Products This Year May Come With A Hint Of Innovation

In particular, "we've been out of balance in shareholder value," Thompson says bluntly. Now it's time to put things back into balance, he indicates.

Efficiency

Several executives say increased efficiency will be key in 2010.

That is the case at Foresters, says Larry Noyse, vice president-U.S. sales for the Toronto fraternal benefit society that markets to all consumers, not just members.

Life underwriting still takes 30-60 days at many carriers, he points out, but distributors want it done faster. What they want is important, he says, because distributors–i.e., wholesalers and national marketing organizations, and their producers and brokers–are the main customers at many life insurers, including at Foresters.

They are so important, Noyse says, that Foresters has begun using an "outside-in" approach to product development. The insurer calls distributors into the home office regularly to glean insight into what customers actually need and want, and it builds products and approaches from there.

The process has spurred the insurer to introduce several efficiencies, he says. These include: underwriting decision at point of sale (on WL, for instance); daily commission processing, with commensurate payment to products; and simplified underwriting up to $250,000, with no blood work, attending physician statement or physical exam required, he says. In January, voice signature over the phone will begin.

The resulting products may not be the cheapest, Noyse allows, but he contends they are process leaders. He says to expect more of this in 2010.

Genworth is looking to efficiencies, as well. It is putting a "laser focus" on innovating design for competitively priced solutions in the mid-market, says Stinson. To be successful there, he notes, "you have to have capability…a cost efficient platform for low(er) face value products."

To that end, he says his company has been "continually investing in technology, process enhancement and Six Sigma approaches." It has also reengineered its UL policies to be more capital efficient.

In 2010, carriers will also need to be able to provide service and support to customers, adds Sun Life's Thompson. That means building the back office, technology, and knowledgeable staff and providing service on a 24/7 basis, he says.

In addition, carriers will need to be more transparent than before around how the products work, says E&Y's French. "They will also need to work on convincing their markets that the products will be a solution to the problems the consumer has."

Products

Products will be changing in 2010 in accord with the expected climate, executives agree. Here are a few examples:

Retirement income. Increasingly, the industry will focus on helping consumers with retirement income security and management, Thompson predicts.

That's a change from the last 20 years when advisors and boomer clients focused on accumulation and asset management, he says. This will put more pressure on advisors to become more knowledgeable about income planning, he predicts, warning that "those who are not will see consumers go elsewhere." To respond effectively, advisors will need to become re-certified to handle income needs, he says, adding that companies with capacity in wholesaling will be in a position to influence this.

Boomer views on retirement are changing, he points out. Many plan to work longer to make up for losses they suffered in the downturn, for instance. "But what is not changing is that there are 78 million boomers, and they are concerned about not outliving their income."

Combination products. The Pension Protection Act provides significant tax advantages for linked-benefit products so these will emerge, observes Stinson. In the first quarter, for instance, Genworth will be debuting a single-premium deferred annuity with LTC features, he says. Look to see more combo products, agrees Fanning, citing annuities with LTC features provided as riders or features that allow for pure product exchanges. Expect more life with LTC features, too, says Thompson.

Annuities/guarantees. With VAs, expect more carriers to increase pricing on guarantees and other product parts, lower benefits and/or exit from the market, says French. Phoenix's Buckingham predicts continued buyer interest in annuities with guarantees.

Term life. This will be an important product in 2010, along with WL, predicts MassMutual's Fanning. There might be a re-introduction of annually renewable term for short-term needs, suggests Conway, the BGA. "Producers might use that for clients who have lost their group life benefits due to job joss," she says.

Long term care (stand-alone products). Even before the downturn, LTC carriers were increasing prices and trimming benefits, Fanning says. "But the crisis put the market over the edge" as older baby boomers who suffered a 30%-40% shock to wealth due to equity exposure. But as economic stability returns, "we might see month over month increases" in LTC sales, he predicts, noting that this started at his own company as early as July 2009.

Genworth's Stinson also expects LTC growth as the economy recovers. "We're hearing that consumers are now paying more attention to it, due to the wakeup call to risk management," he says, citing comments from advisors in AARP's LTC program, which Genworth manages, as well as its other channels.

The aging of baby boomers, and the growth of LTC Partnership programs to 42 states are among factors that should spur sales along, he adds.

Longevity analysis. The life expectancy (LE) analysis business will increase in 2010," predicts Bradley D. Bahr, vice president-sales for 21^st Services, a LE firm in Minneapolis, citing input from investment banks and investor groups. Also, life settlement, institutional and corporate clients are no longer the only ones asking for LE reports, Bahr says. "Financial planners have started asking for them too."