Expert: Industry Needs to Prepare for Growing Latino Market

At the recent State Insurance Trade Association’s (SITA) conference in Las Vegas, representatives listened to a forty-minute presentation on politics, policy and the increasing influence of the Latino electorate. And while that subject might not sound like a natural fit for an insurance convention, the presentation appears to have been well received by attendees.

“It was very eye-opening,” said Peter Moraga of the Insurance Information Network of California. “While it focused on how Latinos vote, it also highlighted just how big the Latino market will be.”

Latino households are projected to currently have about $1.2 trillion of purchasing power across the country, according to the Selig Center for Economic Growth.  Yet, much of that purchasing power is concentrated in the western United States such as California, Nevada, Arizona and Texas, with the Latino population projected to continue growing across the country at a rate faster than any other demographic group, according to the U.S. Census.

The Latino population is expected to double in less than 30 years, according to Census projections, with much of that growth happening in the western states.

“The demographics are changing at light speed,” David Damore told Online Auto Insurance News. “For folks that came outside of the [west], I think it was almost shocking for them to see the numbers. They were really interested in the demographics.”

Power of Latino Electorate Evident in Licensing Laws

Poster made by Rep. Luis Alejo to celebrate passage of California's undocumented immigrant license law

Poster made by Rep. Luis Alejo to celebrate passage of California’s undocumented immigrant license law

Damore is a University of Nevada political scientist who focuses on policy and elections, not insurance. But he has many lessons insurers, agents and lobbyists could learn from Latino politics of the past 30 years.

One example is that some states will begin to look at—or pass—new policies to accommodate immigrant drivers.

“California was the home of Prop 187,” Damore said, referencing the highly controversial ballot measure aimed at curbing illegal immigration. “Now, the state allows undocumented immigrants to get driver’s licenses … Ten years ago, these proposals were talked about from an immigration perspective, but today they’re talked about through the lens of public safety.”

And California’s new law to grant undocumented immigrants driving privileges has plenty of precedent. Nevada, Illinois, Maryland, Oregon, Washington, New Mexico and Utah all have programs that allow undocumented immigrants to drive legally. Damore cited the rise and influence of Latino voters as helping to spur that change to driver policy.

“We’re going to see more of that across the country moving forward,” he predicted.

Insurers Must Adapt

How the auto insurance market adapts to this emerging market is still to be seen, just as the industry is waiting to see how the market responds to advertising and marketing. And presenters at SITA such as Damore did not offer specific insights that could aid auto insurers in tapping that market.

Part of the challenge for insurers, according to the Center for Hispanic Leadership, is that some Latino cultures don’t emphasize financial planning or buying insurance.

In 2012, the Center wrote that “Hispanics represent the group most underserved by the insurance industry.”

The Center noted that “because insurance is not mandatory or necessarily needed in most Latin American countries, its important role in U.S. is not widely understood across the Hispanic population.”

The Center suggests that insurance companies work to help bridge that gap by reaching out to Latino consumers, along with offering literature in Spanish, and explaining English insurance terms that have no Spanish equivalent.

That strategy of outreach was employed by the Democratic Party in California after Proposition 187 was passed, Damore noted, to great success. The Democratic Party has a firm grip on politics in California, in large part because of the Latino electorate. It’s also been used by some big box outlets, like Best Buy, which have weathered the recession and an explosion of online sales in part because of Latino market outreach.

Damore said he noticed many in the crowd were taking notes while he talked about these successes at the SITA conference.

“The insurance industry is sort of an Anglo, Republican group,” Damore said. “But most of them see this is the future, so they want to know about it and make the most of it.”

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