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Life Health > Life Insurance

3 ways to retain clients and grow your base

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Despite all outward appearances, there’s growth in the life and health markets. According to the 2015 U.S. Life-Annuity Insurance Outlook by Ernst & Young (EY), consumer needs and expectations are increasing right along with their confidence in the economy. Insurers are seeing annuity sales improve as well, thanks in part to rising credit rates. According to the market survey, things are looking up.

That’s good news for the life market, which is grappling with ways to increase business and engage apathetic millennials (born between 1980 and early 2000). A recent LIMRA study revealed that fewer than 20 percent of Gen X and Gen Y millennials are “very likely” to buy life insurance. The opportunity is there, however. The same study showed that a whopping 34 percent of millennials do not have life insurance.

Still, even a growing market isn’t much without agent action. Agents are often sitting at a crossroads looking for direction on how to reach and convert client prospects. With retailers like Amazon and Google entering the insurance business – and with a 2013 Accenture study showing 67 percent of respondents willing to consider alternate channels for life, home and auto – the job of selling a product that hasn’t seen much action in nearly a decade has just become even more challenging.

It’s a challenge that some experts think is ripe for opportunity. According to LIMRA’s “Trends in Life Insurance Ownership” study, 72 percent of Americans in 1960 had individual life insurance. In 2010, that number was just 44 percent. Tom Harris, executive vice president of Penn Mutual Life in Philadelphia, says the decline in customers in the life market flattened in 2009 after experiencing a steady decline. “It’s hard to cheer flat,” he says.

Still, given the reasons for some of the decline, Harris says flat, in this case, is something worthy of optimism. That’s because the number of companies in the life industry have also declined. In 1988, he says, there were 2,300 companies in the life business. Flash forward to 2013, where there were 825 remaining. “That’s a 65 percent drop,” says Harris. “Fewer players in the field mean fewer advisors in the field, which means fewer people getting coverage.”

Not all of the companies have exited the life insurance business – some have merged. He cites The Hartford and Prudential merger as a more recent example of one way the numbers of players are decreasing. Even mergers, though, don’t always indicate increased business. “When you look at those two companies as individual companies, in terms of new business they wrote in, say, 2009 and then look at the new business that was written by the combined company in 2014, there was much less business written. It’s not one plus one equals two or more.”

Harris says that capacity too has dried up. He cites the variable annuity with living benefits market as an example. While the product is still being offered, the benefits just aren’t what they used to be. “For example, MetLife in 2011 or 2012 did $29 billion in annuities. The next year, they did $11 billion. Imagine $18 billion in capacity coming out of the market.”

The sales process: What’s missing?

These are not new challenges. The industry has known for some time of the shrinking capacity and the lingering interest. Experts say the tools are there. The problem: agents aren’t using them. According to the EY report, insurers and agents in the life insurance space “will need to leverage technology advances in distribution, underwriting and customer service.”

There’s the majority of the disconnect, in Stuart Ganis’ opinion. Ganis, VP of strategic partnerships at Everquote, an Internet marketing firm, and owner/CEO of Ganis Consulting, has consulted for more than 600 local insurance agencies. He says the disconnect is fueled by the online nature of insurance – instant quotes. It’s a problem only for those agents who have yet to adopt an online presence. “They didn’t embrace the Internet ten or fifteen years ago when they should have,” says Ganis. “So now when you search online, you’re seeing the big boys and not the local agents. When a consumer goes online and shops for insurance, they want to see you.”

Even with the proliferation of technology tools, Ganis thinks agents quickly forget the basics, including reaching out to customers for six-month checkups or annual reviews. He remembers when he was growing up, the local agent would send a calendar at holiday time. The calendar hung on the refrigerator. “That agent was in our kitchen every day,” he says. Plus, the agent would send out seasonal reminders and household tips. “Three or four times a year we were getting something in the mail from this person. They were always top of mind. Agents don’t do that now.”

Worse, Ganis says now there’s little excuse for such easy marketing. Digital marketing is automated, and there are several social media outlets at an agent’s disposal. “They’re not on social media the way they should be. They don’t have a process in their agency so that when they sign someone up, they follow them on Facebook, they invite them to their Twitter page or LinkedIn page. They’re not top of mind. I hear from you when I get a bill,” Ganis adds.

