Insurance Company Financial Stability Poll

[MichaelBurton]

A brief commentary on the options, if this helps you select an option:

1) "Acute Concern" might be someone who is aware of and disturbed by regulatory/reserving trends in the industry. Probably relies upon Ratings Agencies for guidance, even though doesn't trust them; but, thinks, "what else do we have?" In general, feels trouble is afoot but just not exactly sure what to do about it.

2) "Chief Concern" might be someone who who thinks it's the first duty of every agent AND thinks that times are more uncertain now than they have been in past. And (like #3 below) limits carrier selection heavily and relies deeply on ratings agencies. Recommends highest rated carriers even if they are much more expensive than other carriers.

3) "Important Concern" might be someone who, like #2, thinks its the most important concern of writing any policy, considers ratings reports with every purchase, and probably limits carriers to those that are mutual and A+ or higher.

4) "Moderate Concern" might be someone who knows "hey, anything can happen," but doesn't think there are any unique problems afoot, and sticks to writing "A-rated" companies or better.

5) "Not Too Concerned" might be someone who thinks that, even if the sh!t hits the fan, the industry and regulatory bodies will "clean up the mess, just like they always have."

 

[LGilmore]

"My first question is, how concerned are you about company financial stability as you go about writing/selling policies to your customers and clients?"

Quite a bit, even though there are safety nets in place to protect consumers from failures, YOU'RE the one who sold them the policy.

While things happen in this industry and changes occur, I would never knowingly use a substandard company in a presentation unless it was the only choice and I would explain the risk of going that route.

But it comes back to you're the professional who sold the product. You should know as much as you can (from pubic information) about the companies you represent.

 

[MichaelBurton]

"My first question is, how concerned are you about company financial stability as you go about writing/selling policies to your customers and clients?"

Quite a bit, even though there are safety nets in place to protect consumers from failures, YOU'RE the one who sold them the policy.

While things happen in this industry and changes occur, I would never knowingly use a substandard company in a presentation unless it was the only choice and I would explain the risk of going that route.

But it comes back to you're the professional who sold the product. You should know as much as you can (from pubic information) about the companies you represent.

Thank you for your reply, Gilmore. I agree. I'm particularly concerned because most of the policies I sell are well beyond the protections provided by the SGAs.

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To those who participate on this board more than I do (which is pretty much everyone), what do make of the lack of participation in this poll? Could I have worded it more differently? Or is the board just kind of slow right now? Or is it just a lame topic that no one gives a shyt about? Speak your mind. I won't get my feelings hurt!

 

[DHK]

MichaelBurton,

This is really an issue of doing your due diligence BEFORE you meet with the prospect.

Also, I think an A- or better A.M. Best rating is most important when you're dealing with cash value life insurance and annuities. I want my E&O to cover it in the event of a company liquidation. If, at the time you write it, and the company is rated LOWER than an A- (with a stable outlook)... then you could be liable for it and E&O won't cover it. With term, I'm not as worried about it because SOMEBODY will assume the contract, but I still won't go below an A- rating with STABLE outlook.

If there's a 'B' by any ratings agency, I won't write it... period.

 

[BYSFG]

Thank you for your reply, Gilmore. I agree. I'm particularly concerned because most of the policies I sell are well beyond the protections provided by the SGAs.

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To those who participate on this board more than I do (which is pretty much everyone), what do make of the lack of participation in this poll? Could I have worded it more differently? Or is the board just kind of slow right now? Or is it just a lame topic that no one gives a shyt about? Speak your mind. I won't get my feelings hurt!

The other two gurus pretty much nailed it on the head.

I think it should be a big focus or at least a thought in the back of the mind. With how you described each option, for me its a strong 2 (chief) but with a side of 4 (moderate) due to having some carriers at an A-.

When everything turns to shyt, the first person to get chewed out is going to be you, the writing agent. Me, I just dont want to be on the receiving end of that stick, ever.

Question to ask is, who are you more afraid of, the client? or the DOI/DOC/All things insurance, etc.?

 

[MichaelBurton]

MichaelBurton,

This is really an issue of doing your due diligence BEFORE you meet with the prospect.

Also, I think an A- or better A.M. Best rating is most important when you're dealing with cash value life insurance and annuities. I want my E&O to cover it in the event of a company liquidation. If, at the time you write it, and the company is rated LOWER than an A- (with a stable outlook)... then you could be liable for it and E&O won't cover it. With term, I'm not as worried about it because SOMEBODY will assume the contract, but I still won't go below an A- rating with STABLE outlook.

If there's a 'B' by any ratings agency, I won't write it... period.

I definitely agree that term is less exposed than products with cash value. I appreciate your reply. Thank you.

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The other two gurus pretty much nailed it on the head.

I think it should be a big focus or at least a thought in the back of the mind. With how you described each option, for me its a strong 2 (chief) but with a side of 4 (moderate) due to having some carriers at an A-.

When everything turns to shyt, the first person to get chewed out is going to be you, the writing agent. Me, I just dont want to be on the receiving end of that stick, ever.

Question to ask is, who are you more afraid of, the client? or the DOI/DOC/All things insurance, etc.?

That is indeed a very pressing question for me.

I am leaning away from anything A- because that is just too close to the cliff for me. If a carrier drops just one level to B++, they'll get taken off the shelf everywhere (for most agents and agencies) due to the E&O constraints already mentioned. And if that happens, that carrier is pretty much dead in the water. Just the way I'm thinking at present.

 

[DHK]

I *believe* that the E&O coverage applies at the time of the application, not for the life of the policy.

 

[MichaelBurton]

I *believe* that the E&O coverage applies at the time of the application, not for the life of the policy.

That is correct.

 

[KaseyNM]

I think security ratings matter. Big time on annuities and CVL, less on term. LTC insurance matters too. Nothing worse than having a client buy a policy, pay for it for 10 years and then the company raises premiums to the point the client can't afford it anymore.

 

[pfg1]

I think security ratings matter. Big time on annuities and CVL, less on term. LTC insurance matters too. Nothing worse than having a client buy a policy, pay for it for 10 years and then the company raises premiums to the point the client can't afford it anymore.

The hard part is, we can't know or control the future. Look at Genworth. They were a good A rated carrier that sold alot of LTC over the last 10yrs. Big change in short time. My guess is 99% of agents that sold their products back then would have said it couldn't happen.

To me, as long as they are an A- rated company or better, and currently in good shape with good products and cust svc, I am fine with it. Genworth probably won't be the last "good" company to have a slide like that unfortunately.

Selling a B rated company, well (to me) that is just asking for potential problems. Doesn't mean there will be, but odds are higher there could be issues than an A rated company.