and provide constructive feedback.

2. Speak Up!

Crazy as it sounds, I see a lot of people who join my Toastmasters chapter and then never speak. That’s like going to Disney World to take a walk. You paid for the ticket, you might as well ride the ride. While that fear of speaking can be a powerful emotion to overcome, presenting in front of a speaking club is the place 62

I believe there is at least a small part in all of us that enjoys being in control and delivering information. Think about it: You have an audience that isn’t going anywhere until they hear you present whatever you want to talk about.

Share Your Passion

Recommend a book. Show those vacation slides. This is your chance to demonstrate your mastery of a topic. You’ve earned it. What’s the worst thing that can happen? As I noted, nobody has ever died from public speaking (to my knowledge). Heck, Theodore Roosevelt was shot in the chest on his way to delivering a speech in Milwaukee and he talked for 90 minutes with a handkerchief over his wound. If Teddy could do it, so can you. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

InsuranceNewsNet Magazine » November 2019

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BUSINESS

Prioritize vs. Delegate: Identifying Your Gifts Creating an effective practice involves identifying your strengths and delegating the other tasks. By Mike Walters

gents and advisors bring organization, clarity and productivity to their clients’ financial affairs. Over time, their roles have expanded, moving beyond insurance and into investments, cash flow enhancement and real estate investing. Not surprisingly, advisors are busier than ever. As a result, working efficiently has become more important. To work efficiently, advisors must set priorities and delegate responsibilities that take away from their core activities. How do you decide what to prioritize and what to delegate? That depends on the individual advisor. We all have strengths and weaknesses, and each advisor has parts of their job that they feel more passionate about. Creating the most effective practice involves identifying these areas and focusing on them while delegating tasks associated with your weaker skills. By following this method, you can focus on the areas where you have the most skill and passion, and these represent your “giftedness.”

Identifying The Areas Of Focus

It takes some thought to identify where to put most of your time and energy. To get started, consider all that goes into your practice. Advisors wear many hats. They must be salespeople, analysts, accountants, tax experts, marketers, networkers, office managers, students and teachers. You already know how these varied roles keep your job exciting and lucrative. Clients need advisors with this mix of skills because they can offer holistic solutions. 64

When their practice is new, most advisors must take on all these responsibilities. This provides the advantage of sharpening new advisors’ skills and increasing their knowledge base. As the practice grows, the advisor must spend more time with clients and craft more complex solutions. When this occurs, it’s time for the advisor to ask themselves which activities to focus on and which to delegate. At this point, advisors have several important questions to ask themselves: 1. What are my strengths? 2. What are my weaknesses? 3. Which parts of the business am I truly passionate about? 4. What energizes me? 5. When I wake up in the morning and head to my practice, what most excites me about the day ahead? 6. What tasks do I dread performing? I recommend dividing responsibilities into four categories of expertise, according to the advisor’s aptitudes and passions: areas of incompetence, competence, excellence and giftedness.

The Four Categories Of Expertise In Your Practice

Incompetent areas: Admitting weaknesses can be difficult for some of us, but we all have areas in which we are predisposed to struggle. For example, some of us are mechanically inclined while others break every machine they touch.

InsuranceNewsNet Magazine » November 2019

Advisors will always have competence in the core skills of the job, such as sales and presentation ability, product knowledge and analysis. Areas where advisors may struggle often involve the aspects of running a practice that don’t directly

The 4 Categories of Expertise 1. Incompetent – Everyone has that area of core incompetence, something they completely do not know how to do or are totally uninterested in learning. You know what your incompetent areas are. Delegate those tasks to someone else — fast! 2. Competent – You are good at these tasks, but they are not the highest and best use of your time. For example, you may be good at research or cold calling, but those tasks take time away from working directly with clients. Again, delegate those competent areas to someone else. 3. Excellent – You are great at these tasks. But they don’t get you excited or energized. It doesn’t matter how excellent you are — if these tasks leave you feeling less than happy, pass them along to someone else. 4. Giftedness – This is where the magic happens. You are not only great at these tasks, you truly enjoy doing them. They energize you and fuel your practice.

