The life insurance industry in 2013 will be in a state of transition, to say the very least. For an industry not commonly pressured to make substantial and fundamental changes to how it operates, life insurance is finding itself in unfamiliar and uncomfortable territory, indeed. Five topics are likely to show most brightly on the industry’s radar over the next twelve months.
1. The tax-favored status of life insurance products.
Many industry watchers believe that life insurance products will not lose their tax-favored status as a result of fiscal cliff and debt ceiling negotiations. However, as the government looks for new revenues, everything is on the table and there very well may be a change to the tax-favored status of COLI and BOLI products.
Image: House Speaker John Boehner of Ohio points to a chart to emphasize his talking point that government spending complicates the negotiations on avoiding the so-called “fiscal cliff,” during a news conference on Capitol Hill in Washington, Thursday, Dec. 13, 2012. Boehner is insisting that President Barack Obama wants far more in tax increases than spending reductions and appears willing to walk the economy “right up to the fiscal cliff.” (AP Photo/J. Scott Applewhite)
2. Evolving to respond to the changing consumer.
Many life insurers pride themselves on their social media presence, as if having a Facebook page keeps them on the cutting edge. The evolving consumer may shop for life insurance products while standing in line at the supermarket, and insurers must remain nimble and able to adapt to digital marketing and mobile distribution strategies.
Image: In this Friday, Nov. 23, 2012, file photo, Tashalee Rodriguez, of Boston, uses her smartphone while shopping at Macy’s in downtown Boston. Facebook isn’t just for goofy pictures and silly chatter. Whether shoppers know it or not, their actions online help dictate what’s in stores during this holiday season. (AP Photo/Michael Dwyer, File)
3. Remaining relevant.
Life insurers may have to rebrand themselves as many young people are not aware that the product can be used an investment vehicle. An Ernst & Young report found that the average household expenditure on life insurance has declined by 50 percent over the last decade. Insurers need to step-up their marketing campaigns to reach young people whose view of life insurance may be incomplete.