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Distribution DynamicsDistribution Dynamics

Patrick LearyAssistant Vice President

Distribution Research

Today’s Discussion

• The New Rules of Engagement

• Distribution Alignment

• Face-to-Face Channels

• Direct to Consumer

• Engaging Today’s Consumers

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• Face-to-face Channels



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© LL Global, Inc.SM 4

The New Rules of Engagement

“The balance has shifted…In the world of information parity, the new guiding principle is caveat venditor—seller beware.”

To Sell is HumanDaniel H. Pink

© LL Global, Inc.SM

Engaging Our Industry

5

-18%

Blank

+39%

Blank

+23%

blank

+50%

Source: Consumer Internet Use for Insurance, LIMRA, 2012



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69%

-18%

Blank

61%

+39%

Blank

33%

+23%

blank

33%

+50%




7

69%

37%

Blank

61%

25%

Blank

33%

16%

blank

33%

12%


Perspectives

“I am actually pretty technologically literate, but I would not have done this online; I did not know what

I wanted and I wanted someone to explain all the

options to me.”

“I’d like a hybrid. I want to start the process based off

of information I just learned about

online…then I want to talk to someone in person.”

“Online, absolutely. You have kids…you are at a

baseball game…who has time to set up for two

hours in the evening to sit with an agent?”

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© LL Global, Inc.SM 9

How the industry is

prepared to engage

consumers

How consumers

want to engage

The Engagement Gap20th Century Today


The Coverage Gap

10Source: Drivers of Sales, LIMRA, 2012

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Life Policies (000) Age 25 - 34


The Coverage Gap

Source: Drivers of Sales, LIMRA, 2012

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Life Policies Age 25 - 34

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Life Insurance Ownership

81%

70%

1984 1998 2004 2010Individual Group Total

Sources: Household Trends in US Life Insurance Ownership, LIMRA, 2011

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18,700,000PEOPLE ARE STUCK

PEOPLE ARE “STUCK SHOPPERS”

56%49%42%

Gen Y

Married

With Kids

“Insurance companies might as well be speaking in a foreign language...and they talk about life insurance in a way that makes it seem unattainable.”







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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Independent Agents Affiliated Agents Other

U.S. Individual Life InsuranceAnnualized Premium Sales

Source: LIMRA’s U.S. Individual Life Insurance Sales Survey and LIMRA estimates

Affiliated includes Agency-Building, MLEA and Home Service; Independent includes Brokerage, PPGA and Stockbroker/Wirehouse; Other includes Financial Institutions, Worksite and channels other than those included in the previous categories.

49%

41%

10%


Time is Running Out

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The outlook is positive for those organizations willing to embrace change, but time is running out to address some

critical industry issues.

Productivity DriversN

umbe

r of a

dvis

ors

Sales Capacity


Sales Capacity: Number of Sales Professionals

195158158 149

Direct SalesForce

Independent

Number (000)

1998 2010

Source: Census of U.S. Sales Personnel, LIMRA, 2012

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26%6%

45%

34%

29%60%

Career Independent

Age

Less than 35 35 to 54 55 or older


The Aging of the Client Base

10%

22%

35%32%

Under 35 yrs 35 – 49 yrs 50 – 64 yrs 65+ yrs

Source: The Independent Financial Professional, Fitting Into an Ever-Changing Environment, LIMRA and National Underwriter, 2014


The Retirement Wave

• 26 percent of IFPs plan to retire or sell their practice within 10 years.

• 33 percent don’t plan to ever retire or sell their practice.

• Of FPs age 70 and older, planning to retire within the next 10 years, only 17 percent have a formal, written succession plan.



Time is Running Out

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Productivity Drivers

Num

ber o

f adv

isor

s

Sales Capacity



21

New Business

ProcessingTraining & Education Marketing Technology

Support




22

New Business

Processing

84%

Training & Education

67%

Marketing

67%

Technology Support

63%




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New Business

Processing

84%

23%

Training & Education

67%

36%

Marketing

67%

48%

Technology Support

63%

39%



Lifetime Value of a Financial Professional

Talent Acquisition Retention Transition

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Talent Management








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Direct-to-Consumer

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“It would be nice if you could sit in a park, be on your tablet, and just get your life insurance….”

Seeking the Ideal Experience:

How Gen X and Y Want

to Buy Life Insurance

LIMRA, 2014


Stuck Online

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Online searches

Family, friends

TweetCoworkers

Company sites

“It makes me insane when I can’t find the contact

information.”


Stuck Online:Why?

