Bob MacDonald, a former life insurer chief, has accused the life insurance industry of comfortably living in the past. He encourages industry executives to head off a troubled future by creating innovative new products, investing more heavily in its distribution system and embracing interactive technology.
Bob MacDonald adds, "The life insurance industry has offered basically the same lineup of products for more than a century. Worse, it sells them in the same way as when the Wright brothers were at Kitty Hawk and its customer interaction has changed little since the invention of the typewriter. The life insurance industry lags behind other segments of the financial services industry in all areas: product relevancy, relationship with distribution, ease of customer service and use of strategic technology to improve productivity and reduce costs. The failure of the life insurance industry to embrace a changed world also exposes it to an increase in regulatory and enterprise risk management issues. These attitudes and issues portend severe challenges for life insurance companies to achieve both top- and bottom-line growth, now and in the future. But, industry leaders are too de are delusional and procrastinate on taking the steps necessary to make the industry relevant in the future. Insurance companies are offering misleading data on the amount of new money flowing into their coffers. While some companies continue to report increased sales - the reality is that the vast majority of these sales are simply a recycling of existing premiums from one company to another. This enables companies to report increased sales' to shareholders Insurers should only claim net new sales minus premium transferred out to other companies.”
Bob MacDonald believes that the life insurance industry has its collective feet planted firmly in the past, but that the present situation offers the industry a terrific opportunity to grow and change. "The industry could start by designing innovative new products that enhance long-term value, investing in improving the quality of its distribution system and by embracing the benefits of interactive technology, which until now, it has rejected."