Finding The Silver Lining Sometimes Takes Some Gold Reserves
• Urbanization – As American cities grow, the population of rural communities where fraternals have traditionally thrived is shrinking. Internet-based marketing and distribution systems are allowing larger commercial insurers to cost effectively tap into rural markets of middle-income consumers – market segments they have typically ignored – threatening longstanding fraternal strongholds.
• Aging Demographics – The fraternal population is aging and we’re not bringing in enough younger consumers (and I’m talking 30 and 40-somethings, not millennials) to offset the loss of older members. That does not add up to longterm sustainability. ‘Nuf said.
• Technology – Fraternals need to invest in technology (interactive websites, online distribution options, etc.) to remain relevant to the next generation of consumers and to “leverage data analytics and predictive modeling.” That means significant capital allocations. Organizations that can’t afford such investments will be left behind.
• Strong Retention – On the bright side, fraternals outperform all other industry sectors when it comes to retention rates. Once an individual becomes a fraternal member and purchases a life insurance policy or annuity, they’re going to stick around a long time. The potential downside of this characteristic is that many fraternals have sold an abundance of high-yield fixed income annuities that, in an era of prolonged low-yield investments, can increase an organization’s risk profile and constrain access to capital.I’d love to hear your thoughts on the Special Report. Please post a comment here after you’ve had a chance to read it or email me privately at email@example.com.