The changing demographics of the U.S. and how they affect insurance

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26 June 2015
Tom Scales
The U.S. Census Bureau recently released new information on the diversity of the population in the US and it is a fascinating read, at least for an insurance nerd like me. Census Report To summarize some key points for insurers:
  • For the first time, Millennials outnumber Baby Boomers. This means that your potential target market is more technology literate and less understanding of the weaknesses of your systems. No phone app? They’ll find the carrier that has it.
  • For the first time, more than 50% of youth (5 years and younger) are minorities. If you don’t have diverse marketing programs, this single statistic says you should, and will be reinforced below.
  • The 65 and older group grew to 46.2 million, a growth of over 1.5 million in one year. This group is also more technologically literate than ever before. Don't underestimate this group’s expectations.
  • Only ten states have a majority male population, highlighting the need to market directly, and properly, to women.
  • All race and ethnic groups had more births than deaths except non-white, non-Hispanic, where the population declined, again highlighting the need for diversity marketing.
  • Hispanics outnumber Blacks 55.4 million to 45.7 million. While both should remain targets, specialized Hispanic programs make sense.
  • Asians represent 20.3 million, a growth of 3.2% in a single year.
For the most part, this information is of interest to the curious and to the actuaries, but it strongly reinforces the image of the United States as a melting pot. We’re diverse, we’re all both unique and alike, and the needs of our customers are rapidly changing. If you’re not offering new ways to engage, including Exchanges, Roboadvisers, Mobility and more, your company will be left behind. All of this highlights a particular need – the need for Innovation. How do I connect this raw data to the need for Innovation? It’s simple. Our industry has a well-deserved reputation for moving slowly and for being behind other financial services companies. We are even farther behind companies in other industries. The barriers to enter our space have never been lower. Capital is cheap, technology is improving and the marketplace is shifting. Which leads to the question: Has your company culture embraced innovation? Do you have a process to encourage experimention and fast failure? Do you have an approach to change that can bypass the traditional, and constraining, project gates to fast track new ideas? Having discuss this topic with some many companies, it is clear that many, if not most, insurers have not reached this step. The desire is there, but that last leap to make it happen is often lacking. There are stellar examples of exceptions, but even more examples of the status quo. My colleague, Mike Fitzgerald, has made innovation his primary focus for the last eighteen months and his research and his work is insightful. If you have not spoken to Mike, then I strongly suggest such a call is worthwhile. His insights into innovation in insurance are wonderful and can help you company overcome the barriers and hurdles. It is an exciting time in our industry. Let’s all be part of the change.

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