Provinces and Yukon score a C- in flood disaster mitigation
Immediate actions recommended.
Staff on October 31, 2016
All 10 provinces and Yukon are not as prepared for floods as they could be, according to Intact Centre on Climate Adaptation at the University of Waterloo.
Using a scale from A (strong flood preparedness) to E (weak flood preparedness), the average score of the 10 provinces and Yukon is C-, suggesting there is considerable opportunity to limit future flood risk.
The report found the provinces and Yukon are doing relatively well in ensuring public health and safety by maintaining the capacity of hospitals and public health units to support the continuity of service delivery during floods. They also received high scores for emergency preparedness, as the provinces and Yukon work with local authorities and community leaders to identify and prepare for flood vulnerabilities.
Areas where the provinces and Yukon are not doing well include engagement with home and commercial property owners to identify and mitigate flood risks. Also, survey respondents often expressed frustration with municipalities that frequently override direction from the provinces to limit new development in flood-prone areas, thus putting homes and businesses at risk.
“The financial and social costs to Canadians will mount if preparedness to extreme weather events, and in particular flooding, continues to receive limited attention. Premiers are showing leadership on carbon pricing. Now, they need to build upon this commitment by embracing adaptation to address extreme weather and flooding with equal enthusiasm – this would be a strong position to lead with at COP 22 in Morocco,” said Blair Feltmate, head of the Intact Centre and a professor in the School of Environment, Enterprise and Development at UWaterloo.
Based on feedback from those surveyed, the report recommends immediate actions to improve flood preparedness:
Chief Adaptation Officer: Provinces and Yukon should create the position of chief adaptation officer (CAO). The CAO, with direct accountability to the premier, would identify areas of strength and weakness in reference to flood preparedness and actions to mitigate risk.
Audited Flood Preparedness Reports: On a multi-year cycle, such as every five years, provinces and Yukon should issue audited public reports that document the state of flood preparedness.
Land-use Planning: Provinces and Yukon should mandate the restriction of new development in flood-prone areas, or at a minimum, that development in such areas be made flood-resilient. Where development already exists in known flood-prone areas, they should take action to limit potential flood damage. Municipalities should not be able to override direction from the provinces or Yukon that restricts development in flood prone areas, or that mandates flood resilient design.
Build Back Better: Where practically and actuarially cost-effective, infrastructure should be re-built to meet new and future-projected flood risks.
The report, “Climate Change and the Preparedness of Canadian Provinces and Yukon to Limit Potential Flood Damage”, surveyed 103 government representatives across 91 provincial and territorial ministries, departments and agencies between December 2015 and April 2016. Assessments focused on the preparedness of provinces and Yukon to limit flood damage relative to current and future major rainfall events, across 12 categories of assessment, including flood-plain mapping, land-use planning, public health and safety, and emergency preparedness and response.
Among this week’s insurance and financial services industry news items: Former NAIFA President Juli McNeely talks about the mission behind her first book, which came out earlier this year. (Photo: iStock)
Aflac expands its permanent life insurance product portfolio
Aflac, the leader in voluntary insurance sales at the worksite in the United States, today announced the expansion of its Group Life portfolio, which will now include a new Universal Life Plan with Long-Term Care (LTC) benefits and an enhanced Group Whole Life Plan. Brokers asked Aflac for a full suite of permanent life products, and Aflac responded. The new insurance offerings help brokers serve as a true one-stop resource for affordable voluntary benefits.
“With the expansion of our Group Life portfolio, we are broadening the scope of our voluntary solutions. Now brokers can offer a complete portfolio of benefits that include high guaranteed-issue limits so that our customers have the protection they need,” said Stephanie Shields, vice president of Product Innovation and Marketing at Aflac. “We call it ‘quality of life’ insurance — whether the need is to pay off current bills and debt, cover funeral expenses, send children to college or create a scholarship in their loved one’s name, life insurance is the tool to deliver peace of mind and financial stability for all employees.”
See also: What Aflac’s U.S. sales chief sees coming up next
New Northwestern Mutual plans target part-time workers, stay-at-home spouses
Demographic shifts and changing economic realities are redefining the work world with a growing number of Americans opting for the flexibility of freelance or part-time positions. In response to these evolving dynamics, Northwestern Mutual has added two new types of coverage to its suite of disability income insurance solutions designed to reflect the expanding definition of employment:
Stay-at-home spouse/companion coverage — recognizes the important economic value of contributions made by a stay-at-home partner in providing elder, minor or special needs care. This feature is intended to protect the unique family dynamics and lifestyle benefits facilitated by a stay-at-home spouse or caregiver.
Part-time employee coverage — protects individuals who work between 15-29 hours a week. To align with the fluid nature of people’s career paths and personal priorities, Northwestern Mutual is the first provider offering the option to expand coverage if employment status changes to full time. Coverage is also portable between jobs.
“Today, the opportunity to shape one’s personal or professional journey has become increasingly important,” said Steve Stribling, vice president, disability income, Northwestern Mutual. “Our new solutions extend an affordable safety net to people employed outside of traditional positions with paid sick leave and other benefits, enabling them to relieve the pressure of the unexpected while pursuing their aspirations.”
Related: Northwestern Mutual on hiring spree
Customer insights inform new MetLife global brand platform
MetLife, Inc. has launched its new global brand platform under the tagline “MetLife. Navigating life together.” The brand brings to life MetLife’s role as a trusted partner to its customers as they navigate life’s twists and turns and includes an updated visual identity, logo and tagline. The company says this will mark the most significant change to the MetLife brand in over 30 years.
“To adapt to our changing world, we are re-thinking how we do business. We are moving away from a traditional product-development model to one driven by customer insights,” said Steven A. Kandarian, chairman, president and chief executive officer of MetLife, Inc. “Our new brand reflects our company’s transformation and differentiates us in the marketplace, ultimately driving greater value for our customers and shareholders.”
Related: MetLife files for spinoff of U.S. unit after weighing IPO
Accenture updates its life insurance and annuity platform
Accenture has released an updated version of the Accenture Life Insurance & Annuity Platform (ALIP) new business and underwriting component, a platform that enhances productivity levels for underwriters and case managers through a new workbench that streamlines navigation and centralizes information.
The new workbench delivers one simple management tool and view of policies for underwriters and case managers. “The improvements to our new business underwriting and case manager component is another example of how we continue to invest and deliver smart solutions that meet our customers’ needs,” said Mitch Ludwig, product line lead for Life & Annuity Software at Accenture.
