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COVID-19 might seem like a distant memory but for life insurance executives unexpectedly high mortality rates remain a stubborn reminder.

And it’s starting to look like it might not correct itself anytime soon.

During recent third-quarter earnings calls, life insurance executives conceded that mortality assumptions might need to be reconsidered in light of new data.

In particular, a recent Swiss Re Research Institute report concluded that excess mortality is likely to persist for as long as another decade. Excess mortality is a data point that insurers watch very closely.

“Under an optimistic scenario, we find that U.S. and U.K. pandemic-linked excess mortality would disappear by 2028, reverting to pre-pandemic mortality expectations,” Swiss Re concluded. Under a pessimistic scenario, we expect excess mortality to remain elevated until 2033, above pre-pandemic expectations.”

Yanela Frias is executive vice president and chief financial officer for Prudential. During a recent call with Wall Street analysts, she confirmed that the insurer is now taking the long view of mortality.

Accurate and conservative mortality assumptions are a pillar of the life insurance paradigm because they guide financial planning.

“The observations and the expectations from the report are consistent with our internal view and with the approach that we have taken our mortality assumptions,” Frias said. “We have experienced mortality that is broadly in line with expectations since updating our mortality-based table assumptions in 2022.”

The individual life insured population is less impacted by COVID-19 than the general population, Frias explained. But Prudential’s PRT mortality experience “has trended heavier in 2023 that is consistent with continued excess mortality,” she added.

Variety of COVID-related causes

In a report titled “The Future of Excess Mortality After COVID-19,” Swiss Re researchers developed methodology for cross-country comparison of pandemic-era excess mortality.

The data revealed four key patterns: in the United States, excess mortality peaked early and declined rapidly. In contrast, the United Kingdom’s early peak was followed by a slower decline. Australia delayed its peak by close to two years and achieved a quick decline. Canada reported very low excess mortality in 2020, with a gradual increase peaking in 2022 and 2023, “reflecting a late peak and slow decline,” the report said.

“These patterns correlate with countries’ responses to COVID-19, specifically the timing and effectiveness of preventive measures and the rate at which mortality returned to expected levels,” researchers wrote.

The pandemic “significantly altered” the causes of excess deaths, the report concluded. Respiratory mortality accounts for the largest share of excess deaths each year since 2020, researcher wrote.

“However, we find evidence of inconsistency in the causes of death recorded over this period, with signs that other causes of death were misclassified as COVID-19,” the report said.

Both the U.K. and U.S. saw a “large, unexplained jump in deaths attributed to cardiovascular disease” since 2020. Some countries also reported excess mortality for other major causes of death, such as cancer, the report stated.

“Based on current medical trends and expected advancements, we conclude that COVID-19 is still driving excess mortality both directly and indirectly,” the report concluded. “In the long term, lifestyle factors that contribute to poor metabolic health and lead to obesity and diabetes may become another compounding factor in population excess mortality.”

Regulators baffled

Regulators and actuaries continue to work on mortality improvement projections for the National Association of Insurance Commissioners. And the data continues to evade straightforward analysis, said Marianne Purushotham, corporate vice president for statistical analysis and modeling for LIMRA.

“We’ve always run into the issue of the fact that when you’re measuring the change in mortality over time, the industry data has a lot of what we as a subgroup call ‘noise,’” she said, “but what it really is is changes in the industry over time, and so we don’t want those changes in the industry … to be measured as mortality improvement.”

Examples include things like underwriting definitions, changes in the risk class structure, changes in markets and distribution in the marketplace over time, she added.

Purushotham presented historical mortality improvement and future mortality improvement data to the Life Actuarial Task Force at the NAIC fall meeting last month. She is chair of the NAIC Mortality Improvement Life Working Group.

The group is using predictive modeling to help better analyze mortality data, Purushotham said. Three models were created, she explained: one for the term business, one for post-level term business, and one for permanent products.

The five primary industry change factors identified across all products were face amount, risk class, issue age, risk class, and face amount. A tool was created to normalize these factors, but all five cannot be normalized at the same time, Purushotham said.

‘All seem reasonable’

With the available data they have, actuaries are still finding oddities in long-term mortality rates. For example, ages 50-70 reveals a dip in the mortality rate, something that has “been appearing over decades,” Purushotham said, without any viable reason.

