Come the end of April, I will be retiring after 30 years with National Underwriter. (And yes, Virginia, it is a voluntary retirement, thank you.)

So, this will be one of my last pieces as NU Life & Health’s Editor-in-Chief and the first of two parts of a farewell to the business I’ve been fortunate to cover for 3 decades.  What I thought I’d do is use this posting for some reflections about the life and health insurance business in general and then in another one remember some of the outstanding people it’s been my benefit to meet and be associated with in the course of these 30 years.

Let me start by saying that this has been a fascinating business to cover for a number of reasons.  For one, life and health insurance (and here I’m also including disability, ancillary coverages, annuities, etc.) have a visceral importance to people.  You can’t get more to the core of what deeply concerns people than dealing with their “life” and their “health,” and by extension, their families, what they love and what they value most. 

For another, this is a business that for one reason or another always seems to be under attack and thus in the midst of a struggle.  As a journalist I can tell you that this makes for good copy and it makes for interesting stories.  Not only do you have to cover the attacks, but also the industry’s defense and, in some cases, its counterattacks.

This situation has only been exacerbated as the shadow of Washington continues to grow over the insurance business.

For another, this is a business riddled with contradictions.  Its very basis is solemn promises and high aspirations, but the delivery on those noble ideals can run the gamut from total fulfillment to being very shabby indeed.

Society, information technology, communications—all have changed greatly over the last 30 years.  In some cases, the life and health business has kept pace with these changes, but in many other cases the industry has not changed much at all or has lost some ground.

Thirty years ago, for instance, I believe the industry was more successful in reaching the middle class, especially in terms of life insurance coverage, than it is now.  (Not that it was so great back then either.)  There’s been such a widespread emphasis among companies about reaching the well-to-do with larger policies that little if any progress has been made in increasing the reach of life insurance into the precincts of those who are lower on the economic ladder but still have families to protect.

This is a serious failing that the industry leaves unaddressed at its peril.

There is also a tendency in the business to assume that the provisions of law and the tax code upon which many of its products are built are sacrosanct.  Yet what Congress giveth, Congress can taketh away.

This of course is where a lot of that struggle that I referred to above comes in.  The further life insurance is taken from its “widows and orphans” base (i.e, as a force for good in society) to one where the product is used to facilitate all kinds of tax avoidance and other estate planning techniques makes for a more attackable industry, in my view. 

This is also a contributor to the industry’s being not well understood and as such, prey to forays by one administration after another looking for revenue and seeing in the industry a potential goldmine.

I forget who it was that first said, “The more things change, the more they stay the same.”  (I think it was some French guy.)  And while I don’t think he had the life insurance business in mind, he could have.  And that’s both good and bad.

I’ll leave you with that thought until next time.

I was originally going to headline this piece “Run, Sarah, Run.”  But then I realized what a joke it was—and a one-liner at that—so I had to turn to something else to fill the space.

And then I thought: How about the American Council of Life Insurance’s February 3 statement regarding life settlement securitizations, which uses the now-familiar Palin-esque technique of making unfounded allegations to make noise and get noticed.

The ACLI’s comment drew quick and scornful responses from life settlement industry participants.  And rightfully so.

For years now the ACLI has been engaged in a very deliberate campaign to conflate legitimate life settlements with stranger-originated life insurance transactions. 

In the early days this succeeded, largely because both settlements and STOLI were relatively new and unfamiliar and people had difficulty sorting out the two.  But people wised up as the gulf between the two widened.

Part of ACLI’s campaign has been to imply that the life settlement business as a whole is in favor of STOLI and as a whole is behind these transactions.

This of course is not true.  The Life Insurance Settlement Association has fought to have STOLI transactions banished in the various states with as much fervor as the ACLI. 

The life settlement business realized long ago that STOLI was a poison that would choke off the growth of legitimate business if it were not prohibited and thus controlled.

Might there be some “bad apples” in the settlement business who would try to promote STOLI transactions nonetheless?  I’m sure there are.

