The next big thing for Insurance

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Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

Beyond the Challenge podcast is sponsored by Exactuals, perfecting payments and the data driving them; Techficient, transforming the protection journey with intelligent data and machine learning to drive better outcomes; and JourneyGuide, improving your clients’ retirement outcomes through interactive planning software.

Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

Sandy: Welcome to Beyond the Challenge. We have spent the last year talking to some of the most influential and forward-thinking leaders in the insurance marketplace.  Their perspectives have been very well received by our audience and we thought it was time to put together some of our favorite guests to see what they thought about some hot topics.

Sandy: In this episode you will hear from Wayne Chopus, President and CEO of the Insured Retirement Institute, Rob Arena, Co-President and Head of Individual Markets at Global Atlantic, Brian Lauber, SVP Disability Income at Ash Brokerage, and Brad Mendenhall, President, Insurance Solutions at Concourse Financial Group.

Kevin: During our interviews, we asked our guests what they thought was the next big thing coming to their vertical of the industry. 

Kevin: Let’s start with what Wayne Chopus had to say about the retirement marketplace.

Wayne: That’s a good question. I’m not sure I can provide one big thing. I know one thing I can do is look in the rearview mirror and say that I’ve watched 30 years of product innovation through our industry regardless of the environment that we were in and I have no reason to believe that’s going to change and I think if you just look at recent product innovation, which, again, is constantly evolving to meet the needs of consumers, to meet the needs of our advisors and the markets as they play, traditionally, many of the variable annuity products and retirement products that were sold 10, 15, 20 years ago were tied to lifetime income, but I think as we watch consumer needs change, as we’ve watched folks want to be protected against market volatility, and as we’ve seen recently, markets can go down, it’s been awhile but they can go down, as we’ve looked at combating rising inflation, as we’ve looked at these historically low interest rates, we’ve never had a larger diversity of product offerings in our space than we do today. And, again, I’m not sure I can tell you exactly what the next big thing will be but we have people at every one of our member companies working every single day on looking forward to the needs of consumers today but also the needs of consumers in three to five years and they’ve always met that need through product innovation and that’s going to hold true. It actually turned into extraordinary sales in 2021, the highest total of annuity sales in 2021 since 2008, and I think that reflects multiple things. This was during and coming out of pandemic as consumers’ confidence in our products is at an all-time high and the ability for our industry to continue to innovate and meet consumer needs in this environment seems at an all-time high.

Sandy: It sounds like Wayne thinks that annuity products that will protect insureds against market volatility will be important in our current rising inflation and changing interest rates.

Kevin: Yes, he sees consumers moving away from variable products that were popular 10-20 years ago and into products with less volatility. Now it’s time to hear from Rob Arena had to say about the life and annuity marketplace.

Rob: Yeah, this is one of these questions that’s been, I think, hotly debated for a while. We haven’t seen a ton of new innovation come out recently, at least through my eyes, I haven’t seen anything. There’s some stuff that we’ll call innovation but, at the end of the day, it’s fairly similar. There’s been a lot of attention around these hybrid types of products. How do we take and combine the best of what annuity products bring to bear along with life insurance, long-term care insurance? And what does that Swiss army knife, if you will, what does that hybrid product look like as you go forward? And so I think you’ll continue to see a lot of interest there. There was a lot of development, Kevin, and I think, in the low rate environment, it became very difficult. I think as we go forward, I think you’ll see a lot of attention focused on this hybrid nature of products and thinking about how you can provide different types of solutions. We know long-term care is a critical need. We also know standalone, long-term care insurance has been particularly challenging, that doesn’t mean there’s not things you can do in a different type of package, so I think that’s one and I think two is around income, particularly in the annuity industry, for those who are focused on that space. The scale is really tipped to be more of an accumulation-focused business but, fundamentally, the income challenge that exists in our country hasn’t gone away and I think as rates move to the levels they’re at, it allows us to bring back a greater emphasis there. So I think how do we best package the different types of products into a solution that addresses the needs that people have, that’s one, and then sort of the second thing I’d highlight is sort of a reimagined way of thinking about income here as we go forward. You’re seeing this come into play in the 401(k) space. I don’t think that’s by accident. There’s a tremendous need for protected income in our country and I think you’ll continue to see a lot of development go on from that standpoint. So those are the two things that I like.

Sandy: Rob thinks that we will be looking at more hybrid products that combine annuity, life, and LTC into a single offering.

