Life Industry Heads for ACLI Conference Looking for New Ways to Solve Too-Familiar Issues
October 3, 2015 by Dennis Gorski, managing editor-online, BestWeek: Dennis.Gorski@ambest.com
CHICAGO – This year’s American Council of Life Insurers’ annual conference will have no shortage of highly important, and all-too-familiar, issues for attendees to discuss, debate and then depart from Chicago with fresh ideas on how to solve them.
“Capital standards development, both domestically and internationally,” said Jack Dolan, ACLI’s vice president of media relations, listing some of the larger issues that will come before the 500 expected attendees. “Fiduciary issues. Cyber security. These exceedingly low interest rates. Even demographics.”
The conference, set for Oct. 11 through 13, comes just days after the Department of Labor released a mediocre jobs report for September. The report could push back the long-expected Federal Reserve’s uptick in short-term interest rates, and “these prolonged, artificially low interest rates…of course pressure life insurers, and it’s a pressure that attendees discuss, and they have been through recent annual conferences,” Dolan said.
He said the low interest rate environment will be one of the items discussed at the CEO Issues Panel, featuring the heads of Munich American Re, Protective Life and Guardian Life. “It’s one of the threads running through the entire conference,” Dolan noted.
ACLI President and Chief Executive Officer Dirk Kempthorne’s opening remarks will focus on creativity and product innovations, and on how changing demographic patterns will affect the life insurance sector. “Ten thousand baby boomers are retiring every day from now until 2030,” Dolan said. “This is an industry that is filled with some very bright people and our job is to provide a forum where ideas are exchanged” and the seeds are planted for new ways to solve problems.
“You tend to see solutions after the conference,” he added. “The conference becomes a place to share ideas, and even with some friction, you suddenly get the explosion of an idea. Three months, six months, a year down the road” is when Dolan starts seeing the convention’s interactions become new products and better results. “When at the ACLI convention did that idea occur? It becomes difficult to make that connection.”
He’s also certain the Department of Labor’s proposed fiduciary rule will receive generous air-time at the convention. The rule, he said, is “puzzling.”
“During this administration we’ve had a variety of initiatives that boosted annuities so employers can offer them in 401(k)s. We think that’s a smart move and we’ve lauded the administration for those steps,” Dolan said. “Yet we’re finding now that the administration is taking steps that could make it harder for people to obtain an annuity. The administration should have heeded its initial perspective and taken steps to promote this financial product instead of making it unavailable and unaffordable, which is what could happen for many people under the proposed rule.”
He added Kempthorne will make that connection in his address to the conferees. “Clearly as people retire and approach retirement, that’s the time when the need for financial advice is growing, and that’s why we’re so puzzled by the proposed fiduciary regulation.”
The DOL’s proposal “has kept awake at night many people in the life insurance industry,” he said. “One of our great fears is it will create an advice gap, like in the United Kingdom. A Morningstar report found the U.K. has an advice gap in the aftermath of very similar legislation there.”
The latest Best’s Briefing, titled, “Department of Labor Fiduciary Standard Proposal A Concern For Insurance Companies,” addresses the DOL-released proposed regulations covering fiduciary rules for those providing investment advice with respect to retirement plans and their participants. The initial proposal expands the definition and scope of the parties considered fiduciaries and creates a new exception to prohibited transaction rules. The DOL proposal covers not just qualified plans under ERISA, but also includes individual retirement accounts and rollovers within the purview of the proposed rules.
The ACLI has advocated for changes to the proposal in several channels, including recent TV ads, Dolan said. “Our mantra is: Fix the rule.”