“Don’t expect fireworks in
the US life insurance market this year.” This statement sums up the
view of the majority of 70 industry leaders surveyed by research
and consulting organisation Limra.

Specifically, Limra found 59%
of insurance executives believe overall individual life insurance
sales will remain flat in 2011 and 68% feel group life sales will

Limra senior vice-president
Robert Baranoff said, while overall sales may not grow
substantially in 2011, certain products will stand out.

Among insurance executives
surveyed by Limra, a third believe indexed insurance products have
the most growth potential in 2011. Driving growth will be the low
interest rate environment and the Securities and Exchange
Commission’s failure to secure regulatory control of indexed


Bar chart showing the premium income of the US LIFE INSURANCE INDUSTRY, 2001-Q2 2010

Close behind as the most
second-most favoured product group is whole life insurance, with
27% of executives favouring it to grow the most in 2011. Universal
life and term products followed, each garnering about a fifth of
the votes.

Also of note, Limra’s survey
revealed the majority of executives feel there will be growth in
sales to the middle market because more insurers are targeting this
sector. A big incentive for insurers to pay increased attention to
the middle market is the level of underinsurance prevalent in it,
observed Limra.

Supporting this view, Limra’s
2010 Life Insurance Ownership Study found only 44% of US
households have individual life insurance, the lowest level in 50
years. The study also revealed 58m US households, half the total,
say they need more life insurance, the highest level

However, Limra believes, when
it comes to serving the middle market, the challenge is on how best
to do this, because agent distribution is too expensive and a
dwindling resource.

On the agent distribution
channel, more than three-quarters of executives surveyed felt that
the sales force will shrink in 2011. Limra pointed out that after
two years of increased recruiting (2007 and 2008), recruiting was
down in 2009 and the first half of 2010. According to Limra’s
research, only 73 companies recruit at all, down from the 220
companies that recruited 20 years ago. Just five companies account
for about 65% of the new hires.

Contrasting with tradition agent distribution, the
bancassurance channel is expected to continue growing in 2011
according to almost 70% of executives surveyed. Limra noted that
bancassurance has been strong over the past five quarters. However,
Limra emphasised, while insurance executives feel there is strong
potential for the bancassurance channel, US insurers have never
been able to fully capitalise on this potential.