But this leads me to a dirty little secret that ACLI has been loath to even acknowledge; this is that STOLI transactions have to be done through life insurance companies.  Who else writes life insurance policies?

It is hard to believe that life insurers, whose underwriting is truly sophisticated, (and let’s face it, underwriting is involved in any policy large enough to be worthy of settlement) cannot identify an application that is made for STOLI purposes and the agents who consistently bring in these types of apps.

For years there’s been scuttlebutt that certain companies—hungry for business—had little compunction about accepting apps that had STOLI written all over them.

So, I’d like to know more about what type of self-policing the ACLI has encouraged among its members.  I’d like to hear more from companies about what actions they’ve taken against any agent who is involved in promoting STOLI.

It’s hard for me to believe that some evil STOLI promoters in the life settlement business are consistently pulling the wool over the eyes of life insurers—especially to the degree the ACLI would have you believe.

ACLI, in its comments, makes some legitimate points about securitization.  But it so seriously undercuts its case with these STOLI allegations that its credibility is damaged.

There is always going to be tension between the life insurers and the life settlement business.  Just wishing, on ACLI’s part, is not going to make settlements go away—they have, after all, proved their value to consumers.  But scurrilous allegations directed toward the entire life settlement community are not going to work either—one would think that would be obvious to the ACLI by now.

But then again, Sarah’s still at it.

It’s hard to believe that not only are we drawing close to the end of another year, but also closing in on the end of the first decade of the Third Millennium. 

(I already expect to hear from pedants and calendar officials informing me that in strict terms a decade goes from a year beginning with the number one, not zero.  Then I expect to hear from some people telling me that zero is not a number.  But most of you will know what I mean, and the others will just have to deal with it.)

(By the way, these same folks are very likely the ones who are still preoccupied with what to call the decade now about to end.  My own suggestion (considering the tenor of most of those 10 years) would be the Naughties.)

In any case (and to get back to life outside the parentheses) it’s been quite a year, hasn’t it?  

For many people it will be the equivalent of Queen Elizabeth II’s annus horribilis, 1992, and not because two of their sons’ marriages went bust and one of their castles caught on fire, to cite some of the royal disasters of that year that caused Her Majesty so much distress.

Rather many will remember 2009 as a horrible year because of more mundane reasons. They lost their job and couldn’t find another one.  Or their house (castle) went into foreclosure.  Or their retirement funds, once so safely (or so it seemed) parked in a 401(k) had managed to recoup only a small percentage of the 40% or 50% they had lost when the market went into free fall. Or because they were in sales (including insurance products, of course) and every day was more of an uphill climb than it usually is due to the fact that consumers all over the place were holding on to (not to mention squeezing hard) their depleted shekels.

And on that subject, the first six months of 2009 will be (bitterly) remembered as the time when sales of insurance products saw their steepest decline in nearly 70 years, according to LIMRA International.

Things may have started to pick up in a couple of lines, however.  So, in a time when looking for good news is the equivalent of grasping for straws, then the uptick in whole life sales (which account for a thin sliver of the market) is something worth celebrating.

We could also, I suppose, take cheer from the fact that economists are declaring that the recession officially over.  But the response of many non-economists to that claim is: Really?

The danger in trumpeting the macro view in something like this is that it stretches the disconnect between what people feel in the own lives and what they hear from those who see the “big picture” or who have a stake in pushing the rose-colored view of things that the macro view encourages.  (President Obama, take note.)

Needless to say, the widespread pain has made sales of insurance products ever so much more difficult.  The ‘intangible’ thing combined with the depletion of discretionary income has taken a toll on producers and companies alike.

All of which makes it imperative for both producers and companies to keep plugging away and using this time of trouble to reinforce the message of the security that insurance products provide.  Even if sales of those products come later.  

The reality is that these tough times will pass, although not as quickly as we would surely like.  But if producers and companies don’t stay on message now, they will have to compete with a myriad of consumer preoccupations later on (like looking for the best HDTV).

So many consumers are still very scared and want to hear about security. And that’s whether they can pay for it now or not.