PRIORITIZE VS. DELEGATE: IDENTIFYING YOUR GIFTS BUSINESS involve advising. Possible areas advisors should consider delegating include advertising, web design, social media marketing, IT, legal and business accounting. None of these is an advisor’s core competency, so delegating these areas to an employee or outside firm is desirable. Competent areas: These include the tasks you can do well, but they may not be a good use of your time and skills. For example, as a newly minted advisor, you may have not been great at cold calling. You’re still a competent cold caller, but you don’t have time because your clients

areas are, ask the people around you. They’ll know. For many advisors, sales presentations are an area of giftedness. The advisor feels passionate about what he does and loves helping clients build financial security and freedom. This comes across in sales presentations, helping the advisor win more clients. The advisor also has conversational skills, a smile for their clients and a love for demystifying complex products. This is the advisor’s giftedness and what the advisor should build their practice around.

GROW YOUR

As the practice grows, the advisor must spend more time with clients and craft more complex solutions. When this occurs, it’s time for the advisor to ask themselves which activities to focus on and which to delegate. keep you busy; however, if you stop prospecting, new business will dry up. It’s time to delegate appointment setting by hiring people to take on that task for you. Excellent areas: These are tasks that you are great at but not necessarily passionate about. These tasks don’t get you excited or energized. I think of my own experience in dealing with legal and accounting issues as a financial advisor. I was good at dealing with the lawyers and accountants, but found that a day of these types of meetings left me drained. This was an area where I excelled, but not an area of giftedness. I needed to delegate this responsibility and focus on the aspects of the business that were my passion. Giftedness areas: These are the tasks that give you energy. They fuel and excite you. You are both good at them and enjoy them. If you’re not sure what these

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As you start to grow and expand your practice, slowly and strategically shift more time and energy toward the areas where you are excellent and gifted. By planning your practice to grow around these areas, you set yourself up for success. Success in any business requires long hours, diligence and patience. Fortitude is a must and focusing on your giftedness will give you the drive and energy to persevere. Mike Walters is the CEO of USA Financial. Mike may be contacted at mike.walters@innfeedback.com.

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Match Your Advice To Your Client’s Personality Type Which Type Of Client Are You Dealing With? Learn about your client’s personality quickly and adapt to the way they want to have information presented to them. By Eszylfie Taylor

e meet with a lot of people in our line of work, and we need to learn about them quickly and adapt like chameleons when presenting solutions to them. Client personalities typically fall into four distinct categories: the driver, the intellect, the feeler and the amiable. If you tailor your advice to meet your clients’ personality types, you’ll have more fruitful interactions that expand your opportunities for success. To implement this concept into your practice, begin with an examination of the four personality types and categorize your clients accordingly.

The Driver

We’ve all worked with the driver or boss, the client who has plenty of their own ideas and wants those ideas to influence every decision. Let these clients take the lead and simply facilitate the conversation toward the right solution by asking probing questions. If you are discussing life insurance, you don’t need to spend time telling them why they need insurance, because they already knew that when they sought you out. Acknowledge their drive and success and ask some questions along the way, such as “How much income do you want and how much do you want your family to have?” and “If you didn’t come home tomorrow, what would happen to your family?”

The Intellect

The intellect, or brain, wants to understand all facets of their plan, down to the dividends on the third line of the 12th page of the fourth illustration you gave them. 66

When you work with 1. The Driver – They have plenty of their own an analytical person who ideas and aren’t afraid to share them. will dissect everything you 2. The Intellect – They are analytical people share, less is more; otherwho will dissect everything you share. wise, they will be compelled 3. The Feeler – They rely on emotions, and to read every detail. Placing need to envision how something will be 25 pieces of paper in front of before they agree to it. them and asking for a busi4. The Amiable – They don’t want to upset ness decision on the spot anyone, so they frequently do nothing. will make them uncomfortable. They process information better when discussions are conceptually based. Provide ample dis- to ask what happened. They may say closures later on, but in early meetings the something like, “My uncle said $500 a general concept of a policy is more relevant month was too much for insurance. He’s than the minute details. paying $99.” Now you have to backtrack, try to repeat the process and explain the The Feeler value proposition. When working with the feeler, lightly tugAmiable clients don’t want to upset ging on their heartstrings can go a long way. anyone — you or their uncle — so someUse phrases such as, “I’m sure you don’t times they do nothing. The sooner you want to leave your family. You said you can identify this personality type, the would feel horrible about that.” Make your sooner you can adjust your sales methinteractions and recommendations more odology to offer solutions that fit their palpable by breaking life insurance poli- needs. It seems counterintuitive, but you cies down to the day — “So what you’re should take the most time with amiable telling me is you’re willing to set aside $15 personalities to ensure they understand a day to protect your family?” or “I need the value proposition of a product such as $100 a day from you, Alex, but I know life insurance and why they should follow that’s not a problem.” The feeler relies on through with your recommendations. emotions, how a plan or situation would If your prospects do not have a plan look and feel, and if they can comfortably in place, it’s simple to exceed their exenvision that solution in their life. pectations. You don’t have to be perfect; you just have to help them become more The Amiable confident than they were without a plan. Finally, there’s the amiable, or the drifter. Approach your clients based on their Many advisors mistakenly think the ami- needs and personality type, so they know able is the easiest client to work with but, your relationship and advice fit their in my opinion, they present the most sig- unique situation. Remember, we don’t sell nificant challenges. products; we simply identify problems and When you sit down to begin planning, create solutions. they have that deer-in-the-headlights look. You lead with a product, break out Eszylfie Taylor is the a brochure and say, “You should put away founder and president of Taylor Insurance and $500 a month into this plan.” They may Financial Services in not object and they may even return the Pasadena, Calif., and creator of The Taylor Method, his sales training application, but it feels too easy. Ninety days later, you see your client system for financial advisors. He is a 16-year member of MDRT. He may be contacted at canceled the policy so you contact them eszylfie.taylor@innfeedback.com.

