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Life Health > Life Insurance

The Browning of America Calls For Education And Different Approaches

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When Oprah Winfrey said, “I still have my feet on the ground, I just wear better shoes,” her words reflected what many insurers and financial advisors already know: There is a large and growing affluent African-American community waiting to be served.

Census figures suggest an expanding market that is better educated and more affluent (see chart) and insurance experts put a voice to those numbers.

“The insurance industry is catching on to the fact that America is browning and it is important to have diversity as part of its program,” says Roosevelt Haywood III, chairman of the National African-American Insurance Association, Washington.

African-Americans who are part of that change are affluent professionals, says Kevin Taylor, a certified financial planner with H&R Block Financial Advisors, Kansas City, Mo. “They are first generation. They are the first college graduates and the first to go out and make a good living.

“So much of financial planning is new to them. There is a whole education process; they have needs that they didnt know they had,” Taylor says.

That is where financial advisors and insurers need to step in, he continues, because often clients are underinsured, not believing they really need additional protection. Among responses he hears are: Weve had it tough this long and weve gotten through it or The kids will find a way.

Consequently, a financial advisor needs to show the benefit in relation to cost, Taylor says, and it will be easier to show that to your client if you maintain contact with that individual. African-Americans want more contact, he adds. “Advisors need to know it may be harder to get a relationship but these folks are more loyal,” he says.

Taylor adds that “for too many years, too many of us have been ignored by Wall Street.” Wall Street sales forces are trained to go out and reach the ultra-high-net-worth individuals, leaving a lot of African-Americans who are now in the middle class out of the equation. “There are a lot more middle-class Americans out there.”

Taylor says that although he found this to be true of the securities industry, he does not have enough evidence to say whether the same holds for the life insurance industry.

If companies do work with African-Americans, they will find loyal clients, says Damon Dyas, a certified financial planner affiliated with American Express Financial Advisors, Southfield, Mich.

Dyas says a lot of African-Americans have kept older, small face amount policies in force. The policies may not be efficient for their current needs and a planner may need to work with those clients. But the point, Dyas adds, is “once they purchase it, they keep it. There is no buyers remorse.”

Women are more open to insurance, more “security conscious,” he says. “The wife is more realistic.” She is concerned about independence if the spouse dies, Dyas adds.

Many of his clients “do their homework” before they come to him to discuss an insurance need, he says. “They come in with a very set idea of the insurance they want.”

What they want, he continues, is someone to tie insurance into a financial plan that goes beyond just selling insurance.

African-Americans who understand the needs of those in their own community can help achieve this goal, say those already in the business. They need to be trained and encouraged to enter the life insurance business, they add.

“There needs to be visible, professional practitioners supported by a strong company with sensitivity to the needs of the community,” said Haywood, who also is a principal with Haywood & Fleming Associates, Gary, Ind.

Companies need to be “visibly active” in the fabric of events in the African-American community, he says.

If no one approaches African-Americans to buy insurance, how are they going to be familiar enough with it to want to pursue a career? Haywood asks.

He says his father sold industrial life insurance and that connection helped him pursue a career as a producer that has enabled him to insure a school system and an airport. “I am one of the fortunate few that have been exposed to that.”

Diversity programs are not something a company should do “just to keep affirmative action people or regulators off of you,” he says. “You have to invest in it. You have to work at it consistently.

“I knew what it took to build my business,” he adds. It is that same consistency that is needed in building a diversity program, Haywood explains.

Bruce Foudree, of counsel with Bissell Lord Brooks in Chicago, says that if it can be proved there is a difference in service or offerings by life insurers by area, then conceivably some of the same legal issues that have come up in the property-casualty business could surface in the life business.

But, he says, the important thing for life insurers to understand is “the African-American community has opportunities in the marketplace and those that get there first will benefit.”

Mona Carter, an NAAIA board member, says “there is recognition that the market is viable. It is a loyal market.”

Products that help build wealth and establish financial stability are products life insurers should make available to African-Americans, she says.

Insurers can start to offer these products by first educating the African-American community about them, says Eugene Mitchell, assistant vice president and manager of the African-American marketing program with New York Life Insurance Company, New York.

What isnt communicated is the need to use “wealth-creating tools,” he says. African-Americans have been taught to think of insurance as a way to pay for a funeral, he says, but other lessons such as deferring gratification to save today also need to be taught.

Understanding the difference between the symbols of wealth and the effort needed to make sure there is a continuation of wealth is an effort being advanced by the Rev. Jesse Jackson and the Rainbow Coalitions 1,000 Churches Connected program, says Mitchell, and New York Life is participating in that program.

Churches are a “center of influence in the Black community,” he says, and generally two New York Life agents will visit a church together and make a presentation about why life insurance is important.

“A lot of African-Americans have never benefited from the product [life insurance],” he adds. “If you have never been told about the benefits, how can you appreciate them?”

He says New York Life is also doing other things to reach out to the African-American community like sponsoring PBS documentaries such as “The Rise and Fall of Jim Crow,” and “Slavery and the Making of America.”

Marketing to the African-American community is best done by targeting specific African-American publications and media rather than general venues, he says.

More African-Americans pictured in sales brochures, according to Jerald Tillman, NAAIAs founder emeritus, is also needed, as well as more involvement in community events and cultural activities.

According to Tillman of J.L. Tillman Insurance Agency, Cincinnati, insurers need to pay more attention to inner city life than focusing largely on the suburbs. “Companies have to know that it is OK to set up agencies in the city.”

Reproduced from National Underwriter Edition, May 7, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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