Life Insurers and the Capture of Language

Gold Standard Endgames Bring Peace of Mind

​There is so much to admire in the sales and marketing skills of the “Risk Transfer” Industry, whatever one thinks of the products.  Slick, articulate sales teams serenade with derisking graphics showing value at risk falling to provide solace to anxious trustees.  Meanwhile hard headed insurance executives take on public policy issues and its financial services regulators with gusto and effectiveness.  But it is in the capture of language that the industry excels.  

“Risk Transfer”.  Now that has to be good.  It’s not just a bulk annuity it’s a risk transfer journey.  The industry’s premium product is the “Gold Standard”.  Or perhaps the “Holy Grail”.  First there was some asset / liability matching.  But it needed a “Journey Plan” that had to go somewhere.  “The Endgame” was invented.  No one word has been more costly to UK pension provision or profitable to life insurers as “Endgame”.  Whatever the derisking costs, it must be worth it.

Reach the “Endgame” and have “peace of mind”.  A haven where all professionals involved endlessly issue press releases congratulating one other.

As they showed in selling clothes to emperors, those in LDI sales know what they are doing.  Their vision obviously makes sense if you are smart enough.  And its accelerator version “leveraged LDI” is even better.  And they use the best gaslighting techniques to see off awkward types asking about collateral and the need to sell those pesky “illiquids” right now.

And if you don’t hurry along to derisk it must be because you are “gambling” with people’s pensions, betting on risky assets.  It’s a world where “return seeking” is a synonym for suspect.  “Hedge the measure” and you are an actuary’s match for everyone.

Of course schemes need to be “buyout ready” to attract the attention of the mighty life insurers.  They are usually “exceptional” purveyors of always “competitive” pricing.  But trustees must not ask too many questions and need to drop discretionary powers in case you are sent “to the back of the queue”.  No Golden Ticket that way.  Anyway, once in a lifetime Solvency II reform; the FSCS review; life expectancy downgrades “probably” won’t make much difference.  So carry on regardless.  There is a busy year ahead in Risk Transfer land.  So, “lock in” gains now in case markets move.
Worried about the new TAS300V2 calls for a run on comparison – well think “Regret Risk”.  “Fear of missing out” ought to whip in trustees and sponsors questioning the siren calls of the life insurers.

But is it members’ best interests to face the music?  What about the “regret” of knowing the less you fell for “derisk and get rid ASAP” the better off you are now and scheme members and current employees could look forward to discretionary benefit improvements.  All available in a stronger, more ESG aligned economy.  Come on trustees, don’t worry about that.  We are old friends.  Say “fiduciary duty” three times and move with us to the Endgame.
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But what, you should ask, if it’s not the End and it was never a Game?  Time to learn the language of “Run On 4 Good”.