Last week I had the pleasure of attending the International Disability Insurance Society (http://internationaldisociety.com) conference in Charleston, SC—one of the most charming cities in the U.S. The city is full of charming little restaurants (Mike Cogdall found us a great little one called Le Farfalle, http://lefarfallecharleston.com) and the weather was fabulous. I went for a run and saw the students of the Citadel running a race around Hampton Park.
IDIS is an organization devoted to promoting the growth the income protection industry. If you are not a member, I encourage you to consider joining. The conference will be in Tempe, AZ next year and they have ongoing study groups that provide training about IDI.
The conference offered the chance to connect with our partners at the Principal Financial Group, Standard Insurance Company, Ameritas, Assurity, Illinois Mutual, Petersen International, Fidelity, and Mutual of Omaha. It was weird not seeing MetLife there, but great to catch up with everyone else.
I also had the opportunity to see one of our favorite producers, Matt Wiggins of OnCall Advisors (www.oncalladvisors.com), give an excellent presentation as part of a panel discussion on “Big Ideas.” If you need someone to come speak on income protection, especially in the physician market, you would have trouble finding someone better than Matt.
There were a number of informative presentations, but the one that was most interesting to me (lots of graphs and numbers) was by Dan Skwire of Milliman. He is an actuary who presented the results of a recent study by Milliman (http://us.milliman.com/IDI-survey/) that surveyed nearly all of the major carriers in the IDI market.
The first highlight of the study reads:
New IDI annualized premium for the 15 contributors combined was $392.2 million in 2015, which is the highest volume of new premium since the 1990’s. It surpassed the last high point for $379.3 million sold in 2008, which was right before the recession hit and new IDI sales dropped by 13%.
The industry is growing and that is very good news. The authors note that the carriers they surveyed continue to be satisfied with the profitability of their IDI business in 2015—very good news. This good news is true despite the very low interest rate environment of the last few years. As a side note, as I have written before, MetLife’s departure had nothing to do with the profitability of the industry—just poor planning on their part.
The other piece of news that I found interesting in Dan’s presentation is that the industry has a new shared disability claims table from which to work, compiled from the participating carriers. For years the published table was from 1985 (which means that most of the data was from the 1970’s). Because the carriers now have more up to date, industry wide information, they will be able to more accurately price their products. Dan said the data suggested the number for claims has gone down in recent years, but the length of claims has gone up a bit. And Lifetime benefits are never likely to return—the experience with those claims has been particularly bad.
Physicians continue to make up a significant portion of our industry—about 31% in 2015. Executives were only 25% premium and attorneys only 7.7% in 2015–potential areas for growth.
Read More