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Insurance Ads—Who Spends What and Why?

You might think the Super Bowl is about football, but for many, it's the ultimate game day for television advertising. As we head into that time of year, how does property-casualty insurance fit into the total advertising picture?

As an industry, P-C insurers spend a lot on advertising. So, how does insurance advertising spending stack up against all national advertising spending? And, does all that spending even make sense?

Below is the top 10 p-c insurer groups’ advertising spend in 2018. The total, $6.7 billion, is about 2.7% of all U.S. advertising spending, which is $240 billion.

Overall, the advertising spend equates to about $20 per person in the U.S. or about $60 for the typical insurance-purchasing single person, couple or family. After watching the football games last weekend, 2.7% is not as high as I expected that’s for sure.

Note: The total for all insurers is $6.7 Billion and the top 10 are 82% of total. The average cost of advertising for the whole industry is about 1% for all premiums and about 2% for personal lines premiums. The percentage added to the label for each insurer group is the group’s ratio of advertising to the group’s total premiums.

The top three spenders are no surprise to me. Flo, Jake and Aaron Rodgers, and the GEICO Gecko all are so familiar that I think everyone has seen their advertisements. On the other hand, Farmers’ rank outside the top five surprised me as Professor Burke (J.K. Simmons) is so recognizable to me. But maybe it’s because Burke sticks in my mind favorably as his focus is on coverage and not just price. 

I will add, although it's tough for me—a Green Bay fan—to see Aaron Rodgers and know that he isn't exactly on the independent agent's side, it’s refreshing that he does highlight the importance of his human agent advising him in his purchasing decisions. But let's turn an eye toward independent agency companies. These are the insurers that are listed by A.M. Best in their database as "Marketing Type: Independent Agency."

Note: Premiums included are only those for independent agency marketing-type insurers in the group.

In the above, there was a surprise for me: Root Insurance Company. I did some research and I believe the label as “Marketing Type: Independent Agent” is likely due to their ownership of an insurance agency subsidiary. They are probably not "independent," at least not in a traditional sense. I checked their insurer appointments in their largest state, Texas. They show no appointments.

Why does our industry spend billions each year on advertising, and does it make sense?

The textbook reason to advertise is "to make a prospective buyer aware of a product and therefore more likely to buy it." That’s certainly true, but as students of the industry, you should also be aware that advertising might just motivate more frequent shopping based solely on price.

If that is the case, advertising might result in not just a standalone cost added to the premium dollar, but also the increased costs associated with managing more new business instead of renewal business. Of course, as is often the problem with evaluating the effectiveness of advertising spending, the answers are not known for certain.

You should be aware that not all “advertising” captured in insurer annual filings is for TV, and you probably see evidence of that in your agency as insurers increase their emphasis on other promotions, such as digital expenditures.

Stay tuned for the next monthly Student of Industry column in February. Have a thought? Email me about anything you are curious about and might benefit from someone looking into it. 

Until then, if you know anyone at Safeco, tell them to send me $40 worth of the best beers in Washington state and I won't consider increasing the industry's expense ratio by shopping my policies!

This Student of the Industry article is part of a new monthly column exclusively on IA Magazine. Keep an eye on Thursday’s weekly News & Views e-newsletter in February for the next off-beat take on current trends in the insurance industry.

This article was originally written by Paul Buse - operations and strategic advisor, Big I Advantage - and published by IA Magazine.

You’ve Got a Marketing Budget—Now What?

If you’re one of the few agencies that dedicates time and energy to developing a concrete marketing budget, kudos—you’ve taken an important first step in prioritizing your business’s funds to make a little go a long way.

Ideally, if you’re the owner or principal of your agency, you’ve been an integral part of the process so far. Experts agree that at a bare minimum, it’s crucial for agency leadership to have a hand in developing the marketing budget.

“Setting a budget is a function of building the business plan, and that’s a senior management kind of thing,” says Paul Kurnit, clinical professor of marketing at Pace University and CEO of PS Insights, a marketing communications consultancy firm. “The owner needs to be deeply involved.”

“The principal needs to be highly involved—the person spending the money, because no one cares about your money as much as you do,” agrees Robyn Sharp, owner of Sharp Family Insurance and founder of Mega Agency Marketing, a marketing firm that specializes in helping agents use online marketing to grow their agencies. “Delegating creation of the budget to people who don’t have skin in the game can be really dangerous. If you’re getting a paycheck, and you can count on that paycheck, you’re just not as worried about the outcome.”

But it’s one thing to create an agency marketing budget in the first place—it’s another thing entirely to execute it. “Many agencies simply don’t have an active marketer in the office,” says Jennifer Jennings, vice president, marketing and training, Grange Insurance. “The principal is spending their time running their agency and is often still part of client acquisition.”

