Bells and Whistles Skirmishes Pop Up at S&P Conference

Several speakers have suggested here in New York this week, at S&P Global Ratings’ latest insurance conference, that excessive product complexity might be one reason that life insurers have had sales problems, and regulatory headaches.

Mark Mullin, the chief executive officer of Transamerica Corp., made that point today during a life insurance CEO discussion, in a response to a question about why annuities have taken such a whacking over the past 10 years.

Some of the products have been too complex, Mullin said.

“We want people to understand the options embedded in these products,” Mullin said.

(Related: New Life and Annuity Deals May Be Complicated)

Speakers also talked about the topic Wednesday, during a session on life insurance distribution.

Matt Carey, CEO of Blueprint Income, a company that sells annuities through the web, said product complexity limits the range of products Blueprint can offer. When the company tries to develop a simple, short explanation of one type of annuity, the explanation can easily end up being 15 pages long, he said.

Carey said the complexity of life insurers’ processes for reviewing applications and issuing products is another huge problem.

Many Blueprint customers say in the review that they loved the Blueprint sales process, until they began to purchase and pay for their annuities, Carey said.

Andrew McMahon, an executive vice president from Guardian Life Insurance Company of America, said the complexity of many life and annuity products makes likes difficult for the agents as well as for the consumers.