Comments on: The Coming Death of the Insurance Industry

By: asferty

asferty — Tue, 16 Jun 2009 01:18:01 +0000

One more business, – the aristocrat has continued. – a trifle, but I want, that it has been executed.
- What exactly? – has taken an interest ��.
- On this person – very unusual armour. Carried out of the task, work to removetake off them from ithim and to transfertransmit me. You can receive for it the extra charge to a payment for work.

Mister, you offend me! I – �� with high reputation, and I am not engaged in marauding. I recognize, that for heroes and even knights to removetake off an armour with �� the opponent, so noble and notable, – usual business. But it is possibleprobable only on a battlefield, after the open duel.

By: Игорь

Игорь — Wed, 31 Dec 2008 15:48:54 +0000

Вот именно с этой статьи начинаю читать Ваш блог. Плюс 1 подписчик :)

By: Dlewis

Dlewis — Sat, 29 Nov 2008 05:25:34 +0000

Itsme, your understanding is at best basic. The life settlement values are a tiny blip on the overall radar of the life insurance companies.

Of course, they might have to cut back on the corporate retreats to swanky spas, or their taste for credit default swaps.

By: Itsme

Itsme — Sat, 25 Oct 2008 02:41:30 +0000

Since several of the posters (or perhaps Sybil) seem to think that it’s no problem for the insurance industry to pay out on ALL policies that they have written, then are either “simple” minded, or don’t understand or don’t care about the consumer, or they are in an industry that profits from the other side. My money is on the latter.

If insurance companies figure on surrenders as part of their pricing/profit model, then those figures are not realized, rates for insurance will be forced up for everyone. Since the one (or many) poster’s don’t care about that, I can only assume that they are in a position to profit from the other side.

And, no, I don’t work in the insurance industry in any way, shape, or form, but I do have a basic understanding of economics.

By: Ed Mackey

Ed Mackey — Tue, 16 Sep 2008 22:47:22 +0000

How’s that LPHI stock doing?

You look tons better without the 70′s porn stache.

By: Ralph

Ralph — Wed, 02 Jul 2008 00:15:06 +0000

The insurance companies are their own worst enemies. Is all they have to do is raise the rates on people 75 and over, there will be no arbitage and the life settlement business will be history. The trouble is that insurance companies want it both ways. They want to sell large policies, but they don’t want them sold.
When they wake up, they can get out of trouble.

By: Justin

Justin — Fri, 09 Nov 2007 16:52:00 +0000

Andrew it seems you have a bit of the chicken little syndrome. If an Insurance company will write the policy, then the policyholder has a right to the payout promised. It is odd that you are concerned about insurance companies actually having to pay the amount they write the policy for. If they can not afford to pay it, regardless of the circumstances they should not write it. As far as the sick and elderly being swindeled out of there money…I think HGTV gets the award for that.

By: Ed

Ed — Wed, 10 Oct 2007 20:22:17 +0000

Wall Street Journal had a good article on this issue.

http://webreprints.djreprints.com/1530950584910.html

By: Ed

Ed — Tue, 09 Oct 2007 23:19:22 +0000

The pig was to make fun of you saying they were getting slaughtered on crocs?

And what’d you do with Darryl Hall?

By: Ed

Ed — Tue, 09 Oct 2007 23:16:30 +0000

You didn’t answer the question. I was just playing around since everyone makes up names. You know what they say about fighting on the internet.

Stock was up quite a bit again today.

By: Andrew Horowitz

Andrew Horowitz — Tue, 09 Oct 2007 21:37:29 +0000

OK Time to OUT Pig/Eddy/Mark…

All the same person gang. What a joke. He is of the belief that by changing the name on the post that we won’t know that it is the same person? If you read the original post, I mentioned the lying and cheating that goes on in the industry, specifically related to this issue…Chalk up another one.

(BTW, comments are tracked by IP so that spam does not get through and that the integrity of the board/blog is maintained)

YEEESH! Come on, put your comments down and their validity will hold if you are right. No need to make us think that there is a crowd with the same opinion. Then again…maybe there is… Remember that movie Sybil?(sp)

By: Pig

Pig — Tue, 09 Oct 2007 15:59:59 +0000

So since you said it was “beginning” to be something “rather ugly”, the stock is up 35%? What does that company’s earnings guidance or short squeeze on the stock have to do with premium financing?

By: Andrew Horowitz

Andrew Horowitz — Fri, 05 Oct 2007 23:45:11 +0000

Ed/Eddy/Eddie (or is it JackStraw?)…

How shall we profit from the grammar lesson? Also, the “rather ugly” comment has the word “beginning” just before it. Was that something that was unimportant or was it intentionally left out from your comment?

Also, maybe you are unaware of what is really going on in the industry. Agents and insureds are falsifying applications to show insurable interest when there is none. If that is true, does it change your opinion at all?

Grammar lesson aside, if you look at the date of this post, the stock was down $14+ from its peak only a few days prior on some serious news.

Give me something more than an apparent broker looking to protect his business, no matter how shady it may be. (not referring to anyone in particular of course)

Thanks for the effort…

By: Ed

Ed — Fri, 05 Oct 2007 22:36:36 +0000

Andy, Andy, Andy, the possessive form of “it” is “its”, not “it’s”.

By: JackStraw

JackStraw — Fri, 05 Oct 2007 22:25:41 +0000

I didn’t understand the “rather ugly” part. Isn’t the stock in question up over 700%?

By: Ed

Ed — Fri, 05 Oct 2007 22:12:45 +0000

No, I read it. Insurance companies are being made to pay out death benefits on policies they accepted. They have every right to decline policies if they feel there is no insurable interest, but they’re eager to issue policies because so many lapse. If they designed products where the internal cash values actually reflected the real value of the asset, there wouldn’t be an issue. Andy.