“There’s a lot of people making guesses, and they all seem reasonable,” she said. “Things like, maybe as you get closer to 65 you’re not yet on Medicare. Maybe Medicare helps improve it. As you hit those Medicare ages, you get your health coverage increased, and you start to see improvements. But all these are all just educated guesses.”

There will be ongoing adjustments for COVID-19 based on new data that is collected, Purushotham said.

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Jolted by the New York shooting that targeted a healthcare executive, health insurance companies are employing new and rigid security procedures. Companies have removed information about their executives from websites, canceled public meetings in favor of online sessions, and are briefing employees on new safety methods and tactics when traveling or appearing in public.

What they aren’t doing is talking about it. None of the top health insurers contacted for this story responded to questions about security and fears rising in the wake of the shooting. Nor would they comment on the eruption of outrage, even celebration or the killing, aimed at health insurers following the murder of UnitedHealthcare CEO Brian Thompson last week.

Police arrested a 26-year-old Masters honor student, Luigi Mangione, and charged him with murder and various firearms offenses on Tuesday, five days after surveillance videos captured what appeared to be him gunning down the executive outside a Manhattan hotel.

When caught, police say they found a handwritten manifesto raging against the “delay, deny, and depose” tactics to avoid claims the alleged killer said insurers unfairly use against their own customers. Those words were etched into bullet casings left at the scene of the crime, police said.

Lifting a veil off latent hostility

The shooting has lifted a veil off the latent hostility many have toward healthcare providers and insurers.

Some health insurance companies have undertaken efforts to make their executive staff less visible. UnitedHealthcare, CVS, owner of Aetna, and Elevavance Health, the parent company of Anthem Blue Cross and Blue Shield, along with Medica, removed web pages highlighting pictures and bios of their senior leadership. Some insurers are hiring armed security personnel for executives as they travel and commute to work from their homes. Others have increased social media monitoring for potential threats.

Centene Corp., a top healthcare company based in St. Louis, said its Investor Day would be hosted virtually on Thursday instead of the planned public meeting.

Medica, a Minnesota-based nonprofit health care firm, said it would temporarily close its six offices for security reasons and have its employees work from home.

Security: ‘An abundance of caution’

“Although we have received no specific threats related to our campuses, our office buildings will be temporarily closed out of an abundance of caution,” the company said in a statement.

But the anger toward insurers that erupted in the wake of the shooting is more often directed at the large for-profit insurers, which pay enormous salaries to their top executives and have large denial rates, which some consider excessive.

UnitedHealthcare, for example, has a claims denial rate of 32%, according to available in-network claim data for plans sold on the marketplace and compiled by ValuePenguin. Data show Medica with a 27% denial rate; Anthem 23%, Aetna 20%, and Cigna 18%.

By comparison, giant health care provider Kaiser Permanente denies only 7% of medical bills, according to the data.

The most common reasons for claims denials were no prior authorization, physicians not covered by the plan, coding issues, and claims made too late.

But a bigger question stemming from the murder was whether the highly publicized incident would bring meaningful change to health insurer polices and practices. Some theorized that Thompson’s killing could usher in changes the way the assassination of President James Garfield led to major civil service reforms.

But moving the giant and embedded health care industry would be a much bigger slog, advocates say. Already UnitedHealthcare was under fire by the Department of Justice, which sued the company over its $13 billion acquisition of Change Healthcare, a health insurance claims processing center and clearinghouse. The DOJ sought to block the acquisition on antitrust grounds, but the company prevailed, and the Change deal was completed.

It is still facing class action lawsuits relating to the acquisition and its alleged “monopolistic powers.”

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Middle-income households are generally applying strong retirement savings habits and behaviors, even as they balance competing financial priorities, according to a survey from Principal Financial Group.

According to the survey, Principal Real Life Retirement Journeys, 77% of middle-income households (those with between $50,000 and $99,999) are saving for retirement at an average rate of 7.8% of their income before receiving additional contributions from their employers. In addition, 40% of the middle-income household respondents anticipate that their retirement will be better than the one they first envisioned.

Principal reviewed the survey findings in tandem with personal finance expert Jean Chatzky, CEO and founder of HerMoney, who shared: “As vital as our family and friends are to helping shape our values, beliefs, and opinions, there are often limitations on both what they know and what they can do to support our financial goals. Individuals who use resources offered through their employer’s plan – in some cases at no additional cost – or who get help from a financial professional typically express higher levels of confidence in their ability to make decisions and reach their goals. It’s important for people to understand their access to help does not depend on their age or how much money they have.”

