Sunday, December 6, 2015

(No.296) Joe Belth's "MEMOIR" about life insurance


"A review of Joe Belth's "THE INSURANCE FORUM:A Memoir" 
is Part 3 of the RickardsRead series
about how to buy life insurance"

by Alastair Rickard


I was for years employed in the Canadian life insurance business and at the same time I was an unlikely but persistent critic of it. I was also dismissive of certain journalists, analysts and self-appointed 'expert critics' of the insurance industry, its products and those who distributed them.

Why?

Too many of those in these categories did not (and still do not) understand many of the realities of the life insurance business. Neither in my experience did too many of senior decision-makers in the industry, some of whom were astonishingly ignorant of certain industry fundamentals like agency distribution, an ignorance often compounded by a patronizingly arrogant attitude to those who actually sold a company's core products..

As for industry critics: far too many were and are so far below the bar of expertise set by Professor Joseph Belth during his 40 years as founding editor of The Insurance Forum in the U.S. that reaching it would require jet travel. Yet the industry needs and benefits from informed criticism and commentary.

This brings me back to Joe Belth. He is the person I have long regarded as the ablest and best informed critic and analyst the modern North American life insurance industry has had. Belth is the gold standard against which I have measured myself and others.

(I wrote a column a couple of years ago when Joe marked the 40th anniversary of The Insurance Forum; see RickardsRead No. 250, "The magnificent Joseph Belth: a model for insurance critics", posted Nov. 7, 2013).    

Professor Belth has recently written and published a book of great value to any reader who wishes to understand core issues involving the life insurance business and its products in North America: "The Insurance Forum:  A Memoir". The volume deserves to be a vade-mecum for anyone, including consumers. with a serious interest in the  life insurance business (see below for details of publication and purchase).

In his "Memoir" Joe covers his life and influences but most of the book is comprised of his analysis of and reflections about more than two dozen major aspects of the modern North American life insurance business from (for example) the demutalization wave of life insurance companies through the secondary market for the buying and selling of  inforce life insurance policies to executive compensation in life companies and life insurance polucy replacement. All of the analysis and comment is informed by a truly impressive understanding of the business and its impact on consumers.

This is a book that ought to be read by every insurance regulator (whose understanding of the business they regulate is in my experience too often inadequate), and by agents/brokers as well as those industry analysts and self-styled 'expert critics' who purport to offer consumers and investors informed opinions on a business about which their views are frequently not just inadequate but defective.

Indeed, based on my experience as both a company officer and an editor (The Canadian Journal of Life Insurance) observing, working with and exchanging views with life insurance industry people at various levels, I would if it were possible make Joe Belth's recent "Memoir" required reading in the industry.

The sad reality is that many insurance company executives know less (or little more) about many of the fundamentals of the business in which they work than certain self-promoting 'expert critics' I have encountered through the years.

I have long believed that a major reason for Joe Belth's understanding of and effectiveness as a critic of the life insurance business, its products and their distribution is rooted in the fact that, before becoming involved in various capacities with education about insurance, Joe actually worked for a time as a life insurance agent. He learned first hand important realities of the life insurance business -- pro and con.

Over the years I have written thousands of words for both public and corporate consumption about a fundamental function of the business: selling stuff to people, most of whom (even in the internet age) will not take the initiative to purchase. Hence the historical and continuing centrality of the active, prospecting agency system of distribution in taking a core product -- individual life insurance as well as various other financial products -- to consumers and convincing them to purchase it to meet a need, a product still at the base of a proper financial planning pyramid.

I have never made this fundamental point as elegantly or as succinctly as Joe Belth does in the conclusion to his "Memoir". His prose is never obscure or less than understandable

Among other observations he concludes that one of the fundamental obstacles faced by the life insurance business has been and is "that the purchase of life insurance requires consumers to think about the unpleasant subject of their deaths and take action rather than procrastinate. As it is often said: 'life insurance is sold not bought'.

"The significance of this obstacle," he continues,"is that life insurnace companies must hire and train life insurance agents to seek out customers ... [and] persuade their customers to take action rather than wait until next year. I call the latter the critical but difficult anti-procrastination function of life insurrance agents.

"The further significance of this obstacle is that a life insurance company must provide the agent with  a strong financial incentive to engage in a difficult and often discouraging type of work. ... Most people die without wills because no one is compensated for performing the anti-procrastination function."

I recommend Joe Belth's book highly, including to existing or potential life insurance consumers who
seek to understand whether what they are being told involving this core product is understandable and reliable
                                                              ***

The hard cover book "The Insurance Forum: A Memoir" by Joseph A. Belth is available direct from The Insurance Forum at P.O.Box 245, Ellettsville, Indiana 47429. The price is $50 (U.S. funds).  Shipping and handling is included.

For ordering details go to www.theinsuranceforum.com and use the link to Memoirs.  


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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

previous columns and blog archive:
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