Demographics Best They've Ever Looked for Life Industry

Sales of life insurance in the United States will remain pretty modest this year but demographics "are the best they've ever looked" for the industry, said the president and chief executive officer of LIMRA, LOMA and LL Global.

Life insurers emerged from the financial crisis and are well-positioned for the future, said Robert Kerzner at his organization's life insurance and retirement industry conferences held in Las Vegas. Capital and reserves are stronger and balance sheets "look solid," he said. "What everybody now is focusing on is growth."

Following one of the worst years for sales of life insurance in 2009, the good news was that sales were up 4% last year, Kerzner said, noting that was modest growth. Sales will remain pretty modest this year too, he predicted, noting a couple of factors are to blame.

Although the economy is slowly picking up, people are still cautious, and unemployment in the United States remains high, Kerzner said. "We've seen a very slight increase in consumer optimism," he said.

Many people are focused on paying off debt, along with saving for retirement, he said. "Frankly, life insurance falls lower on their list of things they've got to get taken care of." They "have limited dollars to spend" and they're not feeling that same need as others may feel "to take care of their real 'what if?' situations," Kerzner said.

This trend has been occurring across all income brackets — including the rich — not solely among middle or upper-middle income Americans. "Even among the wealthy, those that say they should have more — they believe they need more — aren't necessarily purchasing," Kerzner said.

As for opportunities for the industry, when it comes to demographics, "never before have there been more people that needed what we have," he said. The younger generations, X and Y, need to save money for a long time, plus, they don't have the defined benefit pension plans as their parents did, Kerzner said. The baby boomer generation is still saving for retirement and is worried about how to make their money last when they ultimately do retire. People focusing on saving for retirement is good for the industry's asset-accumulation businesses, he said.

Companies have seen a bit more activity in their 401(k) retirement plan businesses, he said. Kerzner also predicts sales of annuities, especially variable annuities, will grow once again, and, more companies are returning to this market and adding new features to these stock market-linked retirement savings and income products.