All articles by LII editorial
LII editorial
Attorney general throws the book at health insurer
Attorney general throws the book at health insurer Martha Coakley, Attorney General of the US state of Massachusetts, has fired a broadside at MEGA Life and Health Insurance, Mid-West National Life Insurance and their parent company, HealthMarkets Inc (HMI), alleging in a complaint that they have engaged in unfair and deceptive trade practices
The battle for customer loyalty
Customer loyalty is vital but is becoming increasingly illusive in the US and UK financial services industries reveals a study by Thunderhead, a UK-based business communications systems developer Alarmingly, Thunderhead found that only 17 percent of respondents feel a sense of loyalty to their insurance provider and an even lower 16 percent to their bank Also of concern is that 61 percent of consumers surveyed are considering switching insurance providers in the next 12 months.
Insurers face wide-ranging change
US life insurers entered 2008 facing both opportunity and challenges Opportunity lies in abundance in the rapidly expanding retirement market fuelled by millions of retiring baby boomers, while challenges include sweeping regulatory changes and increasingly complex risk management US life insurers will continue to experience modest growth in most lines of business in 2008, believes Doug French, an analyst at professional services firm Ernst & Youngs Global Insurance Center To support his view, French referred to total statutory net operating gains for the industry data published by consultancy Conning Research & Consulting (CR&C)
Private health insurance high on UK employees’ want-list
Private medical insurance (PMI) is fast rising up the workplace benefits want-list of UK employees, a survey conducted by health insurer BUPA reveals Indeed, if the current trend persists, PMI could become the most popular workplace benefit. In its survey, BUPA found that 40 percent of employees were eager to have PMI as a workplace benefit, up from 38 percent of employees in 2007
Axa makes its entry into Russian market
Making its first move into Russia, Axa has paid 810 million ($1.16 billion) to acquire a 36.7 percent stake in Reso Garantia (Reso), a general insurer boasting Russias second-largest agent network Also in Axas sights is an entry into the Russian life insurance and savings market via a joint venture (JV) to be formed with Resos shareholders This strategic investment is an excellent opportunity for Axa to enter the Russian insurance market, which offers strong growth prospects and a favourable business environment, said Henri de Castries, chairman of Axas management board
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The good life is taking its toll
Rising life expectancy has come to be taken for granted, especially in developed economies However, economic prosperity has been accompanied by a rising prevalence of obesity in many countries and with it an increase in obesity-related disease that some experts warn could reverse rising life expectancy Reinsurance group Swiss Re has termed obesity an escalating global epidemic and one too significant for the life insurance industry to ignore
South African insurers stage a comeback
South African insurers stage a comeback South African life insurers could have regained the confidence of consumers, believes Gerhard Joubert, CEO of industry body the Life Offices Association (LOA) According to the LOA, new recurring premium RA funds of ZAR747.1 million ($115 million) were recorded in the first half of 2007, up 36 percent compared with the same period last year
SEC regulation a mixed blessing
Rule 151A, the US Securities and Exchange Commissions (SEC) proposed regulation that would classify indexed annuities as securities, has far-reaching implications for the insurance industry, believes Rachel Alt-Simmons, research director in the insurance practice at consultancy TowerGroup Alt-Simmons explained that indexed annuities have offered investors a middle-ground option between low-return fixed annuities and variable annuities that are fully exposed to market volatility
A tough road to economic recovery
Klaus Schmidt-Hebbel, the Organisation for Economic Co-operation and Developments (OECD) recently appointed chief economist, has delivered a message of hope for global economic recovery tinged with a strong element of caution. Our OECDs base scenario is built on the premise that the current freeze in short-term financial markets will be resolved in a relatively short time span, but that bank deleveraging and recapitalisation, as well as re-building of trust in the markets, will take much more time, said Schmidt-Hebbel. He continued that the OECD expects a significant weakening in the world economy, with many OECD economies slipping into recession sooner or later. He added that economic recovery will be slower than in recent economic downturns, though the actual pace of recovery will depend largely on how quickly financial markets resume transactions and lending, even if that lending remains relatively restricted.
Swiss Life targets accelerated growth
A share buyback totalling CHF2.5 billion ($2.4 billion) over the next two years and a bolstered distribution structure are among key inputs into Swiss Lifes strategy to achieve average annual earnings per share growth of 12 percent and maintain return on equity at above 12 percent While these objectives could be viewed as conservative, they represent a show of confidence from Switzerlands largest life insurer, which has recovered well from net losses of CHF1.7 billion in 2002 and CHF115 million in 2001 The targets were announced at an investors day held in December 2007 and followed Swiss Lifes recent sales of its private banking unit, Banca del Gottardo, to Italian insurer Assicurazioni Generali for CHF1.875 billion and of its Belgian and Netherlands units to Netherlands bancassurer SNS Reaal for 1.45 billion ($2.12 billion) to 1.54 billion.