One thing he sees is the start of a rebound in paper sales.
Matt Berman is responsible for helping people
get covered against the risk of premature death, at a time when COVID-19
appears to be increasing the risk of premature death.
Berman is the chief distribution officer of
the Independent Order of Foresters. The Toronto-based company, which now does
business under the Foresters Financial brand name, has been tightening its
focus on selling life insurance.
Berman himself has a bachelor’s degree from
the University of Pennsylvania and a master’s degree in business from New York
University. He got his start in insurance as an underwriting director at
American International Group Inc. For 10 years, before he joined Foresters, he
held many different roles at AXA US, in areas such as competitive intelligence,
life sales, and life product development.
Here are five things he’s seeing in the life
insurance market now, based on written responses he provided through an e-mail
interview.
1. Agents adapted
quickly to the COVID-19-related shelter-in-place rules.
Berman says independent agents have shown a
great deal of flexibility, and willingness to adopt new technology.
“Their resourcefulness and perseverance in
pursuing credible leads, despite the challenging environment, has been
admirable,” Berman said.
2. The impact of the
shelter-in-place rules seems to be easing.
When the shelter-in-place rules took effect,
in March, the drop in paper sales was sudden and steep, Berman said.
“However, as states and the broader economy
have started to reopen, we’ve simultaneously seen a significant rebound in
these sales,” Berman said.
3. What consumers want
has changed, and what life insurers want to write has changed.
For life insurers, Berman said, the idea that
interest rates might stay very low for a long time has put pressure on life
insurance product prices, and especially on prices for products that support
guarantees that will last for a long time.
For consumers, the COVID-19 crisis has
increased consumers’ interest in term life, and other simple, inexpensive
products that can provide a great deal of protection, Berman said.
Market volatility, meanwhile, has increased
consumers’ interest in products shielded from market fluctuations, such as
whole life, and decreased in interest in products linked to the stock market,
Berman said.
4. The shift to
digital-only, fluid-free underwriting is real.
Berman sees many life insurers accelerating
the shift toward efforts to reduce use of paramedical exams, and increase the
amount of coverage available to applicants who go without paramedical exams.
Life insurers are also trying to eliminate as
many other paper-based and face-to-face components of the sales process as
possible, as responsibly as possible, Berman said.
Foresters, for example, has enabled electronic
signature tools and added support for independent distributors, to increase its
ability to ‘fully function in this new reality,” Berman said.
5. The shift to
fluid-free underwriting might affect underwriting results.
Some consumer groups, such as the Center for
Economic Justice, have questioned whether the new, digital-only, “algorithmic”
underwriting methods might be unfair.
Berman said in the email interview that, for
carriers, one question is what increased use of fluid-free methods will do to
claim costs.
The insurers expanding use of the new
underwriting “are willing to assume the subsequent mortality slippage and, in
turn, will look to reduce their operational expenses internally to neutralize
or mitigate profit compression,” Berman said.
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