2. 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.
3. 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.
4. 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.
5. 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
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