By: Andrew Horowitz

Andrew Horowitz — Fri, 05 Oct 2007 16:59:32 +0000

ED. ED. ED.

Not so simple , you are really not reading…try again

By: Ed

Ed — Fri, 05 Oct 2007 16:56:43 +0000

So insurance companies underwrite clients and have to pay out death benefits when the insured dies?

By: Dave

Dave — Tue, 25 Sep 2007 13:26:08 +0000

Very good article with half truths. As was previously written you have blended life settlements and IOLI/SOLI. While a life settlement is a part of an IOLI/SOLI arrangement, it is the arrangement that is flawed and not the life settlement, which under the proper circumstances is a wonderful alternative tool for a senior to either sell an unwanted or underperforming policy or in most situations restructure that contract with a superior result to a straight 1035 exchange.

By: TDI Podcast 28: A Morbid Tale of Profit

TDI Podcast 28: A Morbid Tale of Profit — Wed, 19 Sep 2007 20:29:28 +0000

[...] Morbid Tale of Profit: AKA -The Death Of the Insurance Industry covers this topic in detail and has the industry concerned. We tackle the very troubling area of [...]

By: GW

GW — Wed, 19 Sep 2007 18:11:45 +0000

Andrew, I also have been involved in insurance and settlements for several years – though I have not taken part in SOLI schemes and beleive them to be vey dangerous. There is plenty of fraud and abuse in the life settlement and viatical business even beyond SOLI schemes and yet a settlement sometimes really is the best option for a senior in need of cash. Anyway, I agree with 95% of your article although there are a few minor technical things that only a life insurance expert would quibble with. (eg, Prudential probably does not want to take credit for inventing the Viatical market – they did invent the accelerated death benefit rider to counteract the attractiveness of viaticals.) I see SOLI programs still being marketed aggressively and everytime an insurance company devises a way to fish them out, some clever marketer finds a loophole.

I wonder if the life insurance industry is going to suffer as much as you say. Right now the 2 year SOLI policies are starting to come out of contestability and many settlement buyers will not touch these policies because of the risk of litigation (note the MCC lawsuit in Orange County). If there is no market for these policies as promised, will some of these lenders or settlement companies suffer or go out of busines – and will the lapse rate on these policies end up being much higher than predicted? If so, then keep going long on insurance stocks….

You mentioned that some carriers are refusing to do assignments or changes of owernship. If you have specific companies or evidence of such please elaborate (email me privately if you prefer) – I am very curious to know if this is true. Thanks.

By: Rich

Rich — Tue, 18 Sep 2007 18:08:35 +0000

Andrew, I have been involved in the life settlements market on the buyside and sell side, as well as a producer, wholesaler and in-house technical expert for various life companies. In my opinion, your article would have been perfect had it been written 3 years ago as what you describe was occurring without much notice. Since then, there has been significant movement to curtail this activity. For example, insurers now require a form at policy inception that makes the insured/owner attest to the fact that they have no current intention of selling the policy. Also, to establish insurable interest, many times a charity was involved. There is legislation sponsored by, among others, Senator Grassley that would put a 100% excise tax on the proceeds of life policies that had the charicteristics of being sold in SOLI/IOLI market. Many charities are now steering clear of anything involving insurance because they don’t understand when they are or are not subject to the proposed excise tax. The word is also out within broker/dealers and many companies. However, I geuss there will always be a company that wants the premium that would look the other way in these deals, however, they are not among the several highly reputable companies doing the majority of traditional life business now, at least absent fraudulent behavior by the producer that conceals the activity. I agree that the SOLI/IOLI market would have devastating effects on the life market if were allowed to continue, however, I believe the practice to be dying a rapid death. I would caution you that the life settlement market is a very legitimate market absent SOLI/IOLI activity. There are many seniors that simply do not wish to continue to have policies that require future premium payments and the life settlement market offers a greater payout than the cash value within the policies themselves. That is simple economics. If the insurers found a way to create higher cash values that would take the economic incentive to sell the policy, the practice would be utilized far less.

By: Andrew Horowitz

Andrew Horowitz — Tue, 18 Sep 2007 17:34:34 +0000

Bob P:

The industry is doing what they can as it is hard to whine about their agents ripping them off if they are also profiting and have basically been putting it to all of us for some time.

So, who is going to feel bad? It is hard to project 20 or 30 years on this as well. So unless this becomes more of a issue, nothing is going to happen….

By: Tim

Tim — Tue, 18 Sep 2007 17:32:45 +0000

This is an excellent article, but my conversations with carriers have proved different than your findings. To the contrary, I have found most will still write large face values, only stipulating that they are not premium financed. But they will still write the policies for those that finance the premiums themselves. There are also large carriers (like ING) that are embracing this business, providing hybrid financing themselves (in conjunction with national agents). Almost all carriers claim they do not have lapse-supported pricing in their products.

If this is true, then the real losers here are the sellers (the seniors) and the buyers (the investors). Some promoters of these products claim 40%-60% returns to investors, with very little risk. The transaction fees are outrageous, and would not/should not hold up if they were ever seriously investigated.

By: Bob P

Bob P — Tue, 18 Sep 2007 16:04:11 +0000

Andrew, I agree with you, Bob and Jerry probably are involved in the industry. Viaticals (pre SOLI) should have been a win-win, but turned out to be win (viator) win (viatical industry) lose (investor).

What confuses me, however, about premium financing of life insurance, is why the insurers aren’t doing something about this legislatively. They have the money and the lobbyists. It wouldn’t be difficult to eliminate these entirely or at least make any lies on the application relating to financing subject to a longer (post-contestable period) time.

What are your thoughts on this?

Bob P.