Related: Insurance consumers: We’ll give up our data for personalized service
World Series spurs Insurance Industry Charitable Foundation’s Midwest Division
The Insurance Industry Charitable Foundation’s (IICF) Midwest Division recently announced a World Series-related fundraising effort benefitting their regional Community Grants Programs. IICF Midwest Division Board members have stepped up to the plate in a friendly competition to raise funds and help support those in need.
Members of the IICF Midwest Board of Directors, based in Chicago, and the Cleveland-based Ohio Chapter Board of Directors are making major league contributions to the IICF Midwest Division as their hometown teams, the Chicago Cubs and the Cleveland Indians – two giants of Midwestern baseball — compete in this historic World Series.
“With our friends, neighbors and colleagues rooting for one team or the other, it was a natural next step to capitalize on the friendly competition and generate funds to help those in need,” said Mary Cummins, IICF Executive Director Midwest Division. “We are so thankful for the generous support of our board members, and for their enthusiastic and creative fundraising on behalf of the IICF Community Grants Programs, and as we all have some fun cheering on our teams.”
Continue reading…
Mutual Trust Introduces Horizon Value™
Mutual Trust Life Insurance Company, a Pan-American Life Insurance Group Stock Company, has introduced Horizon Value™ participating whole life insurance, a leader in early, fast, guaranteed cash growth. Horizon Value’s guaranteed cash values and competitive, non-guaranteed dividends grow rapidly and tax deferred, producing one of the best early cash value guarantees in the industry. Policyowners have access, liquidity and control of this money throughout their lives through policy loans and by withdrawing values generated by dividends. “Following the announcement in late September that A.M. Best upgraded Mutual Trust’s financial rating to ‘A’ Excellent with a stable outlook, the introduction of Horizon Value is the next exciting chapter for the company,” explains Luke Cosme, Mutual Trust’s Senior Vice President, Chief Sales & Marketing Officer.
Related: The value of cash value life insurance
Allianz Worldwide Care garners Cover Excellence Award
Allianz Worldwide Care, a division of Allianz Worldwide Partners, was awarded the Best International Private Medical Insurance title at the 2016 Cover Excellence Awards in London. The award is the third of its kind that the organization has won this year. “We take great pride in developing a comprehensive suite of products and services designed to meet the needs of our clients, providing world-class healthcare support and services, and making the claims process as fast and easy as possible,” Ida Luka Lognoné, CEO at Allianz Worldwide Care, said in statement about the award.
Related: Allianz Life: A tale of transformation
Soltis’ executive elected Utah Retirement System Board president
Soltis Investment Advisors’ William (Bill) Wallace, CFA®, has been elected to serve as President of the Utah Retirement System’s (URS) board for the 2017 term.
The System, founded in 1910 as the “Teachers’ Retirement System,” serves Utah public employees with retirement and insurance benefits. It currently serves almost 209,000 employees and manages more than $29 billion in assets. Bill Wallace (seen here) has served on the Board, which is appointed by the Governor, since 2013.
Indiana executive ascends to top of MassMutual Agents Association
Scott Eckart, of Zionsville, Indiana, recently became president of the MassMutual Agents Association, an independent organization that works with company management to represent the interest of over 9,000 financial professionals across the country and the policyowners and customers they serve.
Eckart, 53, is an advisor with MassMutual MidWest, a general agency of Massachusetts Mutual Life Insurance Company in Indianapolis and WestPoint Private Client Group in Zionsville.
“This is an exciting time for a company and an important moment for our organization,” Eckart said. “MassMutual’s larger sales force magnifies our association’s voice for the company and the industry. Together we are going to help more families and business owners secure their future and protect the ones the love.”
As president, Eckart represents financial professionals on significant regulatory and product issues with MassMutual’s senior management. Eckart has been involved with the Agents Association for a decade and has helped launch the company’s social media platform to help them reach more underserved people in their local communities.
Industry veteran releases book aimed at today’s women
Juli McNeely (pictured at right), LUTCF, CFP, CLU, president of McNeely Financial Services in Wisconsin, a 20-year veteran of the financial services industry and a past NAIFA present, recently released her first book, “No Necktie Needed: A Woman’s Guide to Financial Services.” The book poses the following questions to today’s women:
Does someone else define and measure success for you, instead of you deciding what gives your life purpose?
Can you imagine being a highly valued part of an industry that lets you use the skills and attributes that come naturally to you as a woman to earn an exceptional living and spend ample time with your family — all by helping others find more security and greater peace of mind for theirs?
Why? As McNeely says: “With 85 percent of consumer purchasing decisions being made by women today and only 22 percent of all advisors begin female, the need is significant for more females to serve this important group of decision makers. It is my hope that more and more women choose this amazing career and that this book can give them a glimpse of how rewarding it can be. It is also my hope that this book can encourage those that have already chosen this as a career to push through those defining moments and find success beyond their imagination.” Get your copy at julimcneely.com.
See also:
Insurance Industry News Roundup: Week of October 10, 2016
Insurance Industry News Roundup: Week of September 19, 2016
Insurance Industry News Roundup: Week of September 12, 2016
The Farm Credit Corporation says it will consider deferral of principal payments on loans.
The Canadian Press on October 31, 2016
The Farm Credit Corporation says it will consider deferral of principal payments on loans to help farmers on the Prairies who are facing financial hardship because of wet weather before and during this year’s harvest.
The agricultural lender says rain in the last half of the growing season and snow early in October have caused significant harvesting delays in many areas and reduced crop quality.
The corporation says it will work on a case-by-case basis with customers to find solutions to financial troubles caused by the bad weather.
Besides deferring principal payments, the FCC says it would also look at amending loan payment schedules.
Affected customers are being asked to contact an FCC representative to look at their situation and discuss options.
The Farm Credit Corporation has a loan portfolio of more than $28 billion.
“This year’s wet weather in parts of Alberta, Saskatchewan and Manitoba has certainly been challenging for many farmers whose crops have been affected by excessive moisture,” said FCC president and CEO Michael Hoffort in a statement.
“We want to assure them that we understand their situation and will help them through any financial hardship this has created.”
Relentless rainstorms in Alberta and Saskatchewan during the summer increased the risk of rot and disease in what was being billed as a bumper year.
Snow that fell before Thanksgiving kept many farmers off their fields at a time when they had hoped to be getting the bulk of their crops in the bin.
Last year, large parts of the Prairies were in the midst of a severe drought and farmers were desperate for rain.
These 18 statistics illustrate how frightened Americans are about their retirement readiness. (Photo: iStock)
Americans don’t seem too confident about the state of their financial readiness for retirement, if recent research and surveys are any indication.
