Insurance Business America takes a look at three of the stories that slipped under the wire this week, but are nonetheless important for producers to know.
A new study from the Federal Reserve Bank of Minneapolis claims the US life insurance industry may be posing huge and poorly understood risks to the nation’s financial system.
“Although these risks have been growing rapidly over the past 15 years, they have received relatively little attention from academics and regulators,” said researchers Ralph Koijen of London Business School and Motohiro Yogo of the Minneapolis Fed. “If unaddressed, these risks could cause severe problems.”
Yogo and Koijen noted that insurance firms make up a large portion of the financial sector, with liabilities totaling $4.1 trillion in 2012—compared with $7 trillion in savings deposits.
“As the largest institutional investors in the corporate bond market, insurance companies serve an important role in real investment and economic activity,” the authors wrote.
The study highlighted the so-called “captive reinsurance” sector as among the most potentially risky, which some critics say allows insurers to “set up off-balance-sheet entities, known as ‘captives,’ subject to more advantageous accounting standards and capital regulation” in some states.
“By moving liabilities from operating companies that sell policies to captives, a holding company as a whole can reduce its required capital and increase leverage,” Yogo and Koijen said.
Voluntary benefits sales grew 13% last year, bringing in $4.3 billion, according to a new study from LIMRA released this week. Accident, critical illness and vision products led the way, with sales growing by double-digits for the third year in a row.
LIMRA attributed the growth to employers’ wariness of the Affordable Care Act, and voluntary benefits’ status as “the best option for employees to maintain their overall insurance coverage.” According to an earlier LIMRA survey, 60% of employees prefer to buy health and life insurance benefits at work, while three out of four employers say they intend to change their medical plan design in the near future.
The real growth opportunity in voluntary sales lies in the enterprising agent or carrier who sets up worksite visits to reach the under-served middle market.
The government will likely meet its goal of 6 million healthcare signups by the March 31 deadline, analysts said Wednesday. According to Avalere Health CEO Dan Mendelson, the Obama administration may be in for some even better news.
“It’s clear that March is going to be better than February. They could do something over six,” Medelson told USA Today.
Indeed, on Tuesday alone, 1.2 million people visited HealthCare.gov and—what’s more—the beleaguered site managed to handle the capacity.
The Department of Health and Human Services previously expected to enroll 5.4 million people by March 31, after adjusting estimates to reflect February’s poor enrollment statistics.
The new numbers follow a series of increased efforts on the part of the White House to advertise the deadline, including President Obama’s appearance on the online “Between Two Ferns” interview with actor Zach Galifianakis.
