More than 40 million people work for small businesses—those with less than 100 employees. Yet, only 41 percent of small businesses offer life insurance. Less than 30 percent of small business employees are offered company-provided retirement plans. The top-line annual opportunity for life insurers is from $5 billion to $18 billion in sales depending on penetration rates, premiums and policy face amounts.
To capture the opportunity, insurers will need to:
- Develop and implement cost-effective, multi-channel capabilities to expand reach and access, achieving distribution-at-scale through virtualization and cloud.
- Pursue the segment by sub-sets based on selected criteria (such as income, industry, geography and so forth), backed by a relevant portfolio of products.
- Offer a distinct value proposition for helping small business owners with their executive compensation, business continuity and business succession plans.
- Simplify and create ease in doing business—from products to underwriting to service—with an ability to scale economically.
To enable winning strategies across any and all of the four segments I’ve discussed during this series, insurers will need to have in place several essential capabilities: customer-centric models, a prominent digital presence, highly-effective distribution, powerful analytics, a solutions orientation and optimized operations and IT. The return potential is worth the investment.