Life-Sustaining Measures

Black insurance companies search for strategies to halt the erosion of their ranks

to technology at Golden State. It is the only NIA company with an Internet home page (www.gsmlife.com). The two-year-old site allows customers to learn about the company and its products, and to purchase insurance.

THE FUTURE OF THE NIA
Most of the CEOs of America’s black-owned insurance companies feel uncomfortable speaking about how rapidly their industry’s niche is shrinking. They are members of a small fraternity and are often friends. Consequently, they speak in generalities.

The NIA is a shadow of its former self. Over three decades ago, it had more than 40 members. Of course, there were also many more than 2,000 mainstream insurance companies as well. Both groups have suffered attrition as customers became more savvy and demanded not only insurance, but also other financial instruments that provide them with higher interest rates of return. As investment laws changed, brokerage houses merged with insurance companies, and commercial banks began offering new consumer products. And each competitive development hit insurance companies.

Consequently, when change rippled through the insurance industry, the NIA was hit by tidal waves. Unfortunately, says North Carolina Mutual CEO Bert Collins, that is the natural order of business, and the companies that grow stronger succeed while others fail.

Charles Cornelius, Atlanta Life’s CEO, agrees. He adds that the NIA companies’ greatest weakness is that “the firms are too small, while our greatest strength is that we know our marketplace and our customers know us.” The reality, he continues, is that in order to grow, NIA firms must find some way to consolidate. In the past, firms such as Atlanta Life grew by taking over other NIA members. Now Cornelius says he wants to grow by selling more policies to a broader array of customers.
The contradictions are very apparent to Larkin Teasley. The Golden State Mutual CEO is also the president of the NIA. He says its membership understands lower- to lower-middle-income African Americans better than anyone else. Plus, the NIA firms have substantial financial assets. But, he admits, these assets may not be enough to save every NIA firm. Since segregation ended, the nation’s demographics have changed more quickly than the NIA did. Consequently, many middle-class blacks who knew the NIA became the clients of white insurance firms. And that trend is too far out of the gate to stop.

So what happens now? Teasley, Collins and Cornelius can’t say for sure, but each CEO predicts his firm will survive. They are less sanguine about the NIA’s chances. While Teasley, the group’s president, projects the NIA will make it to 2000, he is not sure how long it will last beyond that. Why?

After a pause, Teasley says, “In my personal opinion–not that of the NIA president–I believe that in 10 years only five African
American-owned insurance firms will remain. The rest will have either died or been merged with other NIA members.” As for the NIA itself, perhaps it will be a memory.

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