The Wiseguy and the Wisdom

I sat toward the back of the room during the LIMRA annual meeting’s general session, so I should not have been surprised to hear a wiseguy chattering behind me. I guess that’s what I get for sitting in the spitballers’ section.

I was eager to hear CEO Bob Kerzner and I didn’t need mood-curdling sarcasm. Plus, it was 8 a.m. for Pete’s sake; the caffeine was still shuffling in its bedroom slippers on its way to my brain. But I have to say—Kerzner made us all wake up and smell the coffee with the eyeopening things he had to say.

Kerzner and his research team have been clanging the warning bells for years now. Last year, they released startling results from a study that showed life insurance ownership is at a 50-year low. That finding went on to be perhaps the most quoted fact in life insurance history. Well, maybe second to “100 percent of lives will end in death.”

That fact has seeped into mythology, often an opening phrase in many presentations and pitches. But is it translating into real reaches into the middle market?

A bit of hand-wringing about the issue could be found at the LIMRA meeting this year, but not a whole lot of answers. And, of course, drastic change can’t be expected in a year. It was reassuring that the carriers were concerned. Kerzner, though, seemed to be ringing the bell a little harder this year, warning that time is running out for the insurance industry’s relevance.

On a side note, another presentation later in the conference further indicated the urgency. Peter Walker, a director at McKinsey & Co., discussed results from his two-year study of industry performance over the past decade. In his cascade of sobering numbers was this key point: While household wealth jumped sevenfold from $7 trillion in 1980 to $48 trillion in 2010, life insurance was the only financial sector losing its share of that wealth. It started at the lowest, below other products such as stocks and bonds. And then it dropped even further, down from .033 percent of the household wealth in 1980 to .023 percent in 2010. (Read more from Walker in this month’s Perspectives column.)

Clearly the industry lost ground over the past decades. And it is a trend could possibly accelerate without any drastic action. That was also the starting point of Kerzner’s message, with an additional warning that all of the problems—regulatory, economic and all the rest—threaten to distract the industry from the work it needs to do to secure its future.

Kerzner focused on how technology offers the tools for reaching the middle market and to get a presence on America’s screen.

“What is it really going to take to get on a path again of growth?” Kerzner asked and then answered. “I am convinced it’s going to take very significant change in how we do business. The technology has got to lead the way to a distinctly different tomorrow. The change in technology is happening at an absolutely staggering pace.”

That brings me back to the wiseguy behind me. He wasn’t getting it.

Kerzner reminded the audience how much technology has already changed the industry. “Remember these?” Kerzner asked as an image of a fax machine appeared on a screen. “This machine changed our business.”

Wiseguy got a hearty snort out of that. Then Kerzner went on to say that many products, such as universal life, would not have been possible without the capacity of computers. Change has been gradual, until now, Kerzner said, offering a few illustrations of the acceleration.

“Last year, Facebook had 350 million; this year, it’s 600 million” Kerzner said. “YouTube is getting 3 billion—3 billion!— hits a day.” “Get a life!” Wiseguy snickered. “Gen X grew up with games, but it isn’t just them playing,” Kerzner said. “Twenty-six percent of those playing games are over 50.”

“Oh God,” Wiseguy moaned. Of course, it’s a stretch to say Wiseguy represented the majority of opinion in the room. In fact, most of the insurance company executives throughout the conference seemed to take these issues seriously. But Wiseguy probably represented some of the interior dialogue going on in the room. After all, Kerzner was gently prodding the audience to rethink their practices.

When Kerzner mentioned how many older people were playing games online, he said it showed the new ways people are engaging online.

“But many of our companies post lots of pages of text on their websites,” Kerzner said. “Then they wonder why no one is getting the message that they need more life insurance; that they need to do more planning for retirement.”

Kerzner’s message was for companies, but it focused on distribution—how to help producers sell. He said social media represents enormous potential for closing the six degrees of separation to just about any prospect.

“Here is someone with 202 contacts on LinkedIn,” Kerzner said, referring to a screenshot. “If you consider the contacts that would be two degrees away, she would have 40,000 potential contacts. If you go to level three of separation, it’s over 3 million contacts.”

He also showed how a web surfer could be converted into a client, how a prospect could find an ideal agent match and how producers can get face-to-face training in the field. He also had a tongue-in-cheek example of really innovative marketing gone, well, maybe a little too creative. I’ll just say that it involved childbirth and invite you to see Kerzner’s presentation for yourself on YouTube. Just search for “Kerzner annual.”

He ended with a call to action. “Make no mistake—tablets, droids, iPhones, social networks, will inexorably change how we do business. The possibilities are endless. But we must move more quickly, be more imaginative. We must embrace this new world and make it ours. “ After the applause, I turned around to get a good look at Wiseguy. But I only caught a glimpse of his back because he was indeed moving quickly—onto the next thing.

December 2011 issue of Insurance News Net Magazine By Steven A. Morelli is editor-in-chief for InsuranceNewsNet.

 

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