Multicultural markets: Positioned for growth

The 2012 U.S. Census Bureau Data reveals that the numbers diverge quite significantly. As shown in Figure 1, the data reveals some major differences in the insurance industry population and the general population. 

Consider that whites account for only 63 percent of the general population, 21 percent lower than their corresponding agent population. In the case of the multicultural groups in the study, all were significantly higher in the general population with African Americans (13 percent, an 8 percent swing), Asians (5 percent, a 2 percent difference), Hispanics (17 percent, the biggest difference in the multicultural groups at 11 percent) and LGBT (3 percent, a 3 percent change).

Given the disparity in the numbers, could this explain why multicultural markets are underserved? Or do the ethnic background of advisors and prospects really matter?

According to the survey, respondents put much more importance on income/asset level (35 percent), age/generation (40 percent) and profession/industry (28 percent) than they do race/ethnicity (4 percent) when targeting prospects. Furthermore, agents also place familial status, whether a client is single, married or divorced (16 percent) much higher than ethnicity. Religion (3 percent) and sexual orientation (2 percent) were the only options that respondents put less importance on than race/ethnicity.

Growth markets

With multicultural markets growing in the U.S., the study asked agents what they see as their growth potential for these potential clients. As shown in Figure 2, more than a quarter, or 26 percent of respondents, saw large to very large growth potential in these markets. Another 51 percent expected modest growth potential, while 23 percent saw no growth potential in multicultural clients. These numbers show that a vast majority of respondents are optimistic about extending their practices into these underserved markets.

To take advantage of the growth potential, some advisors are already marketing to multicultural groups and many wish to grow this market segment in the future. It should be noted that a significantly small number of respondents (5 percent) “consciously market to clients of specific ethnic or cultural backgrounds.” What’s encouraging is that 63 percent of respondents have multicultural clients and would like to grow that book of business. Another 14 percent said they do not have multicultural clients, but are interested in entering this market. Meanwhile, 17 percent of agents in this study said they have multicultural clients and do not plan to grow this segment or do not have the clients and do not plan to work with them in the future.

With 77 percent of the respondents saying they want to extend their business with multicultural groups, where is the potential for the most significant growth and how can agents position themselves to capture it? The study takes a closer look at the African American and Hispanic markets to define who makes up these groups, what are their insurance needs and what are the challenges facing agents in marketing and selling to these diverse markets? [Note: The study did not provide statistically relevant data for the Asian and LGBT markets to warrant additional breakout data.]

Methodology: In June-July 2013, the National Underwriter research team randomly surveyed life/health licensed producers nationwide. These National Underwriter research results reflect answers from personal producing agents who have sold at least one insurance product in the past 12 months. More than 1,600 producers completed the survey.