The life insurance industry needs to simplify the insurance purchasing process and emphasize insurance ownership as a widely accepted social norm to drive more sales, suggests new research from Windsor, Conn.-based global insurance association LIMRA International Inc.
Specifically, insurers need to adapt their marketing and sales strategies to keep up with rapidly evolving consumer expectations, said Alison Salka, senior vice president and director of research with LIMRA International at the 2015 LIMRA and LOMA Canada Annual Conference in Toronto on Thursday.
“[Consumers] are becoming more and more demanding,” Salka said. “Consumers have access to more information from more sources than ever before and, at the same time, they have more product choices, with the additional benefit of Internet convenience.”
Life insurance ownership levels have declined in Canada in recent years, with 68% of Canadian households owning insurance in 2013, down from 79% in 2006, according to LIMRA research. As a result, it’s critical for the insurance industry to find ways of better engaging consumers, Salka said.
Simplifying the decision-making and purchasing process is key to engaging consumers amid the abundance of information and product choices they’re facing, Salka said. In particular, she pointed to retail industry research showing that the best way of increasing the likelihood that a consumer will purchase a product is by simplifying the purchasing journey.
“The ease with which customers can gather trustworthy information about a product, and weigh their options confidently and efficiently, is very important,” Salka said. “They want it to be easier to make a decision.”
The more options consumers have, the harder it is for them to make a decision, Salka said: “[Having] more options is not always helpful. More options can actually backfire.”
Although the complex nature of insurance products can make it challenging for the industry to meet this appetite for simplicity, Salka said insurers could take steps to make it easier for clients to learn about insurance and explore their options. For example, she said insurers should focus on developing tools that can help clients narrow their options and compare products easily.
In turn, life insurance industry players recognize the importance of simplifying the insurance buying process and are already taking steps to do so, said John Hamilton, president of insurance services with RBC Wealth Management Financial Services Inc.
“The life insurance companies in Canada are listening,” Hamilton said at the conference. “They’re trying to make the process easier, simpler, faster, and giving consumers more tools. So, I think the companies are on the right track.”
Sending the right messages as part of the industry’s marketing efforts is also key to better engaging with consumers, Salka said.
The types of messages that tend to most effectively improve perceptions of life insurance and increase the likelihood that consumers will buy it, she said, are those that emphasize insurance ownership as a social norm. By informing consumers that a majority of their peers own life insurance, for example, they’ll be more inclined to buy it, a recent LIMRA research study revealed.
“Social proof is a good way to get people to do things,” Salka said. “[People] take cues on how to behave and what to do based on what other people are doing.”
With products that are more complex in nature, such as insurance, social cues are particularly influential on consumers’ purchasing decisions, she added. “The less knowledge you have, the more likely you are to rely on other people.”