From the April 2012 issue of American Agent & Broker •Subscribe!

Target the 1 Percent

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.

Comments

Resource Center

View All »

Get $100 in leads with $0 down!

NetQuote's detailed, real-time leads have boosted sales for thousands of successful local agents across the...

The Growing Role of Excess & Surplus Lines in Today’s...

The excess and surplus market (E&S) provides coverage when standard insurance carriers cannot or will...

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

Drug and Alcohol Testing Requirements

In this two-part series, NBIS Risk Management team will break down the requirements to assist...

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.