I taped this segment about three weeks ago just before I was laid low with the flu and thought long and hard about releasing it once I saw it after edits.
Everytime I outline for our profession my thoughts on the direction or potential of our business, I'm generally relentlessly optomistic as I believe we have the best product, a pool of buyers that desperately need what we offer and an economic picture that actually favors our products best attributes.
However, the recent departure of Aviva from the settlement market, coupled with the down grades of other life markets financial ratings and the dramatic change in the capital markets is creating a climate where we could have the best possible product and few life markets interested in selling it.
What I mean by that is the structured settlement market has seen AEGON, Aviva, Mass Mutual and Genworth all depart our business, typically after years in which they had record premium written and very good profit margins. The consistent reason is that our business is capital intensive and expensive and even more so compared to regular recurring premium or retirement business that is the bread and butter of most life insurance companies. In short, most life markets look at their structured settlement division as a drain on capital that can be put to higher profit use in estate planning, life insurance and pension/annuity business.
Has anyone noticed we have had ZERO new markets enter our business this decade, a decade that is almost complete?
What I address in this business is the financial imperative of our profession to begin to partner with the life insurance and financial planning sides of the life markets to sell more recurring premium business, gather assets under management via trusts, 529 plans and IRA accounts and engage trial lawyers in retirement and investment planning.
This is no longer an issue of those crazy guys at SSP trying to steal annuity premium from NSSTA members through settlement planning and 468b trusts! No, this is a matter of survival for our profession.
The message today and for this year is if we don't start providing our life markets with matching recurring premium business to offset the capital expense and drain our structured settlement annuity business causes, we will quite soon be looking at 4 to 7 life markets in the business.
In the words of Michael Correlone my friends, This isn't personal, it's business. Business that is expensive and is causing our life partners at the corporate level to take a cold hard look at the benefit of keeping divisions open and operating at a time when capital is expensive, NAIC isnt flinching on reserve requirements and financial planners are desperately looking for new markets to make money in.