Everything is getting better: part IV
This is Part IV of the 4th Life Settlement Roundtable sponsored by National Underwriter Life & Health, the parent publication of Settlement Watch. It is the last segment in the series. Held in Washington, D.C. on May 14, 2008, the 4th Rountable featured life settlement company executives discussing the nuts and bolts of settlement business operations. They identified various process challenges but expressed tremendous confidence in the value of what their firms provide to consumers. The moderator is NU Editor-In-Chief Steve Piontek.
Agents more knowledgeable
MR. PIONTEK: I am curious about your perception of agents over the last 6 months to a year and whether you think they have actually gotten more plugged into this process, whether there is a growing sophistication among agents.
MS. BALSAM: Yes. Yes, we are seeing a growing level. I will say that the process that we started so many years ago with educating. I am also proud to say I started this business educating people kind of by myself on the telephone, educating agents as to the difference between a life settlement and a viatical settlement. “What’s that? A viatical?” "No, it’s a life settlement.”
That being said, those agents who are already participating apparently are actively participating, and they have grown their business. However, there are so many other agents who have kind of an advisory role who have the senior clients who are not in this market space. I know that I see these guys all the time. We are all out there educating people as to the benefits.
MR. PIONTEK: That education, is there a movement afoot in LISA to institutionalize education?
MR. FREEMAN: Yes. Within LISA, there are regional agent seminars and conferences that are going on now. Regional broker seminars. I think you will also find, if you even look beyond LISA that a number of us in our own businesses have educational efforts that we put forth to educate the financial representatives, whoever they may be, whether they are insurance agents, CPAs.
MR. FINFER: We have already gone so far as to get the classes approved for CE credits. That is a big upside for agents to come and listen to you talk about a product that they should know about and get CE credits for it.
But as you can see, this industry is constantly evolving. What I told you six months ago might be a little bit different today. You constantly have to educate.
The nice thing I think is that when you get somebody hooked on this--one agent to get one case done--they will immediately say, “I’ve got to go back to my book because I’ve never made more money and worked less with the outcome in this situation.” They become a life-long agent and understand life settlements even more.
MR. FREEMAN: If you focus on the consumer, the person they helped, too, they have never had a more unique solution to a financial problem that they never had a solution for before.
I think that is really the biggest selling point of the whole life settlement option is that it is an option that solves problems that couldn’t be solved any other way until life settlements came into being.
MR. PIONTEK: From the agent point of view, don’t many agents once they have a client settle a policy, they sell new insurance, don’t they?
MR. FINFER: In some cases, it could be the impetus to review the valuation of the policy, to review that policy as opposed to a 1035 and see if they could increase or provide them with a new product that does the job better. In my business, I’m seeing that 30% of the time.
Wish lists
MR. PIONTEK: We’re getting close to the end of this. If you had a mini wish list of one or maybe two things that you could change to make either the process better for you or better for the business, what would you change?
MR. HAYNIE: Life expectancy reports have slowed down so much, and that’s a problem. That is a big problem right now. I think that is a good problem for the life expectancy companies.
MR. FINFER: I sit on the advisory board of an LE company. You wouldn’t even believe this organization today and where it was 6,7,8 years ago. It is amazing.
Again, they are just going to have to hire more people, but that’s a great problem to have. However, you’re right, you can’t even get a true number for 20 days. It is 20 business days; it’s a month.
MR. FREEMAN: One month.
MR. HAYNIE: God forbid if something happens during that month where a new medical report now comes in and they have already issued a date and then there is a whole other level of problems.
MR. FINFER: It puts us back in the queue.
MR. FREEMAN: Another 30 days, so 60 days just for an LE.
MR. PIONTEK: Anything else?
MS. BALSAM: Securitization, a uniform process.
MR. FINFER: I think from a broker’s perspective, there seems to be a disconnect between the date that you provide a full and complete file and the date that you actually receive a price. As a broker, I spend more time on the phone calling up providers saying, “At least call me back.” I don’t understand it.
MR. FREEMAN: It’s the mechanics of the funding of the business, which is why providers need their own funds. Most providers really don’t have their own funds, so they have to depend on somebody else to agree to a price. That is one of the problems.
MR. HAYNIE: Well, the funding is kind of lumpy. I mean, it’s there sometimes, and it’s not there at other times.
MS. BALSAM: It’s piecemeal.
MR. HAYNIE: Right. That might be difficult to take advantage of.
MR. FINFER: The problem is an agent will call you a hundred times, “I need a price, I need a price, I need a price.” When you finally give them the final price, it’s like, “I’m on a vacation in Europe.” Nobody can sign anything. They don’t know how to make a decision.
That is also very frustrating, very frustrating for us because now we are in the middle of managing the provider’s expectation, and before we were providing the insurance agent the insured’s expectation and we have to flip to the other side.
Now we’ve got to explain to them that we are not trying to BS them. We’re not giving it to somebody else. We just really can’t get this guy to make a decision, and all of a sudden he has brought his daughter into the picture.
MR. FREEMAN: The problem then is when you’ve got money and you’re ready to spend, you’ve got to spend it. Basically, if they wait too long, the offer disappears.
MS. BALSAM: The offer is gone, yes.
MR. HAYNIE: One of the things I would probably say that I would change is when a deal actually goes to paper, an offer, a formal offer, and then that offer goes away, which happens a lot. Really, they kind of pass that down to you and give no real explanation as to why. I’m sure it is a valid reason.
We are seeing a lot of that. I would like to see less of that. In other words, you make a firm commitment, you make the offer. There is really no recourse for you as the broker or for your client to really come back at them. They just pull the offer. Believe me, I’ve been the beneficiary and been the victim.
MR. PIONTEK: Well, I think we have come to the end of the time. I have to say I have really enjoyed this conversation. It has been very stimulating and I think it will really give people, when they read the supplement, an absolutely terrific idea of where the business is now. I thank you all for your contribution.
Note to readers: This concludes the series of articles on the 4th Life Settlements Roundable. But future issues of Settlement Watch will carry new segments of other settlement roundtables as they occur. Stay tuned.
Following is a list of participants in the 4th Settlement Roundtable:
Bryan Freeman
President and Managing member
Habersham funding, LLC
Atlanta, Ga.
www.habershamfunding.com
President and Managing member
Habersham funding, LLC
Atlanta, Ga.
www.habershamfunding.com
Steven Piontek
Editor-in-chief
National Underwriter Life & Health
Hoboken, N.J.
www.lifeandhealthinsurancenews.com
Editor-in-chief
National Underwriter Life & Health
Hoboken, N.J.
www.lifeandhealthinsurancenews.com