Table talk about California annuity sentencing and no hardening market
March 18, 2012 by Bob Graham
About the author
Bob Graham is executive editor at Insurance & Financial Advisor and IFAwebnews.com.
A luncheon with a collection of insurance agents in the Washington, D.C., area recently put two important news stories in a new context.
A couple of insurance agents who sell property-casualty coverage said reports of a hardening market are greatly exaggerated. They hadn’t seen any evidence that rates were going up. Rather, they saw people going out of their way to find lower rates, which isn’t a surprise as many families cope with increasing costs and flat wages. That combination sends them looking anywhere they can for a discount.
Unfortunately, as one of the agents explained, that combination also makes those rate buyers extremely disloyal. That reality, in turn, means that they will go elsewhere the next time their payment is due.
But the big story of the day for the group, mostly life insurance agents and financial service professionals, was the California insurance agent convicted by a jury and sentenced to 90 days in jail for selling an indexed annuity to an elderly woman with dementia. The case is believed to be the first – and hopefully, only – case of an insurance agent sentenced to jail for his product sales. The shock waves throughout the industry are evident everywhere.
(For a thoughtful, comprehensives analysis of the annuity case implications, read Sheryl Moore’s piece.)
One agent admitted to the table that every agent who sells annuities runs the risk of criticism or worse when he sells a product. The group, based on the information available, supported the agent, arguing that his company supported the sale.
The takeaway for me was how precarious a position an insurance agent can find himself or herself in despite following all the rules and policies of his or her company. One luncheon guest put it best: “Whenever there’s some doubt, don’t do it.”
That wisdom applies to all business transactions and all of life – even whether to tackle dessert after a filling lunch.
