VisionsforthefutureOfTheLifeInsuranceSector1Enterpriseriskmanagementcontinuestobeamajorfocusinmanyindustriesandthelifeinsurancesectorisnoexception.Infact,aninsurancecompany’sfuturesurvivalishighlydependentupontheabilitytosuccessfullymanageitsvariousrisks.However,tothriveandnotjustsurvive,aninsurancecompanymusttakeadvantageofitsexper-tiseinriskmanagementbyalsoaddressingtherisksfacedbyitsindividualcustomersinamuchbetterandmorecomprehensivewaythanisdonetoday.Thiscanbeaccomplishedthroughthedevelopmentofasingleproductthatwillallowindividualsandfamiliestosimultaneouslyidentifyandmanagetherisksencounteredoveralifetime.Companiesthatcansuccessfullydevelopsuchaproductwillseeprofitablegrowthandbecomethedominantforceinthelifeinsurancesectorofthefuture.Thevaluederivedfromhumancapitalallowsindividu-alstomeetbasicneedssuchasfood,clothing,housing,educationandhealthcare,bothduringtheworkingyearsandinretirement.Thethreeprimaryrisksinattemptingtomeettheseneedsare:•Mortality(prematuredeathandlongerthanexpectedlifespan),•Morbidity(disability,extendedlaterlifehealthissuesrequiringassistedlivingandlong-termcareandconditionscurrentlycoveredbycomprehensivehealthbenefitplans),and•Investmentrisk(theriskoflosstoretirementandpersonalinvestments).Althoughtheserisksarewellknown,foravarietyofreasonsindividualsoftendonotorcannotprotectthemselves.Forexample,assumingonesavesenoughofcurrentearningsforretirement,investmentriskisstillalargeobstacleinachievingadesiredretirementincome.Thisriskhasincreasedrecentlybytherapiddeclineofdefinedbenefitpensionplans.Mostparticipantsindefinedcontributionplanshavelimitedinvestmentknowledgeandoftenmakeunwisechoiceswheninvestinglargesumsofmoney.Eventhosewhoreceiveinvestmentadviceorchooselife-cyclefundshavenoguaranteethatfuturerequiredreturnswillbeachieved.Althoughcertaincom-plexandcostlyoptionstrategiescouldbeemployed,thereisnoproductthatcurrentlyoffersaneasy-to-understandandaffordablewayfortheaveragepersontopurchaseinsuranceprotectingthevalueofretirementorpersonalinvestments.Furthermore,eventhoughtheinsurancesectorcurrentlydoesofferavastarrayofproductstomitigatemortalityandmorbidity,separatepoliciesmustberesearchedandpurchasedtocoverthevarietyofrisksthatexist.Forexample,toprotectagainstthemorbidityriskonewouldneedmedicalinsurance,disabilityinsuranceandlong-termcare.Consumersandtheiragentsspendvaluabletimetryingtounderstandandcomparefeaturesandcostsfromalaundrylistofproductsratherthanmakingoptimalrisk-baseddecisionsthatmaximizeinsuranceprotectionandminimizecost.Thisisduetobothtraditionandregulation,butitresultsinmanyconsumersfeelingfrustratedwiththeprocessandpur-chasingproductstheymaynotfullyunderstandandthatdonotefficientlycoveralltheprimaryrisks.Withoutanysignificantindustrychange,astechnologyimprovestheabilitytocomparecostsandproductfeatures,theinsuranceproductsasofferedintoday’smarketwillbecomecommodities,limitingopportunitiesforfuturegrowth.Togrowintheyear2020andbeyond,lifeinsurerswillneedtobecomepersonalriskmanagersfortheircustomersratherthanjustaplacewhereinsurancepoliciesaresold.Successfulcompanieswillofferapolicythatprovidescomprehensiveriskmanagementservicesforindividualsandfamilies.TheproductwillofferlifetimeprotectionbyKenBeckmanriskManagementfortheindividual:theKeytoLifeinsurersuccessin2020AndBeyondVisionsforthefutureOfTheLifeInsuranceSector2riskManageme...
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