From the disillusionment of the 1970s, the 1980s moved America to the right with the conservative politics of President Ronald Reagan. Elected by an overwhelming majority in 1980, despite his conservative views, Reagan oversaw the nomination of the first female Supreme Court Justice (Sandra Day O’Connor), saw the first American woman to go to space (Sally Ride), and ushered in the end of the Cold War with the fall of the Berlin Wall in 1989. When Reagan left office in 1989 he had the highest approval rating of any president since FDR.
Inflation that had risen significantly during the 1970s continued to rise in the 1980s. In 1982, the United States experienced the worst recession since the Great Depression. While the economy recovered rather quickly, another stock market crash on October 19th, 1987, highlighted to investors that the economy had entered a new era of volatility.
In terms of women’s rights, the legal battles over discrimination continued. In 1984, the US Supreme Court found it illegal for clubs such as the Kiwanis and Rotary Clubs to discriminate based on sex. In 1986, the Supreme Court found in the Meritor Savings Bank v. Vinson case that sexual harassment was a violation of Title VII of the Civil Rights Act of 1964, and as such was a form of illegal job discrimination.
In 1980, the first woman was elected to Congress without following a husband or father into the position. In 1981, Sandra Day O’Connor was appointed to the Supreme Court. In 1984, the first woman was nominated to be vice president on a major party ticket.
The 1980s saw the rise of the yuppie, the emergence of MTV, the introduction of the blockbuster film (E.T., Return of the Jedi, Raiders of the Lost Ark, to name a few), and the birth of the 24-hour news cycle.
LIFE INSURANCE DURING THE 1980S
The demographics of the US were changing dramatically during this decade. The traditional family, with the husband as the primary (and only) breadwinner was gone, and in its place were single-mother families (approximately 33% of all households in 1984), divorcees, new immigrants, people who chose never to marry, married couples with no children, and retirees. The population had grown 60% since 1960 to 236 million people. These demographic shifts had a marked impact on an industry built on the foundation of the traditional family with a father who needed to protect his family.
Life insurance sales had been flat throughout the prior decade, and the trend continued into the 1980s. In 1960, 64% of all individuals in the US carried some form of life insurance; in 1984, it was 63%. In 1960, 72% of all households owned life insurance purchased through an agent; in 1984 this had dropped to 56%.
In 1981, $371 billion in individual life insurance was sold. Group life insurance sales brought the total to $544 billion. Products shifted during this decade. The “family plan” policy that was popular in the 1960s virtually disappeared. Term insurance took on significant popularity. Due to the increase of women in the workplace, families covered by group life jumped by 12 million between 1976 and 1984.
One LIMRA study showed that replacement activity (dropping one policy in place of a new policy) jumped from 36% of all households in 1980 replacing a policy to 56% in 1984. This marked increase was attributed to agents working their existing market and neglecting new, hard-to-reach markets. Another contributing factor was the industry tendency to recruit existing agents that were more likely to sell to their existing customers rather than reach out to a new market.
Inflation continued to be a major issue for the industry. Loan activity was higher than ever, with policy holders able to earn significant gains by withdrawing their funds from their whole life policies and investing them elsewhere. This inflation along with the recession saw many consumers turning to term insurance and shunning the whole life policy that had been so popular for decades prior. Early in the decade, term insurance accounted for over half of the volume of life insurance sold.
Hotly debated during this decade was the tax-free build up of the accumulating cash value within life insurance policies. President Reagan’s tax plan would have eliminated this provision, and the life insurance industry would have “died a slow death” (New York Times, 1985) as the value in purchasing cash value life insurance dried up. Fortunately for the industry, after all the debate, the cash value was protected from taxes.
In 1985 the news was dominated by the debate in the insurance industry over the use of gender to determine insurance rates. That year, the National Organization of Women filed a lawsuit against Metropolitan Life Insurance Company accusing the company of discrimination in both life insurance and disability insurance pricing. Organizations throughout the industry took sides, and legislatures across the country debated this hotly contested issue.
