From Boomer to bust

July 16, 2006 | By Raymond de Villiers

The life assurance industry is in crisis. Its traditional modus operandi is under attack and its future looks bleak. We offer an insight into how the industry got to this point and the role you play in it.

The era or generation in which you grew up sheds light on why you feel the way you do about most things—including the life assurance industry. The value of generational theory is that it can help you to understand diversity and the influences that have shaped your worldview.

Generational theory is a relatively new science, which was first put forward by two academics in the United States, Neil Howe and William Strauss. Combining social anthropology and political history, they identified recurring patterns of crisis, rebuilding, awakening and inner-directedness in American history.

Although it is fair to say that the theory is most applicable within a middle-class, non-rural society, it does have general relevance, and almost 10 years of anecdotal and business-consulting evidence proves the enduring appeal of the theory.

In terms of generational theory, the life assurance industry is either servicing or selling products to four generations. They are: the Silents, the Baby Boomers, Generation X, and the Millennials or Generation Y.

By identifying with your generation, you gain an awareness of yourself as a policyholder or potential policyholder, and the specific influence you wield over the life industry.


These people were born in the 1930s and 1940s. They are currently in retirement or close to it. The world in which they grew up gave them a worldview that is conservative, respectful of authority and not used to a lot of choice. They are comfortable with Henry Ford’s dictum, “You can have any colour…so long as it is black.”

When it came to insurance, they took the advice of intermediaries and companies as the voice of authority. They didn’t challenge the advice they were given, because they believed that it came from professionals who knew, and were right.

As they have reached retirement and the performance of their products hasn’t matched their expectations, this generation’s reaction has been to adjust their lifestyle quietly and to get on with life. Generally, they do not blame the intermediary for the advice they were given, or the company for poor management, even though they were often the target of unscrupulous intermediaries who advised them poorly in order to generate commissions.

Baby Boomers

Boomers are the architects of the technology and information ages. They are visionaries, prepared to challenge authority, and highly networked and inter-connected. Generally, they gather information, which they use as the basis for decision-making. They have dreams of retiring in opulence and comfort.

When they sat with intermediaries to plan for retirement, they never regarded the illustrative values that were part of the sales pitch as incidental figures. They regarded these big numbers as reliable anchors and based their decisions on them. This is the generation that is taking on the life assurance industry and exposing its practices.

Boomers feel ripped off and lied to, and they are not afraid to challenge those whom they see as at fault. The bad news for the life assurance industry is that the fight has just started. What we have heard up until now are just the rumblings of discontent that will precede the storm as more Boomers approach retirement and realise that they don’t have the money they thought they would have.

Boomers are highly relational and networked, and so they have more people with whom they can share their experiences than the Silents did…and they will share them freely and loudly.

The Boomers and the Silents constitute the bulk of the industry’s current client base and create most of the embedded value by which companies are rated and valued. As customers, they have massive financial muscle to flex, and the Boomers are beginning to do so. As employees of the industry, they are also largely responsible for the state in which it finds itself today.

The younger generations are the industry’s future markets and present it with very different challenges to those of their parents and grandparents.

Generation X

They were born in the 1970s and 1980s and grew up in a world of continuous change. The most cynical of the generations, they are typified by their “Whatever!” attitude. They are young and unconcerned with death. Similarly, they view retirement as a long way off and their short-term materialism means that they don’t care anyway.

The challenge to the life assurance industry is to regain the trust and respect of this generation. They don’t want to compromise their integrity by selling for the industry and they don’t believe the industry’s product promises.

The roots of this mistrust are the 30 years of “fleecing” that the industry did of their parents and grandparents. Xers have watched their elders’ retirement planning crumble while the life assurance companies have grown rich. With the advent of online trading and other options, Xers would rather take a chance on their own abilities than entrust their future to an “industry of thieves.”

For all intents and purposes, this generation is a lost generation to the industry. The flip-side, however, is that this generation is a goldmine for the company that manages to connect with it. The company that does this will succeed because it has managed to regain the generation Xers’ trust. It was lost over decades so they shouldn’t expect to regain it overnight—the process must be enduring, consistent and built with at least a 10-year window before evaluation.

Most importantly, Xers aren’t Boomers waiting to grow up; they are a demanding and influential generation in their own right.

Generation Y or The Millennials

These are the oldest 14-year-olds you will meet. The Millennials are a paradox of streetwise worldly wisdom and optimistic naivety. They have lived relatively sheltered lives and believe the world is their oyster. They are very brand conscious and believe that they will live forever. After the cynicism of the Xers, the optimism and enthusiasm of the Millennials is refreshing. Unfortunately, the implication for the life industry is that this group thinks exclusively about life and gives little thought to death and retirement.

If Xers are the lost generation to the industry, the Millennials represent a “Green fields” possibility. The challenge facing the industry is to draw them in young and then reward their loyalty. Millennials have grown up in an era of loyalty programmes, and they expect short-term benefits that acknowledge and reward their medium-term loyalty and spend, since they have no long-term perspective.

The challenge is to design new products that effectively balance short-, medium- and long-term rewards. The good news is that Xers will also respond well to products such as these.

Time for change

The life assurance industry in South Africa is in a situation of its own making. For too long, it has treated
policyholders with contempt, expecting them to accept whatever returns were thrown their way.

Any company that can afford to write off the embedded value that Xers or Millennials offer can carry on regardless. The rest, who want to survive, need to wake up, grasp the nettle…and change! If not, the industry may never recover from the credibility crisis in which it finds itself today.


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