The Walking Dead: How Flawed Insurance Regulation Creates Serious Risks for U.S. Policyholders A recent report on the rehabilitation of Phoenix Home Life Variable (PHLV) has revealed that the company has $2.1 billion MORE in liabilities than assets. Just two years ago, the company filed financial statements showing it was solvent. This is not just a financial failure – it’s a wake-up call for the life insurance industry. The undeniable conclusion is that accounting gimmicks in the company financials filed with the state covered this problem long before PHVL was put in rehabilitation. PHLV was a “dead company walking” long before this report was released. Why does this matter? It sets a disturbing precedent. For the first time in nearly 100 years, U.S. life insurance policyholders will receive less than their contractual death benefits. Rehabilitation orders have capped death benefits at $300,000 per insured for all general account policies, regardless of policy size. It may be that even this reduced benefit will require financial support from the state guarantee fund. This was the topic for my main stage presentation at Forum 400's annual meeting this month in San Antonio, and on Tuesday, February 25th at 11am EST, I’ll be addressing this critical topic again in a special virtual forum. What you’ll learn: ✅ How PHLV’s collapse happened… from a surplus in 2022 to a $2.1 billion deficit in just over two years. To put this in perspective, the company only had $2.2 billion in total general account assets when it entered rehabilitation. ✅ How variable (separate account) products were largely protected from this loss. ✅ Where regulators failed in protecting policyholders, including the role of private equity and offshore reinsurance in this crisis. ✅ What insurance professionals can do to protect clients from similar risks moving forward. Interested in joining? Email Brandy Friedt, M.A. or register using this link: https://lnkd.in/e2ZGwYHK This promises to be an interactive, informative, and engaging session where we’ll tackle tough questions and provide practical solutions for protecting your clients. Hope to see you there! #lifeinsurance #privateequity #reinsurance #financialservices
Thx Larry, quick question and anyone else is welcome to opine. In CA (ie Executive Life) and I thought other states, if the state PBGC couldn’t cover the DB claim (after the general account used) each admitted carrier had to proportionately “pitch in”(my words) to make up for that loss . Im sure you or someone else on this would know. thx in advance.
Thanks for shining a light on this issue Larry J. Rybka, JD, CFP®.
Steven S. Zeiger
2mo
Larry J. Rybka, JD, CFP® Unfortunately, there’s a huge catch 22 here. Clearly, variable life products provide superior protection due to the protection of the sub accounts under various federal and state regulations. However, marketers of general account products who are not securities licensed have a much easier time Marketing because there is no compliance oversight. If we look at all of the LinkedIn posts, we see some talking about whole life, we see a deluge talking about IUL and we see practically zero on variable life. When we suggest to IUL marketers that they diversify away from the general account with some variable life coverage, they respond that they can’t because they don’t have a securities license and that’s what gives them the permission to have misleading posts about IUL.
Mary MacDermott
2mo
Great post Larry. Looking forward to your Mastermind presentation on this topic.
Chief Revenue Officer
2moThank you for continuing to push against what are clearly risky - if not completely irresponsible, short sighted, and reckless - trends - these are no longer canaries in the coal mine I'm afraid -