The LIMRA Distribution Conference is a great place to get the latest updates on the state of the industry, and we spent several days in Orlando last week attending sessions and meeting with customers and prospects – time well spent! In addition, this conference provides an opportunity to get caught up on trends in distribution, and we continue to get a worrying picture.

Consumers perceive life insurance as one of the most important products for ensuring the financial security of loved ones, yet more than 106 million Americans lack adequate coverage according to LIMRA. The industry refers to this as the life insurance “need-gap” (the difference between respondents that say they “need” life insurance versus those that say they “have” it).

Deloitte estimates the value of the need gap is around US$12 trillion.

The life and annuities (L&A) industry has been trying to close this gap for many years with little success. For example, there has been a lot of investment in direct-to-consumer (DTC) L&A sales using digital technology to simplify the purchasing process, but as a percentage, the DTC channel only accounts for about 7% of all sales. While the DTC channel is growing year-to-year, it’s clearly not the silver bullet needed to close the insurance gap.

At the same time, the advisor workforce is aging rapidly with 20-40% of advisors within 10-years of retirement. The advisor population remains flat, which suggests that encouraging younger generations to join the industry remains an uphill battle.

We’re beginning to see all the elements of a “perfect storm” brewing for the life insurance industry. In broad strokes:

  • Consumers want life insurance coverage
  • Consumers aren’t getting adequate coverage
  • DTC products, powered by digital technology, haven’t solved the problem
  • The advisor workforce is aging, and not growing
  • Life insurance sales are largely flat on either side of the COVID bump

In other words, the industry needs to insure more Americans with less career advisors, and technology alone is not sufficient.

So how can the industry expand the market for life insurance?

At Zinnia, we believe it’s increasingly clear that there is a unique opportunity to expand the market for life and annuities products and that improving the experience of engaging with these products – for advisors, for consumers, and for carriers – is going to be critical to success.

We’ve written extensively about the importance of delivering a better experience of L&A, and in particular, by removing friction and complexity from the buying process. For consumers, this means making it easier to understand, buy, and manage these important financial products on their own terms – with or without advisor support. For advisors, this entails empowering them with modern tools to track progress from quote to customer and beyond (which in turn, will attract younger generations to the profession).

Following several action-packed days at the LIMRA Distribution Conference, we come away even more convinced that Zinnia is on the right track. We want to enable the L&A industry to grow at a pace that reflects the real value that these products bring to the consumer, and close the coverage need gap for good.

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