In a new report, titled “Opportunities in Reaching the Middle Market with Life Insurance,” Conning estimates the middle market life insurance protection gap to be $10.2 trillion — a 56% increase when compared to the firm’s last study of the middle market in 2006. The total protection gap across all income brackets has more than doubled.

According to Conning, the inflamed gap stems largely from demographic trends, including a 4.7% population increase between 2005 and 2009. However, individual life insurance, at best, has only kept pace with inflation, Conning notes.

The total number of lives covered by individual and group life insurance reached its highest point in 2003, but since then, has declined at an annual pace of 1.6%.

Going on to lament the looming prospect of baby boomers leaving their “prime insurance-buying years,” writes Conning, “The evidence so far is that the life insurance industry is not laying the groundwork for replacing its customer base.”

In recent years, according to Conning, tools have become available to cut into this gap. Predictive analytics brings improved marketing as well as efficiency and accuracy to underwriting and policy administration. More importantly, however, are social media and the Internet as outreach tools.

“Current life insurance products and distribution methods do not fit well in those vehicles, but progress is being made,” notes Conning. “Online tools are becoming more robust, and insurers are beginning to approach the Internet and social media as a primary channel, rather than just another place to post material developed for other media. This change in approach, while subtle and still not prevalent for life insurers, maybe the first tentative step to making progress in reaching the middle market.”

Despite compliance, security and data concerns, according to Conning, social media has the potential to disrupt the life insurance sales process. With population growth and the industry’s decreasing reach, a fresh, disruptive approach may go a long way.

— Justin Stephani is the associate editor for Insurance Networking News, a SourceMedia publication.

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