Business Solutions , Breaking News

BKA Digest: Industry-Wide Product Changes Coming

PRICE AND PRODUCT VOLATILITY

For the past seven years, the National Association of Insurance Commissioners has been studying the need to “right size” the reserve calculations used by insurance companies to assure that appropriate funds are on hand when claims come due.

A new methodology was approved in 2017 with a required implementation date of January 1, 2020.

Known as Principles Based Reserving (PBR), the rule requires carriers to ”hold the higher of (a) reserves using prescribed factors or (b) reserves which consider a wide range of future economic conditions and computed using credible insurer experience factors specific to an insurer, such as mortality, policyholder behavior, and expenses.” Carriers can choose the methodology that best suits their business model consistent with regulatory oversight.

Simultaneously, beginning January 1, 2020, all U.S. life insurers must issue new policies using the 2017 Commissioners Standard Ordinary Table (CSO).

WHAT DOES THIS MEAN TO YOU?

Bottom line, this means a period of volatility as carriers align product portfolios with these new requirements. For some, price changes may be necessary. In other cases, products may be withdrawn as it may no longer be cost effective to continue to maintain them for sale.

It is our experience that periods of change and volatility breed substantial OPPORTUNITY. It will be critically important for you to be up to speed on these changes and be in touch with prospects who may have considered a purchase in the past or are now doing so. You will want to alert them to the potential “cost of waiting” as they proceed through their decision-making process.

HOW WILL BELMAN KLEIN HELP YOU?

First, we have created our Product Transition Plan!

Carrier announcements regarding price changes and product transition rules will be coming out with blinding speed as we approach January. To assist you we will provide the following:

  • IMMEDIATE notification of price changes, and/or product withdrawals
  • We will alert you to cases we have quoted for you that have not been closed
  • Where possible, we will provide a cost of waiting summary for you to review with your prospect/client. Many of them will benefit by making a purchase prior to year’s end.
  • Finally, we want to be sure you understand the urgency of the situation. Carriers will not be able to provide exceptions on when paperwork is due. It is imperative that if clients want to move forward that all paperwork is done in a timely manner.

Second, our transition team, headed by Chuck Rich, is here to help. We are fully prepared to assist you with what we see as a huge selling opportunity resulting from these changes. Please contact Chuck at crich@belmanklein.com or 800-729-6007 x114 with any requests or questions.