How to Woo Gen X to Life Insurance: Innovate

By Linda Koco
InsuranceNewsNet

GRAPEVINE, Texas – Life insurance is not attracting a lot of younger buyers so it’s time to innovate around ways to reach this generation, according to a speaker here at the annual meeting of National Association of Independent Life Insurance Brokerage Agencies (NAILBA).

What brokerage general agents (BGAs) need is a fresh perspective how younger adults see and value the life insurance business, said Mike Maddock in an interview with InsuranceNewsNet in advance of his talk.

”You can’t read the label when you’re sitting inside the jar,” said Maddock, who is chief executive officer and founding partner at Maddock Douglas, an Elmhurst, Ill., innovation firm.

He will make that point during an innovation workshop he is co-leading today along with Maria Ferrante-Schepis, a managing principal at the same firm. The two plan to zero in on why brokerage general agents need to rethink business strategy now and how to do it.

Experts in insurance

Inside experts often cannot see how to solve a problem, said Maddock in explaining his inside-the-jar comment.

“Say that you’ve been working with something for six months or more. Then you become an expert at it. But when a problem comes up, your expertise get in the way” of finding an effective solution.

To illustrate, he noted that inside experts may have tried an idea in the past that ended up failing because the market wasn’t ready for it. “But then, when hearing it again at a later time, they may dismiss it without reconsideration.”

His suggestion is for firms to use outside experts to provide a fresh perspective on business issues they encounter.

Where life insurance sales are concerned, he said millennials — now ages 22 to 34 — aren’t living in an era where people worry about the breadwinner not coming home due to death caused by an accident at work.

They didn’t grow up with fear about a “death in the coal mines” or “death at the factory,” he said. So life insurance sold on the basis of fear of early death of the breadwinner is not persuasive to this generation.

Hence the industry finds itself in the position of being able to sell life insurance to older adults -- the baby boomers and Generation X — but the younger adults “don’t want it.”

Millennials do care — and deeply — but about other things, Maddock added. The life insurance industry leaders need to learn about those other things and innovate around that, he said.

“There are experts that know what the younger generation cares about, and what is valuable enough to millennials to get them to write a check to you,” he said. “Be open to these experts so you than get ideas on how to talk about products in a different way.”

A question of relevance

The question for BGAs is, “will we stay relevant if we don’t change?” said co-presenter Ferrante-Schepis in a separate interview.

If not, millennials will give the industry a “pink slip,” the financial services executive predicted, citing research her firm has done in this area. 

The younger people will be "firing" the older generation of advisors, "because the (existing) advice model is becoming irrelevant to them.”

It is not advice that is irrelevant, Ferrante-Schepis emphasized. “Rather, it is the way the industry presents advice and its products that is irrelevant to the younger generation.”

To change things, the industry needs to apply some basic drivers of relevance to their business, Ferrante-Schepis said. These include:

Perception of risk. The younger generation does not perceive the risk of death in the way assumed in today’s dominant insurance business model, she said, underscoring Maddock’s point.

Communication. The insurance industry is not communicating the right content to this generation, she said. “It needs to reexamine the words it uses, the authenticity of its communications, etc.”

Engagement. The industry doesn’t engage well with the “prosumer,” she said. Prosumer refers to people whose knowledge level falls between professional and amateur. “They make decisions about what they need before they see an advisor, and they want a B-to-Me experience where they can customize what they buy to themselves.”

Another area needing work concerns the perception of insurance. To the younger generation, insurance is “weird,” Ferrante-Schepis said.  “Through the lens of this generation, the product behaves in a way that is counterintuitive to the other products they buy. Most do not understand the nature of insurance, so insurance gets vilified.”

Her suggestion: Work on closing the gap between industry intensions and consumer perceptions.

Game-changers

Many game-changing innovations have come about due to the activities of people who were not considered industry experts, pointed out Maddock, citing founders of Travelocity, Amazon and Netflix as examples.

And then there's Quicken, which delivered a software solution for personal financial purposes and wound up putting thousands of accountants out of business, Maddock warned.

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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