IFB Fall Summit 2012

The life insurance industry isn't doing enough to attract, educate and engage younger clients, and as a result, it could fail to capture the business of an entire generation, according to Rick Forchuk, vice president of retail insurance distribution with Kingston, Ont.- based Empire Life Insurance Co.
"We are missing, as an industry, a great big chunk of the marketplace," said Forchuk, speaking at the Independent Financial Brokers (IFB) fall summit in Toronto on Tuesday.

Forchuk pointed to recent figures from the Life Insurance and Market Research Association (LIMRA) showing that sales of life insurance policies in Canada either declined or remained unchanged in 2011 in all age groups, except for consumers over the age of 55. Among consumers under the age of 25, year-over-year sales were flat, and among those between the ages of 25 and 54, year-over-year sales declined slightly.

"What's happening here is 86% of the Canadian marketplace had low growth or negative growth in terms the number of policies sold," said Forchuk. "We, as an industry, are missing an entire generation."

He suggested that perhaps insurance agents aren't being proactive enough about targeting this generation. Since life insurance is a product that is typically sold rather than bought, clients who are not approached by insurance agents are unlikely to seek out the product themselves, Forchuk said.
"A bunch of people are not buying life insurance policies from us, because we're not selling it to them," he said.

Partly contributing to the trend is a decline in sales of life insurance for children. Whereas in the past, insurance agents commonly urged clients to buy policies for their children within about a month of a child's birth, Forchuk said this is no longer a common practice. As a result, he said advisors are missing an opportunity to plant the seed for the next generation of life insurance owners.

"Children who grew up with life insurance policies become life insurance buyers when they become adults and start families and start businesses," he explained. In contrast, it can be tougher to sell insurance to individuals who have lived their lives without it – and without understanding the purpose it serves.
Also contributing to the problem is the poor state of financial literacy, according to Forchuk. Younger generations of Canadians received little, if any, financial education in school, and since advisors don't typically target younger clients, these individuals are not getting professional advice, either.

"Financial literacy is a significant issue in our country," Forchuk said. "We have a generation of people coming out school, who are as deeply indebted as they've even been before, and knowing less about how to deal with money as they ever did before."

This lack of education is affecting the insurance industry, in particular, since most of these Canadians have a poor understanding of insurance products – and this makes them tough to sell. Even individuals covered by group insurance plans through their workplace are often unfamiliar with their coverage, Forchuk said.

"Many times, the end user – the insured person – has no idea what they've got," he said.
"We've got to do something about helping Canadians learn more about their finances."