From millennials who are too busy paying off college debt to even think about saving for retirement, to baby boomers who are hitting retirement age with nothing saved at all, the statistics paint an alarming picture. Add to that compounding factors, such as divorce and skyrocketing health care costs, and the retirement picture is muddied even further for many Americans.
Related: Nearly half of Americans are underprepared for retirement
What’s more, longevity is increasing. Great news, right? Sure, but now everyone will have even more time on their hands to worry about how they are going to fund their lengthening retirement.
Fortunately, many of these scary statistics also come with sound advice about how to plan for and mitigate their impact.
Read on to learn more about these 18 scary retirement statistics:
Longevity has been on an upward trend for decades, and science could provide for even longer, healthier lives. But do people really want that? (Photo: iStock)
1. People could routinely live past 100, but they might not want to
Science is creating a future in which human beings could routinely live past 100 years old in relative health. But do people really want that?
Research from the Pew Research Center regarding attitudes about life extension and human enhancements show that many U.S. adults aren’t willing to embrace these possibilities, for themselves or for society as a whole.
Fifty-six percent of study respondents said they would not want to live at least 120 years. Two-thirds of adults said they would be against having a brain chip implant that could help improve their cognitive abilities, and a similar number were against the idea of using synthetic blood to augment their physical abilities.
Related: 9 factors that affect longevity
Respondents cited concerns with artificially extending life expectancy, such as social inequality where only the rich would have access to life-extending enhancements. Two-thirds of respondents also worried about the implications of using such scientific enhancements before their full impact is understood.
The ideal lifespan is between 79 and 100 years old, 69 percent of respondents said.
Debt and marital disruption are putting women into a more vulnerable financial position today than in the past. (Photo: iStock)
2. Women are more financially fragile than they used to be
Women in their 50s are more financially fragile than they were just a decade ago, according to research from the George Washington University Global Financial Literacy Excellence Center. This trend has led to women in their 50s delaying retirement because of higher levels of debt, including educational debt, and higher rates of life-planning disruption due to divorce and widowhood.
“There are many real and complicated factors contributing to 50-something women’s sense of financial insecurity today. No matter the cause, however, it is time for the financial services industry to zero in on how it is failing women in general and contributing to the financial insecurity of women in this age group in particular,” said Carla Dearing, CEO of SUM180, an online financial planning service.
Related: Being a woman will cost you $430,480 over your working lifetime
Among the report’s findings are that overall debt for women has doubled in their 50s since the early 1990s, while the percentage of 50-something women with less than $25,000 in savings has also doubled. In addition, women in their 50s are more likely to have mortgage debt totaling more than half the value of their homes.
These findings are additionally substantiated by the results of a recent survey of American workers by the Transamerica Center for Retirement Studies. This study reveals that 46 percent of women are either “not too confident” or “not at all confident” in their ability to retire with a comfortable lifestyle, compared with 36 percent of men; only 12 percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle.
Many retirees count on Social Security, but cost of living increases have been small to non-existent for several years. (Photo: iStock)
3. Social Security is not keeping pace with real cost of living increases
The rising cost of living is a major concern for most Americans, and news of Social Security’s paltry 0.3 percent COLA raise in 2017 — amounting to a $5 increase — won’t do much to calm those worries.
According to a recent study from Allianz Life, fears about the rising cost of living are having a real impact on Americans’ retirement planning. Nearly half of Americans (47 percent) reported being either “very concerned” (36 percent) or “terrified” (11 percent) that the rising cost of living will affect their retirement plan, and 53 percent report they would feel either “very worried” (38 percent) or “panicked” (15 percent) about paying for expenses if their income was frozen and they never received an increase in annual salary.
Related: Social Security benefits get small bump for 2017
Perhaps more concerning, most people don’t have a real plan to deal with inflation, as the majority said they would adjust by simply “living more modestly.” That sounds easy but may be more difficult than they think and leave them looking for other solutions, said Allianz.
Gen X experienced the dot-com bust and a global financial crisis, neither of which inspire much confidence for this generation in their financial future. (Photo: iStock)
4. Gen X is on deck, and they are nervous
We don’t tend to hear a whole lot about Gen X, but once baby boomers get done retiring, Gen X is up. And they are just as worried about their retirement readiness as everyone else.
Nearly two-thirds (63 percent) of Gen Xers are kept up at night thinking about financing their retirement, and 1 in 3 are worried they’re not earning enough money to be able to invest for the future, according to a survey by American Funds, a family of mutual funds from Capital Group.
Related: Gen X: The opportunity in front of all of us right now
“After experiencing the dot-com bust, the global financial crisis and the housing collapse, as well as stagnant wage growth during their formative adult years, Gen Xers — or Generation AnXious — are wary about their financial future,” said Heather Lord, senior vice president and head of strategy and innovation at Capital Group. “Perhaps because of these concerns, Gen Xers long to do better than the average market and say actively managed funds can help them reach these goals.”
Almost one-third of caregivers have been unable to save anything for retirement. (Photo: iStock)
5. Caregivers are facing a retirement crisis
A survey of families with children with special needs found that a large majority (82 percent) of caregivers are concerned that they do not have enough financial resources to last their disabled relative’s entire lifetime. Just as alarming, because of the time and cost required for caring for those with special needs, 30 percent of caregivers are not saving at all for their own retirement.
These findings are part of the new Special Needs Caregiver Survey from the American College of Financial Services, which sought to better understand the challenges that caregivers of special needs children and young adults face managing their day-to-day and long-term finances, as well as explore possible solutions that may help these households prepare for their dependent relative’s financial futures.
Related: 5 things to know about getting caregivers a break
“Caring for a child with special needs is a full time job that requires all of your emotional and physical energy, which is why it makes sense that planning beyond the present is often delayed or ignored,” said Professor Adam Beck, director of the American College MassMutual Center for Special Needs Planning. “Leaving a special needs child financially insecure is a serious problem and this study confirms that a majority of special needs families lack the most basic preparations for their own financial security and that of their child.”
Caregivers are concerned about what the future holds for their special needs relative, and for good reason. Alarmingly, 67 percent of Americans with special needs have no Special Needs Trust established for them, which puts them at imminent risk of losing Medicaid coverage and Social Security benefits.
Almost nine in ten caregivers (87 percent) are concerned about what will happen to their special needs relative when they are no longer living.
Fifty-nine (59) percent of caregivers have not taken the basic step of preparing a will
Sixty (60) percent of caregivers with life insurance have less than $300,000 of coverage and fewer than half have the protection of whole life coverage. However, the lifetime cost of caring for a dependent with autism is between $1.4 and $2.4 million.
Only 23 percent of caregivers have a formal financial plan for their dependent and only 37 percent work with a financial advisor.
