Can this industry survive its own Ice Age?
By Bill Coffin
By Bill Coffin
From Jan. 6-11, a cold front descended from the Arctic with temperatures so brutally cold that it pretty much broke the psyche of anyone who ventured outside. The cold moved all the way down to Tampa, Fla., and Houston. Record low temperatures were recorded across the United States, as much of the Midwest was colder than the North Pole. But that was nothing: Even further north, in the Canadian prairie, it was colder than it was on the planet Mars. The cold and its associated snowstorms caused some $500 million in damage and claimed 21 lives.
How cold was it? It was so cold that the entire state of Minnesota canceled school for two days purely because it was too brutal to go outside. It was so cold that zookeepers were actually bringing their polar bears inside. For cheap thrills, people went outside and threw pots of boiling water in the air just to watch it instantly turn into snow.
And yet, it all could have been so much worse. Just imagine, for a moment, if the cold had lasted two weeks. A month. Two months. A year. It sounds impossible, but let’s not forget that there once was a time when this kind of cold was inescapable for the northern reaches of the globe. Some 15,000 years ago, during the Pleistocene Ice Age, young humanity found itself in the kind of deep freeze that destroyed entire species, and could have taken us with it, too.
As sheets of ice 3 and 4 km thick covered everything in North America down to the Great Lakes, and the entire northern coastal areas of Europe, the prey species we lived on were wiped out. Humans themselves had to grow larger, faster and stronger. They had to develop better tools and technology. They had to figure out how to hunt animals they never had hunted before. And through all of that, when the ice retreated, and the warm times came again, a different type of humankind walked the earth — one radically more able to shape its own destiny against the cruel forces of nature. The life insurance world is in the middle of its own cold snap, of sorts — its own little Ice Age. For years, the industry enjoyed times of steady investment growth, all things considered, and then the Great Recession hit, and plunged insurers into a kind of low interest rate environment unseen by almost anybody currently active in the business. And at first, the low rates were just a shock. But insurers’ portfolios were robust enough to endure. Like bears with enough fat, they could ride out the cold ... for a while. But the cold persisted, and a cold snap turned into an Ice Age. The economy is likely to turn around in 2014 and 2015, but even that sounds like a million years away when your own wealth generation — the thing that is supposed to pay your obligations to your customers, has slowly mummified beneath the thick ice of economic stasis.
But there is hope. The agents and brokers of this industry have been those hunters and gatherers forced to become bolder, stronger and smarter, figuring out new ways to make it in the cold. Those with serious vision have recruited new talent to reach new clients, have pointed a critical eye towards the products they sell and banded together to protest the regulatory missteps that turn an industry’s cold spell into a deep freeze.
What this means is that as things turn around, those still in practice will be the survivors who will determine what this industry will look like for the next 10, 20, 30 years. Will it be much like the old, only swifter and more open to change? Or will it emerge reinvented, and ready to forge a new kind of prosperity? Time will tell. But look around at your fellow colleagues still in business. You are already the survivors. And you are already the seeds of the future.