Overview There are roughly 135,000 establishments within this industry, including both single- location companies and branches of multi-location companies. Annual U.S. industry revenue is about $110 billion. Those companies that offer insurance products to businesses are classified primarily as brokers. Independent brokers sell products from several different providers and underwriters.
Types of Brokers Captive agencies operate as sales agents for a single insurer and work on their behalf. Insurance companies continue to face an enormous amount of pressure from a number of sources, including: demanding customers, new regulations, and aging technology systems.
Leaders in the Field A highly fragmented industry, the largest 50 firms hold only 20% of the total market. Individual companies find success by leveraging effective marketing tactics, seeking client referrals, and focusing on superior customer service. There is a significant absence of health insurance competition in 83% of metropolitan U.S. markets, according to the latest Horizontal Merger Guidelines.
Leaders in the Field The U.S. states with the least competitive commercial health insurance markets are: 2) Alabama 1) District of Columbia 3) Alaska 2) Nebraska 4) Delaware 3) North Carolina 5) Michigan 4) Indiana 6) Hawaii 5) Maine
Industry Demand Demand for the services provided by this industry is largely driven by consumer income and commercial business activity. When the economy is doing well, demand increases for personal and business insurance, and vice versa.
The Insured Americans age 40 and younger are becoming more interested in whole-life insurance as an asset management tool. Many are attracted to the policies’ low levels of risk and the promise of financial security by the end of a particular timeline, or for the next generation. White, middle-, and upper-income consumers are most likely to use insurance as a means of asset management and wealth building.
The Insured Most African-American clients typically use life insurance to cover funeral costs but don’t use it as a financial asset. As the African-American middle class grows, more will use insurance for wealth building. Hispanics are an underserved market. Many prefer to read Spanish-language product materials and some prefer to pay their premiums in cash.
Marketing and Advertising The industry is just now beginning to leverage the power of mobile marketing, pushing advertisements to potential customers through mobile apps. Companies that focus on providing a polished online presence, enhanced search and improved content management are stronger competitors.
Marketing and Advertising The online consumer has come to the insurance market, with a large number of individual consumers expecting their insurers to provide information and policy comparison online.
Industry Trends While in the past, insurers have focused on single-channel approaches, more firms are realizing the opportunities that lie with a strategy that combines direct, online self- service, and agent portals to provide advisory services. For 2012, cyber liability insurance is a business product that is expected to really take off, providing coverage for identity theft, network security, etcetera.
Industry Trends Another business-related insurance product that is expected to trend in 2012 is workers compensation insurance. Brokers should also expect requests for information on life insurance policies to continue rising.
Growth Areas Many in the industry are looking for alternatives that can offer mutual benefit; prompting carriers to increase value and distinguish propositions. Insurance companies are continuing to focus with increased vigor on areas such as improving operational efficiency, increasing revenue, and reducing cost.
Growth Areas Insurance executives are taking a close look at how they can improve core operations. It will be necessary for insurers to consider the expansion of their product lines, service, and distribution channels if they seek top- line growth and wider profit margins in the near future.
Future of the Industry Buyers are showing great reserve when it comes to purchasing insurance, brought about largely by a slow economic recovery. A challenging interest-rate environment amid other factors is expected to continue to affect the financial strategies and results of insurers. Experts believe that industry revenue will decline from 2011 to 2014, thanks to tighter government regulations, especially in the healthcare segment.
Advertising Strategies Because individual consumers want the ability to access information and purchase policies online, strategies should include a good mix of online tactics. This includes an inviting, interactive website with policy comparison capabilities and online purchasing options. Social networking is a must. Captive agencies should consider sites such as Facebook, Twitter, MySpace, and on-site blogging in order to build and reinforce brand recognition. Brokers can leverage sites such as LinkedIn to capture business-to-business connections as well.
Advertising Strategies The customer service experience is what can set a smaller agency apart from the competition, and this can in part be achieved by providing proactive information to consumers to address their concerns through though leadership materials such as articles, white papers, blogs, etc.
Advertising Strategies Online ads are another way agencies can leverage the power of the Internet. Identifying sites that target consumers are most likely to visit and placing an ad that links back to agencies’ sites is a smart tactic. Keep in mind that sites such as Facebook and LinkedIn also offer business ads.