Here Come The 20s, PBR, And CSO

Here Come The 20s, PBR, And CSO

The Roaring Twenties – the Jazz Age – were a decade of enormous social change in America. The 1920s were also known as a time of revolution in manners and morals. Men and Women threw off the Victorian era shackles favoring a scandalous and liberating new social freedom.

Well the 20s are back, baby, and this time is no different. Life Insurance is primed for a revolution. This time, government mandated.

2020 is bringing two significant changes to the life insurance industry

And no, it’s not smoking cigarettes, drinking flasks of bootleg whiskey or bathtub gin (like my boss thinks is transpiring at the monthly CPS Happy Hour). It’s Principle-Based Reserving (PBR) and a new standard mortality table, the 2017 Commissioners Standard Ordinary (CSO) Table.

It’s a sensation sweeping the nation and these regulations apply to all life insurance carriers. Which may lead you to the question, “Why should I care about this?” Which is a fair question; but put aside that bathtub gin for a moment.

Existing reserving formulas have been the same since before the original roaring 20s. Time for an upgrade, I’d say. The new PBR considers the vastly upgraded and diverse products available to clients today, ensuring that carriers reserve appropriately for each policy block needed to pay future claims.

EVERY single life insurance carrier product must be refiled before January 1, 2020. Expect Q3 & Q4 to usher Capone levels of chaos as carriers scramble to place cases and file new products before the deadline.

If you begin the sale of a non-compliant product in 2019, but do not have it placed with premium on or before the December 31, 2019 deadline, the original product sale cannot be completed in the new year. No exceptions can be made.

This is important. As we begin the last quarter of 2019, you need to consider a few things:
  • Discuss with a Life Insurance specialist to see if the product you are recommending is PBR/CSO compliant
  • Keep in mind carriers have 6 months to send funds in a 1035 exchange
  • Work with your representative to ensure you abide by carrier transition rules
  • Cash Value Accumulation sales are expected to illustrate less efficiently

Personally, I’m ready. Bring on the 20s. Life Insurance agents are ready to join the iconic images of the flaming youth, flappers, radio and movies, the speakeasy, organized crime, confession magazines, Hemingway and Fitzgerald, Charles Lindbergh, Babe Ruth, Bobby Jones, Sacco and Vanzetti, Al Smith, Freud, the Harlem Renaissance.

Just make sure you don’t get caught in the crash. Contact us for more information.