Caregivers are also concerned about their own financial future and how their caregiving responsibilities may adversely impact their retirement. Most special needs caregivers will be caregivers for the duration of their lives — encompassing their entire retirement period — yet almost one-third of this group (30 percent) is not saving at all for retirement.
Only 16 percent of caregivers strongly believe they are financial secure.
Seventy (70) percent believe they will have to compromise their own retirement plans in order to provide for their special needs dependent.
Seventy-seven (77) percent are concerned they won’t be able to retire when they want to.
Eighty (80) percent of caregivers are concerned they won’t be able to maintain a comfortable lifestyle throughout retirement.
“The number of children born with special needs continues to grow, and the cost of care is escalating as well. Unfortunately, the financial services profession has not made special needs planning a priority, so too many families are unprepared for their financial future,” said Beck. “However, there are well-established resources for special needs planning and advisors who specialize in serving these families. Together, these solutions can help provide financial security for both caregivers and those in need.”
Health care costs during retirement could add up to a hefty $130,000. (Photo: iStock)
6. Retirees need $130,000 to cover health care costs
Retirees who thought they were doing pretty well with a couple hundred thousand set aside for retirement might need to think again. Health care expenses could eat up about $130,000 during an average retiree’s golden years.
The estimate from Fidelity Investments forecasts women will spend about $135,000 on health care in retirement, while men will spend about $125,000 on health care in retirement. Why the difference? Because women tend to live longer than men.
Related: 6 questions about containing health care costs in retirement
That’s up 18 percent from 2014’s estimate for expenses including Medicare premiums, co-payments and out-of-pocket costs for items like hearing aids and glasses. Pushing the costs up are prescription drugs and increasing use of health care services as the economy recovers.
Frighteningly, this estimate doesn’t include long-term care expenses, including home health care or nursing homes, which can be astronomical.
To help mitigate these costs, people should carefully study Medicare supplemental insurance policies and maximize savings through health savings accounts while still working. Retirees can also implement strategic Social Security claiming strategies or invest in a longevity annuity.
With estimates that health care costs could average $130,000 in retirement, people are worried about being able to foot the bill. (Photo: iStock)
7. Most Americans are concerned about health care expenses in retirement
A recent study by financial services firm Edward Jones found that almost two-thirds (60 percent) of Americans are concerned about how they will pay for health care expenses in retirement.
Researchers interviewed more than 1,000 non-retired and retired Americans. The study revealed a strong variation in the level of concern between age groups. Baby Boomers, the most recent generation to enter retirement age, were the most worried about covering the cost of health care, with 69 percent of those polled indicating that they are concerned, and 41 percent suggesting that they are “very” concerned. This is a striking difference from millennials — only 19 percent of whom were “very” concerned.
Related: The wildcard of retirement planning: health care expenses
“Health care expenses can be difficult to project, especially when you are decades away from retirement,” said Scott Thoma, Principal and Investment Strategist for Edward Jones. “Unexpected conditions and medical expenses that manifest later in life pose a great threat not only to physical and mental health, but also to the financial well-being of both the care receiver and the caregiver. That’s why it is critical to start preparing early — proactive planning can ultimately help individuals protect their assets over the long term, even if health complications emerge during retirement.”
A significant out-of-pocket health care expense could jeopardize many retirees’ financial security. (Photo: iStock)
8. Many retirees are one health care crisis away from financial collapse
Findings of a study by the LIMRA Secure Retirement Institute reveal that more than half of nonretired Americans believe a significant out-of-pocket health care expense ($15,000 or more) would seriously compromise their financial security in retirement.
Eight in 10 nonretired Americans think there is a 50/50 chance that they would face this kind of health care expense if they were a 65 retiree today. Although survey retirees have only been retired an average of 8 years, 10 percent have already experienced an out-of-pocket expense of $15,000 or more for health care. The actual incidence of health care shocks is likely even higher because very sick people are usually unable to complete surveys.
Related: Life settlement = solution to rising senior health care costs
According to the “Consumer Expenditure Survey,” the average annual amount spent on health care in 2014 was $5,956 for those age 65 to 74 and $5,708 for those 75 years and older. This represents about 12 percent of all annual spending for those age 65 to 74 and 15 percent for those age 75 or older.
Ignoring large out-of-pocket health care expenses, 6 in 10 nonretired Americans do not believe they have enough to cover day-to-day health care expenses not covered by Medicare in retirement. Women were less confident they could cover these costs in retirement (34 percent) vs. men (46 percent).
The study found that 80 percent of nonretired consumers who worked with a financial professional believed they understood how much their future health care expenses would be in retirement. In comparison, only 6 in 10 who haven’t consulted a financial professional felt confident they knew how much health care expenses would impact their retirement finances.
Overall, both retirees and nonretired consumers believe financial professionals can help consumers manage health care risks in retirement. And it appears financial professionals recognize the need for planning for health care costs in retirement. Recent Institute research finds 42 percent of financial professionals want training on health care planning to better help their clients.
Eighty percent of retired women currently collecting Social Security benefits took those benefits early and missed out on the increased income earned by delaying their claim. (Photo: iStock)
9. Women often regret not waiting to claim Social Security
Looking back, 17 percent of women who are currently drawing Social Security wish they could change their decision and file later, according to a Nationwide Retirement Institute survey conducted by Harris Poll. Of those who would not change their filing decision, 39 percent say an unforeseen life event compelled them to take it early, including unplanned health problems (17 percent).
On average women live longer, meaning they spend more time in retirement and often do so with less savings. Due to these factors, on average women retirees could spend 70 percent of their Social Security benefit on health care costs, the survey said. Women count on Social Security or will count on it to pay, on average, 56 percent of all their expenses in retirement. However, 80 percent of retired women currently collecting Social Security benefits took those benefits early, locking in a lifetime of lower income.
Related: How to maximize Social Security benefits for women
The online survey included 465 women over 50 who are retired or plan to be in the next 10 years. It found that of women currently collecting Social Security, only 17 (5 percent) maximized their monthly check by waiting to claim at age 70 or later.
“Too many women retirees have no retirement income outside of Social Security,” says Roberta Eckert, vice president of the Nationwide Retirement Institute. “And even for women that do, the fact that they live longer makes maximizing Social Security benefits extremely important.”
More than a third of women (35 percent) were kept from doing the things they wanted in retirement. Health care expenses in particular keep nearly one in four (24 percent) from the retirement they desired.
More than one in four women currently drawing Social Security (30 percent) say their Social Security payment is less than they expected. Only 13 percent of women say they received advice on Social Security from a financial advisor. However, nearly 9 in 10 women surveyed who work with an advisor (86 percent) say their Social Security payment was as expected or more than they expected.
