Now is the time for new agents to develop expertise around Hispanic customers and for established agents to diversify their books. Recognizing and adapting to the growing market opportunity is essential.
Latinos have accounted for 52% of the population growth in the U.S. in the last 10 years, according to the Pew Research Center. It's also projected that there will be more than 30 million new Hispanic drivers over the next 30 years.
The demographic shift we are experiencing in the U.S. presents independent agents with an opportunity to build lasting business. I founded my agency on the premise that there is a growing portion of Hispanic-Americans being overlooked by traditional insurance channels, something I witnessed directly after seeing several of my Uruguayan family members struggle through the auto insurance purchasing process through language barriers and unpleasant brick-and-mortar experiences, as well as extra broker fees.
These challenges presented an opportunity. The primary challenge for an agent, after understanding the data, is how to effectively reach and service these customers. As new generations of Hispanic consumers are born in the U.S., there are clear differences in their purchasing behavior and preferences when compared to the broader population.
Understanding the customer is essential to building a solution and business around the opportunity. So, who is this customer?
The median age for the Hispanic consumer is 28 years old. This is not only younger than the general population but represents a young customer at the beginning of their prime earning years. It is also important to note that the purchasing power this customer base has will likely result in increasing needs for personal insurance starting with car insurance and building towards homeowner's insurance.
By 2030, 56% of new homeowners in the U.S. will be Hispanic, according to the National Association of Hispanic Real Estate Professionals. Investing in a relationship with the community today will help agents position themselves for this shift in the market.
Hispanic entrepreneurship has surged by 34% in the last decade, more than any other demographic, according to the Stanford Latino Entrepreneurship Initiative. This means there is an increasing number of Hispanic business owners with commercial insurance needs as well. The types of businesses being started by the Hispanic entrepreneur are also diverse, which will be reflected in their insurance needs. The commercial risks that need to be covered may be different than what most independent agents have today and will be location-specific.
More than half of Hispanics are “likely to find a good source and stick with it" when looking at brand and service loyalty, compared to only 37% of the broader market, according to Customer.com. Building a relationship with this customer is more likely to pay dividends over time, which is the key to unlocking long-term value through recurring revenues as an independent agent.
Once you build the right personal and commercial product offering, the next step for independent agents is to effectively reach the community. The Hispanic consumer spends more time on their phones than any other demographic, according to Nielsen, which means independent agents should explore social and mobile channels to reach them. These channels offer low-cost, targeted ways to get in front of your customer. How to get in front of your customer is just as important as what to put in front of your customer.
While the Hispanic market is a huge opportunity with a lot of similarities to the broader market, in order to build trust and a long-term relationship with your customer, it is critical to understand the defining characteristics of your customer base.
While Latinx is a popular term among millennials like myself, most of the Hispanic market still prefers to be referred to by their family's country of origin hyphenated with American, for example: “Uruguayan-American." Being conscious of the differences is as valuable as recognizing the similarities, like language and music preferences.
Work with your Hispanic employees to really understand your community and hire employees that know the market. You can also explore partnering with other trusted service providers in the community.
Now is the time for new agents to develop expertise around Hispanic customers and for established agents to diversify their books. It should no longer be a recommendation to recognize and adapt to this shift in the market, it should be imperative. There's a massive opportunity currently available—I challenge you to take advantage.
Nestor Solari is the co-founder and CEO of Sigo, a bilingual, mobile-first auto insurance agency focused on serving the Latino community.