By <a href="http://annuitynews.com/AuthorProfile/Linda_Koco/57">Linda Koco
ORLANDO – Life insurance sales, as measured by policy count, increased 2 percent last year, according to LIMRA.
That percentage increase may seem like no big deal to some people, since the increase is so small, conceded Robert A. Kerzner in an interview with InsuranceNewsNet before his opening address here at the annual Life Insurance Conference.
But it is a big deal, said president and CEO of LIMRA, LOMA and LL Global, Inc. “This was only the fourth time in the last 30 years that the industry’s life policy count has increased,” he explained.
That said, the growth needs to continue if the industry is to achieve the goal of insuring more Americans, Kerzner continued.
The numbers spell it out
LIMRA statistics paint the picture in telling detail. In 2011, the number of life policies sold came to 9.5 million, down from the 20.6 million policies sold 11 years earlier, according to the Windsor, Conn., research firm.
That decline occurred even though the U.S. population rose over the same years, from 282 million in 2000 to an estimated 311+ million in 2011.
As an additional point of comparison, in 1980, the U.S. population was 227 million, and the number of life policies sold back then was 14.75 million, LIMRA says.
“We can’t grow if we don’t grow the number of people and households buying life insurance,” Kerzner said.
To do that, the industry needs to address changes of epic proportions, he continued. Those changes include not only adjusting to population growth but also to dramatic demographic trends.
Many wives are now earning more money than their husbands, Kerzner said, and there are more American households where both parents are income earners. Meanwhile, one-parent households are at an all-time high; the ethnic market is growing, especially among the Hispanic population; and the younger generations are getting older and closer to the point where they buy life insurance — especially generation X, many of whose members now have families, homes and businesses, he noted.
“Have we changed enough in response? What are we doing to take advantage of the changes?”
Challenges for the field
Turning to the field, Kerzner touched on the same point: “Have our sales presentations changed enough?” he asked.
The average age of independent advisors is 52, and the average age of affiliated advisors is 47, he noted. Some of these older advisors continue to be influenced by old ideas about selling that just don’t resonate with younger people today, Kerzner contended.
To deal with that, advisors need to learn how to build trust with the younger generations and to do so in a way that will best motivate them to buy, he said.
Right now, 33 percent of generation X (now in their 30s and 40s) own individual life insurance while just 18 percent of Generation Y (now in their 20s and 30s) are owners, he pointed out.
Of the two, Generation X is “clearly the biggest opportunity” for the life insurance industry, he said. That’s because Gen Xers are at the stage in life where they really need life insurance and were life events happen that trigger awareness of this need.
But is the agent on the street reaching this market? Kerzner asked. More specifically, “are advisors saying things that resonate with these buyers?”
Kerzner believes that a lot of the training programs for agents are based on LIMRA data from 30 to 35- year ago. The problem is, “the game has changed,” he said. Today’s producers need to speak to younger consumers in a way those consumers want to be spoken to, and to provide the level of information that younger consumers are seeking.
LIMRA research has found that younger adults want information about how much life insurance they need, what kind of insurance they need, and how to know whether the insurance that is offered to them is the right type for them (not their relative or neighbor), he explained.
Unfortunately, some older producers haven’t changed their ways enough to capture the interest of those younger people, he continued. “Some consumers have even said they are more confused after speaking with an agent than before, and sometimes even after they have bought.”
He takes that as a sign that 1) old habits die hard and 2) many 50-something producers need to change their strategies more than they may have already changed.
Getting additional training in this does produce results, Kerzner maintained. For instance, he said that LIMRA research from last year found that, when agents were trained in building trust using updated approaches, production improved “substantively.” The improvements showed up right after training and also when checked one year later.
Kerzner’s conclusion: To seriously impact productivity “you need to do things differently today than in the past.”
Kerzner plans to touch these and other points in his conference address. The conference is being co-sponsored by LIMRA, LOMA, Society of Actuaries, and the American Council of Life Insurers.