Halting the exodus

That’s fueling a migration that’s already being spawned by automation. Where price may be the initial impetus for consumer migration, Erik Sandquist says lack of personalization is the turning point for many customers. Sandquist, managing director at Accenture Distribution and Marketing Services in Cincinnati, quotes a recent Accenture study: “In their decision to stop doing business with their current provider and switch to another in the next 12 months, 30 percent of consumers surveyed said it was very important for agents to provide a personalized service and an additional 50 percent said it was somewhat important.

“It’s a personalized offer,” Sandquist adds. “It’s personalized messaging. Are you being relevant to me and my particular life circumstances? Are you offering me personalized pricing? Do you know my habits, my usage, my lifestyle?”

One absolute, in Ganis’ opinion, is that agents must adopt social media and technology as part of their business strategy. Even a social platform can create a significant impact on customer retention, he says. Without an online presence, the agency suddenly looks old fashioned. “And they are,” Ganis says. “The consumer isn’t pulling out of the Yellow Pages or asking a friend for a business card. When someone mentions their agent, they’re going to Google and typing in a name. You should dominate the first several results. If I’m not following my agent on Facebook or they’re not in my news feed once or twice a month, you’re off the menu come renewal time.”

Retaining customers

How you contact customers is as important as how often, says Ganis. High-quality touches, he says, are the best way to appeal to customers on an ongoing basis. Holiday cards, birthday emails or “join us on Facebook” messages are great ways to stay in front of customers. He advises against constant solicitation. Also, the message matters. “Where they go wrong is if they do do it, a lot of them will use scare tactics. That’s a turn off,” says Ganis.

Instead, Ganis advises agents to change the message. A recipe at Thanksgiving, for example, can lead customers from the email to the blog housed on the agency website. “They click on something else on your site and then they’re in your sales process,” he says.

Patience, though, is what many agents lack in building an online presence. Ganis says consistency is the key to succeeding with a dynamic online marketing plan. Social media plans have to be worked for months, often years, and as more of a relationship-building strategy than a sales tactic. Too often, Ganis sees agencies stop when immediate sales don’t happen.“They think there’s a magic bullet – if I start this Facebook page, it’s going to pull me out of this rut,” he says. It takes a long time to build those profiles and that online reputation. You will see incremental results and eventually yes, you will definitely write a lot of business.”

Acquiring new business

Similar tactics can work to acquire new business, as well. And according to an Accenture survey, there’s new business to be had. The study revealed that 9 percent of consumers were very likely to switch providers and 31 percent were somewhat likely to switch.

Instead of looking at it as a threat, agents should be considering the hidden opportunity, says Sandquist. “With 40 percent of the market already thinking in that direction, it becomes a huge opportunity for agents,” he says. The same study shows $400 billion in insurance premiums up for grabs over the next 12 months.

Personalization, says Sandquist, can drive much of the retention and acquisition of customers. “We found that in their decision to stop doing business with their current provider and switch to another in the next 12 months, 30 percent of consumers surveyed said it was very important and an additional 50 percent said it was somewhat important for agents to provide a personalized service.”

Harris says his company offers that personalization through a dedicated specialty approach. The idea is to develop an expert-level understanding of a market, including how to deliver the information to those customers. One team, he says, may be focused on the doctor/intern market, and would hold short, information-dense seminars, which take into account their busy schedules.

Other changes at the agency level can create a stronger operation, says Ganis. Culturally, he says, many insurance agencies aren’t run like businesses. “They run it like an insurance agency. They’re constantly focused on insurance,” he says.

A missed opportunity, he adds. He cites a younger agency in California with a younger owner who came from a technology background. “He’s been in business for three years. They acquire 500 new customers a month. They have 15 producers. He’s a sales and marketing company that happens to sell insurance.”

That kind of growth is possible if agents are willing to leave behind antiquated business models and sales approaches. Ganis, who says 30 percent of his wife’s P&C business comes from social media contacts, adds that traditional can still work. “There’s nothing wrong with handwritten cards, referral rewards programs,” he says. The disconnect occurs when agents aren’t willing to look beyond the traditional. “Insurance agents try to sell insurance the way they want to sell it, not necessarily the way a consumer wants to buy it.”

Harris agrees. “We as an industry also need to think beyond that – what if people don’t want a face-to-face advisor? Do we just not offer them coverage? That’s not the right answer.”


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