Why are middle-income households exceeding their retirement savings expectations even when other groups do not appear to be saving enough for retirement?

“Access to a workplace retirement savings plan is the key,” explained Teresa Hassara, senior vice president of workplace savings and retirement solutions at Principal. “Of the 1,000 Americans we surveyed, 88% are saving for retirement, with 89% of those individuals utilizing their employer’s retirement plan. This is double the number of people using IRAs (45%) and is three times more than those with a pension (27%).”

When looking across income bands, there are multiple areas in which middle-income households are managing their finances and expectations similarly to households with higher income, Hassara added. Compared to their first ideas about what retirement could look like, 40% of middle-income households believe their actual retirement will be better, which is only 2% lower than households with an annual income between $100,000 and $199,999, Hassara said.

Reliance on Social Security reveals signs of optimism, too, she added. Slightly more than 1-in-4 middle-income households (27%) expect to rely exclusively or quite a bit on Social Security versus 28% of individuals with a household income of between $100,000 and $199,999.

Additionally, Hassara pointed out, the survey results found that people who rate their employer as the most helpful source of information are less likely to say that saving for retirement was a financial burden when they started. “This is important because people across all income bands share the similar challenge of making financial sacrifices to save for retirement – 59% of middle-income households versus 54% for households with an annual income of at least $100,000 – and non-savers are half as confident in their ability to manage finances,” she said.

Retirement savings habits

According to the survey results, middle-income households are making positive and meaningful decisions to save for retirement even as they balance competing financial priorities, Hassara pointed out. First, she said, a high percentage, 77%, are currently saving for retirement. “Their average savings rate is 7.8% of their annual income, putting many within range of a recommended minimum savings rate of 15% when you include the typical employer match, which was an average of 5.9% for the middle-income households participating in the survey.

Another positive behavior that the survey revealed is how early middle-income households first started saving for retirement, Hassara said. “On average, they began to save at 26.2 years old. This is important because time is the biggest advantage individuals have when it comes to saving for retirement,” she said.

Individually, each of these survey findings is encouraging but, in combination, they tell a powerful story of how the U.S. retirement system is working well to create positive retirement outcomes, according to Hassara. The combination of access, education, financial wellness tools, and advice services, has created meaningful changes in behavior that is delivering progress.

But households are still withdrawing funds

While the survey results illustrate positive momentum for retirement savings, it also found that nearly one-third of middle-income households have made a withdrawal from their retirement accounts to adjust for changes in their personal financial situations.
Of those middle-income households who reported taking a withdrawal, the four most common reasons were to:

1. Address large purchases that were not optional such as urgent home or car repairs (38%).
2. Cover lost income due to the loss of their job or their spouse’s/partner’s job (30%).
3. Repay medical debt (18%).
4. Pay for expenses related to an adult child or parent (18%).

Making things better

So, what can advisors do to help middle-income consumers further exceed their retirement-savings goals? When indicating how helpful different sources of information are to them, using financial professionals is associated with the highest levels of confidence, Hassara noted. Seven out of 10 individuals said financial professionals had all the information needed to help them start saving for retirement while 8-in-10 (82%) said that financial professionals provided confidence they were making the right decisions. “Those are strong marks of trust that we believe can extend into other areas of support,” Hassara said. These include:

• Ongoing advice at scale: Beginning to save for retirement is a big step, but it is only the first step in creating a nest egg for retirement, Hassara said. Life will happen and helping people balance a variety of competing financial priorities such as student loan debt, unexpected medical expenses, or saving for a big purchase can help them stay on a positive path forward. “With more individuals expecting and seeking advice to help them manage their unique financial situations, financial professionals have an immense opportunity to harness the confidence individuals gain from working with them in more ways,” she added.
• Personalize the experience: Retirement is not a one-size-fits-all conversation, Hassara said. “The more we can personalize and tailor experiences to meet the unique needs of individuals, the better we believe their outcomes could be. This ranges from education and communication all the way to investment strategies and planning for income in retirement.”The survey had responses from 1,000 employees between the ages of 18 and 64, with pre-tax household incomes of $50,000 or more, who are currently working or who have previously worked for an employer who offers or offered retirement savings benefits. It was conducted online between August 23, 2024, and September 1, 2024.

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The widow of a New York City man who committed suicide last summer by jumping off a building is suing brokers and insurers for allegedly selling him improper annuities.

