Consider this scenario: Widespread lack of trust in large financial institutions, a prolonged economic slump and a resurgence in the collective yearning for the ties that unite and define us.
These are the times we live in now. These were the times 140 years ago when belonging to a fraternal organization and buying its insurance policies was more the norm than the exception. In fact, for the immigrants that flocked to America to seek opportunity and build a nation, fraternals were the only organizations that would offer them life insurance protection.
Historically, fraternals thrived when times were tough and the need for community was great. The time is right now for fraternals to refine their mission, promote the valuable but often overlooked contributions they make to communities, recruit new agents and members, and engineer a rebirth.
In 1909, fraternals provided about half of all the life insurance in the United States. Today, societies write about 2% of the U.S. life insurance market. Yet more than 9 million Americans are fraternal members and fraternal insurers were the only segment of the industry whose market share grew in the first quarter of 2009, according to a recent study by Life Insurance Marketing and Research Association.
Why did fraternals decline over the last century?
Fraternals were the first social security system-people who shared a common bond (ethnic, religious or patriotic values) joining together to take care of themselves because government programs did not exist. Membership in fraternals grew during the Great Depression, but market share decreased with the creation of social welfare programs such as Social Security.
Over time and several generations, many of the ethnic bonds that defined communities eroded, making individuals less connected and reliant on each other. At the same time, commercial insurers changed their practices and began insuring groups they previously denied.
The way we socialize changed from the face-to-face gatherings fraternals provided to indirect interaction via TV, e-mail, texting and social networking websites such as Facebook.
Many fraternals clung to the old ways and failed to change with the times, never updating their products or distribution systems–making them seem archaic and irrelevant to potential members.
With severe limitations on ways to effectively raise capital, many groups struggled to obtain the financial resources they needed to compete effectively with commercial insurers.