Nearly 50 percent of producers reported an uptick in business and referrals despite the economic crisis, according to new research by LIMRA.
The survey of nearly 700 experienced producers, who focus on individual clients, was conducted in early November and found that about one-third think the U.S. economy will stabilize within one year. More than 90 percent of producers surveyed think their business in 2009 will be as good as or better than it was in 2008. In addition, producers reported that almost 90 percent of their clients made no changes to their financial portfolios as a result of the financial crisis, and 46 percent obtained new referrals during this period.
Similar to a study of consumers that LIMRA conducted, the survey found producer confidence in insurance companies was higher than all other financial institutions, including stock brokerage and investment firms, mutual funds, banks, and even ratings agencies and regulators. Consumers reported highest confidence in local banks and credit unions, ahead of insurers.
When asked what carriers could do to help the producers, the overwhelming response was better communication. They also said they wanted carriers to be more proactive in communicating the security of life insurance.
When asked about the actions they have taken, 85 percent of individual producers reassured their clients to stay the course, while nearly three-quarters provided their clients with information about the financial stability of a company or product. In addition, about two-thirds of these advisors suggested to some clients that this is a good time to invest.
In product news, LIMRA’s sales survey report shows that new annualized premium for individual life insurance dropped 11 percent in the third quarter of 2008. Variable life and variable universal life saw the steepest decline, with a 33 percent drop each quarter. And after seven straight years of considerable growth, universal life premium experienced a significant decline in 2008. Third-quarter premium dropped 12 percent over the same period in 2007.
LIMRA reported that term sales are holding their own, with new premiums flat for the third quarter.
Despite the decline of variable annuity (VA) sales, overall sales of individual annuities continued at a record setting pace in 2008, reaching $197.1 billion through the first three quarters, according to LIMRA’s “U.S. Individual Annuities Third Quarter 2008 Sales Report.”
While VA sales were virtually flat in the first quarter, second-quarter VA sales decreased 12 percent, and sales dropped 18 percent in the third quarter when compared with the same quarter from 2007.
For the first nine months of 2008, VA sales reached $122.0 billion, a decrease of 10 percent. LIMRA estimated that just over 80 percent of new VA premium went into contracts in which a guaranteed living benefit rider was elected, if available.