Joan Jacobson claims her late husband Jay suffered from dementia and was preyed on by a trio of brokers. The brokers sold Jay Jacobson $2 million worth of annuities from 2019 and 2023, Joan Jacobson said, with no death benefits.

Jay Jacobson, 79 at the time of the initial annuity purchase, clearly suffered from dementia, his wife said in the lawsuit filed in New York Supreme Court.

“At the times these annuities were sold, [Jay Jacobson] was unlikely – by virtue of his advanced age and dementia – to live more than five years, let alone the near decade necessary to recoup just the muti-million dollar principal outlay,” the lawsuit states. “These annuities were objectively not in [his] best interest and the recommendations to purchase them are unjustifiable.”

On July 27, Jacobson, 84, committed suicide by jumping from a penthouse apartment at the Anagram Columbus Circle at 1 West 60th Street.

Interestingly, the lawsuit ascribes “fiduciary” status to the brokers who sold the annuities. New York adopted Regulation 187 in 2019. It requires insurance producers to act in the “best interest” of their clients when recommending life insurance and annuity products. While similar to a fiduciary duty, the rule does not technically state as much.

“At all times, a fiduciary relationship existed between [Jacobson] and defendants both at common law and statutorily,” the complaint says. Regulation 187 “required defendants to act in [Jacobson’s] best interest, thereby establishing a fiduciary duty.”

The Nov. 15 lawsuit initially named brokers Michael Venable, Ronald Heywood and Michelle Lister, along with USAA Life Insurance Company, New York Life Insurance and Annuity, Charles Schwab, Fidelity and Massachusetts Mutual Life as defendants.

On Friday, Joan Jacobson’s attorneys filed a partial voluntary discontinuance dropping Heywood, Lister, and Charles Schwab from the lawsuit.

Among the companies, only Charles Schwab responded to a request for comment.

“While Schwab disputes the allegations in the Complaint, we express our deepest condolences to Mr. Jacobson’s loved ones for their loss,” the company said in a statement.

‘Would perform better’

Jay Jacobson bought his first annuity named in the complaint in 2019, a New York Life product sold through Heywood, a Charles Schwab broker, the lawsuit states.

The broker told Jacobson that the annuity “would perform better for him than a reasonably invested securities portfolio,” the lawsuit says. Those claims were false, Joan Jacobson alleges, because the annuity “had no death benefit and would take nearly a decade to simply recoup [the] principal investment amount back.”

Heywood “knew or should have known that the S&P 500 has historically returned roughly double-digit returns on an annualized basis, and even most conservative certificates of deposit would return several percentage points annually while providing FDIC guaranteed protection of principal.”

The New York Life annuity contract began July 24, 2019, the lawsuit states, and Jacobson was to receive monthly payments of $4,285.06 per month until his death and “nothing thereafter.”

In 2021, Heywood returned to sell Jay Jacobson another annuity, the lawsuit says, this time a MassMutual annuity with similar terms. The $500,000 MassMutual annuity took effect June 21, 2021, and paid Jacobson $4,630.67 per month until his death and nothing thereafter, the lawsuit says.

In 2022, Jacobson bought a $500,000 USAA annuity from Lister, the lawsuit says. It took effect on Aug. 19, 2022 and paid Jacobson $5,427.31 per month until his death and nothing thereafter.

A year later, Jacobson allegedly bought another $500,000 New York Life annuity from Venable. It took effect May 10, 2023 and paid Jacobson 5,413.59 per month until his death and nothing thereafter, the lawsuit states.

Heywood deferred comment to Schwab, but the other brokers could not be reached for comment.

Dramatic suicide

Joan Jacobson was named executor of her husband’s estate after his dramatic suicide.

The New York Post reported that Jacobson, who had run a professional staffing company, landed on a third-floor balcony.

Following his death, attempts were made to reverse the annuity sales, the lawsuit says, but none of the insurers would return any money.

“At the time of his death, [Jay Jacobson] had received little benefit from the $2,000,000 he invested in the Annuities sold to him by Defendants, receiving relatively few payments before his untimely death,” the lawsuit says.

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Police announced an arrest today in connection with the brazen midday shooting death of UnitedHealthcare CEO Brian Thompson Wednesday in Manhattan.

According to the New York Times, Luigi Mangione was eating at an Altoona, Pa. McDonald’s when an employee recognized him. The 26-year-old man was in possession of a “ghost gun” and a fraudulent New Jersey I.D. that matches the one the suspect used to check into a NYC hostel.