“There are a variety of efficient filing strategies open to women — but too few seek professional advice from a financial advisor to take advantage of them,” says Kevin McGarry, director of the Nationwide Retirement Institute.
It’s not that women don’t want the advice. In fact, about three in five women (61 percent) admit that if their financial advisor could not show them how to maximize their benefit — then they would switch to an advisor who could.
If worries over health care costs in retirement aren’t enough, people are also afraid they will outlive their savings. (Photo: iStock)
10. Half of Americans are afraid they will outlive their money
A recent survey conducted by Research Now Group Inc. and commissioned by Fifth Third Private Bank found that nearly half of those surveyed have serious concerns that they may outlive their money in retirement.
The bank launched the survey to understand families’ financial planning pain points and gain insight into how the process could be simplified through its new platform, Life360.
“The study confirmed the anxiety that clients have shared with our advisors is reflective of similar concerns nationally,” said Phil McHugh, executive vice president and head of wealth and asset management at Fifth Third. “Much of that anxiety stems from a lack of clearly articulated financial goals and alignment around achieving them.”
Related: 17 unexpected expenses in retirement
The survey revealed that several stressors contribute to anxiety around the financial planning process:
Forty-three percent feel managing their finances has gotten more complex over the past five years.
Nearly half take between one and five hours to research, organize and calculate their overall financial picture on an annual basis.
Only 28 percent feel completely confident in the accuracy of their methods to keep up to date with their overall financial picture.
More than one-third of respondents use two or more advisors to help them manage their financial activities.
Thirty percent of survey respondents were unable to confirm their dependents would know where to easily access or find ALL important and legal documents.
Only one in four feels more optimistic about their financial future than they did one year ago.
Many U.S. employers plan to implement benefit adequacy programs in the next few years to help employees better prepare for retirement. (Photo: iStock)
11. Even your boss is worried about your retirement readiness
U.S. employers are becoming increasingly concerned over their employees’ financial well-being, and they are planning to take action to help their employees retire in a timely manner, according to a new survey by Willis Towers Watson, a global advisory, broking and solutions company. In response, the survey found that a growing number of employers plan to shift resources toward benefit adequacy and retirement readiness over the next two years.
The Retirement Plan Governance Survey of more than 300 U.S. employers found nearly 4 in 10 employers (39 percent) that offer a defined benefit and defined contribution (DC) plan view their employees’ retirement readiness as a current risk. Even more — 44 percent — view it as a risk two years from now.
Related: Most workers have access to employer-sponsored retirement planning
“Not surprisingly, retirement benefit adequacy and the financial fitness of their workers are growing concerns among employers,” said Dave Suchsland, senior retirement consultant at Willis Towers Watson. “This is particularly true among employers that offer only a DC plan. In fact, workers’ inability to retire in a timely fashion was identified as the top risk for nearly 6 in 10 of these plan sponsors. The ongoing shift to DC plans is now prompting employers to prioritize resources that promote retirement readiness.”
A majority of defined contribution plan sponsors currently devote their top investment resources primarily to monitoring investment fees (74 percent) and manager performance (61 percent). However, employers are planning a greater focus on benefit adequacy and monitoring participant behavior moving forward. According to the survey, the percentage of DC plan sponsors that prioritize benefit adequacy will more than double in the next two years, from 18 percent to 38 percent.
“We are beginning to see governance committees adopt a more holistic view to DC oversight. They continue to review investments and plan fees, and they are also considering retirement readiness and how the program influences plan participants’ behavior to improve outcomes for them,” said Suchsland.
People might be worried about outliving their savings because many don’t have any savings at all. (Photo: iStock)
12. The majority of Americans have less than $1,000 in savings
When it comes to saving money, Americans have gone from bad to worse, according to the latest GOBankingRates survey.
In 2015, GOBankingRates surveyed more than 5,000 adults and found that 62 percent have less than $1,000 in savings, and 28 percent reported having no savings at all. This year, those numbers have jumped — 69 percent have less than $1,000 in savings, and 34 percent have a savings account balance of $0.
Related: Bankrate survey: Retirement savings at record levels
“What our survey found is extremely shocking because it shows that the majority of Americans are just one emergency expense away from being broke,” said Kristen Bonner, lead researcher on the study. “Because there is no way to predict when a financial emergency can arise, it is crucial to make saving money a habit in case the worst happens.”
Among the study findings:
Forty percent of Americans making $100,000-plus a year have less than $1,000 in savings.
Women are more likely than men to have $0 saved — 42 percent have nothing saved versus 28 percent.
Millennials aged 25 to 34 are more likely than Gen Xers aged 45-54 to have $1,000 or more in savings.
These 5 Southern states have the highest percentage of residents with $0 in savings: Louisiana, Mississippi, Oklahoma, Georgia and Texas.
Sixty-two percent of seniors aged 65 and up have less than $1,000 in savings, with 1 in 3 having no savings account at all.
In addition to the fact that many Americans have little or no savings, about half also are in debt. (Photo: iStock)
13. Half of Americans are in debt
Paying off debt is the No. 1 source of financial stress in the U.S. today, according to GOBankingRates, which surveyed nearly 3,000 adults asking about their mortgage, credit card, student loan and medical debts.
The median debt for the 49 percent of those who owe money is $38,850.
Mortgage loan debt was the largest category of debt, with 39 percent of Americans reporting they owe money on a mortgage. The median mortgage loan debt is $59,500. However the median mortgage debt for women is $74,000, $14,000 more than it is for men.
Related: 15 of the most debt-ridden states
Credit card debt was the second largest category at 38 percent. The median credit card debt is $2,000. Almost half of adults earning $100,000 to $149,999 have credit card debt,the largest percentage of any income bracket
Auto loans account for the third largest pool of debt among Americans, with 38 percent say they are paying on a vehicle loan. The median auto loan debt is $8,000.
Student loan debt came in fourth place with 27 percent of Americans paying school loans on a medium debt of $9,100. Women reported having twice as much student loan debt as men.
Finally, 21 percent of Americans reported having debt related to medical expenses. The median medical debt is $600.
“Our survey found that Americans are saddled with various types of debt — from mortgages and student loans to credit card and medical debt — but it is a burden that can be overcome,” said Cameron Huddleston, life and money columnist for GOBankingRates. “The best way to dig yourself out of debt is to make paying off what you owe a priority. Take a close look at your spending to figure out what unnecessary costs you can cut, then put that money toward your debt each month before you have a chance to spend it on something else.”
The good news? Fifty-one percent of Americans report that they are debt free.
