Life insurers are leaving money on the table by ignoring the untapped middle market. Their traditional agent-based model has typically focused on more affluent customers. Carriers have found it difficult to get the economics right when they pursue less affluent segments.
However, most of the recent U.S. population growth has been in the middle and low income segments, which remain underserved. Today, only 44 percent of the middle market, which includes over 52 million U.S. households, owns life insurance. This leaves a $12 trillion gap in protection for U.S. middle market consumers. Insurers who focus on this market stand to gain revenues of $12 billion and profits of half a billion dollars annually.
The underserved middle market is hardly a secret within the industry, but two factors have now tipped the scale. Changing consumer behavior and advances in digitization make a profitable middle market customer strategy possible.