Over the course of developing the budget, “the owner needs to identify two or three or four trusted resources in the agency who have a stake in developing and fulfilling the plan,” Kurnit suggests. “They may not have a vote in terms of what the budget’s going to be, and that’s OK. Having that understanding is critically important because it has a bearing on not only financial investment, but also human investment. Staff should get a vote on whether or not marketing ideas they develop will be consistent with the budget.”

Aligning your people with the marketing budget and plan is a crucial step that many agencies overlook. “A lot of times you see the principal hand marketing responsibilities over to a CSR and say, ‘Hey, you can work on this.’ But then they never block out time for that person to do it,” points out Dale Steinke, director, independent agent marketing programs, Safeco Insurance. “If you don’t block out the time, it doesn’t happen.”

At the average agency with revenues under $5 million, one employee is dedicated to marketing, and marketing payroll totals approximately 2.5% of net revenue, according to the 2018 Best Practices Study Update. Meanwhile, the average agency with revenues over $5 million employs nearly four marketing staffers and devotes approximately 1.3% of net revenue to marketing payroll.

“Figure out, within the components of the plan, who is best suited to do which aspects of it,” Kurnit suggests. “You could have a relative’s kid who’s got a good gift of gab doing cold-calling, for example. That would be a very inexpensive component of your budget.”

Once you’ve determined who’s going to execute what, “someone needs to have accountability for marketing results,” says Sharp, who works with a variety of agencies on Facebook advertising specifically. Who that person is will vary agency to agency.

“I’ve seen this with a lot of my clients—at smaller agencies, it’s usually the owner who’s keeping up with exactly how many leads their staff is responding to, getting quotes from, all of that,” Sharp says. “Then I have larger agencies that kind of just turn it over to their employees. They vaguely know what’s happening, but their staff has a clear picture. Either way, you need to really understand how well your marketing is performing.”

Regardless of how your agency structures its marketing manpower, “you need to have somebody who’s dedicated to doing it, even if it’s only a few hours a week,” Steinke says. “Among the fastest-growing agencies, one of the core things they have is some sort of marketer—part-time, full-time, something.”

Jacquelyn Connelly is IA senior editor.

3 Ways to Future-Proof Your Agency

Written by Jennifer Gahrt, originally published by Independent Insurance Agents & Brokers of America, Inc.

As millennials enter their prime spending years, they’re in a position to heavily influence the economy for decades to come. Many industries will have to reinvent themselves to align with millennial preferences—and as one of the oldest and most lucrative institutions in the U.S., the insurance industry is a prime candidate for that task.

The relationship between millennials and insurance needs repair. Only 4% of Gen Y is interested in an insurance career, according to The Hartford. Simultaneously, insurance technology (InsurTech) has seen a surge of investment in recent years, with global InsurTech investment tripling in 2015.

This combination of factors sets the stage for technological disruption in the insurance industry. Here are three ways your agency can ride the tech wave instead of drowning in it.

Prove your worth 

Ever since McKinsey released its infamous report with the “The End of An Era for the Local Insurance Agent” section, the industry has been abuzz about the eventual demise of independent insurance agents.

While it’s true that InsurTech is automating processes from underwriting to sales, this trend does not guarantee the complete displacement of insurance agents. Like all enterprise technologies, InsurTech generates massive amounts of data. The average consumer doesn’t know what all this data means, and although millennials are quick to self-educate, they don’t necessarily want to do extensive insurance research.

This is where an agent can add value to the consumer by serving as a guide in navigating the complex world of insurance. Independent agents are still important when it comes to helping clients weigh insurance options and providing counseling when they need to settle claims, for example.

Technology can amplify this supportive environment by enabling agents to offer additional services to customers. For example, some InsurTech software serves as a cloud-based self-service platform for clients. This is especially important when serving millennials, who have come to expect instant access to information.

Satisfy millennials 

InsurTech has the potential to change customer experiences for clients. A Capgemini study found that on average, only 30% of customers had a positive experience when interacting with their insurance companies.

Meanwhile, independent agents remain the most common point of contact consumers have with their insurance, writing nearly 58% of all premiums in the property-casualty market, according to the 2016 Market Share Report from the Big “I.” This makes independent agents highly influential in the outcome of customer experiences with insurance.

Keep in mind that Gen Y is accustomed to being connected and having access to many options. As an independent agent, you already have the benefit of being able to offer policies from different companies. Insurance software can further help diversify your services.

By leveraging technology and the Internet of Things (IoT), insurance agents can offer a variety of forward-thinking policies. Consider auto insurance: Traditional coverage uses past driver history, vehicle type, and the like to calculate pricing. With IoT car services, however, insurance agents can also offer usage-based insurance, which is informed by metrics collected straight from the car via in-auto telematics. This is especially significant for millennial consumers, who typically assign high value to connectivity.

Convenience is something consumers look for, especially millennials. Insurance software can also facilitate the notoriously dreaded claims process by processing claims information quickly and providing claims tracking and reporting services for both clients and agents.

