By now most U.S. cities have seen their share of Occupy protestors; but if you’re an insurance agent, you’re probably less interested in the 99 percent as you are in the 1 percent. After all, high-net worth individuals can be a great target for an agency to specialize in (we’ll be taking a more in-depth look at writing affluent personal lines buyers in the October AA&B).
But although you may believe these wealthy buyers are more concerned about the state of their polo ponies than the nuts-and-bolts insurance purchases of the rest of us, the recent Consumer Expenditure Survey put out by the Bureau of Labor Statistics might come as a surprise.
The BLS finds that affluents are the “spending engine” driving today’s economy. And unlike the ongoing taxation discussions in Washington, there’s no quibbling over how to define “affluent.” According to the study, they’re the 58.6 million adults living in households with at least $100,000 in annual household income. And although that number doesn’t put you in a league with Bill Gates and Co., it’s impressive considering that the median U.S. household income in 2010 was $49,445, according to the U.S. Census Bureau. Affluents account for roughly 60 percent of all household income earned in the U.S., and hold roughly 70 percent of the privately held wealth in the U.S.
The study’s findings shed light on what higher-income buyers spend their discretionary income on. For example, affluents account for:
- 76 percent spent on cruise ship fares
- 51 percent spent on airline fares and trip lodging
- 70 percent spent on second homes
- 58 percent spent on motorboats
- 51 percent spent on jewelry
- 59 percent spent on “personal digital assistants.”
What a coincidence—all of those items are insurable!
And while affluents don’t mind spending money on products and services, they most definitely want a bang for their bucks. According to the annual Ipsos Mendelsohn Affluent Survey, a national study of more than 14,000 adults living in households with at least $100,000 in annual household income:
- 78 percent agreed with the statement, “When it comes to quality, I believe you get what you pay for”
- 60 percent agreed with, “Even though the recession is ‘officially’ over, I am still spending money much more cautiously than I used to”
- And only 18 percent agreed with, “I tend to buy based on price, not quality.”
These findings seem to suggest an ongoing need for agents and brokers as trusted advisors. Affluent buyers, with more to insure, need expert counsel and high-quality insurance products, and they’re willing to pay more to get them—as long as that higher price buys them exactly what they need.
It’s just another way consumer demand is raising the performance bar for our industry.