State differences in demographics and economics have been drivers for life insurer strategic planning and business development. With the recessionary impacts and the likelihood of a single regulatory system, however, some of those factors and insurer response may change significantly in the future, according to a new study by Conning Research and Consulting.
“In our review of state-level performance factors and metrics in the life industry, we confirmed that larger insurers have been thinking at a state level in making and managing big distribution bets,” said Greg Smith, analyst at Conning Research & Consulting. “Over the past decade, large insurers have focused on explosive growth states, but as state experience changes due to the recession, insurer geographic distribution strategies may need to change. For instance, the prospect of single licensure would allow more flexibility in distribution focus.”
The Conning Research study, “State Differences in Life Insurance Marketing: Considerations of a Federal Level Playing Field,” analyzes current state level performance and strategies as insurers prepare for the possibility that some portion of the life insurance market will operate under a single, uniform regulatory system in the future. The study identifies significant performance differences among states, along with the underlying drivers of this performance. Further, the study presents methodologies for identifying under-realized market potential at the state, county and metro levels.
“State-level focus has made sense in the past, due to the high barriers to entry at each state market,” said Stephan Christiansen, director of research at Conning. “That said, those insurers who are prepared for the likely single-licensure, single regulatory system, in terms of distribution, geographic focus and other issues will gain a significant advantage. So, rather than committing to and investing throughout a specific set of states, we may well see some insurers shift to a metro level distribution strategy as a result of falling barriers.”
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