The retirement savings crisis, cybersecurity threats and the evolving adoption of technology by the insurance industry were among key topics discussed during this year’s Global Insurance Symposium in Des Moines.

Attendance set a record at the sixth annual conference, which drew about 700 participants.

“There is a lot of change coming,” said David Levenson, president and CEO of LIMRA, a worldwide research, consulting and professional development organization for the financial services industry. “I always reference the Chinese symbol for change. It’s two characters — one for danger and one for opportunity. At LIMRA we share the facts — it’s up to you decide if it’s a danger or opportunity.”

‘A doubling opportunity’

Looking back at the last 20 years, life insurance sales have grown at a tepid 1.6 percent annual rate, and if you look back at the past 10 years, the growth is even less, he said. Growth has been concentrated in a small number of products like indexed universal life and whole life policies.

“The decline in life insurance ownership is an opportunity,” Levenson said. “Group insurance tends be employer-paid, but it tends not to be enough. I see this as a rallying cry for the industry.”

LIMRA estimates the U.S. market opportunity for life insurance is $12 trillion, an amount equal to the current amount of life insurance in force. “So there’s a doubling opportunity here for the industry,” Levenson said.

The situation isn’t that much different with annuities, he said. Over the last 10 years, there has actually been a slight overall decline in sales, with pockets of growth coming largely in indexed annuity products. Currently, only 15 percent of U.S. households own an annuity.

Finding innovative ways to address the retirement savings crisis is one of the biggest societal challenges that the American Council of Life Insurers is taking on, said Susan Neely, the organization’s president and CEO. The ACLI represents 95 percent of the U.S. life insurance industry.   

Neely, an Iowa City native and University of Iowa alumna, began her new role in September, after 13 years as president and CEO of the American Beverage Association. As press secretary for Gov. Terry Branstad during his first term, she had worked on an initiative during the farm crisis to recruit more insurance companies to Iowa to diversify the state’s economy.

Increasing access to retirement savings

Helping Americans better prepare for retirement will be a significant challenge, she said in an interview with the Business Record.

“We have 10,000 baby boomers each day turning 65 between now and 2027. At the same time, one-third of baby boomers have between zero and $25,000 in retirement savings. So they’re going to depend on Social Security, which is a very important system. But it was never intended to be the sole source of retirement, and now it’s not going to be able to pay its bills currently by 2034.”

ACLI supports legislation introduced by House Ways and Means Chairman Richard Neal, D-Mass. A centerpiece of the Setting Every Community Up for Retirement Enhancement Act, or Secure Act, is auto-enrollment provisions that would get millions more Americans enrolled in their workplace plans.

“Although it gives you the ability to opt out, the majority of people don’t,” she said. “So if you’re auto-enrolled in some kind of retirement savings vehicle by your employer, then you’re going to build a savings habit that can really stand you in good stead for your whole life.”

A provision that makes Neal’s proposal controversial — but also gives it significant reach — is the requirement that companies with more than 11 employees will offer a retirement plan.

Having advocated for business interests throughout her career, Neely said she is aware of the potential burden that government mandates can be for small businesses.  

“We took this position because it’s the only proposal out there that is going to really increase access to retirement savings,” she said. ACLI estimates that 30 million more people will have access to retirement savings under the proposal, and of those, 22 million will stay in the program. The organization’s goal is to tee the issue up over the next 18 months to secure passage in 2021.

A more immediate piece of policy that could pass this year is the Secure Act, which in the Senate has been introduced by Sen. Chuck Grassley as the Retirement Enhancement and Saving Act of 2019 (RESA).

“It’s a good piece of retirement security policy that would, by our estimates, provide retirement savings to another 700,000 people,” Neely said. A key component of the legislation is allowing small employers to band together to offer retirement savings to spread out the costs and the risks.


Crushing debt, data anxiety

As many millennials are hitting their 30s and having families, surveys show they’re well aware they should be buying life insurance and saving for retirement, Neely said, but crushing student debt has become a significant obstacle.

One approach ACLI has supported is to work with insurers and employers to develop new types of retirement savings programs — for instance, providing matching incentives to 401(k) plans in exchange for employees paying toward their student loan debt.

Neely said that another side of that issue has been to figure out how to best approach younger consumers and engage them through technology.

Data privacy concerns have also been at the forefront of concerns at both the federal and state congressional levels. The leaders of the House Financial Services Committee and the Senate Banking Committee have each requested information from ACLI on the issue. Meanwhile, about 15 states are considering data privacy bills, following passage last year of a measure that California is now tweaking this year.

There is significant anxiety among policymakers about the technology and how social media companies are using people’s information, Neely said.

“One of our concerns is that in the rush to action the insurance industry gets swept in there, and it has a material impact on our ability to run our businesses. We’ve been handling people’s information for 100-plus years before it was called data, and we don’t monetize the information.”