Typically, my articles speak generally to professionals in a variety of roles and industries. Today though, I want to address insurance agents directly.
Why Insurance Agents?
I spent more than a decade working in the insurance industry. Because of this, I appreciate the unique role insurance plays in our society. First, insurance makes all economic investment possible. No one would buy a home or start a new business without a way to manage or transfer that risk. Second, the industry is there for people on their worst day.
Insurance agents are on the front lines of the industry. Agents work to help protect the people in their communities. They help determine families’ and businesses’ coverage needs. Agents often serve as translators, putting complex jargon in lay terms. What’s more, they are typically the first responders when a crisis befalls an insured. For all these reasons and more, it’s important to me that every agency is ready to welcome and serve diverse clientele. No one should face life uninsured or underinsured.
Now, to the Topic at Hand
To understand why it pays to be intentionally inclusive in your insurance agency, we first need to explore the potential of reaching underserved markets in your community.
Before we continue, I’d like to point out that there are dozens of ways we can measure diversity. When discussing diversity, most people immediately think of demographic characteristics such as race, gender, and age. These are certainly important factors in determining market segmentation. Because of this, most of the available data will focus on demographic traits. Future posts will also cover ways to make space for other differences. These include cultural and language differences, be mindful of different family structures, consider clients with disabilities, and so on.
For now, though, let’s look at some U.S. demographic data and consider the implications for your insurance agency.
The U.S. Population Is Changing
According to U.S. Census demographic data:
- The birth rate is in decline in the United States. People are waiting longer to have children and are having few children than did past generations.
- The rate of decline is highest for white, non-Hispanics
- Hispanics of all races represent the fastest growing ethnicity in the United States
Consider these overall population trends and what signs of change you are seeing in your own community.
Is your insurance agency prepared to meet the needs of – and compete for the attention of – a more diverse client pool?
To explore this question, let’s look at some implications for both personal and small business lines.
Home Ownership Trends
A Brookings Institute report on the change in home ownership from 2001 to 2015 breaks down data by race and ethnicity.
We can see from this data that both homeowners and renters are following overall population trends, with fewer white homeowners and renters over a 14-year period, and an increasing number of Hispanic homeowners and renters.
Hispanic consumers, therefore, represent a growing market for agents selling homeowners’ and renters’ insurance.
When you further consider that more than 90 percent of new car buyers are also homeowners, you can see the cross-marketing potential of these consumers.
Business Ownership Trends
What about small business policies?
A growing number of small businesses can be attributed to minority and women owners. Nearly 1.5 million U.S. businesses are owned by racial and ethnic minorities, and more than one million U.S. businesses are owned by women — including Lead at Any Level®. Veterans account for 360,000 businesses in the United States, though that number shows moderate decline in the past three years.
Furthermore, the Small Business Administration reports that from 2007 to 2012, the percentage of Minority- and Hispanic-owned businesses rose within the small business landscape.
Taken in total, agents should realize that a growing percentage of small commercial policies will be purchased by women, Black, Asian, and Hispanic business owners.
Accurate data is not available on the number of businesses owned by LGBTQ individuals. However, the National LGBT Chamber of Commerce (NGLCC) has certified roughly 1,100 businesses — including Lead at Any Level® — in this category. This number is expected to grow substantially as more corporate partners begin to expand their supplier diversity programs to recognize and include LGBT Business Enterprises.
The Small Business Administration’s website advises owners of small businesses to “Get business insurance” as a critical step in the business launch process. The SBA’s guide further advises business owners to “Find a reputable, licensed agent.”
New business owners will probably start with the agent they already know: the one who sold them their home and auto policies.
Insurance Agency Data
Relative to the overall U.S. population, licensed insurance professionals are disproportionately White, non-Hispanic, and male.
More than 80 percent of Insurance Agents are white, compared with just 73.6 percent of the general population. And while those numbers do roughly represent the demographic proportions of small business owners today, keep in mind that those percentages are changing rapidly.
Recall, however, that only about 67 percent of new homebuyers and 52 percent of renters are also white, non-Hispanic.
Based on my own research, most of us tend to do business with people who are already in our networks. And our networks tend to be very homogeneous, specifically, very much like us demographically.
This means that minority populations are likely underserved by our industry. Therefore, they may also be underinsured.
Gender Differences
To bring this into even sharper focus, consider that 65 percent of insurance agency principals and senior managers are men. (Source: Independent Insurance Agents & Brokers of America (Big “I”). 2018 Agency Universe Study Full Report.)
However, Forbes estimates that women drive between 70 and 80 percent of all household purchasing decisions.
In other words, if women (of all races and ethnicities) don’t feel welcome and comfortable in your insurance agency, you are likely losing a lot of business!
Summary: Invite Diversity into Your Insurance Agency
Considering the underrepresentation of women and minorities in insurance agency leadership, we can imagine how underserved – and underinsured – some members of our communities may be.
What can your insurance agency do to attract and welcome a more diverse customer base?
I’ll share my thoughts in future articles. In the meantime, I’d love to hear your ideas and questions.
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