How do FE insurers (carriers) make money?

[VolAgent]

So one thing everyone glossed over.

There is no guarantee you'll make money. Quite a few companies have stuck their toes in the FE waters and lost them to the piranhas. The product may have been mispriced when compared to the underwriting and general market, it may have been poorly marketed to agents, poor customer service may have driven off agents and insureds, etc.

I had the opportunity to see one company's actuarial study, and they projected it taking quite a few years to actually be profitable. The initial expense of commissions and reserves takes a number of years to overcome.

 

[WinoBlues]

Quite a few companies have stuck their toes in the FE waters and lost them to the piranhas.

I also have seen quite a few drown. Adverse selection being another reason. There is a little Fraternal that several people are talking about that seems prime for adverse selection. IMofsoHO

 

[goillini52]

I also have seen quite a few drown. Adverse selection being another reason. There is a little Fraternal that several people are talking about that seems prime for adverse selection. IMofsoHO

About 1/2 an hour ago, I got a call from Huff-Cook, who originally started Settlers Life. They're a FMO now and pushing UHL.

We talked a bit about Settler's history. I asked her about the guy that about ran Settlers into the ground before NGL took them over. I said I couldn't remember the guy's name. She said, "Steve Bontell?". I busted out laughing and said that, "while Steve's good at running companies into the ground(Settlers and Forethought), it was before Steve's time."

 

[rousemark]

I also have seen quite a few drown. Adverse selection being another reason. There is a little Fraternal that several people are talking about that seems prime for adverse selection. IMofsoHO

I have also seen products fail to be profitable because, believe it or not, persistency was too good. That is what happened with the LTC market and has on occasion happened with life products. If more people keep the product that anticipated, the claims will be higher than the assumptions upon which the premium was calculated. We agents like to groan and complain about premiums with this or that product being "too high" but very few have any idea of just how many things that can affect the calculations that go into assuring a profitable product.

 

[rousemark]

About 1/2 an hour ago, I got a call from Huff-Cook, who originally started Settlers Life. They're a FMO now and pushing UHL.

We talked a bit about Settler's history. I asked her about the guy that about ran Settlers into the ground before NGL took them over. I said I couldn't remember the guy's name. She said, "Steve Bontell?". I busted out laughing and said that, "while Steve's good at running companies into the ground(Settlers and Forethought), it was before Steve's time."

When Settlers failed, Huff cook had already spun off into an IMO under Miller (name ?) The people at the head of Settlers at that time were the original owners, Mr. Harmon and Mr. Walker. And, the failure was not brought about anything they actually did wrong. Prior to coming out with a cancer policy, they kept everything in house. But when they brought out the cancer product, they had to re-insure it. They bought reinsurance through an approved re-insurer.. Everything should have been OK but they had no idea, and neither did the state DOI at the time, that Martin Frankel was embezzling the monies from the re-insuring companies. When they failed, the liability for the cancer policies reverted back to Settlers and since they did not have the money to post the reserves, the state of VA declared them insolvent and seized the company which they later sold to NGL.. I never have heard what happened to the cancer policies.

 

[shonceman]

About 1/2 an hour ago, I got a call from Huff-Cook, who originally started Settlers Life. They're a FMO now and pushing UHL.

We talked a bit about Settler's history. I asked her about the guy that about ran Settlers into the ground before NGL took them over. I said I couldn't remember the guy's name. She said, "Steve Bontell?". I busted out laughing and said that, "while Steve's good at running companies into the ground(Settlers and Forethought), it was before Steve's time."

Were you thinking of Marty Frankel? She probably thought you meant someone inside the company, and Bontell would be the first guy to come to mind for me, too. I started with them when Eddie Grills was the marketing director. They were a good company then.

 

[shonceman]

I also have seen quite a few drown. Adverse selection being another reason. There is a little Fraternal that several people are talking about that seems prime for adverse selection. IMofsoHO

I think I know who you mean, but they seem to have a pretty effective business prevention department (to borrow a phrase from @jdeasy) , so maybe they'll be ok!

 

[goillini52]

When Settlers failed, Huff cook had already spun off into an IMO under Miller (name ?) The people at the head of Settlers at that time were the original owners, Mr. Harmon and Mr. Walker. And, the failure was not brought about anything they actually did wrong. Prior to coming out with a cancer policy, they kept everything in house. But when they brought out the cancer product, they had to re-insure it. They bought reinsurance through an approved re-insurer.. Everything should have been OK but they had no idea, and neither did the state DOI at the time, that Martin Frankel was embezzling the monies from the re-insuring companies. When they failed, the liability for the cancer policies reverted back to Settlers and since they did not have the money to post the reserves, the state of VA declared them insolvent and seized the company which they later sold to NGL.. I never have heard what happened to the cancer policies.

Martin Frankel's the name I was trying to remember.

 

[goillini52]

Were you thinking of Marty Frankel? She probably thought you meant someone inside the company, and Bontell would be the first guy to come to mind for me, too. I started with them when Eddie Grills was the marketing director. They were a good company then.

Yep, I was trying to think of Frankel.

 

[Todd King]

Were you thinking of Marty Frankel? She probably thought you meant someone inside the company, and Bontell would be the first guy to come to mind for me, too. I started with them when Eddie Grills was the marketing director. They were a good company then.

Yep, but the only problem with Eddie Grills is that he thought there was only one company that you ever needed, and that was Settler's. Much like Bontell, clueless to the real world.