Attract young talent 

Of course, one of the most profound ways to reach millennials is to have them on your team. With up to a quarter of U.S. insurance agents expected to retire by 2018, recruitment is crucial to the survival of the insurance industry.

According to a recent report from Vertafore, technology-fueled millennial professionals are finding fulfilling careers in insurance. Citing “the rapid adoption of technology in the industry,” the report found that 86% of respondents indicated that technology in the workplace is increasing and giving them the tools they need to compete. Meanwhile, two-thirds are satisfied with their own company’s use of technology, and 50% regularly use social media to perform business functions like building brand awareness, business development and customer support.

Implementing InsurTech is a sure way to attract millennial workers, who are commonly attracted to careers in technology. By integrating technology into your business, you communicate that you are a modern agency where a millennial worker can offer valuable contributions.

When it’s to choose a career path, millennials value upward mobility, among other opportunities. Because there will be plenty of spaces to fill in the insurance industry in the coming years, your agency should highlight the ample growth and leadership opportunities you have to offer  young employees. Millennial employees will better engage with fellow millennial consumers, all of whom will help guide the technological transformation of your agency.

Millennials are the leaders of today and tomorrow. In order to fill the looming perpetuation gap in the insurance industry, agencies need to stay ahead of the curve, leveraging InsurTech and software to attract these young professionals and fuel their business.

Jennifer Gehrt is an author and partner at Communiqué Public Relations.


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How To Automate Customer Experience

This article was written by Jason Keck and originally published by Agency Nation.

Think of the most memorable experiences in your life. The ones that surprised you, excited you and possibly even scared you. You know, the ones that changed you and the way you see the world.

Those are experiences you remember.

Customer experience is more than product user experience – it’s about powerful human emotions.

It’s product UX combined with real human interaction and how that makes you feel when it’s all over.

But in the world of insurance, customer experience lags behind.

A handshake and a meal is almost always followed by additional hours of paperwork and filling out forms by hand. It’s only now that the “robots” are starting to come for the insurance industry.

As with other industries, AI will undoubtedly prove to be a positive industry influence – great products like Knotes & Datacubes are starting to gain traction.

I’d even go as far to say that it will improve data privacy and security since computers, not people, are seeing information.

But if the automation process introduces access to information, which wasn’t previously there, companies need to be clear on how they are protecting information.

Here are four tips to elevate customer experience without entirely surrendering to the robot army, and a few companies that are already getting it right.

Be a Transparent Resource

Don’t just deliver a product or service – explain to your customers how you got to the end result.

Maintaining a company blog as an extension of your website is a great way to feature content that’s relevant to customers and the industry.

They’ll appreciate the learning process and develop trust with you as a provider.

Give your customers information. There’s nothing worse than feeling in the dark about something.

Keep them up to date on progress and set their expectations on delivery, whether it be through direct email or a more widespread message via social media channels.

Go Mobile

Meet your customers where they are.

Smartphones now capture two-thirds of US digital media time, meaning if you’re not available via a mobile device you’re missing out on a lot of potential exposure to customers.

Start simple by optimizing your website for mobile and being active on social media.

Create a Customer Journey

As you’re filtering potential customers through the sales funnel, identify key moments to make them feel special.

Mapping out the customer journey down to the last detail will enhance the onboarding process and minimize the need for troubleshooting via telephone or email.

A referral program offering perks and bonuses based on milestones is a great way to create brand loyalty and in effect, increase retention and repeat purchases.

Automate Repetitive Tasks

Many argue that AI, chatbots and self-service technologies increase efficiency by freeing up valuable employee time – and I’m all for it.

But those technologies should be used to automate repetitive tasks and enhance existing service, not replace it entirely.

As a customer, I see them as useful when they give me the answers I need because they allow me to work on my own time.

The problem is there’s almost always a roadblock, leading the customer to a dead end without an easy way to connect directly with a real person.

Although the application and renewal process takes place online, our agency clients can chat real-time with our customer success team and their clients can leave notes and comments in an application to get help from their brokers on confusing questions.

The end result is increased efficiency, deeper trust and more time that can be reinvested in growing your business.

2019 Insurance Trends

According to a recent article from Smart Harbor, "Digital marketing strategy and technology in the insurance space will continue to change radically in 2019. Advances in artificial intelligence (AI) are enabling digital assistants to become smarter about insurance, Google’s mobile-first indexing will change the way content is ranked, and texting is becoming a mainstream form of client service communication for millennials—all changes insurance agencies must consider in advancing their sales and marketing to compete."

There are no signs of technology slowing down any time soon, and it's time the insurance industry jumps on board with these changes!

Voice search, chatbots, micro-experiences, texting, and everything being done on your mobile device -- we get it, this is A LOT to take in. That's why we created this video to answer all your questions. 

Read the full article from Smart Harbor here.


Click below to contact Ashley, OIA's Customer Experience Manager!

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