Liberty Bankers Life

[theinsuranceman]

Exactly... First year persistency 100%.. 2nd year down the tubes.. Think that is why a couple of companies are now paying 80% first year and 40%-48% second year to GAs

I believe it's because you have some brokers rolling business from carrier to carrier every 6-12 months just so they can get a new advance on the same customer. Ms. Jones isn't on the books long enough for the carrier to recover the commissions they've advanced, not to mention admin. costs, early deaths, etc., etc.

I predict that in a few years you'll see FE carriers stop their broker business model and go to a captive model. They'll probably tell agents they will not accept their business unless they are captive to them, to help reduce the rolling of business from carrier to carrier. The carriers will finally see that quality business issued is more profitable than the quantity of business issued. They'll probably run nationwide checks with DOI's monthly to enforce their captive model. This won't prevent all of this rolling of business, but would reduce it drastically.

 

[rousemark]

Duh, maybe the agent just can't afford to pay the 12 months premium all at once. Isn't that why they're running this scam with their family members to start with?

Doesn't have to be at once .every month, then pay $100, they get a check for $120.

 

[suranceman]

I believe it's because you have some brokers rolling business from carrier to carrier every 6-12 months just so they can get a new advance on the same customer. Ms. Jones isn't on the books long enough for the carrier to recover the commissions they've advanced, not to mention admin. costs, early deaths, etc., etc.

I predict that in a few years you'll see FE carriers stop their broker business model and go to a captive model. They'll probably tell agents they will not accept their business unless they are captive to them, to help reduce the rolling of business from carrier to carrier. The carriers will finally see that quality business issued is more profitable than the quantity of business issued. They'll probably run nationwide checks with DOI's monthly to enforce their captive model. This won't prevent all of this rolling of business, but would reduce it drastically.

Not a chance in hell would this occur. The free market assures it wont'. The moment an independent carrier tries to enforce this, the brokers will simply pivot to other carriers that didn't make such a stupid choice.

Furthermore, the independent broker model has been around for a very long time. It wouldn't still be going on today if it weren't profitable.

You seem like a cool guy, but I think you are really showing you bias here towards Senior Life. Their captive model is in the minority for a reason.

 

[theinsuranceman]

Not a chance in hell would this occur. The free market assures it wont'. The moment an independent carrier tries to enforce this, the brokers will simply pivot to other carriers that didn't make such a stupid choice.

Furthermore, the independent broker model has been around for a very long time. It wouldn't still be going on today if it weren't profitable.

You seem like a cool guy, but I think you are really showing you bias here towards Senior Life. Their captive model is in the minority for a reason.

Thanks for the compliment!

Businesses will ONLY stay in business if they are making a profit, not to keep agents happy. They answer to the share holders. I'd feel this same way even if I was an independent agent. Carriers really don't need agents to survive. Look at AARP and other mail order carriers.

If carriers are not getting the returns they expect or need believe me they will change their business model, or leave town (5 Star)

Sr Life is not captive! Common misconception. I've had brokers representing 20+ life/FE carriers on my team before. Right now I have 2 P&C agents on my team who are selling Legacy Assurance along with a small policy to their P&C customers. Now, when it comes to leads there is a fine line as Sr Life is not going to feed leads to brokers to write for the competition. And I ain't cosigning for brokers to get leads on credit. Who would be so stupid as to do that? I will cosign for my full-time people loyal to me.

And your comment about "the free market assures that" is just not accurate. "The free market assures that" ONLY if it's profitable. Heck, look at direct express. I believe a few carriers, in the last few years, have stopped accepting DE because it just wasn't profitable (or profitable enough) to continue.
Or the 12 month advance. That's almost unheard of now.
Or the fact that DM leads were profitable to sell for $15 apiece 25 years ago but not profitable today at $15.

