Signs are increasingly starting to point to the lower-income and even some of the middle-market end of the life insurance market going direct, and momentum in that direction seems to be building with a number of recent developments.
As life insurance agents continue to gravitate toward wealthy consumers, many carriers are ramping up their direct sales efforts and introducing new programs designed to reach the lower and middle markets. You’ve probably heard about MetLife’s Walmart pilot program. The company now has kiosks in about 200 Walmart stores in South Carolina and Georgia — and will likely expand into Pennsylvania soon, as well. Based on what I’ve heard at various industry conferences so far this year, I’d be shocked if we didn’t hear about at least a couple more partnerships between carriers and retailers — big box or department stores — before the end of this year.
Who can blame carriers? Life insurance premiums have been flat for some time, and it’s not like we’re going to have a huge influx of new agents anytime soon that are going to target lower- and middle-market consumers. Knowing this, the carriers are more open than ever to experimenting with selling direct — or at least via a non-traditional retail partner.
New research shows consumers are open to it. Nearly 1 in 5 consumers are willing to purchase life insurance from a retail outlet like Costco or Walmart, according to a study just released in conjunction with the LIMRA Life Insurance Conference in New Orleans, April 15-17.
The 2013 Insurance Barometer Study from LIMRA and the LIFE Foundation revealed that 17 percent of respondents said they would be willing to purchase life insurance directly from a retail outlet, which seems like a significant percentage given that this is the first time consumers were asked about their interest in purchasing life insurance from a nontraditional distribution channel. By the time the 2015 study comes out, would you be at all surprised if that 17 percent figure has risen to 40 percent?
See our infographic: Why 1 in 5 prospects would buy life insurance from a retail outlet
“While the number of consumers willing to purchase a life product through a retail outlet is not overwhelming, it certainly is worthy of note,” says Todd A. Silverhart, Ph.D., corporate vice president and director of LIMRA Insurance Research. “In light of the novelty of the concept and that few people have actually shopped for life insurance through a retail outlet, there is likely to be considerable confusion in the eyes of the consumer as to what such a purchasing experience might entail. For carriers seeking a niche market, retail ventures could be a worthy approach.”
An opening session at the recent LIMRA Life Insurance Conference in New Orleans featured Manish Bhatt, MetLife's senior vice president of global brand and digital marketing, who spoke at length about the company’s patented partnership with Walmart. He noted that if you had asked people 15 years ago if they would be interested in purchasing a book online, the vast majority would have said, “No way.” How many bookstores has Amazon put out of business since then?
“We have to act; we have to move; we have to try things. This is how new industries are born,” Bhatt told the crowd. He also said carriers are not necessarily competing against each other, but against non-consumption, given the flat new premium figures and the high percentage of Americans who have inadequate or no coverage. “If things were working well, they’d be consuming,” he said.
At the Walmart stores with the MetLife kiosks, customers can bring the “life insurance in a box” — actually a prepaid Discover card — to the checkout. To activate, the buyer must call MetLife and answer six questions. If there are no “yes” answers, the one-year term policy is activated. If you have one “yes” answer, you can get a one-year accidental death policy or your money back. The person hasn’t technically bought the insurance until the call. (Read Carriers actively exploring alternative distribution and Walmart just moved your cheese for more details about the program.) Bhatt said that when people who purchase from Walmart call, they are offered a quote for level term, and 20 percent of the people who call end up going with level term instead of the one-year, non-renewable policy.
Bhatt said they have not sold “a ton” of the policies through Walmart to date, specifying only “triple digits.” But the pilot program is definitely helping them figure out how to make it work, as Bhatt mentioned a laundry list of alterations being considered, including a renewable policy and the need for monthly payment options.
Nobody is pretending the MetLife/Walmart program is the best deal for consumers, who could do better through an agent or an online quote site. But, apparently, there are a lot of consumers out there who would pay a lot more money to avoid dealing with an agent. Bhatt told the LIMRA conference crowd that blowback from producers about the Walmart program has not been an issue, as the average case size they see from a producer is substantially larger. "If [a producer] is going after this [Walmart] market, they aren’t going to make it in this business,” he said.
I would love to hear your thoughts about this program and whether you agree that carriers targeting direct sales to this market have minimal impact on producers. Please feel free to share your opinion via the comment tool below.
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