Inform The Annuity Agent When Bad Stuff Happens At An Insurer
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Like it or not, bad stuff happens, even to insurance companies.
In the early 1990s, a rash of life company failures hit. Since then, laws have been enacted to improve dramatically the financial stability of insurers. However, even with the best of oversight, a few companies still have gotten in financial trouble.
Given the proper time, most of them will survive and thrive. The problem is, what do the interested parties do during the "rehabilitation?"
The first priority for regulators, insurers, agents and clients is to protect policy values. Its a slam dunk. Everyone is working toward the same goal. They just have different perceptions on how to do it and "therein lies the rub!"
Clients who own life and health policies seem to take it in stride, weathering the storm very well when an insurer is in peril. But, if the client owns an annuity from a troubled insurer, the fear factor increases considerably, bordering on hysteria.
As the saying goes, the best defense is a good offense. Financially troubled companies should aggressively provide timely and accurate information to agents and clients on plans to restore the companys financial integrity.
If the problem is one that can be solved in a few months, care should be taken not to frighten clients unnecessarily. Still, agents always need to know what is going on.
On the other hand, if the company is receiving bad press and the problem is going to take quite a bit of time to resolve, tell the agents and the clients exactly what the insurer is doing to solve the problems.
These suggestions result from witnessing past financial company struggles. In every instance Im aware of, when the insurer encounters problems, it distributes little or no information to agents or policy owners. The attitude seems to be one of keeping agents in the dark. The companies do usually send a short note stating all is well and not to worry, but there is little substance and no hard facts in those communications.
With no information, agents and clients are left to come up with their own interpretation of whats happening. The natural instinct is to predict the worst-case scenario.
Professional agents take their fiduciary responsibility to clients very seriously and have a zealous desire to offer the best advice possible. But they cant do that in a vacuum. Without the facts, the tendency is to cut and run, with the agent and client taking a "better safe than sorry" attitude.
Agents are between the proverbial rock and a hard place on this issue.
