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Two articles you have to read…

With the NAIC Summer Meeting coming up this weekend and the Alliance Annual Meeting following quickly on its heels, there is just not much time for writing creative blog posts. Fortunately, I came across two terrific articles this past week that addressed two important topics better than I could have on my own. I wanted to share them with you because they provide such profound insights into our business.

The first is a blog post written by my colleague Faye Lageu of the International Cooperative and Mutual Insurance Federation (ICMIF). The topic is “Corporate Social Responsibility” and the often overlooked role that insurers – life, health, and property-casualty – play in this arena. I know in my 25+ years in public affairs for the property-casualty industry, I was always a little miffed that the media (and a few self-serving politicos) seemed to seize on the opportunity to pillory the entire industry when a questionable claim was denied (such as the “wind vs. water” debate that occurs after almost any major storm), but failed to notice that the massive rebuilding efforts after any major disaster were financed almost entirely by insurance claim checks.CSRNow that I represent fraternal life insurers, “Corporate Social Responsibility” is even more relevant to me. Because for fraternal insurers and their millions of members, the simple act of purchasing a life insurance certificate or annuity helps secure a family’s financial future AND fund community engagement activities that improve the lives of others. It’s a dual benefit system: in the here-and-now and in the hereafter. Not a bad deal…

The second is a more troubling piece that appeared in The New York Times earlier this month entitled “When Your Life Insurance Gets Sick.” If you didn’t expect The Times to write a glowing piece about the life insurance industry, you won’t be disappointed. But the article does point out one of the most vexing challenges facing every insurer – fraternal and commercial – operating anywhere in the world: low interest rates.

low interest rates

The compelling quote: “Interest rates are at near zero and in some places have turned negative – unprecedented until recent years. It is contributing to a crisis moment for a business once considered a bedrock of financial stability and an industry that supports the retirement of millions. In particular, companies that sell policies that run for decades…face a twofold challenge: how to fund policies that were sold back when their actuaries couldn’t envision a world of interest rates below 8 percent, and what to sell now, when those same actuaries can’t envision an appreciable rise in rates anytime soon.”

I welcome your comments on either or both of these articles. Post a comment here or send me a personal email at jannotti@fraternalalliance.org.

Next week’s post: a last minute primer on the Annual Meeting.

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