“It does seem he has some ill will toward corporate America,” Joseph Kenny, NYC chief of detectives, told the Times.

Thompson was on his way to an investor conference at the New York Hilton Hotel when an gunman ambushed and shot him in the chest, NYC police say.

The shooting death sharpened the focus on how healthcare is delivered in the United States. UnitedHealth is noted for rejecting claims. Investors are also unhappy with the healthcare giant.

A class-action lawsuit initially filed in May, but amended as recently as last month, claims UnitedHealth executives kept secret a “non-public antitrust investigation into the company” by the Department of Justice, the lawsuit states. That investigation was launched in October 2023.

“Concealing this material information from investors and the public, UnitedHealth chairman Stephen J. Hemsley and several other senior executives immediately took action – selling more than $100 million of their own UnitedHealth stock at artificially inflated prices as the market and other investors remained unaware of the new federal antitrust investigation,” the lawsuit claims.

When the Wall Street Journal exposed the investigation in a Feb. 27, 2024 article, the price of UnitedHealth stock declined over $27 per share, falling from $525.32 per share on Feb. 26, 2024 to $498.28 on Feb. 28, 2024, the lawsuit notes.

The lawsuit class includes any owners of UnitedHealth Group shares between Sept. 22, 2021 and Feb. 27, 2024. During this time, Thompson sold over 31% of his UnitedHealth shares for proceeds of over $15 million, the lawsuit says.

Thompson, 50, was named CEO for UnitedHealthcare in April 2021. Prior to taking that role, he served as CEO of UnitedHealthcare government programs, including Medicare & Retirement and Community & State. Before leading government programs, Thompson served as CEO of UnitedHealthcare Medicare & Retirement.

Thompson joined UnitedHealth Group in 2004 and has held numerous leadership positions including chief financial officer for UnitedHealthcare’s Employer & Individual, Community & State and Medicare & Retirement businesses. In addition, Thompson has served as the financial controller for UnitedHealthcare’s Employer & Individual business and a director in Corporate Development.

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Life insurance with either long-term care riders or chronic illness riders are picking up steam in the marketplace, said Steve Cain, national sales leader with LTCI Partners.

Cain spoke about the rising interest in hybrid life policies during the National Association of Insurance and Financial Advisors Peak 65 Impact Day.

“Most clients like the idea of a dual-purpose policy,” he said. “Life with chronic illness rider is seeing the lion’s share of the new business written but I still think there’s a time and a place for traditional long-term care insurance.”

Cain cited LIMRA’s 2023 annual individual long-term care sales survey, which showed that 68% of new policies sold that year – more than 342,000 policies – were life/chronic illness combination policies. Twenty-five percent – about 126,000 policies – were life/LTC combinations while only 7% – about 34,000 policies – of new sales were traditional individual LTCi.

Consumers have several LTCi planning solutions available to them, Cain said. Those solutions include:

• Short-term care insurance.
• Traditional LTCi.
• Hybrid life plus qualified long-term care insurance.
• Life insurance with chronic illness/accelerated death benefit or QLTCi riders.
• Annuities with LTC riders.

Short-term care insurance is growing in popularity, he said. These policies may be suitable for an older client who has some health concerns. Discussing STC with an older client would be a complimentary discussion to a Medicare conversation.

Hybrid life and annuities with LTC riders are seeing some growth in the marketplace, Cain said. “Our job is to look through these and find the right solutions for your clients,” he said.

Cain said that to find the product that is the best fit for a client, advisors must ask the following:

• What is the client’s health condition?
• How much coverage does the client need now and at age 85?
• Does the client need life insurance?
• What is the client’s budget?
• Is the client comfortable paying for a “pure protection” product?
• Are premium guarantees important to the client?

Buying long-term care coverage is “a mind share and a wallet share issue,” Cain said.

“I have to think about protecting my family, but beyond that, I have to be able to afford it.”

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Americans held $33 trillion in individual retirement accounts in 2022, and many of those IRA holders have yet to withdraw their funds and pay taxes on them.

With the total debt of the U.S. federal government standing at $35.46 trillion in 2024, Washington is interested in having fewer IRA beneficiaries stretch their inherited assets.

In July, the IRS issued final regulations on the SECURE Act, which included updating the rules on taking required minimum distributions from IRAs and eliminating the stretch provision for many IRA beneficiaries.

Ann Hagerty, advanced sales counsel with Securian Financial, gave a rundown on the new regulations during a recent webinar by the National Association for Fixed Annuities.

