A recent study by Conning & Company details how the US population is changing, and how those changes will carry over into the next several decades.
The life insurance industry needs to keep up with these changes, and many insurers are already positioning themselves to do so.
For example, many carriers are deploying more resources to Western and Southern regions, especially states like Texas and Florida, where population growth and economic conditions are more favorable.
Minorities, especially the rapidly growing Hispanic segment, have been on insurers’ radar for a while. With the overall Hispanic personal lines market expected to reach nearly $40 billion by 2020, insurers like Allstate, Nationwide, and State Farm “all devote significant resources to account acquisition and client servicing in this segment,” the Conning report notes.
News is also good for insurers specializing in high-net-worth business, a market the report estimates at between $56 billion and $87 billion. Although Chubb, AIG and PURE have long histories with this market, Conning estimates that as much as 80 percent of high-net-worth coverage is insured outside of specialty insurers. This potentiality is enticing new entries to the field, including Nationwide and Cincinnati Financial, both of which have announced expansion into the high-net-worth market.
On the life and annuities side, another Conning report outlines how the increasing tide of baby boomers reaching retirement age—as many as 4.5 million will hit 65 through 2015—is only part of the picture.
Increased longevity, ethnic diversity, and income pressures are changing the life sales landscape. Gen X and millennials offer new markets for life insurance sales, although old approaches will not work with them. Likewise, Hispanics, African-Americans and Asian-Americans are historically underserved markets for life insurance.
The key to reaching all of these new markets is for insurers to explore new distribution channels. With the increasing level of diversity in the consumer market, a single channel is unlikely to meet all these different needs.
The Conning reports point to retailers like Amazon and Walmart as ways for insurers to expand their distribution options, with special attention to digital and mobile options because of the importance of real-time contact to modern buyers.
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