In my March 2014 blog, “One Area Where Our Life Insurance Industry is Failing Canadian Consumers”, I reported CLHIA figures on the number of life insurance policies sold annually, over the last 30 years. I asked my son (Stuart), who is much better at math than I am, to analyze the CLHIA figures. His analysis of the period covering 1990 to 2012 indicated a 1.9% annual decrease in the number of cases sold. This corroborates what I witnessed when I was involved in the corporate life insurance world – roughly a 2% decrease annually.
So I asked Stuart to take the numbers and project them out to 2021 (7 years from now). The results show a staggering 61% drop in the number of cases purchased since 1990. Restated, consumers will be purchasing, assuming no change in the long term trend, approximately 39% of the number of policies that were bought in 1990 – in spite of a significant increase in the number of individuals licenced to sell life insurance.
Changing gears a little…I recently attended the LIMRA/LOMA Canadian Annual Conference. The theme was “Ants and Rubber Tree Plants – Achieving High Hopes for Sustainable Growth”. Some key take-aways for me included:
- Major industry challenges: (1) changing consumer expectations, (2) aging adviser population, and (3) an outdated distribution model. (I think we can go beyond just three!)
- The rate of change occurring outside of our industry is faster than the rate of change occurring inside our industry.
- When it comes to buying life insurance, face to face is preferred across generations and income levels
So after distilling all of this, and layering on my 34 years (ouch!) in the business, here are some recommendations I have for life companies (not in any particular order):
- They need to engage organizations that can help them understand how consumer and distribution demographics are changing, and the implications for their business – now and in the future
- If they have not done so already, they need to be undertaking a significant, strategic review of all aspects of their business. I mean everything – markets, products, distribution, technology, operations, insourcing & outsourcing, et. al. – there can be no sacred cows
- They need to get their minds around consumer market segments – and build (or strategically align) distribution channels to develop them
- Their cultures have to change. Change agents (new blood from outside our industry?) are needed in both senior and mid-management ranks, and they must be given the responsibility and authority to drive the type of change that will result in flatter, more resilient organizational structures.
- Hire competent people to assist them in the development and implementation of a social media strategy
What I am talking about is transformational change, and those of us that have led it understand the short-term pain/stress that accompanies the process. However, the outcomes can be most gratifying. The unfortunate reality will be that some management teams will be paralyzed by senior management ‘turf-protecting’ or will be blinded by the sheer magnitude of what has to be done, and will continue to just tinker with things. Those companies risk being marginalized and will eventually disappear from the Canadian landscape.
The bright side is that those few companies that remain should not just have high hopes for sustainable growth, they will be realizing sustainable growth.
I would love to hear what you think. Scroll down and leave a comment!