Insurance Companies are Really Busy Right Now
Things are happening a little bit more slowly at insurance companies these days, and that’s because so much is happening all at once. Since interest rates have risen over the past few months, people are flocking to insurance contracts to protect money. It has been more than ten years since available interest rates were this good. People have been starved for safety and yield for a long time so all of us on this side of the financial business have been pretty busy.
When rates rise consistently for a few months, insurance companies have several choices for using the extra margins. You guys all want stronger yield and higher income payments and that’s usually the first thing to change. Most companies focus on creating competitive products that offer more than any other company. It’s a competitive business and they are all keeping tabs on each other.
Other companies focus on expanding their sales force or increasing commissions. It all costs money and there still are lots of agents that will only sell whatever pays them the most. The influx of additional business also has to be processed so many companies are hiring and training new employees, costing more time and money. One popular company is supposedly receiving 1000 new applications every day.
Yep, money is moving and it exposes a lot of weak spots in the system. Some companies have handled it well while others have struggled. Much of it has reinforced my selection of the companies I prefer to send new business. With rates changing rapidly between companies I’ve had to contract with a few new carriers this year all but one experience has been just fine. Contract service in the coming years is gonna be my big question.
I’m feeling pretty good about things because my top-choice companies have all kept things running smoothly. Annuity applications used to be processed in a day or two and now it takes three. Applications have to be processed before transfer paperwork can be sent for IRAs and then we have to wait for the ceding company to send the money. If things aren’t done efficiently then the process can drag on for weeks. What should take 7-10 days is taking many companies more than three weeks to complete. Fortunately I haven’t had to deal with that yet.
Much of the extended processing time can be explained but sometimes it exposes inadequacy at the insurance company. That’s a good indicator that you should maybe skip that company for one that operates more efficiently. Seriously, no matter how good the product is, the extra benefit may not be worth complex contract service over the life of the contract. I’ve said for a long time that customer service is incredibly important and that is no more apparent than it is now.
The worst story I have from this year was dealing with Brighthouse Life. About five years ago, Met Life wanted to separate life insurance and annuity business so they spun off annuities and created Brighthouse. It’s not quite the same as Met Life but they branded it well enough that a lot of people believe the new company is the same thing. That included me until I did a little digging.
One client that I have worked with since 2015 wanted a Brighthouse fixed annuity. So I did what was needed to get it for him. The application was submitted on June 23rd and the contract was issued on July 11th so it took almost three weeks. No big deal, although we handled the transfer to speed things up so that’s just pure processing time at the company. The problem is that we are near the end of August and we have not received a hard copy of the contract. It has supposedly been sent twice but didn’t arrive at the correct location either time. Every time we call for an update the call is routed to a call center in another country and it’s hard to get answers. We are still waiting.
An identical situation happened with another client that I’ve also worked with since 2015. In each case the money came from the same company but was sent to different companies for a fixed annuity. With this one the application was submitted on July 16th and I delivered the contract to the client on July 26th. It was a completely different experience. When several hundred thousand dollars is involved then I’m sure you’d agree that efficiency is fairly important.
It is great that so many people are flocking to annuities to protect money. It’s a very good time. I would like to caution everyone against chasing rates. It doesn’t always work out well or give you the best experience throughout the process. I’ve learned a few things over the past 20 years and you should all take advantage of it. I don’t always go with highest rates because there are other factors to consider. When insurance companies are really busy then those things that seem intangible become glaringly obvious.
Have a nice weekend!