In March of that year, the American Council of Life Insurance took out a full-page ad in the Boston Globe and other newspapers across the country in order to defend the industry against NOW. The advertisement read: “Some people would charge women more than their fair share for insurance and call it equality. Sound like a good idea to you? We hope not.” The implication here is that if unisex rates were to be implemented, women would have to pay more to compensate for the higher mortality rates of men. Advocates for the unisex rates and NOW’s lawsuit claimed, “The insurance industry is the only industry that practices sex discrimination overtly [by setting rates based on gender].”
Montana was the only state to have implemented the unisex rates when the Massachusetts legislature began to seriously consider mandating unisex rates for all types of insurance. It is important to note that this issue was larger than just life insurance. At the time, women were paying higher rates than men for health, accident, annuities and disability income insurance, but lower life insurance rates. In the end, likely due to the intense lobbying efforts by the industry, Massachusetts did not include life insurance in the legislation it passed. In 1987, a similar law was struck down in New York.
In 1987, the AIDS epidemic hit center stage for the US and for the life insurance industry. In that year, a test was developed for life insurance applications, and rules were set regarding when and where such a test could be required. Companies added new questions to their applications regarding AIDS, and a new era of medical testing was introduced.
In that year, AIDS-related claims reached $487.2 million, a 67% increase over the year prior. This was thought to be an understatement of the effect on claims given that insurance companies rarely investigate the cause of death beyond the incontestability period (usually the first two years of the policy). In terms of claims counts, in 1987 1.2% of all individual life claims were attributed to AIDS, up from 0.9% the year prior.
The advent of AIDS introduced the industry to “living benefits,” although the concept was already in the introduction phase when the epidemic hit. The ability and willingness to pay out a portion of the life insurance proceeds to aid a person who is terminally ill came about at the end of the decade. Initially these benefits were offered to those with cancer, Lou Gehrig’s disease, and complications of AIDS. There were some initial concerns over this benefit, with many companies worried such a payment would be subject to taxation, that medical diagnoses could differ between doctors, and that some beneficiaries may disagree with the arrangements. Despite these concerns, this practice quickly became standard in the industry.
WOMEN IN LIFE INSURANCE DURING THE 1980S
In the beginning of the decade, over half of all adult women in the US were employed, and the vast majority of them were employed full time. The number of single women delaying marriage and/or having children was growing, as was the number of single mothers. This, in turn, meant that the number of female heads of households were increasing, reaching 7.7 million families in 1980. In 1981, women made up 54% of the workforce, and the numbers were increasing.
While women had started to climb the corporate ladder, they were well behind men in terms of pay. A study conducted near the opening of the decade showed that in the 1,000 largest industrial companies in the US, 28% of the officers were women. However, nearly two-thirds of these officers were earning less than $50,000 per year, and a third of them were paid less than $30,000 per year. The average business woman in 1982 earned $10,000 per year, while the average man earned $17,000 according to a report from a study done in Chicago. In 1984, 64% of the largest American companies still had no women on their boards, and only 8% had two or more women on their boards.
In the insurance industry, a study by the ACLI in 1987 showed that only 2% of the women working in this industry made more than $25,000 per year while 42% of the men did. Reasons given for this phenomenon included the possibility that men at the highest ranks of the companies had not yet grown comfortable with women in leadership roles, and that women in life insurance may have concentrated themselves in self-segregated groups, keeping them from the mainstream where jobs paid more.
One important issue causing trouble for working women was that childcare options were not keeping up with the change in women’s status. As more moms went to work, they had to battle a system that simply had not kept up. The number of daycares was extremely low, many had inconvenient hours, and the cost, if a woman could find one, was prohibitively high.
As women continued to gain access and higher level positions in the work place, they were still, in terms of life insurance, underinsured or in many cases not insured at all. In 1980, 65% of all adult women held some kind of life insurance, but this was nowhere near the 80% of adult men who held life insurance. In addition, the average face amount for women’s policies was $7,680 compared to men’s at $29,000.
The Life Insurance industry continued to recognize the importance of the women’s market. In one article the author stated, “Women are important enough as buyers and decision makers for insurance companies to be concerned with them” (Wexler, 1980). A marketing magazine suggested that the women’s market was a “special” market, and as such, deserved “special treatment.” Although what this treatment would entail is not defined, the author does indicate that there is a difference between single women and married women.
