As speaker after speaker talked about disruption, my attention wandered out the door, down the street and into the Chicago River.
That’s where I had been the day before the LIMRA annual meeting in October. A boat trip on the river offers the best view of the buildings and history of downtown’s development. Near the boat’s dock off Michigan Avenue and Wacker Drive was where Chicago started as a trading post established by a black man from Haiti in the 1780s.
Since then, Chicago has been constantly disrupting and disrupted, never more so than in 1871. That’s when fire left a four-mile-long and mile-wide scar where neighborhoods and the business district existed. Three hundred died and 100,000 were left homeless.
Chicago got right to work and built its Second City. It is easy to imagine that people just started building like crazy. But reconstruction had a rough start. People were supposed to use fireproof material, but it was expensive. So, many people still used wood. Another fire put an end to that in 1874, when 60 acres of the city burned again.
Innovation carried the day, though. Terra-cotta made from sand and clay proved to be an inexpensive answer.
Chicago could have blown away with the ashes but it still had a strong position for meat, grain and lumber processing and shipping. There was never any doubt that Chicago was coming back. After all, the town faced existential threat before.
In the 1850s, it became apparent that Chicago’s frequent flooding was a public health hazard. The standing water engendered typhoid and dysentery, besides just being all around nasty.
The problem was that the city was level with Lake Michigan, the small ocean at its door. But what to do? Buildings and whole neighborhoods were already built.
Just Doing It
In an era before mechanical engines or electrical power, people decided to raise their buildings about six feet. After a few individuals did it first,
others joined in and soon city blocks were lifted with jacks and manpower.
After a trial by flood, fire came next and Chicago boomed out a modern city, inventing the high-rise building in the meantime. Even when nothing was ready for the work, they did it anyway.
In 1883, just over a decade since the fire, Mark Twain said: “It is hopeless for the occasional visitor to try to keep up with Chicago. She outgrows his prophecies faster than he can make them.”
The next impossible task was preparing for the 1892 Columbian Exposition World Fair, which was touted to surpass Philadelphia’s 1876 fair, London’s 1851 Crystal Palace Exposition and many others. Again, no one and nothing was near ready to attempt it, but they succeeded against all odds.
From the river, the city passes by like pages of architectural textbook of the past century and a half. All were examples of innovation and drive blasting through obstacles.
Back in the hotel auditorium, uncertainty was the theme, particularly with the election campaign raging in the background.
Obviously, the Department of Labor’s conflict of interest fiduciary rule is the precipitating factor, but the insurance industry already faced difficulty. Just as the demographics are making the industry’s products and services more relevant, agents and advisors are also aging out.
Products that sell best, with some exceptions, dangle the taste of an equity-like return in combination with an insurance guarantee. That sounds as good as putting together chocolate and peanut butter, but people don’t realize they pay for the balance of gain and safety. They don’t know because it is really difficult for even salespeople to explain some of the products, which can get pretty complicated to fulfill some promises.
The New York Times in late October had a headline across the top of one of the sections reading: “Even Math Teachers Are at a Loss to Understand Annuities.” It had the usual, an example of someone who was not well-served by an agent and some inaccurate information about how annuities work. (By the way, Sheryl Moore of Wink did a masterful job rebutting the article in online comments.)
So, the fact remains that the industry has not gotten very far in rehabilitating the image of annuities. That was partly what led to the DOL rule. All of this is failing Americans who need the products.
In the magazine feature this month, we look at where we are amid the DOL fallout. Company plans are still forming, which is a little disconcerting. But some people are going ahead, even if no one and nothing is ready. The story of Curtis Cloke shows how a bit of insight helped him create a new way to offer better service for his clients and sell a range of insurance and financial products. He is by no means the only person doing it.
Starting All Over
During a break in the LIMRA meeting, a group of disruptors past and present stood around a table. The subject was how old regulation stifles innovation. The example at hand was from a breakout session that discussed online marketing and rules against targeting and excluding sexes.
Apparently, they said, rules would not allow you to target an insurance product to just women. This would counteract the trend in online marketing to find the niches that need your products and services. Marketing to everyone on the internet without being able to select a segment of the audience is not affordable and does not serve the consumers who would want that product. Does everything have to go through Amazon, then?
Byron Udell, who created the online insurance quoting system, Accuquote, in the 1990s said it would be better to start all over again with regulations. He’s a disruptor from way back, constantly fighting against new disruptors all around him. But he’ll probably do OK for himself.
He’s from Chicago.