According to a new study by Conning & Company, the US continues to undergo changes in its demographic structure. This ever-changing customer face bears little resemblance to customers traditionally served by insurance.
And the face of the insurance customer continues to change. Dramatic shifts in the US population over the next decades—changes in ethnicity, geographical density, age and net worth—mean that the life insurance industry must take similarly dramatic steps to tap into these changing markets.
The report focuses on four major drivers of demographic changes:
- Population growth. Revised figures by the US Census Bureau suggest slower population growth from 2015 to 2050 than previously suggested: 1.5 million fewer people than the original 399.8 million by 2050. Population growth is now the slowest it’s been since the Great Depression, and in the next decade it will be even slower.
- Population aging. Much has been written on the aging of the huge baby boomer population: the 65-plus age group is expected to reach 22 percent of the population by 2050. This can be a challenge for some personal lines insurance, but a boom in specialized products and services that cater to seniors.
- Shifting geographic population distribution. “Go west, young man” is as true today as it was during the Gold Rush. Millennials are heading away from the Northeast and Midwest to the South and the West. As a result, more than 80 percent of the 2000-2014 US population growth came from these regions.
- Ethnic-racial diversity. Minorities in the US accounted for 87 percent of the national population growth from 2000 to 2010. The US Census Bureau projects that the US will be “majority-minority” by 2044, with Hispanics accounting for more than 50 percent of the population.
Next time I’ll discuss the impact these changes will have on the life insurance industry, and how it can keep up with the changes.