Template Letter to Insurance Broker Re: Effect of All-Cause Mortality Increase on Insurance Company Credit



Joe Insurance Broker
Insurance Brokers, Inc.
1234 Happy Lane
City, State Zip Code

Re:   John and Mary Smith
            Insurance Carrier, Inc. Term/Whole Life/Disability/Other] Insurance Policy
            Policy No. ________________

Dear Joe:

I/We are writing to ask your advice regarding my/our insurance policy(ies) issued by [Insurance Carrier, Inc.] in light of recent financial market revelations.

In November 2022, I/we saw in The Wall Street Journal that the stock of industry leader Lincoln Financial fell by 30% in just one day. Lincoln Financial itself was downgraded from A+ to A and is on negative outlook (for possible further downgrades). See the press release below for additional details about AM Best’s reasoning and future expectations.

Also note Lincoln Financial’s recapitalization with 9.25% preferreds following the blow-up and some other comments in this press release:
https://news.ambest.com/presscontent.aspx?refnum=32763&altsrc=2. Lincoln has had to raise additional funds to maintain its required statutory capital levels.

As I/we understand it, Lincoln discovered it was under-reserving in its universal life insurance business. I/We have also read that Prudential Financial took similar charges in its life insurance business earlier this year and that many other companies, including Globe Life, reported elevated group life insurance loss ratios over the past twelve months. This is consistent with the information in the additional sources below.

My/Our understanding of the reported data is that an increase in all-cause mortality of non-disabled employees of working age occurred after the height of the “pandemic,” when COVID-related claims would have been expected to have occurred, becoming noticeable after the administration of COVID vaccines began.

It seems to us/me that a continued decrease in life expectancy is likely to have an effect on insurance industry profits, reserves, and credit ratings. The prospect of current and future increases in death claims, whether due to COVID boosters, delayed effects from both the original vaccines and boosters, or as a result of other government policies and mandates may not bode well for policyholders.

I/we remember the financial crisis in 2008, and it began like this—with problems at Bear Stearns. I am/We are concerned. Can you help me/us make sure the life insurance policy(ies) that I/we have been paying for are going to be safe?

[If desired, insert specific information about the particular situation and what the author’s individual fears or concerns are. e.g., how old the policy is, what situation is intended to be covered, etc.]

I/we would like to make an appointment to meet with you in order to discuss my/our concerns and to determine what changes I/we should make, if any. Please call to let me/us know a convenient time for such a meeting and any other information you can share to help me/us prepare.

Thank you for your consideration.

Very truly yours,

John and Mary Smith

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