• Consumers accustomed to going online for everything else

• Countless insurance web sites• Few places to transact online• Life insurance is a complex product• Confusing terminology

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The Price Dilemma

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Complexity

Cos

t of C

over

age

Tradeoff to Achieve Efficiency & Scale

Predictive analyticsStraight through processing

Contact Centers Take Center Stage

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Service Relationship Management

The New Frontier

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“The days of hiring empty nesters, retired life agents, and those in their second career are over. This is the new frontier of the life insurance industry – competitive, talented, confident, knowledgeable, alert and driven individuals are required to maximize the investment and generate returns.”

Contact Center Director

Source: LIMRA Contact Center Market Study, LIMRA, 2014







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Today’s Consumer Is…

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EMPOWERED OMNI-CHANNEL EXPECTING MORE


Will the face-to-face of the future be the same?


Same Business, New Tools

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Sources: Connecting Through Social Media, LIMRA, 2012; Technology Leaders Study, LIMRA, 2013

I use LinkedIn to broaden my network.

Using social media builds credibility.

Social media is a retention tool.

Social media is just the car you drive.

43%

40%

35%

31%

31%

24%

17%

15%

9%

Marketing/Advertising

Prospecting

Communication

Brand management

Networking/Education

Events/Community

Customer service

Sales

Recruiting

Uses of Social Media


Why Do Some Lead and Others Follow?

• Tech leaders…• See the value of technology in their business• Have a better vision for how technology fits into the

traditional sales model• Actively strive to reduce barriers

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Technology helps me stay on top of my business. The bigger your book, the harder that is … I want every client to feel as if they are my only client, and technology helps me accomplish this.

— Financial professional, interview


Client

An Integrated Service Model

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Advisor/ Rep.

Sales Desk

Collaboration Team

Website & Mobile

Contact Center

Local Office

Web & Mobile Portal

Sales Leadership & Practice Management


In An Omni-Channel World

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Where They Want How They Want

When They Want

CommunicationStrategy

“Insurance companies might as well be speaking in a foreign language...and they

talk about life insurance in a way that makes it seem unattainable.”

Intent vs. Perception

39Source: Get Real Already: Industry Innovation Through Authentic Language. LIMRA & Maddock Douglas, 2014

What We Say

Premium

Protection

Universal life

Death benefit

Elite; expensive

Birth control

Coverage good anywhere!

“I just can’t think of any benefit to

death”

What They Think


The Six Elements of Authenticity

1. Easy to Understand2. Down to Earth3. Memorable4. Positive5. Credible6. Relevant

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Source: Get Real Already: Industry Innovation Through Authentic Language. LIMRA & Maddock Douglas, 2014


Authenticity “First Impression” Scoreboard

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NEUTRAL

Confusing Easy to Understand

Impractical Down to Earth

Forgettable Memorable

Negative Positive

Unreliable Credible

Irrelevant Relevant

Retirement Life Insurance



1. Easy to Understand“Easy to understand” means simple, everyday language.

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“If they use every day kind of language and stay away from buzz words that define their

business, it might be easier to understand.”

“They send me brochures and I have no idea what it means…I don’t

understand a word of it.”

“The confusion is indescribable — It

makes me want to stop reading.”

“Put it in a way normal people can understand.”



2. Down to Earth“Down to earth” means real, human and approachable images.

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“People just look too damn

happy and healthy.”

“…they promise we can have this lifestyle once we retire and I don’t think

that’s realistic.”



3. Memorable“Memorable” means interesting and refreshing.

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“Somewhere in a sea of tasteless mediocrity lies a

ripened gem just for me. I just need to find it.”

“When you started reading deep into it, it got a little like ‘what are they

talking about?’…when you got into stuff it just kind of bored you.”



4. Positive“Positive” means warm and comforting.

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“Maybe a little less harsh…it sounds so dismal…maybe a little humor in it, make it easier to digest.”

“Offer a little bit of sunshine with it — it doesn’t have to be a scary thing.”

“We’re talking about something ending, we already know how bad that is. Maybe not use such heavy words with it.”



5. Credible

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“I wish they wouldn’t slide things in under the radar.”

“Too much verbiage. Makes me think they’re trying to hide something from the

public.”

“I need to talk to someone who knows insurance inside

and out.”

“Credible” means trustworthy and unbiased.



6. Relevant“Relevant” means you understand or know me and your message is for someone like me.

“It didn’t seem like it was identifying me personally…I

didn’t think they were talking to me. Did they do that on

purpose?”

“It’s not clear for me what my best option is…so I didn’t choose anything.”


They Believe We Can Do Better

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• believe life insurance products don’t have to sound so complicated72%

• say there’s no reason why a life insurance company can’t offer the same high quality customer experience as other types of companies

80%


To Sum Up….






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Date post:	16-May-2015
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