Over the last several decades (yes, decades…), the insurance industry has been observing and lamenting over the decline of life insurance ownership in the U.S., and also the shrinking, aging and general economic malaise of the face-to-face distribution channel. Attempts at modernizing these channels have failed; attempts at growing them significantly have failed; and attempts at going direct have not even had much of a chance to fail or succeed.
As the life insurance industry reaches its 50-year record low for life insurance ownership in the U.S. (LIMRA 2010) and companies continue to struggle with how to reach the underserved middle market, one can’t be shocked at why the government is so hell-bent on taxing the cash value. Nobody’s talking about death these days.
I predict that Time magazine’s 2010 Person of the Year is going to reinvent the insurance industry. Not sure if he knows this yet, but that’s just because he is still young enough to be insured under his parents’ health policy. Perhaps on his birthday in 2011, when he is no longer covered, he will start thinking about it.
A recent study from IBM indicates that the “trust gap” between the industry and the end-consumer is fueling a “business model identity crisis.” In other words, the thing that is keeping most of the industry executives awake at night is the fact that they do not know what the best way to deliver their products and services will look like in the future.