Kevin: He says that the scale is tipped to be more of an accumulation focused business but that the income challenge that exists hasn’t gone away and as rates move to the levels they’re at now, it allows companies to bring ack a greater emphasis on income protection. Let’s see what Brian Lauber thinks is coming for the Disability marketplace.

Brian: One of the biggest opportunity, I think, for us is to communicate the consumer need. The consumer need outweighs our ability to meet it dramatically. I think we’re going to do that through social media. We’ll make it easier for the advisor to write in the business insurance market. As you know, all businesses have benefit requirements. It’s that time of year, it’s October, and what do we usually do in October? What do all employees do? We sign up for our benefits. So, if you think about that and most people doing that and it’s usually is because of the, I don’t want to say the average employee but other than the professionals, there are literally millions of people that don’t understand even what they’re signing up for their employee benefits. Even if they do, they feel a little uncomfortable. There’s no guidance or advice given to them. So I think that opportunity to reach the masses with the need for income protection makes total sense. I also think the other opportunity is, I talk about this a lot when I talk to financial planning, there are a lot of financial planners and a lot of conversations about retirement and distribution of income and I’ve boiled it down to a simple explanation. Financial planning is basically people gathering assets so that they have a stream of income when they retire so they can live comfortably. And most people, that’s what they want to do. You ask all the financial planners. So I think the financial planners out there, that’s a huge opportunity for us. So it’s an easy question, if you were the financial planner, Kevin, is your customer in their earnings years or are they looking at the distribution years? And what do they need? If someone told me and I thought about it, I’m of that age, I started thinking about what streams of income I need when I retire, well, that’s the stream of income I need when I’m working. So it’s an easy transition, if you get someone to talk about the future because it’s not so threatening is to bring them back. So our ability to work with financial planners and explain that the income, the importance of income, and then income protection, before and during after retirement kind of makes sense. As you know, people buy annuities and stuff like that to protect their stream of income, they buy long-term care on the risk side of it, then it’s just an easy question. What’s your income continuation plan? Your own income continuation plan, and most people say, “I have it at work,” then you review their group benefits. It sounds really like common sense or easy but, right now, you’re going to see a little social campaign from Memphis, you’re signing up for your benefits, what’s the most important benefit? They’ll probably say health insurance, but the problem with that is that that means you think you could get hurt or sick. Well, actually, your income is more important than health insurance. Your ability to continue to receive your income, because if I didn’t have health insurance, as long as I get back to work and pay it, I could pay my bill off. But if your income stops, everything else stops. So you’ll see a little bit — take a different approach and even though people are so busy during benefit enrollment, I think that’s a good time for a reminder to say, “Here’s the need.”

Sandy: Brian thinks the consumer need for DI insurance or other asset protection, outweighs our ability to meet that need.  He thinks we need to make it easier for the advisor or employer to explain why consumers need asset protection products.

Kevin: So he thinks the next big thing for Disability insurance is making it easier to understand and teaching advisors how to bring the asset protection need into their overall financial and estate planning.

Kevin: Finally, let’s hear what Brad had to say from the perspective of the BGA/IMO marketplace.

Brad: Well, I think it’s a great industry. We’re known as an old slow growth industry. I think that’s maybe true but I think the opportunity is endless because there’s fewer people in it so the opportunity in the industry, I think, or I guess if I boiled this down, Kevin, the biggest opportunity really is to provide that holistic service, the holistic insurance and financial planning advice to that end customer. As we mentioned before, those end customers are looking to find more things in one place, trying to find advice, become an informed consumer, and they want to know how each piece of the puzzle fits into the overall picture for their financial plan and I think that’s the biggest opportunity for us. There’s a lot of ways to do that, as distributors, obviously, we curate that product set, we bring people to the table to work collaboratively in that environment but I think the biggest opportunity is looking at it holistically and where the market is going and what consumers want versus what carriers or product providers want to provide to that consumer.

Sandy: Brad agrees with Rob that the industry needs to look at products from a holistic view and create products that serve the overall needs in consumers financial planning.

Kevin: And he also agrees with Brian that we need to find a way to better inform consumers about the products and services that are available and help them see an overall picture for their financial plan.

Sandy: One of the repeating themes I heard from many of our guests was that advisors need to do a better job of explaining the products available and how they work within a good financial plan.  

Kevin: Yes, our old slow industry needs to start looking at ways to use platforms like social media to better inform consumers on products and services. 

Kevin: I really enjoy going back and listening to our past interviews.  I always tend to find something new that I missed the first time and today was no different.

Sandy: I agree, I always pick up at least one more tip that I missed the first time.

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