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The Time To Disrupt Life Insurance Is Now


WESLEY CHAPEL, Fla. — “We can’t experiment any more. We need to disrupt!” Those words came from Mark Hug, the opening general session speaker here at LIMRA’s annual distribution conference.

Some insurance companies have been experimenting with alternative distribution channels as part of their efforts to expand distribution, he noted. A long time ago, brokerage was considered alternative, but now alternative means different things, and carriers are experimenting with those different things.

That’s good, mused the executive vice president-product and marketing for Prudential. “But the life insurance industry is not going to make progress through experimentation. The contracts we write take years to develop.”

The industry doesn’t have years. It has been stagnant for a long time and it needs to make changes now, he emphasized repeatedly. Later in his talk, Hug offered some ideas on how to do that. But first he made his case for change.

Some people say they don’t want to disrupt, that they have a good thing going, Hug allowed.

“That’s fine, but think of other people who had a good thing going,” he said, pointing to firms like Netflix and Amazon.

Amazon recently bought a whole company that has as its sole purpose figuring out how to deliver groceries in the same day, he said. That’s not because Amazon wants to get into the grocery business, he said. Rather, it’s because Amazon wants to be able to deliver their product s in the same day. They’re spending millions of dollars on this, he said.

Distribution and sales in the life insurance industry are, and have been, stagnant for several years, he contended. For example, he said:

· Life insurance sales, as measured by premium, were projected to get back to where they were in 2007 by the year 2015. But preliminary results for 2013 put the total life insurance sales for the year at $13.2 billion, according to LIMRA figures that Hug showed. So “I don’t think we’re going to get there by ’15 — we’ll be lucky to do that by ‘16.”

Advisors Guide to Selling IUL

· By some measures, the industry has experienced 25 percent fewer distributor hours spent on selling life insurance today than 10 years ago.

· Although there was some growth in the number of producers selling life insurance in 2000, in more recent years, the numbers have been hovering in the range of 300,000. “Stagnant, stagnant, stagnant,” Hug said.

· Over the same years, there were roughly 200,000 financial advisors, targeting life insurance sales of about $1.5 billion a year. That’s two-thirds of the size of the life producers and 10 percent of $13 billion in sales for 2013. “Think there might be a little potential there?” Hug asked. “Think about that.”


Advisors Guide to Selling IUL Industry workers are getting old. “Our distribution is in the upper 50s. Financial advisors and broker-dealers are in the lower 50s. So we’re not keeping up with the population of the U.S.”

Some people say that the industry’s sales declines are the result of industry trends to lower the price per thousand of life insurance face amount, Hug said. “They say, ‘Just get that price back up there and that’s all we need.’”

Well, said Hug, “that’s not happening, guys. We have to find ways to sell a lot more. We don’t talk in terms of big enough numbers.”

“Other industries are spending billions on advertising, he added. But do we pull together as an industry, full bore, and put millions of dollars into our advertising? No, ain’t happening.”

The result, he said, is “we get what we pay for.” What is that? “Two out of every three adults have no life insurance — zero, none!”

The industry is also not keeping up with sales uses of technology, he said. To illustrate, he pulled out his smart phone and did a search for “Find me a lawyer.” Within seconds, the search brought up three lawyers within a mile, and one with positive reviews. Then he searched on “I need to buy life insurance” and the search brought up two articles from Money Magazine, one from Forbes, and a link to a Genworth page on long term care insurance.

Hug said he could always go to a phone book to look up life insurance agents, “but I don’t look at phone books.”

“This is the future,” he concluded. “The future is right now. Don’t let it pass by or we won’t be there. The world is changing. Get on it.”

Hug included in his address numerous ideas on areas for change. These include: adopting multicultural marketing; use of social media and predictive analytics to “know your customer;” use of neuro-marketing to learn the words and concepts that help motivate people to buy life insurance; use of market segment for sales initiatives (Hispanics, women, Generations X and Y, etc.); expansion into alternative points of sale (ATMs, grocery stores, Google, etc.); simplification of products and processes; and improvement of the customer experience according to customer loves, hates, behaviors, etc.

One survey found that if an agent just mentions the words “life insurance,” 20 percent of the listeners, even if they don’t buy, will recommend the agent to a friend, Hug said. “Just say the word,” he said.

Advisors Guide to Selling IUL

, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda may be reached at [email protected].

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Advisors Guide to Selling IUL