Worries about health care costs and outliving savings may be driving an increasing number of Americans to work longer. (Photo: iStock)
14. The majority of Americans plan to work during retirement
Seventy percent of nonretired Americans plan to work as long as possible during retirement, according to a Bankrate.com report. Only 25 percent say they have no plans to work during retirement.
Of those who plan to work as long as possible during retirement, 38 percent are planning to work because they like to work and 35 percent said they plan to work because they need the money. Twenty-seven percent said both. Early retirement is no longer the goal it once was: just 13 percent of nonretired Americans hope to retire in their 50s, down from 27 percent in 2007.
Related: Beyond a traditional retirement
Additionally, the Bankrate.com survey found that nearly half of retirees (47 percent) are either very worried or somewhat worried about outliving their retirement savings, up from 37 percent in 2009, the last time this question was asked.
“Working during retirement brings a lot of benefits,” said Jill Cornfield, Bankrate.com retirement analyst. “I’m not surprised that nearly three-quarters of people said they’d like to work as long as they can while in retirement. It’s not just the money. When you can work as a consultant or find some part-time gig, it really helps you stay sharp.”
As for Social Security, 70 percent of nonretirees expect it to account for some of their income in retirement, including 10 percent who are depending on Social Security for all of their income. Interestingly, out of all the age groups, millennials were the most likely to say that they don’t expect to receive any money from Social Security when they retire (32 percent).
People who want or need to continue working may find the tax drawbacks outweigh the earnings benefits. (Photo: iStock)
15. Retirees who continue working face tax disincentives
Extended work can lead to higher taxes, according to a study conducted by researchers at Boston University, the University of California at Berkeley and Economic Security Planning Inc.
“If the boomers are short on regular assets, short on retirement account assets, short on defined benefit pensions, short on Social Security benefits, long on explicit and implicit taxes, and the government can’t help, boomers have but one option to maintain their living standards —earn more by working more at their current jobs, delaying their retirements, or returning to work if they have already retired,” the report said.
Related: 7 ways to make your clients’ portfolios tax efficient
“This is far easier said than done. Hour constraints at their current jobs, age discrimination, increasing preference for leisure, and health limitations are four major factors that limit older workers’ abilities and desire to raise their earnings through time. Older workers also experience age-related declines in productivity and, where applicable, negative private pension accrual associated with ongoing work.”
Even worse, government-imposed work disincentives may discourage people from extending work. The report listed explicit marginal taxation such as FICA payroll taxes, implicit taxation associated with the loss of government benefits, and increased premiums associated with increased earnings as disincentives for workers continue working at or after retirement age.
Divorce after 50 creates unique issues surrounding alimony and retirement accounts. (Photo: iStock)
16. Baby boomers keep getting divorced
“Gray divorce” is a trend with no end in sight, according to research from the American Academy of Matrimonial Lawyers. A survey of its members found that 64 percent have seen an increase in divorces cases among couples aged 50 years or older.
Failed marriages among people over 50 doubled from 1990 to 2010, according to Bowling Green State University’s National Center for Family & Marriage Research.
The top three issues divorcing boomers fight about is alimony (83 percent), retirement accounts and pensions (62 percent) and business interests (60 percent).
Related: Divorce and annuities: a costly combination
“A rising divorce rate is becoming a very consistent trend with the baby boomer generation,” said Joslin Davis, president of the American Academy of Matrimonial Lawyers. “As people live longer, their relationships can change in some very dramatic ways, but spouses within this age range also need to be extremely mindful about the complexities of negotiating key issues involving spousal support and retirement accounts.”
Davis recommends couples in the over-50 age range who are divorcing immediately recognize and accept that two households will often not be able to live at the same level as one household. She also cautions the supporting spouse in these cases that it is often worthwhile to consider sharing more assets and retirement funds upfront in order to work out an agreement that doesn’t necessarily include alimony. Davis also advises dependent spouses that the prospect of long-term alimony can serve as a very powerful negotiating tool.
Even when adult children leave the “nest,” they often leave a few things behind, like bills. (Photo: iStock)
17. Adult children are derailing their parents’ retirement
After two or more decades of raising children, empty nesters often look forward to a break from the financially draining years of parenting and the resulting opportunity to build their retirement savings. People in their 50s often are at the peak of their earning potential and theoretically are well positioned to accelerate their retirement savings when their children leave home.
In reality, household savings through 401(k) plans do increase for empty nesters, but only a tiny 0.3 to 0.7 percentage points, according to research from Boston College’s Center for Retirement Research.
“Among the explanations offered for the lackluster increase in savings is empty nesters’ continued financial support of adult children,” wrote Dearing of SUM180. “Picking up their grown kids’ expenses — student loans, insurance, auto payments, smart phone bills — is a generosity those who have not yet saved enough for retirement can ill-afford.”
Related: Feathering the empty nest: FIAs can help
Dearing recommends empty nesters recognize that the years after children leave home and before retirement are critical to setting themselves up for a comfortable retirement and long-term financial security. This may encompass re-evaluating priorities, including reducing or eliminating financial assistance to adult children.
The 2016 election has triggered a wellspring of concern among all constituents about the future of retirement under either candidate. (Photo: iStock)
18. We’re all worried about the election, but not enough of us are worried about saving for retirement
A study from Personal Capital finds that while all Americans seem to place a low priority on retirement savings in general, Republicans are more likely to maintain a retirement savings account than democrats. The survey found 1 in 5 Americans of working age have no retirement savings regardless of party affiliation.
“Regardless of who wins the presidency, there are 10,000 people who retire each day in this country, and that number is expected to remain the same until the last baby boomer turns 65 in 2030,” said Bill Harris, CEO of Personal Capital. “If this survey shows us anything, it’s that we all need to see retirement savings as a priority, because we will all be impacted by it in the future.”
Related: Baby boomer election reign could end this year
The survey found that millennials (age 18-34) feel more secure about their retirement (20 percent) versus those aged 35-54 (12 percent). Younger people see education as a priority issue this election (31 percent), behind terrorism (43 percent) but ahead of the economy (28 percent), with only 7 percent listing retirement savings as a top issue.
“The increasing costs of higher education are having a direct impact on millennials who are holding off on saving for retirement,” said Harris. “With the average new graduate saddled with $37,172 in debt, up from about $35,000 last year, that may seem like the logical choice today. But, our fear is that this group will hold off until it’s too late.”
Americans are universal in their concern about the consequences of their preferred candidate not winning the election. When asked about retirement, 64 percent of Republicans and 18 percent of Democrats are “more worried” about their retirement savings if Hillary Clinton is elected, while 59 percent of Democrats and 15 percent of Republicans are “more worried” about their retirement savings if Donald Trump is elected.