InsuranceNewsNet Magazine » November 2019

INSIGHTS

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

Getting Referrals When Asking Isn’t Allowed The most effective way to get a referral is to make sure our clients are prepared to give the referral when the time is right for them. By Elie Harriett

y business is Medicare. That’s all. In many ways, it is similar to securities and financial services in its rules. There are restrictions on advertising and limitations on what we are allowed to say and how we say it. There are also record-retention requirements and even a cooling off period for selling other products. Many of our marketing activities are regulated by the federal government. And the federal government has strict guidelines for the sale of Medicare-related insurance. One of those guidelines deals with first contacts and referrals. I’m still an insurance professional, like you. To avoid having to prospect like a newbie every week of my career, I need to build on referrals. But I cannot ask for names and phone numbers of people I can call. I can get an address and send a note, but even that has restrictions on what can be sent. I might be able to host a dinner or lunch, but that skirts right along the lines of rules that state that the moment I talk shop, I might be in violation, depending on what is said and how it is interpreted.

Getting Referrals

As a result, the traditional ways of asking for and contacting referrals do not work for my business. I have had debates with colleagues about the interpretations of these laws. The bottom line is that my actions are held accountable, and the key to not running afoul of rules is to give them a wide interpretation rather than skirt as close to legality as I can. So, here is how

our method for getting referrals works. For starters, when I meet a new prospect and explain what I do, the subject of how I get compensated often comes up. And if they don’t ask, I tell them: “We’ll get paid a commission or a fee by the carrier (depending on the product), but you won’t pay anything to us. If you are happy with what we’ve done, please let everybody know about it.” Every now and then, we’ll get someone who will ask if I can call their family member, neighbor or someone like that. I can’t initiate that kind of contact. So, I make sure to give them an extra business card to pass along.

Did You Know? Medicare’s Communications and Marketing Guidelines are 84 pages long. Section 40.3 of the guidelines states that agents and brokers may not make unsolicited telephone calls to prospective enrollees. However, they are permitted to contact their current enrollees to discuss plan business, but cannot market before Oct. 1 under the pretense of plan business.

Business Card Tips You Can Use

And speaking of business cards, how many do you give out? One? One per person? Why be stingy? Every person I sit down with gets two business cards at a minimum. Most people ask why. I always respond: “Everyone tells me they lose one. So, here’s a second one to lose.” No one ever gives it back. I’ve gone back to see clients a year later and have seen two business cards on refrigerators, by their phones and in other places around the house. And you’d be surprised at how many of those spare cards show up in other people’s hands eventually

NO REFERRAL REQUESTS

— sometimes years later. The most effective way for me to get a referral is to make sure my clients are prepared to give the referral when the time is right for them. Make sure they have a spare card to give at all times. Here’s another business card tip: If you are able, change your business card every couple of years even if nothing at your business changes. This is an excuse to give out another couple of cards. Change the coloring slightly, if that’s all you need to do, add a period or change an abbreviation. Now you can give two cards out again to all your clients and they’ll have both the new and the old ones. I was surprised recently when I saw a referral from a client who had a card that I last used in 2008! Finally, the best way to be referable when you can’t ask is to simply be available. My clients can call me. They can call the office and get our office manager, but they can also call me. Do you know how many clients call me because they’re sick of having to call and be put on hold for a generic customer service rep? People are getting tired, really tired of being put on hold, even though they are told that their call is very important. Leaving me a voice mail message but knowing I’ll call them back personally is a good way of capturing new clients. Reliably returning a call in this day and age is a means of advertising that money cannot buy. Elie Harriett is a NAIFA member and co-owns Classic Insurance & Financial Services, specializing in Medicarerelated insurance. Elie may be reached at elie.harriett@innfeedback.com.

