There was a lot worth noting about the Olympics closing ceremony Sunday night. Fat Boy Slim spinning jams from … an inflatable octopus. That awkward fashion show/David Bowie tribute. The Spice Girls reunion. (And, my neighbors might say, my loud, off-key singing during said reunion…)
But what really stood out to me was the interesting dynamic in the arena. Here were tens of thousands of citizens cheering an elite group of Olympians, who were in turn cheering an even more elite group of performers, like Annie Lennox and (shriek!) One Direction.
And, of all things, that odd caste structure made me think of the life insurance market. It's kind of similar, right? You’ve got a very small group of ultra high net-worth individuals (represented by the closing ceremony celebrities), a slightly larger group of affluents (the Olympians) and then everybody else (the massive crowd).
Over the last few years, life insurance agents have focused their efforts largely on serving those first two high-income groups. Meanwhile, all those figurative "people in the stands" have been, increasingly, neglected. According to LIMRA, 58% of middle market households have no life insurance coverage. That’s 35 million households, up from 24 million in 2004. And that number doesn’t include the many households that have life insurance, just not enough of it. The coverage shortfall represents a $10.2 trillion opportunity for the industry, according to a report released by Conning Research earlier this year.
Yet, despite those numbers, I haven’t encountered large numbers of agents shifting their strategies and flocking to fill the coverage gap. And I get why they wouldn’t. High-income individuals have high-priority estate planning and protection needs, not to mention the money to buy products that solve those needs.
But if you think about a middle-market-focused strategy in terms of that closing ceremony crowd, it’s a move that makes a lot of sense. How many celebrities have you met in your lifetime? How many Olympians? I’ve met Dinger, the Colorado Rockies mascot. I once saw Jerry Springer walking through the MGM Grand. And, one time, while sitting in traffic on an L.A. freeway, I was pretty sure I saw Steven Spielberg driving a beat-up Volkswagen Rabbit and wearing a ripped flannel shirt. I yelled “Steven!” out the window at him, but he didn’t respond. Pfft. Celebrities.
Just like celebrities, there’s a limited number of affluent people out there, and they’re often just as hard to meet. And as more agents compete to serve this market, it’s quickly going to become — or might already be — saturated.
Contrast that with the middle market. How likely are you to meet a regular person, someone who, while at a big event, is more likely to be sitting in the stands than up on the stage? I talked to five neighbors on the trail, just while walking my dog this morning. At work, I sit in a hallway filled with regular-people co-workers. After work, I’m stopping at the library, which I hear is a haven for Average Joes.
The middle market might be, comparatively, asset-poor, but it’s people-rich. All those people are easier to see, and they have loads of unmet insurance needs. And because the market is so underserved, you’ve likely got little to no competition.
Maybe serving the high end of the market is working really well for you. If it is, that’s great. Keep at it. But maybe it isn’t. If you’re running into a lot of closed doors, call-screening secretaries and “I’m all set” executives, maybe it’s time to stop chasing after the elite set.
The message we’re supposed to take from the Olympics is one of striving, aiming for the top and never giving up. But maybe that’s partially wrong, at least in life insurance anyway. Maybe the surest way to reach the top in our industry these days is to aim squarely for the middle.
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