Insurance sales don’t exist in a vacuum – any number of outside factors can influence a client’s willingness to invest in a product or service. And nothing can impact producer success quite like consumer feelings regarding the economy.
It’s for this reason that producers would be wise to stay up to date on general consumer sentiment.
Americans feeling more confident about the economy
Sentiment regarding the U.S. economy is more positive, according to the LIMRA.
“As 2015 gets underway, more than a third of consumers have a favorable opinion of the economy – the highest rate since LIMRA started tracking the metric in March 2008,” the organization stated in a recent report. “There is no clear driver of consumer sentiment. At times it appears to be nothing more than seasonal. At other times, sentiment aligns with the labor market, the stock market, and/or the price of gasoline. All of these factors may be playing a role in January 2015 when, for the first time in 7 years, consumers with a negative opinion of the economy are in the minority.”
These findings are supported by the most recent Thomson Reuters/University of Michigan consumer sentiment index. Data from the index showed consumer sentiment reached its highest level in 11 years during January.
However, data also showed that consumer confidence in insurance companies, agents and brokers is not seeing the same level of improvement as other segments of the financial market, such as banks. At the same time, lower confidence in insurance producers doesn’t necessarily apply to life coverage.
“Consumer confidence in life insurance companies correlates to their confidence in both property & casualty and health insurers; however, it’s not a perfect correlation,” LIMRA stated. “For example, 2 in 5 people who have no confidence in health insurance companies have at least some confidence in life insurers. This is especially true when consumers have exposure to life insurance (i.e., someone in their household has life insurance).”
Making the most of positive consumer sentiment
Generally speaking, when individuals are feeling confident in the economy, they’ll be more likely to spend money. Economic confidence is at a high at the moment, and this is being seen in consumer spending patterns.
Bloomberg reported that personal consumption expenditures grew by 4.3 percent during the fourth quarter of 2014 – the fastest pace seen since 2006. The goal for insurance producers is to translate a greater willingness to spend into the purchase of specific products. Fortunately, insurance coverage is not an unwarranted expenditure. Instead, it’s a valuable form of protection clients can take pride in buying, making producers’ jobs a bit easier.
One way to maximize consumer confidence in insurance sales is to use it as a lead-in with prospects.
For instance, low gas prices are contributing to positive sentiment among consumers, with Ipsos reporting that 69 percent of survey respondents cite low gas prices as resulting in significant savings. Meanwhile, 75 percent of respondents said low gas prices give them more spending money.
As an insurance professional, you can use this as a jumping off point in your conversation. First, the fact that more Americans are finding themselves with extra money means price is less of a barrier to successful sales.
Secondly, you can highlight how taking this extra money and investing it in comprehensive coverage is a much more valuable and strategic decision than using funds on nonessential expenditures.
Consumers who are enjoying stronger economic circumstances may also be more willing to invest in products and services they might otherwise see as superfluous.
For instance, now might be the time to broach the topic of long-term care insurance with clients who already have sufficient life insurance coverage.