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November 2019 » InsuranceNewsNet Magazine

More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

INSIGHTS

Are Criminals Endangering The Customer Experience? The latest technology allows for easier and smoother business processes for consumers, but it also opens up new avenues for criminal activity. By Paul S. Henry

oon after the first insurance policy was written, and the first investment account was opened, criminals began looking for ways to misappropriate funds. From the beginning, financial services companies have grappled with the challenge of creating a seamless customer experience, while also providing a level of security that protects both the company and the customer. In the current environment of the internet and advanced technology, this problem compounds exponentially. While the latest tech allows for easier and smoother business processes for consumers, it also opens up new avenues for criminal activity. The very defenses that companies set up to combat fraudsters can negatively affect the customer experience that they work so hard to cultivate.

A Growing Threat

The fraud threat is growing and continues to reach further into the financial services landscape. A LIMRA survey conducted in June 2018 found that three product lines in particular experienced the greatest increase in attempted fraud: individual life insurance (76%), individual annuities (75%) and retirement plans (52%). In eight out of 10 instances, the increases are related to attempts at account takeover. In 2016, losses from account takeovers in the U.S. equaled $2.3 billion, an increase of 61% from 2015, a Javelin Strategy and Research study revealed. Takeover attacks are up 210% over 2016. Today, 10 new account takeover attempts are launched every second. The payoff is huge for the attackers - garnering them more than $5 billion in 2017, a 120% increase in 68

just one year, a ThreatMetrix Cybercrime Report said. Criminals have begun to target the life and retirement industries in earnest, with more sophisticated attempts to take over client accounts, to strip retirement plans of savings and to perpetrate fraudulent withdrawals. Institutional retirement operations and life operations are particularly vulnerable. Financial services companies hold trillions of dollars in assets through retirement accounts, permanent life policies and annuities; and fraudsters are looking for vulnerabilities in systems. It was inevitable that in response to these attacks, the industry would create more effective identity authentication defenses — perhaps to the detriment of consumer experience.

The Customer Experience Challenge

Solving the riddle of combating fraud while maintaining a positive customer experience has ramifications on several fronts. Fraud can damage a company’s reputation, customer experience and loyalty, shareholder confidence, and financial results. It can be a difficult trade off; good security protocols may make it more difficult to create a quick and easy customer experience. In addition, often the customer, rather than the company, discovers the fraud. This can shake consumer faith in the companies they work with, resulting in serious financial and reputational consequences. The challenge for companies can involve a wide range of customer touchpoints. According to LIMRA survey findings, since January 2017 the channels seeing increased fraud attempts include interactive voice response systems (33%), financial professional portals (37%), the customer website (73%), and the contact center (80%). A significant risk for contact centers is “social engineering fraud” in which fraudsters — possessing basic customer

InsuranceNewsNet Magazine » November 2019

information such as name, address, Social Security number and date of birth — use their understanding of a company’s business processes and a representative’s genuine desire to help, to take over actual customer accounts and withdraw funds.

How Can We Help

As companies work toward creating a better customer experience, while also providing an increased level of security, they are reviewing policies and procedures, updating training programs and implementing new identity authentication protocols. Last year, LIMRA and LOMA launched an industry fraud initiative designed to help companies understand the evolving nature of fraud, its implications, and ways to help foresee fraud and enable companies to deliver a customer experience that is consistent with expectations. The latest tool to come out of these efforts — FraudShare — is an information sharing and alert system that will help companies differentiate between actual customers and fraudsters. While the industry strives to create exceptional customer experiences that will both attract and retain clients, criminals are looking for ways to exploit new access to personally identifiable information and their understanding of our processes to their advantage. It is a cat-and-mouse game — the industry against the fraudsters. Working together, we can, and will, find ways to preserve and enhance the customer experience while keeping fraudsters at bay. Paul S. Henry is corporate vice president and managing director, LIMRA LOMA Secure Retirement Institute. In addition, he is the co-lead of the LIMRA and LOMA Fraud Prevention Initiative. Paul may be contacted at paul.henry@ innfeedback.com.

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