Retirement woes by the numbers:
Total millennials from both parties feel “very unfavorable” toward Trump (57 percent) and are “more worried”‘ about retirement savings if he is elected (49 percent)
Households that earn under $50,000 say they are ‘more worried’ if Trump is elected; households that earn over $50,000 say they are ‘more worried’ if Clinton is elected
Only 19 percent of Clinton supporters and 18 percent of Trump supporters report feeling “confident” with their retirement savings
“Both parties have devoted sections of their official 2016 platforms to Social Security and how they will address retirement security if they are in the White House,” continued Harris. “We know that with the growing cost of healthcare, education and the shifting economy, Americans will only be able to retire comfortably by planning and saving for the future — no matter who wins the election.”
Related:
Having a formal retirement plan boosts confidence, preparedness
Annuity ownership increases retirement confidence
The roots of retirement uncertainty: Not knowing how much to save
Wildrose members give leader mandate to fight to end Alberta carbon tax
Endorsement made on Saturday in Red Deer.
Dean Bennett, The Canadian Press on October 31, 2016
Wildrose party members have given Official Opposition Leader Brian Jean a mandate to fight Alberta’s looming carbon tax.
Party rank and file, voting at the annual general meeting in Red Deer on Saturday, overwhelmingly endorsed a change to the policy manual in order to promise the Wildrose will repeal the $3-billion-a-year tax should it win power.
“The members have ratified exactly our position on a very bad and regressive tax,” Jean said later in an interview.
He said any such carbon pricing needs to work in lockstep with other energy-producing jurisdictions to be both fair and effective.
“If not, we’re just penalizing ourselves,” he said.
Jean called the motion one more weapon in his arsenal as his caucus prepares to debate the promised legislation during the fall legislature sitting.
The legislation would end coal-fired electricity, cap oilsands emissions and remake Alberta’s energy grid with increased emphasis on renewables like wind, solar, and hydro power.
“We’re going to see the climate change agenda move forward very aggressively,” said Jean.
“Once you dissuade investors from coming into Alberta, once you have energy companies leave Alberta ? it’s very difficult to get them back.
“The climate change costs are going to hit everybody.”
The NDP is bringing in a carbon levy on Jan. 1 on gasoline prices and home heating bills tied to a $20 a tonne levy on greenhouse gas emissions in 2017, rising to $30 a tonne by 2018.
Low and middle income earners will get partial or full rebates.
The money raised will be reinvested in green initiatives and programs, including rapid transit.
Looming behind the Alberta debate is the federal government’s recent announcement to impose carbon pricing on provinces through a tax, or a cap-and-trade system, if the provinces do not impose one themselves.
Wildrose members voted on number of changes to their policy book on the final day of the meeting.
They urged a repeal to Alberta’s farm safety bill, which extends workers’ compensation coverage and workplace safety rules to paid farm workers. Members voted instead to engage in consultations before introducing such rules.
They also voted to abandon the NDP’s graduated income tax system and return it to a flat tax system used by the former Progressive Conservatives.
They voted that politicians and political parties should not be reimbursed by taxpayers for campaign expenses. Earlier this year, the NDP majority on an all-party committee voted to have candidates get some of that money back. The legislature as a whole would have to approve it for it to become law.
And by a narrow margin they voted to have the government provide free parking for the first two hours at health facilities, so that families are not penalized with hefty parking fees just to visit loved ones in the hospital.
They also endorsed the concept that photo radar should be scrutinized to ensure it is strictly used to improve safety and is not used as a cash cow.
They also overwhelmingly voted down a motion to include parents in all issues related to a child’s education, including sexual identity or identification.
Speaking to defeat the motion, Wildrose MLA Derek Fildebrandt said the Wildrose policy already makes clear the importance of parental rights and choice in education, but said passing such a motion “can be viewed by our opponents as trying to out gay kids when they’re not ready to come out.”
The fall sitting of the legislature begins Monday and is expected to run until Dec. 8.
Given limited IT budgets, life insurers should target digital investments to a few key areas that will have the most bang for the buck, say McKinsey’s analysts. (Photo: Thinkstock)
It’s long been understood that life insurers have lagged other sectors in digitizing their business processes and directing money to new technologies to try to gain a competitive edge.
The only question is, how much have they underinvested?
One answer comes from McKinsey & Co. In a new report, “Harnessing the Power of Digital in Life Insurance,” the market research firm suggests that most carriers will have to “quadruple” spending on information technologies — back-office policy administration and underwriting systems, customer-facing web portals, mobile solutions for agents and advisors, among other business operations — to boost sales and their bottom line. The task is all the more urgent, the report warns, because of two forces buffeting the industry:
a marked decline in industry revenue (annual sales of new policies have dipped from about 17 million contracts in the 1980s to roughly 10 million today); and
growing competition from non-traditional players — including banks, wealth managers and brokers — that don’t have an insurance focus and may be looking to steer clients to alternative vehicles.
Related: DOL fiduciary rule: Disruption or opportunity?
Potential disrupters also include nimble technology firms that are increasingly making their presence felt in the “insurance value chain.” Friendsurance, PolicyGenius, WeChat, Zenefits and Lemonade are among the companies redefining products for social and mobile platforms.
Other potential distributors (think Google and TenCent) are looking to revamp other business functions such as underwriting, risk selection and customer relationships. Still others (Alibaba, Oscar, Vitality Group) are kick-starting innovative offerings, such financial health and wellness programs, that could eat into insurers’ market share.
To protect and expand their turf, insurers can’t take a scattershot approach to digital investments, the report cautions. Given limited IT budgets, the spending will have to be directed to a few key areas that will have the most bang for the buck. But, the report’s authors note, they needn’t allocate IT dollars in one fell swoop.
Savings gained from well-targeted investments — for example upgrading back-office policy administration systems — could help to “self-fund” other needed digital initiatives, as well as preserve cash reserves for non-IT business priorities, according to Parker Shi (pictured), an analyst and senior partner at McKinsey & Co.
Funding aside, a big challenge for the industry has been a lack of consistency. Some insurers are digitally upgrading their operations from top to bottom. Others are making small tweaks; or they view digital investments as a longer-term proposition.
“The recognition that digital solutions will be critical to the life insurance industry over the next 5 to 7 years has been reinforced in every discussion we’ve had with insurers,” says Ramnath Balasubramanian, an analyst and partner at McKinsey & Co. “However, the intensity about the need to act has varied significantly.”
