WINDSOR, Conn., Jan. 19, 2011 — Fifty-nine percent of insurance executives believe overall individual life insurance sales will remain flat and 68 percent feel group life sales will stall in 2011, according to a survey of 70 industry leaders conducted by LIMRA in early December 2010.
"Generally speaking, significant growth in life insurance sales is driven by new products in the market," said Robert Baranoff, LIMRA senior vice president and co-author of the report. "While overall sales may not substantially grow in 2011, LIMRA predicts that certain products will stand out in this low-interest environment."
A third of executives felt that indexed insurance products had the most growth potential in 2011. The resolution of 151A, as well as low interest rates make indexed life insurance more attractive to producers and has more carriers entering the market. Whole life insurance was a close second, with 27 percent of executives favoring it to grow the most in 2011. UL and term products each garnered about a fifth of the votes.
The majority of executives feel there will be growth in sales to the middle market resulting in an increase in policy count, which was observed in the third quarter of 2010. With the number of U.S. households uninsured or underinsured at a 50 year record high, more companies are targeting this market, which may improve sales. The challenge remains on how best to serve this market as agent distribution is seen as too expensive and dwindling.
Traditional distribution will continue to struggle in 2011. More than three-quarters of executives surveyed felt that the sales force will shrink in 2011. After two years of increased recruiting (2007 and 2008), recruiting was down in 2009 and the first half of 2010. According to LIMRA's research, only 73 companies recruit at all (down from the 220 companies that recruited 20 years ago); and five companies account for about 65 percent of the new hires.
However, bancassurance (bank distribution of life insurance products) is expected to continue to grow in 2011, according to almost seven in 10 executives. Bancassurance has been strong over the past five quarters, culminating in a 30 percent increase in the third quarter of 2010. While executives feel there is strong potential for this channel, U.S. insurers have never been able to fully capitalize on this potential, as they have in other parts of the world. LIMRA research indicates that the interest rate environment will be a key driver on whether bancassurance maintains its trajectory throughout 2011.
To learn more about the study, please contact LIMRA public relations.
LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness.