LIMRA Chief: Fight The War For Consumers On Many Fronts

By Linda Koco
InsuranceNewsNet

The life insurance industry needs to fight the war on many fronts if it wants to get consumers to act on purchasing insurance to protect their families. This is the word from Robert Kerzner, president and chief executive officer of LIMRA, LOMA and LL Global.

In a wide-ranging interview in advance of his address here at LIMRA’s 2014 annual meeting, Kerzner urged the industry — including agents and advisors as well as carriers — “to do new and different things if we hope to win the hearts and minds” of today’s very diverse group of consumers.

He’s talking about improving the way the industry communicates with consumers as well as the quality of the customer experience. He’s also talking about using things like technology, data analytics and social media to learn more about what consumers want and how they think. 

The challenge

Today’s consumers are very different from one another as well as from consumers in previous eras, Kerzner said. They also make decisions based on different information and on what is best for them.

In addition, they are “confronted with more demands on their time and money than ever before,” he said, noting that this makes it ever more difficult for carriers and advisors to connect with consumers and engage them. That impacts insurance sales.

“Everything we think we know about the consumer needs to be examined critically,” he said, “because you are not just competing with each other. You are competing with Apple, Amazon and every other company trying to gain consumer mind share.”

The American household is different today than it was previously, he said. It’s less homogenous than it once was, and the definition of a family is “quite different,” too.

For instance, the traditional household — married with children — now represents only 20 percent of households, down from 40 percent in 1970, according to U.S. Census Bureau data pulled by LIMRA. Meanwhile, multigenerational households are up 50 percent since 1980, and single-parent households have more than doubled since 1970.

Fewer people are getting married, too — only 51 percent today versus 72 percent in 1960 — and many are marrying their late 20s versus the early 20s as was common in the 1950s, he said.

“If the purchase of life insurance is tied to events, and if the events decline, the needs will decline,” Kerzner surmised.

Millennials are more educated than previous generation, he pointed out. But they also have “way more debt.” That means they will need life insurance. However, they can less afford to pay for it, because 37 percent of Generation Y is unemployed, and more than a third depends upon family members for regular financial assistance, he said, citing Pew Research statistics.

“Is it any wonder that the industry is doing a lousy job of convincing people to buy?”

Another change the industry needs to address is the increasing diversity of the U.S. population. The Asian population is predicted to more than double by 2060, he said, and the U.S. Hispanic population is projected to grow 125 percent by that same year.

Still another difference is how people buy.  Some consumers prefer a do-it-yourself approach to purchasing insurance, while others go to commission-based advisors, and still others go to fee-based advisors and contact centers, Kerzner noted.

Some good news too

LIMRA has also found some “good news” for the industry in the data. For instance, 39 percent of Gen Y consumers are likely to buy life insurance within the next 12 months, as compared to just 30 percent of Generation X and 18 percent of baby boomers, he said.

Also, women value life insurance more than men, according to LIMRA research. Women are also more likely than men to think that saving for retirement is important. These tendencies, combined with a Pew Research finding that 40 percent of households with children under 18 have a women as the sole or primary source of income, have insurance-buying implications.

Among divorces in the 40-69 age group, LIMRA found that women instigated the divorce 66 percent of the time, and many of them joined up with other households afterward. “This fundamental shift changes retirement planning dramatically for many,” Kerzner said.

Alternatives needed

For the life insurance industry to cover this market effectively and grow sales, “we need to provide an array of alternatives in how consumers can buy, and in how they can get information and advice.”

That advice model will need to morph to provide options that people want, he contended. “Some will want to buy online at 2 a.m., so we need to provide them an effective medium to buy” at that time, Kerzner said.

This won’t exclude advisors but it will likely change how consumers get to advisors, he indicated.

LIMRA research shows that consumers are affected by many influencers, such as family, friends, the Internet, social media and news stories, he said. Since the impressions they collect impact how they think about things, including insurance products and services, the industry needs to “improve all these impressions.”

In addition, the industry needs to know what prompted people to act.

The industry will probably never know all of that, he allowed. For that reason, the industry needs to approach consumers on many fronts, not just social media or another single strategy.

What’s more, “you have to do it all right,” because no one knows which influencer will inspire a person to act.

His suggestions included:

• Listen better to consumers’ real wants and needs.
• Use technology and big data to better understand consumers, and to give advisors “leads to people with a high proclivity to buy.”
• Use social media and mobile to be where the consumers are.
• Change the customer experience and how advisors communicate so they are more trusted.
• Encourage producers to use Skype so they can see customers even if not in person.
• Employ behavioral economics and “gamification” (online games that engage and educate on insurance while also being fun to play) to improve people’s understanding of the importance of protecting loved ones and saving systematically for retirement.
• Help people make better financial decisions.

Companies like Amazon and Apple wow customers today, Kerzner concluded. “That’s what we’re competing with, whether we’re realize it or not.”

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