An influx of new entrants in the life and annuity business combined with COVID-induced employee retention issues and a hybrid work environment are challenges facing the industry, a LIMRA seminar was told.
“There’s a lot going on,” said David Levenson, president and CEO of LIMRA, LOMA and LL Global. “But while it’s a tremendous challenge, it’s also a tremendous opportunity.”
“Employee exhaustion and burnout is arguably the biggest problem for senior leaders, both for themselves and the employees they lead. Most companies are understaffed.” - David Levenson
In a virtual presentation at LIMRA’s annual conference, Levenson said the industry has come through choppy markets, a decline in bond yields and an increase in the number of COVID-related claims. Despite all of this, the overall supply of capital in the industry rose four percentage points in 2020.
In Q1 2020, new life policy sales slipped by only one per cent compared to the first quarter of 2019 then rose throughout the rest of 2020, he said. By the second quarter of 2021, annuity sales were up 40 per cent from the previous year and the total number of life insurance policies sold rose seven per cent.
Mergers and acquisitions on the rise
That was the good news. But now the North American industry faces a number of other issues. The first is what Levenson said was a dramatic increase in the amount of mergers and acquisitions. This year alone, the number of life and annuity deals has tripled, with 10 per cent of the public market capitalization of the life insurance industry trading in the first half of this year.
He said these kinds of arrangements require a lot of attention from senior management. And while they may be strategically important, they are taking up time that might well be spent looking at other important issues.
“Yes, our list of what needs to get done is clearly getting longer.”
Private equity firms
The second major change in the industry has been the arrival of new, non-traditional entrants in the life and annuity space, especially among private equity firms. Companies like Blackstone for example, formed an insurance company in 2018 to deliver its asset management expertise to the insurance industry. KKR recently bought insurer Global Atlantic Financial Group and is expected to add about US$90 billion to KKR’s assets under management.
While debate may continue on whether their entry into the industry is good or bad, Levenson said these moves do have potential implications for customers, carriers and insurers.
Employee retention
Then there is the growth of the hybrid home/office work model which has some insurers concerned about long-term changes to their company cultures. LIMRA firms are also struggling with retention as a large number of workers hunt for new jobs and new hires are required to replace many of those leaving the industry. According to a LIMRA poll of its largest members, about 17 per cent of the insurance industry employment base has been hired since the start of the pandemic, said Levenson.
Hiring is one thing, but firms must then train and develop workers, most of whom have never worked in the industry before. Many of these employees are in key roles like call centres and require more than just a baseline understanding of what they’re doing.
“Employee exhaustion and burnout is arguably the biggest problem for senior leaders, both for themselves and the employees they lead. Most companies are understaffed,” said Levenson. “There is so much to do with all of this change and it’s a hard environment for all of us to navigate.”
Despite all of these changes, Levenson said LIMRA is committed to working with all of those involved to ensure a better future for both employees and customers.