Rules depend on owner’s RBD

Many of the rules surrounding inherited IRAs depend on whether the original owner died before or after their required begin date, she said. Hagerty went on to explain the types of IRA beneficiaries effected by the SECURE Act’s changes to IRA stretch rules.

Two types of IRA beneficiaries are impacted by changes to the stretch rules, she said. They are non-designated beneficiaries and non-eligible designated beneficiaries. Eligible designated beneficiaries are still able to stretch an IRA.

Non-designated beneficiaries

Non-designated beneficiaries are entities and not people. They include the deceased IRA owner’s estate, a charity or a nonqualifying trust. Hagerty explained the post-death payout rules for these beneficiaries.

• If the IRA owner or plan participant dies before the owner’s required beginning date, the account must be withdrawn under SECURE’s five-year rule.
• If the owner dies on or after the RBD, required minimum distributions must be taken over the deceased owner’s remaining single life expectancy. This is often known as the “ghost rule,” Hagerty said.

Non-eligible designated beneficiaries

These beneficiaries are any nonspouse beneficiaries who don’t qualify for the IRA stretch under the current rules. “SECURE brought the hammer down on these folks because they can no longer stretch the IRA they inherit,” Hagerty said.

Non-eligible designated beneficiaries include grandchildren, older children and qualifying trusts. Under the new rules for these beneficiaries, the beneficiaries must withdraw funds from the IRA over a 10-year period defined as ending on Dec. 31 of the 10^th year following the original IRA owner’s death.

• If the original owner died before their RBD, beneficiaries are not required to take RMDs but all distributions must be completed before the end of the 10-year period.
• If the original owner died after their RBD, the beneficiary must take RMDs based on their own life expectancy in years 1 through 9 and take the final distribution before the end of the 10-year period.

Eligible designated beneficiaries

These are what Hagerty described as “the VIPs of beneficiaries,” and are able to stretch an inherited IRA under SECURE rules. Eligible designated beneficiaries include surviving spouses, minor children, disabled individuals, chronically ill individuals and individuals not more than 10 years younger than the IRA owner.

A surviving spouse has the most options when inheriting an IRA, Hagerty said. One option is taking a spousal rollover, which includes transferring the assets into a new IRA or the surviving spouse’s existing IRA. The IRA assets can continue to grow tax-deferred and the IRA will be subject to normal IRA distribution rules if the surviving spouse is under age 59½. A spousal rollover is not a good option for a surviving spouse under 59½ because they will be subject to a 10% penalty if they withdraw funds from the IRA before reaching age 59½. But a spousal rollover can be done anytime after the surviving spouse reaches age 59½ and that IRA will be treated as the spouse’s own.

If the spouse keeps the IRA as an inherited IRA, no 10% early distribution penalty applies, so this is a good option for a younger spouse who needs distributions, Hagerty said. Mandatory RMDs are taken over the spousal beneficiary’s single life expectancy unless they are more than 10 years younger than the original owner, in which case they would use the joint and last survivor table.

SECURE’s final regulations define a minor child as an eligible designated beneficiary until their 21^st birthday. The minor child must be the child of the original IRA owner, Hagerty said. After the child no longer qualifies as a minor, they must take RMDs based on their life expectancy during the 10-year period regardless of when the original IRA owner died. If multiple minor children of the IRA owner are beneficiaries, a full distribution under the 10-year rule occurs when the youngest child reaches age 21.

Eligible beneficiaries who are disabled or chronically ill must have had their disability or illness at the time of the IRA owner’s death in order to take advantage of IRA stretch eligibility.

“The SECURE Act is really a down payment for the deficit because we have these unpaid taxes on IRAs,” Hagerty said. “We are shifting when people are taking money out of IRAs. Washington is looking at this from the perspective of ‘we’re trying to get this IRA money out faster in larger portions at a higher tax rate.’”

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While many insurtechs and insurers leveraging AI are considering whether to build or buy their solutions, an industry leader said the decision should ultimately be guided by how they intend to use the technology.

“I think insurtechs will be looking around and thinking [about] do we get to 100% coverage of AI supporting our business,” Erez Barak, CTO, Earnix, said.

While he believes a hybrid solution may be the best option, he suggested a general guideline for businesses to keep in mind.

“Map your business to where you have coverage and where you don’t. The more urgent, and I’d say more complex and deep areas, that’s where buy would probably trump the case. The more customized, more flexible, maybe not as complex but super important areas, maybe build is where you want to play,” he said.

