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By Fran Lysiak |
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A.M. Best Company, Inc. |
Applications for individually underwritten life insurance in the United States last year showed a positive trend of "stability," says the chief executive officer of MIB Group Inc.
Overall, the MIB Life Index has shown stability three years in a row, compared with about five years ago, when the industry was seeing year-over-year decreases, said Lee Oliphant, CEO and president of MIB Group. "The stability that it's shown in this difficult economy...bodes well for the industry as it's an affirmation that people really recognize a need for life insurance."
MIB says its index is the life insurance industry's timeliest measure of application activity in the United States, and is based on the number of searches its life member company underwriters perform on its database.
A strong December, up 5.8% year-over-year, contributed to year-end 2011 results that were slightly positive, up 0.2% year to date, all ages combined, according to MIB. It represented the third straight year where the index finished near parity, down 1.2% in 2010 and down 0.2% 2009 — a flat trend considering prior consecutive annual losses ranging 3%.
The mixed 2011 results included: 44 and younger, down 2.2% year to date, 45-59, flat year to date, and 60 and older, up 8.9%, year to date. People 44 and younger continue to lose ground but at a slower pace when compared with 2010 and 2009, according to MIB.
The 44 and younger crowd is a concern, said Oliphant. One reason is simply the demographic, as this age group is declining as a percentage of the total U.S. population, he said.
But there's also questions around this group's disposable income, and whether the industry is serving them adequately, Oliphant said. The agents tend to sell higher face amounts to the older population. Also, the younger group embraces social media such as Facebook but the industry's use of social media as a marketing tool "has lagged behind the general acceptance" of it.
Seniors, on the other hand, are increasing as a percentage of the total US. population, Oliphant said. People 60 and older have increased for five straight years, up 42.2% since 2007.
Also, agents service this older group better because they are higher face amount policies, with higher commissions, he said. Wealthy people 60 and older probably use life insurance as an estate-planning vehicle but there's "a lot of uncertainty" around the tax law, he said.
To see an interview with Oliphant, where he also discusses fraud detection, which saves the industry about $1 billion a year, go to http://www.ambest.com/media/MA.asp?vid=oliphant212
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
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(c) 2012 A.M. Best Company, Inc. |
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