Benefits Selling: Where do you see the market headed this year and beyond, and where does American General Life fit in?
Mary Jane Fortin: I'm pretty bullish on our opportunities here. I always like to start at the beginning, which to me is with the consumer. Today, 35 million households have no [life insurance] coverage. One-third of all households have no life insurance - the highest level in four decades
BS: What is American General doing to communicate with brokers and maintain that relationship?
MJF: Out in the field, we aren't hearing background noise in terms of concerns or willingness to work with us, and that's principally because we've been really trying to tell the financial strength stories of American General: The fact that we've got $80 billion in assets; the fact that our capital levels today are higher than they've were at the end of 2007 before the crisis even hit. (Our capital levels are up a third.)
From where we sit and the feedback we got from brokers speaks to our value proposition in that we're able to bring a broad portfolio of both employer-paid and employee-paid products, and so we really believe that is a differentiator for us. And that's an area we're going to continue to invest in. We really do believe that differentiated delivery and design of product is going to win the day. I saw on your [www.benefitssellingmag.com] blog you talked about your purchase of life insurance through the voluntary segment and how it was a huge missed opportunity.
BS: A lot of carriers are moving more toward the voluntary field or the carriers who are in the voluntary field are moving more toward the group market. And brokers aren't necessarily happy with that because they want a lot of this, the voluntary stuff, to stay on an individual chassis.
MJF: We have voluntary products on both individual and group chassis, so once again, I think we have flexibility in terms of a product sweep. This is where we're focused on the bundling of products, and I don't know that we should dictate to the broker or to the employer what they should offer.
I'd like us to be in a position to be able to work with them on bundling the products in a way they're interested in serving their employee base. So I don't see us going one way or another. I think the other piece of it is portability.That's where we'll truly serve the middle market. The young worker today is probably not like our parents who might have worked at the same place their entire career.
BS: LIMRA reported late last year that individual life insurance ownership sunk to a 50-year low. The number of U.S. households without any life insurance whatsoever is growing - the study revealed 30 percent of households have no life insurance coverage, compared to 22 percent of households just half a dozen years ago. What can be done to reverse this trend, and do you see significant growth for the industry on the horizon or would you expect it to remain flat for now?
MJF: I believe life insurance sales will grow at a modest rate over the next several years commensurate with the recovery of the economy. It's interesting to note that through Sept.30, 2010, total life insurance sales were up 6 percent over the same period last year (as measured by LIMRA on a CPPE basis).
As an industry, I believe we have a huge opportunity to fill the gap in coverage that exists today. However, we need to be creative. As I said, I firmly believe the worksite is a terrific way to reach the middle-market consumer who has a huge need for protection solutions.
BS: How can we do a better job of educating consumers about the need for life insurance coverage and change consumer attitudes to make having life insurance a higher priority?
MJF: How we address this question is key. I found it striking that the LIMRA study you refer to points out that the challenge isn't for us to convey the critical role of life insurance - the study found that 92 percent of middle-market consumers consider life insurance as important or more important in today's difficult economy. The problem is consumers don't have the urgency to buy when compared with other competing financial goals.
The same study suggests that about 40 percent of consumers readily admit their household doesn't have enough life insurance coverage. They know they need more protection. The study also showed that only 5 percent of consumers actually spoke with an agent about life insurance within the past year.
So, to your question, how do we get the consumer to act? I believe the workplace is a great avenue to educate the consumer/employee and provide the solutions they need.
BS: As a result of the PPACA, would you expect to see a rise in the sale of hybrid products - life insurance with long-term care riders?
MJF: I definitely believe the sale of hybrid products will increase, and I expect this to be in the areas of both life insurance and annuity products. As I spend time with our distribution partners, it's clear interest in combination products is quite high - including long-term care and critical illness. I believe this increased interest is driven by both the PPACA as well as the desire to meet several consumer needs through a single product strategy, ideally creating a more cost-efficient solution for the consumer.
This is an area that's under "R&D" at American General. The key for us is to ensure that we can build something that provides value for each key stakeholder - the consumer, the distributor and ourselves as the carrier.
When it all came crashing down
It was March of '09, during the height of the media and Congressional vilification of AIG, and I was all wrapped up in that. It was very difficult. I'd never worked harder in my life, but yet you were afraid to stay where you worked. We had to change our badges. We had employees afraid for their kids at school.
But it was a Sunday morning and my parents called early to let me know that my 47-year-old cousin died unexpectedly.
He left a stay-at-home wife and two 9-year-old children. The first thought I had was obviously for him and his family, but then it was like, you know, you think you've been living in the crisis, and you know what? It's all relative. It's not a crisis. You will get through this.