Just because a business model was profitable in times past doesn't guarantee profitability in the future. Look at IBM 50 years ago. They were the Microsoft of that era. Or look at Kodack, they were the king of cameras back then, but where are they now? Times changed and they couldn't make a profit anymore with their outdated business model. I believe the same holds true for the broker model. But I could be wrong.

I agree the independent broker model has been profitable for all parties concerned. That's why it's still in existence today. But as time goes on more and more FE companies are struggling to make a profit. Settlers in receivership years ago. AIG, 5 Star, etc. I believe the low interest rate they earn on their reserves, compared to 10-50 years ago, and poor persistency have been the biggest impact.

I could be wrong, just stating my opinion.

 

[theinsuranceman]

Doesn't have to be at once .every month, then pay $100, they get a check for $120.

I thought you meant pay the annual premium. Try using a better choice of words...lol

 

[rousemark]

Not my fault you can't read hillbilly.

 

[Life Hawk]

Settlers in receivership years ago. AIG, 5 Star, etc. I believe the low interest rate they earn on their reserves, compared to 10-50 years ago, and poor persistency have been the biggest impact.

I wonder sometimes if companies aren't adjusting quick enough to adapt to the new business model. But let's be honest here... the artificially low interest rates left to us by two prior admins is not in any historical models... once again Uncle Sam screws it up.

And addressing the captive model... with the business atmosphere we just came out of and the promise of all kinds of unearned goodies... I wonder how many ins. company boards had a growing fear of having to pay anything from health ins. to investing in retirement plans for producers because of "good will" bureaucratic types.

The independent model still puts space enough between the "agent" and the company that the company has financial breathing room... not to mention the legal issues of captivity and keeping the cats all herded in the right direction.

We remain valuable... as the "red headed stepchild"... ... as long as we continue to bring money to the table.

 

[shonceman]

I agree the independent broker model has been profitable for all parties concerned. That's why it's still in existence today. But as time goes on more and more FE companies are struggling to make a profit. Settlers in receivership years ago. AIG, 5 Star, etc. I believe the low interest rate they earn on their reserves, compared to 10-50 years ago, and poor persistency have been the biggest impact.

I could be wrong, just stating my opinion.

Not disagreeing with your point. But neither the Settlers receivership nor the AIG bailout were due to any persistency issues or returns on reserves. Settlers went down because of the infamous Marty Frankel reinsurance embezzlement that ended up taking down around 30 companies. AIG only had problems in the parent company due to investment failure during the general collapse of 2008. Their insurance company holdings actually remained financially strong. I don't know about 5 Star or others.

I don't think that there are that many agents rolling business these days, anyway. The carriers have gotten better at spotting that sort of thing, and terminate the offenders pretty quickly.

 

[rousemark]

Not disagreeing with your point. But neither the Settlers receivership nor the AIG bailout were due to any persistency issues or returns on reserves. Settlers went down because of the infamous Marty Frankel reinsurance embezzlement that ended up taking down around 30 companies. AIG only had problems in the parent company due to investment failure during the general collapse of 2008. Their insurance company holdings actually remained financially strong. I don't know about 5 Star or others.

I don't think that there are that many agents rolling business these days, anyway. The carriers have gotten better at spotting that sort of thing, and terminate the offenders pretty quickly.

The Settlers failure also had nothing to do with their FE products. They kept that in house and did not reinsurance it. They were reinsuring the cancer insurance through Frankle's company. When his companies were taken over by the states, that transferred the risk back to Settlers and they did not have enough assets to cover the required reserves.

 

[VolAgent]

AIG is the poster child for insurance regulation.

The parent company was writing CDOs like there was no tomorrow. From what I understand, they were setting these up over instant messenger. There was absolutely no investigation of the quality of the assets. Also, there was absolutely no investigation of the AIG and its ability to back up all the CDOs, there was no where near sufficient reserves. Also, many of the CDOs were naked, the buyer did not own the underlying MBS. It was pure speculation using what was effectively an insurance product, yet there was no regulation or due diligence by the counter parties.