Are Gen AI and AI the same?

One of the first considerations insurance businesses have to keep in mind is the distinction between AI and generative AI.

Artificial intelligence is a form of technology capable of interpreting human input and responding in kind, whether through actions or output.

Generative AI, on the other hand, wields creativity to create text, images and other types of content. It’s the specific form of AI being used by increasingly popular tools such as chatbots or deepfake software.

However, Barak suggested the distinction may not be as important as having both AI and GenAI work together to drive productivity.

“I think, broadly, you want intelligence everywhere. That’s where the world is heading, the ecosystem is heading and we’re heading as an industry. But I think different types of AI, GenAI versus others, will together serve the global needs and we won’t find ourselves comparing which one’s which,” he said.

Is building a solution feasible?

While the idea of building an AI solution may seem ideal, Leandro DalleMulle, VP and global head of insurance, Planck/Applied Systems, pointed out that it can come with downsides.

“In the earlier days of AI, building systems in-house was often a viable option… For industries that relied on bespoke solutions, building their own AI systems offered a competitive edge,” he noted.

However, the development of GenAI has “changed the game.”

“Training foundation models, such as large language models, is an entirely different level of complexity. These systems require enormous datasets… The cost of training a state-of-the-art GenAI model can run into hundreds of millions or billions of dollars, with ongoing expenses for fine-tuning and maintenance. For most organizations, this makes building GenAI systems from scratch financially and technically infeasible,” DalleMule said.

Simple vs complex AI needs

Despite the challenges, building an AI solution may be an option for companies who have specific needs and can function with simple models, according to Barak.

“In some other areas, building your own co-pilot, even using simple techniques or building some simple models that allow prediction, may make more sense with an internal data science team that can go faster, be agile in terms of changing needs and also provide a very customized solution,” he explained.

Businesses may be better off buying a solution for more complex and urgent needs, where there is less flexibility and more depth at play, Barak suggested.

Consider a hybrid option

Both experts noted that companies do not necessarily have to choose between exclusively building or buying, as they can opt for a solution that combines both.

“Companies are increasingly turning to ‘buy and customize’ strategies… Customization options, such as fine-tuning a model with proprietary data or integrating APIs, allow organizations to achieve tailored results without shouldering the astronomical costs of full-scale development,” DalleMule said.

“What you want to do is have this tapestry of areas, see where you want coverage first, look at the time dimension, the complexity dimension, the maturity dimension and build a portfolio of build versus buy,” Barak added.

He emphasized that there is no one correct answer for everyone, as some companies choose to buy everything while others choose to build everything. However, he said most of Earnix’s client base tends to take a mixed approach based on unique considerations and business priorities.

Assessment comes first

Although the build vs buy question is crucial, Barak said it’s secondary to determining how the company will leverage AI technology — which is increasingly becoming a question of “when” or “how” rather than “if.”

“My advice would be to work with the belief that 100% of your business is going to be supported by AI. You’re not going to be an AI business, but if you want to be in business, if you want to compete, if you want to innovate quickly, you want to have AI in every aspect of your business,” he said.

Earnix, founded in 2001, is a global insurance and banking operations provider based out of Israel.

Applied Systems is an insurance and technology software company founded in 1983 and based in Chicago. In July 2024, Applied Systems acquired Planck, an American insurance AI solutions provider.

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With sales of annuities exploding to record levels, it’s probably no surprise that in the first nine months of 2024 total annuity sales increased 23% to $331.2 billion, and are on pace for another record-breaking year, according to LIMRA’s U.S. Individual Annuity Sales Survey.

Total U.S. annuity sales reached a record-high $385.4 billion in 2023, ballooning 23% year over year, according to LIMRA’s U.S. Individual Annuity Sales Survey. Insurers last year paid out $104 billion in annuity benefits, the most ever, and a nearly 10% increase over 2022 benefits.

“Annuities have been available for more than a century, though in many ways you could say they are finally being understood as a retirement product for most everyone,” said David Chavern, president, and CEO of the American Council for Life Insurers. “For example, research shows that people retiring with $250,000 or less would most benefit from annuitizing higher portions of their retirement savings, if not all of it.”

Interestingly, ACLI data show life insurance purchases and in-force coverage increased in 2023 to record levels, while life insurance death benefit payments decreased nearly 3 percent to $89 billion.

