Demographic Shift Offers Opportunity for Agents

Minorities Destined to Become Majority by Mid-Century

Before the 21st century reaches the half-way mark, more than 50 percent of the population of the United States will be represented by a vast cultural mix of people considered to be “minorities,” according to the U.S. Census Bureau. It’s a shift with tremendous business implications.

Independent agents who wish to compete in this changing demographic environment would be wise to tap into cultural and ethnic markets that are perhaps different than their own. And a lot of agents are doing just that.

William Pierson, assistant vice president of agent development at the Independent Insurance Agents and Brokers of America and a member of the association’s diversity task force, related the story of an enterprising young agent who reached out to a group of Korean fish vendors in Washington, D.C., with great success.

The young man, a Caucasian, was trying to drum up business, Pierson said, so he went to the fish market area of D.C. where the vendors are mostly of Korean descent. He approached one of the vendors, who said he didn’t have time to talk with the agent just then. If the agent wanted to talk about insurance he would have to come back at 4 a.m. when the vendor did his bookkeeping and other management tasks.

“So this young guy got up and went down there the next morning,” Pierson said. The Korean man was so impressed that he gave the young agent his business and told all his friends and peers. The young agent ended up writing the insurance for all of the Korean fish vendors.

That kind of initiative is a great way to break into a cultural group, Pierson said. “The most effective way to expand into a cultural group is through word of mouth. It’s not through advertising.”

Ron Patterson of Ron Patterson Insurance Agency in Richardson, Texas, would agree with that. Patterson’s agency specializes in writing insurance for churches, which he said was a gateway for him into African American and Hispanic communities.

“That opened the door to black churches,” Patterson said. “It’s amazing how you can cross racial barriers and lines when you get involved with people that are involved with churches. It’s been a wonderful opportunity to for us.”

Brad Berrong with Ed Berrong Insurance Agency in Weatherford, Okla., also sees big potential in ethnic markets. Speaking at a presentation at the Independent Insurance Agents of Texas conference last June, Berrong said 15 to 20 percent of the total premium volume of his agency — which is located in Western Oklahoma — comes from the Asian Indian community. The agency also writes a lot of business with Pakistani and Hispanic communities as well.

“It’s a very big market,” Berrong said. Minority groups own a large and growing number of businesses in the United States. “If people are missing embracing the change in ownership, then they’re missing out on a lot of these accounts.”

Understand the Culture

It’s an impressive effort to show up at a local fish market at 4 a.m. in order to write a piece of business. But initiative only goes so far. Agents who hope to the capture business of a diverse community need to try to understand the culture of the group they aim to serve.

Agents should “look at what they don’t know,” the IIABA’s Pierson said. “Look at your operation from the eyes of diverse people. … If you want your agency to grow you need to look at the populations that are growing.”

The Hispanic population is the fastest growing minority group in the United States; it’s expected to triple between 2008 and 2050. But Hispanics already represent around 80 percent of the population of El Paso, Texas. There, agents say tapping into the Hispanic market is essential, even for non-Hispanics.

But it still takes a lot of work, according to George Saenz Sr., owner of Cielo Vista Insurance Agency in El Paso. Commercial business represents 70 percent of his total premium volume, and Saenz works with a lot of small businesses and a lot of start ups. Most of his business comes from referrals, but Saenz says he also does a lot of marketing by joining professional organizations like chambers of commerce. Customers want to know he’s part of the community, he said.

“You have to know the culture,” advised Luis Rico, vice president of Desert West Insurance, which is headquartered in El Paso but also has an office in San Antonio. “It’s one thing to know the product that you are selling and it’s another thing to know who you are going to selling it to.”

He says his agency, which specializes in trucking and transportation, does advertise that they speak Spanish. “A lot of folks here in El Paso feel more comfortable with that. They are bilingual but they feel more comfortable speaking with somebody in their own language.”

Referrals, Referrals

When it comes to expanding an agency’s market share in a particular community, Patterson, Berrong, Saenz, Rico and Pierson all agreed: It’s all about referrals.

Rico’s transportation clients are mostly long-haul truckers and they are “99.9 percent” Hispanic. “They have trucking companies and they are working at it hard,” he said. When a new client comes to them, it’s almost always the case where they were referred by another client, “people that know us and know we do a good job.”

Patterson, who’s been in the insurance business for nearly 30 years, also says most of his business comes through referrals. “When you treat people with respect and honor, they honor you with their business. They return that and they share with their friends. When they are treated well … it comes back to you tenfold.”

Pierson agreed. “Cultural groups that are outside the mainstream, that maybe don’t speak English that well, are truly going to rely on referrals of people similar to themselves,” he said. “Referral, word of mouth, is the way to do it. It’s that classic thing, if you do something good they’ll tell people.”

Ethnic communities in many ways are closed communities, Berrong explained. “What I mean by that is they’re talking to each other more than they’re speaking to their banker. They talk to each other. [They’re saying] who can I get that will solve my problems, and hopefully that’s where a lot of our referrals come from.”

Pierson warned, however, if you do a bad job, “they will tell even more people.”

Patterson concurred. “People will go where they are invited but they return to places where they are well-treated. And the contrary is the same. If you mistreat somebody … they’re going to tell an awful lot of folks.”

A More Diverse Nation
By mid century, the U.S. population will be far more racially and ethnically diverse than today, according to estimates by the Census Bureau. Minorities currently represent about one-third of the U.S. population and are expected to become the majority in 2042, with the nation projected to be 54 percent minority in 2050. By 2023, minorities will comprise more than half of all children, according to a report released by the Census Bureau in August 2008.

• By 2050, the minority population — everyone except for non-Hispanic, single-race whites — is projected to be 235.7 million out of a total U.S. population of 439 million.
• The non-Hispanic, single-race white population is projected to be only slightly larger in 2050 (203.3 million) than in 2008 (199.8 million). This group is projected to comprise 46 percent of the total population in 2050, down from 66 percent in 2008.
• The Hispanic population is projected to nearly triple, from 46.7 million to 132.8 million during the 2008-2050 period. Its share of the nation’s total population is projected to double, from 15 percent to 30 percent.
• The black population is projected to increase from 41.1 million, or 14 percent of the population in 2008, to 65.7 million, or 15 percent in 2050.
• The Asian population is projected to climb from 15.5 million to 40.6 million. Its share of the nation’s population is expected to rise from 5.1 percent to 9.2 percent.
• The American Indian and Alaska Native populations are projected to rise from 4.9 million to 8.6 million (or from 1.6 to 2 percent of the total population).
• The Native Hawaiian and Other Pacific Islander population is expected to more than double, from 1.1 million to 2.6 million.
• The number of people who identify themselves as being of two or more races is projected to more than triple, from 5.2 million to 16.2 million.

Business by the Numbers

• 1.6 million – Number of Hispanic-owned businesses in 2002 (the latest year for which statistics are available). The rate of growth of Hispanic-owned businesses between 1997 and 2002 was 31 percent, compared with the national average of 10 percent for all businesses.
• 1.2 million – Number of black-owned businesses in 2002. Black-owned firms accounted for 5 percent of all nonfarm businesses in the United States.
• 1.1 million – Number of businesses owned by Asian-Americans in 2002; up 24 percent from 1997. The rate of increase in the number of Asian-owned businesses was about twice that of the national average for all businesses.
• 201,387 – Number of American Indian- and Alaska Native-owned businesses in 2002.

Source: U.S. Census Bureau

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