Dots - What Happened in the 1980s?

  • Dorfman

The life insurance industry takes great pride in its survival of the depression, although it seems to me that it was bailed out by government intervention.

  • I wonder if the time may come again, say if the prime rate goes to 38%, that the life insurance industry will need to be bailed out in some fashion.
  • I do not know what that fashion might be, but that is why I am curious about the nature of the discussions of April 1980.

--  Joseph Belth

1981 - SOA - The Life Insurance Business --- The View of Consumerists, Society of Actuaries - 18p

  • 1990-IB, NAIC Proceedings - Presentation By James P. Corcoran, Superintendent of Insurance, State of New York -Before the Insurance Committee of the Organization for Economic Cooperation and Development (OECD) - Paris, France - October 27, 1989 - (p868)
    • Until recently, Life insurance was regarded as a stable industry where little change took place, either in the policies offered to the public or in the regulatory environment in which insurers operated.
      • Investments, subject to strict qualitative and quantitative standards, were generally made for the long term in traditional vehicles such as bonds, stocks and mortgages.
    • Over the past decade, however, many revolutionary changes have taken place. Life insurers are now competing with banks and brokerage firms for a piece of the financial services pie.
      • Each player contends that it wants a "level playing field," but in fact seeks to gain some competitive advantage over the other.
      • Life insurers have been placing greater emphasis on financial services and educating their agents to be financial planners as well as life insurance experts.
    • Competition in financial services has resulted in the introduction of new products which offer a variety of investment incentives coupled with an insurance component.
      • Sophisticated consumers are bypassing the traditional life products for these new "interest-sensitive" products, many of which are backed by vehicles other: than the traditional bonds, stocks and mortgages.
      • High risk-high yield obligations, leased securities and futures contracts are now common components of the portfolios of our life companies.
    • All of these changes have, of course, added increased strains on the life insurance community

The 1980s ushered in the era of universal life policies.

  • While such universal life policy features as flexible premiums, current and guaranteed cost of insurance scales, guaranteed maturity funds and guaranteed maturity premiums added a few wrinkles to the calculation process, the fundamentals of generating policy reserves remained fairly intact.
  • In contrast, today’s products have become much more complex.

2013 01 - CIPR Newsletter