The protection gap for the US’s middle income
market is estimated at $10.2 trn, representing a huge opportunity
for life insurers, according to a new study by Conning Research
& Consulting.

“Over the past five years the missed
opportunity in the middle market for life insurers has grown
significantly, and our latest estimate is that it has reached $10.2
trn,” said Terence Martin, director at Conning Research &

Martin said there is a huge demographic bulge
of consumers in the US entering their prime insurance-buying years,
but the recession, combined with soaring healthcare costs, has
caused the protection gap to balloon.

“Add downturns in the equity, credit and
housing markets, and you get a sense of just what insurers are up
against,” said Martin.

Online value

The Conning Research study,
Opportunities in Reaching the Middle Market with Life
recommends insurers drastically increase their use
of online channels and social network marketing to overcome
challenges relating to distribution costs, access to insurance
products and financial planning availability.

For insures struggling with the cost of
underwriting, the implementation of predictive modeling and a more
automated underwriting process holds promise, says the study.

Already popular in the property-casualty
market, advanced predictive modeling technologies are beginning to
be applied on the life side as well.

Conning’s study urges insurers to couple
predictive modeling with social network marketing as a means of
tailoring messages to online customers.

Whereas in the past, life insurers to date
have viewed the channel as a supplemental communication and
marketing tool, for much of the  middle income market, the
internet and social media are the primary channel for financial
planning and advice.

“This change in approach, while subtle and
still not prevalent for life insurers, may be the first tentative
step to making progress in reaching the middle market,” Martin