We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!


media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us


Close [x]

Industry News


  • Industry Articles (16,283)
  • Industry Conferences (3)
  • Industry Job Openings (9)
  • Negative Media (138)
  • Positive Media (73)
  • Sheryl's Articles (605)
  • Sheryl's Blogs (171)
  • Wink's Articles (235)
  • Wink's Blogs (216)
  • Wink's Press Releases (94)
  • Blog Archives

  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • May 2008
  • February 2008
  • August 2006
  • 12 Months In The Life Of The Index Product Market

    January 9, 2010 by Sheryl J. Moore

    Published 12/14/2008

    A look back at 2008 provides a stunning view of how far the index product industry has come in the past 12 months.

    One of the first items to affect the index annuity (IA) market this year was the Joint Annuity Disclosure Pilot Project of American Council of Life Insurers and the Iowa Insurance Division. This project enhances disclosure on all annuity products through a standardized template disclosure form. Thus far, 16 companies are participating (7 of which offer indexed products), and more anticipate joining as administrative systems allow.

    This venture was a tremendous regulatory step forward for an industry that is perceived to have inadequate disclosure requirements.

    The primary focus of IA manufacturers in 2008 was the debut of guaranteed lifetime withdrawal benefits on their IA products. These GLWB riders guarantee that an annuitant can take annual withdrawals from their IA (at a specified level), regardless of whether the contract’s account value falls to zero. They provide for guaranteed lifetime income, without the “handcuffs” of annuitization.

    How popular are the GLWBs? Consider: only 30 new IAs were developed in 2008, but 27 GLWBs were rolled out or revamped. That definitely speaks to the power of flexible, guaranteed lifetime income.

    Carriers not only developed these benefits, but also added some innovative new enhancements such as bonuses credited to the benefit base of the GLWB and simple interest accumulation benefits. Undoubtedly, 2009 will be another year of carriers thinking outside-the-box, in an attempt to gain market share in the IA-GLWB market.

    The year 2008 also saw numerous carriers stray from the norm when it came to crediting methods. They did this by spicing up their ordinary annual point-to-point and monthly averaging crediting methods by offering the methods with a “rainbow” concept. Today, at year-end, 9 insurance companies now offer crediting methods that track 3 or more indices over the crediting term, and credit a stated percentage to the best performing, next-best performing, and least best-performing indices over the crediting period.

    Because of the popularity of these methods, several other carriers have made the decision to add multiple index methods which are similar, but do not perform a look-back.

    Premium bonuses made a comeback in IAs in 2008, as well. The manufacturers found methods of keeping surrender charges low while using recapture charges and vesting schedules. These pricing strategies allow the insurers to offer premium bonuses, while sharing some of the risk with the consumer. Withdrawals in excess of the penalty-free amount will cause a recapture of some or all of the premium bonus, and only partial vesting occurs with any bonus using the alternative option (resulting in a loss of bonus).

    As readers may recall, high premium bonuses first fell out of favor when the “10/10” rule became a basis for products meeting broker-dealers’ “approved list” criteria in 2005. The 10/10 rule says a fixed IA should have 10-year surrender charge, starting at 10% in year one and declining to zero after year 10.

    Interestingly, the new pricing strategies that came out in 2008 work around 10/10, while still providing a more generous bonus. (Noteworthy: It has now been an entire year since an additional state adopted the 10/10 desk drawer legislation.)

    A 2008 review of IAs would not be complete without mention the touchy subject of Chris Hansen’s televised Dateline “exposé” on IA sales suitability in April. The NBC program reported on results of an undercover investigation of the IA industry; it was one-sided, not including commentary from pro-IA professionals such as insurance companies, insurance commissioners, etc. Instead, it painted the IA industry with a broad stroke, inferring that all products and sales are unsuitable.

    That telecast has provided the IA industry with a refreshing opportunity to make certain that all are all doing their best when it comes to sales suitability.

    Perhaps the most notable IA occurrence was distribution of the Securities and Exchange Commission’s proposed Rule 151A. Here, the SEC suggested that IAs are not annuities, that they are securities and should be under federal regulation. The SEC offered two comment periods on the proposal, and over 4,376 formal comments flowed in, most in opposition to the proposal. As of this writing, the SEC has not made a formal decision on whether it will adopt the proposed rule or not.

    Over the course of a single year, participation rates, caps and spreads went from being depressed due to an inverted yield curve—to rebounding and increasing sales 20% in a single quarter (2Q2008). Then, the bottom dropped out of the market and carriers began pulling uncapped crediting methods (those utilizing only a participation rate or spread).

    As a result of unfavorable option costs on uncapped methods, additional carriers have limited the amount of premium that consumers can allocate to such strategies, or even reduced commissions.

    Late in the year, 5 carriers announced they are exiting the IA market.

    On the indexed life side of the market, things have been comparatively positive in the past 12 months. Sales of indexed universal life (IUL) increased every quarter, and it doesn’t appear the momentum will stop anytime soon. Despite the fact that several carriers have announced formal decisions not to accept equity harvesting business, sales of these fixed insurance products are on the increase.

    The year saw a continued focus on survivorship life in the IUL market. Two carriers rolled out new survivorship universal life (SUL) designs this year, indicating that the market is becoming much more competitive. No-lapse guarantees on SUL, in particular, have become a luxury as carriers have had to re-price due to implementation of the 2001 Commissioners Standard Ordinary tables.

    Like the IA industry, IUL has been adopting rainbow crediting methods. However, carriers offering any international index as the basis for their crediting methods have been able to successfully increase market share this year.

    Perhaps the most interesting development in the IUL market in 2008 had to do with the products’ minimum guarantees.

    For instance, where IUL primarily offered 1%-2% guaranteed annual return minimums in years past, recent designs have offered 0% annual guarantees that true-up to a minimum of 1%-3% upon a trigger event (e.g., death, surrender, lapse). This allows carriers a higher option budget, thus resulting in more favorable caps and participation rates on the IUL product. Since 2005, the number of carriers offering these standard non-forfeiture (SNF) minimums has increased dramatically. However, a market leader was granted a patent for this SNF minimum concept in May. This patent will impact most of IUL carriers, and only time will tell how the carrier will proceed, as their competitors increase market share with this innovation.

    Another example: One carrier came out with an alternative offering of a guaranteed annual floor for IULs (via a rider). The carrier, which normally offers a 0% annual floor that trues up to 2% over the life of the contract, developed a unique rider that offers consumers a 1% annual floor. Current caps, participation rates, and fixed rates are reduced to offset the costs of the annual floor.

    Other developments with minimum guarantees on IUL include several carriers’ moves to 0% guarantees that never true-up with their 2001 CSO re-priced offerings.

    All IUL developments in 2008 pale in comparison with the scramble to comply with the 2001 CSO. Fourteen of the 16 IULs launched in 2008 were a re-priced 1980 CSO product. One carrier has exited the market as a result of low sales, as compared to re-pricing costs. However, the market has grown significantly as IUL has established itself as a mainstream product, no longer niche.

    All this activity, for IAs and IULs, should make for a very interesting sales year in 2009.

    Originally Posted at National Underwriter on December 14, 2008 by Sheryl J. Moore.

    Categories: Sheryl's Articles