For nearly two years, consumer concerns about COVID-19 and the economy went hand in hand.
However, the two concerns diverged more recently as fears about the virus eased this year and the focus shifted to the flagging economy.
LIMRA’s quarterly Consumer Sentiment in the Time of COVID-19 study found that just 29% of Americans reported a high level of concern about COVID-19 in July 2022, compared with 50% just six months earlier. In contrast, 63% of consumers said they were very concerned about the economy. That is 13 percentage points more than at the beginning of the year. Just 15% of adults have a positive view of the economy today, the lowest sentiment we’ve captured during the pandemic.
Understandably, people with high levels of stress about their household finances (74%) and those expecting increased financial stress this year (85%) expressed the most concern about the economy.
With inflation at its highest level since 1982, virtually every American is concerned to some degree. Inflation appears to be a key reason for anticipating increasing financial stress. Almost 9 in 10 people who think their financial stress will (further) increase in 2022 say inflation is a major concern.
In recent months, a majority of Americans have taken action to respond to the current economic climate. Nearly 9 in 10 adults have taken favorable measures — steps likely to improve their financial stability and security — such as B. being more budget conscious, saving or investing more, and taking action to increase their income. However, to make ends meet, nearly 3 in 5 adults have taken “unfavorable actions” that may be more harmful, such as: B. save less, increase their own debt, reduce pension contributions or do without medical care.
Most consumers have changed their spending over the last few months. Some of the most common include cutting back on dining or entertainment, changing their shopping habits, and driving less. Other changes, such as delaying a major purchase, canceling subscriptions or memberships, and changing or canceling vacation plans, are likely to increase unless economic conditions improve.
Household finances top the list of stressors today, closely followed by work. Both have reached or exceeded their pre-pandemic levels. Half of adults expect their financial stress to remain about the same over the next six months, while a quarter expect it to get worse and a quarter expect it to improve.
Consumer confidence in carriers and agents remains high
Other LIMRA research shows that people who have life insurance feel more financially secure. Two-thirds (68%) of life insurance policyholders say they feel financially secure, compared to 47% of non-life insurance policyholders. Although consumers in the current study make some difficult decisions about their finances, very few (just 1%) say they are likely to reduce or cancel their life insurance coverage, or delay purchasing any insurance coverage they feel necessary ( 2%). Economic conditions are not improving this year. At the same time, very few adults say that poor economic conditions would motivate them to take out life insurance to reduce their risk (1%).
Confidence in various segments of the financial services industry has declined since January, but is similar to pre-pandemic levels in January 2020. Nearly one in three Americans have “fairly much” or “extremely much” trust in insurance companies today, and nearly 9 in 10 have at least ” something” trust.
Consumer confidence in insurance agents and brokers has accelerated during the pandemic and remains higher than since the 2008 Great Recession. Confidence in financial advisors has also improved significantly during the pandemic and is well above pre-Great Recession levels.
With consumer confidence in our industry, the current economic uncertainty presents life insurance carriers and advisors with the perfect opportunity to educate consumers about the importance of life insurance and the financial security it can provide today and for generations to come.