Traditional pensions ‘declining’

“Traditional pensions that guarantee retirees income for life are declining. Couple that with the Peak 65 era we are in today with 11,200 on average daily reaching age 65 and it is clear why Americans are dedicating more of their savings to annuities. They want guaranteed sources of retirement income,” Chavern said.

LIMRA announced Thursday that total retail life insurance new annualized premiums jumped 6% to $3.9 billion in the third quarter 2024. The number of policies sold in the third quarter was level with the same period in 2023.  Year to date (YTD), new premiums topped $11.6 billion, up 1% over the prior year’s results.

“Following solid third-quarter results and strong preliminary October sales figures, LIMRA expects 2024 will mark the fourth year of record-high new premium collected for the industry,” said John Carroll, senior vice president and head of Life & Annuities, LIMRA and LOMA. “Barring an unforeseen economic downturn, LIMRA is forecasting life sales to grow in 2025.”

VUL new premium rises

Variable universal life (VUL) new premium totaled $668 million in the third quarter, 41% higher than third quarter 2023. Accumulation-focused products drove much of the sales this quarter, prompted by the continued growth in the equity markets. The number of policies sold rose 3% in the quarter. Year-to-date, VUL new premium jumped 17% to $1.6 billion and policy count increased 4%. In the third quarter, VUL held 17% of the total U.S. individual life insurance market.

Whole Life new premium totaled $1.3 billion in the third quarter, down 3% from the prior year’s results. The number of whole life policies sold slipped 1%. YTD, whole life new premium dropped 6% to $4.3 billion. Policy count fell 4% compared with the same period in 2023.

“Whole life sales continue to struggle under higher interest rates as consumers move to products with potentially better returns,” said Karen Terry, assistant vice president, head of LIMRA’s insurance product research. “Should the yield curve return to normal next year, we expect WL sales to improve in 2025.”

In the third quarter, whole life new premium represented 34% of the total life insurance market.
Term life sales also tumbled slightly in the third quarter, LIMRA said. In the third quarter, term life new premium totaled $727 million, down 1% year over year. Policy count also fell 1%, compared with third quarter 2023. The number of policies sold increased 1% in the first nine months of 2024. Term life new premium represented 19% of total sales in the third quarter.

More details on sales results can be found at the Life Insurance Sales Growth Rates (2024 Third Quarter) in LIMRA’s Fact Tank.

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Anthem Blue Cross Blue Shield is backing down from a plan that would have set limits on the amount of time it would pay for anesthesia in certain surgeries.

In November, Anthem had told health care providers that its plans in Connecticut, New York and Missouri would no longer pay for anesthesia care if the surgery or procedure were to go beyond a specified time limit, regardless of how long the surgical procedure took. The change was to take effect Feb. 1, 2025. At the time of its announcement, Anthem said the change is part of an effort to make health care more affordable by reducing overbilling for anesthesia.

Exceptions were to be made for surgeries on patients under the age of 22 and for anesthesia administered in maternity-related care.

After an association of medical professionals went public with their concerns about the plan, a spokesperson for Elevance Health, Anthem’s parent company, told InsuranceNewsNet the insurer has “decided to not proceed with this policy change.”

“There has been significant widespread misinformation about an update to our anesthesia policy,” said Janey Kiryluik, staff vice president, corporate communications, with Elevance Health.

“To be clear, it never was and never will be the policy of Anthem Blue Cross Blue Shield to not pay for medically necessary anesthesia services. The proposed update to the policy was only designed to clarify the appropriateness of anesthesia consistent with well-established clinical guidelines.”

The American Society of Anesthesiologists, which represents 59,000 members, had called on Anthem to reverse this policy, calling it “another example of insurers putting profits over patients.”

In a news release, the ASA said payment for anesthesia services is based on several factors, including the exact amount of time for anesthesiologists to deliver care preoperatively, during the operation, and when transitioning the patient to the recovery unit afterward. With this new policy, Anthem would have pre-determined the time allowed for anesthesia care during a surgery or procedure. If an anesthesiologist submitted a bill where the actual time of care was longer than Anthem’s limit, Anthem would then have denied payment for the anesthesiologist’s care, according to the ASA. “With this new policy, Anthem will not pay anesthesiologists for delivering safe and effective anesthesia care to patients who may need extra attention because their surgery is difficult, unusual or because a complication arises,” the association had said.

ASA had urged people concerned about Anthem’s proposal to contact their state insurance commissioner or state legislator.

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