LIMRA’s Kerzner: Life Industry Needs to Move Beyond Life Events
September 9, 2014 by Lee McDonald
WINDSOR, Conn. – LIMRA President and Chief Executive Officer Robert Kerzner said he believes life insurers have huge untapped growth opportunity but must convince consumers that life insurance is a necessity, not just a purchase tied to major life events. Kerzner was interviewed as part of special coverage of Life Insurance Awareness Month.
LIMRA recently identified a potential $9.5 trillion opportunity for the life industry. Best’s Review Senior Associate Editor Angelo Lewis visited the organization’s headquarters in Windsor, Conn., to speak with Kerzner about how life insurers might tap into that opportunity.
Q: Where do you see the opportunities for the life industry today?
A: Consumers might not be buying life insurance but in fact 50% of Americans tell us they know they need more. If all of them actually bought, that would be a $9.5 trillion opportunity. There is this opportunity out there. What we know today is that four in 10 people who buy, buy because of a life event. They got married. They had a child. They bought a new home. They took on debt. They’re life event-associated. One of the things that we have to do is figure out how to get consumers really thinking about life insurance the rest of the time. But we also know that Gen Y, in fact more than half of them believe they need more life insurance. But with Gen X and Gen Y marrying later, having children later, some of those life events are pushed off. What else can we do to help educate them to move the buying dates up, to not just be of life events?
Q: From an industry perspective, what do you see are the challenges facing the industry right now?
A: There are a couple. Certainly the big one is the low interest rate environment that we’re in. This makes it very hard to price a product based on today’s interest rate that you are really guaranteeing a premium or a benefit out 30, 40 or even 50 years. That’s a challenge but it’s also a challenge on companies’ ability to invest and get a higher return, which certainly affects profitability. That’s a big one. The second thing is changing demographics. The consumer of today is very different than they were, from a whole array of reasons. They’re certainly more diverse but X and Y certainly think differently than their parents or grandparents. So learning how to better connect, how to get our messages to that demographic is really a challenge that we’re really wresting with. The third, frankly, is regulation. There have been a lot of new regulations. There are a lot of proposed regulations. This creates uncertainty. It’s always hard to advance the ball when this uncertainty exists. No question that more regulation and legislation often mean more complexity, more difficulty and expense to the business. But the ones that really could become problematic are with more Americans needing life insurance, rules and regulations that make it harder to get advice to a consumer. Those certainly could be harmful to helping more people get coverage they need.
Q: What are you doing at LIMRA to address some of these challenges in the industry and in society?
A: Our role is really to provide knowledge. We are a research organization. First and foremost, we want to try to get good information about what are the facts, what do we see from those facts as the trends, but especially around these issues of consumers. We want to make sure that we get those facts to our members, to the broader financial services industry, but also to other stakeholders like regulators and legislators so that those policy makers have the right facts and really understand what are consumers thinking, what are their concerns. Ultimately, our role is to provide that data and hopefully that gives some clues as to how are those folks thinking about financial decisions and how can we in the industry and policy makers all help them get the knowledge they need to make better decisions about life insurance and retirement.
View the video version of this interview at: http://www.ambest.com/v.asp?v=kerzner914
