Solving the perennial problem of declining individual life insurance sales should start with looking introspectively at the role insurance companies play today and accepting that role's optimum performance requirements.
Individual life insurance is a product that 44% of U.S. households say they need more of and that 27% say they intend to buy in the coming year, according to an early 2005 LIMRA survey. That should spark a firestorm of creative marketing and sales excitement. Yet, the 20-plus-year decline in the number of new policies sold continues.
So, what is the problem?
Prior to the advent of universal life insurance and the escalated focus it precipitated on comparative shopping and agent objectivity, life insurance products were linked through marketing to the companies that issued them, and were considered differentiated and sold with conviction by loyal career agency systems. All functions involved in product manufacturing, marketing, selling and servicing were controlled and vertically integrated within each company.
Much of that now has changed. Today, most insurers are predominately manufacturers of undifferentiated products. They pursue a mercurial share of mind of an ever-dwindling stable of independent distributors. Seemingly, they have resolved to a prevailing belief that price is the only available product differentiator.
But acceptance of a predominant manufacturing role and the independence of distributors should not be linked to an acceptance of undifferentiated products.
Instead, companies should redirect internal priorities around attributes that can differentiate manufacturers in any industry–e.g., innovation, manufacturing efficiency and delivery response time. They must view distributors as entrepreneurs who seek the means to differentiate and grow their own businesses within this underserved and purportedly undifferentiated marketplace.
If industry leaders still subscribe to the adage that "individual life insurance is sold, not bought," then an agent's conviction about a product is a key to the customer's motivation to buy it. And, distributors and customers alike must first be interested in the product and motivated to sell or buy it, before price is even a factor.
