The Hispanic population is, like the wave of baby boomers, poised to crest in the United States and its financial services industries, according to J.D. Moya, president of Pegasus Insurance Group, Albuquerque, N.M.
Moya says that if life insurers want to ride that wave, they need to understand a significant part of its energy: the Mexican community.
Mexicans make up 66% of the 40.4 million Hispanics in the United States, according to a 2004 survey from the U.S. Census Bureau.
A number of traits and needs will help insurance professionals better understand Mexican-Americans, according to experts interviewed by National Underwriter.
First, the traits that insurance producers say are critical to understand: the importance of family, a conservative approach to money, the importance of trust and the establishment of relationships.
Next, the needs they say are necessary to satisfy: the need to be educated on financial products, and the need to both protect and educate their children.
Moya says the need to own a home is a fourth driver of the Mexican community. A total of 55% of Mexican-Americans say they are optimistic they will buy a home within five years, according to Moya.
Another point he raises is that because many Mexican-Americans are in the service industries and many own their own businesses, there is a need for health coverage.
Given these two facts alone, Moya says there should be a big market for life insurance to protect the home owner’s family in case of death, as well as health insurance products, such as Health Savings Accounts. An insurer who could offer HSAs or other employee benefits “would probably be overrun with business,” he continues. And, if the life insurance offers guarantees, so much the better, he adds.
One reason that Mexican-Americans are so concerned about the preservation of the money they have, Moya says, is that it does not come from investment income but is money that they went out and worked for.
Moya says the Mexican community has more money to spend on life insurance than might initially be thought. He cites the example of his plumber, a 36-year-old man who has a family. He asked his plumber if he had insurance to protect his wife in the event of his death and was told that the plumber had a $50,000 policy. Moya suggested that this would be insufficient to protect her and asked the plumber if he could set aside at least some money and make an annual commitment to an indexed UL contract. The plumber put up $40,000 and made an annual commitment of $5,000. It was a matter of educating him about how to better protect his family, Moya says.
That focus on work may be one reason why retirement ranks fourth among Mexican-Americans as a financial priority, according to Moya, because if people are focused on making a living and caring for family, retirement is not as high a priority.
Juan Job, corporate vice president, Hispanic market, with New York Life Insurance Company, New York, says Mexican-Americans are not only the largest segment of the Hispanic community but also the youngest in both actual age and arrival in this country.
But even if many entrants are perceived to be at the lower end of the economic scale for the moment, the Mexican-American community is so large that there is still a sizeable middle market life insurers can service, he continues, citing a 2005 survey from the U.S. Census Bureau that notes that Hispanics lead all other minority groups in the number of businesses owned.
Since there are so many closely held businesses, owners will need to assure that the business is passed from generation to generation, he adds.
One of the hallmarks of this community, according to Job, is the tendency to send money home to family in Mexico. So, he continues, a needs analysis may have to include ways to protect family both in the United States and in Mexico.