Retirement Market Boom
Redefining Financial Services
And there are lots of them. Along with the stragglers of the "silent generation" that preceded them, baby boomers are ushering in an unprecedented retirement market comprised of nearly 77 million individuals in the next five years alone, according to a TowerGroup (Needham, Mass.) report by Cynthia Saccocia, research director, insurance practice.
Given its size and level of expectations, this group will "redefine the financial services industry and accelerate industry consolidation in banking, securities and investments, and insurance," Saccocia writes. The companies that succeed in acquiring and retaining their business, she adds, will be those that invest "in areas such as product development, distribution and services to court the customers nearing retirement and to retain these coveted investors for the long term."
Insurers can start by finding out where the boomers are, counsels Andrew Robinson, head of Chicago-based DiamondCluster's insurance practice. Carriers are starting to take advantage of GIS (geographic information systems) to determine where to place their distribution outlets, according to Robinson. "They are mapping and overlaying demographic data and information such as new-construction starts to try to get ahead of where populations are moving," he says.
In the past, carriers would simply place an agency based on a certain density of population, Robinson explains. "With a more sophisticated application of data analytics, they can do much better today than that 'gross cut' approach," he says. Analytics also are being applied to match individual producers to those populations in which there is an identifiable factor such as ethnicity, Robinson adds. "There is much more development of agents around specific cohorts than there was even two years ago, let alone 10," he says.
Sophisticated physical outreach is crucial because, although boomers are much more likely to use the Internet, they still want face-to-face interaction when it comes to planning retirement, adds DiamondCluster insurance partner Paul Blase. "While the Internet purchase rate of insurance hasn't necessarily increased much, the shopping rate has gone up by about 200 percent in the last four years," he says. "Carriers need to figure out how to get boomers to transition from shopping to purchase."
A major factor in solving that puzzle is simply to provide the appropriate products. As the soon-to-retire begin looking to shift from accumulation products to financial solutions that will provide them income over time, carriers increasingly are seeking to retain customers by offering them attractive ways to redirect their assets. "Life insurers have begun to get better insights into the lapsing and redemption of policies," Robinson says. "They have also started to identify distinct product needs that they are not well-positioned to provide."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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