Also a mixed bag are results achieved on digital investments made to date. The more successful ones, observes Balasubramanian, involve the various stakeholders — customers, agents and advisors, home-office employees and other supporting staff — in co-designing and developing solutions. Successful carriers also need to increase adoption of proposed technologies by establishing meaningful metrics (meetings per customer, value of sales, customer satisfaction scores, reduction in sales cycles and costs, etc.) against which to measure return on investment.
Related: 4 tips for surfing the barrel: How to turn disruption into opportunity
Life insurers will have to create self-service portals that make insurance-buying a hassle-free experience. (Photo: Thinkstock)
Dollars for digital
Which aspects of the business are most in need of a digital overhaul? The study identifies several, including product development, “consideration and evaluation” (marketing, distribution and advice), and purchasing (underwriting and policy issuance).
Related: 21 emerging risks for the insurance industry and global economy
In respect to the first, life insurers will have to develop products that lend themselves to online purchasing. They’ll also have to create self-service portals that make insurance-buying a hassle-free experience, especially for people most in need of protection products: folks in the middle market.
One company to watch in this space is Policy Genius, a New York-based firm backed by several insurers, including AXA Strategic Ventures, MassMutual Ventures and Transamerica Ventures. The tech firm has developed an online platform where prospects can buy multiple types of insurance including life, disability income, renters and pet insurance.
Related: The top 4 life insurance brands of 2016
The site includes an “insurance checkup” feature to determine how much coverage an applicant needs. Prospects can get a quote, access educational resources, and complete an application online.
McKinsey estimates that life insurers can boost sales by 3 to 5 percent through such streamlined web portals. On the distribution front, revenue gains can be achieved by equipping agents and advisors in the field with productivity-enhancing “digital advice tools.”
Mobile apps that let advisors connect with clients via a video service are chief among these tools. Others include cloud-based software that lets producers graphically view sales- and marketing-related data to better tailor outreach to new or existing clients; and solutions that let them dispense with physical office space, such online document storage services.
Related: Eye on genomics: 9 questions for Dr. Craig Venter
Alliances with third-parties that help expand the market for insurers extends to companies specializing in health and financial wellness solutions.(Photo: Thinkstock)
The value of teaming up
As to a longstanding industry bottleneck —underwriting — the McKinsey report estimates that insurers can substantially reduce sales “cycle times” (from 50 to 70 percent) and administrative costs (from 20 to 30 percent) by digitizing functions that ease and speed the process. Examples: streamlining the procurement of attending physician statements (APSs); and developing simplified issue term insurance products that require little or no medical underwriting.
To expand the applicant pool, insurers can also team up with companies that are researching underwriting risks associated with certain medical conditions. Among them: diseases that insurers have traditionally been loath to underwrite or to issue policies for on preferred basis.
Last December, for example, Prudential Financial began offering 10- and 15-year term life policies to people living with HIV — a community that (in the U.S.) had heretofore been largely uninsurable. The product rollout stems from an unusual partnership with Aequalis, an independent organization that conducted extensive research into the feasibility of availing the HIV community of life insurance products.
Related: Aequalis: leveling the playing field for those living with HIV
Alliances with third-parties that help expand the market for insurers, the McKinsey reports add, extend to companies specializing in health and financial wellness solutions. On the cutting edge in this space is John Hancock Financial, which in 2015 teamed up with the Vitality Group, a provider of incentive-based wellness programs.
John Hancock policyholders now can save on their annual premiums, and earn rewards and discounts, by taking steps to improve their health. As part of the initiative, policyholders are given a Fitbit, a high-tech wristband that tracks the user’s number of steps walked, quality of sleep and other personal metrics.
“These partnerships, whether focused on customer acquisition, marketing or client engagement, can be a win-win for companies across the insurance value chain,” says Balasubramanian (pictured above). “What’s particularly important is that insurers effectively manage their portfolio of partners.”
“That often requires a venture capital mindset,” he adds. “In many cases, the partner will initially fill a capability gap, but over time, the insurer will want to bring those capabilities in-house.”
Related: Bringing long-overdue innovation to a premium pricing model
How successful life insurers are with their digital initiatives, say McKinsey’s analysts, will depend in part on digital leadership at the top. (photo: Thinkstock)
Foundations for success
The McKinsey report goes on to list 5 “building blocks” that life insurers will need to digitally transform their companies. Among them:
Developing a “digital strategy” for overhauling business operations — from record-keeping and policy administration to product development, marketing, and sales activities — by aligning digital investments with long-term objectives;
Capturing “digital value” by building, among other things, a “digital front-office” (a “remote advice” or call center) where agents and advisors can serve customers via phone, e-mail, web chat, or video; and by setting up an independent company to experiment with new products, user experiences, underwriting and servicing;
Investing in technical capabilities, including flexible and modular hardware and predictive analytics software that enables the “mass-customization” of products, services and other customer-facing solutions;
Creating a “digital culture, talent and organization” that heightens carriers’ focus on customers’ needs (for example, by incorporating consumer insights and market testing into product design); and
Developing a “digital road map” that integrates the aforementioned elements into blueprint for achieving ongoing innovation, the map to be tailored to the insurer’s “digital maturity,” product and market focus.
Related: Digitizing the insurance process – are you ready?
Many life insurance executives know what they have to do, but postpone making digital changes because of the financial risks and challenges, says McKinsey’s Shi.
Getting from here to there
How fast might all this come to fruition? Much will depend, the McKinsey analysts say, on digital leadership at the top — executives in insurers’ C-suites. And that could require a cultural makeover, one that values agility and speed, is willing to experiment with new ideas, and prepared for failure.
Insurers sensing an opportunity: the promise of sensor data
“These cultural shifts are hard to bring about in a tradition-bound life insurance company,” says Shi. “Many executives know what they have to do, but postpone making changes because of the financial risks and challenges.”
One way to address the cultural challenge is to offload the digital legwork to a more agile dot.com company that’s well-versed in the ways of Silicon Valley and isn’t shy about tackling technical, financial or market obstacles head-on. But this path, too, could pose issues for insurers.
“In the end, you face the same challenge: how to integrate separate companies with different operating cultures, so they can work together,” says Shi. “Upgrading your existing capabilities versus making a clean sweep by starting up or investing in a new company are different approaches. Both have pros and cons.”
Related:
The coming IoT revolution: a 6-point plan for life insurers
8 tech trends that will change how carriers to business
How life insurers must adapt to an omnichannel world: Part 3
Juli McNeely (pictured at right), LUTCF, CFP, CLU, president of McNeely Financial Services in Wisconsin, a 20-year veteran of the financial services industry and a past NAIFA present, recently released her first book, “No Necktie Needed: A Woman’s Guide to Financial Services.” The book poses the following questions to today’s women:
