OneAmerica Financial is focused on its mission and “serving the needs of our clients and also the needs of the advisors who serve them,” said Scott Davison.
Davison said he entered the insurance business as a complete accident. “I picked my city first (Portland, Maine) and then found someone who would actually give me a job” — Unum Insurance, where he stayed for 14 years. “I had the privilege of learning and growing there.”
In 2000, Davison joined OneAmerica Financial as vice president of strategic planning and corporate development. He was appointed president in 2013, CEO in 2014 and chairman of the board in 2017.
OneAmerica Financial’s stability as a 140-year-old company and its wide range of products — from life insurance to hybrid long-term care insurance to retirement — provide a strong basis for continued success, Davison said. “We’re focused on growing all of those businesses and continuing to compete, to develop, to change with the industry and serve those clients every day.”
In this interview with publisher Paul Feldman, Davison described his history in the industry and his vision for OneAmerica Financial.
Paul Feldman: Tell me a little about OneAmerica, because you have a very fascinating story in the industry.
Scott Davison: We are a mutual company, so we are focused on the mission and, long term, serving the needs of our clients as well as the needs of the advisors who serve them. So we have a number of businesses. We start with our traditional life insurance business, which is focused on whole life. We are also a market leader in asset-based long-term care, or hybrid long-term care. We’ve been in that business for 30 years, and we really know it inside and out. It’s one of the things that we would consider ourselves to be expert in and an innovator in that market.
We also have a small but growing employee benefits business, group life and group disability, both traditional and voluntary. And then we have our recordkeeping business: 401(k), 403(b), 457. You name it in the retirement space — we do it. And finally, we have an institutional markets space, mostly focused on pension risk transfer. That has been a very fast-growing and a very helpful business for us. We’re pretty well diversified. We have the tools that your typical client will need to build their financial future.
Feldman: Tell me about OneAmerica’s whole life business. That’s key to OneAmerica’s roots, correct?
Davison: We started as a fraternal organization in the 1870s. Life insurance was the start of what we do, and it continues to be a product that we think almost every consumer in America should own. That is right at the heart of our mission. It’s a participating policy, being mutual, and it’s very competitive in the marketplace. It’s focused on providing the flexibility for people to be able to use the cash value in the policy while they’re alive, and also on providing death protection in the event of a premature death and being an effective part of an estate plan. So it is very much part of what we, and it is at the core of our traditional mission.
Feldman: Let’s talk about your long-term care hybrid. OneAmerica is a pioneer in this marketplace, and long-term care is a huge issue for everybody.
Davison: There is such a need out there. If you look at the demographics in the individual life and annuity space, the demographics for long-term care are the most promising over the next couple of decades of any product. And the asset-based long-term care — the hybrid long-term care — is the most sustainable model. It’s sustainable for the clients because the rates are guaranteed, so you’re not going to get a large rate increase in your old age when you can least afford it.
And because it’s built on a life insurance or an annuity platform, it’s financially sustainable for the insurance company, for the carrier. When you combine those things, it is the ultimate suitable sale for a client who’s starting to think toward retirement. It’s a great way to reposition some assets for those clients so they can cover their long-term care needs and also to put them in a product that is going to pay a benefit no matter what — whether they keep the policy, whether they choose later to let the policy lapse, whether they die early, whether they need long-term care or not. This product really responds in all those scenarios.
One of the reasons we love it so much is that it puts us on the same side of the table as the client, because they’re going to get a benefit whether they live, die or quit. We hope the client stays with the policy and lives a happy, healthy life. But we know at the end of the day, we are going to be the pay window, one way or the other, providing a great benefit for that client and their family.
Feldman: So much has been said about having security in retirement and being happy. I think that your product provides that in many ways.
Davison: I think so, and it does something else that I think is important. I’ve been going through a long-term care journey with my own parents. My mom was in long-term care recently and died December 2022. My dad’s in care today; he is mostly independent but needs some level of care to be able to live his life to the fullest at age 95 1/2. So it gives independence and dignity at the later stages of retirement, which I don’t think most of us really think about until we’ve been through it with our own parents or another loved one.
For my father to be able to live on his own, to not have to depend on family members to provide care all the time, is such a gift. We — my sisters and I — can be his children, can be his emotional support, but not have to worry about every last detail of his daily care. I think as we can get that story out to consumers, more and more of them will seek out this product, especially a product that is guaranteed. You know what you’re buying, and you know you will get a benefit.
Feldman: What would you tell advisors who do not offer this type of product today?
Davison: I would say you’re missing an opportunity. To best serve your client and take your practice to the next level, you should invest some time in exploring how these products work. If you’re familiar with life insurance, our products are built on a whole life chassis and a fixed annuity chassis for our annuity care suite of products. We have all sorts of tools to help advisors make that transition to broaden their practice to include asset-based long-term care.
I think they’ll find that if they have trusted relationships with consumers, this is a very easy pivot to both help grow their practice and help clients. In a time in which we’re all under scrutiny for suitability, making sure that our sales are in the best interest of the clients, it’s hard to find a circumstance with a client who has some savings for retirement where this isn’t the right thing for them. It’s a win for the client; it’s a win for the advisor. I would hate to see people miss that opportunity, because it’s also a huge and growing market. It does take some investment of time, though, to learn about the product, to learn how to approach a client with it, and there are tools that can help advisors learn that fairly quickly.
Feldman: What are the biggest challenges advisors face to getting into this and adding this to their portfolio?
Davison: I think it’s just the change, because this is something new. It’s a bit of a pivot. It does take some energy to learn how these products work. They’re a little bit more complex in some ways. They have some more options. Also, there’s learning the process of having those critical conversations with the client about long-term care and why this is a better alternative than trying to self-fund it or hope that Medicaid is going to pay for it.
Feldman: Does your whole life product have that long-term care protection?
Davison: We do have an accelerated benefit on our whole life, which is a little bit different. The difference when you go to the hybrid product is that it is built on a whole life chassis but it also has long-term care riders attached to it. The product must go through two different reviews with departments of insurance when we file it around the country. It is a fully integrated product that is much different from simply a critical illness rider on a whole life policy. It provides a much more meaningful long-term care benefit.
For many clients, they want to build their whole life portfolio, or universal life or whatever products they choose, and they want to have an asset-based long-term care product alongside that. That’s what I did personally, and that’s typically what we recommend to people. Have your basic life coverage — whole life, term, whatever you’re buying. Then also set aside a life- or annuity-based product specifically aimed toward supporting your long-term care that includes these deep long-term care benefits, as opposed to just relying on the critical illness rider to support your long-term care needs.
And there are many benefits. When advisors get into the learning process, they’ll see that these products are well worth it, but it is a different product from just a plain vanilla whole life policy available in the market today, even with the critical illness rider.
Feldman: What is your opinion on individual long-term care insurance at this point? Because it doesn’t seem to have worked very well for a lot of carriers.
Davison: It certainly has been very difficult for carriers. Especially if you look at the historic versions of that product that were written back in the 1980s and the 1990s, it’s been difficult for carriers, for clients, for their advisors, and it’s been difficult, frankly, for the regulators. Because of the lapse rate, and because interest rate assumptions were not well understood at the very beginning, traditional long-term care insurance has been a money loser for many of the carriers that entered that market.
They’ve had to raise rates, which is really difficult for clients and creates problems for the advisors serving those clients. Advisors have to go back and tell their clients about the rate increase. The regulators have to approve the rate increase, so the regulators are in a tough spot. They need to support fairness and also the solvency of the insurers that wrote these health-based long-term care products. And they also have to be an advocate for the consumer. So there are some difficult choices for everybody.
We believe that the best way to serve this market is with products that are guaranteed, where you know what you must do to have that coverage enforced and that you have to pay those premiums. Those premiums won’t change, and you’ll have the coverage that you expected when it gets to the time when you need care, or you die and your beneficiaries receive the death benefit. I also think a big opportunity in the asset-based space versus the traditional health care long-term care products is that health care products generally are use it or lose it. So, if you don’t need long-term care, you pay premiums and you get nothing back. And again, on the asset-based side, you will receive a benefit regardless.
If you are fortunate enough to live to 100 and not need long-term care, we know that eventually mortality is going to catch up with all of us and you will get that benefit. You won’t have to worry that you spent thousands and thousands of dollars for no benefit. You’re not guessing whether you’re going to need long-term care or not. Most of us will need it at some point, and that’s why we like the guaranteed benefit part of our product design.
Feldman: What do you see as the biggest challenges or opportunities in the marketplace today with life and, especially right now, annuities?
Davison: We think there are huge opportunities in the market today. We are seeing record levels of sales growth. Our life premiums this year are up 36% for new business. We’re excited about that. We see more opportunity than barriers. The challenge is always making sure that consumers can hear the message. We’re figuring out new ways to support our distribution partners so that they can be more effective and can spend more of their time finding new clients and advising the ones that they have.
At OneAmerica Financial, we believe strongly that a trusted relationship with a human advisor will be absolutely the key to success as far out into the future as we can see. We think technology can aid in that process, can make us more efficient, but there has to be that trusted relationship. That’s what advisors bring to the table first and foremost.
The challenge is, with all the new technologies coming out — artificial intelligence and all the things that you hear about — how do we best combine the human factor and use technology to make that process as efficient and as satisfying for the end client as it can be? And, of course, we want it to be as easy for the advisor as we can possibly make it.
I think our industry has a long way to go, frankly. We are complicated as an industry. We must be able to do things more quickly. The technology tools that are coming out are exciting, but they’re also super challenging to integrate with systems that have be en around for decades. Getting that mix of human beings and technology right — that, I think, is the biggest challenge we have today.
Feldman: What is OneAmerica doing to enable improvement on the technological side?
Davison: The first thing we’re trying to do is make sure that our distribution partners have the data they need to be able to build and grow their practice, and the data that they need to be able to serve their clients better. They need to have at their fingertips what the requirements are. This speeds up the process so we have fewer policies that don’t pay and more policies that get through the process quickly and get into the client’s hands as fast as possible.
Some of the innovations in underwriting will aid that process and speed it up significantly for most people. It’s also critical to have tools that are intuitive and easy for the advisor. We must have the appropriate level of self-service tools for the clients so that they can directly access information from us — without our getting in the way of the relationship — and then call their advisor when it’s appropriate.
There’s a lot of work to do there, but I think there’s an incredible opportunity, and I think that will bring opportunity for sales growth. The last part of that is determining how we can use AI and predictive analytics to be able to prospect so that we can feed prospects to our distribution partners and help them be more efficient.
Feldman: The Department of Labor released a newly proposed fiduciary rule. Do you have any comment on that?
Davison: One thing I would encourage advisors to do is what I’ve done: Join both the National Association of Insurance and Financial Advisors and Finseca, because they are the voice of advisors. The people in Washington certainly want to hear from CEOs at carriers — like me — but more important, they want to hear from a small-business owner, like an advisor, like a head of a financial planning practice in their home district. Getting engaged with NAIFA, Finseca and organizations such as those is important to making sure that we can preserve the system of regulation that we have today.
Feldman: With all that’s happening in regulation today, let’s talk about how your products are evolving.
Davison: There’s always an evolution, and we’re always looking to keep our products fresh. We’ve tended to stay with products that stand the test of time and address client needs — and our whole life is a great example. Most of our product updates are not radical departures, because we know what a typical American family needs to build a secure financial plan. We tend to stick with products that have a long track record of being great for clients.
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