Jay Scheiner, Principal

ASG Partner Jay Scheiner discusses how an insurer’s past behavior in the marketplace can and should influence you, the advisor, in recommending certain companies while possibly avoiding others.  The flight to quality should be more than just about ratings.

The past year has been notable for several insurance companies going on apology tours in announcing such bad news as:

–          “Sorry… We are increasing your client’s current cost of insurance (COI’s) on Universal Life policies effective on the next policy anniversary.”

–          “Sorry… That cutting edge product (or valuable rider) that you can’t sell enough of… we have decided to eliminate it from our portfolio effective three days from now and any applications not received by then will not be underwritten.”

–          “Sorry… Our new term conversion guidelines state that the only policy your clients can now convert to is a separate conversion only policy” (one that makes a Preferred conversion illustrate like a Table-2).

–          “Sorry… Due to the regulatory environment for term and UL products with secondary guarantees in New York only, we will be suspending sales of these products” (effectively leaving the local marketplace)

–          “Sorry… Although we cannot change contractual guarantees, just give us until next month and we will find another way to mess-with your client or render his/her policy less valuable or less secure.”

The apologies usually begin with an email from the home office, or by one of our associates sharing advanced spy information.  Needless to say, I’ve had several weekends ruined just thinking of the ways many of our partner insurance companies have behaved in recent months. And, while none of these company actions involved changes to contractual rights or obligations, that does not mean some harm did not occur, if only in the form of reduced confidence.

What can we as an agency and you, the advisor, do about this?  I’ll tell you what I’m doing about it:

–          I am not willing to forgive a carrier’s bad behavior and go on with business as usual – even if they have strong financial ratings which are unaffected by the changes.

–          I am now more selective than ever in strongly recommending the companies that have not (yet anyway) engaged in the bad behavior and have treated their policyholders… and producers… and agencies with respect, honesty and some level of transparency.  These companies will receive the bulk of our business.

–          Recommending only those term policies that are convertible to the best permanent policies the company offers – and putting warning labels on those that are not.

–          Stressing, wherever possible, policies with the strong contractual guarantees over those where “trust me” is the underlying actuarial assumption.

The flight to quality is more than just about ratings. You have a choice when choosing an insurance company, a product and an agency for your client’s coverage.  it is your right to factor in an insurer’s behavior as well as subtle policy provisions when recommending a company.  We at ASG will continue to keep you apprised of the important changes that affect your decisions through our blasts, e-news and notices.  We hope to continue to earn your trust and we will stand beside you to navigate this quickly changing landscape.


–          Jay Scheiner, JD, CLU has been a partner at Agent Support Group since 1992