Nearly everyone was saying the same thing about the Women’s Market – it was new, it was something separate from the “mainstream,” and it was something worth paying attention to. The Boston Globe announced, “For the industry, there’s the prospect of an almost entirely new market.” A representative from Travelers Life stated, “We noticed the status of women had changed. Women were economically more valuable. They had a life insurance value” (Saltzman, 1980). Manager’s Magazine wrote “The last great untapped market is the women’s market” (Myers, 1983). Metropolitan Life was quoted as saying, “We think its [the women’s market] going to be a tremendous market…Traditionally insurance companies would talk to the so-called head of the household, the breadwinner…but with more women in the workplace…the distinction between earner and dependent has often ceased to apply” (O’Connor, 1981). The Globe Mail stated “Many industry insiders still consider women an untapped market…It would be utter folly to ignore such a vast market potential” (Stinson, 1982).
Some strides were made in reaching the women’s market. In 1981, John Hancock Mutual Life sold 32% of their policies to women, up from 20% in 1971. In 1989, AIG Life launched their Women’s Group, a network of female agents challenged with reaching the women’s market. While they do not present statistics on how effective the effort was, they did report that the first printing of their marketing material went out of stock extraordinarily quickly.
Sun Life introduced a product named HER, the main feature being that the rates were based on a separate mortality table for women instead of the setback method used in decades past. These new tables claimed to save women up to 40% on their life insurance premiums. Sun Life was not alone in adapting pricing for the new mortality gains recognized for women. Equitable Life Assurance developed a new classification for women based on new mortality tables, and Manhattan Life instituted discounts on the male 3-year setback for women.
An article in a 1983 edition of Manager’s Magazine encourages salesmen to avoid female stereotypes such as (1) women are basically emotional; (2) successful women are tough, pushy and less than feminine; and (3) woman’s place is in the home (Myers, 1983). Women were, in fact, looking at life insurance differently. A focus group in 1989 revealed that the main reason women purchased insurance was to help fund the education of their children. Women wanted more information on their options and how their life insurance would help them reach their goals.
WOMEN AS LIFE INSURANCE SALES REPRESENTATIVES
A prediction from an article in 1980 claims “During the 1980s, women will play a greater part in the distribution of insurance products…Currently the percentage of women in the agency forces has increased dramatically, due primarily to social and government pressures and good experience with women in sales” (Weech, 1980).
In some places, women were finally being seen the same as men. One author wrote, “Women will generally fail and succeed in the same ways as men, provided that they are selected in the same manner that is used to select males.” The women that were successful reported great satisfaction with their jobs. One agent for Metropolitan Life, June Visconti, said insurance sales was “one of the most financially and personally satisfying careers a woman can embark on.”
In 1980, Mutual of New York’s Pittsburgh agency formed a Women’s Unit, and found it to be a success. The company found that by capitalizing on the natural skills of women, including teaching, listening, nurturing and influencing, women were successful in reaching female customers. In 1981, 13% of the sales agents with both John Hancock Mutual Life and New York Life were women. In 1982, Sun Life of Canada, a company that had stepped up recruiting efforts in the women’s market, boasted 24% women in their new recruits.
One report stated that in 1983, there had been a significant increase in US women selling life insurance. A LIMRA report from 1984 stated that 12% of the agency force was female at that time. By mid-1986, it had risen to 18%. The reasons given for the increase in the number of female agents included the fact that no particular education level was required for the profession, that the pay had no ceiling and was the same regardless of gender, and that life insurance was rewarding for those who were looking to doing something good for other people.
In the 1980s, the retention of women agents increased to equal that of men, however most of the women entering the field were new. According to the 1984 LIMRA report, 40% of the women agents that year were in their first year of selling.
There was recognition that selling life insurance to women would require a different approach. Women typically needed more information and more time to make decisions. Companies and agents alike were called on to provide additional information and services in order to attract the female market. Women also were believed to trust other women, and were believed to be the decision-makers in the home when dealing with financial concerns.
As we move closer and closer to present day, it will be harder to generalize on the women’s market. We will try, however, to look at the 1990s next.
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