Problem - Illustrations

  • We've all heard a lot about the junk bond crisis.
    • Is the next crisis going to be junk illustrations?

--  Judy Faucett

1991 - SOA - Illustrations, Society of Actuaries - 20p

  • The United Kingdom and Australia have relatively competitive life insurance markets, with many similarities to the North American market.
  • As in our market, ledger illustrations have been employed for Type B comparative cost and performance evaluation.
  • Not surprisingly, these countries have also encountered problems with sales illustrations.  (p161)

1991-1992 - SOA - Final Report* of the Task Force for Research on Life Insurance Sales Illustrations, Society of Actuaries - 142p

The number one perceived problem is that buyers simply do not understand the nonguaranteed nature of life insurance illustrations.

  • Also, it is impossible for the average buyer to judge the reasonableness of the assumptions underlying the numbers in the illustration. 

--  John W. Keller - (Northwestern Mutual)

1991 - SOA - Illustrations, Society of Actuaries - 20p

In my presentation, I will be talking about the views of the regulators in the U.S. on the illustration problem.

Some of the comments that we have heard from regulators about the illustration situation suggest feelings of, if not outright despair, growing frustration.

  • A couple of them spoke sadly of the futility of regulating an illustration when the real issues involve the agent or the company.
  • Larry Gorski of the Illinois department mentioned that in states that do not regulate advertising or promotional materials, misleading statements can be rampant in those materials even if the illustrations are made pure.

 --  Benjamin J. Bock - Transamerica Occidental

1992 - SOA - Life Insurance Sales Illustrations, Society of Actuaries - 16p

  • How did the industry, in the 1980s and 1990s, get into a situation where it was selling illustrations instead of value?

--  Roger R. Heath

1991 - SOA - Disclosure Systems: Can an Ideal Method be Found?, Society of Actuaries - 22p

  • Those illustrations were too aggressive I think.

-- Shane Chalke

1995 - SOA - Current Developments Surrounding Regulations and Standards of Life and Annuity Products, Society of Actuaries - 18p