Editor's Note: Please see a sidebar accompanying this story, which appeared on page 2 of The Messenger.
While lacking the headline grabbing stories of past years, 2005 will be remembered as an important year in the term insurance business. Retail premium rates for market leaders were relatively stable, and industry sales showed no big moves up or down.
Behind the scenes, however, there was a substantial amount of activity. Increased reinsurance rates put pressure on a number of companies already struggling with the profitability and competitiveness of their term portfolio. In general, companies responded in one of three ways:
- A few decided to exit term business.
- Some passed new reinsurance costs on in the form of premium increases.
- A number have absorbed additional costs, leaving retail rates untouched while pondering their next move.
Given these conditions, many companies are discussing the strategic value of their term insurance business and asking important questions:
- What are we trying to accomplish with our term product?
- How does term life fit our distribution strategy?
- At what retail price does offering term cease to help our marketing plan?
- How much money do we make on term today?
- Are we truly allocating the appropriate expenses to this product line?
A more fundamental question remains: Can 100+ manufacturers own all aspects of designing, creating and servicing a low cost, low margin, commodity product?
In an ideal world, most life insurance managers would prefer to completely control the term product available for their producers. But in today’s environment, decision-makers should consider all product options, including private label solutions that offer the advantages of a company-branded product while minimizing costs.
Transamerica Reinsurance private label solutions presents opportunities for companies to strategically partner with us and our select group of service providers to develop a customized term product and servicing solution that meets their needs.
We have been offering private label solutions for more than 10 years, but recent technology advances have revolutionized the flexibility available in these plans. An internet based service infrastructure lets our clients outsource components of their term program while retaining pieces that are their core strengths.
As each phase of a new term program is developed, we determine who can most effectively handle the function – the client, Transamerica Reinsurance or one of our business processing partners. This flexibility allows companies to outsource major functions while retaining producer and client facing functions like underwriting and policy administration. Their term life product has the “look and feel” of their existing portfolio.
As a leading life reinsurer, Transamerica Reinsurance offers valuable mortality expertise plus the ability to finance redundant Triple X reserves. In addition, our uniquely flexible private label capabilities allow clients to take advantage of our strengths in developing programs and managing workflows and integration requirements that are necessary for success in a competitive term life market.
For more information, you may contact the author at 704.344.2700.