In a new report titled Opportunities in Reaching the Middle Market with Life Insurance: New Pathways to Growth, Conning estimates the middle- market life insurance protection gap to be $10.2 trillion - a 56% increase when compared to the firm's last study of the middle market in 2006. The total protection gap across all income brackets has more than doubled.

With the simultaneous downturns in the equity, credit and housing markets, coupled with employee benefits being squeezed by the recession and rising health care costs, the middle market protection gap - already large - has grown.

According to Conning, the inflamed gap stems largely from demographic trends, including a 4.7% population increase between 2005 and 2009. However, individual life insurance, at best, has only kept pace with inflation, Conning notes.

The total number of lives covered by individual and group life insurance reached its highest point in 2003, but since then has declined at an annual pace of 1.6%.

Going on to lament the looming prospect of baby boomers leaving their "prime insurance-buying years," the report says "the evidence so far is that the life insurance industry is not laying the groundwork for replacing its customer base."

In recent years, according to Conning, tools have become available to cut into this gap. Predictive analytics brings improved marketing, as well as efficiency and accuracy, to underwriting and policy administration. More important, however, are social media and the Internet as outreach tools.

"Current life insurance products and distribution methods do not fit well in those vehicles, but progress is being made," notes Conning. "Online tools are becoming more robust, and insurers are beginning to approach the Internet and social media as a primary channel, rather than just another place to post material developed for other media. This change in approach, while subtle and still not prevalent for life insurers, maybe the first tentative step to making progress in reaching the middle market."

Despite compliance, security and data concerns, according to Conning, social media has the potential to disrupt the life insurance sales process. With population growth and the industry's decreasing reach, a fresh, disruptive approach may go a long way.

Justin Stephani is an associate editor for Insurance Networking News, a SourceMedia publication.

 


Tech-savvy customers more satisfied According to a report from J.D. Power and Associates, insurance customers who use emerging technologies, such as smartphone applications, online chat and email, as complementary channels to interact with their insurance providers "are significantly more satisfied than [customers] using only their purchase channel to meet their service needs."Translation: Those who are technologically savvy tend to feel they have a much richer customer service experience if the insurance provider offers a variety of these emerging technologies to communicate with their customers.The report also found that most insurance companies (80%) allow users to complete their entire auto, home and life insurance purchases online. Even customers who took the time to pick up the phone vs. purchasing a policy online subsequently spend nearly as much time on their insurance company's website.Source: AnswerFinancial.com

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