The popularity of life insurance has declined because the industry has failed to keep up with changing consumer buying habits and behaviors.
Many US consumers do not clearly understand how life insurance works or how it should be prioritized among their other financial investments. They want options laid out in a way that is fast and easy to understand, where they can compare products among different insurers. After decades of relying on agency distribution, life insurers are woefully unprepared to survive in today’s consumer-driven economy. They must do a better job of reaching the underinsured.
The number of life insurance agents continues to decline as more consumers turn to the Web for insurance. The Web now plays a role in 8 out of 10 life insurance purchases and one out of 10 customers now engages a carrier via mobile phone. Among those ages 25-44, 31% prefer to buy direct, and 37% of term-life share is sold direct, a trend that is expected to grow to 63% by 2015.
Direct distribution is not only important to meeting evolving customer needs, but also to the survival of traditional life insurers. The low interest-rate environment requires companies to implement cost-effective sales and service processes. The declining number of agents requires organizations to reinvent their go-to-market strategies. In short, consumers are moving toward direct distribution, and companies that fail to follow will lose market share.
Insurance Advisory Practice Leader
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Global Growth Strategy, US Financial Services Practice
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