Opportunities in the promising middle-income market are unlikely to last long. Life insurers need to take some key steps to quickly seize a stake in this once-neglected sector.

Life insurers need to move quickly if they are to secure a slice of the potentially lucrative middle-income market.

Long shunned because it offered lackluster profits and growth, the middle-income market is likely to become a prized target for life insurance providers. Advances in digital technology and the growing presence in this sector of tech-savvy consumers have wrought a huge turnaround. The middle-income market now offers insurers substantial returns.

To capitalize on this shift, life insurance providers, as I mentioned in an earlier blog post, need to adopt a direct-to-customer (D2C) strategy. They have to deploy digital channels to deliver products and services straight to consumers. But they need to move fast. Insurance firms, such as MassMutual and MetLife in the US, Direct Line in the UK and Generali in Germany, are already using direct distribution channels to tap the middle-income market.

Opportunities for new entrants are unlikely to last long. To secure a good foothold in the middle-income sector life insurers need to take several essential steps. They include:

Micro-segment the market. The middle-income market is far from homogeneous. Digital analytics allows life insurers to target specific parts of the market with specially tailored products and features. Monthly easy-payment facilities, for example, will appeal to young entrants to the job market while final expense products will be attractive to retired customers.

Simplify product offerings. Digital D2C products need to be simple, modular and robust. Consumers should understand them easily and be able to buy them quickly with little inconvenience.

Mix mediums. Digital distribution is most effective when it incorporates a variety of sales and service channels. Analytics systems allow insurance providers to blend call-center facilities with digital advertising, online services and self-service portals to get the right mix of contact points for different target audiences.

Create stand-alone businesses. Digital D2C channels need to operate separately from traditional business units. Legacy technology, systems and processes slow innovation and hamper agility. Insurers should consider establishing an in-house incubator or outsourcing their D2C unit to ensure it is sufficiently nimble.

Build customer relationships. To retain and grow D2C relationships life insurers must constantly engage with their customers. Furthermore, they should interact through the channels customers choose. Regular and frequent communication with customers is essential.

Integrate the D2C channel with the organization’s business model. While the D2C channel should operate separately from the life insurer’s core business, it is essential that its activities support the company’s business model. The middle-income sector is a key market that offers significant revenues and profits. Competition for resources between business units, and lack of cohesion, can easily dilute a company’s effectiveness.

For further information on using a D2C strategy to serve the middle-income life insurance market take a look at this link. I’m sure you’ll find it helpful.

Tapping the $12 billion life insurance middle market opportunity

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