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As much as the life insurance industry has stayed relatively consistent over the years, there are always shifts that independent insurance agents need to keep apprised of which can impact the way they do business. This is why staying ahead of life insurance trends is important.
Keeping up to date with trends and world events that impact the whole life insurance industry as an independent insurance agent can be challenging. However, doing so helps you better develop strategies for your clients and ensure their needs are met more thoroughly.
By understanding up-and-coming movements in the field, you’ll be able to serve your clients more effectively in 2023 and beyond—ensuring your life insurance policies remain relevant, valuable, and attractive to buyers regardless of whatever changes may hit the market.
Let’s cover some of the key insurance industry trends agents will need to keep an eye out for.
What Are Life Insurance Trends?
The word “trend” can have a few different meanings. It can indicate a direction, a new fashion, or a change or development in an industry. Life insurance trends fall under the third meaning—a change or development in an industry that can affect how agents in the industry operate.
These trends can come from numerous sources. For example, trends can be driven by new technologies, shifts in customer demographics, changes among the largest insurance providers, or regulatory initiatives from lawmakers.
How Do Life Insurance Trends Impact the Market?
Life insurance trends can impact the market in a variety of ways. Some trends can leave independent life insurance agents scrambling to take advantage of new opportunities in the market. Others might necessitate the adoption of new internal processes to keep up with consumer demands or industry regulations.
Changes in the life insurance landscape can depress new policy sales or cause a surge in a particular type of policy. For example, as noted by Broker World, “The industry is feeling the effects of the pandemic, not to mention rising inflation and related inflation-driven pressures on disposable income as well as rising interest rates.” This can make it more difficult for insurance agents to sell insurance policies as prospective buyers have fewer funds available and life insurance policy premiums have to be adjusted to keep policies profitable.
How Can Independent Life Insurance Agents Leverage Trends?
Independent insurance agents can leverage trends in the industry to accomplish a few different things, such as:
- Capturing Underserved Markets. If there is a trend creating an underserved market in the insurance industry, independent agents can leverage that knowledge to target the underserved market themselves—capturing sales that others may miss.
- Future-proofing Insurance Policies. Knowing if or when a major change is coming to the industry is key to preparing for it. With foreknowledge of changes in insurance rates or new regulations affecting insurers, agents can modify policies to account for these changes before they occur—helping to reduce the impact of the change on operations when it occurs. This, in turn, helps the agent avoid complications at a time when others might be struggling to adapt.
- Adjusting to Meet Consumer Expectations. We are fully in the digital age. Modern consumers expect a certain level of convenience in their interactions with insurance agents and brokers alike. By shifting their business model to take advantage of online resources, agents can capture customers who would be left behind by more traditional sales and marketing.
- Identifying More Valuable Partnership Opportunities. Finding the best products to offer clients is important to grow revenue. Identifying trends in consumer preferences early on can help independent life insurance agents identify the best products to add to their portfolio and offer to their clients across every stage of the customer lifecycle.
These are just a few of the potential ways to leverage insurance industry trends as an independent agent. The specific strategies that insurance agents will want to employ will depend on the insurance industry outlook and the nature of the trends that emerge.
Life Insurance Trends to Watch in 2023
So, what are some of the major life insurance industry trends agents should keep an eye out for in 2023? A few of the major trends include:
1. An Increased Focus on Environmental, Social, and Governance (ESG) as a Differentiator
According to Deloitte Insights, “Insurers are likely to be judged not just by plans laid out in their annual sustainability reports, but by how their initiatives actually limit the impact of climate change and other nascent systemic environmental risks.”
While this initially sounds like an issue more for brokerages and other large organizations in the insurance industry, it can affect individual life insurance agents as well. The policies they offer to their clients, and the partnerships they form, may be scrutinized by eco-conscious clients.
Agents who can demonstrate support for environmental initiatives and have partnerships with organizations that reflect those values could possess a key differentiator from other agents.
2. Embedded Life Insurance
Fintech Global reports that “Meeting consumers where they are is key to reaching new customers and reducing the life insurance need-gap.” One method of accomplishing this is offering embedded life insurance policies wherein life insurance is bundled with other products—sometimes as an optional add-on or feature and sometimes as a mandatory part of the other product.
This may mean that independent insurance agents will need to compete with a new class of companies that are now bundling life insurance with their other products. These competitors will be offering their life insurance products to consumers during their regular sales process for other products and potentially catching consumers in a more agreeable state of mind for making the purchase.
Mimicking this behavior and offering bundled insurance policies that combine life insurance with other forms of insurance (such as health insurance, pre-need funeral insurance, etc.) could be one way for some insurance agents to expand their revenue opportunities with existing prospects.
3. Rising Insurance Premiums
The cost of insurance is on the rise globally. In Q2 2022, global insurance prices rose 9%—the 19th consecutive quarterly rise. This contributes to market hardening as consumers don’t have the disposable income to spend given that, after adjusting for inflation, wages for the average American have remained largely stagnant since 1964 (source: Pew Research Center). In 1964, an hourly wage of $2.50 would be roughly equivalent to a wage of $24.26 in 2023.
In 2023, the average salary of a U.S. worker is around $53,490/year. This equates to roughly $25.70 per hour assuming a 40-hour work week with no PTO.
This makes life insurance inherently less affordable when premiums go up. With costs rising for insurance agents, brokerages, and others within the industry, it will be harder to offer products that align with the customer’s budget and needs.
One option would be to offer whole life insurance policies where the insurance never expires and continually provides cash value that these clients may find attractive.
4. Slight Decline in the Percentage of Americans Insured
According to annuity.org, “About 50% of America owns life insurance as of 2022. This marks a 2% decrease from 2021 and about a 13% decrease over the last decade.” With fewer Americans purchasing life insurance policies, agents may struggle to meet their sales goals.
Here, finding alternative products that balance the client’s needs against their budget may prove difficult, but effective, for capturing cost-conscious customers. Additionally, finding underserved markets or niches in the life insurance market could help agents outperform the industry average and drive new revenue.
5. A Shift to Digital Interactions with Clients
Modern consumers are becoming increasingly familiar with (and reliant on) the internet and smart devices. For example, according to Pew Research, fully 85% of American adults own a smartphone—and roughly three-quarters of adults in the USA report using a smartphone for shopping.
To sell life insurance policies more effectively, agents may need to enhance their digital capabilities—including creating mobile-friendly websites for the products they offer. This can help to capture the majority of American customers that do their shopping from their handheld on a daily basis.
ELCO Mutual is proud to support independent insurance agents by providing marketing resources to help them sell their life insurance policies. From dedicated support staff to consistent product training and education, we help ensure agents have what they need to drive revenue for their agency.
Contact us to learn more about our life insurance products and how we can help you delight your clients.
